DLB FUND GROUP, 485BPOS, 1998-04-30

DLB FUND GROUP
485BPOS, 1998-04-30

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<PAGE> 1
File No. 33-82366
File No. 811-08690
As filed with the Securities and Exchange Commission

on April 30, 1998

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------

FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 /X/

POST-EFFECTIVE AMENDMENT NO. 8 /X/

AND/OR
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/

AMENDMENT NO. 10

THE DLB FUND GROUP
(Exact Name of Registrant as Specified in Charter)

One Memorial Drive, Cambridge, Massachusetts 02142
(Address of Principal Executive Office)

(617)225-3800
(Registrant's Telephone Number, Including Area Code)

Ronald E. Gwozdz with a copy to:
David L. Babson and Company Incorporated Gregory D. Sheehan, Esq.
One Memorial Drive Ropes & Gray
Cambridge, Massachusetts 02142 One International Place

(Name and Address of Agent for Service) Boston, Massachusetts 02110

It is proposed that this filing become effective (check appropriate box):
<TABLE>

<S> <C> <C>
/X/ Immediately upon filing pursuant to / / on (date) pursuant to paragraph (b)
paragraph (b)

/ / 60 days after filing pursuant to paragraph / / on (date) pursuant to paragraph (a)(1)
(a)(1)

/ / 75 days after filing pursuant to paragraph / / on (date) pursuant to paragraph (a)(2) of rule
(a)(2) 485.
</TABLE>

If appropriate, check the following box:

/ / This post-effective amendment designates a new effective date for a
previously-filed post-effective amendment.

This Post-Effective Amendment relates solely to the DLB Fixed Income
Fund, the DLB Global Small Capitalization Fund, the DLB Value Fund, the DLB Mid
Capitalization Fund, the DLB Global Bond Fund and the DLB Quantitative Equity
Fund. No information relating to any other series of the registrant is amended

<PAGE> 2

or superseded hereby.

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<PAGE> 3
THE DLB FUND GROUP
CROSS REFERENCE SHEET
FORM N-1A

Part A: Information Required in Prospectus

<TABLE>
<CAPTION>
Location in the
N-1A Registration Statement
Item No Item by Prospectus Heading
- ------- ---- ----------------------

<S> <C> <C>
1. Cover Page Cover Page

2. Synopsis "Shareholder Transaction and Fund Expenses"

3. Condensed Financial Information "Financial Highlights"

4. General Description of the "Organization and Capitalization of the Trust,"
Registrant "Investment Objectives and Policies and Associated
Risks" and Cover Page

5. Management of the Fund "Management of the Trust"

5A. Management's Discussion of Fund Not Applicable - Included in Annual Report
Performance

6. Capital Stock and Other Securities "Distributions," "Taxes" and "Shareholder Inquiries"

7. Purchase of Securities Being "Purchase of Shares" and "Determination of Net Asset
Offered Value"

8. Redemption or Repurchase "Redemption of Shares" and "Determination of Net Asset
Value"

9. Pending Legal Proceedings Not Applicable

</TABLE>

-3-
<PAGE> 4
Part B: Information Required in
Statement of Additional Information ("SAI")

<TABLE>
<CAPTION>
Location in the
N-1A Registration Statement
Item No Item by SAI Heading
- ------- ---- ----------------------

10. Cover Page Cover Page

11. Table of Contents "Table of Contents"

12. General Information and History Not Applicable

13. Investment Objective and Policies "Investment Objectives and Policies and Associated
Risks" in the Prospectus and "Investment
Restrictions," "Additional Investment Practices of the
Fixed Income Fund," "Additional Investment Practices
of the Global Bond Fund," and "Additional Investment
Practices of the Global Bond and Quantitative Equity
Funds-Futures and Options"

14. Management of the Registrant "Management of the Trust"

15. Control Persons and Principal "Description of the Trust
Holders of Securities and Ownership of Shares"

16. Investment Advisory and Other "Investment Advisory and
Services Other Services"

17. Brokerage Allocation "Portfolio Transactions"

18. Capital Stock and Other Securities "Description of the Trust" and "Ownership of Shares"

19. Purchase, Redemption and Pricing "Purchase of Shares" and "Redemption of Shares" in
of Securities Being Offered Prospectus and "Determination of Net Asset Value"

20. Tax Status "Income Dividends, Distributions and Tax Status"

21. Underwriters Not Applicable

22. Calculation of Performance Data "Investment Performance"

23 Financial Statements "Report of Independent Auditors and Financial
Statements"
</TABLE>

-4-
<PAGE> 5
PART C

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C of the Registration Statement.

-5-
<PAGE> 6
PROSPECTUS
THE DLB FUND GROUP
One Memorial Drive
Cambridge, Massachusetts 02142
(617) 225-3800

April 30, 1998

The DLB Fund Group (the "Trust") is an open-end management investment
company offering through this Prospectus four non-diversified portfolios with
different investment objectives and strategies (such portfolios are each
referred to as a "Fund," and, collectively, as the "Funds"). The Funds are
intended primarily to serve as investment vehicles for institutional investors.
Each Fund's investment manager is David L. Babson and Company Incorporated (the
"Manager").

The DLB FIXED INCOME FUND (the "Fixed Income Fund") seeks to achieve a
high level of current income consistent with preservation of capital through
investment in a portfolio of fixed income securities.

The DLB GLOBAL SMALL CAPITALIZATION FUND (the "Global Small Cap Fund")
seeks long-term capital appreciation through investment primarily in common
stocks of smaller foreign and domestic companies.

The DLB VALUE FUND (the "Value Fund") seeks long-term capital
appreciation primarily through investment in a portfolio of common stocks of
established companies.

The DLB MID CAPITALIZATION FUND (the "Mid Cap Fund") seeks long-term
capital appreciation primarily through investment in a portfolio of common
stocks of small to medium-size companies.

Shares of each Fund are sold to investors by the Trust. The minimum
initial investment in a Fund is $100,000, and the minimum for each subsequent
investment is $10,000.

This Prospectus concisely describes the information which investors
ought to know before investing in any of the Funds. Please read this Prospectus
carefully and keep it for further reference.

A Statement of Additional Information dated April 30, 1998 is available
at no charge by writing to the Trust, c/o David L. Babson and Company
Incorporated, Marketing Department, Attention: Maureen M. Bates, One Memorial
Drive, Cambridge, Massachusetts, 02142 or by telephoning (617) 225-3800. The
Statement of Additional Information, which contains more detailed information
about all of the Funds, has been filed with the Securities and Exchange
Commission and is incorporated by reference into this Prospectus.

- --------------------------------------------------------------------------------

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

<PAGE> 7
TABLE OF CONTENTS

PAGE

SHAREHOLDER TRANSACTION AND FUND EXPENSES.....................................3

FINANCIAL HIGHLIGHTS..........................................................7

INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS......................11

PURCHASE OF SHARES...........................................................17

REDEMPTION OF SHARES.........................................................18

DETERMINATION OF NET ASSET VALUE.............................................19

DISTRIBUTIONS................................................................19

TAXES ....................................................................20

MANAGEMENT OF THE TRUST......................................................21

PERFORMANCE INFORMATION......................................................22

ORGANIZATION AND CAPITALIZATION OF THE TRUST.................................22

SHAREHOLDER INQUIRIES........................................................23

-2-
<PAGE> 8
SHAREHOLDER TRANSACTION AND FUND EXPENSES

1. FIXED INCOME FUND

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (after fee waiver) (a)................... .20%
12b-1 Fees (b)........................................... 0
Other Expenses (after fee waiver) (a).................... .35%
----
Total Fund Operating Expenses (after fee waiver) (a)..... .55%

EXAMPLE:

<TABLE>
<S> <C> <C> <C> <C>
You would pay the following Years
expenses on a $1,000 investment,
assuming a 5% annual return 1 3 5 10
- - - --
with or without redemption at
the end of each period: $6 $18 $31 $69
</TABLE>

- ---------------

(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses for the current fiscal year to the extent that
the Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed .55% of the Fund's average daily
net assets. Therefore, so long as the Manager agrees to reduce its fee
and to bear certain expenses, total annual expenses of the Fund, other
than brokerage commissions and transfer taxes, will not exceed .55%.
Absent such agreement by the Manager to waive its fee and bear certain
expenses, management fees would be .40%, "Other Expenses" would be
.66% and "Total Fund Operating Expenses" would be 1.06%.

(b) The Fund has adopted a distribution and services plan pursuant to Rule
12b-1 that permits payments by the Fund at an annual rate of up to .50%
of the Fund's average net assets, but the Trustees do not currently
intend to implement such plan during the Fund's current fiscal year.
See "Purchase of Shares -- 12b-1 Plans."

-3-
<PAGE> 9
2. GLOBAL SMALL CAP FUND

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (after fee waiver) (a).......................... .80%
12b-1 Fees (b).................................................. 0
Other Expenses (after fee waiver) (a)........................... .70%
----
Total Fund Operating Expenses (after fee waiver) (a)............ 1.50%

EXAMPLE:

- ---------------

(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses for the current fiscal year to the extent that
the Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed 1.50% of the Fund's average
daily net assets. Therefore, so long as the Manager agrees to reduce
its fee and to bear certain expenses, total annual expenses of the
Fund, other than brokerage commissions and transfer taxes, will not
exceed 1.50%. Absent such agreement by the Manager to waive its fee and
bear certain expenses, management fees would be 1.00%, "Other Expenses"
would be 1.14% and "Total Fund Operating Expenses" would be 2.14%.

-4-
<PAGE> 10
3. VALUE FUND

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (after fee waiver) (a)......................... .35%
12b-1 Fees (b)................................................. 0
Other Expenses (after fee waiver) (a).......................... .45%
----
Total Fund Operating Expenses (after fee waiver) (a)........... .80%

EXAMPLE:
<TABLE>
<S> <C> <C> <C> <C>

You would pay the following Years
expenses on a $1,000 investment,
assuming a 5% annual return 1 3 5 10
- - - --
with or without redemption at
the end of each period: $8 $26 $44 $99
</TABLE>

- ---------------

(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses for the current fiscal year to the extent that
the Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed .80% of the Fund's average daily
net assets. Therefore, so long as the Manager agrees to reduce its fee
and to bear certain expenses, total annual expenses of the Fund, other
than brokerage commissions and transfer taxes, will not exceed .80%.
Absent such agreement by the Manager to waive its fee and bear certain
expenses, management fees would be .55%, "Other Expenses" would be .37%
and "Total Fund Operating Expenses" would be .92%.

-5-
<PAGE> 11
4. MID CAP FUND

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (after fee waiver) (a)......................... .30%
12b-1 Fees (b)................................................. 0
Other Expenses (after fee waiver) (a).......................... .60%
----
Total Fund Operating Expenses (after fee waiver) (a)........... .90%

EXAMPLE:

- ---------------

(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses for the current fiscal year to the extent that
the Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed .90% of the Fund's average daily
net assets. Therefore, so long as the Manager agrees to reduce its fee
and to bear certain expenses, total annual expenses of the Fund, other
than brokerage commissions and transfer taxes, will not exceed .90%.
Absent such agreement by the Manager to waive its fee and bear certain
expenses, management fees would be .60%, "Other Expenses" would be
.73% and "Total Fund Operating Expenses" would be 1.33%.

The purpose of the foregoing tables is to assist an investor in
understanding the various costs and expenses of each of the Funds that are borne
by holders of Fund shares. THE FIVE PERCENT ANNUAL RETURN AND EXPENSES USED IN
CALCULATING THE EXAMPLES ARE NOT REPRESENTATIONS OF PAST OR FUTURE PERFORMANCE
OR EXPENSES; ACTUAL PERFORMANCE AND/OR EXPENSES MAY BE MORE OR LESS THAN SHOWN.

-6-
<PAGE> 12
' FINANCIAL HIGHLIGHTS

The following tables, which present per share financial information for each of
the Funds, have been audited by Deloitte & Touche LLP, independent accountants,
whose report thereon is incorporated by reference into the Statement of
Additional Information relating to the Funds, and may be obtained by
shareholders. Additional performance information is contained in the annual
report for each of the Funds, which is available at no charge upon request.
These tables should be read in conjunction with the Funds' other audited
financial statements and related notes which are incorporated by reference into
the Statement of Additional Information.

1. FIXED INCOME FUND

Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 10.11 $ 10.26 $ 10.00
---------- ---------- ----------
Net investment income 0.42 0.53 0.28
Net realized and unrealized gain (loss) on investments 0.49 (0.15) 0.37
---------- ---------- ----------
Total from investment operations 0.91 0.38 0.65
---------- ---------- ----------

Less distributions declared to shareholders:
From net investment income(1) (0.41) (0.53) (0.28)
From net realized gain on investments -- -- (0.11)
---------- ---------- ----------
Total distributions declared to shareholders (0.41) (0.53) (0.39)
---------- ---------- ----------

Net asset value - end of period $ 10.61 $ 10.11 $ 10.26
========== ========== ==========
Total return 9.03% 3.70% 14.75%*

Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.55% 0.55% 0.55%*
Ratio of net investment income to average net assets 5.74% 6.36% 6.24%
Portfolio turnover 44% 65% 42%
Net assets at end of period (000 omitted) $ 32,155 $ 15,261 $ 5,325

The Manager has agreed with the Fund to reduce its
management fee and bear certain expenses, such that expenses
do not exceed 0.55% of average daily net assets on an
annualized basis. If the fee and expenses had been incurred
by the Fund and had 1995 expenses been limited to that
required by state securities laws then in effect, the net
investment income per share and ratios would have been:

Net investment income $ 0.38 $ 0.44 $ 0.19

Ratios (to average net assets):
Expenses 1.06% 1.66% 2.50%*
Net investment income 5.22% 5.25% 4.33%*
</TABLE>

- -------------

(1) Distributions in excess of net investment income for the year ended
December 31, 1996 were less than $0.01 per share.
* Annualized

-7-
<PAGE> 13
2. GLOBAL SMALL CAP FUND

<TABLE>
<CAPTION>
For the period
July 19, 1995
Year Ended Year Ended (commencement of
December 31, December 31, operations) to
1997 1996 December 31, 1995
------------- ------------ -----------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.19 $ 10.33 $ 10.00
------------- ------------ -----------------
Income from investment operations:
Net investment income 0.02 0.01 0.07
------------- ------------ -----------------
Net realized and unrealized gain on investments 0.50 1.01 0.33
------------- ------------ -----------------
Total from investment operations

0.52 1.02 0.40

Less distributions declared to shareholders:
From net investment income (0.01) (0.01) (0.07)
From net realized gain on investments (0.02) (0.11) --
In excess of net realized gain on investments (0.01) (0.04) --
Tax return of capital (0.40) -- --
------------- ------------ -----------------
Total distributions declared to shareholders (0.44) (0.16) 0.07
------------- ------------ -----------------

Net asset value - end of period $ 11.27 $ 11.19 $ 10.33
============= ============ =================

Total return 4.66% 9.85% 8.96%*

Ratios and Supplemental Data:
Ratio of expenses to average net assets 1.50% 1.50% 1.46%*
Ratio of net investment income to average net assets 0.22% 0.09% 1.46%*
Portfolio turnover 44% 22% 5%
Average commission rate paid(1) $ 0.0115 $ 0.01170 --
Net assets at end of period (000 omitted) $ 13,887 $ 12,586 $ 10,509

The Manager has agreed with the Fund to reduce its
investment management fee and bear certain expenses, such
that expenses do not exceed 1.50% of average daily net assets
on an annualized basis. If the fee and expenses had been
incurred by the Fund and had 1995 expenses been limited to
that required by state securities laws then in effect, the
net investment income (loss) per share and ratios would
have been:

Net investment income (loss) $ (0.05) $ (0.10) $ 0.02

Ratios (to average net assets):
Expenses 2.14% 2.36% 2.50%*
Net investment income (loss) (0.42)% (0.77)% 0.42%*
</TABLE>

- -------------

(1) For years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades
on which commissions are charged. Average commission rate paid is
computed by dividing the total dollar amount of commission paid during
the year by the total number of shares purchased and sold on which
commissions were charged.
* Annualized

-8-
<PAGE> 14
3. VALUE FUND

Income from investment operations:
Net investment income 0.15 0.16 0.09
Net realized and unrealized gain on investments 3.15 2.38 0.73
------------- ------------- -------------
Total from investment operations 3.30 2.54 0.82
------------- ------------- -------------

Less distributions declared to shareholders:
From net investment income (0.15) (0.16) (0.09)
From net realized gain on investments (0.70) (0.41) (0.15)
In excess of net realized gain on investments (0.07) (0.02) --
------------- ------------- -------------
Total distributions declared to shareholders (0.92) (0.59) (0.24)
Net asset value - end of period $ 14.91 $ 12.53 $ 10.58
============= ============= =============

Total return 26.35% 23.99% 18.64%*

Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.71% 0.80% 0.80%*
Ratio of net investment income to average net assets 1.40% 1.56% 2.02%*
Portfolio turnover 25% 23% 7%
Average commission rate paid(1) $ 0.05796 $ 0.05378 --
Net assets at end of period (000 omitted) $ 56,499 $ 19,228 $ 10,818

The Manager has agreed with the Fund to reduce its
management fee and bear certain expenses, such that expenses
do not exceed 0.80% of average daily net assets on an
annualized basis. If the fee and expenses had been incurred
by the Fund, the net investment income per share and ratios
would have been:

Net investment income $ 0.13 $ 0.09 $ 0.02

Ratios (to average net assets):
Expenses 0.92% 1.50% 2.43%*
Net investment income 1.19% 0.86% 0.40%*
</TABLE>

- -------------

(1) For years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades
on which commissions are charged. Average commission rate paid is
computed by dividing the total dollar amount of commissions paid during
the year by the total number of shares purchased and sold on which
commissions were charged.

* Annualized

-9-
<PAGE> 15
4. MID CAP FUND

<TABLE>
<CAPTION>
For the period
July 25, 1995
Year Ended Year Ended (commencement of
December 31, December 31, operations) to
1997 1996 December 31, 1995
------------ --------------- -------------------
<S> <C> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.51 $ 10.75 $ 10.00
----------- ------------- -------------
Income from investment operations:
Net investment income 0.08 0.15 0.08
Net realized and unrealized gain on investments 3.72 1.44 0.84
----------- ------------- -------------
Total from investment operations 3.80 1.59 0.92
----------- ------------- -------------

Less distributions declared to shareholders:
From net investment income(1) (0.08) (0.15) (0.08)
From net realized gain on investments(2) (1.04) (0.68) (0.09)
----------- ------------- -------------
Total distributions declared to shareholders (1.12) (0.83) (0.17)
-------------
Net asset value - end of period $ 14.19 $ 11.51 $ 10.75
=========== ============= =============

Total return 32.95% 14.75% 21.17%*

Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.90% 0.90% 0.90%*
Ratio of net investment income to average net assets 0.78% 1.28% 1.90%
Portfolio turnover 32% 25% 6%
Average commission rate paid(3) $ 0.05262 $ 0.05270 --
Net assets at end of period (000 omitted) $ 27,358 $ 13,690 $ 10,929

The Manager has agreed with the Fund to reduce its
management fee and bear certain expenses, such that expenses
do not exceed 0.90% of average daily net assets on an
annualized basis. If the fee and expenses had been incurred
by the Fund and had 1995 expenses been limited to that
required by state securities laws then in effect, the net
investment income per share and ratios would have been:

Net investment income $ 0.04 $ 0.05 $ 0.01

Ratios (to average net assets):
Expenses 1.33% 1.77% 2.50%*
Net investment income 0.36% 0.41% 0.32%*
</TABLE>

- -------------

(1) Distributions in excess of net investment income for the year ended
December 31, 1996 were less than $0.01 per share.

(2) Distributions in excess of net realized gain on investments for the
year ended December 31, 1996 were less than $0.01 per share.

(3) For years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades
on which commissions are charged. Average commission rate paid is
computed by dividing the total dollar amount of commissions paid during
the year by the total number of shares purchased and sold on which
commissions were charged.

* Annualized

-10-
<PAGE> 16
INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS

FIXED INCOME FUND

The Fixed Income Fund's investment objective is to achieve a high level
of current income consistent with preservation of capital through investment in
a portfolio of fixed income securities.

The Manager will pursue the Fixed Income Fund's objective by investing
the Fund's assets primarily in publicly traded domestic fixed income securities,
including U.S. Treasury and agency obligations, mortgage-backed and asset-backed
securities and corporate debt securities. The Fund will also invest in other
fixed income markets, such as corporate private placements, directly-placed
mortgage obligations and foreign currency denominated bonds. Substantially all
(but no less than 65%) of the Fund's total assets will at all times be invested
in fixed income securities. Pending investment and reinvestment in fixed income
securities, the Manager may invest the Fund's assets in money market
instruments. Allocations are made among a wide array of market sectors, such as
U.S. Treasury and agency obligations, corporate securities, mortgages and
mortgage-backed securities, private placement securities and non-U.S. dollar
denominated securities, based on the relative attractiveness of such sectors.
Following these sector allocations, the Manager will purchase those securities
deemed attractively valued in the desired sectors. The Fund may invest in any
fixed income security, including preferred stocks. The Fund may also hold a
portion of its assets in cash or money market instruments.

PORTFOLIO DURATION AND MATURITY. The Fund's portfolio will generally
have an average dollar weighted portfolio maturity of five to twelve years and a
duration of no less than three years and no more than ten years (excluding
short-term investments). 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 Fund's portfolio
may include securities with maturities and durations outside of these ranges.

PORTFOLIO QUALITY. The Fund may invest in any security that is rated
investment grade at the time of purchase (i.e., at least Baa as determined by
Moody's Investors Service, Inc. ("Moody's") or BBB as determined by Standard &
Poor's ("S&P")), or in any unrated security that the Manager determines to be of
comparable quality. Securities rated Baa by Moody's or BBB by S&P and comparable
unrated securities have speculative characteristics, and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments on such obligations than in the case of
higher- rated securities. In the event that any security held by the Fund ceases
to be of investment grade quality, the Fund will not be obligated to dispose of
such security and may continue to hold the obligation if, in the opinion of the
Manager, such investment is considered appropriate under the circumstances.
However, if more than 5% of the Fund's net assets are below investment grade
quality, the Manager will dispose of such securities as are necessary to reduce
such holdings to 5% or less.

INTEREST RATE RISK. The values of fixed income securities generally
vary inversely to changes in prevailing interest rates. Investments in lower
quality fixed income securities generally provide greater income than
investments in higher-rated securities but are subject to greater market
fluctuations and risks of loss of income and principal than are higher-rated
securities. Fluctuations in the value of portfolio securities will not affect
interest income on existing portfolio securities but will be reflected in the
Fund's net asset value.

MORTGAGE-BACKED AND OTHER ASSET-BACKED SECURITIES. The Fund may invest
in mortgage-backed and other asset-backed securities issued by the U.S.
Government and its agencies and instrumentalities and by non- governmental
issuers. Interest and principal payments (including prepayments) on the
mortgages underlying

-11-
<PAGE> 17
mortgage-backed securities are passed through to the holders of the
mortgage-backed security. Prepayments occur when the mortgagor on an individual
mortgage prepays the remaining principal before the mortgage's scheduled
maturity date. As a result of the pass-through of prepayments of principal on
the underlying securities, mortgage-backed securities are often subject to more
rapid prepayment of principal than their stated maturity would indicate. Because
the prepayment characteristics of the underlying mortgages vary, there can be no
certainty as to the predicted yield or average life of a particular issue of
pass-through certificates. Prepayments are important because of their effect on
the yield and price of the securities. During periods of declining interest
rates, such prepayments can be expected to accelerate and the Fund would be
required to reinvest the proceeds at the lower interest rates then available. In
addition, prepayments of mortgages which underlie securities purchased at a
premium could result in capital losses because the premium may not have been
fully amortized at the time the obligation was prepaid. As a result of these
principal payment features, the values of mortgage-backed securities generally
fall when interest rates rise, but their potential for capital appreciation in
periods of falling interest rates is limited because of the prepayment feature.
The mortgage-backed securities purchased by the Fund may include adjustable rate
instruments. See "Adjustable Rate Securities" below.

