<PAGE>
Registration No. 2-15530 and 811-901
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. 78 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 79 /X/
DAVID L. BABSON GROWTH FUND, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Registration No. 33-17762 and 811-5386
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. 17 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 18 /X/
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Registration No. 33-15074 and 811-5218
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. 17 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 19 /X/
SHADOW STOCK FUND, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Registration No. 2-85791 and 811-3823
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. 21 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 22 /X/
BABSON ENTERPRISE FUND, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Registration No. 33-39321 and 811-6252
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. 12 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 13 /X/
BABSON ENTERPRISE FUND II, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Registration No. 2-93363 and 811-4114
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. 19 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 21 /X/
BABSON VALUE FUND, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Registration No. 2-65761 and 811-2963
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. 27 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 29 /X/
D. L. BABSON MONEY MARKET FUND, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Registration No. 2-65489 and 811-2948
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. 27 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 28 /X/
D. L. BABSON TAX-FREE INCOME FUND, INC.
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Registration No. 2-10002 and 811-495
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. 101 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 101 /X/
D.L. BABSON BOND TRUST
(Exact name of Registrant as Specified in Charter)
BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)
(816) 751-5900
(Registrant's Telephone Number, including Area Code)
Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering
It is proposed that this filing become effective check appropriate box:
/_/ immediately upon filing pursuant to paragraph (b) of Rule 485
/X/ on October 31 pursuant to paragraph (b) of Rule 485
/_/ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
/_/ on (date) pursuant to paragraph (a)(1) of Rule 485
/_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
/_/ on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/_/ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment
<PAGE>
Babson Funds
Prospectus
October 31, 2000
Equities
Enterprise Fund
Enterprise Fund II
Growth Fund
Shadow Stock Fund
Value Fund
International Fund
Fixed Income
Bond Trust
Money Market Fund
Tax-Free Income Fund
Babson Funds
Jones & Babson, Inc. Distributors
A Member of the Generali Group
Shares of the Funds have not been approved or disapproved by the Securities
and Exchange Commission nor has the Commission passed on the adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
Prospectus
October 31, 2000
Babson Funds
Investment ADVISER:
David L. Babson & Co., Inc.
Cambridge, Massachusetts
Managed and Distributed by:
Jones & Babson, Inc.
Kansas City, Missouri
Equity Funds
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
Babson Growth Fund, Inc.
Shadow Stock Fund, Inc.
Babson Value Fund, Inc.
Babson-Stewart Ivory
International Fund, Inc.
Fixed Income Funds
D.L. Babson Bond Trust
D.L. Babson Money Market Fund, Inc.
D.L. Babson Tax-Free Income Fund, Inc.
Table of Contents
Information About the Funds
Investment Objectives and
Principal Investment Strategies 2
Principal Risk Factors 5
Past Performance 7
Fees and Expenses 10
Management and Investment Adviser 11
Financial Highlights 12
Information about Investing
How to Purchase Shares 18
How to Redeem Shares 18
Shareholder Services 18
How Share Price is Determined 19
Dividends, Distributions and their Taxation 19
Additional Policies about Transactions 20
Conducting Business with the Babson Funds 22
<PAGE>
INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES
Babson Fund
Babson Enterprise Fund
Babson Enterprise Fund II
Shadow Stock Fund
Objective
Long term growth of capital.
PRINCIPAL RISKS*
Market Risks
Small Company Risks
Babson Fund
Babson Growth Fund
Objective
Above average total return over longer periods of time through the growth
of both capital and dividend income.
PRINCIPAL RISKS*
Market Risks
Babson Fund
Babson Value Fund
Objective
Long term growth of capital and income.
PRINCIPAL RISKS*
Market Risks
Babson Fund
Babson-Stewart Ivory International Fund
Objective
Favorable total return (market appreciation and income).
PRINCIPAL RISKS*
Market Risks
International Risks
Babson Fund
Babson Bond Trust
Portfolio S - Shorter Term
Babson Bond Trust
Portfolio L - Longer Term
Objective
Maximum current income and reasonable stability of principal, consistent with
stated quality and maturity standards.
PRINCIPAL RISKS*
Fixed Income Risks
Credit Risks
Babson Fund
Babson Money Market Fund
Objective
Maximizing income consistent with safety of principal and liquidity. Seeks to
maintain liquidity and a one dollar net asset value.
PRINCIPAL RISKS*
Fixed Income Risks
Babson Fund
Babson Tax-Free Income Fund
Objective
Providing the highest level of regular income exempt from federal income tax
consistent with stated quality and maturity standards.
PRINCIPAL RISKS*
Fixed Income Risks
*The Principal Risks associated with each Fund or Portfolio are described more
fully in the section titled Principal Risk Factors.
<PAGE>
PRINCIPAL INVESTMENT STRATEGIES:
Each Fund and Portfolio will normally invest for the long term (but may sell a
stock at any time the Adviser considers it overvalued or otherwise
unfavorable). They intend to pursue their objectives by principally investing
as described below:
Babson Enterprise Fund - This Fund will invest at least 80% in common stocks
of small, faster-growing companies (referred to as micro-cap) worth between
$15 million and $300 million in stock market capitalization at the time of
purchase. The Fund will select companies whose stocks are selling at prices it
believes are reasonable in relation to the company's fundamental financial
characteristics and business prospects. The primary valuation ratios used are:
* price relative to earnings
* price relative to sales
* price relative to assets as measured by book value
* price relative to cash flow
Babson Enterprise Fund II - This Fund will invest substantially the same way
as Babson Enterprise Fund with the exception that it will target companies
larger relative to net worth of between $250 million and $1 billion in stock
market capitalization at the time of purchase. The Fund generally invests in
stocks listed on national or regional exchanges or listed over-the-counter
(e.g., NASDAQ) with prices quoted daily in the financial press.
Babson Growth Fund - To seek above average total return, this Fund will remain
at least 80% invested in a diversified list of common stocks representing
companies selected for their long-term possibilities of both capital and
dividend income growth. The Adviser defines "above average total return" as
total return that is higher than return generated by traditional investment
vehicles other than equity products.
Babson Growth Fund will invest at time of initial purchase in stocks of well-
managed companies in growing industries which have demonstrated both a
consistent and an above average ability to increase their earnings and
dividends and which have favorable prospects of sustaining such growth.
Measurements used for selection screening include:
* earning power
* dividend paying ability
* assets of the company
Shadow Stock Fund - This Fund will invest in small company stocks called
"Shadow Stocks." These are stocks that combine the characteristics of "small
stocks" and "neglected stocks." The Fund defines "small stocks" as those
stocks of companies that have market capitalization of between $20 million
and $213 million and have annual net profits of at least $1 million for the
three most recent fiscal years. The Fund defines "neglected stocks" as those
that have below average institutional holdings and below average coverage by
analysts and newsletters. It is estimated that the Shadow Stock Fund will
contain about 400 stocks at any one time.
The Fund will screen "small and neglected stocks" and will not buy a stock
or will sell part or all of a stock it owns if the Adviser believes:
* the financial condition of the company is in jeopardy
* that liquidity is insufficient
* that total acquisition costs are unreasonably high
* the stock is selling for less than $5 per share (stock will
not be sold for this reason alone but additional stock will
not be bought below $4 per share)
The Fund will also sell stock based on:
* potential negative earnings
* tenders or potential mergers
* not meeting criteria for "neglected stocks" for three
semi-annual evaluations
* not meeting criteria for "small stocks" by having market
capitalization below $10 million or above $426 million
<PAGE>
Babson Value Fund - This Fund will invest at least 90% in common stocks that
are considered to be undervalued in relation to earnings, dividends and/or
assets. The Fund will invest at time of initial purchase in stocks that meet
each of the following criteria:
* stocks that the Fund considers to be undervalued based on their
earnings, dividends and/or assets, or other widely recognized
stock valuation measurements
* stocks of companies the Fund believes are sound businesses with
good future potential based on their fundamental characteristics
* stocks of companies with an investment quality rating (growth
and stability of earnings and dividends) of "B-" or better by
Standard & Poor's, or a financial strength rating of "B" or
better by Value Line.
* stocks of any price range that may or may not be paying current
dividends
Babson-Stewart Ivory International Fund - This Fund will invest at least 80% in
equity securities (common stocks and securities convertible into common stocks)
of established companies whose primary business is carried on outside the
United States. It will invest in at least 3 foreign countries and no more than
35% of its assets in any one country. Securities purchased will primarily be
listed on foreign stock exchanges and will have attractive characteristics in
terms of:
* growth
* financial resources
* quality
* acceptance of products or services
* ability to generate profits and in many cases - dividends
Babson-Stewart Ivory International Fund from time to time will also purchase:
* investment grade fixed income securities of foreign governments
or corporations
* American Depository Receipts
* European Depository Receipts
* International Depository Receipts
* foreign currency or foreign currency forwards (the latter only
for hedging)
* securities not listed on an exchange (which may be more
difficult to sell)
D.L. Babson Bond Trust - Portfolio L and portfolio S - D.L. Babson Bond Trust
offers shares of two separate fixed income portfolios. Portfolio L (Longer
Term) will have an expected dollar weighted average maturity of more than five
years. Portfolio S (Shorter Term) will have an expected dollar weighted average
maturity of five years or less. Each Portfolio may invest at time of purchase:
* At least 80% of its assets in debt securities to include:
(1) direct or guaranteed obligations of the U.S. government
and its agencies, and (2) investment grade debt securities
issued by corporations or other business organizations,
including notes and bonds. The Portfolios will limit its
investment in securities rated BBB or Baa to no more than 25%
of their assets.
* In debt securities secured by specific assets of the issuing
corporation (such as mortgage bonds and equipment trusts) as
well as unsecured debt securities that represent claims on the
general credit of the issuer.
* Up to 25% of their assets in Yankee Bonds. Yankee Bonds are
issued by foreign-domiciled entities and underwritten by a
U.S. syndicate for delivery in the U.S.
* In cash or short term debt obligations.
* In variable rate master demand notes, which represent a
borrowing agreement between an institutional lender and
borrower.
<PAGE>
Currently, the average weighted maturity range of Portfolio L is approximately
9 years and Portfolio S is approximately 6 years, but maturities may be
shortened or lengthened to respond to interest rate changes.
D.L. Babson Money Market Fund - This Fund invests in high quality short-term
debt instruments for the purpose of maximizing income consistent with safety
of principal and liquidity. The primary investment is commercial paper issued
by corporations. The Fund will have an expected weighted average maturity 90
days or less. Net asset value is expected to remain constant at $1.00 per
share. The Fund may invest at time of purchase in:
* Direct obligations of the U.S. Government.
* Obligations of U.S. government agencies and instrumentalities
which are secured by the full faith and credit of the U.S.
Treasury such as Government National Mortgage Association,
Export-Import Bank, or the Student Loan Marketing Association;
or which are secured by the right of the issuer to borrow from
the Treasury, such as securities issued by the Federal Financing
Bank or the U.S. Postal Service; or are supported by the credit
of the government agency or instrumentality itself, such as
securities of the Federal Home Loan Banks, or the Federal
National Mortgage Association.
* Repurchase agreements collateralized by issues of the United
States Treasury or United States government agencies.
* Short term obligations issued domestically by U.S. commercial
banks or savings and loan associations having assets of at
least $1 billion and are members of FDIC or Federal Home Loan
Banks Association.
* High quality commercial paper or variable rate master demand
notes of corporations.
* High quality non-convertible short-term debt obligations.
D.L. Babson Tax-Free Income Fund - This Fund offers shares exempt from federal
income tax. The Fund will have an expected weighted average maturity between
ten and twenty-five years with maturities being longer than five years at time
of purchase. The Fund may invest at time of purchase:
* At least 80% of its assets (exclusive of cash) in municipal
securities, such as bonds and other debt instruments issued
by or on behalf of states, territories and possessions of the
United States, including their subdivisions, authorities,
agencies and instrumentalities. The interest they pay is
expected to be exempt from federal income tax including the
alternative minimum tax.
* At least 90% of the municipal bonds bought will be rated
within the three top rating categories of Moody's (Aaa, Aa or
A) or Standard & Poor's (AAA, AA or A).
* Investments in short term municipal obligations and notes will
be (1) backed by the full faith and credit of the United States;
or (2) rated MIG-1, MIG-2 or MIG-3 by Moody's; or (3) A-1 or A-2
by Standard & Poor's; or (4) if unrated short-term then the
issuer's long-term bond rating must be at least A as determined
by Moody's or Standard & Poor's.
* In cash or short term money market obligations (including
taxable money market obligations on a temporary basis) that
are rated in the top two categories (A-1/Prime-1 or A-2/Prime-2).
<PAGE>
PRINCIPAL RISK FACTORS
As with any mutual fund, there is a risk that you could lose money by investing
in the Funds or Portfolios. Investments are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency.
Market Risks
Common stocks fluctuate in price. Since the Growth, Enterprise, Enterprise II,
Value, Shadow and International Funds invest primarily in common stocks, the
value of the Funds may go down and you could lose money over short or even
extended periods.
Small Company Risks
Generally, smaller and less seasoned companies have more potential for rapid
growth. However, they often involve greater risk than larger companies. They
may not have the management experience, financial resources, product
diversification and competitive strengths of larger companies.
Smaller company stocks tend to be bought and sold less often and in smaller
amounts than larger company stocks. Because of this, if a Fund wants to sell
a large quantity of a small company stock it may have to sell at a lower price
than its Adviser might prefer, or it may have to sell in small quantities over
a period of time. Enterprise and Enterprise II Funds try to minimize this risk
by investing in stocks that are readily bought and sold. However, the lower
liquidity of the neglected stocks in which Shadow Stock Fund invests carry
greater risk in the event of a weak stock market and substantial liquidations
by the Fund.
Fixed Income Risks
The yields and principal values of debt securities fluctuate. Generally, values
of debt securities change inversely with changes in interest rates. For example,
when interest rates go up, the values of debt securities tend to go down. As a
result, the values of the Portfolio L and S of Bond Trust and the value of the
Tax-Free Income Fund may go down. The fluctuations that are experienced by
Portfolio L of Bond Trust and by the Tax-Free Income Fund will likely be greater
than those of Portfolio S, since longer-term bond prices tend to fluctuate more
in response to interest rate changes. Future interest rates cannot be accurately
and consistently forecast.
The amount of the dividends paid by Bond Trust, Tax-Free Income Fund and Money
Market Fund will change based on the amount of income it earns on its
investments. Also, it is possible that the issuer of a debt security may default
on the interest and principal payments due to a Fund, which may affect a Fund's
total return.
Credit Risks
The Bond Trust and Tax-Free Income Fund may purchase fixed income securities
rated in the fourth classification by Moody's (Baa) and S&P (BBB). These
securities have speculative characteristics and changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity of those
issuers to make principal or interest payments, as compared to issuers of more
highly rated securities.
International Risks
International investing by Babson-Stewart Ivory International Fund poses
additional risks such as currency fluctuation and political instability. These
risks are inherently passed on to the company's shareholders and in turn, to
the Fund's shareholders.
Investing in developing countries may pose additional risks. Securities issued
by companies in developing countries may not be as liquid as those in more
developed countries. In addition, regulations in developing countries may not
be as strong nor information as readily available. The International Fund
intends to limit purchases of securities issued by developing countries to no
more than 20% of the Fund.
Temporary Defensive Strategy
Each Fund may respond to adverse market, economic, political or other conditions
by investing up to 100% of its assets in temporary defensive investments, such
as cash, short-term debt obligations or other high quality investments. During
such periods, the Funds may not achieve their investment objectives.
<PAGE>
PAST PERFORMANCE
The tables on the following pages provide an indication of the risks of
investing in the Funds. The tables below show how the total returns generated
by the respective Funds have changed for each calendar year and how the Funds'
average annual returns for certain periods compare with those of an appropriate
benchmark. Each table reflects all expenses of each Fund and assumes that all
dividends and capital gains distributions have been reinvested in new shares
of the same Fund. Past performance is not necessarily an indication of how a
Fund will perform in the future.
Babson Enterprise Fund
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Babson Enterprise Fund -7.26 8.98% 10.63%
Russell 2000 Index 21.26% 16.70% 13.40%
Babson Enterprise Fund II
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
Inception
1 Year 5 Years 8/5/91
Babson Enterprise Fund II 6.16% 15.67% 13.19%
Russell 2000 Index 21.26% 16.70% 13.40%
Babson Growth Fund
Chart - AAnnual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Babson Growth Fund 12.57% 24.99% 15.34%
S&P 500 Index 21.04% 28.54% 18.20%
Russell 1000 Growth Index 33.16% 32.41% 20.31%
Shadow Stock Fund
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Shadow Stock Fund 4.89% 14.62% 11.22%
Russell 2000 Index 21.26% 16.70% 13.40%
Babson Value Fund
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Babson Value Fund 1.09% 17.01% 13.80%
S&P 500 Index 21.04% 28.54% 18.20%
S&P Barra Value 12.72% 22.94% 15.37%
<PAGE>
Babson-Stewart Ivory International fund
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Babson Stewart Ivory
International Fund 31.06% 14.06% 10.35%
MSCI EAFE Index 26.96% 12.83% 7.01%
Babson Bond Trust - Portfolio L
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Babson Bond Trust - Portfolio L -1.40% 6.75% 7.15%
Lehman Bros. Aggregate Bond Index -0.83% 7.73% 7.70%
Babson Bond Trust - Portfolio S
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Babson Bond Trust - Portfolio S 0.37% 6.61% 6.83%
Lehman Bros. Intermediate
Govt./Corporate Index 0.39% 7.09% 7.26%
Babson Money Market Fund
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Babson Money Market Fund 4.37% 4.72% 4.54%
Merrill Lynch 91-Day
Treasury Bill Index 4.77% 5.03% 4.87%
Babson Tax-Free Income Fund
Chart - Annual Total Return as of December 31 of Each Year
Average Annual Total Return as of December 31, 1999
1 Year 5 Years 10 Years
Babson Tax-Free Income Fund -3.10% 5.95% 6.02%
Lehman Bros. Municipal Bond Index -2.07% 6.91% 6.90%
<PAGE>
Fees & Expenses
The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Funds.
Stewart
BABSON BABSON BABSON SHADOW BABSON IVORY
Enter- Enter- Interna-
Prise prise Growth Stock Value tional
FUND FUND II FUND FUND FUND FUND
Shareholder Fees
(fees paid directly from
your investment)
Maximum Sales Charge (Load)
Imposed on Purchases None None None None None None
Maximum Deferred Sales
Charge (Load) None None None None None None
Maximum Sales Charge (Load)
Imposed on Reinvested
Dividends None None None None None None
Redemption Fee None* None* None* None* None* None*
Exchange Fee None None None None None None
*A $10 fee is imposed for redemptions by wire.
Annual Fund Operating Expenses
(expenses that are deducted
from Fund assets)
Management Fees 1.12% 1.24% .78% 1.00% .95% .95%
Distribution (12b-1) Fees None None None None None None
Other Expenses .02% .03% .01% .07% .01% .29%
Total Annual Fund Operating
Expenses 1.14% 1.27% .79% 1.07% .96% 1.24%
BABSON BABSON
Bond BOND BABSON BABSON
TRUST TRUST Money TAX-FREE
PORT- Port- Market Income
FOLIO L FOLIO S FUND FUND
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load)
Imposed on Purchases None None None None
Maximum Deferred Sales Charge (Load) None None None None
Maximum Sales Charge (Load) Imposed
on Reinvested Dividends None None None None
Redemption Fee None* None* None* None*
Exchange Fee None None None None
*A $10 fee is imposed for redemptions by wire.
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fees .95% .95%** .85% .95%
Distribution (12b-1) Fees None None None None
Other Expenses .03% .03% .03% .06%
Total Annual Fund Operating Expenses .98% .98% .88% 1.01%
**The Manager has voluntarily agreed to a reduction in the management fee paid
by the portfolio to .65% through March 31, 2001.
<PAGE>
Fee Examples
These examples are intended to help you compare the cost of investing in each
Fund with the cost of investing in other mutual funds. They assume you invest
$10,000, receive a 5% return each year, and that operating expenses for each
period remain the same. Although your actual costs may be higher or lower,
based on the assumptions below your costs would be:
1 Year 3 Years 5 Years 10 Years
Babson Enterprise Fund 116 362 628 1,386
Babson Enterprise Fund II 129 403 697 1,534
Babson Growth Fund 81 252 439 978
Shadow Stock Fund 109 340 590 1,306
Babson Value Fund 98 306 531 1,178
Babson-Stewart Ivory International Fund 126 393 681 1,500
Babson Bond Trust - Portfolio L 100 312 542 1,201
Babson Bond Trust - Portfolio S 100 312 542 1,201
Babson Money Market 90 281 488 1,084
Babson Tax-Free Income 103 322 558 1,236
MANAGEMENT AND INVESTMENT ADVISER
Jones & Babson, Inc. was founded in 1959. Jones & Babson, Inc. acts as the
Manager and Principal Underwriter of the Babson Fund family. 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 Funds. This includes investment management and
supervision; fees of the custodian, independent auditors and legal counsel;
officers, directors and other personnel; rent; shareholder services; and other
items incidental to corporate administration.
Operating expenses not required in the normal operation of the Funds are payable
by the Funds. These expenses include taxes, interest, governmental charges and
fees, including registration of the Fund with the Securities and Exchange
Commission and the fees payable to various States, brokerage costs, dues, and
all extraordinary costs including expenses arising out of anticipated or actual
litigation or administrative proceedings.
As a part of the Management Agreement, Jones & Babson, Inc. employs at its own
expense David L. Babson & Co., Inc., an investment advisory firm founded in
1940, as its Investment Adviser to assist in the investment advisory function.
To assist in the investment advisory function related to Babson-Stewart Ivory
International Fund, Jones & Babson, Inc. employs at its own expense Babson-
Stewart Ivory International, a partnership formed in 1987, by David L. Babson
& Co. of Cambridge, Massachusetts and Stewart Ivory & Company (International)
Ltd., an indirect subsidiary of the Commonwealth Bank of Australia.
James B. Gribbell has been the manager of Babson Growth Fund since 1996. He is
a Chartered Financial Analyst ("CFA"). He joined David L. Babson & Co. in 1991.
Lance F. James has been the manager of Babson Enterprise II since its inception
in 1991 and manager of Enterprise since 1999. He joined David L. Babson & Co.
in 1986. Anthony M. Maramarco, CFA, has been the manager of Babson Value Fund
and the Shadow Stock Fund since 1999. He joined David L. Babson & Co. in 1996
and has over 18 years investment management experience. Mr. Maramarco was
previously at Concert Capital Management, Inc., an investment advisory firm,
from 1993-1996. James W. Burns has been the manager of Babson-Stewart Ivory
International Fund since 1999. He joined Stewart Ivory in 1990, and has 18 years
of investment management experience. Babson Bond Trust has been managed by a
committee of fixed income professionals since October 1999. Joanne E. Keers,
CFA, has been the manager of Babson Tax-Free Income Fund since 1999. She joined
David L. Babson & Co. in 1987.
For its services, Babson Enterprise Fund and Enterprise Fund II pay Jones &
Babson, Inc. a fee at the annual rate of 1.50% of the first $30 million of
average daily net assets and 1% of amounts in excess of $30 million. Babson
Growth Fund pays Jones & Babson, Inc. a fee at the annual rate of .85% of the
first $250 million and .70% of amounts in excess of $250 million of average
daily net assets. Shadow Stock Fund pays Jones & Babson, Inc. a fee of 1.00%
of average daily assets. Babson Value Fund, Babson-Stewart Ivory International
Fund and Babson Bond Trust pay Jones & Babson, Inc. a fee at the annual rate
of .95% of average daily net assets. However, during the period from May 1,
1988 through March 31, 2001, Jones & Babson has agreed to voluntarily waive
.30% of the fee for Portfolio S of Babson Bond Trust bringing its total to
.65%. Babson Tax-Free Income Fund pays Jones & Babson, Inc. a fee at the annual
rate of .95% of average daily net assets. Babson Money Market Fund pays Jones
& Babson, Inc. a fee at the annual rate of 0.85% of average daily assets. The
Management Agreement limits the liability of the Manager or its Investment
Adviser, 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.
Jones & Babson, Inc. is located at 700 Karnes Blvd., Kansas City, MO 64108-3306
and David L. Babson & Co., Inc. is located at One Memorial Drive, Cambridge,
MA 02142.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights tables are intended to help you understand each Fund's
financial performance for the five years ended June 30, 2000, except for Babson
Enterprise Fund, Babson Enterprise Fund II, Babson Value Fund and Babson Bond
Trust (Portfolio L & Portfolio S) which are for the one year ended June 30, 2000
, the seven months ended June 30, 1999 and the four years ended November 30,
1998, respectively. Certain information reflects financial results for a single
share of a Fund. The total returns in the tables represent the rate that an
investor would have earned on an investment in a Fund (assuming reinvestment
of all dividends and distributions). This information has been derived from
the Funds' financial statements which have been audited by Ernst & Young LLP,
except for the financial highlights for Babson Growth Fund, Shadow Stock Fund,
Babson- Stewart Ivory International Fund, Babson Money Market Fund and Babson
Tax-Free Income Fund for the years ended on or before June 30, 1998 which have
been audited by other auditors. This information, along with the Funds'
financial statements, are included in the annual report, which is available
upon request.
BABSON ENTERPRISE FUND
Condensed data for a share of capital stock
outstanding throughout each period.
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
Net asset value, beginning
of period $14.72 $16.63 $21.22 $18.51 $17.35 $16.64
Income from investment
operations:
Net investment income .03 .03 .04 .06 .06 .10
Net gains (losses)
on securities (both
realized and unrealized) .18 .58 (2.15) 5.31 3.06 2.34
Total from investment operations .21 .61 (2.11) 5.37 3.12 2.44
Less distributions:
Dividends from net
investment income (.04) (.05) (.06) - (.12) (.04)
Distributions from
capital gains (1.07) (2.47) (2.42) (2.66) (1.84) (1.69)
Total distributions (1.11) (2.52) (2.48) (2.66) (1.96) (1.73)
Net asset value, end of
period $13.82 $14.72 $16.63 $21.22 $18.51 $17.35
Total return* 2.84% 4.70% (11.05%) 33.49% 20.17% 16.42%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 111 $ 155 $ 179 $ 216 $ 202 $ 202
Ratio of expenses to
average net assets** 1.14% 1.11% 1.09% 1.08% 1.08% 1.09%
Ratio of net investment
income to average net
assets** .15% .32% .29% .30% .35% .67%
Portfolio turnover rate 32% 12% 22% 22% 24% 13%
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
<PAGE>
BABSON ENTERPRISE FUND II
Condensed data for a share of capital stock
outstanding throughout each period.
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
Net asset value, beginning
of period $24.48 $23.20 $26.70 $22.75 $19.19 $16.22
Income from investment
operations:
Net investment income .02 .03 .10 .08 .11 .05
Net gains (losses)
on securities (both
realized and unrealized) 1.30 2.37 (1.50) 6.97 4.45 3.03
Total from investment operations 1.32 2.40 (1.40) 7.05 4.56 3.08
Less distributions:
Dividends from net
investment income (.02) (.05) (.05) (.11) (.05) (.02)
Distributions from
capital gains (.60) (1.07) (2.05) (2.99) (.95) (.09)
Total distributions (.62) (1.12) (2.10) (3.10) (1.00) (.11)
Net asset value, end of
period $25.18 $24.48 $23.20 $26.70 $22.75 $19.19
Total return* 5.63% 11.03% (5.61%) 35.29% 25.04% 19.11%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 60 $ 77 $ 83 $ 82 $ 46 $ 40
Ratio of expenses to
average net assets** 1.27% 1.23% 1.22% 1.28% 1.38% 1.45%
Ratio of net investment
income to average net
assets** .08% .11% .40% .27% .55% .30%
Portfolio turnover rate 23% 14% 25% 25% 30% 15%
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
BABSON GROWTH FUND
Condensed data for a share of capital stock
outstanding throughout each year.
Years Ended JUNE 30,
2000 1999 1998 1997 1996
Net asset value, beginning of year $20.01 $20.77 $17.80 $14.42 $13.43
Income from investment operations:
Net investment income (.04) .02 .06 .09 .12
Net gains (losses) on securities
(both realized and unrealized) 4.00 3.25 4.41 4.16 2.91
Total from investment operations 3.96 3.27 4.47 4.25 3.03
Less distributions:
Dividends from net investment income - (.02) (.06) (.09) (.13)
Distributions from capital gains (3.10) (4.01) (1.44) (.78) (1.91)
Total distributions (3.10) (4.03) (1.50) (.87) (2.04)
Net asset value, end of year $20.87 $20.01 $20.77 $17.80 $14.42
Total return 20.69% 17.04% 26.73% 30.10% 22.99%
Ratios/Supplemental Data
Net assets, end of year (in millions) $525 $490 $451 $365 $280
Ratio of expenses to average net assets .79% .79% .80% .83% .85%
Ratio of net investment income to
average net assets (.18%) .09% .30% .61% .82%
Portfolio turnover rate 62% 39% 35% 20% 33%
<PAGE>
SHADOW STOCK FUND
Condensed data for a share of capital stock
outstanding throughout each year.
Years Ended JUNE 30,
2000 1999 1998 1997 1996
Net asset value, beginning of year $12.06 $13.24 $12.57 $11.31 $10.55
Income from investment operations:
Net investment income .09 .11 .08 .12 .09
Net gains (losses) on securities
(both realized and unrealized) 1.04 (.24) 2.54 2.44 1.67
Total from investment operations 1.13 (.13) 2.62 2.56 1.76
Less distributions:
Dividends from net investment income (.07) (.07) (.10) (.09) (.10)
Distributions from capital gains (.86) (.98) (1.85) (1.21) (.90)
Total distributions (.93) (1.05) (1.95) (1.30) (1.00)
Net asset value, end of year $12.26 $12.06 $13.24 $12.57 $11.31
Total return 9.91% (.25%) 21.98% 23.63% 17.13%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 45 $ 50 $ 52 $ 41 $ 39
Ratio of expenses to average net assets 1.07% 1.10% 1.16% 1.13% 1.14%
Ratio of net investment income to
average net assets .66% .97% .56% 1.00% .79%
Portfolio turnover rate 18% 21% 43% 0% 25%
BABSON VALUE FUND
Condensed data for a share of capital stock
outstanding throughout each period.
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
Net asset value, beginning
of period $51.36 $47.42 $47.73 $38.65 $31.78 $25.19
Income from investment
operations:
Net investment income 1.27 .45 .62 .51 .55 .59
Net gains (losses)
on securities (both
realized and unrealized) (9.35) 5.90 1.09 9.65 7.20 7.20
Total from investment operations (8.08) 6.35 1.71 10.16 7.75 7.79
Less distributions:
Dividends from net
investment income (.96) (.44) (.56) (.47) (.53) (.60)
Distributions from
capital gains (3.56) (1.97) (1.46) (.61) (.35) (.60)
Total distributions (4.52) (2.41) (2.02) (1.08) (.88) (1.20)
Net asset value, end of
period $38.76 $51.36 $47.42 $47.73 $38.65 $31.78
Total return* (15.93%) 14.14% 3.85% 26.89% 24.91% 32.07%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 528 $1,244 $1,494 $1,419 $ 764 $ 293
Ratio of expenses to
average net assets** .96% .96% .98% .97% .96% .98%
Ratio of net investment
income to average net
assets** 2.41% 1.05% 1.28% 1.22% 1.63% 2.12%
Portfolio turnover rate 18% 13% 42% 17% 11% 6%
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
<PAGE>
BABSON-STEWART IVORY INTERNATIONAL FUND
Condensed data for a share of capital stock
outstanding throughout each period.
Years Ended JUNE 30,
2000 1999 1998 1997 1996
Net asset value, beginning of year $19.48 $19.65 $19.53 $18.04 $15.96
Income from investment operations:
Net investment income (.04) .03 .08 .07 .07
Net gains (losses) on securities
(both realized and unrealized) 4.45 .66 1.07 1.70 2.85
Total from investment operations 4.41 .69 1.15 1.77 2.92
Less distributions:
Dividends from net investment income - (.04) (.07) (.05) (.08)
Distributions from capital gains (.30) (.82) (.96) (.23) (.65)
Distributions in excess of
realized capital gains - - - - (.11)
Total distributions (.30) (.86) (1.03) (.28) (.84)
Net asset value, end of year $23.59 $19.48 $19.65 $19.53 $18.04
Total return 22.64% 3.76% 6.48% 9.91% 18.66%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 85 $ 89 $104 $111 $ 80
Ratio of expenses to average net assets 1.24% 1.23% 1.16% 1.19% 1.26%
Ratio of net investment income to
average net assets (.06%) .24% .37% .47% .44%
Portfolio turnover rate 47% 51% 48% 40% 33%
BABSON BOND TRUST - PORTFOLIO L
Condensed data for a share of capital stock
outstanding throughout each period.
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
Net asset value, beginning
of period $1.52 $1.59 $1.56 $1.55 $1.58 $1.47
Income from investment
operations:
Net investment income .09 .05 .09 .10 .11 .11
Net gains (losses) on
securities (both realized
and unrealized) (.04) (.07) .03 .01 (.03) .11
Total from investment
operations .05 (.02) .12 .11 .08 .22
Less distributions:
Dividends from net
investment income (.09) (.05) (.09) (.10) (.11) (.11)
Distributions from capital
gains - - - - - -
Total distributions (.09) (.05) (.09) (.10) (.11) (.11)
Net asset value, end of period $1.48 $1.52 $1.59 $1.56 $1.55 $1.58
Total return* 3.54% (1.16%) 8.13% 7.26% 5.17% 15.28%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 100 $ 121 $ 128 $ 132 $ 142 $ 161
Ratio of expenses to average
net assets** .98% .97% .97% .97% .97% .97%
Ratio of net investment income to
average net assets** 6.14% 5.73% 5.93% 6.38% 6.96% 7.06%
Portfolio turnover rate 26% 38% 43% 59% 61% 50%
<PAGE>
BABSON BOND TRUST - PORTFOLIO S
Condensed data for a share of capital stock
outstanding throughout each period.
Seven
Year Months
Ended Ended
June 30, June 30, Years Ended November 30,
2000 1999 1998 1997 1996 1995
Net asset value, beginning
of period $9.60 $9.91 $9.78 $9.77 $9.90 $9.43
Income from investment
operations:
Net investment income .58 .33 .58 .62 .69 .73
Net gains (losses) on
securities (both
realized and unrealized (.25) (.31) .13 .01 (.13) .47
Total from investment
operations .33 .02 .71 .63 .56 1.20
Less distributions:
Dividends from net
investment income (.58) (.33) (.58) (.62) (.69) (.73)
Distributions from
capital gains - - - - - -
Total distributions (.58) (.33) (.58) (.62) (.69) (.73)
Net asset value, end of period $9.35 $9.60 $9.91 $9.78 $9.77 $9.90
Total return* 3.55% .15% 7.47% 6.70% 5.96% 13.10%
Ratios/Supplemental Data
Net assets, end of period
(in millions) $ 30 $ 37 $ 38 $ 41 $ 34 $ 33
Ratio of expenses to
average net assets** .68% .67% .67% .66% .66% .67%
Ratio of net investment
income to average net
assets** 6.12% 5.75% 5.90% 6.42% 7.10% 7.47%
Ratio of expenses to
average net assets before
voluntary reduction of
management fee ** .98% .97% .97% .97% .96% .97%
Portfolio turnover rate 35% 54% 60% 65% 48% 57%
Total return not annualized for periods less than one full year
Annualized for periods less than one full year
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
<PAGE>
BABSON MONEY MARKET FUND
Condensed data for a share of capital stock
outstanding throughout each year.
Years Ended JUNE 30,
2000 1999 1998 1997 1996
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment operations:
Net investment income .05 .04 .05 .05 .05
Less distributions:
Dividends from net investment income (.05) (.04) (.05) (.05) (.05)
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
Total return 4.97% 4.38% 4.82% 4.61% 4.83%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 39 $ 39 $ 37 $ 38 $ 36
Ratio of expenses to average net assets .88% .88% .91% .92% .92%
Ratio of net investment income to
average net assets 4.86% 4.30% 4.73% 4.58% 4.75%
BABSON TAX-FREE INCOME FUND
Condensed data for a share of capital stock
outstanding throughout each year.
Years Ended JUNE 30,
2000 1999 1998 1997 1996
Net asset value, beginning of year $8.91 $9.22 $8.96 $8.74 $8.67
Income from investment operations:
Net investment income .39 .40 .40 .42 .41
Net gains (losses) on securities
(both realized and unrealized) (.21) (.24) .28 .24 .07
Total from investment operations .18 .16 .68 .66 .48
Less distributions:
Dividends from net investment income (.39) (.40) (.40) (.42) (.41)
Distributions from capital gains (.08) (.07) (.02) (.02) -
Total distributions (.47) (.47) (.42) (.44) (.41)
Net asset value, end of year $8.62 $8.91 $9.22 $8.96 $8.74
Total return 2.18% 1.70% 7.82% 7.67% 5.60%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 24 $ 26 $ 27 $ 27 $ 27
Ratio of expenses to average net assets 1.01% 1.03% 1.06% 1.01% 1.01%
Ratio of net investment income to
average net assets 4.53% 4.36% 4.46% 4.71% 4.67%
Portfolio turnover rate 48% 9% 18% 21% 39%
<PAGE>
HOW TO PURCHASE SHARES
No Load Funds
* There are no sales commissions or Rule 12b-1 fees
How to Buy Shares (see accompanying chart on page 22 for details)
* By phone, mail or wire
* Through Automatic Monthly Investments
* Through exchanges from a Babson or Buffalo Fund (non fiduciary
accounts only)
Minimum Initial Investment
* $1,000 for most accounts
* $250 for IRA and Uniform Transfer (Gift) to Minors accounts
* $100 with an Automatic Monthly Investment
* $1,000 for exchanges from another fund ($100 for IRAs and
Uniform Gifts to Minors accounts)
Minimum Additional Investment
* $100 by phone, mail or ACH
* $1,000 By Wire
* $50 for Automatic Monthly Investments
* $1,000 for exchanges from another fund ($100 for IRAs and
Uniform Gifts to Minors accounts)
Minimum Account Size
You must maintain a minimum account value equal to the current minimum initial
investment ($1,000). If your account falls below this amount due to redemptions
(not market action) we may notify you and ask you to increase the account to
the minimum. We will close the account and send your money if you do not bring
the account up to the minimum within 60 days after we mail you the notice.