The Fund may also invest in asset-backed securities such as securities
backed by pools of automobile loans, educational loans and credit card
receivables, both secured and unsecured. These assets are generally held by a
trust and payments of principal and interest or interest only are passed through
to certificate holders. The underlying assets are subject to prepayment, which
may reduce the overall return to certificate holders. Nevertheless, principal
repayment rates tend not to vary much with interest rates and the short-term
nature of the assets tends to dampen the impact of any change in the prepayment
level. Certificate holders may also experience delays in payment on the
certificates if the full amounts due on the underlying assets are not realized
by the trust because of unanticipated legal or administrative costs of enforcing
the contracts or because of depreciation or damage to the collateral (usually
automobiles) securing certain contracts, or other factors.

In addition to the risks described above, mortgage-backed and
asset-backed securities without a U.S. Government guarantee involve risk of loss
of principal if the obligors of the underlying obligations default in payment of
the obligations.

COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). The Fund may invest in
CMOs. A CMO is a security backed by a portfolio of mortgages or mortgage-backed
securities held under an indenture. The issuer's obligation to make interest and
principal payments is secured by the underlying portfolio of mortgages or
mortgage-backed securities. CMOs are issued in multiple classes or series which
have different maturities representing interests in some or all of the interest
or principal on the underlying collateral or a combination thereof. CMOs of
different classes are generally retired in sequence as the underlying mortgage
loans in the mortgage pool are repaid. In the event of sufficient early
prepayments on such mortgages, the class or series of CMO first to mature
generally will be retired prior to its stated maturity. Thus, the early
retirement of a particular class or series of CMO held by the Fund would have
the same effect as the prepayment of mortgages underlying a mortgage-backed
pass-through security. CMOs also include securities ("Residuals") representing
the interest in any excess cash flow and/or the value of any collateral
remaining after the issuer has applied cash flow from the underlying mortgages
or mortgage-backed securities to the payment of principal of, and interest on,
all other CMOs and the administrative expenses of the issuer. Due to uncertainty
as whether any excess cash flow or the underlying collateral will be available,
there can be no assurances that Residuals will ultimately have value.

ADJUSTABLE RATE SECURITIES. The Fund may invest in adjustable rate
securities which are securities that have interest rates that are reset at
periodic intervals, usually by reference to some interest rate index or market
interest rate. They may be U.S. Government securities or securities of other
issuers. Some adjustable rate

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<PAGE> 18
securities are backed by pools of mortgage loans. Although the rate adjustment
feature may act as a buffer to reduce sharp changes in the value of adjustable
rate securities, these securities are still subject to changes in value based on
changes in market interest rates or changes in the issuer's creditworthiness.
Because the interest rate is reset only periodically, changes in the interest
rates on adjustable rate securities may lag changes in prevailing market
interest rates. Also, some adjustable rate securities (or the underlying
mortgages) are subject to caps or floors that limit the maximum change in
interest rate during a specified period or over the life of the security.
Because of the resetting of interest rates, adjustable rate securities are less
likely than non-adjustable rate securities of comparable quality and maturity to
increase significantly in value when market interest rates fall.

OTHER INVESTMENT POLICIES. The Fund may also invest a limited portion
of its net assets (in all cases less than 5%) in IO/PO strips, zero coupon
securities, indexed securities, loans and other direct debt instruments, reverse
repurchase agreements and dollar roll agreements. See the Statement of
Additional Information for a description of each of these investment practices
and the related risks.

See "Investment Objectives And Policies and Associated Risks--General"
for additional information.

GLOBAL SMALL CAP FUND

The investment objective of the Global Small Cap Fund is to seek
long-term capital appreciation through investment primarily in common stocks of
foreign and domestic companies with market capitalizations at the time of
investment by the Fund of up to $1.5 billion. Such companies are referred to
herein as "small capitalization companies." Current income is only an incidental
consideration in selecting investments for the Fund. The Fund is designed for
investors seeking above-average capital growth potential through a global
portfolio of common stocks.

Under normal circumstances, substantially all (but no less than 65%) of
the Fund's total assets will at all times be invested in common stocks of small
capitalization companies. Such companies may present greater opportunities for
capital appreciation because of high potential earnings growth, but may also
involve greater risk. Small capitalization companies tend to be smaller than
other companies and may be dependent upon a single proprietary product or market
niche. They may have limited product lines, markets or financial resources or
may depend on a limited management group. Typically, small capitalization
companies have fewer securities outstanding, which may be less liquid than
securities of larger companies. Their common stock and other securities may
trade less frequently and in limited volume. The securities of small
capitalization companies are generally more sensitive to purchase and sale
transactions; therefore, the prices of such securities tend to be more volatile
than the securities of larger companies. As a result, the securities of small
capitalization companies may change in value more than those of larger, more
established companies.

In seeking capital appreciation, the Fund follows a global investment
strategy of investing primarily in common stocks traded in securities markets
located in a number of foreign countries and in the United States. The Fund
normally expects to invest approximately 40% to 60% of its assets outside the
United States and the remaining 60% to 40% of its assets inside the United
States. The weighting of the Fund's portfolio between foreign and domestic
investments will depend upon prevailing conditions in foreign and domestic
markets. Under certain market conditions, the Fund may invest more than 60% of
its assets either outside or inside the United States. In addition, the Fund
will always invest at least 65% of its total assets in at least three different
countries, one of which will be the United States. The selection of the Fund's
domestic investments will generally be based on value factors, while the
selection of the Fund's foreign investments will generally be based on growth
factors. In certain foreign countries, particularly the newly industrializing
countries described below, the Fund's market capitalization guideline of $1.5
billion may include companies which, when viewed

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<PAGE> 19
on a relative basis, are not considered "small cap" in the particular country.
The Fund may hold a portion of its assets in cash or money market instruments.

Consistent with the above policies, the Fund may at times invest more
than 25% of its assets in the securities of issuers located in a single country.
At such times, the Fund's performance will be directly affected by political,
economic, market and exchange rate conditions in such country. When the Fund
invests a substantial portion of its assets in a single country it is subject to
greater risk of adverse changes in any of these factors with respect to such
country than a Fund which does not invest as heavily in the country.

The Fund may invest up to 15% of its assets in stocks traded in the
securities markets of newly industrializing countries in Asia, Latin America,
the Middle East, Southern Europe, Eastern Europe (including the former Soviet
Union) and Africa. Investment in such countries involves a greater degree of
risk than investment in industrialized countries, as discussed below. In order
to gain exposure to certain foreign countries which prohibit or impose
restrictions on direct investment, the Fund may (subject to any applicable
regulatory requirements) invest in foreign and domestic investment companies and
other pooled investment vehicles that invest primarily or exclusively in such
countries. The Fund's investment through such vehicles will generally involve
the payment of indirect expenses (including advisory fees) which the Fund does
not incur when investing directly.

The Manager believes that the securities markets of many nations move
relatively independently of one another because business cycles and other
economic or political events that influence one country's securities markets may
have little effect on securities markets in other countries. By investing in a
global portfolio, the Fund attempts to reduce the risks associated with
investing in the economy of only one country. The countries that the Manager or
Babson-Stewart Ivory International, the Fund's sub-adviser (the "Sub-Adviser"),
believes offer attractive opportunities for investment may change from time to
time. The Fund will invest only in exchange-traded securities and securities
traded through established over-the-counter trading systems which the Manager or
the Sub-Adviser believes provide comparable liquidity to exchange-traded
securities.

Foreign investments can involve risks, however, that may not be present
in domestic securities. Because foreign securities are normally denominated and
traded in foreign currencies, the value of the assets of the Fund may be
affected favorably or unfavorably by changes in currency rates and exchange
control regulations. There may be less information publicly available about a
foreign company than about a U.S. company, and foreign companies are not
generally subject to accounting, auditing and financial reporting standards and
practices comparable to those in the United States. The securities of some
foreign companies are less liquid and at times more volatile than securities of
comparable U.S. companies. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement procedures and
trade regulations may involve certain risks (such as delay in payment or
delivery of securities or in the recovery of the Fund's assets held abroad) and
expenses not present in the settlement of domestic investments.

In addition, with respect to certain foreign countries, there is a
possibility of expropriation of assets, imposition of currency exchange
controls, confiscatory taxation, political or financial instability and
diplomatic developments which could affect the value of investments in those
countries. In certain countries, legal remedies available to investors may be
more limited than those available with respect to investments in the United
States or other countries. The laws of some foreign countries may limit the
Fund's ability to invest in securities of certain issuers located in those
countries. Finally, special tax considerations apply to foreign securities.

See "Investment Objectives and Policies and Associated Risks--General"
for additional information.

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<PAGE> 20
VALUE FUND

The Value Fund's investment objective is to seek long-term capital
appreciation primarily through investment in a portfolio of common stocks of
established companies. Strong consideration is given to common stocks whose
current prices do not adequately reflect, in the opinion of the Manager, the
true value of the underlying company in relation to earnings, dividends and/or
assets.

The Fund will ordinarily invest in the securities of companies which
are listed on national securities exchanges or on the National Association of
Securities Dealers Automated Quotation System. The Manager will select which
issues to invest in based on its assessment of whether the issue is likely to
provide favorable capital appreciation over the long-term.

The Fund's investments may be made in companies which are currently of
below average quality but which, in the opinion of the Manager, are undervalued
by the market and offer attractive opportunities for long-term capital
appreciation. Such companies involve a greater degree of investment risk than
companies of average or above average quality, including the risk of a total
loss in the event of insolvency or bankruptcy. Investment quality is evaluated
using fundamental analysis emphasizing an issuer's historic financial
performance, balance sheet strength, management capability and competitive
position. Various valuation parameters are examined to determine the
attractiveness of individual securities. The Fund may also hold a portion of
its assets in cash or money market instruments.

See "Investment Objectives And Policies and Associated Risks--General"
for additional information.

MID CAP FUND

The investment objective of the Mid Cap Fund is to seek long-term
capital appreciation primarily through investment in small to medium-size
companies. Such companies are referred to herein as "mid capitalization
companies," which for these purposes means companies with a market
capitalization at the time of investment by the Fund of between $400 million and
$2 billion. Current income is only an incidental consideration. Strong
consideration is given to common stocks of mid capitalization companies whose
current prices do not adequately reflect, in the opinion of the Manager, the
ongoing business value of the underlying company.

The Mid Cap Fund invests primarily in common stocks. Under normal
circumstances, substantially all (but no less than 65%) of its total assets will
be invested in the common stock of mid capitalization companies. Such companies
may present greater opportunities for capital appreciation because of high
potential earnings growth, but may also involve greater risk. Mid capitalization
companies, when compared to larger capitalization issuers, may be more dependent
upon a single proprietary product or market niche, may have limited product
lines, markets or financial resources, or may depend on a limited management
group. Typically, mid capitalization companies have fewer securities outstanding
and are less liquid than securities of larger companies. Their common stock and
other securities may trade less frequently and in limited volume. The securities
of mid capitalization companies are generally more sensitive to purchase and
sale transactions; therefore, the prices of such securities tend to be more
volatile than the securities of larger companies. As a result, the securities of
mid capitalization companies may change in value more than those of larger, more
established companies. The Fund generally intends to stay fully invested in
equity securities, although the Fund may hold a portion of its assets in cash or
money market instruments.

See "Investment Objectives and Policies and Associated Risks--General"
for additional information.

GENERAL

ILLIQUID SECURITIES. Each of the Funds may purchase "illiquid
securities," which are securities that are not readily marketable, including
securities whose disposition is restricted by contract or under federal
securities laws, so long as no more than 15% of a Fund's net assets would be
invested in such illiquid securities. A Fund may not be able to dispose of such
securities in a timely fashion and for a fair price, which could result in
losses to the Fund. In addition, illiquid

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<PAGE> 21
securities. A Fund may not be able to dispose of such securities in a timely
fashion and for a fair price, which could result in losses to the Fund. In
addition, illiquid securities are generally more difficult to value.

PORTFOLIO TURNOVER. Although portfolio turnover is not a limiting
factor with respect to investment decisions for the Funds, the Funds expect to
experience relatively low portfolio turnover rates. It is not anticipated that
under normal circumstances the annual portfolio turnover rate of any Fund will
exceed 100%. However, in any particular year, market conditions may result in
greater rates than are currently anticipated. Portfolio turnover involves
brokerage commissions and other transaction costs, which will be borne directly
by the relevant Fund, and could involve realization of capital gains that would
be taxable when distributed to shareholders. To the extent that portfolio
turnover results in realization of net short-term capital gains, such gains are
ordinarily taxed to shareholders at ordinary income tax rates. Portfolio
turnover rates for each Fund are shown in the section "Financial Highlights."
See "Taxes" below and "Portfolio Transactions" in the Statement of Additional
Information for additional information. The tax consequences of portfolio
transactions may be a secondary consideration for tax-exempt investors.

REPURCHASE AGREEMENTS. Each Fund may enter into repurchase agreements.
Under repurchase agreements a Fund acquires a security for cash and obtains a
simultaneous commitment from the seller to repurchase the security at an
agreed-upon price and date. The resale price exceeds the acquisition price and
reflects an agreed-upon market rate unrelated to the coupon rate on the
purchased security. Such transactions afford an opportunity for a Fund to earn a
return on temporarily available cash at no market risk, although there is a risk
that the seller may default on its obligation to pay the agreed-upon sum on the
redelivery date. Such a default may subject a Fund to expenses, delays and risks
of loss. Repurchase agreements entered into with foreign brokers, dealers and
banks involve additional risks similar to those of investing in foreign
securities. For a discussion of these risks, see "Global Small Cap Fund," above.

FIRM COMMITMENTS. Each Fund may enter into firm commitment agreements
for the purchase of securities at an agreed-upon price on a specified future
date. A Fund will only enter into firm commitment arrangements with parties
which the Manager or Sub-Adviser determines present minimal credit risks. A Fund
will maintain, in a segregated account with its custodian, cash or securities in
an amount equal to the Fund's obligations under firm commitment agreements. The
Fund bears the risk that the other party will fail to satisfy its obligations to
the Fund. Such a default may subject the Fund to expenses, delays and risks of
loss.

LOANS OF PORTFOLIO SECURITIES. Each Fund may make secured loans of
portfolio securities on up to 33 1/3% of the Fund's total assets. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. However, such loans will be
made only to parties that are believed by the Manager or the Sub-Adviser to be
of relatively high credit standing. Securities loans are made pursuant to
agreements requiring that loans be continuously secured by collateral in cash or
U.S. Government securities at least equal at all times to the market value of
the securities lent. The borrower pays to the lending Fund an amount equal to
any dividends or interest received on the securities lent. The Fund may invest
the cash collateral received or may receive a fee from the borrower. Although
voting rights or rights to consent with respect to the loaned securities pass to
the borrower, the Fund retains the right to call the loans at any time on
reasonable notice. The Fund may also call such loans in order to sell the
securities involved. The Fund pays various fees in connection with such loans
including shipping fees and reasonable custodian and placement fees.

DERIVATIVES. Certain of the instruments in which the Funds may invest,
such as mortgage-backed securities and indexed securities, are considered to be
"derivatives." Derivatives are financial instruments whose value depends upon,
or is derived from, the value of an underlying asset, such as a security or
currency. The use of such instruments may result in a higher amount of
short-term capital gains (taxed at ordinary income tax rates) than would result
if the Funds did not use such instruments. Further information about these
instruments and the risks involved in their use is included elsewhere in this
prospectus and in the Statement of Additional Information.

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<PAGE> 22

RISKS OF NON-DIVERSIFICATION. As a non-diversified fund, each Fund may
invest a relatively high percentage of its assets in the securities of
relatively few issuers, rather than invest in the securities of a large number
of issuers merely to satisfy diversification requirements. Investment in the
securities of a limited number of issuers may increase the risk of loss to a
Fund should there be a decline in the market value of any one portfolio
security. Investment in a non-diversified fund therefore entails greater risks
than investment in a "diversified" fund.

CHANGES TO INVESTMENT OBJECTIVES. The investment objective and (except
for policies identified as "fundamental" in this Prospectus or the Statement of
Additional Information) policies of each Fund may be changed by the Trustees
without shareholder approval. Any such change may result in a Fund having an
investment objective and policies different from the objective and policies
which a shareholder considered appropriate at the time of such shareholder's
investment in the Fund. Shareholders of the relevant Fund will be notified of
any changes in a Fund's investment objective or policies through a revised
prospectus or other written communication.

PURCHASE OF SHARES

Shares of each Fund may be purchased directly from the Trust on any day
when the New York Stock Exchange is open for business (a "business day"). The
minimum for an initial investment in a Fund is $100,000, and the minimum for
each subsequent investment is $10,000. The purchase price of a share of each
Fund is the net asset value next determined after a purchase order is received
in good order. No sales charge is imposed on purchases of Fund shares.

Shares of each Fund may be purchased either (i) in exchange for common
stocks on deposit at The Depository Trust Company ("DTC") or appropriate fixed
income securities, subject to the determination by the Manager that the
securities to be exchanged are acceptable, (ii) in cash (i.e., by wire transfer)
or (iii) by a combination of such securities and cash. In all cases, the Manager
reserves the right to reject any particular investment. Securities accepted by
the Manager in exchange for Fund shares will be acquired for investment only and
not for resale and will be valued as set forth under "Determination of Net Asset
Value" (generally the last quoted sale price) as of the time of the next
determination of net asset value after such acceptance. All dividends, interest,
subscription or other rights which are reflected in the market price of accepted
securities at the time of valuation become the property of the relevant Fund and
must be delivered to the Trust upon receipt by the investor from the issuer. A
gain or loss for federal income tax purposes may be realized by investors
subject to Federal income taxation upon the exchange, depending upon the
investor's basis in the securities tendered.

The Manager will not approve the acceptance of securities in exchange
for Fund shares unless (1) the Manager, in its sole discretion, believes the
securities are appropriate investments for the Fund; (2) the investor represents
and agrees that all securities offered to the Fund are not subject to any
restrictions upon their sale by the Fund under the Securities Act of 1933, or
otherwise; and (3) the securities may be acquired under the investment
restrictions applicable to the relevant Fund. Investors interested in purchases
through exchange should telephone the Manager at (617) 225-3800, Attn: Maureen
M. Bates.

Investors should call the offices of the Trust before attempting to
place an order for Fund shares. The Trust reserves the right at any time to
reject an order.

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<PAGE> 23

In most cases, if the consideration is not received by the Trust before the
relevant deadline, the purchase order is not considered to be in good order and
the purchase order and consideration are required to be resubmitted on the
following business day, unless Investors Bank & Trust Company can credit the
consideration to the account for a specific Fund.

All federal funds must be transmitted to Investors Bank & Trust Company
to Account No. 777777722 for the account of the specific Fund.

"Federal funds" are monies credited to Investors Bank & Trust Company's
account with the Federal Reserve Bank of Boston.

Purchases will be made in full and fractional shares of each Fund
calculated to three decimal places. The Trust will send to shareholders written
confirmation (including a statement of shares owned) at the time of each
transaction.

12B-1 PLANS. The Trust has adopted a distribution and services plan
(each a "Plan") for each Fund under Rule 12b-1 of the Investment Company Act of
1940, but the Trustees do not intend to implement such Plans during the Trust's
current fiscal year. The purposes of each Plan if implemented would be to
compensate and/or reimburse investment dealers and other persons for services
provided and expenses incurred in promoting sales of shares, reducing
redemptions or improving services provided to shareholders by such dealers and
other persons. Each Plan would permit payments by a Fund for such purposes at an
annual rate of up to .50% of the Fund's average daily net assets, subject to the
authority of the Trustees to reduce the amount of payments or to suspend the
Plan for such periods as they may determine. Subject to these limitations, the
amount of payments under each Plan and the specific purposes for which they are
made would be determined by the Trustees. At present, the Trustees have no
intention of implementing any Plan.

REDEMPTION OF SHARES

Shares of each Fund may be redeemed on any business day in cash or in
kind. The redemption price is the net asset value per share next determined
after receipt of the redemption request in good order. There is no redemption
fee for any of the Funds. Cash payments generally will be made by transfer of
Federal funds for payment into the investor's account the next business day
following the redemption request. Redemption requests should be sent to
Investors Bank & Trust Company. In order to help facilitate the timely payment
of redemption proceeds, it is recommended that investors telephone the Manager
at (617) 225-3800, Attn: Maureen M. Bates, at least two days prior to submitting
a request.

Payment on redemption will be made as promptly as possible and in any
event within seven days after the request for redemption is received by the
Trust in good order. A redemption request is in good order if it includes the
correct name in which shares are registered, the investor's account number and
the number of shares or the dollar amount of shares to be redeemed and if it is
signed correctly in accordance with the form of registration. Persons acting in
a fiduciary capacity, or on behalf of a corporation, partnership or trust, must
specify, in full, the capacity in which they are acting. In-kind redemptions, as
described below, will be transferred and delivered as directed by the investor.

If the Manager determines, in its sole discretion, that it would be
detrimental to the best interests of the remaining shareholders of a Fund to
make payment wholly or partly in cash, the Fund may pay the redemption price in
whole or in part by a distribution in kind of readily marketable securities held
by the Fund in lieu of cash. Securities used to redeem Fund shares in kind will
be valued in accordance with the relevant

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<PAGE> 24
Fund's procedures for valuation described under "Determination of Net Asset
Value." Investors generally will incur brokerage charges on the sale of any such
securities so received in payment of redemptions.

When opening an account with the Trust, shareholders will be required
to designate the account(s) to which funds or securities may be transferred upon
redemption. Designation of additional accounts and any change in the accounts
originally designated must be made in writing with the signature guaranteed by a
commercial bank, a member firm of a domestic securities exchange or one of
certain other financial institutions.

Each Fund may suspend the right of redemption and may postpone payment
for more than seven days when the New York Stock Exchange is closed for other
than weekends or holidays, or if permitted by the rules of the Securities and
Exchange Commission during periods when trading on the Exchange is restricted or
during an emergency which makes it reasonably impracticable for the Fund to
dispose of its securities or fairly to determine the value of the net assets of
the Fund, or during any other period permitted by the Securities and Exchange
Commission for the protection of investors.

DETERMINATION OF NET ASSET VALUE

The net asset value of a share of each Fund is determined at 4:15 p.m.,
Eastern time, on each day on which the New York Stock Exchange is open. The net
asset value per share for a Fund is determined by dividing the total value of
the Fund's portfolio investments and other assets, less any liabilities, by the
total outstanding shares of the Fund. Portfolio securities (including options
and futures contracts) for which market quotations are available are valued at
the last quoted sale price, or, if there is no such reported sale, at the
closing bid price. Securities traded in the over-the-counter market are valued
at the most recent bid price as obtained from one or more dealers that make
markets in the securities. Portfolio securities that are traded both in the
over-the-counter market and on one or more stock exchanges are valued according
to the broadest and most representative market. Unlisted securities for which
market quotations are not readily available are valued at the most recent quoted
bid price. Short term debt securities with a remaining maturity of 60 days or
less will be valued at amortized cost, unless conditions dictate otherwise.
Illiquid securities or restricted securities will be valued at fair value based
on information supplied by a broker. Other assets for which no quotations are
readily available are valued at fair value as determined in good faith in
accordance with procedures adopted by the Trustees of the Trust. Determination
of fair value will be based upon such factors as are deemed relevant under the
circumstances, including the financial condition and operating results of the
issuer, recent third party transactions (actual or proposed) relating to such
securities and, in extreme cases, the liquidation value of the issuer.

Because of time zone differences, foreign exchanges and securities
markets will usually be closed prior to the time of the closing of the New York
Stock Exchange and the value of foreign securities will be determined as of the
closing of such exchanges and securities markets. Events affecting the values of
such foreign securities, however, may occasionally occur between the closings of
such exchanges and securities markets and the time the Fund determines its net
asset value. If an event materially affecting the value of such foreign
securities occurs during such period, then such securities will be valued at
fair value as determined in good faith in accordance with procedures adopted by
the Trustees.

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<PAGE> 25
denominated. The value of foreign securities is converted into U.S. dollars at
the rate of exchange prevailing at the time of determination of net asset value.

DISTRIBUTIONS

Each Fund intends to pay out as dividends substantially all of its net
investment income (which comes from dividends and any interest it receives from
its investments and net short-term capital gains). Each Fund also intends to
distribute substantially all of its net long-term capital gains, if any, after
giving effect to any available capital loss carryover. Each Fund's present
policy is to declare and pay distributions of its dividends and interest at
least annually. Each Fund also intends to distribute net short-term capital
gains and net long-term capital gains at least annually.