HOW TO REDEEM SHARES
You may withdraw from your Fund's account at any time in the following amounts:
* any amount for redemptions requested by mail or phone to address
of record
* $50,000 for fund web site redemptions
* $1,000 or more for redemptions wired to your account ($10 fee)
($100 minimum for ACH to bank account)
* $50 or more for redemptions by a systematic redemption plan
(there may be a fee)
* $1,000 or more for exchanges to another fund ($100 for IRAs and
Uniform Gifts to Minors accounts)
* $100 or more for redemptions by automatic monthly exchange to
another fund
<PAGE>
SHAREHOLDER SERVICES
The following services are also available to shareholders. Please call
1-800-4-BABSON (1-800-422-2766) for more information:
* Uniform Transfers (Gifts) to Minors accounts
* Accounts for corporations or partnerships
* Sub-Accounting Services for tax qualified retirement plans
and others
* Prototype Retirement Plans for the self-employed, partnerships
and corporations.
* Traditional IRA accounts
* Roth IRA accounts
* Simplified Employee Pensions (SEPs)
HOW SHARE PRICE IS DETERMINED
Shares of the Funds are purchased or redeemed at the net asset value per share
next calculated after your purchase order and payment or redemption order is
received in good order (see "Additional Policies"). In the case of certain
institutions which have made satisfactory payment or redemption arrangements
with the Funds, orders may be processed at the net asset value per share next
effective after receipt by that institution.
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. The net asset value per share (except for
Money Market Fund) is computed once daily, Monday through Friday, at 4:00 p.m.
(Eastern Time) on days when the Funds are open for business (generally the same
days that the New York Stock Exchange is open for trading). The net asset value
per share for the Money Market Fund is computed at 1:00 p.m. (Eastern Standard
Time).
Each security owned by the Funds that is 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 Funds will use the
price of that Exchange which they generally consider 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.
Short-term instruments maturing within 60 days may be valued at amortized cost.
The Money Market Fund values assets on the basis of amortized cost.
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION
Your distributions will be reinvested automatically in additional shares of the
same Fund unless you have elected on your original application, or by written
instructions filed with the Funds, to have them paid in cash ($10 minimum check
amount). There are no fees or sales charges on reinvestments.
If you buy shares of any Fund shortly before the record date, please keep in
mind that any distribution will lower the value of the Fund's shares by the
amount of the distribution and you will then receive a portion of the price
back in the form of a taxable distribution.
DISTRIBUTIONS - Bond Trust, Tax-Free Income Fund and Money Market Fund - At the
end of each day, the Funds declare dividends from their net investment income.
These dividends are payable to those who were shareholders of record at the end
of the previous business day. On the last day of the month, all dividends
declared during that month are credited to the accounts of those shareholders.
Distributions from capital gains, if any, will be declared annually by
December 31.
Shares begin earning income on the day following the effective date of purchase.
Income earned by a Fund on weekends, holidays and other days on which the Fund
is closed for business is declared as a dividend on the next day on which the
Fund is open for business. However, on month-end such dividend is declared as
of the last day of the month.
Value Fund - The Value Fund pays shareholder distributions from its net
investment income quarterly, usually in March, June, September and December.
Distributions from any net capital gains that it has realized on the sale of
securities will be declared and paid semiannually, usually in June and December.
Enterprise Fund, Enterprise Fund II, Growth Fund, Shadow Stock Fund and Stewart
Ivory International Fund - The Funds pay shareholder distributions from its net
investment income and from net capital gains that it has realized on the sale
of the securities, if any, semiannually, usually in June and December.
<PAGE>
TAX CONSIDERATIONS - In general, fund distributions are taxable to you as
either ordinary income or capital gains. This is true whether you reinvest your
distributions in additional fund shares or receive them in cash. Any capital
gains a fund distributes are taxable to you as long-term capital gains no matter
how long you have owned your shares.
Distributions from the Tax-Free Income Fund will consist primarily of exempt-
interest dividends from interest earned on municipal securities. In general,
exempt-interest dividends are exempt from federal income tax. The Fund,
however, may invest a portion of its assets in securities that pay income that
is not tax-exempt.
By law, a fund must withhold 31% of your taxable distributions and proceeds if
you do not provide your correct social security or taxpayer identification
number, or if the IRS instructs the fund to do so.
Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.
In general, when you sell your shares of a fund, you may have a capital gain
or loss. For tax purposes, an exchange of your fund shares for shares of a
different Babson Fund is the same as a sale. The individual tax rate on any
gain from the sale or exchange of your fund shares depends on your marginal
tax bracket and on how long the shares have been held. However, because the
Money Market Fund expects to maintain a $1.00 net asset value per share,
investors should not have any gain or loss on the sale of such shares.
Exempt-interest dividends paid by the Tax-Free Income Fund are taken into
account when determining the taxable portion of an investor's social security
or railroad retirement benefits. The Fund may invest a portion of its assets
in private activity bonds. The income from these bonds will be a preference
item when determining an investor's alternative minimum tax.
Many states grant tax-free status to dividends paid from interest earned on
direct obligations of the U.S. government, subject to certain restrictions.
Exempt-interest dividends from interest earned on municipal securities of a
state, or of its political subdivisions, generally will be exempt from that
state's personal income taxes. Most states, however, do not grant tax-free
treatment to interest on investments in municipal securities of other states.
Fund distributions and gains from the sale or exchange of your fund shares
generally will be subject to state and local income tax. Any foreign taxes
paid by the Stewart Ivory International Fund on its investments may be passed
through to you as a foreign tax credit. Non-U.S. investors may be subject to
U.S. withholding and estate tax. You should consult your tax adviser about the
federal, state, local or foreign tax consequences of your investment in a fund.
<PAGE>
ADDITIONAL POLICIES ABOUT TRANSACTIONS
We cannot process transaction requests that are not complete and in good order
as described in this section. We may cancel or change our transaction policies
without notice. To avoid delays, please call us if you have any questions about
these policies.
If you wish to purchase (or redeem) shares of a Babson Fund through a broker, a
fee may be charged by that broker. In addition, you may be subject to other
policies or restrictions of the broker such as higher minimum account value,
etc.
Purchases - We may reject orders when not accompanied by payment or when in the
best interest of the Funds and their shareholders.
Redemptions - The Funds try to send 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 reserves the right under certain circumstances
to delay redemption transactions up to seven days, or as required by applicable
law. The Fund Manager believes that certain investors who try to "time the
market" by purchasing and redeeming shares from the Funds on a regular basis,
may disrupt the investment process and pose additional transactions costs to
the Funds. In those cases the Fund Managers may delay redemption proceeds as
described above or take other actions it deems necessary to discourage such
activity.
If you request a redemption within 15 days of purchase, we will delay sending
your proceeds until we are certain that we have collected unconditional payment,
which may take up to 15 days from the date of purchase. For your protection, if
your account address has been changed within the last 30 days, your redemption
request must be in writing and signed by each account owner, with signature
guarantees. The right to redeem shares may be temporarily suspended in emergency
situations only as permitted under Federal law.
Withdrawal by Draft ("check") is limited to open account shares of Babson Money
Market Fund. Draft amounts may range from $500 to $100,000.
We cannot accept requests that contain special conditions or effective dates.
We may request additional documentation to insure that a request is genuine.
Under certain circumstances, we may pay you proceeds in the form of portfolio
securities owned by the Fund being redeemed. If you receive securities instead
of cash, you may incur brokerage costs when converting into cash.
Signature Guarantees - You can get a signature guarantee from most banks or
securities dealers, but not a notary public. For your protection, we require
a guaranteed signature if you request:
* A redemption check sent to a different payee, bank or address
than we have on file.
* A redemption check mailed to an address that has been changed
within the last 30 days.
* A redemption for $50,000 or more in writing.
* A change in account registration or redemption instructions
(including withdrawal by draft election).
Corporations, Trusts and Other Entities - Additional documentation is normally
required for corporations, fiduciaries and others who hold shares in a
representative or nominee capacity. We cannot process your request until we
have all documents in the form required. Please call us first to avoid delays.
Exchanges to Another Fund - You must meet the minimum investment requirement
of the fund you are exchanging into. The names and registrations on the two
accounts must be identical. Your shares must have been held in an open account
for 15 days or more and we must have received good payment before we will
exchange shares.
Telephone and fund web site Services - During periods of increased market
activity, you may have difficulty reaching us by telephone. If this happens,
contact us by mail or web site. We may refuse a telephone request, including
a telephone redemption request. We will use reasonable procedures to confirm
that telephone or Fund web site instructions are genuine. If such procedures
are not followed, the Funds may be liable for losses due to unauthorized or
fraudulent instructions. At our option, we may limit the frequency or the amount
of telephone redemption requests. Neither the Funds nor Jones & Babson, Inc.
assumes responsibility for the authenticity of telephone and Fund web site
redemption requests.
<PAGE>
CONDUCTING BUSINESS WITH THE BABSON FUNDS
By Phone
1-800-4-BABSON
(1-800-422-2766)
in the Kansas City area 816-751-5900
You must authorize each type of telephone transaction on your account
application or the appropriate form, available from us. All account owners
must sign. When you call, we may request personal identification and tape
record the call.
How to Open an Account
If you already have an account with us and you have authorized telephone
exchanges, you may call to open an account in another Babson or Buffalo Fund
by exchange ($1,000 minimum). The names and registrations on the accounts must
be identical.
How to Add to an Account
You may make investments ($100 minimum) by telephone. After we have received
your telephone call, we will deduct from your checking account the cost of the
shares.
Availability of this service is subject to approval by the Funds and
participating banks.
How to Sell Shares
You may withdraw any amount ($1,000 minimum if wired) by telephone or telegram.
We will send funds only to the address or bank account on file with us. Provide
the Fund's name, your account number, the names of each account owner (exactly
as registered), and the number of shares or dollar amount to be redeemed. For
wires, also provide the bank name and bank account number.
How to Exchange Shares
You may exchange shares ($1,000 minimum or the initial minimum fund requirement)
for shares in another Babson Fund which have been held in open account for 15
days or more.
All account owners are automatically granted telephone and Fund web site
exchange privileges unless they decline them explicitly in writing, either on
the account application or by writing to the Babson Funds.
By Mail
Initial Purchases, Redemptions and all Correspondence:
The Babson Fund Group
P.O. Box 219757
Kansas City, MO 64121-9757
Subsequent Purchases:
The Babson Fund Group
P.O. Box 219779
Kansas City, MO 64121-9779
How to Open an Account
Complete and sign the application which accompanies this Prospectus. Your
initial investment must meet the minimum amount. Make your check payable to
UMB Bank, n.a.
How to Add to an Account
Make your check ($100 minimum) payable to UMB Bank, n.a. and mail it to us.
Always identify your account number or include the detachable reminder stub
(from your confirmation statement).
<PAGE>
How to Sell Shares
In a letter, include the genuine signature of each registered owner (exactly
as registered), the name of each account owner, the account number and the
number of shares or the dollar amount to be redeemed. We will send funds only
to the address of record.
How to Exchange Shares
In a letter, include the genuine signature of each registered owner, the account
number, the number of shares or dollar amount to be exchanged ($1,000 minimum)
and the Babson Fund into which the amount is being transferred.
By Wire
UMB Bank, n.a., Kansas City, Missouri, ABA #101000695
For Account Number 9870326213
Please provide:
Fund Number/Babson Account Number/Name on Account
How to Open an Account
Call us first to get an account number. We will require information such as
your Social Security or Taxpayer Identification Number, the amount being wired
($1,000 minimum), and the name and telephone number of the wiring bank. Then
tell your bank to wire the amount. You must send us a completed application as
soon as possible or payment of your redemption proceeds will be delayed.
How to Add to an Account
Wire share purchases ($1,000 minimum) should include the names of each account
owner, your account number and the Babson Fund in which you are purchasing
shares. You should notify us by telephone that you have sent a wire purchase
order to UMB Bank, n.a.
How to Sell Shares
Redemption proceeds ($1,000 minimum) may be wired to your pre-identified bank
account. A $10 fee is deducted. If we receive your request before 4:00 P.M.
(Eastern Time) we will normally wire funds the following business day. If we
receive your request later in the day, we will normally wire funds on the second
business day. Contact your bank about the time of receipt and availability.
How to Exchange Shares
Not applicable.
Through Automatic Transaction Plans
You must authorize each type of automatic transaction on your account
applicationor complete an authorization form, available from us upon request.
All registered owners must sign.
How to Open an Account
Not applicable.
How to Add to an Account
Automatic Monthly Investment:
You may authorize automatic monthly investments in a constant dollar amount
($50 minimum) from your checking account. We will draft your checking account
on the same day each month in the amount you authorize.
How to Sell Shares
Systematic Redemption Plan:
You may specify a dollar amount ($50 minimum) to be withdrawn monthly or
quarterly or have your shares redeemed at a rate calculated to exhaust the
account at the end of a specified period. A fee of $1.50 or less may be charged
for each withdrawal. You must own shares in an open account valued at $10,000
when you first authorize the systematic redemption plan. You may cancel or
change your plan or redeem all your shares at any time. We will continue
withdrawals until your shares are gone or until the Fund or you cancel the
plan.
<PAGE>
How to Exchange Shares
Monthly Exchanges:
You may authorize monthly exchanges from your account ($100 minimum) to another
Babson Fund. Exchanges will be continued until all shares have been exchanged
or until you terminate the service.
Additional Information
The Statement of Additional Information (SAI) contains additional information
about the Funds and is incorporated by reference into this Prospectus. The
Funds' annual and semi-annual reports to shareholders contain additional
information about each Funds' investments. In the Funds' annual report, you
will find a discussion of the market conditions and investment strategies that
significantly affected each Fund's performance during the last fiscal year.
You may obtain a free copy of these documents by calling, writing or e-mailing
the Funds as shown below. You also may call the toll free number given below
to request other information about the Funds and to make shareholder inquiries.
You may review and copy the SAI and other information about the Funds by
visiting the Securities and Exchange Commission's Public Reference Room in
Washington, DC (1-202-942-8090) or by visiting the EDGAR Database on the
Commission's Internet site at http://www.sec.gov. Copies of this information
also may be obtained, upon payment of a duplicating fee, by writing to the
Public Reference Section of the Commission, Washington, DC 20549-0102 or by
electronic request at [email protected].
811-3823 Enterprise Fund
811-6258 Enterprise Fund II
811-901 Growth Fund
811-5218 Shadow Stock Fund
811-4114 Value Fund
811-5386 International Fund
811-495 Bond Trust
811-2963 Money Market Fund
811-2948 Tax-Free Income Fund
Babson Funds
Jones & Babson Distributors
A Member of the Generali Group
P.O. Box 219757, Kansas City, MO 64121-9757
1-800-4-babson
(1-800-422-2766)
www.babsonfunds.com
<PAGE>
PART B
BABSON ENTERPRISE FUND, INC. BABSON BOND TRUST
BABSON ENTERPRISE FUND II, INC. BABSON MONEY MARKET FUND, INC.
BABSON GROWTH FUND, INC. BABSON TAX-FREE INCOME FUND, INC.
SHADOW STOCK FUND, INC.
BABSON VALUE FUND, INC.
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
October 31, 2000
This Statement is not a Prospectus but should be read in conjunction
with the Funds' current combined Prospectus dated October 31, 2000. To
obtain the Prospectus or Annual Report to Shareholders, please call the
Funds toll-free at 1-800-4-BABSON (1-800-422-2766), or in the Kansas City
area (816) 751-5900. Certain information from the Annual Report to
Shareholders is incorporated by reference into this Statement.
TABLE OF CONTENTS
Page
Investment Strategies and Risks 2
Fund Strategies 2
Repurchase Agreements - All Funds 5
Risks for Babson-Stewart Ivory International Fund 6
Cash Management - All Funds 7
Fundamental Investment Restrictions 7
Portfolio Transactions 11
Performance Measures 12
Total Return 12
How the Fund's Shares are Distributed 14
Purchase and Redemption Services 14
How Share Purchases are Handled 14
Redemption of Shares 15
Management and Investment Adviser 16
Officers and Directors 17
Compensation Table 18
Holidays 19
Dividends, Distributions and their Taxation 19
General Information and History 21
Custodian 22
Transfer Agent 23
Independent Auditors 23
Other Jones & Babson Funds 23
Description of Stock Ratings 24
Ratings of Municipal and Taxable Securities 24
Description of Commercial Paper Ratings 26
Financial Statements 27
INVESTMENT STRATEGIES AND RISKS
The Funds are open-ended, diversified management investment companies commonly
known as mutual funds. The following information supplements the Prospectus
which describes each Fund's investment objective, and principal strategies and
risks. None of the Funds will invest more than 25% of its assets in a single
industry. In addition, none of the Funds intend to borrow in excess of 5% of its
total assets.
<PAGE>
FUND STRATEGIES
Babson Enterprise Fund and Babson Enterprise Fund II. Since Babson Enterprise
Fund's and Babson Enterprise Fund II's focus on smaller companies, the overall
income return on these Funds may be low. Smaller companies frequently need to
retain all or most of their profits to finance their growth and will pay 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.
Effective July 1, 1999, the Babson Enterprise Fund was opened to new investors.
This means that investors may open new accounts with the Fund through direct
purchases, or through exchanges from any other fund in the Babson Funds family
or the Buffalo Funds family. Investors whose accounts were open in 1992 when the
Fund was closed to new investors have been permitted to add to their accounts
since that time. It is anticipated that the Fund will again close to new
investors when it reaches $280 million in assets.
Babson Growth Fund. Current yield is secondary objective. The Fund generally
defines "above average total return" as total return that is higher than return
generated by traditional investment vehicles other than equity products,
including but not limited to, passbook savings accounts, certificates of
deposit, bonds, U.S. government securities and traditional insurance products,
such as whole life policies and annuities. 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
reserves the freedom to invest in preferred stocks, high grade bonds or other
defensive issues when, in management's 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.
Babson Shadow Stock Fund, Inc. "Small stocks" were originally defined as those
in the bottom quintile of stocks listed on the New York Stock Exchange ("NYSE")
when ranked by market capitalization (number of shares outstanding times price
per share). At present this would be a market capitalization of below $213
million, but this level changes as market prices rise and fall. Currently, this
concept is also applied to stocks listed on the American Stock Exchange ("AMEX")
and over-the- counter ("OTC") stocks. The Fund defines "small stocks" to include
stocks listed on the NYSE, AMEX and OTC stocks that have market capitalization
of between $20 million and $213 million and have annual net profits of at least
$1 million for the three most recent fiscal years. "Neglected stocks" are those
that have below average institutional holdings and below average coverage by
analysts and newsletters. The term "neglected" has not had a consistent
definition, but the Fund's Manager and Investment Adviser define it as meaning
the fifty percent of "small stocks" which have the least coverage by
institutions and analysts. The Fund's Manager and Investment Adviser will use
their judgment in determining the methods of measuring analyst and institutional
interest. It is estimated that Shadow Stock Fund's portfolio will contain about
250 stocks and thus be very diversified.
It is the intention of the Fund to maintain ownership of the Shadow Stocks
approximately in proportion to their respective market capitalizations, but this
approach may be departed from for the following reasons. First, acquisition of
the shares of smaller companies is sometimes difficult without disrupting the
supply/demand relationship and thereby increasing transaction costs. For this
reason, shares of companies on the buy list may be purchased when opportunities
for block trades present themselves even if purchases of such a company's stock
would not otherwise be the highest priority on a market capitalization basis.
Conversely, high priority shares might be avoided if they cannot be acquired at
the time without disrupting the market. Second, the Fund will attempt to
purchase shares in optimal lot sizes which precludes fine tuning of the
weighting. Third, the Fund's Manager and Investment Adviser will take a
long-term view and do not feel it prudent to constantly purchase and sell stocks
for short-term balancing. Guideline relative weights will be reviewed in detail
twice a year.
<PAGE>
Shares of stock will be considered for elimination from the portfolio in the
following bases: (1) on the basis of the $5 minimum price criterion (a stock
will not be sold for this reason alone, but additional shares will not be
purchased below $4 per share which may result in a disproportionate
representation in terms of ideal weighting); (2) on the basis or profitability
(a company's stock will be sold as soon as the Fund's Manager and Investment
Adviser feel it is highly unlikely that there will be negative earnings in the
current fiscal year); (3) on the basis of tenders or potential mergers (the
Fund's Manager and Investment Adviser will use their judgment as to the best
time to sell or tender); (4) on the basis on neglect (shares will be sold when
the company has been beyond the Manager's and Investment Adviser's criteria for
a neglected stock for three successive semiannual evaluation periods); or (5) on
the basis of capitalization a stock will be sold if, at a semiannual evaluation,
either the market capitalization is twice the current acceptable maximum or
one-half the current minimum. In the case of portfolio companies whose
capitalization has gone beyond the current maximum or minimum, the Fund's
Investment Adviser may keep the portfolio weighting at the level appropriate for
the current maximum or minimum. If funds beyond current liquid assets are
necessary to meet redemptions, stocks not meeting current initial criteria will
be liquidated first.
While the objectives of the Fund would favor a fully invested position in Shadow
Stocks, the practicality of Fund management requires liquidity. An average of
about 5% of the Fund's assets may be invested in cash or cash equivalents
including: securities that are issued or guaranteed as to principal and interest
by the U.S. government, its agencies, authorities or instrumentalities (such as
U.S. Treasury obligations, which differ only in their interest rates, maturities
and times of issuance, and obligations issued or guaranteed by U.S. government
agencies or instrumentalities which are backed by the full faith and credit of
the U.S. Treasury or which are supported by the right of the issuer to borrow
from the U.S. government), repurchase agreements, certificates of deposit, time
deposits, commercial paper and other high quality short-term debt securities.
The Fund may adopt a temporary defensive position by investing it assets in debt
securities, such as money market obligations, including securities of the U.S.
government and its agencies, high quality commercial paper, bankers' acceptances
and repurchase agreements with banks and brokers for U.S. government securities.
Babson Value Fund. Under normal conditions, the Fund will invest at least 90% of
its assets in common stocks. In addition, the Fund intends to hold a small
percentage of cash or high quality, short term debt obligations for reserves to
cover redemptions and unanticipated expenses.
Babson-Stewart Ivory International Fund, Inc. The Fund will look at such factors
as the location of the company's assets, personnel, sales and earnings, to
determine whether a company's primary business is carried on outside the United
States. The Fund diversifies its investments among various countries and a
number of different industries. The Fund is designed to provide investors with a
diversified participation in international businesses. Over the years, some
foreign businesses have been especially successful in their particular
industries and some foreign stock markets have outperformed the American
markets. Foreign securities markets do not always move in parallel with the U.S.
securities markets, so investing in international securities can provide
diversification advantages.
The Fund primarily invests in equity securities of seasoned companies which are
listed on foreign stock exchanges and which the investment counsel considers to
have attractive characteristics in terms of profitability, growth and financial
resources. "Seasoned" and "established" companies are those companies which, in
the opinion of the investment counsel, are known for the quality and acceptance
of their products or services and for their ability to generate profits and in
many cases pay dividends. The Fund may invest in fixed-income securities of
foreign governments or companies when the investment counsel believes that
prevailing market, economic, political or currency conditions warrant such
investments. While most foreign securities are not subject to standard credit
ratings, the investment counsel intends to select "investment grade" issued of
foreign debt securities which are comparable to a Baa or higher rating by
Moody's Investors Service, Inc. or a BBB or higher rating by Standard and Poor's
Corporation based on available information, and taking into account liquidity
and quality issues. Securities rated BBB or Baa are considered to be medium
grade and may have speculative characteristics.
The Fund may also purchase American Depository Receipts ("ADRs") which represent
foreign securities traded on U.S. exchanges or in the over-the-counter market,
European Depository Receipts ("EDRs"), and International Depository Receipts
("IDRs"), in bearer form, which are designed for use in European and other
securities markets. The Fund may also invest in securities that are not listed
on an exchange. Generally, the volume of trading in an unlisted common stock is
less than the volume of trading in a listed stock. This means that the degree of
market liquidity of some stocks in which the Fund invests may be relatively
limited. When the Fund disposes of such a stock it may have to offer the shares
at a discount from recent prices or sell the shares in small lots over an
extended period of time.
<PAGE>
In order to expedite settlement of portfolio transactions and to minimize
currency value fluctuations, the Fund may purchase foreign currencies and/or
engage in forward foreign currency transactions. The Fund will not engage in
forward foreign currency exchange contracts for speculative purposes. A forward
foreign currency exchange contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the time
of the contract. These contracts may be bought or sold to protect the Fund, to
some degree, against a possible loss resulting from an adverse change in the
relationship between foreign currencies and the U.S. dollar. This method of
protecting the value of the Fund's investment securities against a decline in
the value of a currency does not eliminate fluctuations in the underlying prices
of the securities. It establishes a rate of exchange that one can achieve at
some future point in time. Although such contracts tend to minimize the risk of
loss due to a decline in the value of the hedged currency, at the same time,
they tend to limit any potential gain which might result should the value of
such currency increase.
Generally, the Fund does not intend to invest more than 35% of its total assets
in any one particular country. However, the Fund may, at times, temporarily
invest a substantial portion of its assets in one or more of such countries if
economic and business conditions warrant such investments, although it currently
does not intend to do so to any principal extent. The Fund may also invest up to
20% of its assets in companies located in developing countries. A developing
country is generally considered to be a country which is in the initial stages
of its industrialization cycle with a low per capita gross national product.
Compared to investment in the United States and other developed countries,
investing in the equity and fixed income markets of developing countries
involves exposure to relatively unstable governments, economic structures that
are generally less mature and based on only a few industries, and securities
markets which trade a small number of securities. Prices on securities exchanges
in developing countries tend to be more volatile than those in developed
countries. The Fund will not invest more than 20% of its total assets in
companies located in developing countries.
Under normal conditions, the Fund will invest at least 65% of its assets in
equity securities of foreign issuers. However, to meet the liquidity needs of
the Fund or when the Fund believes that investments should be deployed in a
temporary defensive position because of economic or market conditions, the Fund
may invest all or a major portion of its assets in short- term debt securities
denominated in U.S. dollars, including U.S. Treasury bills and other securities
of the U.S. government and its agencies, bankers' acceptances, certificates of
deposit, and repurchase agreements maturing in seven days or less with U.S.
banks and broker-dealers. The Fund may also hold cash and time deposits in
foreign banks, denominated in any major foreign currency.
D.L. Babson Bond Trust. Babson Bond Trust will limit its investments in
securities rated in the fourth classification (Baa and BBB) to a maximum of 25%
of its assets since these securities may have speculative characteristics and
changes in economic conditions or other circumstances are more likely to lead to
a weakened capacity of those issuers to make principal or interest payments.
The Portfolios may shorten or lengthen portfolio maturities as interest rates
change. If the bond rating of a security purchased by a Portfolio is
subsequently downgraded, the Portfolio will take any necessary steps designed to
bring the Portfolio into compliance with its investment policies as soon as
reasonably practicable. The Portfolios may also respond to adverse market,
economic, political or other considerations by investing up to 100% of its
assets in cash or short-term debt obligations for temporary defensive purposes.
Portfolio L will generally have a duration of between 3.5 and 7 years (excluding
short-term investments). Portfolio S will generally have a duration of between 2
and 4 years (excluding short-term investments). Duration is a portfolio
management tool used to determine the price sensitivity of an individual bond or
portfolio of fixed income securities to a change in interest rates. Unlike
maturity, which only states when the final payment is received, the duration of
a fixed income security is the weighted average maturity, expressed in years, of
the present value of all future cash flows, including coupon payments and
principal repayments. The Portfolios may include securities with maturities and
durations outside these ranges.
<PAGE>
Babson Money Market Fund. To achieve its objectives the Fund may engage in
trading activity in order to take advantage of opportunities to enhance yield,
protect principal or improve liquidity. This trading activity should not
increase the Fund's expenses since there are normally no broker's commissions
paid by the Fund for the purchase or sale of money market instruments. However,
a markup or spread may be paid to a dealer from which the Fund purchases a
security.
To assure compliance with the adopted procedures pursuant to Rule 2a-7 under the
Investment Company Act of 1940, the Fund will only invest in U.S. dollar
denominated securities with remaining maturities of 397 days or less, maintain
the dollar weighted average maturity of the securities in the Fund's portfolio
at 90 days or less and limit its investments to those instruments which the
Directors of the Fund determine to present minimal credit risks and which are
eligible investments under the rule.
Babson Tax-Free Income Fund. The Fund will have substantially all of its assets
invested in investment-grade municipal securities, the interest on which is
deemed exempt from federal income tax (including the alternative minimum tax).
During periods of normal market conditions, the Fund will invest at least 80% of
its total assets (exclusive of cash) in municipal securities. The Fund may
invest any remaining balance in taxable money market instruments on a temporary
basis, if management believes this action would be in the best interest of
shareholders. Included in this category are: obligations of the U.S., its
agencies or instrumentalities; certificates of deposit; bankers' acceptances and
other short-term debt obligations of U.S. banks with total assets of $1 billion
or more; and commercial paper rated A-2 or better by Standard & Poor's Corp.
("S&P") or Prime-2 or better by Moody's Investors Services, Inc. ("Moody's"), or
certain rights to acquire these securities.
The Fund reserves the right to deviate temporarily from this policy during
extraordinary circumstances when, in the opinion of management, it is advisable
to do so in the best interests of shareholders.
At least 90% of the municipal bonds in the Fund will be rated at the time of
purchase within the top three classifications of Moody's (Aaa, Aa and A), or by
S&P (AAA, AA, and A). Any municipal bond backed by the full faith and credit of
the federal government shall be considered to have a rating of AAA. Investments
in short-term municipal obligations and notes are limited to those obligations
which at the time of purchase: (1) are backed by the full faith and credit of
the U.S.; or (2) are rated MIG- 1, MIG-2 or MIG-3 by Moody's; or (3) if the
notes are not rated, then the issuer's long-term bond rating must be at least A
as determined by Moody's or by S&P. Short-term discount notes are limited to
those obligations rated A-1 or A-2 by S&P, or Prime-1 or Prime-2 by Moody's or
their equivalents as determined by the Board of Directors. With respect to
short-term discount notes which are not rated, the issuer's long-term bond
rating must be at least A by S&P or Moody's.
It is the policy of the Fund not to invest more than 25% of its assets in any
one classification of municipal securities, except tax-exempt obligations which
are backed by the U.S. governments. Should the rating organizations used by the
Fund cease to exist or change their systems, the Fund will attempt to use other
comparable ratings as standards for its investments in municipal securities in
accordance with its investment policies.
REPURCHASE AGREEMENTS - ALL FUNDS
All the Funds may invest in issues of the United States Treasury or a United
States government agency subject to repurchase agreements. A repurchase
agreement involves the sale of securities to the Funds 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 Funds.
The Funds 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 Funds. The
term to maturity of a repurchase agreement normally will be no longer than a few
days. Repurchase agreements maturing in more than seven days and other illiquid
securities will not exceed 10% of the net assets of the Funds.
Repurchase Agreement Risk Factors. 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 Funds 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 Funds may not be able to perfect
its interest in the underlying securities. While the Funds management
acknowledges these risks, it is expected that they can be controlled through
stringent security selection criteria and careful monitoring procedures.
<PAGE>
RISKS FOR BABSON-STEWART IVORY
INTERNATIONAL FUND
Foreign Investments. Investors should recognize that investing in foreign
companies involves certain special considerations which are not typically
associated with investing in U.S. companies. Since the stocks of foreign
companies are frequently denominated in foreign currencies, and since the Fund
may temporarily hold uninvested reserves in bank deposits in foreign currencies,
the Fund will be affected favorably or unfavorably by changes in currency rates
and in exchange control regulations, and may incur costs in connection with
conversions between various currencies. The investment policies of the Fund
permit it to enter into forward foreign currency exchange contracts in order to
hedge the Fund's holdings and commitments against changes in the level of future
currency rates. Such contracts involve an obligation to purchase or sell a
specific currency at a future date at a price set at the time of the contract.
As foreign companies are not generally subject to uniform accounting, auditing
and financial reporting standards and practices comparable to those applicable
to domestic companies, there may be less publicly available information about
certain foreign companies than about domestic companies. Securities of some
foreign companies are generally less liquid and more volatile than securities of
comparable domestic companies. There is generally less government supervision
and regulation of stock exchanges, brokers and listed companies than in the U.S.
In addition, with respect to certain foreign countries, there is the possibility
of expropriation or confiscatory taxation, political or social instability, or
diplomatic developments which could affect U.S. investments in those countries.
Although the Fund will endeavor to achieve most favorable execution costs in its
portfolio transactions, fixed commissions on many foreign stock exchanges are
generally higher than negotiated commissions on U.S. Exchanges. In addition, it
is expected that the expenses of custodian arrangements of the Fund's foreign
securities will be somewhat greater than the expenses for the custodian
arrangements for handling the Fund's securities of equal value.
Certain foreign governments levy withholding taxes against dividend and interest
income. Although in some countries a portion of these taxes are recoverable, the
nonrecovered portion of foreign withholding taxes will reduce the income
received from the companies comprising the Fund's portfolio.
Foreign Currency Transactions. The value of the assets of the Babson-Stewart
Ivory International Fund as measured in U.S. dollars may be affected favorably
or unfavorably by changes in foreign currency exchange rates and exchange
control regulations, and the Fund may incur costs in connection with conversions
between various currencies.
The Fund will conduct its foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through the use of forward contracts to purchase or sell
foreign currencies. A forward foreign currency exchange contract will involve an
obligation by the Fund to purchase or sell a specific amount of currency at a
future date, which may be any fixed number of days, from the date of the
contract agreed upon by the parties, at a price set at the time of the contract.
These contracts are transferable in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirements, and no commissions are
charged at any stage for trades. Neither type of foreign currency transaction
will eliminate fluctuations in the prices of the Fund's portfolio securities or
prevent loss if the prices of such securities should decline.
The Fund may enter into forward foreign currency exchange contracts only under
two circumstances. First, when the Fund enters into a contract for the purchase
or sale of a security denominated in a foreign currency, it may desire to "lock
in" the U.S. dollar price of the security. The Fund will then enter into a
forward contract for the purchase or sale, for a fixed amount of dollars, of the
amount of foreign currency involved in the underlying securities transaction; in
this manner the Fund will be better able to protect itself against a possible
loss resulting from an adverse change in the relationship between the U.S.
dollar and the subject foreign currency during the period between the date the
securities are purchased or sold and the date on which payment is made or
received.
<PAGE>
Second, when the Investment Adviser believes that the currency of a particular
foreign country may suffer a substantial decline against the U.S. dollar, it may
enter into a forward contract to sell, for a fixed amount of dollars, the amount
of foreign currency approximating the value of some or all of the Fund's
securities denominated in such foreign currency. The precise matching of the
forward contract amounts and the value of the securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of short-term currency market movement is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. The Investment Adviser does not intend to enter
into such forward contracts under this second circumstance on a regular or
continuous basis. The Fund will also not enter into such forward contracts or
maintain a net exposure to such contracts when the consummation of the contracts
would obligate the Fund to deliver an amount of foreign currency in excess of
the value of the Fund's securities or other assets denominated in that currency.
The Investment Adviser believes that it is important to have flexibility to
enter into such forward contracts when it determines that to do so is in the
best interests of the Fund. The Fund's custodian bank segregates cash or equity
or debt securities in an amount not less than the value of the Fund's total
assets committed to forward foreign currency exchange contracts entered into
under this second type of transaction. If the value of the securities segregated
declines, additional cash or securities is added so that the segregated amount
is not less than the amount of the Funds' commitments with respect to such
contracts. Under normal circumstances, the Fund expects that any appreciation or
depreciation on such forward exchange contracts will be approximately offset by
the depreciation or appreciation in translation of the underlying foreign
investment arising from fluctuations in foreign currency exchange rates.
The Fund will recognize the unrealized appreciation or depreciation from the
fluctuation in a foreign currency forward contract as an increase or decrease in
the Fund's net assets on a daily basis, thereby providing an appropriate measure
of the Fund's financial position and changes in financial position.
CASH MANAGEMENT - ALL FUNDS
For purposes including but not limited to meeting redemptions and unanticipated
expenses, the Funds may invest a portion of their assets in cash or high-
quality, short-term debt obligations readily changeable into cash such as:
(1) certificates of deposit, bankers' acceptances and other short-term
obligations issued domestically by United States commercial banks having assets
of at least $1 billion and which are members of the Federal Deposit Insurance
Corporation or holding companies of such banks; (2) commercial paper of
companies rated P-2/MIG-2 or higher by Moody's Investors Service, Inc. (Moody's)
or A-2 or higher by Standard and Poor's Corporation (S&P), or if not rated by
either Moody's or S&P, a company's commercial paper may be purchased by the Fund
if the company has an outstanding bond issue rated A or higher by Moody's or A
or higher by S&P; (3) short-term debt securities which are non-convertible and
which have one year or less remaining to maturity at the date of purchase and
which are rated A or higher by Moody's or A or higher by S&P; (4) negotiable
certificates of deposit and other short-term debt obligations of savings and
loan associations having assets of at least $1 billion and which are members of
the Federal Home Loan Banks Association and insured by the Federal Deposit
Insurance Corporation.
<PAGE>
FUNDAMENTAL INVESTMENT
RESTRICTIONS
In addition to the investment objective and portfolio management policies set
forth in the Prospectus under the caption "Investment Objective and Principal
Investment Strategies," the Funds are 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.
Babson Enterprise Fund, Babson Enterprise Fund II and Shadow Stock Fund will
not: (1) purchase the securities of any one issuer, except the United States
government, if immediately after and as a result of such purchase (a) the value
of the holdings of the Fund in the securities of such issuer exceeds 5% of the
value of the Fund's total assets, or (b) the Fund owns more than 10% of the
outstanding voting securities, or any other class of securities, of such issuer;
(2) engage in the purchase or sale of real estate or commodities or, with
respect to Enterprise Fund II, 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 more than 25% of the Fund's assets in any one
industry; (10) enter into dealings with its officers or directors, its manager
or underwriter, or their officers or directors or any organization in which such
persons have a financial interest except for transactions in the Fund's own
shares or other securities through brokerage practices which are considered
normal and generally accepted under circumstances existing at the time; (11)
purchase or retain securities of any company in which any Fund officers or
directors, or Fund manager, its partner, officer, or director beneficially owns
more than 1/2 of 1% of said company's securities, if all such persons owning
more than 1/2 of 1% of such company's securities, own in the aggregate more than
5% of the outstanding securities of such company; (12) borrow or pledge its
credit under normal circumstances, except up to 10% of its gross assets
(computed at the lower of fair market value or cost) for temporary or emergency
purposes, and not for the purpose of leveraging its investments, and provided
further that any borrowing in excess of 5% of the total assets of the Fund shall
have asset coverage of at least 3 to1; (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.