All dividends and/or distributions will be paid in shares of the
relevant Fund, at net asset value, unless the shareholder elects to receive
cash. Shareholders may make this election by marking the appropriate box on the
application form or by writing to Investors Bank & Trust Company.

TAXES

The following is a general summary of the federal income tax
consequences for the Funds and shareholders who are U.S. citizens or residents
or domestic corporations. The last paragraph of this section contains
information relevant to foreign investors. Shareholders should consult their own
tax advisors about the tax consequences of investments in a Fund in light of
their particular tax situations. Shareholders should also consult their own tax
advisors about consequences under foreign, state, local or other applicable tax
laws.

Each Fund is treated as a separate taxable entity for federal income
tax purposes. Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended. By
so qualifying, a Fund itself will not pay federal income tax on the income and
gain distributed annually to its shareholders. Distributions of ordinary income
and short-term capital gains, whether received in cash or reinvested shares,
will be taxable as ordinary income to shareholders subject to federal income
tax. Designated distributions of net gains on capital assets held (i) for more
than one year but not more than 18 months and (ii) for more than 18 months are
taxable as such, regardless of how long a shareholder may have owned shares in
the Fund or whether such distributions are received in cash or in reinvested
shares. Any loss recognized on the sale or disposition of shares held for six
months or less will be treated as long-term capital loss to the extent of any
long-term capital gain distributions received by a shareholder with respect to
those shares. A distribution paid to shareholders in January generally is deemed
to have been received by shareholders on December 31 of the preceding year, if
the distribution was declared and payable to shareholders of record on a date in
October, November or December of that preceding year. The Trust will provide
federal tax information annually, including information about dividends and
distributions paid during the preceding year.

Dividends and distributions on each Fund's shares are generally
subject to federal income tax as described herein to the extent they do not
exceed the Fund's realized income and gains, even though such dividends and
distributions may economically represent a return of a particular shareholder's
investment. Such distributions are likely to occur in respect of shares
purchased at a time when the Fund's net asset value reflects gains that are
either unrealized, or realized but not distributed.

BACK-UP WITHHOLDING. The back-up withholding rules set forth below do
not apply to tax exempt entities or corporations that furnish the Trust with an
appropriate certification. For other shareholders, however, the Trust is
generally required to withhold and remit to the U.S. Treasury 31% of all
distributions, whether distributed in cash or reinvested in shares, and 31% of
the proceeds of any redemption paid or credited to the shareholder's account if
an incorrect or no taxpayer identification number has been provided, where
appropriate certification has not been provided for a foreign shareholder, or
where the Trust is notified that the shareholder has underreported income in the
past (or the shareholder fails to certify that he is not subject to such
withholding). Special withholding rules, described below, may apply to foreign
shareholders.

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<PAGE> 26
FOREIGN WITHHOLDING TAXES. The Global Small Cap Fund may be subject to
foreign withholding taxes on income and gains derived from foreign investments.
Such taxes would reduce the yield on such Fund's investments, but, as discussed
below, may be taken as either a deduction or a credit by U.S. investors if the
Fund makes the election described below.

If, at the end of the fiscal year, more than 50% of the total assets of
the Global Small Cap Fund are comprised of stock or securities of foreign
corporations, the Trust intends to make an election which allows shareholders
whose income from the Fund is subject to U.S. taxation at the graduated rates
applicable to U.S. citizens, residents or domestic corporations to claim a
foreign tax credit or deduction (but not both) on their U.S. income tax return.
In such case, the amount of qualified foreign income taxes paid by the Fund
would be treated as additional income to Fund shareholders from non-U.S. sources
and as foreign taxes paid by Fund shareholders. Investors should consult their
tax advisors for further information relating to the foreign tax credit and
deduction, which are subject to certain restrictions and limitations (including
with respect to a foreign tax credit, a holding period requirement imposed
pursuant to the Taxpayer Relief Act of 1997). Shareholders of the Global Small
Cap Fund whose income from the Fund is not subject to U.S. taxation at the
graduated rates applicable to U.S. citizens, residents or domestic corporations
may receive substantially different tax treatment on distributions by such Fund,
and may be disadvantaged as a result of the election described in this
paragraph. Organizations that are exempt from U.S. taxation will not be affected
by the election described above.

WITHHOLDING ON DISTRIBUTIONS TO FOREIGN INVESTORS. Dividend
distributions (including in general distributions derived from short-term
capital gains, dividends and interest) are in general subject to a U.S.
withholding tax of 30% when paid to a non-resident alien individual, foreign
estate or trust, a foreign corporation, or a foreign partnership ("foreign
shareholder"). Persons who are residents in a country, such as the United
Kingdom, that has an income tax treaty with the United States may be eligible
for a reduced withholding rate (upon filing of appropriate forms), and are urged
to consult their tax advisors regarding the applicability and effect of such a
treaty. Distributions of net long-term capital gains to a foreign shareholder
and any gain realized upon the sale of Fund shares by such a shareholder will
ordinarily not be subject to U.S. taxation, unless the recipient or seller is a
nonresident alien individual who is present in the United States for more than
182 days during the taxable year, and certain other conditions apply. Foreign
shareholders with respect to whom income from a Fund is "effectively connected"
with a U.S. trade or business carried on by such shareholder, however, will in
general be subject to U.S. federal income tax on the income derived from the
Fund at the graduated rates applicable to U.S. citizens, residents or domestic
corporations, whether such income is received in cash or reinvested in shares,
and may also be subject to a branch profits tax. Again, foreign shareholders who
are residents in a country with an income tax treaty with the United States may
obtain different tax results and all foreign investors are urged to consult
their tax advisors.

NEW WITHHOLDING TAX RULES FOR PAYMENTS AFTER 1999. The Internal Revenue
Service recently revised its regulations affecting the application to foreign
investors of the back-up withholding and withholding tax rules described above.
The new regulations will generally be effective for payments made on or after
January 1, 1999 (although transition rules will apply). In some circumstances,
the new rules will increase the certification and filing requirements imposed on
foreign investors in order to qualify for exemption from the 31% back-up
withholding tax and for reduced withholding tax rates under income tax treaties.
The U.S. Treasury Department and the Internal Revenue Service have announced
that the effective date of these regulations will be amended to apply to
payments made on or after January 1, 2000. Foreign investors in a Fund should
consult their tax advisors with respect to the potential application of these
new regulations.

MANAGEMENT OF THE TRUST

Each Fund is advised and managed by David L. Babson and Company
Incorporated, One Memorial Drive, Cambridge, Massachusetts 02142, which provides
investment advisory services to a substantial number of institutional and other
investors, including other registered investment companies. David L. Babson and
Company Incorporated

-21-
<PAGE> 27

a registered investment adviser, is a wholly owned subsidiary of DLB Acquisition
Corp., a holding company, which is controlled by Mass Mutual Holding Company, a
holding company and wholly owned subsidiary of Massachusetts Mutual Life
Insurance Company, a mutual life insurance company.

Under separate Management Contracts relating to each Fund, the Manager
selects and reviews each Fund's investments and provides executive and other
personnel for the management of the Trust. Pursuant to the Trust's Agreement and
Declaration of Trust, the Board of Trustees supervises the affairs of the Trust
as conducted by the Manager. In the event that the Manager ceases to be the
manager of any Fund, the right of the Fund or of the Trust to use the
identifying name "DLB" may be withdrawn.

The Manager has entered into a Sub-Advisory Agreement (the
"Sub-Advisory Agreement") with Babson-Stewart Ivory International (the
"Sub-Adviser"), One Memorial Drive, Cambridge, Massachusetts 02142, with respect
to the management of the international component of the Global Small Cap Fund's
portfolio. The Sub-Adviser also provides investment advisory services to a
substantial number of institutional and other investors, including other
registered investment companies. The Sub-Adviser is a general partnership owned
50% by the Manager and 50% by Stewart-Ivory & Company (International) Limited,
an indirect wholly owned subsidiary of Stewart Ivory (Holdings) Ltd., which is
controlled by James G.D. Ferguson and John G.L. Wright.

Each of the Funds pays the Manager a monthly fee at the annual rate of
the relevant Fund's average daily net assets set forth below. The Manager,
however, has agreed to waive a portion of its fee and to bear certain expenses
for the current fiscal year to the extent each of the Fund's annual expenses
(including the management fee but excluding brokerage commissions and transfer
taxes) would exceed the percentage of the Fund's average daily net assets set
forth below:

<TABLE>
<CAPTION>
Management Fee Expense Limitation
(as a % of Average (as a % of Average
Daily Net Assets) Daily Net Assets)

Name of Fund

<S> <C> <C>
Fixed Income Fund .40% .55%
Global Small Cap Fund 1.00* 1.50
Value Fund .55 .80
Mid Cap Fund .60 .90
</TABLE>

* Under the Sub-Advisory Agreement, the Manager pays the Sub-Adviser a
monthly fee at the annual rate of .50% of the Global Small Cap Fund's
average daily net assets, although the Sub-Adviser has currently agreed
to waive a portion of its fee. Payments made to the Sub-Adviser by the
Manager will not affect the amounts payable by the Fund to the Manager
or the Fund's expense ratio.

These fees and expenses and the terms applicable to them are described under
"Shareholder Transaction and Fund Expenses" above.

Edward L. Martin, an Executive Vice President and Director of the
Manager, is primarily responsible for the day-to-day management of the portfolio
of the Fixed Income Fund. Peter C. Schliemann, an Executive Vice President and
Director of the Manager, and James W. Burns and John Wright, who are each
Managing Directors of the Sub-Adviser, are primarily responsible for the
day-to-day management of the portfolio of the Global Small Cap Fund. Roland W.
Whitridge, Senior Vice President and Director of the Manager, is primarily
responsible for the day-to-day management of the Value Fund. Eugene Gardner, a
Vice President of the Manager, is primarily responsible for the day-to-day
management of the Mid Cap Fund. Mr. Martin, Mr. Schliemann, Mr. Whitridge and
Mr. Gardner have each been employed by the Manager in portfolio management for
at least the past five years and have each been responsible for management of
their respective Funds since inception. Mr. Burns and Mr. Wright have each been
employed by the Sub-Adviser in portfolio management for at least the past five
years, and have each been responsible for management of the Global Small Cap
Fund since its inception.

-22-
<PAGE> 28
PERFORMANCE INFORMATION

Yield (in the case of the Fixed Income Fund) and total return data (for
all Funds) may from time to time be included in advertisements about each Fund.
"Yield" for the Fixed Income Fund is calculated by dividing the Fund's
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share on the last day of that period. "Total
return" for the one-year period and for the life of a Fund, each through the
most recent calendar quarter, represents the average annual compounded rate of
return on an investment of $1000 in a Fund at net asset value (assuming
immediate reinvestment of any dividends or capital gains distributions at net
asset value). Quotations of yield or total return for any period when an expense
limitation was in effect will be greater than if the limitation had not been in
effect. See "Investment Performance" in the Statement of Additional Information.

All data is based on a Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of a Fund's
portfolio, and a Fund's operating expenses. Investment performance also often
reflects the risks associated with a Fund's investment objective and policies.
These factors should be considered when comparing a Fund's investment results to
those of other mutual funds and other investment vehicles.

ORGANIZATION AND CAPITALIZATION OF THE TRUST

The Trust was established on August 1, 1994 as a business trust under
Massachusetts law. The Trust has an unlimited number of authorized shares of
beneficial interest which may, without shareholder approval, be divided into an
unlimited number of series of such shares and which are presently divided into
eight series of shares, each representing a different fund. The Trust does not
generally hold annual meetings of shareholders and will do so only when required
by law. Matters submitted to shareholder vote must be approved by each fund of
the Trust separately except (i) when required by the Investment Company Act of
1940 (the "1940 Act"), shares shall be voted together as a single class, and
(ii) when the Trustees have determined that the matter affects one or more
funds, then only shareholders of such fund or funds shall be entitled to vote on
the matter. Shares are freely transferable, are entitled to dividends as
declared by the Trustees, and, in liquidation of the Trust, are entitled to
receive the net assets of their fund, but not of any other fund. Shareholders
holding a majority of the outstanding shares of the Trust may remove Trustees
from office by votes cast in person or by proxy at a meeting of shareholders or
by written consent. Massachusetts Mutual Life Insurance Company currently owns
more than 25% of the outstanding shares of the Fixed Income Fund, the Global
Small Cap Fund and the Mid Cap Fund, and therefore is deemed to "control" such
Funds within the meaning of the 1940 Act. Massachusetts Mutual Life Insurance
Company Separate Investment Account N.V. currently owns more than 25% of the
outstanding shares of the Value Fund, and therefore is deemed to control such
Fund within the meaning of the 1940 Act.

Shareholders could, under certain circumstances, be held personally
liable for the obligations of the Trust. The risk of a shareholder incurring
financial loss on account of that liability, however, is considered remote
because liability may arise only in very limited circumstances and shareholders
are entitled to indemnification out of the assets of the relevant fund for any
such liability.

-23-
<PAGE> 29
SHAREHOLDER INQUIRIES

Shareholders may direct inquiries to the Trust c/o David L. Babson and
Company Incorporated, Attn: Maureen M. Bates, One Memorial Drive, Cambridge,
Massachusetts 02142 (617-225-3800).

When required by the 1940 Act, the Manager's discussion of the
performance of each Fund in its most recent fiscal year as well as a comparison
of each Fund's performance over the life of the Fund with that of a benchmark
securities index selected by the Manager will be included in the Trust's Annual
Report for that fiscal year. Copies of the Annual Report will be available upon
request without charge.

-24-
<PAGE> 30
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110

INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110

CUSTODIAN
Investors Bank & Trust Company

John Hancock Tower

200 Clarendon Street, 16th Floor

Boston, MA 02116

TRANSFER AGENT
Investors Bank & Trust Company

John Hancock Tower

200 Clarendon Street, 5th Floor

Boston, MA 02116

<PAGE> 31
PROSPECTUS
THE DLB QUANTITATIVE EQUITY FUND
One Memorial Drive
Cambridge, Massachusetts 02142
(617) 225-3800

April 30, 1998

The DLB Quantitative Equity Fund (the "Fund") is a portfolio of The DLB
Fund Group (the "Trust"), an open-end management investment company offering
non-diversified portfolios with different investment objectives and strategies.
The Fund is intended primarily to serve as an investment vehicle for
institutional investors. The Fund's investment manager is David L. Babson and
Company Incorporated (the "Manager").

Shares of the Fund are sold to investors by the Trust. The minimum
initial investment in the Fund is $100,000, and the minimum for each subsequent
investment is $10,000.

This Prospectus concisely describes the information which investors
ought to know before investing in The DLB Quantitative Equity Fund. Please read
this Prospectus carefully and keep it for further reference.

A Statement of Additional Information dated April 30, 1998 is available
at no charge by writing to the Trust, c/o David L. Babson and Company
Incorporated, Marketing Department, Attention: Maureen M. Bates, One Memorial
Drive, Cambridge, Massachusetts 02142, or by telephoning (617) 225-3800. The
Statement of Additional Information, which contains more detailed information
about the Fund, has been filed with the Securities and Exchange Commission and
is incorporated by reference into this Prospectus.

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

<PAGE> 32
TABLE OF CONTENTS

PAGE

SHAREHOLDER TRANSACTION AND FUND EXPENSES.....................................3

FINANCIAL HIGHLIGHTS..........................................................4

INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS.......................5

PURCHASE OF SHARES............................................................7

REDEMPTION OF SHARES..........................................................9

DETERMINATION OF NET ASSET VALUE.............................................10

DISTRIBUTIONS................................................................10

TAXES ....................................................................10

MANAGEMENT OF THE TRUST......................................................12

PERFORMANCE INFORMATION......................................................12

ORGANIZATION AND CAPITALIZATION OF THE TRUST.................................13

SHAREHOLDER INQUIRIES........................................................13

-2-
<PAGE> 33
SHAREHOLDER TRANSACTION AND FUND EXPENSES

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (after fee waiver) (a)........................... .55%
12b-1 Fees(b).................................................... 0
Other Expenses(after fee waiver)(a).............................. .35%
----
Total Fund Operating Expenses (after fee waiver) (a)............. .90%

EXAMPLE:

<TABLE>
<S> <C> <C> <C> <C>
You would pay the following Years
expenses on a $1,000 investment,
assuming a 5% annual return, 1 3 5 10
- - - --
with or without redemption at
the end of each period: $9 $29 $50 $111
</TABLE>

- ---------------

(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses for the current fiscal year to the extent that
the Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed .90% of the Fund's average daily
net assets. Therefore, so long as the Manager agrees to reduce its fee
and to bear certain expenses, total annual expenses of the Fund, other
than brokerage commissions and transfer taxes, will not exceed .90%.
Absent such agreement by the Manager to waive its fee and bear certain
expenses, management fees would be .75%, "Other Expenses" would be
.80% and "Total Fund Operating Expenses" would be 1.55%.

The purpose of the foregoing table is to assist an investor in
understanding the various costs and expenses of the Fund that are borne by
holders of Fund shares. THE FIVE PERCENT ANNUAL RETURN AND ESTIMATED EXPENSES
USED IN CALCULATING THE EXAMPLE ARE NOT A REPRESENTATION OF PAST OR FUTURE
PERFORMANCE OR EXPENSES; ACTUAL PERFORMANCE AND/OR EXPENSES MAY BE MORE OR LESS
THAN SHOWN.

-3-
<PAGE> 34
FINANCIAL HIGHLIGHTS

The following table, which presents per share financial information for the
Fund, has been audited by Deloitte & Touche LLP, independent accountants, whose
report thereon is incorporated by reference into the Statement of Additional
Information, and may be obtained by shareholders. Additional performance
information is contained in the annual report for the Fund, which is available
at no charge upon request. The table should be read in conjunction with the
Fund's other audited financial statements and related notes which are
incorporated by reference into the Statement of Additional Information.

<TABLE>
<CAPTION>
For the period
August 26, 1996
(Commencement of
Year Ended operations) to
December 31, December 31,
1997 1996
------------ -------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 11.66 $ 10.00
Income from investment operations: ------------ ------------
Net investment income 0.03 0.01
Net realized and unrealized gain on investments 3.73 1.84
------------ ------------
Total from investment operations 3.76 1.85
------------ ------------

Less distributions declared to shareholders:
From net investment income (0.03) (0.01)
From net realized gain on investments (0.83) (0.18)
In excess of realized gain on investments (0.01) --
------------ ------------
Total distributions declared to shareholders (0.87) (0.19)
------------ ------------

Net asset value - end of period $ 14.55 $ 11.66
============ ============

Total return 32.23% 18.51%

Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.90% 0.90%*
Ratio of net investment income to average net assets 0.23% 0.43%*
Portfolio turnover 46% 10%
Average commission rate paid(1) $ 0.0336 $ 0.0192
Net assets at end of period (000 omitted) $ 25,069 $ 13,897

The Manager has agreed with the Fund to reduce its
management fee and bear certain expenses, such that expenses
do not exceed 0.90% of average daily net assets on an
annualized basis. If the fee and expenses had been incurred by
the Fund, the net investment loss per share and ratios would
have been:

Net investment loss $ (0.06) $ (0.01)

Ratios (to average net assets):
Expenses 1.55% 1.82%*
Net investment income (loss) (0.43)% (0.50)%*
</TABLE>

- --------------
(1) For years beginning on or after September 1, 1995, a fund is required
to disclose its average commission rate per share for security trades
on which commissions are charged. Average commission rate paid is
computed by dividing the total dollar amount of commissions paid during
the year by the total number of shares purchased and sold on which
commission were charged.

* Annualized

-4-
<PAGE> 35
INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS

The Fund seeks long-term growth of capital. Under normal market
conditions, substantially all of the Fund's total assets (but no less than 65%
of its total assets) will be invested in common stocks and other equity
securities. Although common stocks of well-established, medium- to
large-capitalization companies will normally comprise the Fund's principal
investments, the Fund may also purchase convertible bonds, convertible preferred
stocks, preferred stocks and debt securities that are of investment grade
quality at the time of purchase if the Manager believes they would help achieve
the Fund's objective. The Fund may also hold a portion of its assets in cash or
money market instruments and may engage in the various investment practices
described below. The Fund is not intended to be a complete investment program,
and there is no assurance it will achieve its objective.

BASIC INVESTMENT STRATEGY. The Manager believes that there are
systematic mispricings in the securities markets that can be exploited by a
disciplined investment strategy based predominately on quantitative factors. The
Manager seeks to exploit these mispricings by constructing a portfolio using a
proprietary analytical model. A broad cross-section of securities is ranked
using both value factors and growth factors. Securities are then selected for
the Fund based on these rankings, with weight also given to the impact of
transaction costs and the portfolio's overall characteristics, including sector
weightings, beta, market capitalization, yield and liquidity.

DEFENSIVE STRATEGIES. At times the Manager may judge that market
conditions make pursuing the Fund's basic investment strategy inconsistent with
the best interests of its shareholders. At such times the Manager may
temporarily use "defensive" strategies designed primarily to reduce fluctuations
in the value of the Fund's assets. In implementing these defensive strategies,
the Fund may invest without limit in securities of any kind. It is not currently
anticipated that the Fund, when investing for such defensive purposes, will
invest in securities that entail greater overall risk than the Fund's typical
investments. It is impossible to predict when, or for how long, the Fund will
use these alternative strategies.

FINANCIAL FUTURES AND OPTIONS. The Fund may buy and sell financial
futures contracts on securities indexes and fixed income securities. A futures
contract is a contract to buy or sell units of a particular securities index, or
a certain amount of a fixed income security, at an agreed price on a specified
future date. Depending on the change in value of the index or security between
the time when the Fund enters into and terminates a futures contract, the Fund
realizes a gain or loss. The Fund may purchase and sell futures contracts for
hedging purposes and to adjust that Fund's exposure to relevant stock or bond
markets. For example, when the Manager wants to increase the Fund's exposure to
equity securities, it may do so by taking long positions in futures contracts on
equity indices such as futures contracts on the Standard & Poor's 500 Composite
Stock Price Index. Similarly, when the Manager wants to increase the Fund's
exposure to fixed income securities, it may do so by taking long positions in
futures contracts relating to fixed income securities such as futures contracts
on U.S. Treasury bonds or notes. The Fund may buy and sell call and put options
on futures contracts or on stock indices in addition to or as an alternative to
purchasing or selling futures contracts.

The use of futures and options involves certain special risks. Certain
risks arise because of the possibility of imperfect correlations between
movements in the prices of financial futures and options and movements in the
prices of the underlying securities index or securities or of the securities
which are the subject of the hedge. The successful use of futures and options
further depends on the Manager's ability to forecast market or interest rate
movements correctly. Other risks arise from the Fund's potential inability to
close out its futures or related options positions, and there can be no
assurance that a liquid secondary

-5-
<PAGE> 36
market will exist for any futures contract or option at a particular time. The
Fund's ability to terminate option positions established in the over-the-counter
market may be more limited than for exchange-traded options and may also involve
the risk that securities dealers participating in such transactions would fail
to meet their obligations to the Fund. The use of futures or options on futures
for purposes other than hedging may be regarded as speculative. Certain
provisions of the Internal Revenue Code and certain regulatory requirements may
also limit the Fund's ability to engage in futures and options transactions. See
the Statement of Additional Information for additional information regarding
risks of financial futures and options.

OPTIONS. The Fund may purchase and sell call and put options on
securities it owns or in which it may invest. The Fund receives a premium from
writing a call or put option, which increases the Fund's return if the option
expires unexercised or is closed out at a net profit. When the Fund writes a
call option, it gives up the opportunity to profit from any increase in the
price of a security above the exercise price of the option; when it writes a put
option, the Fund takes the risk that it will be required to purchase a security
from the option holder at a price above the current market price of the
security. The Fund may terminate an option that it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. The Fund may also from
time to time buy and sell combinations of put and call options on the same
underlying security to earn additional income. The aggregate value of the
securities underlying the options written by the Fund may not exceed 25% of the
Fund's total assets. The Fund's use of these strategies may be limited by
applicable law.