<PAGE>
Babson Growth Fund and Babson Value Fund will not: (1) purchase the securities
of any one issuer, except the United States government, if immediately after and
as a result of such purchase (a) the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of the Fund's total assets, or
(b) the Fund owns more than 10% of the outstanding voting securities, or any
other class of securities, of such issuer; (2) engage in the purchase or sale of
real estate or commodities; (3) underwrite the securities of other issuers; (4)
make loans to any of its officers, directors, or employees, or to its manager,
or general distributor, or officers or directors thereof; (5) make any loan (the
purchase of a security subject to a repurchase agreement or the purchase of a
portion of an issue of publicly distributed debt securities is not considered
the making of a loan); (6) invest in companies for the purpose of exercising
control of management; (7) purchase securities on margin or sell securities
short; (8) purchase shares of other investment companies except in the open
market at ordinary broker's commission, but, with respect to the Growth Fund,
not in excess of 5% of the Growth Fund's assets, or, for either Fund, 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, with respect to the Growth Fund,
invest more than 25% of the Growth Fund's assets in any one industry; (10) enter
into dealings with its officers or directors, its manager or underwriter, or
their officers or directors or any organization in which such persons have a
financial interest except for transactions in the Fund's own shares or other
securities through brokerage practices which are considered normal and generally
accepted under circumstances existing at the time; (11) purchase or retain
securities of any company in which any Fund officers or directors, or Fund
manager, its partner, officer, or director beneficially owns more than 1/2 of 1%
of said company's securities, if all such persons owning more than 1/2 of 1% of
such company's securities, own in the aggregate more than 5% of the outstanding
securities of such company; (12) borrow or pledge its credit under normal
circumstances except up to 10% of its gross assets (computed at the lower of
fair market value or cost) for temporary or emergency purposes, and not for the
purpose of leveraging its investments, and provided further that any borrowing
in excess of 5% of the total assets of the Fund shall have asset coverage of at
least 3 to1; (13) make itself or its assets liable for the indebtedness of
others; or (14) invest in securities which are assessable or involve unlimited
liability.
Babson-Stewart Ivory International Fund will not: (1) purchase the securities of
any one issuer, except the United States government, if immediately after and as
a result of such purchase (a) the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the value of the Fund's total assets, or
(b) the Fund owns more than 10% of the outstanding voting securities, or any
other class of securities, of such issuer; (2) engage in the purchase or sale of
real estate or commodities; (3) underwrite the securities of other issuers; (4)
make loans to any of its officers, directors, or employees, or to its manager,
or general distributor, or officers or directors thereof; (5) make loans to
other persons, except by the purchase of debt obligations which are permitted
under its investment policy; (6) invest in companies for the purpose of
exercising control of management; (7) purchase securities on margin or sell
securities short; (8) purchase shares of other investment companies except
shares of closed-end investment companies, purchased in the open market at
ordinary broker's commission, but not in excess of 5% of the Fund's assets, or
pursuant to a plan of merger or consolidation; (9) invest in the aggregate more
than 5% of the value of its gross assets in the securities of issuers (other
than federal, state, territorial, or local governments, or corporations, or
authorities established thereby), which including predecessors, have not had at
least three years' continuous operations nor invest more than 25% of the Fund's
assets in any one industry; (10) enter into dealings with its officers or
directors, its manager or underwriter, or their officers or directors or any
organization in which such persons have a financial interest except for
transactions in the Fund's own shares or other securities through brokerage
practices which are considered normal and generally accepted under circumstances
existing at the time; (11) purchase or retain securities of any company in which
any Fund officers or directors, or Fund manager, its partner, officer, or
director beneficially owns more than 1/2 of 1% of said company's securities, if
all such persons owning more than 1/2 of 1% of such company's securities, own in
the aggregate more than 5% of the outstanding securities of such company; (12)
borrow or pledge its credit under normal circumstances, except up to 10% of its
gross assets (computed at the lower of fair market value or cost) for temporary
or emergency purposes, and not for the purpose of leveraging its investments,
and provided further that any borrowing in excess of 5% of the total assets of
the Fund shall have asset coverage of at least 3 to1; (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.
<PAGE>
Although not fundamental policies subject to shareholder vote, Babson-Stewart
Ivory International Fund may not engage in any of the following activities: (1)
invest directly in oil, gas, or other mineral exploration or development
programs: (2) invest more than 5% of its total assets in securities which are
restricted as to future sale; (3) invest more than 5% of its total assets in
puts, calls, straddles, spreads, and any combination thereof (the Fund will
engage in options transactions for hedging purposes only); and (4) purchase
warrants, valued at the lower of cost or market, in excess of 5% of the value of
the Fund's net assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants which are not listed on the New
York or American Stock Exchange. Warrants acquired by the Fund at any time in
units or attached to securities are not subject to this restriction.
Babson Bond Trust will not: (1) purchase any investment security for credit or
on margin, except such short-term credits as are necessary for the clearance of
transactions; (2) participate on a joint or a joint-and-several basis in any
trading account in securities; (3) sell any securities short; (4) borrow money,
securities or other property in any event or for any purpose whatsoever, or
issue any security senior to the shares authorized by the Trust Indenture; (5)
lend money, securities or other assets of the Trust for any purpose whatsoever,
provided, however, that the acquisition of any publicly distributed securities
shall not be held or construed to be the making of a loan; (6) mortgage, pledge,
hypothecate or encumber in any manner whatsoever any investment securities at
any time owned or held by the Trust; (7) underwrite or participate in the
underwriting of any securities; (8) purchase shares of other investment
companies except in the open market at ordinary broker's commission or pursuant
to a plan of merger or consolidation; (9) acquire any security issued by any
issuer in which an officer, director or stockholder of such issuer is a Trustee
of the Trust or an officer or director of a principal underwriter (as defined in
the Investment Company Act of 1940) if after the purchase of such security one
or more of the Trustees owns beneficially more than 1/2 of 1% of the capital
stock of such issuer and such Trustees together own beneficially more than 5% of
the capital stock of such issuer; (10) acquire any security of another issuer if
immediately after and as a result of such acquisition the market value of such
securities of such other issuer shall exceed 5% of the market value of the total
assets of the Trust or the Trust shall own more than 10% of the outstanding
voting securities of such issuer (this restriction does not apply to securities
issued by the United States or any state, county or municipality thereof; (11)
invest more than 25% of the value of its assets in any one industry; (12) engage
in the purchase or sale of real estate or commodities; (13) invest in companies
for the purpose of exercising control of management; or (14) purchase any
securities which are subject to legal or contractual restrictions, i.e.,
restricted securities which may not be distributed publicly without registration
under the Securities Act of 1933.
Babson Money Market Fund will not: (1) invest in equity securities or securities
convertible into equities; (2) purchase the securities of any issuer (other than
obligations issued or guaranteed as to principal and interest by the government
of the United States, its agencies or instrumentalities), if as a result, (a)
more than 5% of the Fund's total assets (taken at current value) would be
invested in the securities of such issuer, or (b) the Fund would hold more than
10% of any class of securities of such issuer (for this purpose, all debts and
obligations of an issuer maturing in less than one year are treated as a single
class of securities); (3) borrow money in excess of 15% of its total assets
taken at market value, and then only from banks as a temporary measure for
extraordinary or emergency purposes; the Fund will not borrow to increase income
(leveraging) but only to facilitate redemption requests which might otherwise
require untimely dispositions of Portfolio securities; the Fund will repay all
borrowings before making additional investments, and interest paid on such
borrowings will reduce net income; (4) mortgage, pledge or hypothecate its
assets except in an amount up to 15% (10% as long as the Fund's shares are
registered for sale in certain states) of the value of its total assets but only
to secure borrowings for temporary or emergency purposes; (5) issue senior
securities, as defined in the Investment Company Act of 1940, as amended; (6)
underwrite securities issued by other persons; (7) purchase or sell real estate,
but this shall not prevent investment in obligations secured by real estate; (8)
make loans to other persons, except by the purchase of debt obligations which
are permitted under its investment policy; (9) purchase securities on margin or
sell short; (10) purchase or retain securities of an issuer if to the knowledge
of the Fund's management those directors of the Fund, each of whom owns more
than 1/2 of 1% of such securities, together own more than 5% of the securities
of such issuer; (11) purchase or sell commodities or commodity contracts; (12)
write or invest in put, call, straddle or spread options or invest in interests
in oil, gas or other mineral exploration or development programs; (13) invest in
companies for the purpose of exercising control; (14) invest in securities of
other investment companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets; (15) invest more than 5% of the value of
its total assets at the time of investment in the securities of any issuer or
issuers which have records of less than three years continuous operation,
including the operation of any predecessor, but this limitation does not apply
to securities issued or guaranteed as to interest and principal by the U.S.
government or its agencies or instrumentalities; or (16) purchase any securities
which would cause more than 25% of the value of a Portfolio's total net assets
at the time of such purchase to be invested in any one industry; provided,
however, the Prime Portfolio does not consider assets in certificates of deposit
or bankers' acceptances of domestic branches of U.S. banks to be investments in
a single industry.
<PAGE>
There is no limitation with respect to investments in U.S. Treasury Bills, or
other obligations issued or guaranteed by the federal government, its agencies
and instrumentalities.
Babson Tax-Free Income Fund will not: (1) invest in equity securities or
securities convertible into equities; (2) purchase more than 10% of the
outstanding publicly issued debt obligations of any issuer; (3) borrow money
except for temporary emergency purposes, and then only in an amount not
exceeding 10% of the value of the total assets of the Fund; (4) mortgage, pledge
or hypothecate the assets of the Fund to an extent greater than 10% of the value
of the net assets of the Fund; (5) issue senior securities, as defined in the
Investment Company Act of 1940, as amended; (6) underwrite any issue of
securities; (7) purchase or sell real estate, but this shall not prevent
investment in municipal bonds secured by real estate; (8) make loans to other
persons, except by the purchase of bonds, debentures or similar obligations
which are publicly distributed; (9) purchase securities on margin or sell short;
(10) purchase or retain securities of an issuer if to the knowledge of the
Fund's management those directors of the Fund, each of whom owns more than 1/2
of 1% of such securities, together own more than 5% of the securities of such
issuer; (11) purchase or sell commodities or commodity contracts; (12) invest in
put, call, straddle or special options; (13) purchase securities of any issuer
(except the U.S. government, its agencies and instrumentalities, and any
municipal bond guaranteed by the U.S. government) in the Fund if, as a result,
more than 5% of the total assets of the Fund would be invested in the securities
of such issuer; for purposes of this limitation, "issuer" will be based on a
determination of the source of assets and revenues committed to meeting interest
and principal payments of each security, and a government entity which
guarantees the securities issued by another entity is also considered an issuer
of that security; (14) invest in companies for the purpose of exercising
control; (15) invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets;
(16) invest more than 5% of the value of its total assets at the time of
investment in the securities of any issuer or issuers which have records of less
than three years continuous operation, including the operation of any
predecessor, but this limitation does not apply to securities issued or
guaranteed as to interest and principal by the U.S. government or its agencies
or instrumentalities.
PORTFOLIO TRANSACTIONS
Decisions to buy and sell securities for the Funds are made by Jones & Babson,
Inc. pursuant to recommendations by David L. Babson & Co. Inc. and
Babson-Stewart Ivory International. Officers of the Funds and Jones & Babson,
Inc. are generally responsible for implementing or supervising these decisions,
including allocation of portfolio brokerage and principal business and the
negotiation of commissions and/or the price of the securities. Portfolio
turnover will be no more than is necessary to meet the Funds' investment
objectives. Under normal circumstances, it is anticipated that the Funds'
portfolio turnover will not exceed 100%.
In instances where securities are purchased on a commission basis, the Funds
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 Funds, in purchasing and selling portfolio securities,
will seek the best available combination of execution and overall price (which
shall include the cost of the transaction) consistent with the circumstances
which exist at the time. The Funds do not intend to solicit competitive bids on
each transaction.
<PAGE>
The Funds believe it is in its best interest and that of their 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 Funds, when acting
on their behalf, as well as for any research or other services provided to the
Funds. Substantially all of the equity portfolio transactions (except for the
Babson-Stewart Ivory International Fund) 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. Commissions of transactions executed on
foreign exchanges are generally on a fixed basis. The Babson-Stewart Ivory
International Fund endeavors to obtain the rate of such commission in good faith
so as to achieve the most favorable results under the circumstances of each
transaction. When buying securities in the over- the-counter market, the Funds
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 Funds 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
Funds reserve 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 Funds and Jones & Babson, Inc.
Since the Funds do not currently market shares through intermediary brokers or
dealers, it is not the Funds' 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 Funds to other clients, or who act as agents in the purchase of
the Funds' shares for their clients.
Research services furnished by broker-dealers may be useful to the Fund managers
in serving other clients, as well as the Funds. Conversely, the Funds may
benefit from research services obtained by the managers from the placement of
portfolio brokerage of other clients.
When it appears to be in the best interests of its shareholders, the Funds may
join with other clients of the managers in acquiring or disposing of a portfolio
holding. Securities acquired or proceeds obtained will be equitably distributed
between the Funds and other clients participating in the transaction. In some
instances, this investment procedure may affect the price paid or received by
the Funds or the size of the position obtained by the Funds.
For the past three fiscal years each year, the total dollar amount of brokerage
commissions paid by the Funds were as follows:
Enterprise - $194,880, $92,129* and $264,561 for 2000, 1999 and 1998,
respectively; Enterprise II - $87,374, $64,350* and $95,748; Growth - $664,645,
$488,655 and $208,141; Shadow $31,070, $38,503 and $81,743; Value - $1,223,429,
$866,352* and $1,103,306; Stewart Ivory International - $236,401, $260,815 and
$268,815.
*Denotes seven month figures.
<PAGE>
PERFORMANCE MEASURES
The Funds 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 Funds from the beginning date of the measuring period to
the end of the measuring period. These figures reflect changes in the price of
the Funds' shares and assume that any income dividends and/or capital gains
distributions made by the Funds during the period were reinvested in shares of
the Funds. 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 Funds 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.
TOTAL RETURN
The Funds' "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:
n
P(1+T) = ERV
Where: P = a hypothetical initial payment
of $1,000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a
hypothetical $1,000 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).
From time to time, Babson Bond Trust and Babson Tax-Free Income Fund may quote
its yield in advertisements, shareholder reports or other communications to
shareholders. Yield is calculated according to the following standardized SEC
formula.
Current yield reflects the income per share earned by the Fund's investments.
Current yield is determined by dividing the net investment income per share
earned during a 30-day base period by the maximum offering price per share on
the last day of the period and annualizing the result. Expenses accrued for the
period include any fees charged to all shareholders during the base period.
The SEC standardized yield formula is as follows:
6
Yield = 2((((a-b)/cd)+1) -1)
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursements)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the maximum offering price per share on the last
day of the period.
From time to time, the Babson Money Market Fund may quote its yields in
advertisements, shareholder reports or other communications to shareholders.
Yield information is generally available by calling the Funds toll free
1-800-4-BABSON (1-800-422- 2766), or in the Kansas City area (816) 751-5900. The
current annualized yield for the Money Market Fund is computed by: (a)
determining the net change in the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the beginning of a seven calendar
day period for which yield is to be quoted, (b) dividing the net change by the
value of the account at the beginning of the period to obtain the base period
return, and (c) annualizing the results (i.e., multiplying the base period
return by 365/7). The net change in value of the account reflects the value of
additional shares purchased with dividends declared on the original share and
any such additional shares, but does not include realized gains and losses or
unrealized appreciation and depreciation. In addition, the Fund may calculate a
compound effective yield by adding 1 to the base period return (calculated as
described above, raising the sum to a power equal to 365/7 and subtracting 1).
For the seven-day period ended June 30, 2000, the current annualized yield and
compound effective yield of the Money Market Fund was 5.71% and 5.87%. At June
30, 2000, the average maturity of the Money Market Fund was 53 days.
<PAGE>
Performance Comparisons. In advertisements or in reports to shareholders, the
Funds may compare their performance to that of other mutual funds with similar
investment objectives and to stock or other relevant indices. For example, they
may compare their performance to rankings prepared by Lipper Analytical
Services, Inc. (Lipper) or Morningstar, Inc., two widely recognized independent
services which monitor the performance of mutual funds. The Funds may compare
their 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 MSCI/EAFE, an index of unmanaged stocks from 20 international
markets, the S&P Barra Value, a capitalization weighted index associated with
"value" stocks, the S&P Barra Growth, a capitalization weighted index associated
with "growth" stocks, the Russell 2000 Index, an index that measures the
performance of the smallest 2000 publicly traded companies, the Lehman Brothers
Aggregate Bond Index, an index of government, corporate and agency bonds, the
Lehman Brothers Intermediate Government Corporate Index, an index of government,
agency and corporate notes between 1 and 10 year maturities, 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.
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 Funds are 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.
The table below shows the average annual total return for each Fund for the
specified periods.
For the one year 7/1/99-6/30/00
Enterprise 2.84%
Enterprise II 5.63%
Growth 20.69%
Shadow Stock 9.91%
Value -15.93%
Stewart Ivory International 22.64%
Bond Trust - L 3.54%
Bond Trust - S 3.55%
Tax-Free Income 2.18%
Money Market 4.97%
For the five years 7/1/95-6/30/00
Enterprise 9.97%
Enterprise II 15.11%
Growth 23.42%
Shadow Stock 14.13%
Value 11.71%
Stewart Ivory International 12.06%
Bond Trust - L 5.40%
Bond Trust - S 5.52%
Tax-Free Income 4.97%
Money Market 4.72%
For the ten years 7/1/90-6/30/00
Enterprise 11.82%
Enterprise II 13.29%*
Growth 16.36%
Shadow Stock 12.60%
Value 13.02%
Stewart Ivory International 9.34%
Bond Trust - L 7.22%
Bond Trust - S 6.82%
Tax-Free Income 6.21%
Money Market 4.42%
*Inception date 8/5/91.
<PAGE>
HOW THE FUND'S SHARES ARE
DISTRIBUTED
Jones & Babson, Inc., as agent of the Funds agrees to supply its best efforts as
sole distributor of the Funds' 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. is located at BMA Tower,
700 Karnes Blvd., Kansas City, MO 64108-3306.
Jones & Babson, Inc. does not receive any fee or other compensation under the
distribution agreement which continues in effect until October 31, 2000, and
which will continue automatically for successive annual periods ending each
October 31, if continued at least annually by the Funds' 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 UMB Scout
Equity Index Fund, UMB Scout Regional Fund, UMB Scout Stock Fund, UMB Scout
Stock Select Fund, UMB Scout Technology Fund, UMB Scout WorldWide Fund, UMB
Scout WorldWide Select Fund, UMB Scout Capital Preservation Fund, UMB Scout
Balanced Fund, UMB Scout Bond Fund, UMB Scout Kansas Tax- Exempt Bond Fund, UMB
Scout Money Market Fund, UMB Scout Tax-Free Money Market Fund, Buffalo Balanced
Fund, Buffalo Equity Fund, Buffalo High Yield Fund, Buffalo USA Global Fund,
Buffalo Small Cap Fund, and AFBA Five Star Fund.
PURCHASE AND REDEMPTION SERVICES
We reserve the right to:
Waive or increase the minimum investment requirements with respect to any person
or class of persons, which include shareholders of the Funds' special investment
programs.
Cancel or change the telephone/Fund web site investment service, the
telephone/internet exchange service and the automatic monthly investment plan
without prior notice to you where in the best interest of the Funds and theirs
investors.
Cancel or change the telephone/Fund web site redemption service at any time
without notice.
Begin charging a fee for the telephone investment service or the automatic
monthly investment plan and to cancel or change these services upon 15 days
written notice to you.
Begin charging a fee for the telephone/Fund web site service and to cancel or
change the service upon 60 days written notice to you.
Begin charging a fee for the systematic redemption plan upon 30 days written
notice to you.
Waive signature guarantee requirements in certain instances where it appears
reasonable to do so and will not unduly affect the interests of other
shareholders. We may waive the signature guarantee requirement if you authorize
the telephone/Fund web site redemption method at the same time you submit the
initial application to purchase shares.
Require signature guarantee if there appears to be a pattern of redemptions
designed to avoid the signature guarantee requirement, or if we have other
reason to believe that this requirement would be in the best interests of the
Funds and their shareholders.
<PAGE>
HOW SHARE PURCHASES ARE HANDLED
We will not be responsible for the consequences of delays, including delays in
the banking or Federal Reserve wire systems. We cannot process transaction
requests that are not complete and in good order as described in the prospectus.
If you use the services of any other broker to purchase or redeem shares of the
Funds, that broker may charge you a fee. Each order accepted will be fully
invested in whole and fractional shares, unless the purchase of a certain number
of whole shares is specified, at the net asset value per share next effective
after the order is accepted by the Funds.
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.
The shares which you purchase are held by the Funds in open account, thereby
relieving you of the responsibility of providing for the safekeeping of a
negotiable share certificate. Jones & Babson does not intend to issue new
certificated shares for any accounts.
If an order to purchase shares must be canceled due to non-payment, the
purchaser will be responsible for any loss incurred by the Funds arising out of
such cancellation. To recover any such loss, the Funds reserve 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 Funds reserve 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 Funds and their shareholders.
The Funds may accept investments in kind of stocks based on judgments as to
whether, in each case, acceptance of stock will allow the Fund to acquire the
stock at no more than 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 stock are issued at net asset
value.
The Funds reserve 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 Funds sustain a loss as the result of failure by a purchaser
to make payment, the Funds underwriter, Jones & Babson, Inc., will cover the
loss.
<PAGE>
REDEMPTION OF SHARES
We will not be responsible for the consequences of delays, including delays in
the banking or Federal Reserve wire systems. We cannot process transaction
requests that are not complete and in good order. We must receive an endorsed
share certificate with a signature guarantee, where a certificate has been
issued.
The Telephone/Fund Web Site Redemption Service may only be used for non
certificated shares held in an open account. We reserve the right to refuse a
telephone or Fund web site redemption request. At our option, we may pay such
redemption by wire or check. We may reduce or waive the $10 charge for wiring
redemption proceeds in connection with certain accounts.
To participate in the Systematic Redemption Plan your dividends and capital
gains distributions must be reinvested in additional shares of the Funds.
The right of redemption may be suspended, or the date of payment postponed
beyond the normal three- day period 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 Funds of securities owned by it is not reasonably practicable,
or (b) it is not reasonably practicable for the Funds to determine the fair
value of its net assets; or (3) under certain circumstances where certain
shareholders are attempting to "time the market" by purchasing and redeeming
shares from the Funds on a regular basis; or (4) for such other periods as the
Securities and Exchange Commission may by order permit for the protection of the
Fund's shareholders.
Babson Money Market Fund may accept drafts (checks) on the form provided by the
Fund without the necessity of an accompanying guarantee of signature, and drawn
on the registered shareholder account, to redeem sufficient shares in the
registered shareholder account and to deposit the proceeds in a special account
at UMB Bank, n.a. for transmission through the commercial banking system to the
credit of the draft payee. The drafts must be in at least the amount of $500,
and may be drawn only against shares held in open account (no certificate
outstanding). The Funds and their Manager may refuse to honor drafts where there
are insufficient open account shares in the registered account, or where shares
to be redeemed which were purchased by check have been held for less than 15
days, and to the specific conditions relating to this privilege as well as the
general conditions set out above.
The Funds have elected to be governed by Rule 18f-1 under the Investment Company
Act of 1940 pursuant to which the Funds are obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the Funds' net asset value during any
90-day period for any one shareholder. Should redemptions by any shareholder
exceed such limitation, the Funds 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.
MANAGEMENT AND
INVESTMENT ADVISER
As a part of the Management Agreement, Jones & Babson, Inc. employs at its own
expense David L. Babson & Co. Inc. and for the Babson-Stewart Ivory
International Fund, Babson-Stewart Ivory International, as its investment
advisers. David L. Babson & Co. Inc. was founded in 1940 as a private investment
research and counseling organization. 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. Babson-
Stewart Ivory International is a partnership formed in 1987, by David L. Babson
& Co. of Cambridge, Massachusetts and Stewart Ivory & Company (International)
Ltd, is a indirect subsidiary of the Commonwealth Bank of Australia.
The aggregate management fees paid to Jones & Babson, Inc. by the Funds during
the three most recent fiscal years ended June 30, 2000, 1999, and 1998 (from
which Jones & Babson, Inc. paid all the Funds' expenses except those payable
directly by the Funds) were $1,391,765, $990,364* and $2,199,612, respectively
for the Enterprise Fund; $774,998, $513,015* and $998,783 for the Enterprise
Fund II; $3,815,605, $3,699,538 and $3,251,137 for the Growth Fund; $423,887,
$468,438 and $527,001 for the Shadow Stock Fund; $7,927,419, $7,202,092* and
$5,468,960 for the Value Fund; $837,900, $884,366 and $995,338 for the Stewart
Ivory International Fund; $1,039,152, $691,818* and $1,226,260 for the Bond
Trust Portfolio L; $316,619, $215,212* and $370,143 for the Bond Trust Portfolio
S (does not include the effect of fee waiver); $430,401, $448,280 and $426,396
for the Money Market Fund; $436,994, $513,722 and $530,401 for the Tax-Free
Income Fund. Figures followed by an asterisk (*) denote 7 month figures due to a
change in fiscal year end from November 30 to June 30. The annual fee charged by
Jones & Babson, Inc. covers all normal operating costs of the Funds. 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 Funds. Yet, it
compares favorably with these other advisers when all expenses to Funds
shareholders are taken into account.
<PAGE>
David L. Babson & Co. Inc. has an experienced investment analysis and research
staff which eliminates the need for Jones & Babson, Inc. and the Funds to
maintain an extensive duplicate staff, with the consequent increase in the cost
of investment advisory service. Jones & Babson, Inc. pays David L. Babson & Co.
Inc. a fee of 70/100 of one percent (0.70%) of the first $30 million and 50/100
of one percent (0.50%) of amounts in excess of $30 million of Enterprise Fund's
average daily total net assets; 70/100 of one percent (0.70%) of the first $30
million and 50/100 of one percent (0.50%) of amounts in excess of $30 million of
Enterprise Fund II's; 30/100 of one percent (0.30%) for the first $100 million,
25/100 of one percent (0.25%) on the next $150 million and 20/100 of one percent
(0.20%) for amounts in excess of $250 million of Growth Fund's; 25/100 of one
percent (0.25%) of Shadow Stock Fund's; 35/100 of one percent (0.35%) of Value
Fund's; 475/1000 of one percent (0.475%) of Stewart Ivory International Fund's;
25/100 of one percent (0.25%) of Bond Trust Portfolio L's; 15/100 of one percent
(0.15%) of Bond Trust Portfolio S's (through March 1, 2001); 20/100 of one
percent (0.20%) of Money Market Fund; 25/100 of one percent (0.25%) of Tax-Free
Income Fund, which is computed daily and paid semimonthly. The cost of the
services of David L. Babson & Co. Inc. is included in the services of Jones &
Babson, Inc. During the three most recent fiscal years ended June 30, 2000, 1999
and 1998, Jones & Babson, Inc. paid David L. Babson & Co. Inc. fees amounting to
$678,776, $486,539* and $1,088,793, respectively for the Enterprise Fund;
$371,379, $249,077* and $486,060 for the Enterprise Fund II; $1,155,760,
$1,128,746 and $1,003,328, for the Growth Fund, $189,873, $117,145 and $131,750
for the Shadow Stock Fund; $2,909,143, $2,652,720* and $5,468,960 for the Value
Fund; $418,950, $442,183 and $497,669 for the Stewart Ivory International Fund;
$272,699, $182,021* and $323,879 for the Bond Trust Portfolio L; $49,848,
$33,198* and $58,443 for the Bond Trust Portfolio S; $101,003, $105,477 and
$100,325 for the Money Market Fund; $111,918, $131,478 and $136,416 for the
Tax-Free Income Fund, related to services provided to the Funds. Figures
followed by an asterisk (*) denote seven month figures due to a change in fiscal
year end from November 30 to June 30.
Controlling Persons. Certain officers and directors of the Funds are also
officers or directors or both of Jones & Babson, Inc., Babson-Stewart Ivory
International 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 DLB Acquisition
Corporation, an indirect, majority 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. Babson-Stewart Ivory International is a
partnership formed in 1987 by David L. Babson & Co. Inc. and Stewart Ivory &
Company Ltd.
OFFICERS AND DIRECTORS
The officers of the Funds manage their day-to-day operations. The Funds' manager
and their officers are subject to the supervision and control of the Board of
Directors.
The following table lists the officers and directors of the Funds and their
ages. Unless noted otherwise, the address of each officer and director is BMA
Tower, 700 Karnes Blvd., Kansas City, Missouri 64108- 3306. Except as indicated,
each has been an employee of Jones & Babson, Inc. for more than five years.
* Stephen S. Soden, (55), President and Director. President and Director, Jones
& Babson, Inc., and of each of the Babson Funds, UMB Scout Funds, Buffalo Funds
and the Investors Mark Series Fund, Inc.; President and Trustee, D.L. Babson
Bond Trust; Director, AFBA Five Star Fund, Inc.
<PAGE>
Francis C. Rood (66), Director. Retired, 73-395 Agave Lane, Palm Desert,
California 92260-6653. Formerly Vice President of Finance, Hallmark Cards, Inc.;
Director, of each of the Babson Funds, Buffalo Funds and the Investors Mark
Series Fund, Inc.; Trustee, D.L. Babson Bond Trust.
William H. Russell (76), Director. Financial Consultant, 645 West 67th Street,
Kansas City, Missouri 64113; previously Vice President, Sprint; Director, of
each of the Babson Funds, Buffalo Funds and the Investors Mark Series Fund,
Inc.; Trustee, D.L. Babson Bond Trust.
H. David Rybolt (58), Director. Consultant, HDR Associates, P.O. Box 2468,
Shawnee Mission, Kansas 66201; Director, of each of the Babson Funds, (except
the Babson-Stewart Ivory International Fund, Inc.) Buffalo Funds and the
Investors Mark Series Fund, Inc.; Trustee, D.L. Babson Bond Trust.
James T. Jensen (71), Director. Chief Executive Officer, Jensen Associates,
Inc., 892 Worcester Street, Suite 210, Wellesley, Massachusetts 02482; Director,
of Babson-Stewart Ivory International Fund, Inc.
Richard J. Phelps (72), Director. Chairman, Phelps Industries, Inc., 122 Quincy
Shore Drive, Quincy, Massachusetts 02171. Trustee, The DLB Fund Group; Director,
Superior Pet Products (Aust.) Pty. Ltd. and Superior Pet Products, Ltd.
(England); Member, Board of Overseers, Tufts University School of Veterinary
Medicine and Dean's Council, Harvard Graduate School of Education; Director, of
Babson-Stewart Ivory International Fund, Inc.
P. Bradley Adams (40), Vice President and Treasurer. Vice President and
Treasurer, Jones & Babson, Inc., and each of the Babson Funds, UMB Scout Funds
and Buffalo Funds; Vice President and Chief Financial Officer, AFBA Five Star
Fund, Inc.; Principal Financial Officer, Investors Mark Series Fund, Inc.
Martin A. Cramer (50), Vice President and Secretary. Vice President and
Secretary, Jones & Babson, Inc., and of each of the Babson Funds, UMB Scout
Funds and Buffalo Funds; Secretary and Assistant Vice President, AFBA Five Star
Fund, Inc.; Secretary, Investors Mark Series Fund, Inc.;
Constance E. Martin (39), Vice President. Shareholder Operations Vice President
and Director, Jones & Babson, Inc.; Vice President, of each of the Babson Funds,
UMB Scout Funds, Buffalo Funds and AFBA Five Star Fund, Inc.
W. Guy Cooke (39), Vice President. Chief Compliance Officer, Jones & Babson,
Inc.; Vice President, of each of the Babson Funds, Buffalo Funds and AFBA Five
Star Fund, Inc. He joined Jones & Babson in 1998.
Anthony M. Maramarco (51), Vice President- Portfolio. Senior Vice President and
Director, David L. Babson & Co. Inc., One Memorial Drive, Cambridge,
Massachusetts 02142; Vice President- Babson Value Fund, Inc. and Shadow Stock
Fund, Inc.
James B. Gribbell (33), Vice President-Portfolio. Vice President, David L.
Babson & Co. Inc., One Memorial Drive, Cambridge, Massachusetts 02142; Vice
President-Babson Growth Fund, Inc.
Lance F. James (46), Vice President-Portfolio. Executive Vice President and
Director, David L. Babson & Co. Inc., One Memorial Drive, Cambridge,
Massachusetts 02142; Vice President-Babson Enterprise Fund, Inc. and Babson
Enterprise Fund II, Inc.
Remuneration of Officers, Directors and Trustees. None of the officers,
directors or Trustees will be remunerated by the Funds for their normal duties
and services. Their compensation and expenses arising out of normal operations
will be paid by Jones & Babson, Inc. under the provisions of the Management
Agreement.
Messrs. Rood, Russell, Rybolt, Jensen and Phelps 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 for Babson-Stewart Ivory
International Fund, Inc. is composed of Messrs. Jensen, Phelps, Rood and
Russell. The Audit Committee of the Board of Directors for the other Babson
Funds is composed of Messrs. Rood, Russell and Rybolt.
The officers, directors and trustees of the Funds as a group own less than 1% of
the Fund. To the best information available to the Manager, there are no
"Controlling Persons", shareholders that constitute 5% of the Funds.
<PAGE>
COMPENSATION TABLE
Total
Pension or Estimated Compensation
Aggregate Retirment Annual From
Compensation Benefits Accrued Benefits All Babson
Name of From As Part of Fund Upon Funds Paid to
Director the Fund Expenses Retirement Directors**
------------------ ------------ ---------------- ------------ -------------
Stephen S. Soden* -- - - -
Francis C. Rood $625 - - $ 7,500
William H. Russell $625 - - $ 7,500
H. David Rybolt $625 - - $ 7,125
James T. Jensen $500 - - $ 3,500
Richard J. Phelps $500 - - $ 3,500
* As an "interested director," Mr. Soden received no compensation for his
services as a director.
** The amounts reported in this column reflect the total compensation paid to
Messrs. Jensen and Phelps for services as directors of Babson-Stewart Ivory
International Fund, Inc. Mr. Rybolt for services as director or trustee of
eight Babson Funds and to Messrs. Rood and Russell for services as
directors or trustees of nine Babson Funds during the fiscal year ended
June 30, 2000. Directors' fees are paid by the Funds' manager and not by
the Funds themselves.
CODE OF ETHICS
The Funds, its investment adviser, sub-adviser and principal underwriter have
each adopted a code of ethics, as required by federal securities laws. Under
each codes of ethics, persons who are designated as access persons may engage in
personal securities transactions, including transactions involving securities
that may be purchased or sold by any Fund, subject to certain restrictions and
procedures. Each code of ethics also contains certain reporting requirements and
securities trading clearance procedures. The codes of ethics are on file with
the Securities and Exchange Commission.
HOLIDAYS
The net asset value per share is computed once daily, Monday through Friday, at
4:00 p.m. (Eastern Time) except: days when the Funds are not open for business;
days on which changes in the value of portfolio securities will not materially
affect the net asset value; days during which no purchase or redemption order is
received by the Funds; and customary holidays.
The Funds do not compute their net asset value on the following customary
holidays:
New Year's Day January 1
Martin Luther King Third Monday King, Jr. in January
Presidents' Holiday Third Monday in February
Good Friday Friday before Easter
Memorial Day Last Monday in May
Independence Day July 4
Labor Day First Monday in September
Thanksgiving Day Fourth Thursday in November
Christmas Day December 25
<PAGE>
DIVIDENDS, DISTRIBUTIONS AND THEIR
TAXATION
Distributions of net investment income. In general, the Funds receive income in
the form of dividends or interest on their investments. This income, less
expenses incurred in the operation of a Fund, constitutes a Fund's net
investment income from which dividends may be paid to investors. Any
distributions by a Fund from such income will be taxable to investors as
ordinary income, whether the investors take them in cash or in additional
shares.
By meeting certain requirements of the Internal Revenue Code, the Tax-Free
Income Fund has qualified and continues to qualify to pay exempt- interest
dividends. These dividends are derived from interest income exempt from regular
federal income tax, and are not subject to regular federal income tax when they
are distributed. In addition, to the extent that exempt-interest dividends are
derived from interest on obligations of a state or its political subdivisions,
or from interest on qualifying U.S. territorial obligations (including
qualifying obligations of Puerto Rico, the U.S. Virgin Islands or Guam), they
also will be exempt from such state's personal income taxes. A state generally
does not grant tax-free treatment to interest on state and municipal securities
of other states.
The Tax-Free Income Fund may earn taxable income on any temporary investments,
on the discount from stripped obligations or their coupons, on income from
securities loans or other taxable transactions, or on ordinary income derived
from the sale of market discount bonds. Any Fund distributions from such income
will be taxable as ordinary income, whether received by investors in cash or in
additional shares.
The Money Market Fund and Portfolios S and L of the Bond Trust declare dividends
for each day that their net asset value is calculated. These dividends will
equal all of the daily net income payable to shareholders of record as of the
close of business the preceding day. The daily net income includes accrued
interest and any original issue or acquisition discount, plus or minus any gain
or loss on the sale of portfolio securities and changes in unrealized
appreciation or depreciation in portfolio securities (to the extent required to
maintain a constant net asset value per share), less the estimated expenses of
the Funds.
Distributions of capital gains. In general, the Funds may derive capital gains
and losses in connection with sales or other dispositions of their portfolio
securities. Distributions from net short- term capital gains will be taxable as
ordinary income. Distributions from net long-term capital gains will be taxable
as long-term capital gain, regardless of how long the Fund shares have been
held. Any net capital gains realized by a Fund generally will be distributed
once each year, and may be distributed more frequently, if necessary, in order
to reduce or eliminate excise or income taxes on the Fund. Because the Money
Market Fund is a money market fund, it does do not anticipate realizing any
long-term capital gains.
Effect of foreign investments on distributions. Most foreign exchange gains
realized on the sale of debt securities are treated as ordinary income by a Fund
for tax purposes. Similarly, foreign exchange losses realized by a Fund on the
sale of debt securities are generally treated as ordinary losses by the Fund for
tax purposes. These gains when distributed will be taxable as ordinary
dividends, and any losses will reduce a Fund's ordinary income otherwise
available for distribution. This treatment could increase or reduce a Fund's
ordinary income distributions, and may cause some or all of a Fund's previously
distributed income to be classified as a return of capital.
The Funds may be subject to foreign withholding taxes on income from certain of
their foreign securities. If more than 50% of a Fund's total assets at the end
of the fiscal year are invested in securities of foreign corporations, the Fund
may elect to pass-through each investor's pro rata share of foreign taxes paid
by the Fund. If this election is made, the year-end statement investors receive
from the Fund will show more taxable income than was actually distributed.
However, investors will be entitled to either deduct their share of such taxes
in computing their taxable income or (subject to limitations) claim a foreign
tax credit for such taxes against their U.S. federal income tax. The Fund will
provide investors with the information necessary to complete their individual
income tax returns if it makes this election.
<PAGE>
Information on the tax character of distributions. The Funds will inform you of
the amount of your ordinary income dividends and capital gains distributions at
the time they are paid, and will advise you of their tax status for federal
income tax purposes shortly after the close of each calendar year. If you have
not held Fund shares for a full year, a Fund may designate and distribute to
you, as ordinary income or capital gain, a percentage of income that is not
equal to the actual amount of such income earned during the period of your
investment in the Fund.