ILLIQUID SECURITIES. The Fund may purchase "illiquid securities," which
are securities that are not readily marketable, including securities whose
disposition is restricted by contract or under Federal securities laws, so long
as no more than 15% of the Fund's net assets would be invested in such illiquid
securities. The Fund may not be able to dispose of such securities in a timely
fashion and for a fair price, which could result in losses. In addition,
illiquid securities are generally more difficult to value.

LOANS OF PORTFOLIO SECURITIES. The Fund may make secured loans of
portfolio securities on up to 33 1/3% of its total assets. The risks in lending
portfolio securities, as with other extensions of credit, consist of possible
delay in recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. However, such loans will be made only to
parties that are believed by the Manager to be of relatively high credit
standing. Securities loans are made pursuant to agreements requiring that loans
be continuously secured by collateral in cash or U.S. Government securities at
least equal at all times to the market value of the securities lent. The
borrower pays to the Fund an amount equal to any dividends or interest received
on the securities lent. The Fund may invest the cash collateral received or may
receive a fee from the borrower. Although voting rights or rights to consent
with respect to the loaned securities pass to the borrower, the Fund retains the
right to call the loans at any time on reasonable notice. The Fund may also call
such loans in order to sell the securities involved. The Fund pays various fees
in connection with such loans including shipping fees and reasonable custodian
and placement fees.

PORTFOLIO TURNOVER. Portfolio turnover is not a limiting factor with
respect to investment decisions for the Fund. It is anticipated that under
normal circumstances the annual portfolio turnover rate of the Fund will not
exceed 200%. However, in any particular year, market conditions may result in
greater rates than are currently anticipated. Portfolio turnover involves
brokerage commissions and other transaction costs, which will be borne directly
by the Fund, and could involve realization of capital gains that would be
taxable when distributed to shareholders. To the extent that portfolio turnover
results in realization of net short-term capital gains, such gains are
ordinarily taxed to shareholders at ordinary income tax rates. The portfolio
turnover rate for the Fund is shown in the section "Financial Highlights." See
"Taxes" below and "Portfolio Transactions" in the Statement of Additional
Information for additional information. The tax consequences of portfolio
transactions may be a secondary consideration for tax-exempt investors.

-6-
<PAGE> 37
REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
Under repurchase agreements the Fund acquires a security for cash and obtains a
simultaneous commitment from the seller to repurchase the security at an
agreed-upon price and date. The resale price exceeds the acquisition price and
reflects an agreed-upon market rate unrelated to the coupon rate on the
purchased security. Such transactions afford an opportunity for the Fund to earn
a return on temporarily available cash at no market risk, although there is a
risk that the seller may default on its obligation to pay the agreed-upon sum on
the redelivery date. Such a default may subject the Fund to expenses, delays and
risks of loss.

FIRM COMMITMENTS. The Fund may enter into firm commitment agreements
for the purchase of securities at an agreed-upon price on a specified future
date. The Fund will only enter into firm commitment arrangements with parties
which the Manager determines present minimal credit risks. The Fund will
maintain, in a segregated account with its custodian, cash or securities in an
amount equal to the Fund's obligations under firm commitment agreements. The
Fund bears the risk that the other party will fail to satisfy its obligation to
the Fund. Such a default may subject the Fund to expenses, delays and risks of
loss.

DERIVATIVES. Certain of the instruments in which the Fund may invest,
such as futures contracts and options, are considered to be "derivatives."
Derivatives are financial instruments whose value depends upon, or is derived
from, the value of an underlying asset, such as a security or an index. The use
of such instruments may result in a higher amount of short-term capital gains
(taxed at ordinary income tax rates) than would result if the Fund did not use
such instruments. Further information about these instruments and the risks
involved in their use is included elsewhere in this prospectus and in the
Statement of Additional Information.

RISKS OF NON-DIVERSIFICATION. As a non-diversified fund, the Fund may
invest a relatively high percentage of its assets in the securities of
relatively few issuers, rather than invest in the securities of a large number
of issuers merely to satisfy diversification requirements. Investment in the
securities of a limited number of issuers may increase the risk of loss to the
Fund should there be a decline in the market value of any one portfolio
security. Investment in a non-diversified fund therefore entails greater risks
than investment in a "diversified" fund.

CHANGES TO INVESTMENT OBJECTIVE. The investment objective and policies
of the Fund may be changed by the Trustees without shareholder approval (except
for policies identified as "fundamental" in this Prospectus or the Statement of
Additional Information). Any such change may result in the Fund having an
investment objective and policies different from the objective and policies
which a shareholder considered appropriate at the time of such shareholder's
investment in the Fund. Shareholders of the Fund will be notified of any changes
in the Fund's investment objective or policies through a revised prospectus or
other written communication.

PURCHASE OF SHARES

Shares of the Fund may be purchased directly from the Trust on any day
when the New York Stock Exchange is open for business (a "business day"). The
minimum for an initial investment in the Fund is $100,000, and the minimum for
each subsequent investment is $10,000. The purchase price of a share of the Fund
is the net asset value next determined after a purchase order is received in
good order. No sales charge is imposed on purchases of Fund shares.

-7-
<PAGE> 38
(iii) by a combination of such securities and cash. In all cases, the Manager
reserves the right to reject any particular investment. Securities accepted by
the Manager in exchange for Fund shares will be acquired for investment only and
not for resale and will be valued as set forth under "Determination of Net Asset
Value" (generally the last quoted sale price) as of the time of the next
determination of net asset value after such acceptance. All dividends, interest,
subscription or other rights which are reflected in the market price of accepted
securities at the time of valuation become the property of the Fund and must be
delivered to the Trust upon receipt by the investor from the issuer. A gain or
loss for federal income tax purposes may be realized by investors subject to
Federal income taxation upon the exchange, depending upon the investor's basis
in the securities tendered.

The Manager will not approve the acceptance of securities in exchange
for Fund shares unless (1) the Manager, in its sole discretion, believes the
securities are appropriate investments for the Fund; (2) the investor represents
and agrees that all securities offered to the Fund are not subject to any
restrictions upon their sale by the Fund under the Securities Act of 1933, or
otherwise; and (3) the securities may be acquired under the investment
restrictions applicable to the Fund. Investors interested in purchases through
exchange should telephone the Manager at (617) 225-3800, Attn: Maureen M. Bates.

Investors should call the offices of the Trust before attempting to
place an order for Trust shares. The Trust reserves the right at any time to
reject an order.

The deadline for wiring federal funds to the Trust is 2:00 p.m. Eastern
time; in the case of an investment in-kind, the investor's securities must be
placed on deposit at DTC, and 4:00 p.m. Eastern time is the deadline for
transferring those securities to the account designated by the Fund's custodian.
In most cases, if the consideration is not received by the Trust before the
relevant deadline, the purchase order is not considered to be in good order and
the purchase order and consideration are required to be resubmitted on the
following business day, unless Investors Rank and Trust Company can credit the
consideration to the account for a specific fund.

All federal funds must be transmitted to Investors Bank & Trust Company
to Account No. 777777722 for the account of the Fund.

"Federal funds" are monies credited to Investors Bank & Trust Company's
account with the Federal Reserve Bank of Boston.

Purchases will be made in full and fractional shares of the Fund
calculated to three decimal places. The Trust will send to shareholders written
confirmation (including a statement of shares owned) at the time of each
transaction.

12B-1 PLAN. The Trust has adopted a distribution and services plan (the
"Plan") for the Fund under Rule 12b-1 of the Investment Company Act of 1940, but
the Trustees do not intend to implement such Plan during the Trust's current
fiscal year. The purposes of the Plan if implemented would be to compensate
and/or reimburse investment dealers and other persons for services provided and
expenses incurred in promoting sales of shares, reducing redemptions or
improving services provided to shareholders by such dealers and other persons.
The Plan would permit payments by the Fund for such purposes at an annual rate
of up to .50% of the Fund's average daily net assets, subject to the authority
of the Trustees to reduce the amount of payments or to suspend the Plan for such
periods as they may determine. Subject to these limitations, the amount of
payments under the Plan and the specific purposes for which they are made would
be determined by the Trustees. At present, the Trustees have no intention of
implementing the Plan.

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<PAGE> 39
REDEMPTION OF SHARES

Shares of the Fund may be redeemed on any business day in cash or in
kind. The redemption price is the net asset value per share next determined
after receipt of the redemption request in good order. There is no redemption
fee for the Fund. Cash payments generally will be made by transfer of Federal
funds for payment into the investor's account the next business day following
the redemption request. Redemption requests should be sent to Investors Bank &
Trust Company. In order to help facilitate the timely payment of redemption
proceeds, it is recommended that investors telephone the Manager at (617)
225-3800, Attn: Maureen M. Bates, at least two days prior to submitting a
request.

Payment on redemption will be made as promptly as possible and in any
event within seven days after the request for redemption is received by the
Trust in good order. A redemption request is in good order if it includes the
correct name in which shares are registered, the investor's account number and
the number of shares or the dollar amount of shares to be redeemed and if it is
signed correctly in accordance with the form of registration. Persons acting in
a fiduciary capacity, or on behalf of a corporation, partnership or trust must
specify, in full, the capacity in which they are acting. In-kind redemptions, as
described below, will be transferred and delivered as directed by the investor.

If the Manager determines, in its sole discretion, that it would be
detrimental to the best interests of the remaining shareholders of the Fund to
make payment wholly or partly in cash, the Fund may pay the redemption price in
whole or in part by a distribution in kind of readily marketable securities held
by the Fund in lieu of cash. Securities used to redeem Fund shares in kind will
be valued in accordance with the Fund's procedures for valuation described under
"Determination of Net Asset Value." Investors generally will incur brokerage
charges on the sale of any such securities so received in payment of
redemptions.

The Fund may suspend the right of redemption and may postpone payment
for more than seven days when the New York Stock Exchange is closed for other
than weekends or holidays, or if permitted by the rules of the Securities and
Exchange Commission during periods when trading on the Exchange is restricted or
during an emergency which makes it reasonably impracticable for the Fund to
dispose of its securities or fairly to determine the value of the net assets of
the Fund, or during any other period permitted by the Securities and Exchange
Commission for the protection of investors.

DETERMINATION OF NET ASSET VALUE

The net asset value of a share of the Fund is determined at 4:15 p.m.,
Eastern time, on each day on which the New York Stock Exchange is open. The net
asset value per share for the Fund is determined by dividing the total value of
the Fund's portfolio investments and other assets, less any liabilities, by the
total outstanding shares of the Fund. Portfolio securities (including options
and futures contracts) for which market quotations are available are valued at
the last quoted sale price, or, if there is no such reported sale, at the
closing bid price. Securities traded in the over-the-counter market are valued
at the most recent bid

-9-
<PAGE> 40
price as obtained from one or more dealers that make markets in the securities.
Portfolio securities that are traded both in the over-the-counter market and on
one or more stock exchanges are valued according to the broadest and most
representative market. Unlisted securities for which market quotations are not
readily available are valued at the most recent quoted bid price. Short term
debt securities with a remaining maturity of 60 days or less will be valued at
amortized cost, unless conditions dictate otherwise. Illiquid securities or
restricted securities will be valued at fair value based on information supplied
by a broker. Other assets for which no quotations are readily available are
valued at fair value as determined in good faith in accordance with procedures
adopted by the Trustees of the Trust. Determination of fair value will be based
upon such factors as are deemed relevant under the circumstances, including the
financial condition and operating results of the issuer, recent third party
transactions (actual or proposed) relating to such securities and, in extreme
cases, the liquidation value of the issuer.

DISTRIBUTIONS

The Fund intends to pay out as dividends substantially all of its net
investment income (which comes from dividends and any interest it receives from
its investments and net short-term capital gains). The Fund also intends to
distribute substantially all of its net long-term capital gains, if any, after
giving effect to any available capital loss carryover. The Fund's present policy
is to declare and pay distributions of its dividends and interest at least
annually. The Fund also intends to distribute net short-term capital gains and
net long-term capital gains at least annually. All dividends and/or
distributions will be paid in shares of the Fund, at net asset value, unless the
shareholder elects to receive cash. Shareholders may make this election by
marking the appropriate box on the application form or by writing to Investors
Bank & Trust Company.

TAXES

The following is a general summary of the federal income tax
consequences for the Fund and shareholders who are U.S. citizens or residents or
domestic corporations. The last paragraph of this section contains information
relevant to foreign investors. Shareholders should consult their own tax
advisors about the tax consequences of investments in the Fund in light of their
particular tax situations. Shareholders should also consult their own tax
advisors about consequences under foreign, state, local or other applicable tax
laws.

The Fund is treated as a separate taxable entity for federal income tax
purposes. The Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended. By
so qualifying, the Fund itself will not pay federal income tax on the income and
gain distributed annually to its shareholders. Distributions of ordinary income
and short-term capital gains, whether received in cash or reinvested shares,
will be taxable as ordinary income to shareholders subject to federal income
tax. Designated distributions of net gains on capital assets held (i) for more
than one year but not more than 18 months and (ii) for more than 18 months are
taxable as such, regardless of how long a shareholder may have owned shares in
the Fund or whether received in cash or in reinvested shares. Any loss
recognized on the sale or disposition of shares held for six months or less will
be treated as long-term capital loss to the extent of any long-term capital gain
distributions received by a shareholder with respect to those shares. A
distribution paid to shareholders in January generally is deemed to have been
received by shareholders on December 31 of the preceding year, if the
distribution was declared and payable to shareholders of record on a date in
October, November or December of that preceding year.

-10-
<PAGE> 41
The Fund will provide federal tax information annually, including information
about dividends and distributions paid during the preceding year.

Dividends and distributions on the Fund's shares are generally subject
to federal income tax as described herein to the extent they do not exceed the
Fund's realized income and gains, even though such dividends and distributions
may economically represent a return of a particular shareholder's investment.
Such distributions are likely to occur in respect of shares purchased at a time
when the Fund's net asset value reflects gains that are either unrealized, or
realized but not distributed.

WITHHOLDING ON DISTRIBUTIONS TO FOREIGN INVESTORS. Dividend
distributions (including in general distributions derived from short-term
capital gains, dividends and interest) are in general subject to a U.S.
withholding tax of 30% when paid to a non-resident alien individual, foreign
estate or trust, a foreign corporation, or a foreign partnership ("foreign
shareholder"). Persons who are residents in a country, such as the United
Kingdom, that has an income tax treaty with the United States may be eligible
for a reduced withholding rate (upon filing of appropriate forms), and are urged
to consult their tax advisors regarding the applicability and effect of such a
treaty. Distributions of net long-term capital gains to a foreign shareholder
and any gain realized upon the sale of Fund shares by such a shareholder will
ordinarily not be subject to U.S. taxation, unless the recipient or seller is a
nonresident alien individual who is present in the United States for more than
182 days during the taxable year, and certain other conditions apply. Foreign
shareholders with respect to whom income from the Fund is "effectively
connected" with a U.S. trade or business carried on by such shareholder,
however, will in general be subject to U.S. federal income tax on the income
derived from the Fund at the graduated rates applicable to U.S. citizens,
residents or domestic corporations, whether such income is received in cash or
reinvested in shares, and may also be subject to a branch profits tax. Again,
foreign shareholders who are residents in a country with an income tax treaty
with the United States may obtain different tax results and all foreign
investors are urged to consult their tax advisors.

NEW WITHHOLDING TAX RULES FOR PAYMENTS AFTER 1999. The Internal Revenue
Service recently revised its regulations affecting the application to foreign
investors of the back-up withholding and withholding tax rules described above.
The new regulations will generally be effective for payments made on or after
January 1, 1999 (although transition rules will apply). In some circumstances,
the new rules will increase the certification and filing requirements imposed on
foreign investors in order to qualify for exemption from the 31% back-up
withholding tax and for reduced withholding tax rates under income tax treaties.
The U.S. Treasury Department and the Internal Revenue Service have announced
that the effective date of these regulations will be amended to apply to
payments made on or after January 1, 2000. Foreign investors in the Fund should
consult their tax advisors with respect to the potential application of these
new regulations.

-11-
<PAGE> 42
MANAGEMENT OF THE TRUST

The Fund is advised and managed by David L. Babson and Company
Incorporated, One Memorial Drive, Cambridge, Massachusetts 02142, which provides
investment advisory services to a substantial number of institutional and other
investors, including other registered investment companies. David L. Babson and
Company Incorporated, a registered investment adviser, is a wholly owned
subsidiary of DLB Acquisition Corp., a holding company, which is controlled by
Mass Mutual Holding Company, a holding company and wholly owned subsidiary of
Massachusetts Mutual Life Insurance Company, a mutual life insurance company.

Under a separate Management Contract relating to the Fund, the Manager
selects and reviews the Fund's investments and provides executive and other
personnel for the management of the Trust. Pursuant to the Trust's Agreement and
Declaration of Trust, the Board of Trustees supervises the affairs of the Trust
as conducted by the Manager. In the event that the Manager ceases to be the
manager of the Fund, the right of the Fund or of the Trust to use the
identifying name "DLB" may be withdrawn.

The Fund pays the Manager a monthly fee at the annual rate of the
Fund's average daily net assets set forth below. The Manager, however, has
agreed to waive a portion of its fee and to bear certain expenses for the
current fiscal year to the extent the Fund's annual expenses (including the
management fee but excluding brokerage commissions and transfer taxes) would
exceed the percentage of the Fund's average daily net assets set forth below:

Management Fee Expense Limitation
(as a % of Average (as a % of Average
Daily Net Assets) Daily Net Assets)

.75% .90%

These fees and expenses and the terms applicable to them are described under
"Shareholder Transaction and Fund Expenses" above.

Michael Caplan, Vice President of the Manager, has been primarily
responsible for the day-to-day management of the Fund since its inception. Prior
to joining the Manager in December 1995, Mr. Caplan was employed as a portfolio
manager by Concert Capital Management, Inc. from January 1995 through December
1995. Prior to January 1995, Mr. Caplan was employed as a portfolio manager by
State Street Global Advisors.

PERFORMANCE INFORMATION

Yield and total return data may from time to time be included in
advertisements about the Fund. "Yield" is calculated by dividing the Fund's
annualized net investment income per share during a recent 30-day period by the
maximum public offering price per share on the last day of that period. "Total
return" for the one-year period and for the life of the Fund, each through the
most recent calendar quarter, represents the average annual compounded rate of
return on an investment of $1000 in the Fund at net asset value (assuming
immediate reinvestment of any dividends or capital gains distributions at net
asset value). Quotations of yield or total return for any period when an expense
limitation was in effect will be greater than if the limitation had not been in
effect. See "Investment Performance" in the Statement of Additional Information.

All data is based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the

-12-
<PAGE> 43
composition of the Fund's portfolio, and the Fund's operating expenses.
Investment performance also often reflects the risks associated with the Fund's
investment objective and policies. These factors should be considered when
comparing the Fund's investment results to those of other mutual funds and other
investment vehicles.

ORGANIZATION AND CAPITALIZATION OF THE TRUST

The Trust was established on August 1, 1994 as a business trust under
Massachusetts law. The Trust has an unlimited number of authorized shares of
beneficial interest which may, without shareholder approval, be divided into an
unlimited number of series of such shares and which are presently divided into
eight series of shares, each representing a different Fund. The Trust does not
generally hold annual meetings of shareholders and will do so only when required
by law. Matters submitted to shareholder vote must be approved by each fund of
the Trust except (i) when required by the Investment Company Act of 1940, shares
shall be voted together as a single class, and (ii) when the Trustees have
determined that the matter affects one or more funds, then only shareholders of
such fund or funds shall be entitled to vote on the matter. Shares are freely
transferable, are entitled to dividends as declared by the Trustees, and, in
liquidation of the fund, are entitled to receive the net assets of the fund.
Shareholders holding a majority of the outstanding shares of the Trust may
remove Trustees from office by votes cast in person or by proxy at a meeting of
shareholders or by written consent. Massachusetts Mutual Life Insurance Company
currently owns more than 25% of the outstanding shares of the Fund and therefore
is deemed to "control" the Fund within the meaning of the Investment Company Act
of 1940.

SHAREHOLDER INQUIRIES

Shareholders may direct inquiries to the Trust c/o David L. Babson and
Company Incorporated, Marketing Department, Attn: Maureen M. Bates, One Memorial
Drive, Cambridge, Massachusetts 02142 (617-225-3800).

When required by the Investment Company Act of 1940, the Manager's
discussion of the performance of the Fund in its most recent fiscal year as well
as a comparison of the Fund's performance over the life of the Fund with that of
a benchmark securities index selected by the Manager will be included in the
Trust's Annual Report for that fiscal year. Copies of the Annual Report will be
available upon request without charge.

-13-
<PAGE> 44
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110

INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110

CUSTODIAN
Investors Bank & Trust Company

John Hancock Tower

200 Clarendon Street, 16th Floor

Boston, MA 02116

TRANSFER AGENT
Investors Bank & Trust Company
John Hancock Tower
200 Clarendon Street, 5th Floor
Boston, MA 02116

-14-
<PAGE> 45
PROSPECTUS
THE DLB GLOBAL BOND FUND
One Memorial Drive
Cambridge, Massachusetts 02142
(617) 225-3800

April 30, 1998

The DLB Global Bond Fund (the "Fund") is a portfolio of The DLB Fund
Group (the "Trust"), an open-end management investment company offering
non-diversified portfolios with different investment objectives and strategies.
The Fund is intended primarily to serve as an investment vehicle for
institutional investors. The Fund's investment manager is David L. Babson and
Company Incorporated (the "Manager"), and its subadviser is Potomac Babson
Incorporated (the "Sub-Adviser").

Shares of the Fund are sold to investors by the Trust. The minimum
initial investment in the Fund is $100,000, and the minimum for each subsequent
investment is $10,000.

This Prospectus concisely describes the information which investors
ought to know before investing in The DLB Global Bond Fund. Please read this
Prospectus carefully and keep it for further reference.

A Statement of Additional Information dated April 30, 1998 is available
at no charge by writing to the Trust, c/o David L. Babson and Company
Incorporated, Marketing Department, Attention: Maureen M. Bates, One Memorial
Drive, Cambridge, Massachusetts 02142, or by telephoning (617) 225-3800. The
Statement of Additional Information, which contains more detailed information
about the Fund, has been filed with the Securities and Exchange Commission and
is incorporated by reference into this Prospectus.

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

-1-
<PAGE> 46
TABLE OF CONTENTS

PAGE

SHAREHOLDER TRANSACTION AND FUND EXPENSES.....................................3

FINANCIAL HIGHLIGHTS..........................................................4

INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS.......................5

PURCHASE OF SHARES...........................................................11

REDEMPTION OF SHARES.........................................................13

DETERMINATION OF NET ASSET VALUE.............................................13

DISTRIBUTIONS................................................................14

TAXES ....................................................................15

MANAGEMENT OF THE TRUST......................................................16

PERFORMANCE INFORMATION......................................................17

ORGANIZATION AND CAPITALIZATION OF THE TRUST.................................17

SHAREHOLDER INQUIRIES........................................................18

-2-
<PAGE> 47
SHAREHOLDER TRANSACTION AND FUND EXPENSES

ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)

Management Fees (after fee waiver) (a)........................ .55%
12b-1 Fees(b)................................................. 0
Other Expenses (after fee waiver) (a)......................... .25%
----
Total Fund Operating Expenses (after fee waiver) (a).......... .80%

EXAMPLE:

- ---------------

(a) The Manager has agreed with the Fund to reduce its management fee and
to bear certain expenses for the current fiscal year to the extent that
the Fund's total annual expenses, other than brokerage commissions and
transfer taxes, would otherwise exceed .80% of the Fund's average daily
net assets. Therefore, so long as the Manager agrees to reduce its fee
and to bear certain expenses, total annual expenses of the Fund, other
than brokerage commissions and transfer taxes, will not exceed .80%.
Absent such agreement by the Manager to waive its fee and bear certain
expenses, management fees would be .75%, "Other Expenses" would be
.67% and "Total Fund Operating Expenses" would be 1.42%.

-3-
<PAGE> 48
FINANCIAL HIGHLIGHTS

The following table, which presents per share financial information for the
Fund, has been audited by Deloitte & Touche LLP, independent accountants, whose
report thereon is incorporated by reference into the Statement of Additional
Information, and may be obtained by Shareholders. Additional performance
information is contained in the annual report for the Fund which is available at
no charge upon request. The table should be read in conjunction with the Fund's
other audited financial statements and related notes which are incorporated by
reference into the Statement of Additional Information.

<TABLE>
<CAPTION>
For the period
August 26, 1996
(commencement
Year Ended of operations) to
December 31, December 31,
1997 1996
------------ -----------------
<S> <C> <C>
Per share data (for a share outstanding throughout each period):
Net asset value - beginning of period $ 9.99 $ 10.00
Income from investment operations: ------- --------
Net investment income 0.58 0.19
Net realized and unrealized gain on investments
and foreign currency 0.08 0.13
------- --------
Total from investment operations 0.66 0.32
------- --------

Less distributions declared to shareholders:
From net investment income (0.58) (0.19)
In excess of net investment income (0.35) (0.11)
From net realized gain on investments
and foreign currency -- (0.03)
------- --------
Total distributions declared to shareholders (0.93) (0.33)
------- --------

Net asset value - end of period $ 9.72 $ 9.99
======= ========

Total return 6.57% 3.21%
Ratios and Supplemental Data:
Ratio of expenses to average net assets 0.80% 0.80%*
Ratio of net investment income to average net assets 5.64% 5.35%*
Portfolio turnover 234% 232%
Net assets at end of period (000 omitted) $28,501 $ 25,805
The Manager has agreed with the Fund to reduce its
management fee and bear certain expenses, such that expenses
do not exceed 0.80% of average daily net assets on an
annualized basis. If the fee and expenses had been incurred by
the Fund, the net investment income per share and ratios would
have been:
Net investment income $ 0.52 $ 0.17
Ratios (to average net assets):
Expenses 1.42% 1.33%*
Net investment income 5.01% 4.81%*

</TABLE>

- ----------

* Annualized.

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<PAGE> 49
INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS

The Fund's investment objective is to seek total return. The Fund
invests in a global portfolio consisting principally of governmental or
supranational debt securities denominated in currencies of the member states of
the Organization for Economic Cooperation and Development. Under normal market
conditions, the Fund will invest at least 65% of its total assets in debt
securities of issuers located in at least three different countries, one of
which may be the United States, and will invest at least 15% of its total assets
in U.S. dollar-denominated securities, issued domestically or abroad. The Fund
may also hold a portion of its assets in cash or money market instruments. The
Fund is not intended to be a complete investment program, and there is no
assurance it will achieve its objective.

GLOBAL BOND MARKETS. In recent years, opportunities for investment in
global bond markets have become more significant. Participants in these markets
have grown in number, thereby providing better liquidity. A number of global
bond markets have reduced barriers to entry to foreign investors by deregulation
and by reducing their withholding taxes. Simultaneous with the opening of
foreign markets, barriers to global capital flows have been reduced or
eliminated. The Fund provides a convenient vehicle to participate in global bond
markets, some of which may outperform U.S. dollar-denominated bond markets in
U.S. dollar terms during certain periods of time.

Although the Fund is a non-diversified investment company, investing in
the Fund can provide global diversity to an investor's existing portfolio of
U.S. dollar-denominated bonds, thereby potentially reducing volatility or risk
over time. Historically, returns of foreign bond markets have often diverged
from returns generated by U.S. bond markets. These divergences stem not only
from fluctuating exchange rates, but also from foreign interest rates not always
moving in the same direction, or moving to the same extent, as interest rates in
the U.S.

A global income portfolio composed of both international and U.S. bonds
is able to take advantage of a far wider range of investment opportunities than
one that is restricted to U.S. dollar securities and may, at times, provide
higher investment returns. For example, global bonds may provide higher current
income than U.S. bonds and/or the local price of global bonds can appreciate
more than U.S. bonds. Fluctuations in foreign currencies relative to the U.S.
dollar can potentially benefit investment returns. Of course, in each case, at
any time the opposite may also be true.

PORTFOLIO QUALITY. The Fund will invest only in debt securities that
are rated at the time of purchase A or better by Moody's Investors Service, Inc.
("Moody's") or by Standard & Poor's ("S&P"), or in unrated securities which the
Sub-Adviser determines to be of comparable quality. In the event that any
security held by the Fund ceases to be of this quality, the Fund will not be
obligated to dispose of such security and may continue to hold the obligation
if, in the opinion of the Sub-Adviser, such investment is considered appropriate
under the circumstances.

PORTFOLIO MATURITY. The Sub-Adviser may take full advantage of the
entire range of maturities offered by fixed income securities and may adjust the
average maturity of the Fund's portfolio from time to time depending on its
assessment of the relative yields on securities of different maturities and its
expectations of future changes in interest rates. It is currently expected that,
under normal market conditions, the Fund's average portfolio maturity will range
from five to ten years. The Fund's portfolio may include securities with
maturities outside of this range.

GOVERNMENTAL AND SUPRANATIONAL ISSUERS. The obligations of U.S. and
foreign governmental entities, including supranational issuers, have different
kinds of government support. For instance, as used

-5-
<PAGE> 50
in this Prospectus, the term "U.S. government obligations" refers to debt
securities issued or guaranteed by the U.S. government or by various of its
agencies or instrumentalities. Certain of these obligations, such as U.S.
Treasury bonds, are supported by the full faith and credit of the United States.

Other U.S. government obligations issued or guaranteed by federal
agencies or government-sponsored enterprises are not supported by the full
faith and credit of the United States. These securities include obligations
supported by the right of the issuer to borrow from the U.S. Treasury, such as
obligations of Federal Home Loan Banks, and obligations supported only by the
credit of the instrumentality, such as Federal National Mortgage Association
bonds.

Similarly, obligations of foreign governmental entities include
obligations issued or guaranteed by national, provincial, state or other
governments with taxing power or by their agencies. Some of these obligations
are supported by the full faith and credit of a foreign government and some are
not.

Supranational entities include international organizations designated
or supported by governmental entities to promote economic reconstruction or
development and international banking institutions and related government
agencies. Examples include the International Bank for Reconstruction and
Development (the World Bank), the European Steel and Coal Community, the Asian
Development Bank and the Inter-American Development Bank. The members, or
"stockholders," of a supranational entity make initial capital contributions to
the supranational entity and in many cases are committed to make additional
capital contributions if the supranational entity is unable to repay its
borrowings. Each supranational entity's lending activities are limited to a
percentage of its total capital (including "callable capital" contributed by
members at the entity's call), reserves and net income. By engaging in lending
activities and other activities intended to foster international economic growth
and development, supranational entities further the particular governmental
purposes of their members.

DEFENSIVE STRATEGIES. At times the Sub-Adviser may judge that market
conditions make pursuing the Fund's basic investment strategy inconsistent with
the best interests of its shareholders. At such times the Sub-Adviser may
temporarily use the defensive strategies of investing up to 100% of the Fund's
assets in securities of issuers located in the United States or in money market
instruments, including short-term bank obligations, such as certificates of
deposit. It is impossible to predict when, or for how long, the Fund will use
these alternative strategies.

INTEREST RATE RISK. The market value of the Fund's investments will
change in response to changes in interest rates and other factors. During
periods of falling interest rates, the values of long-term, fixed income
securities generally rise. Conversely, during periods of rising interest rates,
the values of such securities generally decline. Changes in exchange rates for
foreign currencies may affect the value of portfolio securities denominated in
those currencies. Changes by recognized rating services in their ratings of
securities and in the ability of an issuer to make payments of interest and
principal may also effect the value of these investments. Changes in the value
of portfolio securities generally will not affect interest income derived from
those securities, but will affect the Fund's net asset value. Exchange rate
fluctuations, however, may impact both the value of a particular investment and
the income derived from that investment.

FOREIGN INVESTMENTS. Investments in sovereign debt of foreign issuers
and other foreign securities involve risks that may not be present in domestic
investments. Since foreign securities are typically denominated in foreign
currencies, the value of the assets of the Fund and its net investment income
available for distribution may be affected favorably or unfavorably by changes
in currency exchange rates

-6-
<PAGE> 51
and exchange control regulations. The Fund will not invest in securities
denominated in a foreign currency that is not fully exchangeable into U.S.
dollars without legal restriction at the time of investment.

There may be less information publicly available about a foreign issuer
than about a U.S. issuer, and foreign issuers are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the United States. The willingness and ability of sovereign issuers
to pay principal and interest on government securities depends on various
economic factors, including without limitation the issuer's balance of payments
and its overall debt level, as well as cash flow considerations related to the
availability of tax or other revenues to satisfy the issuer's obligations. The
securities of some foreign issuers are less liquid and at times more volatile
than securities of comparable U.S. issuers. Foreign brokerage commissions and
other fees are also generally higher than in the United States. Foreign
settlement procedures and trade regulations may involve certain risks (such as
delay in payment or delivery of securities or in the recovery of the Fund's
assets held abroad) and expenses not present in the settlement of domestic
investments.

In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange controls, confiscatory
taxation, political or financial instability and diplomatic developments which
could affect the value of investments in certain foreign countries.

Legal remedies available to investors in certain foreign countries may
be more limited than those available with respect to investments in the United
States or in other foreign countries. The laws of some foreign countries may
limit investments in securities of certain issuers located in those foreign
countries.

Special tax considerations apply to foreign securities. In determining
whether to invest in securities of foreign issuers, the Sub-Adviser will
consider the likely impact of foreign taxes on the net yield available to the
Fund and its shareholders. Income received by the Fund from sources within
foreign countries may be reduced by withholding and other taxes imposed by such
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Any such taxes paid by the Fund will reduce its
net income available for distribution to shareholders.

Because the Fund intends to purchase securities denominated in foreign
currencies, a change in the value of any such currency against the U.S. dollar
will result in a change in the U.S. dollar value of the Fund's assets and the
Fund's income available for distribution. In addition, although at times most of
the Fund's income may be received or realized in these currencies, the Fund will
be required to compute and distribute its income in U.S. dollars. Therefore, if
the exchange rate for any such currency declines after the Fund's income has
been earned and translated into U.S. dollars but before payment, the Fund could
be required to liquidate portfolio securities to make such distributions.
Similarly, if an exchange rate declines between the time the Fund incurs
expenses in U.S. dollars and the time such expenses are paid, the amount of such
currency required to be converted into U.S. dollars in order to pay such
expenses in U.S. dollars will be greater than the equivalent amount in any such
currency of such expenses at the time they were incurred.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. The Fund may engage in foreign
currency exchange transactions to protect against uncertainty in the level of
future exchange rates. The Sub-Adviser may engage in foreign currency exchange
transactions in connection with the purchase and sale of portfolio securities
("transaction hedging") and to protect the value of specific portfolio positions
("position hedging"). The Sub-Adviser's decision as to whether and to what
extent to hedge the Fund's foreign currency risk is dependent upon a number of
factors, and, as a result, there can be no assurances that the Fund's portfolio
will be hedged at any particular time.

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<PAGE> 52
The Fund may engage in "transaction hedging" to protect against a
change in the foreign currency exchange rate between the date on which the Fund
contracts to purchase or sell the security and the settlement date, or to "lock
in" the value of a dividend or interest payment in a particular currency. The
Fund may purchase or sell a foreign currency on a spot (or cash) basis at the
prevailing spot rate in connection with the settlement of transactions in
portfolio securities denominated in that foreign currency.

If conditions warrant, the Fund may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward contracts") and
may purchase and sell foreign currency futures contracts as part of its
transaction hedging strategies. A foreign currency forward contract is a
negotiated agreement to exchange currency at a future time at a rate or rates
that may be higher or lower than the spot rate. Foreign currency futures
contracts are standardized exchange-traded contracts and have margin
requirements. The Fund may also purchase exchange-listed and over-the-counter
call and put options on foreign currency futures contracts and on foreign
currencies.

The Fund may engage in "position hedging" to protect against a decline
in the value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in the value of
the foreign currencies for securities which the Fund intends to buy, when the
Fund holds cash reserves or short-term investments). For position hedging
purposes, the Fund may purchase or sell foreign currency futures contracts and
foreign currency forward contracts, and put and call options on foreign currency
futures contracts and on foreign currencies on exchanges or over-the-counter
markets. In connection with position hedging, the Fund may also purchase or sell
foreign currencies on a spot basis.

The Fund's currency hedging transactions may call for the delivery of
one foreign currency in exchange for another foreign currency and may at times
involve a currency other than that in which the particular securities that are
the subject of the hedge are denominated or in which any of the Fund's portfolio
securities are then denominated. These transactions involve the risk of
imperfect correlation between changes in the values of the currencies to which
such transactions relate and changes in the value of the currency or other asset
or liability which is the subject of the hedge.

OPTIONS AND FUTURES PORTFOLIO STRATEGIES. The Fund may purchase and
sell call and put options with respect to securities and currencies. The Fund
receives a premium from writing a call or put option, which increases the Fund's
return if the option expires unexercised or is closed out at a net profit. When
the Fund writes a call option, it gives up the opportunity to profit from any
increase in the price of a security or currency above the exercise price of the
option; when it writes a put option, the Fund takes the risk that it will be
required to purchase a security or currency from the option holder at a price
above the current market price of the security or currency. The Fund may
terminate an option that is has written prior to its expiration by entering into
a closing purchase transaction in which it purchases an option having the same
terms as the option written.

The Fund may also purchase and sell futures contracts and related
options on securities and currencies in order to reduce fluctuations in net
asset value by hedging against a decline in the value of securities or
currencies owned by the Fund or an increase in the value of securities or
currencies which the Fund expects to purchase. A futures contract sale creates
an obligation by the seller to deliver, and by the purchaser to take delivery
of, the type of instrument called for in the contract at a specified future date
at an agreed price. The Fund may also use such techniques, to the extent
permitted by applicable law, as a substitute for direct investment in foreign
securities.

The use of futures and options involves certain special risks and may
result in realization of taxable income or capital gains. Certain risks arise
because of the possibility of imperfect correlations among

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<PAGE> 53

movements in the prices of financial futures and options and movements in
the prices of the underlying securities or currencies or of the securities or
currencies that are the subject of the hedge. The successful use of futures and
options further depends on the Sub-Adviser's ability to forecast market
movements correctly. Other risks arise from the Fund's potential inability to
close out its futures or options positions, and there can be no assurance that a
liquid secondary market will exist for any futures contract or option at a
particular time. If the Fund purchases or sells options in the over-the-counter
market, the Fund's ability to terminate those option positions may be more
limited than for exchange-traded options and may also involve the risk that
securities dealers participating in such transactions would fail to meet their
obligations to the Fund. Certain regulatory requirements may limit the Fund's
ability to engage in futures and options transactions. Position limits and other
rules of foreign exchanges may differ from those in the United States. Also,
options and futures markets in some countries, many of which are relatively new,
may be less liquid than comparable markets in the United States. See Statement
of Additional Information for additional information regarding the risks of
financial futures and options.

INDEXED SECURITIES. The Fund may invest in indexed securities which are
short to intermediate term fixed-income securities whose values at maturity, or
the interest rates on which, rise or fall according to the change in one or more
specified underlying instruments, such as currencies, securities, interest
rates, commodities, indices, or other financial indicators. Indexed securities
may be positively or negatively indexed (i.e., their value may increase or
decrease if the underlying instrument appreciates), and may have return
characteristics similar to direct investments in the underlying instrument or to
one or more options on the underlying instrument. Indexed securities may be more
volatile than the underlying instrument itself. Because certain foreign markets
may be closed for all practical purposes to U.S. investors such as the Fund, the
Fund may invest indirectly in such markets through the purchase of indexed
securities and would therefore be subject to the risks described above with
respect to investments in foreign securities as well as being subject to the
risk of relying upon the issuer of the indexed security to fulfill its
obligations under the terms of the security. See Statement of Additional
Information for additional information regarding the risks of indexed
securities.

SHORT SALES. The Fund may make short sales of securities. A short sale
is a transaction in which the Fund sells a security it does not own in
anticipation that the market price of that security will decline. When the Fund
makes a short sale, it must borrow the security sold short and deliver it to the
other party to the transaction. Short sales involve certain expenses and entail
risks. The Fund may have to pay a fee to borrow particular securities and is
often obligated to pay over any payments received on such borrowed securities.
The net proceeds of the short sale will be retained by the broker, to the extent
necessary to meet margin requirements, until the short position is closed out.
If the price of the security sold short increases between the time of the short
sale and the time the Fund replaces the borrowed security, the Fund will incur a
loss; conversely, if the price declines, the Fund will realize a gain. Any gain
will be decreased, and any loss increased, by transaction costs. Although the
Fund's gain is limited to the price at which it sold the security short, its
potential loss is unlimited if the Fund does not own the security.

The staff of the Securities and Exchange Commission is of the opinion
that a short sale involves the creation of a senior security and is, therefore,
subject to the limitations of Section 18 of the 1940 Act. The staff has taken
the position that in order to comply with the provisions of Section 18, the Fund
must put in a segregated account (not with the broker) an amount of cash or
United States Government securities equal to the difference between: (a) the
market value of the securities sold short at the time they were sold short, and
(b) any cash or United States Government securities required to be deposited as
collateral with the broker in connection with the short sale (not including the
proceeds from the short sale). In addition, until the Fund replaces the borrowed
security, it must daily maintain the segregated account at such a level that

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<PAGE> 54
the amount deposited in it plus the amount deposited with the broker as
collateral will equal the current market value of the securities sold short. It
is currently expected that no more than 25% of the Fund's net assets will be
used as collateral or deposited in a segregated account in connection with short
sales.

REVERSE REPURCHASE AGREEMENTS. The Fund may enter into reverse
repurchase agreements in which the Fund sells securities to a bank or dealer and
agrees to repurchase them at a mutually agreed date and price. Generally, the
effect of such a transaction is that the Fund can recover all or most of the
cash invested in the portfolio securities involved during the term of the
reverse repurchase agreement, while it will be able to keep the interest income
associated with those portfolio securities. Such transactions are advantageous
if the interest cost to the Fund of the reverse repurchase transaction is less
than the cost of otherwise obtaining the cash.

The Fund will establish a segregated account with its custodian in
which it will maintain cash and/or liquid high grade debt securities equal in
value to its obligations in respect of reverse repurchase agreements. Reverse
repurchase agreements involve the risk that the market value of the securities
that the Fund is obligated to repurchase under the agreement may decline below
the repurchase price. In the event the buyer of securities under a reverse
repurchase agreement files for bankruptcy or becomes insolvent, the Fund's use
of the proceeds of the agreement may be restricted pending a determination by
the other party, or its trustee or receiver, whether to enforce the Fund's
obligation to repurchase the securities.

LOANS OF PORTFOLIO SECURITIES. The Fund may make secured loans of
portfolio securities on up to 33 1/3% of its total assets. The risks in lending
portfolio securities, as with other extensions of credit, consist of possible
delay in recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. However, such loans will be made only to
parties that are believed by the Sub-Adviser to be of relatively high credit
standing. Securities loans are made pursuant to agreements requiring that loans
be continuously secured by collateral in cash or U.S. Government securities at
least equal at all times to the market value of the securities lent. The
borrower pays to the Fund an amount equal to any dividends or interest received
on the securities lent. The Fund may invest the cash collateral received or may
receive a fee from the borrower. Although voting rights or rights to consent
with respect to the loaned securities pass to the borrower, the Fund retains the
right to call the loans at any time on reasonable notice. The Fund may also call
such loans in order to sell the securities involved. The Fund pays various fees
in connection with such loans including shipping fees and reasonable custodian
and placement fees.

PORTFOLIO TURNOVER. Portfolio turnover is not a limiting factor with
respect to investment decisions for the Fund. It is anticipated that under
normal circumstances the annual portfolio turnover rate of the Fund will not
exceed 400%. However, in any particular year, market conditions may result in
greater rates than are currently anticipated. Portfolio turnover involves
brokerage commissions and other transaction costs, which will be borne directly
by the Fund, and could involve realization of capital gains that would be
taxable when distributed to shareholders. To the extent that portfolio turnover
results in realization of net short-term capital gains, such gains are
ordinarily taxed to shareholders at ordinary income tax rates. The portfolio
turnover rate for the Fund is shown in the section "Financial Highlights." See
"Taxes" below and "Portfolio Transactions" in the Statement of Additional
Information for additional information. The tax consequences of portfolio
transactions may be a secondary consideration for tax-exempt investors.

REPURCHASE AGREEMENTS. The Fund may enter into repurchase agreements.
Under repurchase agreements the Fund acquires a security for cash and obtains a
simultaneous commitment from the seller to repurchase the security at an
agreed-upon price and date. The resale price exceeds the acquisition price and
reflects an agreed-upon market rate unrelated to the coupon rate on the
purchased security. Such transactions afford an opportunity for the Fund to earn
a return on temporarily available cash at no market risk, although there is a
risk that the seller may default on its obligation to pay the agreed-upon sum on
the

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<PAGE> 55
redelivery date. Such a default may subject the Fund to expenses, delays and
risks of loss. Repurchase agreements entered into with foreign brokers, dealers
and banks involve additional risks similar to those of investing in foreign
securities.

FIRM COMMITMENTS. The Fund may enter into firm commitment agreements
for the purchase of securities at an agreed-upon price on a specified future
date. The Fund will only enter into firm commitment arrangements with parties
which the Sub-Adviser determines present minimal credit risks. The Fund will
maintain, in a segregated account with its custodian, cash or securities in an
amount equal to the Fund's obligations under firm commitment agreements. The
Fund bears the risk that the other party will fail to satisfy its obligation to
the Fund. Such a default may subject the Fund to expenses, delays and risks of
loss.

DERIVATIVES. Certain of the instruments in which the Fund may invest,
such as indexed securities, forward contracts, futures contracts and options,
are considered to be "derivatives." Derivatives are financial instruments whose
value depends upon, or is derived from, the value of an underlying asset, such
as a security or a currency. The use of such instruments may result in a higher
amount of short-term capital gains (taxed at ordinary income tax rates) than
would result if the Fund did not use such instruments. Further information about
these instruments and the risks involved in their use is included elsewhere in
this prospectus and in the Statement of Additional Information.

CHANGES TO INVESTMENT OBJECTIVE. The investment objective and (except
for policies identified as "fundamental" in this Prospectus or the Statement
of Additional Information) policies of the Fund may be changed by the Trustees
without shareholder approval. Any such change may result in the Fund having an
investment objective and policies different from the objective and policies
which a shareholder considered appropriate at the time of such shareholder's
investment in the Fund. Shareholders of the Fund will be notified of any changes
in the Fund's investment objective or policies through a revised prospectus or
other written communication.

PURCHASE OF SHARES

Shares of the Fund may be purchased either (i) in exchange for common
stocks on deposit at The Depository Trust Company ("DTC") or appropriate fixed
income securities, subject to the determination by the Manager that the
securities to be exchanged are acceptable, (ii) in cash (i.e., by wire transfer)
or (iii) by a combination of such securities and cash. In all cases, the Manager
reserves the right to reject any particular investment. Securities accepted by
the Manager in exchange for Fund shares will be acquired for investment only and
not for resale and will be valued as set forth under "Determination of Net Asset
Value" (generally the last quoted sale price) as of the time of the next
determination of net asset value after such acceptance. All dividends, interest,
subscription or other rights which are reflected in the market

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<PAGE> 56
price of accepted securities at the time of valuation become the property of the
Fund and must be delivered to the Trust upon receipt by the investor from the
issuer. A gain or loss for federal income tax purposes may be realized by
investors subject to Federal income taxation upon the exchange, depending upon
the investor's basis in the securities tendered.

The Manager will not approve the acceptance of securities in exchange
for Fund shares unless (1) the Manager, in its sole discretion, believes the
securities are appropriate investments for the Fund; (2) the investor represents
and agrees that all securities offered to the Fund are not subject to any
restrictions upon their sale by the Fund under the Securities Act of 1933, or
otherwise; and (3) the securities may be acquired under the investment
restrictions applicable to the Fund. Investors interested in purchases through
exchange should telephone the Manager at (617) 225-3800, Attn: Maureen M. Bates.

Investors should call the offices of the Trust before attempting to
place an order for Fund shares. The Trust reserves the right at any time to
reject an order.

The deadline for wiring federal funds to the Trust is 2:00 p.m. Eastern
time; in the case of an investment in-kind, the investor's securities must be
placed on deposit at DTC, and 4:00 p.m. Eastern time is the deadline for
transferring those securities to the account designated by the Fund's custodian.
In most cases, if the consideration is not received by the Trust before the
relevant deadline, the purchase order is not considered to be in good order and
the purchase order and consideration are required to be resubmitted on the
following business day, unless Investors Bank & Trust Company can credit the
consideration to the account for a specific fund.