Election to be taxed as a regulated investment company. Each Fund has elected to
be treated as a regulated investment company under Subchapter M of the Internal
Revenue Code, has qualified as such for its most recent fiscal year, and intends
to so qualify during the current fiscal year. As regulated investment companies,
the Funds generally pay no federal income tax on the income and gains they
distribute to you. The board reserves the right not to maintain the
qualification of a Fund as a regulated investment company if it determines such
course of action to be beneficial to shareholders. In such case, a Fund will be
subject to federal, and possibly state, corporate taxes on its taxable income
and gains, and distributions to you will be taxed as ordinary dividend income to
the extent of such Fund's earnings and profits.
Excise tax distribution requirements. To avoid federal excise taxes, the
Internal Revenue Code requires a Fund to distribute to you by December 31 of
each year, at a minimum, the following amounts: 98% of its taxable ordinary
income earned during the calendar year; 98% of its capital gain net income
earned during the twelve month period ending October 31; and 100% of any
undistributed amounts from the prior year. Each Fund intends to declare and pay
these amounts in December (or in January that are treated by you as received in
December) to avoid these excise taxes, but can give no assurances that its
distributions will be sufficient to eliminate all taxes.
Redemption of Fund shares. Redemptions and exchanges of Fund shares are taxable
transactions for federal and state income tax purposes. If you redeem your Fund
shares, or exchange your Fund shares for shares of a different Babson Fund, the
IRS will require that you report a gain or loss on your redemption or exchange.
If you hold your shares as a capital asset, the gain or loss that you realize
will be capital gain or loss and will be long- term or short-term, generally
depending on how long you hold your shares. Any loss incurred on the redemption
or exchange of shares held for six months or less will be treated as a long-term
capital loss to the extent of any long-term capital gains distributed to you by
the Fund on those shares.
All or a portion of any loss that you realize upon the redemption of your Fund
shares will be disallowed to the extent that you buy other shares in such Fund
(through reinvestment of dividends or otherwise) within 30 days before or after
your share redemption. Any loss disallowed under these rules will be added to
your tax basis in the new shares you buy.
As to the Tax-Free Income Fund, any loss incurred on the redemption or exchange
of shares held for six months or less will be disallowed to the extent of any
exempt-interest dividends distributed to investors with respect to his or her
Fund shares and any remaining loss will be treated as a long-term capital loss
to the extent of any long-term capital gains distributed to the investor by the
Fund on those shares.
As to the Money Market Fund, because the Fund seeks to maintain a constant $1.00
per share net asset value, investors should not expect to realize a capital gain
or loss upon redemption or exchange of Fund shares.
U.S. government obligations. Many states grant tax-free status to dividends paid
to you from interest earned on direct obligations of the U.S. government,
subject in some states to minimum investment requirements that must be met by a
Fund. Investments in Government National Mortgage Association or Federal
National Mortgage Association securities, bankers' acceptances, commercial paper
and repurchase agreements collateralized by U.S. government securities do not
generally qualify for tax-free treatment. The rules on exclusion of this income
are different for corporations.
Dividends-received deduction for corporations. If you are a corporate
shareholder, you should note that dividends paid by the following Funds for the
most recent fiscal year qualified for the dividends- received deduction as set
forth below:
Enterprise Fund 99%
Enterprise Fund II 100%
Growth Fund 100%
Shadow Stock Fund 100%
Value Fund 100%
<PAGE>
In some circumstances, you will be allowed to deduct these qualified dividends,
thereby reducing the tax that you would otherwise be required to pay on these
dividends. The dividends-received deduction will be available only with respect
to dividends designated by such Fund as eligible for such treatment. All
dividends (including the deducted portion) must be included in your alternative
minimum taxable income calculation.
Because the Stewart Ivory International Fund's income is derived primarily from
investments in foreign rather than domestic U.S securities, no portion of its
distributions will generally be eligible for the dividends-received deduction.
Because the Money Market Fund, the Tax-Free Income Fund and the Bond Trust's
(Portfolios S and L) income consists of interest rather than dividends, no
portion of their distributions will generally be eligible for the
dividends-received deduction. None of the dividends paid by the Funds for the
most recent calendar year qualified for such deduction, and it is anticipated
that none of the current year's dividends will so qualify.
Investment in complex securities. The Funds may invest in complex securities.
These investments may be subject to numerous special and complex tax rules.
These rules could affect whether gains and losses recognized by a Fund are
treated as ordinary income or capital gain, accelerate the recognition of income
to a Fund and/or defer a Fund's ability to recognize losses, and, in limited
cases, subject a Fund to U.S. federal income tax on income from certain of its
foreign securities. In turn, these rules may affect the amount, timing or
character of the income distributed to you by a Fund.
GENERAL INFORMATION AND HISTORY
The Babson Bond Trust was organized in Kansas City, Missouri, as a common law
trust under an Agreement and Declaration of Trust dated November 2, 1944, which
was amended and restated on February 24, 1989. It originally was known as Mutual
Trust. When it came under the management of Jones & Babson, Inc., its name was
changed to Babson (D.L.) Income Trust. On February 14, 1984, shareholders
changed its name to D.L. Babson Bond Trust. On March 31, 1988, the issued and
outstanding shares of beneficial interest of the Trust were redesignated as
"Portfolio L" (longer term) and a second class or series of shares known as
"Portfolio S" (shorter term) was created. Each full and fractional share, when
issued and outstanding, has: (1) equal voting rights with respect to matters
which affect the Trust in general and with respect to matters relating solely to
the interests of the Portfolio for which issued, and (2) equal dividend,
distribution and redemption rights to the assets of the Portfolio for which
issued and to general assets, if any, of the Trust which are not specifically
allocated to either Portfolio. Shares when issued are fully paid and
non-assessable. Except for the priority of each share in the assets of its
Portfolio, the Trust will not issue any class of securities senior to any other
class. The initial par value of the shares was $1.00 each. On September 30,
1955, this was changed to $0.25 each, and three additional shares at that time
were issued for each share then outstanding. Shareholders do not have
pre-emptive or conversion rights.
The other Babson Funds were incorporated in Maryland as follows: The Enterprise
Fund on July 5, 1983, has a present authorized capitalization of 20,000,000
shares of $1 par value common stock; the Enterprise Fund II on February 5, 1991,
has a present authorized capitalization of 10,000,000 shares of $1 par value
common stock; the Growth Fund, originally incorporated in Delaware in 1959 and
was merged into a Maryland corporation in 1978, has a present authorized
capitalization of 100,000,000 shares of $1 par value common stock; the Shadow
Stock Fund on June 3, 1987, has a present authorized capitalization of
10,000,000 shares of $1 par value common stock; the Value Fund on July 24, 1984,
has a present authorized capitalization of 50,000,000 shares of $1 par value
common stock; the Stewart Ivory International Fund on October 2, 1987, has a
present authorized capitalization of 10,000,000 shares of $1 par value common
stock; the Money Market Fund on October 19, 1979, has a present authorized
capitalization of 2,000,000,000 shares of $.01 par value common stock to be
issued in two separate classes; and the Tax-Free Income Fund on August 22, 1979,
has a present authorized capitalization of 200,000,000 shares of $.10 par value
common stock to be issued in three separate classes. All shares are of the same
class unless otherwise stated and 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 Funds may create other series of stock but will not
issue any senior securities. Shareholders do not have pre-emptive or conversion
rights.
<PAGE>
Non-cumulative voting -- The Funds' 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 Funds may not, at their 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 Funds do not intend to hold annual meetings.
The Funds will not hold annual meetings except as required by the Investment
Company Act of 1940 and other applicable laws. A special meeting of shareholders
of the Funds must be held if the Fund receives the written request for a meeting
from the shareholders entitled to cast at least 25% of all the votes entitled to
be cast at the meeting. The Funds have undertaken that their Directors will call
a meeting of shareholders if such a meeting is requested in writing by the
holders of not less than 10% of the outstanding shares of each Fund. To the
extent required by the undertaking, the Funds will assist shareholder
communications in such matters.
The Funds may use the name "Babson" in their names so long as Jones & Babson,
Inc. continues as manager and David L. Babson & Co. Inc. as its investment
adviser. Complete details with respect to the use of the name are set out in the
Management Agreement between the Funds and Jones & Babson, Inc.
Shadow Stock Fund has an exclusive and perpetual license to use the name "Shadow
Stock" in its name so long as Analytic Systems, Inc. or an affiliate thereof or
of James B. Cloonan, acts as its Investment Adviser. Complete details with
respect to the use of the name are set out in the Management Agreement between
the Fund and Jones & Babson, Inc.
CUSTODIAN
Except for the Babson-Stewart Ivory International Fund, Inc., the Funds' assets
are held for safekeeping by an independent custodian, UMB Bank, n.a. This means
the bank, rather than the Funds, has possession of the Funds' cash and
securities. The custodian bank is not responsible for the Funds' investment
management or administration. But, as directed by the Funds' officers, it
delivers cash to those who have sold securities to the Funds in return for such
securities, and to those who have purchased portfolio securities from the Funds,
it delivers such securities in return for their cash purchase price. It also
collects income directly from issuers of securities owned by the Funds and holds
this for payment to shareholders after deduction of the Funds' expenses. The
custodian is compensated for its services by the manager. There is no separate
charge to the Funds.
The Babson-Stewart Ivory International Fund's assets are held for safekeeping by
an independent custodian, State Street Bank and Trust Company of Boston,
Massachusetts and foreign subcustodians as discussed below. This means State
Street Bank and Trust Company, rather than the Fund, has possession of the
Fund's cash and securities. State Street Bank and Trust Company is not
responsible for the Fund's investment management or administration. But, as
directed by the Fund's officers, it delivers cash to those who have sold
securities to the Fund in return for such securities, and to those who have
purchased portfolio securities from the Fund, it delivers such securities in
return for their cash purchase price. It also collects income directly from
issuers of securities owned by the Fund and holds this for payment to
shareholders after deduction of the Fund's expenses. The custodian is
compensated for its services by the Fund.
Pursuant to rules adopted under the 1940 Act, the Fund may maintain its foreign
securities and cash in the custody of certain eligible foreign banks and
securities depositories. Selection of these foreign custodial institutions is
made by the Board of Directors following a consideration of a number of factors,
including (but not limited to) the eligibility and financial stability of the
institution; the ability of the institution to perform capably custodial
services for the Fund; the reputation of the institution in its national market;
the political and economic stability of the country in which the institution is
located; and further risks of potential nationalization or expropriation of Fund
assets.
<PAGE>
TRANSFER AGENT
Jones & Babson, Inc. also serves as transfer agent to the Funds.
INDEPENDENT AUDITORS
The Funds' 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, serves as the Funds'
independent auditor.
OTHER JONES & BABSON FUNDS
Jones & Babson also sponsors and manages the Buffalo Group of Mutual Funds. They
are:
BUFFALO BALANCED FUND 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 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 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 was organized in 1994, with the objective of capital
growth by investing in common stocks of companies based in the United States
that receive greater than 40% of their revenues or pre-tax income from
international operations.
BUFFALO SMALL CAP FUND was organized in 1998, with the objective of long-term
capital growth by investment in equity securities of small companies.
A prospectus for any of the Funds may be obtained from Jones & Babson, Inc., BMA
Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306.
Jones & Babson, Inc. also sponsors thirteen mutual funds which especially seek
to provide services to customers of affiliate banks of UMB Financial
Corporation. They are: UMB Scout Equity Index Fund, UMB Scout Regional Fund, UMB
Scout Stock Fund, UMB Scout Stock Select Fund, UMB Scout Technology Fund, UMB
Scout WorldWide Fund, UMB Scout WorldWide Select Fund, UMB Scout Capital
Preservation Fund, UMB Scout Balanced Fund, UMB Scout Bond Fund, UMB Scout
Kansas Tax-Exempt Bond Fund, UMB Scout Money Market Fund and UMB Scout Tax-Free
Money Market Fund.
Jones & Babson, Inc., also sponsors the AFBA Five Star Fund.
DESCRIPTION OF STOCK RATINGS
Standard & Poor's Earnings and Dividend Rankings for Common Stocks (S&P) -
Growth and stability of earnings and dividends are deemed key elements in
establishing Standard & Poor's earnings and dividend rankings for common stocks.
Basic scores are computed for earnings and dividends, then adjusted by a set of
predetermined modifiers for growth, stability within long-term trend, and
cyclically. Adjusted scores for earnings and dividends are then combined to
yield a final score. The final score is measured against a scoring matrix
determined by an analysis of the scores of a large and representative sample of
stocks. The rankings are:
A+ Highest
A High
A- Above Average
B+ Average
B Below Average
B- Lower
C Lowest
D In Reorganization
<PAGE>
Value Line Ratings of Financial Strength - The financial strength of each of the
companies reviewed by Value Line is rated relative to all the others. The
ratings are:
A++ The very highest relative financial
strength.
A+ Excellent financial position relative to
other companies.
A High grade relative financial strength.
B++ Superior financial health on a relative
basis.
B+ Very good relative financial structure.
B Good overall relative financial structure.
C++ Satisfactory finances relative to other
companies.
C+ Below-average relative financial position.
C Poorest financial strength relative to other
major companies.
The ratings are based upon computer analysis of a number of key variables that
determine: (a) financial leverage, (b) business risk and (c) company size plus
the judgment of their analysts and senior editors regarding factors that cannot
be quantified across-the-board for all stocks. The primary variables that are
indexed and studied include equity coverage of debt, equity coverage of
intangibles, "quick ratio" accounting methods, variability of return, quality of
fixed charge coverage, stock price stability and company size.
MUNICIPAL SECURITIES DESCRIBED
AND RATINGS
In evaluating investment suitability, each investor must relate the
characteristics of a particular investment under consideration to personal
financial circumstances and goals.
Municipal securities include bonds and other debt obligations issued by or on
behalf of states, territories and possessions of the United States of America
and the District of Columbia including their political subdivisions or their
duly constituted authorities, agencies and instrumentalities, the interest on
which is exempt from federal income tax.
Municipal securities are issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities, such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets, waterworks and sewer systems. Municipal securities also may be issued
in connection with the refunding of outstanding obligations and obtaining funds
to lend to other public institutions and facilities or for general operating
expenses.
The two principal classifications of municipal bonds are "general obligation"
and "revenue". General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable only from the revenues derived from a
particular facility or class of facilities, or in some cases, from the proceeds
of a special excise tax or other specific revenue source.
<PAGE>
The Fund may invest in industrial development bonds, the interest from which is
exempt from federal income tax. Under certain circumstances, "substantial users"
of the facilities financed with such obligations, or persons related to
"substantial users" of the facilities financed with such obligations, or persons
related to "substantial users," may be required to pay federal income tax on
this otherwise exempted interest. Such persons should consult the Internal
Revenue Code and their financial adviser to determine whether or not the Fund is
an appropriate investment for them.
There are a variety of hybrid and special types of municipal obligations, as
well as numerous differences in the security of municipal bonds, both within and
between the two principal classifications of general obligation and revenue.
Municipal notes include tax, revenue and bond anticipation notes of short
maturity, generally less than three years, which are issued to obtain temporary
funds for various public purposes. Also included in this category are
Construction Loan Notes, Short-Term Discount Notes and Project Notes issued by a
state or local housing agency but secured by the full faith and credit of the
United States.
Yields on municipal securities depend on a variety of factors, such as the size
of a particular offering, the maturity and the rating of the obligation,
economic and monetary conditions, and conditions of the municipal securities
market, including the volume of municipal securities available. Market values of
municipal securities will vary according to the relation of their yields
available. Consequently, the net asset value of the Fund and its shares can be
expected to change as the level of interest rates fluctuates.
Municipal obligations, like all other debt obligations, carry a risk of default.
Through careful selection and supervision, and concentration in the
higher-quality investment grade issues, management intends to reduce this risk.
Prices of outstanding municipal securities will fluctuate with changes in the
interest rates on new issues. Thus, the price of the Fund's shares will tend to
increase as the rates on new issues decline, and decrease whenever the current
rate is rising. Management will seek to minimize such share price fluctuation to
the extent this can be achieved without detracting from the Fund's primary
objective of the highest quality and maturity characteristics of the Fund.
Municipal securities are not traded as actively as other securities. Even though
municipal securities will be redeemed at face value upon maturity, from time to
time, when there has been no active trading in a particular Fund holding, its
interim pricing for the purpose of the daily valuation of the Fund shares may
have to be based on other sources of information and methods deemed fair and
reasonable by the Board of Directors. One principal method which is commonly
used by Funds and other investors who own municipal securities is called matrix
pricing.
From time to time, proposals have been introduced in Congress to restrict or
eliminate the federal income tax exemption for interest on municipal securities.
Similar proposals may be introduced in the future. If such a proposal was
enacted, the availability of municipal securities for investment by the Fund
would be adversely affected. In such event, the Fund would reevaluate its
investment objective and policies and submit possible changes in the structure
of the Fund for the consideration of the shareholders.
<PAGE>
RATINGS OF MUNICIPAL AND TAXABLE
SECURITIES
The ratings of bonds by Moody's and Standard and Poor's Corporation represent
their opinions of quality of the municipal bonds they undertake to rate. These
ratings are general and are not absolute standards. Consequently, municipal
bonds with the same maturity, coupon and rating may have different yields, while
municipal bonds of the same maturity and coupon with different ratings may have
the same yield.
Both Moody's and S&P's Municipal Bond Ratings cover obligations of states and
political subdivisions. Ratings are assigned to general obligation and revenue
bonds. General obligation bonds are usually secured by all resources available
to the municipality and the factors outlined in the rating definitions below are
weighted in determining the rating. Because revenue bonds in general are payable
form specifically pledged revenues, the essential element in the security for a
revenue bond is the quantity and quality of the pledged revenues available to
pay debt service.
S&P'S BOND RATINGS
AAA Prime - These are obligations of the highest quality. They have the
strongest capacity for timely payment of debt service.
General Obligation Bonds - In a period of economic stress, the issuers will
suffer the smallest declines in income and will be susceptible to autonomous
decline. Debt burden is moderate. A strong revenue structure appears more than
adequate to meet future expenditure requirements. Quality of management appears
superior.
Revenue Bonds - Debt service coverage has been, and is expected to remain,
substantial. Stability of the pledged revenues is also exceptionally strong, due
to the competitive position of the municipal enterprise or to the nature of the
revenues. Basic security provisions (including rate covenant, earnings test for
issuance of additional bonds, debt service, reserve requirements) are rigorous.
There is evidence of superior management.
AA - High Grade - The investment characteristics of general obligation and
revenue bonds in this group are only slightly less marked than those of the
prime quality issues. Bonds rated "AA" have the second strongest capacity for
payment of debt service.
A - Good Grade - Principal and interest payments on bonds in this category are
regarded as safe. This rating describes the third strongest capacity for payment
of debt service. It differs from the two higher ratings because:
General Obligation Bonds - There is some weakness, either in the local economic
base, in debt burden, in the balance between revenues and expenditures, or in
quality of management. Under certain adverse circumstances, any one such
weakness might impair the ability of the issuer to meet debt obligations at some
future date.
Revenue Bonds - Debt service coverage is good, but not exceptional. Stability of
the pledged revenues could show some variations because of increased competition
or economic influences on revenues. Basic security provisions, while
satisfactory, are less stringent. Management performance appears adequate.