All federal funds must be transmitted to Investors Bank & Trust Company
to Account No. 777777722 for the account of the Fund.

"Federal funds" are monies credited to Investors Bank & Trust Company's
account with the Federal Reserve Bank of Boston.

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<PAGE> 57
REDEMPTION OF SHARES

Shares of the Fund may be redeemed on any business day in cash or in
kind. The redemption price is the net asset value per share next determined
after receipt of the redemption request in good order. There is no redemption
fee for the Fund. Cash payments generally will be made by transfer of Federal
funds for payment into the investor's account the next business day following
the redemption request. Redemption requests should be sent to Investors Bank &
Trust Company. In order to help facilitate the timely payment of redemption
proceeds, it is recommended that investors telephone the Manager at (617)
225-3800, Attn:
Maureen M. Bates, at least two days prior to submitting a request.

Payment on redemption will be made as promptly as possible and in any
event within seven days after the request for redemption is received by the
Trust in good order. A redemption request is in good order if it includes the
correct name in which shares are registered, the investor's account number and
the number of shares or the dollar amount of shares to be redeemed and if it is
signed correctly in accordance with the form of registration. Persons acting in
a fiduciary capacity, or on behalf of a corporation, partnership or trust must
specify, in full, the capacity in which they are acting. In-kind redemptions, as
described below, will be transferred and delivered as directed by the investor.

DETERMINATION OF NET ASSET VALUE

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<PAGE> 58
price as obtained from one or more dealers that make markets in the securities.
Portfolio securities that are traded both in the over-the-counter market and on
one or more stock exchanges are valued according to the broadest and most
representative market. Unlisted securities for which market quotations are not
readily available are valued at the most recent quoted bid price. Short term
debt securities with a remaining maturity of 60 days or less will be valued at
amortized cost, unless conditions dictate otherwise. Illiquid securities or
restricted securities will be valued at fair value based on information supplied
by a broker. Other assets for which no quotations are readily available are
valued at fair value as determined in good faith in accordance with procedures
adopted by the Trustees of the Trust. Determination of fair value will be based
upon such factors as are deemed relevant under the circumstances, including the
financial condition and operating results of the issuer, recent third party
transactions (actual or proposed) relating to such securities and, in extreme
cases, the liquidation value of the issuer.

Because foreign securities are quoted in foreign currencies,
fluctuations in the value of such securities in relation to the U.S. dollar will
affect the net asset value of shares of the Fund even though there has not been
any change in the values of such securities measured in terms of the foreign
currencies in which they are denominated. The value of foreign securities is
converted into U.S. dollars at the rate of exchange prevailing at the time of
determination of net asset value.

DISTRIBUTIONS

All dividends and/or distributions will be paid in shares of the Fund,
at net asset value, unless the shareholder elects to receive cash. Shareholders
may make this election by marking the appropriate box on the application form or
by writing to Investors Bank & Trust Company.

TAXES

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<PAGE> 59
Shareholders should also consult their own tax advisors about consequences under
foreign, state, local or other applicable tax laws.

FOREIGN WITHHOLDING TAXES. The Fund invests in foreign securities and
therefore may be subject to foreign withholding taxes on income and gains
derived from foreign investments. Such taxes would reduce the yield on the
Fund's investments, but, as discussed below, may be taken as either a deduction
or a credit by U.S. investors if the Fund makes the election described below.

If, at the end of the fiscal year, more than 50% of the total assets of
the Fund are comprised of stock or securities of foreign corporations, the Trust
intends to make an election which allows shareholders whose income from the Fund
is subject to U.S. taxation at the graduated rates applicable to U.S. citizens,
residents or domestic corporations to claim a foreign tax credit or deduction
(but not both) on their U.S. income tax return. In such case, the amount of
qualified foreign income taxes paid by the Fund would be treated as additional
income to Fund shareholders from non-U.S. sources and as foreign taxes paid by
Fund shareholders. Investors should consult their tax advisors for further
information relating to the foreign tax credit and deduction, which are subject
to certain restrictions and limitations (including with respect to a foreign tax
credit, a holding period requirement imposed pursuant to the Taxpayer Relief Act
of 1997). Shareholders of the Fund whose income from the Fund is not subject to
U.S. taxation at the graduated rates applicable to U.S. citizens, residents or
domestic corporations may receive substantially different tax treatment on
distributions by the Fund, and may be disadvantaged as a result of the election
described in this paragraph. Organizations that are exempt from U.S. taxation
will not be affected by the election described above.

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<PAGE> 60

withholding tax of 30% when paid to a non-resident alien individual, foreign
estate or trust, a foreign corporation, or a foreign partnership ("foreign
shareholder"). Persons who are residents in a country, such as the United
Kingdom, that has an income tax treaty with the United States may be eligible
for a reduced withholding rate (upon filing of appropriate forms), and are urged
to consult their tax advisors regarding the applicability and effect of such a
treaty. Distributions of net long-term capital gains to a foreign shareholder
and any gain realized upon the sale of Fund shares by such a shareholder will
ordinarily not be subject to U.S. taxation, unless the recipient or seller is a
nonresident alien individual who is present in the United States for more than
182 days during the taxable year, and certain other conditions apply. Foreign
shareholders with respect to whom income from the Fund is "effectively
connected" with a U.S. trade or business carried on by such shareholder,
however, will in general be subject to U.S. federal income tax on the income
derived from the Fund at the graduated rates applicable to U.S. citizens,
residents or domestic corporations, whether such income is received in cash or
reinvested in shares, and may also be subject to a branch profits tax. Again,
foreign shareholders who are residents in a country with an income tax treaty
with the United States may obtain different tax results and all foreign
investors are urged to consult their tax advisors.

NEW WITHHOLDING TAX RULES FOR PAYMENTS AFTER 1999. The Internal Revenue
Service recently revised its regulations affecting the application to foreign
investors of the back-up withholding and withholding tax rules described above.
The new regulations will generally be effective for payments made on or after
January 1, 1999 (although transition rules will apply). In some circumstances,
the new rules will increase the certification and filing requirements imposed on
foreign investors in order to qualify for exemption from the 31% back-up
withholding tax and for reduced withholding tax rates under income tax treaties.
The U.S. Treasury Department and the Internal Revenue Service have announced
that the effective date of these regulations will be amended to apply to
payments made on or after January 1, 2000. Foreign investors in the Fund should
consult their tax advisors with respect to the potential application of these
new regulations.

MANAGEMENT OF THE TRUST

The Fund is advised and managed by David L. Babson and Company
Incorporated, One Memorial Drive, Cambridge, Massachusetts 02142, which provides
investment advisory services to a substantial number of institutional and other
investors, including other registered investment companies. David L. Babson &
Co., Inc., a registered investment adviser, is a wholly owned subsidiary of DLB
Acquisition Corp., a holding company, which is controlled by Mass Mutual Holding
Company, a holding company and wholly owned subsidiary of Massachusetts Mutual
Life Insurance Company, a mutual life insurance company.

In order to assist it in carrying out its responsibilities, the Manager
has entered into a Sub-Advisory Agreement (the "Sub-Advisory Agreement") with
Potomac Babson Incorporated (the "Sub-Adviser"), 1290 Avenue of the Americas,
New York, New York 10019, with respect to the management of the Fund's
portfolio. The Sub-Adviser, a registered investment adviser, is a majority-owned
subsidiary of the Manager.

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<PAGE> 61
but excluding brokerage commissions and transfer taxes) would exceed the
percentage of the Fund's average daily net assets set forth below:

Management Fee Expense Limitation
(as a % of Average (as a % of Average
Daily Net Assets) Daily Net Assets)

.75% .80%

These fees and expenses and the terms applicable to them are described under
"Shareholder Transaction and Fund Expenses" above. Under the Fund's
Sub-Advisory Agreement, the Manager pays the Sub-Adviser a monthly fee at the
annual rate of .65% of the Fund's average daily net assets, although the
Sub-Adviser has currently agreed to waive a portion of its fee. Payments made to
the Sub-Adviser by the Manager will not affect the amounts payable by the Fund
to the Manager or the Fund's expense ratio.

Hani Findakly, President of the Sub-Adviser, has been primarily
responsible for the day-to-day management of the Fund since its inception. He
has been employed by the Sub-Adviser (and its predecessor) in portfolio
management for more than five years.

PERFORMANCE INFORMATION

Yield and total return data may from time to time be included in
advertisements about the Fund. "Yield" is calculated by dividing the Fund's
annualized net investment income per share during a recent 30- day period by the
maximum public offering price per share on the last day of that period. "Total
return" for the one-year period and for the life of the Fund, each through the
most recent calendar quarter, represents the average annual compounded rate of
return on an investment of $1000 in the Fund at net asset value (assuming
immediate reinvestment of any dividends or capital gains distributions at net
asset value). Quotations of yield or total return for any period when an expense
limitation was in effect will be greater than if the limitation had not been in
effect. See "Investment Performance" in the Statement of Additional Information.

All data is based on the Fund's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of the Fund's
portfolio, and the Fund's operating expenses. Investment performance also often
reflects the risks associated with the Fund's investment objective and policies.
These factors should be considered when comparing the Fund's investment results
to those of other mutual funds and other investment vehicles.

ORGANIZATION AND CAPITALIZATION OF THE TRUST

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<PAGE> 62

1940, shares shall be voted together as a single class, and (ii) when the
Trustees have determined that the matter affects one or more funds, then only
shareholders of such fund or funds shall be entitled to vote on the matter.
Shares are freely transferable, are entitled to dividends as declared by the
Trustees, and, in liquidation of the fund, are entitled to receive the net
assets of the fund. Shareholders holding a majority of the outstanding shares of
the Trust may remove Trustees from office by votes cast in person or by proxy at
a meeting of shareholders or by written consent. Massachusetts Mutual Life
Insurance Company currently owns more than 25% of the outstanding shares of the
Fund and therefore is deemed to "control" the Fund within the meaning of the
Investment Company Act of 1940.

SHAREHOLDER INQUIRIES

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<PAGE> 63
LEGAL COUNSEL
Ropes & Gray
One International Place
Boston, MA 02110

INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110

CUSTODIAN
Investors Bank & Trust Company

John Hancock Tower

200 Clarendon Street, 16th Floor

Boston, MA 02116

TRANSFER AGENT
Investors Bank & Trust Company
John Hancock Tower
200 Clarendon Street, 5th Floor
Boston, MA 02116

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<PAGE> 64
THE DLB FUND GROUP

DLB FIXED INCOME FUND
DLB SMALL CAPITALIZATION FUND
DLB VALUE FUND
DLB MID CAPITALIZATION FUND
DLB QUANTITATIVE EQUITY FUND
DLB GLOBAL BOND FUND

STATEMENT OF ADDITIONAL INFORMATION

April 30, 1998

This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the prospectuses of The DLB Fund
Group dated April 30, 1998, as amended from time to time, and should be read in
conjunction therewith. Each reference to the term "Prospectus" in this Statement
of Additional Information shall include the Trust's prospectuses relating to the
DLB Fixed Income Fund, the DLB Small Capitalization Fund, the DLB Value Fund,
the DLB Mid Capitalization Fund, the DLB Quantitative Equity Fund and the DLB
Global Bond Fund. A copy of the Prospectus may be obtained free of charge by
writing The DLB Fund Group, c/o David L. Babson and Company Incorporated,
Marketing Department, Attention: Maureen M. Bates, One Memorial Drive,
Cambridge, Massachusetts 02142, or by telephoning (617) 225-3800.

<PAGE> 65
Table of Contents

Caption Page

INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS .................. 1

INVESTMENT RESTRICTIONS .................................................. 1

INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS ........................... 4

MANAGEMENT OF THE TRUST .................................................. 6

INVESTMENT ADVISORY AND OTHER SERVICES ................................... 8

ADDITIONAL INVESTMENT PRACTICES OF THE GLOBAL BOND FUND .................. 11

ADDITIONAL INVESTMENT PRACTICES OF THE GLOBAL BOND AND
QUANTITATIVE EQUITY FUNDS -- FUTURES AND OPTIONS ................ 13

ADDITIONAL INVESTMENT PRACTICES OF THE FIXED INCOME FUND ................. 17

PORTFOLIO TRANSACTIONS ................................................... 20

DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES ......................... 24

INVESTMENT PERFORMANCE ................................................... 29

DETERMINATION OF NET ASSET VALUE ......................................... 31

EXPERTS .................................................................. 31

REPORT OF INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS .................. 31

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<PAGE> 66
INVESTMENT OBJECTIVES AND POLICIES AND ASSOCIATED RISKS

The investment objective and policies of each of the DLB Fixed Income
Fund (the "Fixed Income Fund"), the DLB Global Small Capitalization Fund (the
"Global Small Cap Fund"), the DLB Value Fund (the "Value Fund"), the DLB Mid
Capitalization Fund (the "Mid Cap Fund"), the DLB Quantitative Equity Fund (the
"Quantitative Equity Fund") and the DLB Global Bond Fund (the "Global Bond
Fund") (each a "Fund," and collectively the "Funds") of The DLB Fund Group (the
"Trust") are set forth in the Prospectus.

INVESTMENT RESTRICTIONS

Without a vote of the majority of the outstanding voting securities of
the relevant Fund, the Trust will not take any of the following actions with
respect to any Fund:

(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of the Fund's total assets (not
including the amount borrowed) at the time the borrowing is made, and
then only from banks for temporary, extraordinary or emergency
purposes, except that the Fund may borrow through reverse repurchase
agreements or dollar rolls up to 33 1/3% of the value of the Fund's
total assets. Such borrowings (other than borrowings relating to
reverse repurchase agreements and dollar rolls) will be repaid before
any investments are purchased.

(2) Underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under federal
securities laws.

(3) Purchase or sell real estate (including real estate
limited partnerships), although it may purchase securities of issuers
which deal in real estate, including securities of real estate
investment trusts, securities which represent interests in real estate
and securities which are secured by interests in real estate, and the
Fund may acquire and dispose of real estate or interests in real estate
acquired through the exercise of its rights as a holder of debt
obligations secured by real estate or interests therein or for use as
office space for the Fund.

(4) Make loans, except by purchase of debt obligations
(including nonpublicly traded debt obligations), by entering into
repurchase agreements or through the lending of the Fund's portfolio
securities. Loans of portfolio securities may be made with respect to
up to 100% of the Fund's assets in the case of each Fund.

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<PAGE> 67
(5) Issue any senior security (as that term is defined in the
Investment Company Act of 1940 (the "1940 Act")), if such issuance is
specifically prohibited by the 1940 Act or the rules and regulations
promulgated thereunder. (The Funds have no intention of issuing senior
securities except as set forth in Restriction 1 above.)

(6) Invest 25% or more of the value of its total assets in
securities of issuers in any one industry. (Securities issued or
guaranteed as to principal or interest by the U.S. Government or its
agencies or instrumentalities are not considered to represent
industries.)

(7) Purchase or sell commodities or commodity contracts,
including futures contracts, except that the Global Bond Fund and the
Quantitative Equity Fund may purchase and sell futures contracts,
options, including options on commodities and commodity contracts, and
other financial instruments and may enter into foreign exchange
transactions.

Notwithstanding the latitude permitted by Restrictions 1 and 3 above,
no Fund has any current intention in the coming year of (a) borrowing money from
banks, (b) entering into dollar rolls or (c) investing in real estate investment
trusts. In addition, notwithstanding the latitude permitted by Restriction 1
above, no Fund, except the Global Bond Fund, has any current intention in the
coming year of entering into reverse repurchase agreements. The Global Bond
Fund's obligations under reverse repurchase agreements will not exceed 5% of the
Fund's net assets.

It is contrary to the present policy of each Fund, which may be changed
by the Trust's Trustees without shareholder approval, to:

(a) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and sales of
securities.

(b) (All Funds except the Global Bond Fund) Make short sales
of securities or maintain a short position for the Fund's account
unless at all times when a short position is open the Fund owns an
equal amount of such securities or owns securities which, without
payment of any further consideration, are convertible into or
exchangeable for securities of the same issue as, and equal in amount
to, the securities sold short. The Funds (other than the Global Bond
Fund) have no current intention in the coming year of engaging in short
sales or maintaining a short position.

(c) Invest in securities of any issuer if officers and
Trustees of the Trust and officers and partners of David L. Babson and
Company Incorporated (the "Manager") who

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<PAGE> 68
beneficially own more than 1/2 of 1% of the securities of that issuer
together beneficially own more than 5%.

(d) Invest in securities of other investment companies, except
by purchase in the open market involving only customary brokers'
commissions, or in connection with mergers, consolidations or
reorganizations. For purposes of this restriction, foreign banks or
their agents or subsidiaries are not considered investment companies.

(e) Invest in (a) securities which at the time of such
investment are not readily marketable, (b) securities the disposition
of which is restricted under federal securities laws, excluding
restricted securities that have been determined by the Trustees of the
Trust (or the person designated by them to make such determination) to
be readily marketable, and (c) repurchase agreements maturing in more
than seven days if, as a result, more than 15% of the Fund's net assets
(taken at current value) would then be invested in securities described
in (a), (b) and (c) above.

(f) Acquire more than 10% of the voting securities of any
issuer.

(g) Invest in warrants or rights (other than warrants or
rights acquired by the Fund as a part of a unit or attached to
securities at the time of purchase), except that the Fund may invest in
such warrants or rights so long as the aggregate value thereof (taken
at the lower of cost or market) does not exceed 5% of the value of the
Fund's total assets and so long as no more than 2% of its total assets
are invested in warrants that are not listed on the New York Stock
Exchange or the American Stock Exchange.

(h) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts.

(i) Make investments for the purpose of gaining control of a
company's management.

Except as otherwise indicated in Restriction 1 or Restriction (e)
above, all percentage limitations on investments set forth herein and in the
Prospectus will apply at the time of the making of an investment and shall not
be considered violated unless an excess or deficiency occurs or exists
immediately after and as a result of such investment.

The phrase "shareholder approval," as used in the Prospectus, and the
phrase "vote of a majority of the outstanding voting securities," as used herein
with respect to a Fund, means the affirmative vote of the lesser of (1) more
than 50% of the

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<PAGE> 69
outstanding shares of that Fund, or (2) 67% or more of the shares of that Fund
present at a meeting if more than 50% of the outstanding shares are represented
at the meeting in person or by proxy.

INCOME DIVIDENDS, DISTRIBUTIONS AND TAX STATUS

Each Fund intends to qualify each year as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended (the
"Code"). In order to so qualify and to qualify for the favorable tax treatment
accorded regulated investment companies and their shareholders, the Fund must,
among other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to certain securities loans, and gains from the
sale of stock, securities and foreign currencies, or other income (including but
not limited to gains from options, futures or firm commitments) derived with
respect to its business of investing in such stock, securities or currencies;
(b) distribute at least 90% of its dividend, interest and certain other income
(including, in general, short-term capital gains) each year; and (c) diversify
its holdings so that at the end of each fiscal quarter (i) at least 50% of the
market value of the Fund's assets is represented by cash items, U.S. Government
securities, securities of other regulated investment companies, and other
securities, limited in respect of any one issuer to a value not greater than 5%
of the value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities (other than those of the U.S. Government or other
regulated investment companies) of any one issuer or of two or more issuers
which the Fund controls and which are engaged in the same, similar or related
trades or businesses. So long as a Fund qualifies for treatment as a regulated
investment company, the Fund will not be subject to federal income tax on income
paid to its shareholders in the form of dividends or capital gain distributions.

The tax status of each Fund and the distributions which it may make are
summarized in the Prospectus under the heading "Taxes." Each Fund intends to pay
out substantially all of its ordinary income and net short-term capital gains,
and to distribute substantially all of its net capital gain, if any, after
giving effect to any available capital loss carry-over. Net capital gain is the
excess of net long-term capital gain over net short-term capital loss. It is the
policy of each Fund to make distributions sufficient to avoid the imposition of
a 4% excise tax on certain undistributed amounts. A shareholder may be limited
in its ability to recognize losses on the sale of Fund shares if the shareholder
subsequently invests in that Fund or another Fund.

If a Fund engages in certain transactions, such as firm commitments and
hedging transactions, including hedging transactions in options, futures
contracts, and straddles, or other similar transactions, it will be subject to
special tax rules (including constructive sale, mark-to-market, straddle, wash
sale, and short sale rules), the effect of which may be to accelerate income,
defer losses, cause adjustments in the holding periods of the Fund's securities
and convert short-term capital gains or losses into long-term capital gains or
losses. Such transactions may therefore affect the amount, timing and character
of distributions to shareholders.

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<PAGE> 70

The Fund's investment in securities issued at a discount and certain
other obligations will (and investments in securities purchased at a discount
may) require the Fund to accrue and distribute income not yet received. In
such cases, the Fund may be required to sell assets (including when it is not
advantageous to do so) to generate the cash necessary to distribute as
dividends to its shareholders all of its income and gains and therefore to
eliminate any tax liability at the Fund level.

Investment by a Fund in certain "passive foreign investment companies"
could subject the Fund to a U.S. federal income tax or other charge on
distributions received from or the sale of its investment in such a company,
which tax could not be eliminated by making distributions to Fund shareholders.
To avoid this treatment, a Fund may elect to mark to market annually all of its
stock in a passive foreign investment company. Alternatively, if a Fund elects
to treat a passive foreign investment company as a "qualified electing fund,"
different rules would apply, although the Funds do not currently expect to be in
the position to make such elections.

In general, all dividends derived from ordinary income and short-term
capital gain are taxable to investors as ordinary income (subject to special
rules concerning the availability of the dividends-received deduction for
corporations) and distributions of net gains on capital assets held (i) for more
than one year but not more than eighteen months and (ii) for more than 18 months
are taxable to investors as such, regardless of how long a shareholder may have
owned shares in the relevant Fund or whether such distributions are received in
shares or cash. Tax exempt organizations or entities will generally not be
subject to federal income tax on dividends or distributions from a Fund, except
certain organizations or entities, including private foundations, social clubs,
and others, which may be subject to tax on dividends or capital gains. Each
organization or entity should review its own circumstances and the federal tax
treatment of its income.

The dividends-received deduction for corporations will generally apply
to a Fund's dividends paid from investment income to the extent derived from
dividends received by the Fund from domestic corporations that would be entitled
to such deduction in the hands of the Fund if it were a regular corporation. A
corporate shareholder will only be eligible to claim a dividends-received
deduction with respect to a dividend from the Fund if the shareholder held its
shares on the ex-dividend date and for at least 45 more days during the 90-day
period surrounding the ex-dividend date.

Certain of the Funds which invest in foreign securities may be subject
to foreign withholding taxes on income and gains derived from foreign
investments. Such taxes would reduce the yield on the Fund's investments, but,
as discussed below, may be taken as either a deduction or a credit by U.S.
investors if the Fund makes the election described below.

If, at the end of the fiscal year, more than 50% of the total assets of
any Fund are comprised of stock or securities of foreign corporations, the Trust
intends to make an election with respect to the relevant Fund which allows
shareholders whose income from the Fund is subject to U.S. taxation at the
graduated rates applicable to U.S. citizens, residents or domestic corporations
to claim a foreign tax credit or deduction (but not both) on their U.S. income
tax return. In such case, the amount of qualified foreign income taxes paid by
the Fund would be treated as additional income to Fund shareholders from
non-U.S. sources and as foreign taxes paid by Fund shareholders. Investors
should consult their tax advisors for further information relating to the
foreign tax credit

-5-
<PAGE> 71

and deduction, which are subject to certain restrictions and limitations
(including with respect to a foreign tax credit, a holding period requirement
imposed pursuant to the Taxpayer Relief Act of 1997). Shareholders of any of the
Funds whose income from the Fund is not subject to U.S. taxation at the
graduated rates applicable to U.S. citizens, residents or domestic corporations
may receive substantially different tax treatment of distributions by the
relevant Fund, and may be disadvantaged as a result of the election described in
this paragraph. Organizations that are exempt from U.S. taxation will not be
affected by the election described above.

MANAGEMENT OF THE TRUST

The Trustees and officers of the Trust and their principal occupations
during the past five years are as follows:

Trustees

*Ronald E. Gwozdz, age 59, has been the Executive Vice President of the
Manager since July 1991 and Managing Director of Babson-Stewart Ivory
International since 1994, prior to which he was Senior Vice President of
Auburndale Management since January 1990, and before that, President of Plymouth
Funds for Fidelity Investments.

*James W. MacAllen, age 54, Chairman of the Trustees, has been the
President, Chief Executive Officer and a Director of the Manager and a Managing
Director of Babson-Stewart Ivory International since April 1, 1998. He has been
employed as Executive Vice President, Chief Investment Officer and has served a
Director of the Manager since 1996, prior to which he was a Portfolio Manager
for Hagler, Mastrovita & Hewitt, an investment management company, since 1994,
and before that, Chief Investment Officer at Wilmington Capital Management, Inc.

Charles E. Hugel, age 69, serves as a Director of Eaton Corporation, a
manufacturer of auto parts, and Pitney Bowes, Inc., a manufacturer of business
and office equipment. He is also Chairman of the Board of Trustees of Lafayette
College. Mr. Hugel is the former Chairman of Asea Brown Boveri Inc., which
principally engages in the manufacture of electrical equipment and the
generation, transmission, distribution and transportation of power, the former
Chairman, President and Chief Executive Officer of Combustion Engineering, Inc.
and a former Executive Vice President of American Telephone and Telegraph
Company.

Richard A. Nenneman, age 68, is the former Editor-in-Chief of The
Christian Science Monitor and a former Senior Vice President of Girard Bank. He
currently serves as a member of the boards of various civic associations.

Richard J. Phelps, age 69, is the Chief Executive Officer of Phelps
Industries, Inc., a manufacturer of rawhide dog treats. He currently serves as a
director of Superior Pet, U.K. and Superior Pet Australia, both manufacturers of
rawhide dog treats; Bio-Comp, USA, a manufacturer of fertilizer; Stockton
Baseball Co., USA, which operates a minor league baseball team; and
Babson-Stewart Ivory International Fund, Inc.

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<PAGE> 72
*Deemed to be an "interested person" of the Trust and the Manager, as defined by
the 1940 Act

Officers

Ronald E. Gwozdz, President.

DeAnne B. Dupont, age 44, Treasurer, is the Vice President of the
Manager.

Frank L. Tarantino, age 58, Clerk, is the Senior Vice President and
Chief Operating Officer of the Manager. Mr. Tarantino was President of Liberty
Securities Corporation from 1994 to 1997, and was previously Executive Vice
President of State Street Research & Management Company.

The mailing address of each of the officers and Trustees is c/o David
L. Babson and Company Incorporated, One Memorial Drive, Cambridge, Massachusetts
02142.

Except as stated above, the principal occupations of the officers and
Trustees for the last five years have been with the employers as shown above,
although in some cases they may have held different positions with such
employers.

Trustee Compensation

The Trust pays each Trustee who is not an "interested person" of the
Trust a fee for his services. The Trustees periodically review their fees to
assure that such fees continue to be appropriate in light of their
responsibilities as well as in relation to fees paid to Trustees of other mutual
fund complexes. The fees paid to each Trustee by the Trust for the fiscal year
ended 12/31/97 are shown below:

<TABLE>
<CAPTION>
Total Compensation
Aggregate from Registrant
Compensation and Fund Complex
Name of Trustee from Trust* Paid to Trustees
<S> <C> <C>
Ronald E. Gwozdz $ 0 $ 0

Charles E. Hugel 11,000 11,000

Richard A. Nenneman 11,000 11,000

Richard J. Phelps 11,000 11,000

Peter C. Thompson** 0 0

James W. MacAllen 0 0
</TABLE>
- ---------------

*Includes an annual retainer and an attendance fee for each meeting attended.
**Retired from service as a Trustee effective April 22, 1998.

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<PAGE> 73
INVESTMENT ADVISORY AND OTHER SERVICES

Management Contracts

The Trust's investment manager, David L. Babson and Company Incorporated
(the "Manager"), One Memorial Drive, Cambridge, Massachusetts 02142, is a wholly
owned subsidiary of DLB Acquisition Corp., a holding company which is owned by
Mass Mutual Holding Company, a holding company and a wholly owned subsidiary of
Massachusetts Mutual Life Insurance Company, a mutual life insurance company.
Massachusetts Mutual Life Insurance Company also currently owns more than 25% of
such the outstanding shares of each of the Fixed Income Fund, Global Small Cap
Fund, Mid Cap Fund, Quantitative Equity Fund and Global Bond Fund and therefore
is deemed to "control" each such Fund within the meaning of the Investment
Company Act of 1940. As disclosed in the Prospectus under the heading
"Management of the Trust," under separate Management Contracts (each a
"Management Contract") between the Trust and the Manager, subject to such
policies as the Trustees of the Trust may determine, the Manager will furnish
continuously an investment program for each Fund and will make investment
decisions on behalf of the Fund and place all orders for the purchase and sale
of portfolio securities. The Manager has entered into a Sub-Advisory Agreement
with Babson-Stewart Ivory International ("BSII") with respect to the management
of the international component of the Global Small Cap Fund's portfolio and a
Sub-Advisory Agreement with Potomac Babson Incorporated ("PBI") with respect to
the management of the Global Bond Fund. (BSII and PBI are collectively referred
to herein as the "Sub-Advisers.") Subject to the control of the Trustees, the
Manager also manages, supervises and conducts the other affairs and business of
the Trust, furnishes office space and equipment, provides bookkeeping and
certain clerical services and pays all salaries, fees and expenses of officers
and Trustees of the Trust who are affiliated with the Manager. As indicated
under "Portfolio Transactions," the Trust's portfolio transactions may be placed
with broker-dealers which furnish the Manager, at no cost, certain research,
statistical and quotation services of value to the Manager in advising the Trust
or its other clients.

As disclosed in the Prospectus, each of the Funds pays the Manager a
monthly fee at the annual rate of the relevant Fund's average daily net assets
set forth therein. In addition, the Manager has agreed to waive its fee and to
bear certain expenses until further notice to the extent each of the Fund's
annual expenses (including the management fee, but excluding brokerage
commissions and transfer taxes) would exceed the percentage of the Fund's
average daily net assets set forth in the Prospectus. The Sub-Advisers have also
agreed to waive a portion of their fees.

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<PAGE> 74
The Funds paid the following management fees during the periods
indicated:

1. FIXED INCOME FUND

<TABLE>
<CAPTION>
Management
Fiscal Year Management Fee Paid Fee Waived
- ------------------- ------------------- ----------
<S> <C> <C>
1995 $ 0 $ 8,911
1996 $23,616 $23,977
1997 $43,160 $43,352
</TABLE>

2. GLOBAL SMALL CAP FUND

<TABLE>
<CAPTION>
Management
Fiscal Year Management Fee Paid* Fee Waived
- ------------------- ------------------- ----------
<S> <C> <C>
1995 $ 0 $45,284
1996 $ 95,914 $24,608
1997 $105,509 $26,418
</TABLE>

3. VALUE FUND

<TABLE>
<CAPTION>
Management
Fiscal Year Management Fee Paid Fee Waived
- ------------------- ------------------- ----------
<S> <C> <C>
1995 $ 0 $24,862
1996 $ 53,072 $30,836
1997 $131,383 $75,644
</TABLE>

4. MID CAP FUND

<TABLE>
<CAPTION>
Management
Fiscal Year Management Fee Paid Fee Waived
- ------------------- ------------------- ----------
<S> <C> <C>
1995 $ 0 $26,445
1996 $37,317 $37,918
1997 $54,798 $55,036
</TABLE>

- ----------------------------

* Under the relevant Sub-Advisory Agreement, for fiscal years 1995,
1996 and 1997, (i) the Manager paid BSII subadvisory fees of $17,572, $47,957
and $52,754, respectively, and (ii) BSII waived a portion of its fees in an
amount equal to $4,393, $12,304 and $13,209, respectively.

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<PAGE> 75
5. GLOBAL BOND FUND

<TABLE>
<CAPTION>
Management
Fiscal Year Management Fee Paid** Fee Waived
- ------------------- ------------------- ----------
<S> <C> <C>
1996 $ 48,407 $17,775
1997 $149,928 $54,592
</TABLE>

6. QUANTITATIVE EQUITY FUND

<TABLE>
<CAPTION>
Management
Fiscal Year Management Fee Paid Fee Waived
- ------------------- ------------------- ----------
<S> <C> <C>
1996 $ 24,714 $ 9,094
1997 $110,944 $40,577
</TABLE>

Each Management Contract provides that the Manager shall not be subject
to any liability in connection with the performance of its services thereunder
in the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties.

Each Management Contract has an initial two-year term and will continue
in effect thereafter indefinitely so long as its continuance is approved at
least annually by (i) vote, cast in person at a meeting called for that purpose,
of a majority (or one, if there is only one) of those Trustees who are not
"interested persons" of the Manager or the Trust, and by (ii) the majority vote
of either the full Board of Trustees or the vote of a majority of the
outstanding shares of the relevant Fund. Each Management Contract automatically
terminates on assignment and is terminable on not more than 60 days' notice by
the Trust to the Manager. In addition, each Management Contract may be
terminated on not more than 60 days' written notice by the Manager to the Trust.

The Sub-Advisory Agreements contain provisions similar to those
contained in the Management Contracts.

Custodial Arrangements. Investors Bank & Trust Company ("IBT") serves
as the Trust's custodian on behalf of the Funds. As such, IBT holds in
safekeeping certificated securities and cash belonging to a Fund and, in such
capacity, is the registered owner of securities in book-entry form belonging to
a Fund. Upon instruction, IBT receives and delivers cash and securities of a
Fund in connection with Fund transactions and collects all dividends and other
distributions made with respect to Fund portfolio securities. IBT also maintains
certain accounts and records of the Trust and calculates the total net asset
value, total net income and net asset value per share of each Fund on a daily
basis.

Transfer Agent. IBT also serves as the Trust's transfer agent on
behalf of the Funds.

- -------------------------------

** Under the relevant Sub-Advisory Agreement, for the fiscal years 1996
and 1997, the Manager paid PBI subadvisory fees of $41,953 and $129,943,
respectively, and PBI waived a portion of its fees in an amount equal to $15,406
and $47,315, respectively.

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<PAGE> 76
ADDITIONAL INVESTMENT PRACTICES OF THE GLOBAL BOND FUND

As described in its Prospectus, the Global Bond Fund can engage in
foreign currency exchange transactions and may invest in indexed securities. The
following sections provide more detailed information about these practices.

Foreign Currency Transactions. The Fund may conduct foreign currency
transactions on a spot (i.e., cash) basis or by entering into forward contracts
to purchase or sell foreign currencies at a future date and price. The Fund will
convert currency on a spot basis from time to time, and investors should be
aware of the costs of currency conversion. Although foreign exchange dealers
generally do not charge a fee for conversion, they do realize a profit based on
the difference between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to the Fund at
one rate, while offering a lesser rate of exchange should the Fund desire to
resell that currency to the dealer. Forward contracts are generally traded in an
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. The parties to a forward contract may
agree to offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated currency exchange. The Fund
may use currency forward contracts for any purpose consistent with its
investment objective. The following discussion summarizes the principal currency
management strategies involving forward contracts that could be used by the
Fund. The Fund may also use indexed securities and options and futures contracts
relating to foreign currencies for the same purposes.

When the Fund agrees to buy or sell a security denominated in a foreign
currency, it may desire to "lock in" the U.S. dollar price of the security. By
entering into a forward contract for the purchase or sale, for a fixed amount of
U.S. dollars, of the amount of foreign currency involved in the underlying
security transaction, the Fund will be able to protect itself against an adverse
change in foreign currency values between the date the security is purchased or
sold and the date on which payment is made or received. This technique is
sometimes referred to as a "settlement hedge" or "transaction hedge." The Fund
may also enter into forward contracts to purchase or sell a foreign currency in
anticipation of future purchases or sales of securities denominated in foreign
currency, even if the specific investments have not yet been selected by the
Manager or the relevant Sub-Adviser.

The Fund may also use forward contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. For example,
if the Fund owned securities denominated in pounds sterling, it could enter into
a forward contract to sell pounds sterling in return for U.S. dollars to hedge
against possible declines in the pound's value. Such a hedge, sometimes referred
to as a "position hedge," would tend to offset both positive and negative
currency fluctuations, but would not offset changes in security values caused by
other factors. The Fund could also hedge the position by selling another
currency expected to perform similarly to the pounds sterling - for example, by
entering into a forward contract to sell deutschemarks or European Currency
Units in return for U.S. dollars. This type of hedge, sometimes referred to

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<PAGE> 77
as a "proxy hedge," could offer advantages in terms of cost, yield, or
efficiency, but generally would not hedge currency exposure as effectively as a
simple hedge into U.S. dollars. Proxy hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in which the
hedged securities are denominated.

The Fund may enter into forward contracts to shift its investment
exposure from one currency into another. This may include shifting exposure from
U.S. dollars to a foreign currency, or from one foreign currency to another
foreign currency. For example, if the Fund held investments denominated in
deutschemarks, the Fund could enter into forward contracts to sell deutschemarks
and purchase Swiss francs. This type of strategy, sometimes known as a
"cross-hedge," will tend to reduce or eliminate exposure to the currency that is
sold, and increase exposure to the currency that is purchased, much as if the
Fund had sold a security denominated in one currency and purchased an equivalent
security denominated in another. Cross-hedges protect against losses resulting
from a decline in the hedged currency, but will cause the Fund to assume the
risk of fluctuations in the value of the currency it purchases.

Under certain conditions, SEC guidelines require mutual funds to set
aside appropriate liquid assets in a segregated custodial account to cover
currency forward contracts. To the extent required by SEC guidelines, the Fund
will segregate assets to cover currency forward contracts.

Successful use of currency management strategies will depend on the
Manager's or relevant Sub-Adviser's skill in analyzing and predicting currency
values. Currency management strategies may substantially change the Fund's
investment exposure to changes in currency exchange rates, and could result in
losses to the Fund if currencies do not perform as the Manager or relevant
Sub-Adviser anticipates. For example, if a currency's value rose at a time when
the Manager or relevant Sub-Adviser had hedged the Fund by selling that currency
in exchange for dollars, the Fund would be unable to participate in the
currency's appreciation. If the Manager or relevant Sub-Adviser hedges currency
exposure through proxy hedges, the Fund could realize currency losses from the
hedge and the security position at the same time if the two currencies do not
move in tandem. Similarly, if the Manager or relevant Sub-Adviser increases the
Fund's exposure to a foreign currency, and that currency's value declines, the
Fund will realize a loss. There is no assurance that the Manager's or
Sub-Adviser's use of currency management strategies will be advantageous to the
Fund or that it will hedge at an appropriate time.

Indexed Securities. The Fund may purchase securities whose prices are
indexed to the prices of other securities, securities indices, currencies,
precious metals or other commodities, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits whose
value at maturity or coupon rate is determined by reference to a specific
instrument or statistic. Gold-indexed securities, for example, typically provide
for a maturity value that depends on the price of gold, resulting in a security
whose price tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt securities whose
maturity values or interest rates are determined by reference to the values of
one or more specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed securities
may be positively or negatively

-12-
<PAGE> 78
indexed; that is, their maturity value may increase when the specified currency
value increases, resulting in a security that performs similarly to a
foreign-denominated instrument, or their maturity value may decline when foreign
currencies increase, resulting in a security whose price characteristics are
similar to a put on the underlying currency. Currency-indexed securities may
also have prices that depend on the values of a number of different foreign
currencies relative to each other.

The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the United
States and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates. Indexed
securities may be more volatile than the underlying instruments.

ADDITIONAL INVESTMENT PRACTICES OF THE GLOBAL BOND AND
QUANTITATIVE EQUITY FUNDS -- FUTURES AND OPTIONS

As described in their Prospectuses, the Global Bond and Quantitative
Equity Funds can engage in a variety of transactions using futures and options.
The following sections provide more detailed information about these practices.

Asset Coverage for Futures and Options Positions. The Funds will comply
with guidelines established by the Securities and Exchange Commission with
respect to coverage of options and futures strategies by mutual funds, and if
the guidelines so require will set aside appropriate liquid assets in a
segregated custodial account in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with other suitable assets. As a result,
there is a possibility that segregation of a large percentage of a Fund's assets
could impede portfolio management or the Fund's ability to meet redemption
requests or other current obligations.

Combined Positions. A Fund may purchase and write options in
combination with each other, or in combination with futures or forward
contracts, to adjust the risk and return characteristics of the overall
position. For example, the Fund may purchase a put option and write a call
option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a futures
contract. Another possible combined position would involve writing a call option
at one strike price and buying a call option at a lower price, in order to
reduce the risk of the written call option in the event of a substantial price
increase. Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open and close
out.

Correlation of Price Changes. Because there are a limited number of
types of exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match a Fund's current or anticipated
investments exactly. Each Fund may invest in options and

-13-
<PAGE> 79
futures contracts based on securities with different issuers, maturities, or
other characteristics from the securities in which it typically invests, which
involves a risk that the options or futures position will not track the
performance of the Fund's other investments.

Options and futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments match a Fund's
investments well. Options and futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instruments, and the time remaining until expiration of the contract,
which may not affect security prices the same way. Imperfect correlation may
also result from differing levels of demand in the options and futures markets
and the securities markets, from structural differences in how options and
futures and securities are traded, or from imposition of daily price fluctuation
limits or trading halts. A Fund may purchase or sell options and futures
contracts with a greater or lesser value than the securities it wishes to hedge
or intends to purchase in order to attempt to compensate for differences in
volatility between the contract and the securities, although this may not be
successful in all cases. If price changes in a Fund's options or futures
positions are poorly correlated with its other investments, the positions may
fail to produce anticipated gains or result in losses that are not offset by
gains in other investments.

Futures Contracts. When a Fund purchases a futures contract, it agrees
to purchase a specified underlying instrument at a specified future date. When a
Fund sells a futures contract, it agrees to sell the underlying instrument at a
specified future date. The price at which the purchase and sale will take place
is fixed when a Fund enters into the contract. Some currently available futures
contracts are based on specific securities, such as U.S. Treasury bonds or
notes, and some are based on indices of securities prices, such as the Standard
& Poor's Composite Index of 500 Stocks ("S&P 500"). Futures can be held until
their delivery dates, or can be closed out before then if a liquid secondary
market is available. The value of a futures contract tends to increase and
decrease in tandem with the value of its underlying instrument. Therefore,
purchasing futures contracts will tend to increase a Fund's exposure to positive
and negative price fluctuations in the underlying instrument, much as if it had
purchased the underlying instrument directly. When a Fund sells a futures
contract, by contrast, the value of its futures position will tend to move in a
direction contrary to the market. Selling futures contracts, therefore, will
tend to offset both positive and negative market price changes, much as if the
underlying instrument had been sold.

Futures Margin Payments. The purchaser or seller of a futures contract
is not required to deliver or pay for the underlying instrument unless the
contract is held until the delivery date. However, both the purchaser and seller
are required to deposit "initial margin" with a futures broker, known as a
futures commission merchant ("FCM"), when the contract is entered into. Initial
margin deposits are typically equal to a percentage of the contract's value. If
the value of either party's position declines, that party will be required to
make additional "variation margin" payments to settle the change in value on a
daily basis. The party that has a gain may be entitled to receive all or a
portion of this amount. Initial and variation margin payments do not constitute
purchasing securities on margin for purposes of a Fund's investment limitations.
In the event of the bankruptcy of an FCM that holds margin on behalf of a Fund,
the Fund may be entitled to

-14-
<PAGE> 80
return of margin owed to it only in proportion to the amount received by the
FCM's other customers, potentially resulting in losses to the Fund.

Limitations on Futures and Options Transactions. The Funds have filed
notices of eligibility for exclusion from the definition of the term "commodity
pool operator" with the Commodity Futures Trading Commission ("CFTC") and the
National Futures Association, which regulate trading in the futures markets. The
Funds intend to comply with Rule 4.5 under the Commodity Exchange Act. To the
extent the Funds do not engage in commodity futures or commodity options for
"bona fine" hedging purposes, the Rule requires each Fund to limit the initial
margin and premiums paid to establish such positions to 5% of net assets. The
amount by which a commodity option is "in the money" is excluded for these
purposes.

Liquidity of Options and Futures Contracts. There is no assurance a
liquid secondary market will exist for any particular options or futures
contract at any particular time. Options may have relatively low trading volume
and liquidity if their strike prices are not close to the underlying
instrument's current price. In addition, exchanges may establish daily price
fluctuation limits for options and futures contracts, and may halt trading if a
contract's price moves upward or downward more than the limit in a given day. On
volatile trading days when the price fluctuation limit is reached or a trading
halt is imposed, it may be impossible for a Fund to enter into new positions or
close out existing positions. If the secondary market for a contract is not
liquid because of price fluctuation limits or otherwise, it could prevent prompt
liquidation of unfavorable positions, and potentially could require a Fund to
continue to hold a position until delivery or expiration regardless of changes
in its value. As a result, a Fund's access to other assets held to cover its
options or futures positions could also be impaired.

Options and Futures Relating to Foreign Currencies (Global Bond Fund
only). Currency futures contracts are similar to forward currency exchange
contracts, except that they are traded on exchanges (and have margin
requirements) and are standardized as to contract size and delivery date. Most
currency futures contracts call for payment or delivery in U.S. dollars. The
underlying instrument of a currency option may be a foreign currency, which
generally is purchased or delivered in exchange for U.S. dollars, or may be a
futures contract. The purchaser of a currency call obtains the right to purchase
the underlying currency, and the purchaser of a currency put obtains the right
to sell the underlying currency.

The uses and risks of currency options and futures are similar to
options and futures relating to securities or indices, as discussed above. The
Fund may purchase and sell currency futures and may purchase and write currency
options to increase or decrease its exposure to different foreign currencies.
The Fund may also purchase and write currency options in conjunction with each
other or with currency futures or forward contracts. Currency futures and
options values can be expected to correlate with exchange rates, but may not
reflect other factors that affect the value of the Fund's investments. A
currency hedge, for example, should protect a Yen-denominated security from a
decline in the yen, but will not protect the Fund against a price decline
resulting from deterioration in the issuer's creditworthiness. Because the value
of the Fund's foreign-denominated investments changes in response to many
factors other than exchange

-15-
<PAGE> 81
rates, it may not be possible to match the amount of currency options and
futures to the value of the Fund's investments exactly over time.

OTC Options. Unlike exchange-traded options, which are standardized
with respect to the underlying instrument, expiration date, contract size, and
strike price, the terms of over-the-counter ("OTC") options (options not traded
on exchanges) generally are established through negotiation with the other party
to the option contract. While this type of arrangement allows a Fund greater
flexibility to tailor an option to its needs, OTC options generally involve
greater credit risk than exchange-traded options, which are guaranteed by the
clearing organization of the exchanges where they are traded.

Purchasing Put and Call Options. By purchasing a put option, a Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. In return for this right, the Fund pays the
current market price for the option (known as the option premium). Options have
various types of underlying instruments, including specific securities, indices
of securities prices, and futures contracts. A Fund may terminate its position
in a put option it has purchased by allowing it to expire or by exercising the
option. If the option is allowed to expire, the Fund will lose the entire
premium it paid. If the Fund exercises the option, it completes the sale of the
underlying instrument at the strike price. The Fund may also terminate a put
option position by closing it out in the secondary market at its current price,
if a liquid secondary market exists.

The buyer of a typical put option can expect to realize a gain if
security prices fall substantially. However, if the underlying instrument's
price does not fall enough to offset the cost of purchasing the option, a put
buyer can expect to suffer a loss (limited to the amount of the premium paid,
plus related transaction costs).

The features of call options are essentially the same as those of put
options, except that the purchaser of a call option obtains the right to
purchase, rather than sell, the underlying instrument at the option's strike
price. A call buyer typically attempts to participate in potential price
increases of the underlying instrument with risk limited to the cost of the
option if security prices fall. At the same time, the buyer can expect to suffer
a loss if security prices do not rise sufficiently to offset the cost of the
option.

Writing Put and Call Options. When a Fund writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the Fund assumes the obligation to pay the strike price
for the option's underlying instrument if the other party to the option chooses
to exercise it. When writing an option on a futures contract, the Fund will be
required to make margin payments to an FCM as described above for futures
contracts. The Fund may seek to terminate its position in a put option it writes
before exercise by closing out the option in the secondary market at its current
price. If the secondary market is not liquid for a put option the Fund has
written, however, the Fund must continue to be prepared to pay the strike price
while the option is outstanding, regardless of price changes, and must continue
to set aside assets to cover its position.