BBB Adequate Grade - These are obligations regarded as having adequate capacity
to pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
<PAGE>
MOODY'S RATINGS OF BONDS
Aaa - Bonds which are rated Aaa are judged to be the best quality. These
securities carry the smallest degree of investment risk and are generally
referred to as "gilt-edge." Interest payments are protected by a large, or by an
exceptionally stable margin, and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by all standards.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities, fluctuation of protective elements may be of
greater amplitude, or there may be other elements present which make the
long-term risks appear somewhat greater.
A - Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa Adequate Grade - These are obligations regarded as having adequate capacity
to pay interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher rated categories.
MOODY'S RATINGS
OF MUNICIPAL NOTES
MIG 1: The best quality, enjoying strong protection from established cash flow
of funds for their servicing or from established and broad based access to the
market for refinancing, or both.
MIG 2: High quality with margins of protection ample, although not so large as
in the preceding group.
MIG 3: Favorable quality, with all security elements accounted for, but lacking
the undeniable strength of the preceding grades. Market access for refinancing,
in particular, is likely to be less well established.
<PAGE>
DESCRIPTION OF COMMERCIAL
PAPER RATINGS
Moody's . . . Moody's commercial paper rating is an opinion of the ability of an
issuer to repay punctually promissory obligations not having an original
maturity in excess of nine months. Moody's has one rating - prime. Every such
prime rating means Moody's believes that the commercial paper note will be
redeemed as agreed. Within this single rating category are the following
classifications:
Prime - 1 Highest Quality
Prime - 2 Higher Quality
Prime - 3 High Quality
The criteria used by Moody's for rating a commercial paper issuer under this
graded system include, but are not limited to the following factors:
(1) evaluation of the management of the issuer;
(2) economic evaluation of the issuer's industry or industries and an appraisal
of speculative type risks which may be inherent in certain areas;
(3) evaluation of the issuer's products in relation to competition and customer
acceptance;
(4) liquidity;
(5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years;
(7) financial strength of a parent company and relationships which exist with
the issuer; and
(8) recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet such
obligations.
S&P . . . Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely repayment of debt having an original maturity of no
more than 270 days. Ratings are graded into four categories, ranging from "A"
for the highest quality obligations to "D" for the lowest. The four categories
are as follows:
"A" Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
the designations 1, 2, and 3 to indicate the relative degree of safety.
"A-1" This designation indicates that the degree of safety regarding timely
payment is very strong.
"A-2" Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as overwhelming.
"A-3" Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
"B" Issues rated "B" are regarded as having only an adequate capacity for timely
payment. Furthermore, such capacity may be damaged by changing conditions or
short-term adversities.
"C" This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.
"D" This rating indicates that the issuer is either in default or is expected to
be in default upon maturity.
FINANCIAL STATEMENTS
The audited financial statements of the Funds which are contained in the June
30, 2000, Annual Report to Shareholders are incorporated herein by reference.
<PAGE>
BABSON FUND GROUP
PART C
OTHER INFORMATION
ITEM 23. EXHIBITS:
(a) Articles of Incorporation
(1) David L. Babson Growth Fund, Inc.
(A) Articles of Incorporation of the
Registrant as filed in Maryland on
August 17, 1978.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on
August 30, 1999.
(B) Articles of Amendment and
Restatement of the Registrant
as filed in Maryland on
October 3, 1978.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on
August 30, 1999.
(C) Articles of Merger of the Registrant
as filed in Maryland on
October 31, 1978.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on
August 30, 1999.
(D) Articles of Amendment of the Registrant
as filed in Maryland on
October 3, 1983.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on
August 30, 1999.
(2) D. L. Babson Money Market Fund, Inc.
(A) Articles of Incorporation of the
Registrant as filed in Maryland on
October 19, 1979.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on
August 30, 1999.
(B) Articles of Amendment of the
Registrant as filed in Maryland on
April 15, 1982.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on
August 30, 1999.
(C) Articles Supplementary of the
Registrant as filed in Maryland on
April 22, 1982.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on
August 30, 1999.
<PAGE>
(3) D. L. Babson Tax-Free Income Fund, Inc.
(A) Articles of Incorporation of the
Registrant as filed in Maryland on
August 22, 1979.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on
August 30, 1999.
(B) Articles of Amendment of the
Registrant as filed in Maryland on
November 30, 1979.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on
August 30, 1999.
(C) Articles of Amendment of the
Registrant as filed in Maryland on
January 2, 1981.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on
August 30, 1999.
(4) Babson-Stewart Ivory International Fund, Inc.
(A) Articles of Incorporation of the
Registrant as filed in Maryland on
October 2, 1987.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on
August 30, 1999.
(B) Articles of Amendment of the
Registrant as filed in Maryland on
December 10, 1987.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on
August 30, 1999.
(5) Shadow Stock Fund, Inc.
(A) Articles of Incorporation of the
Registrant as filed in Maryland on
June 3, 1987.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on
August 30, 1999.
(6) Babson Enterprise Fund, Inc.
<PAGE>
(A) Articles of Incorporation of the
Registrant as filed in Maryland on
July 5, 1983. Previously filed with
Post-Effective Amendment No. 19 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(B) Articles Supplementary of the
Registrant as filed in Maryland on
October 14, 1983. Previously filed with
Post-Effective Amendment No. 19 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(C) Articles Supplementary of the
Registrant as filed in Maryland on
April 24, 1991. Previosly filed with
Post-Effective Amendment No. 19 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(7) Babson Enterprise II Fund, Inc.
(1) Articles of Incorporation of the
Registrant as filed in Maryland on
January 30, 1991. Previously filed with
Post-Effective Amendment No. 10 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(2) Articles Supplementary of the
Registrant as filed in Maryland on
April 18, 1991. Previously filed with
Post-Effective Amendment No. 10 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(8) Babson Value Fund, Inc.
(A) Articles of Incorporation of the
Registrant as filed in Maryland on
July 24, 1984. Previously filed with
Post-Effective Amendment No. 17 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(B) Articles Supplementary of the
Registrant as filed in Maryland on
September 25, 1984. Previously filed with
Post-Effective Amendment No. 17 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(C) Articles Supplementary of the
Registrant as filed in Maryland on
February 9, 1996. Previously filed with
Post-Effective Amendment No. 17 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(D) Articles Supplementary of the
Registrant as filed in Maryland on
October 30, 1996. Previously filed with
Post-Effective Amendment No. 17 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
<PAGE>
(9) D. L. Babson Bond Trust
(A) Amended and Restated Agreement
and Declaration of Trust of the
Registrant dated March 31, 1988.
Previously filed with
Post-Effective Amendment No. 99 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(B) Provisions of Supplementary Agreement
and Declaration of Trust of the
Registrant dated March 31, 1988.
Previously filed with
Post-Effective Amendment No. 99 to
the Registration Statement on
Form N-1A on Janaury 22, 1999.
(b) By-laws
(1) David L. Babson Growth Fund, Inc.
By-laws for the Registrant.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on August 30, 1999.
(2) D. L. Babson Money Market Fund, Inc.
By-laws for the Registrant.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(3) D. L. Babson Tax-Free Income Fund, Inc.
By-laws for the Registrant.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(4) Babson-Stewart Ivory International Fund, Inc.
By-laws for the Registrant.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
(5) Shadow Stock Fund, Inc.
By-laws for the Registrant.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
(6) Babson Enterprise Fund, Inc.
By-laws for the Registrant
Previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(7) Babson Enterprise II Fund, Inc.
By-laws for the Registrant
Previously filed with Post-Effective
Amendment No. 10 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(8) Babson Value Fund, Inc.
By-laws for the Registrant
Previously filed with Post-Effective
Amendment No. 17 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(9) D. L. Babson Bond Trust
By-laws for the Registrant
Previously filed with Post-Effective
Amendment No. 99 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
<PAGE>
(c) Instrument Defining Rights of Security Holders
Not Applicable
(d) Investment Advisory Contracts
(1) David L. Babson Growth Fund, Inc.
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on August 30, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on August 30, 1999.
(2) D. L. Babson Money Market Fund, Inc.
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(3) D. L. Babson Tax-Free Income Fund, Inc.
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(4) Babson-Stewart Ivory International Fund, Inc.
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
Babson-Stewart Ivory International
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
<PAGE>
(5) Shadow Stock Fund, Inc.
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
(C) Investment Counsel Agreement between
Jones & Babson, Inc. and
Anaylitc Systems, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
(6) Babson Enterprise Fund, Inc.
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(7) Babson Enterprise II Fund, Inc.
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 10 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 10 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
<PAGE>
(8) Babson Value Fund, Inc.
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(9) D. L. Babson Bond Trust
(A) Investment Management Agreement between
Registrant and Jones & Babson, Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 99 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(B) Investment Counsel Agreement between
Jones & Babson, Inc. and
David L. Babson & Co., Inc.
dated June 30, 1995.
Previously filed with Post-Effective
Amendment No. 99 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(e) Underwriting Contracts between:
(1) David L. Babson Growth Fund, Inc.
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on August 30, 1999.
(2) D. L. Babson Money Market Fund, Inc.
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(3) D. L. Babson Tax-Free Income Fund, Inc.
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(4) Babson-Stewart Ivory International Fund, Inc.
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
<PAGE>
(5) Shadow Stock Fund, Inc.
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
(6) Babson Enterprise Fund, Inc.
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(7) Babson Enterprise II Fund, Inc.
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 10 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(8) Babson Value Fund, Inc.
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 17 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(9) D. L. Babson Bond Trust
and Jones & Babson, Inc. dated
September 30, 1995.
Previously filed with Post-Effective
Amendment No. 99 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(f) Bonus or Profit Sharing Contracts
Not Applicable.
(g) Custodian Agreement between:
Registrants and
UMB Bank, N.A. dated
May 5, 1997
is filed herewith as
Exhibit No. EX99.23(g).
(h) Other Material Contracts:
(1) Transfer Agency Agreement between
David L. Babson Growth Fund, Inc.
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Amendment No. 77 to the Registration
Statment on Form N-1A on August 30, 1999.
(2) Transfer Agency Agreement between
D. L. Babson Money Market Fund, Inc.
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(3) Transfer Agency Agreement between
D. L. Babson Tax-Free Income Fund, Inc.
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Amendment No. 27 to the Registration
Statment on Form N-1A on August 30, 1999.
(4) Transfer Agency Agreement between
Babson-Stewart Ivory International Fund, Inc.
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
<PAGE>
(5) Transfer Agency Agreement between
Shadow Stock Fund, Inc.
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Amendment No. 17 to the Registration
Statment on Form N-1A on August 30, 1999.
(6) Transfer Agency Agreement between
Babson Enterprise Fund, Inc.
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(7) Transfer Agency Agreement between
Babson Enterprise II Fund, Inc.
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Amendment No. 10 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(8) Transfer Agency Agreement between
Babson Value Fund, Inc.
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Amendment No. 17 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(9) Transfer Agency Agreement between
D. L. Babson Bond Trust
and Jones & Babson, Inc. dated
October 31, 1994.
Previously filed with Post-Effective
Statement filed on Form N-1A on
Janaury 22, 1999.
(i) Opinion and Consent of Counsel as to the
Legality of the Securities Issued for:
(1) David L. Babson Growth Fund, Inc.
previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(2) D. L. Babson Money Market Fund, Inc.
previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(3) D. L. Babson Tax-Free Income Fund, Inc.
previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
<PAGE>
(4) Babson-Stewart Ivory International Fund, Inc.
previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(5) Shadow Stock Fund, Inc.
previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(6) Babson Enterprise Fund, Inc.
previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(7) Babson Enterprise II Fund, Inc.
previously filed with Post-Effective
Amendment No. 10 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(8) Babson Value Fund, Inc.
previously filed with Post-Effective
Amendment No. 19 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(9) D. L. Babson Bond Trust
previously filed with Post-Effective
Amendment No. 99 to Registration
Statement filed on Form N-1A on
Janaury 22, 1999.
(j) Other Opinions
(1) Consent of Independent Auditors for:
(A) David L. Babson Growth Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(1)(A).
(B) D. L. Babson Money Market Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(1)(B).
(C) D. L. Babson Tax-Free Income Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(1)(C).
(D) Babson-Stewart Ivory International
Fund, Inc. is filed herewith as
Exhibit No. EX99.23(j)(1)(D).
(E) Shadow Stock Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(1)(E).
(F) Babson Enterprise Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(1)(F).
(G) Babson Enterprise II Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(1)(G).
(H) Babson Value Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(1)(H).
(I) D. L. Babson Bond Trust
is filed herewith as
Exhibit No. EX99.23(j)(1)(I).
<PAGE>
(2) Power of Attorney for:
(A) David L. Babson Growth Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(2)(A).
(B) D. L. Babson Money Market Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(2)(B).
(C) D. L. Babson Tax-Free Income Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(2)(C).
(D) Babson-Stewart Ivory International
Fund, Inc. is filed herewith as
Exhibit No. EX99.23(j)(2)(D).
(E) Shadow Stock Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(2)(E).
(F) Babson Enterprise Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(2)(F).
(G) Babson Enterprise II Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(2)(G).
(H) Babson Value Fund, Inc.
is filed herewith as
Exhibit No. EX99.23(j)(2)(H).
(I) D. L. Babson Bond Trust
is filed herewith as
Exhibit No. EX99.23(j)(2)(I).
(k) Omitted Financial Statments
Not Applicable.
(l) Initial Capital Agreements
Not Applicable.
(m) Rule 12b-1 Plan
Not Applicable.
(n) Rule 18f-3 Plan
Not Applicable.
(p) The joint Code of Ethics of each Registrant and
the investment manager and underwriter, Jones &
Babson, Inc. is filed herewith as Exhibit
EX-99.23(p)(1).
(p) The Code of Ethics of the sub-advisor,
Kornitzer Capital Management, Inc. is filed
herewith as Exhibit No. EX-99.23(p)(2).
<PAGE>
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT:
None
ITEM 25. INDEMNIFICATION:
Under the terms of the Maryland General Corporation Law and
the Registrant's By-Laws, the Registrant shall indemnify any person who
was or is a director, officer, or employee of the Registrant 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 Registrant only as authorized in the
specific case upon a determination that indemnification of such person
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 Registrant 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 Registrant to any
director or officer of the Registrant for any liability to the
Registrant or shareholders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of duty.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.
The principal business of Jones & Babson, Inc. is the management of the
Babson and Buffalo families 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.
ITEM 27. PRINCIPAL UNDERWRITER:
(a) Jones & Babson, Inc., the only principal underwriter of the
Registrant, also acts as principal underwriter for:
David L. Babson Growth Fund, Inc.
D.L. Babson Money Market Fund, Inc.
D.L. Babson Tax-Free Income Fund, Inc.
Shadow Stock Fund, Inc.
Babson-Stewart Ivory International Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
Babson Value Fund, Inc.
D.L. Babson Bond Trust
UMB Scout Stock Fund, Inc.
UMB Scout Bond Fund, Inc.
UMB Scout Money Market Fund, Inc.
UMB Scout Tax-Free Money Market Fund, Inc.
UMB Scout Balanced Fund, Inc.
UMB Scout Regional Fund, Inc.
UMB Scout WorldWide Fund, Inc.
UMB Scout Capital Preservation Fund, Inc.
UMB Scout Kansas Tax-Exempt Bond Fund, Inc.
UMB Scout Technology Fund
UMB Scout Equity Fund
Buffalo Balanced Fund, Inc.
Buffalo Equity Fund, Inc.
Buffalo High Yield Fund, Inc.
Buffalo Small Cap Fund, Inc.
Buffalo USA Global Fund, Inc.
and AFBA Five Star Fund, Inc.
<PAGE>
(b) The tables below set forth certain information as to
the Underwriter's Directors, Officers, Partners and
Control Persons:
Name and Business Positions and Offices Positions and Offices
Address with Underwriter with the Registrant
Stephen S. Soden Chairman, President President and Director
BMA Tower and Director
700 Karnes Blvd.
Kansas City, MO 64108-3306
Giorgio Balzer Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Robert T. Rakich Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Edward S. Ritter Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
Robert N. Sawyer Director None
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
P. Bradley Adams Vice President and Vice Presdient and
BMA Tower Treasurer Treasurer
700 Karnes Blvd.
Kansas City, MO 64108-3306
Martin A. Cramer Legal and Regulatory Vice President and
700 Karnes Blvd. Affairs, Vice Pres. Secretary
Kansas City, MO and Secretary
64108-3306
Constance E. Martin Asst. Vice President Asst. Vice President
BMA Tower
700 Karnes Blvd.
Kansas City, MO 64108-3306
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS:
Each account, book or other document required to be
maintained by Section 31(a) of the Investment Company Act of 1940, as
amended and Rules (17 CFR 270-31a-1 to 31a-3) promulgated thereunder, is
in the physical possession of Jones and Babson, Inc., at BMA Tower, 700
Karnes Blvd., Kansas City, Missouri 64108-3306.
ITEM 29. MANAGEMENT SERVICES:
There are no management related service contracts not discussed in
Part A or Part B.
ITEM 30. 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, as
amended (the "1933 Act") and the Investment Company Act of 1940, as amended,
the Registrant certifies that it meets all of the requirments for
effectiveness of this Registration Statement under Rule 485(b) under the 1933
Act and has duly caused this Registration Statement to be signed on its behalf
by the undersigned, duly authorized, on the 27th day of October, 2000.
David L. Babson Growth Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
D.L. Babson Money Market Fund, Inc.
D.L. Babson Tax-Free Income Fund, Inc.
D.L. Babson Bond Trust
Babson Value Fund, Inc.
Shadow Stock Fund, Inc.
Babson-Stewart Ivory International Fund, Inc.
By /s/ Stephen S. Soden
Stephen S. Soden, Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and the date(s) indicated.
Signature Title Date
/s/ Stephen S. Soden President, Principal Executive October 27, 2000
Stephen S. Soden Officer and Director
/s/ Fracis C. Rood Director October 27, 2000
Francis C. Rood*
/s/ William H. Russell Director October 27, 2000
William H. Russell*
/s/ H. David Rybolt Director October 27, 2000
H. David Rybolt*
/s/ Richard J. Phelps Director October 27, 2000
Richard J. Phelps*
/s/ James T. Jensen Director October 27, 2000
James T. Jensen*
/s/ P. Bradley Adams Vice President and Principal October 27, 2000
P. Bradley Adams Financial and Accounting Officer
By: /s/ Stephen S. Soden
Attorney-in-Fact
(Pursuant to Power of Attorney)
<PAGE>
EXHIBIT INDEX
Exhibit Exhibit No.
------- -----------
EX-99.23(j) Consent of Counsel
EX-99.23(j)(1)(A) Consent of Independent Auditor
EX-99.23(j)(1)(B) Consent of Independent Auditor
EX-99.23(j)(1)(C) Consent of Independent Auditor
EX-99.23(j)(1)(D) Consent of Independent Auditor
EX-99.23(j)(1)(E) Consent of Independent Auditor
EX-99.23(j)(1)(F) Consent of Independent Auditor
EX-99.23(j)(1)(G) Consent of Independent Auditor
EX-99.23(j)(1)(H) Consent of Independent Auditor
EX-99.23(j)(1)(I) Consent of Independent Auditor
EX-99.23(j)(2)(A) Power of Attorney
EX-99.23(j)(2)(B) Power of Attorney
EX-99.23(j)(2)(C) Power of Attorney
EX-99.23(j)(2)(D) Power of Attorney
EX-99.23(j)(2)(E) Power of Attorney
EX-99.23(j)(2)(F) Power of Attorney
EX-99.23(j)(2)(G) Power of Attorney
EX-99.23(j)(2)(H) Power of Attorney
EX-99.23(j)(2)(I) Power of Attorney