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<PAGE> 82
If security prices rise, a put writer would generally expect to profit,
although its gain would be limited to the amount of the premium it received. If
security prices remain the same over time, it is likely that the writer will
also profit, because it should be able to close out the option at a lower price.
If security prices fall, the put writer would expect to suffer a loss. This loss
should be less than the loss from purchasing the underlying instrument directly,
however, because the premium received for writing the option should mitigate the
effects of the decline. Writing a call option obligates a Fund to sell or
deliver the option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options are similar
to those of writing put options, except that writing calls generally is a
profitable strategy if prices remain the same or fall. Through receipt of the
option premium, a call writer mitigates the effects of a price decline. At the
same time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
a call writer gives up some ability to participate in security price increases.

ADDITIONAL INVESTMENT PRACTICES OF THE FIXED INCOME FUND

In addition to the investment practices described in detail in the
Fund's Prospectus under the heading "Investment Objectives and Policies and
Associated Risks - Fixed Income Fund," the Fixed Income Fund may also engage, to
a limited extent, in the following investment practices, which are identified in
the Prospectus and more fully described below. The Fund currently intends to
invest less than 5% of its net assets in each of these instruments in the coming
year.

Strips and Residuals. The Fund may invest in stripped mortgage-backed
securities which are usually structured with two classes that receive different
portions of the interest and principal distributions on a pool of mortgage
loans. The Fund may invest in both the interest-only or "IO" class and the
principal-only or "PO" class. Prepayments could result in losses on such
stripped mortgage-backed securities. The yield to maturity on an IO class of
stripped mortgage-backed securities is extremely sensitive not only to changes
in prevailing interest rates but also to the rate of principal payments
(including prepayments) on the underlying assets. A rapid rate of principal
prepayments may have a measurably adverse effect on the Fund's yield to maturity
to the extent it invests in IOs. If the assets underlying the IO experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities. Conversely, POs tend to
increase in value if prepayments are greater than anticipated and decline if
prepayments are slower than anticipated. Stripped mortgage-backed securities may
have limited liquidity. The Fund may also invest in IO or PO strips relating to
other types of fixed income securities, such as asset-backed securities. Such
investments would be subject similar to risks similar to those described above.

Residuals also involve the additional risk of loss of the entire value
of the investment if the underlying securities are prepaid. In addition, if a
CMO (as defined in the Prospectus) bears interest at an adjustable rate, the
cash flows on the related Residual will also be extremely sensitive to the level
of the index upon which the rate adjustments are based.

-17-
<PAGE> 83
Zero Coupon Securities. The Fund may invest in "zero coupon" fixed
income securities. The Fund is required to accrue interest income on these
securities at a fixed rate based on the initial purchase price and the length to
maturity, but these securities do not pay interest in cash on a current basis.
The Fund is required to distribute the income on these securities to its
shareholders as the income accrues, even though the Fund is not receiving the
income in cash on a current basis. Thus, the Fund may have to sell other
investments to obtain cash to make income distributions. The market value of
zero coupon securities is often more volatile than that of non-zero coupon fixed
income securities of comparable quality and maturity.

Indexed Securities. The Fund may purchase securities the redemption
values and/or the coupons of which are indexed to the prices of other
securities, securities indices, precious metals or other commodities, or other
financial indicators. Indexed securities typically, but not always, are debt
securities or deposits whose value at maturity or coupon rate is determined by
reference to a specific instrument or statistic. Gold-indexed securities, for
example, typically provide for a maturity value that depends on the price of
gold, resulting in a security whose price tends to rise and fall together with
gold prices.

The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the U.S. and
abroad. At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Indexed securities
may be more volatile than the underlying instrument.

Indexed securities in which the Fund may invest include so-called
"inverse floating obligations" or "residual interest bonds" on which the
interest rates typically decline as short-term market interest rates increase
and increase as short-term market rates decline. Such securities have the effect
of providing a degree of investment leverage because they will generally
increase or decrease in value in response to changes in market interest rates at
a rate which is a multiple of the rate at which fixed-rate long-term securities
increase or decrease in response to such changes. As a result, the market values
of such securities will generally be more volatile than the market values of
fixed rate securities.

Loans and Other Direct Debt Instruments. The Fund may invest in direct
debt instruments which are interests in amounts owed by a corporate,
governmental, or other borrower to lenders or lending syndicates (loans and loan
participations), to suppliers of goods or services (trade claims or other
receivables), or to other parties. Direct debt instruments are subject to the
Fund's policies regarding the quality of debt securities.

Purchasers of loans and other forms of direct indebtedness depend
primarily upon the creditworthiness of the borrower for payment of principal and
interest. Direct debt instruments may not be rated by any nationally recognized
rating agency. Loans that are fully secured offer the Fund more protection than
an unsecured loan in the event of non-payment of scheduled interest or
principal. However, there is no assurance that the liquidation of collateral
from a secured loan

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<PAGE> 84
would satisfy the borrower's obligation, or that the collateral can be
liquidated. Indebtedness of borrowers whose creditworthiness is poor involves
substantially greater risks, and may be highly speculative. Borrowers that are
in bankruptcy or restructuring may never pay off their indebtedness, or may pay
only a small fraction of the amount owed. Direct indebtedness of emerging
countries will also involve a risk that the governmental entities responsible
for the repayment of the debt may be unable, or unwilling, to pay interest and
repay principal when due.

Investments in loans through direct assignment of a financial
institution's interest with respect to a loan may involve additional risks to
the Fund. For example, if a loan is foreclosed, the Fund could become part owner
of any collateral, and would bear the costs and liabilities associated with
owning and disposing of the collateral. In addition, it is conceivable that
under emerging legal theories of lender liability, the Fund could be held liable
as a co-lender. Direct debt instruments may also involve a risk of insolvency of
the lending bank or other intermediary.

A loan is often administered by a bank or other financial institution
that acts as agent for all holders. The agent administers the terms of the loan,
as specified in the loan agreement. The Fund may have to rely on the agent to
collect and pass on to the Fund any payments received from the borrower and to
apply appropriate credit remedies against a borrower. When the Fund is required
to rely upon a financial institution to pass on to the Fund principal and
interest, the Fund will evaluate the creditworthiness of such financial
institution as well as the creditworthiness of the borrower.

Direct indebtedness purchased by the Fund may include letters of
credit, revolving credit facilities, or other standby financing commitments
obligating the Fund to pay additional cash on demand. These commitments may have
the effect of requiring the Fund to increase its investment in a borrower at a
time when it would not otherwise have done so. The Fund will set aside
appropriate liquid assets in a segregated custodial account to cover its
potential obligations under standby financing commitments.

Reverse Repurchase Agreements and Dollar Roll Agreements. The Fund may
enter into reverse repurchase agreements and dollar roll agreements with banks
and brokers to enhance return.

Reverse repurchase agreements involve sales by the Fund of portfolio
assets concurrently with an agreement by the Fund to repurchase the same assets
at a later date at a fixed price. During the reverse repurchase agreement
period, the Fund continues to receive principal and interest payments on these
securities and also has the opportunity to earn a return on the collateral
furnished by the counterparties to secure their obligation to redeliver the
securities.

Dollar rolls are transactions in which the Fund sells securities for
delivery in the current month and simultaneously contracts to repurchase
substantially similar (same type and coupon) securities on a specified future
date. During the roll period, the Fund forgoes principal and interest paid on
the securities. The Fund is compensated by the difference between the current

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<PAGE> 85
sales price and the forward price for the future purchase (often referred to as
the "drop") as well as by the interest earned on the cash proceeds of the
initial sale.

The Fund will establish segregated accounts with its custodian in which
it will maintain assets equal in value to its obligations in respect of reverse
repurchase agreements and dollar rolls. Reverse repurchase agreements involve
the risk that the market value of the securities retained by the Fund may
decline below the price of the securities the Fund has sold but is obligated to
repurchase under the agreement. In the event the buyer of securities under a
reverse repurchase agreement or dollar roll files for bankruptcy or becomes
insolvent, the Fund's use of the proceeds of the agreement may be restricted
pending a determination by the other party, or its trustee or receiver, whether
to enforce the Fund's obligation to repurchase the securities. Reverse
repurchase agreements and dollar rolls are considered borrowings by the Fund for
purposes of the Fund's fundamental investment restriction with respect to
borrowings.

PORTFOLIO TRANSACTIONS

Investment Decisions

Investment decisions for the Funds and for the other investment
advisory clients of the Manager and the Sub-Advisers and their affiliates are
made with a view to achieving their respective investment objectives. Investment
decisions are the product of many factors in addition to basic suitability for
the particular client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or sold for other
clients at the same time. Likewise, a particular security may be bought for one
or more clients when one or more other clients are selling the security. In some
instances, one client may sell a particular security to another client. It also
sometimes happens that two or more clients simultaneously purchase or sell the
same security, in which event each day's transactions in such security are,
insofar as possible, averaged as to price and allocated between such clients in
a manner which in the Manager's or the Sub-Adviser's opinion is equitable to
each and in accordance with the amount being purchased or sold by each. There
may be circumstances when purchases or sales of portfolio securities for one or
more clients will have an adverse effect on other clients.

Brokerage and Research Services

Transactions on U.S. stock exchanges, commodities markets and futures
markets and other agency transactions involve the payment by a Fund of
negotiated brokerage commissions. Such commissions vary among different brokers.
A particular broker may charge different commissions according to such factors
as the difficulty and size of the transaction. Transactions in foreign
investments often involve the payment of fixed brokerage commissions, which may
be higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid by a Fund usually includes an undisclosed dealer commission or
mark-up. In underwritten offerings, the price paid by a Fund includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.
It is anticipated that most purchases and sales of securities by the Fixed
Income Fund and the Global Bond Fund

-20-
<PAGE> 86
will be with the issuer or with underwriters of or dealers in those securities,
acting as principal. Accordingly, such Funds would not ordinarily pay
significant brokerage commissions with respect to securities transactions.

It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Manager and the Sub-Advisers may receive brokerage and research
services and other similar services from many broker-dealers with which the
Manager and the Sub-Advisers place the Funds' portfolio transactions and from
third parties with which these broker-dealers have arrangements. These services
may include such matters as general economic and market reviews, industry and
company reviews, evaluations of investments, recommendations as to the purchase
and sale of investments, newspapers, magazines, pricing services, quotation
services, news services and personal computers utilized by the Manager's or
Sub-Adviser's investment professionals. Where the services referred to above are
not used exclusively by the Manager or a Sub-Adviser for research purposes, the
Manager or Sub-Adviser, based upon allocations of expected use, would bear that
portion of the cost of these services which directly relates to their
non-research use. Some of these services may be of value to the Manager, the
Sub-Advisers or their affiliates in advising various of their clients (including
the Funds), although not all of these services would necessarily be useful and
of value in managing the Funds or any particular Fund. The management fee paid
by each Fund is not reduced because the Manager, the Sub-Advisers or their
affiliates may receive these services even though the Manager or the
Sub-Advisers might otherwise be required to purchase some of these services for
cash.

The Manager and Sub-Advisers each place orders for the purchase and
sale of portfolio investments for the Funds and buy and sell investments for the
Funds through a substantial number of brokers and dealers. In so doing, the
Manager and the Sub-Advisers use their best efforts to obtain for the Funds the
most favorable price and execution available, except to the extent they may be
permitted to pay higher brokerage commissions as described below. In seeking the
most favorable price and execution, the Manager and the Sub-Advisers, having in
mind each Fund's best interests, consider all factors they deem relevant,
including, by way of illustration, price, the size of the transaction, the
nature of the market for the security or other investment, the amount of the
commission, the timing of the transaction taking into account market prices and
trends, the reputation, experience and financial stability of the broker-dealer
involved and the quality of service rendered by the broker-dealer in other
transactions.

As permitted by Section 28(e) of the 1934 Act, and by each Management
Contract or, as applicable, the Sub-Advisory Agreements, the Manager and the
Sub-Advisers may cause a Fund to pay a broker-dealer which provides "brokerage
and research services" (as defined in the 1934 Act) to the Manager or
Sub-Adviser an amount of disclosed commission for effecting securities
transactions on stock exchanges and other transactions for such Fund on an
agency basis in excess of the commission which another broker-dealer would have
charged for effecting that transaction.

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<PAGE> 87
The Manager's or the Sub-Adviser's authority to cause the Funds to pay any such
greater commissions is also subject to such policies as the Trustees may adopt
from time to time. It is the position of the staff of the Securities and
Exchange Commission that Section 28(e) does not apply to the payment of such
greater commissions in "principal" transactions. Accordingly the Manager and the
Sub-Advisers will use their best effort to obtain the most favorable price and
execution available with respect to such transactions, as described above.

The following tables show brokerage commissions on portfolio
transactions paid by each Fund during the fiscal periods indicated.

1. FIXED INCOME FUND

<TABLE>
<CAPTION>
Fiscal Year Brokerage Commissions
----------- ---------------------
<S> <C>
1995 $0
1996 $0
1997 $0
</TABLE>

2. GLOBAL SMALL CAP FUND

<TABLE>
<CAPTION>
Fiscal Year Brokerage Commissions
----------- ---------------------
<S> <C>
1995 $38,917
1996 $26,636
1997 $32,949
</TABLE>

3. VALUE FUND

<TABLE>
<CAPTION>
Fiscal Year Brokerage Commissions
----------- ---------------------
<S> <C>
1995 $16,731
1996 $15,351
1997 $60,776
</TABLE>

4. MID CAP FUND

<TABLE>
<CAPTION>
Fiscal Year Brokerage Commissions
----------- ---------------------
<S> <C>
1995 $18,964
1996 $14,880
1997 $36,573
</TABLE>

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<PAGE> 88
5. GLOBAL BOND FUND

<TABLE>
<CAPTION>
Fiscal Year Brokerage Commissions
----------- ---------------------
<S> <C>
1996 $ 964
1997 $8,903
</TABLE>

6. QUANTITATIVE EQUITY FUND

<TABLE>
<CAPTION>
Fiscal Year Brokerage Commissions
----------- ---------------------
<S> <C>
1996 $ 5,791
1997 $17,992
</TABLE>

The following tables show transactions placed by each Fund with brokers and
dealers during the fiscal year ended December 31, 1997 to recognize research,
statistical and quotation services.

1. FIXED INCOME FUND

<TABLE>
<CAPTION>
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
------------------ ------------------ -----------
<S> <C> <C>
$0 0% $0
</TABLE>

2. GLOBAL SMALL CAP FUND

<TABLE>
<CAPTION>
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
------------------ ------------------ -----------
<S> <C> <C>
$115,473 2.4% $231
</TABLE>

3. VALUE FUND

<TABLE>
<CAPTION>
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
------------------ ------------------ -----------
<S> <C> <C>
$18,004,715 39.7% $24,281
</TABLE>

4. MID CAP FUND

<TABLE>
<CAPTION>
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
------------------ ------------------ -----------
<S> <C> <C>
$3,380,839 18.0% $8,655
</TABLE>

-23-
<PAGE> 89
5. GLOBAL BOND FUND

<TABLE>
<CAPTION>
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
------------------ ------------------ -----------
<S> <C> <C>
$0 0% $0
</TABLE>

6. QUANTITATIVE EQUITY FUND

<TABLE>
<CAPTION>
Dollar Value of Percent of Amount of
Those Transactions Total Transactions Commissions
------------------ ------------------ -----------
<S> <C> <C>
$2,102,489 8.46% $2,754
</TABLE>

DESCRIPTION OF THE TRUST AND OWNERSHIP OF SHARES

The Trust is organized as a Massachusetts business trust under the laws
of Massachusetts by an Agreement and Declaration of Trust ("Declaration of
Trust") dated August 1, 1994. A copy of the Declaration of Trust is on file with
the Secretary of The Commonwealth of Massachusetts. The fiscal year for each
Fund ends on December 31.

Each share of each Fund represents an equal proportionate interest in
such fund. Shares of the Trust do not have any preemptive rights. Upon
liquidation of a fund, shareholders of such fund are entitled to share pro rata
in the net assets of the fund available for distribution to shareholders.

The Declaration of Trust also permits the Trustees, without shareholder
approval, to subdivide any series of shares into various sub-series of shares
with such dividend preferences and other rights as the Trustees may designate.
While the Trustees have no current intention to exercise this power, it is
intended to allow them to provide for an equitable allocation of the impact of
any future regulatory requirements which might affect various classes of
shareholders differently. The Trustees may also, without shareholder approval,
establish one or more additional separate portfolios for investments in the
Trust or merge two or more existing portfolios. Shareholders' investments in
such a portfolio would be evidenced by a separate series of shares.

The Declaration of Trust provides for the perpetual existence of the
Trust. The Trust, however, may be terminated at any time by vote of at least
two-thirds of the outstanding shares of the Trust. The Declaration of Trust
further provides that the Trustees may also terminate the Trust upon written
notice to the shareholders.

-24-
<PAGE> 90
Voting Rights

As summarized in the Prospectus, shareholders are entitled to one vote
for each full share held (with fractional votes for fractional shares held) and
will vote (to the extent provided herein) in the election of Trustees and the
termination of the Trust and on other matters submitted to the vote of
shareholders. Shareholders vote by individual fund on all matters except (i)
when required by the 1940 Act, shares shall be voted in the aggregate and not by
individual fund, and (ii) when the Trustees have determined that the matter
affects only the interests of one or more funds, then only shareholders of such
funds shall be entitled to vote thereon. Shareholders of one fund shall not be
entitled to vote on matters exclusively affecting another fund, such matters
including, without limitation, the adoption of or change in the investment
objective, policies or restrictions of the other fund and the approval of the
investment advisory contract of the other fund.

There will normally be no meetings of shareholders for the purpose of
electing Trustees except that in accordance with the 1940 Act (i) the Trust will
hold a shareholders' meeting for the election of Trustees at such time as less
than a majority of the Trustees holding office have been elected by
shareholders, and (ii) if, as a result of a vacancy in the Board of Trustees,
less than two-thirds of the Trustees holding office have been elected by the
shareholders, that vacancy may only be filled by a vote of the shareholders.
Upon written request by the holders of at least 10% of the outstanding shares
stating that such shareholders wish to communicate with the other shareholders
for the purpose of obtaining the signatures necessary to demand a meeting to
consider removal of a Trustee, the Trust has undertaken to provide a list of
shareholders or to disseminate appropriate materials (at the expense of the
requesting shareholders). In addition, shareholders of the Trust holding at
least 10% of the outstanding shares entitled to vote have the right to call a
meeting to elect or remove Trustees or to take other actions as provided in the
Declaration of Trust. Except as set forth above, the Trustees shall continue to
hold office and may appoint successor Trustees. Voting rights are not
cumulative.

No amendment may be made to the Declaration of Trust without the
affirmative vote of a majority of the outstanding shares of the Trust except (i)
to change the Trust's name or to cure technical problems in the Declaration of
Trust and (ii) to establish, designate or modify new and existing series or
sub-series of Trust shares or other provisions relating to Trust shares in
response to applicable laws or regulations.

Shareholder and Trustee Liability

Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust.
However, the Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Declaration of Trust provides for indemnification out of
the property of the relevant fund for all loss and expense of any shareholder of
that fund held personally liable for the obligations of the Trust. Thus, the
risk of a shareholder incurring financial loss on account of

-25-
<PAGE> 91

shareholder liability is considered remote because it is limited to
circumstances in which the disclaimer is inoperative and the fund of which he is
or was a shareholder would be unable to meet its obligations.

The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law. However, nothing in
the Declaration of Trust protects a Trustee against any liability to which the
Trustee would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct of
his office. The By-laws of the Trust provide for indemnification by the Trust of
the Trustees and the officers of the Trust except with respect to any matter as
to which any such person did not act in good faith in the reasonable belief that
his action was in or not opposed to the best interests of the Trust. Such person
may not be indemnified against any liability to the Trust or the Trust's
shareholders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office.

At March 31, 1998, except as noted below, the officers and Trustees of the Trust
did not own any shares of any Fund, and, to the knowledge of the Trust no person
owned of record or beneficially 5% or more of the shares of any Fund.

1. FIXED INCOME FUND

<TABLE>
<CAPTION>
Shareholder Name Percentage
and Address Owned
------------------------------ ----------
<S> <C>
Massachusetts Mutual Life 28.3%
Insurance Company
1295 State Street
Springfield, MA 01111

The Stackpole Hall Foundation 23.3%
44 South St. Marys Street
St. Marys, PA 15857

Haley & Aldrich 14.8%
465 Medford Street
Suite 2200
Boston, MA 02129

MassMutual Foundation for Hartford Inc. 13.9%
1295 State Street
Springfield, MA 01111

David L. Babson & Co. Pension 7.7%
and Profit Sharing Plan
c/o David L. Babson and Company Incorporated
One Memorial Drive
Cambridge, MA 02142
</TABLE>

-26-
<PAGE> 92
2. GLOBAL SMALL CAP FUND

<TABLE>
<CAPTION>
Shareholder Name Percentage
and Address Owned
------------------------------ ----------
<S> <C>
Massachusetts Mutual Life 87.1%
Insurance Company
1295 State Street
Springfield, MA 01111
</TABLE>

3. VALUE FUND

<TABLE>
<CAPTION>
Shareholder Name Percentage
and Address Owned
------------------------------ ----------
<S> <C>
Massachusetts Mutual Life Insurance
Company Separate Investment
Account N.V. 37.4%
1295 State Street
Springfield, MA 01111

Massachusetts Mutual Life 17.0%
Insurance Company
1295 State Street
Springfield, MA 01111

MassMutual Foundation for Hartford Inc. 11.0%
1295 State Street
Springfield, MA 01111

Universal Cooperatives 9.3%
7801 Metro Parkway
P.O. Box 460
Minneapolis, MN 55440

Evans & Sutherland 6.4%
600 Komas Drive
Salt Lake City, UT 84058

Allegheny County Police Pension 6.0%
P.O. Box 242
Bethel Park, PA 15102

Officers and Trustees 0.9%
as a Group
c/o David L. Babson and Company Incorporated
</TABLE>

-27-
<PAGE> 93
One Memorial Drive
Cambridge, MA 02142

4. MID CAP FUND

<TABLE>
<CAPTION>
Shareholder Name Percentage
and Address Owned
------------------------------ ----------
<S> <C>
Massachusetts Mutual Life 69.5%
Insurance Company
1295 State Street
Springfield, MA 01111

Massachusetts Mutual Life Insurance
Company Separate Investment
Account S.F. 25.3%
1295 State Street
Springfield, MA 01111
</TABLE>

5. GLOBAL BOND FUND

<TABLE>
<CAPTION>
Shareholder Name Percentage
and Address Owned
------------------------------ ----------
<S> <C>
Massachusetts Mutual Life 96.4%
Insurance Company
1295 State Street
Springfield, MA 01111
</TABLE>

6. QUANTITATIVE EQUITY FUND

<TABLE>
<CAPTION>
Shareholder Name Percentage
and Address Owned
------------------------------ ----------
<S> <C>
Massachusetts Mutual Life 80.6%
Insurance Company
1295 State Street
Springfield, MA 01111

David L. Babson & Co. Pension 7.5%
and Profit Sharing Plan
c/o David L. Babson and Company Incorporated
One Memorial Drive
Cambridge, MA 02142
</TABLE>

-28-
<PAGE> 94

<TABLE>
<S> <C>
Officers and Trustees 0.7%
as a Group
c/o David L. Babson and Company Incorporated
One Memorial Drive
Cambridge, MA 02142
</TABLE>

INVESTMENT PERFORMANCE

Standard Performance Measures for the periods ended December 31, 1997.

1. FIXED INCOME FUND

<TABLE>
<CAPTION>
Average Annual
One-Year Total Return
Total Return Since Inception Yield
------------ --------------- -----
<S> <C> <C>
9.01% 7.70% 5.75%
</TABLE>

2. GLOBAL SMALL CAP FUND

<TABLE>
<CAPTION>
Average Annual
One-Year Total Return
Total Return Since Inception
------------ ---------------
<S> <C>
4.65% 7.41%
</TABLE>

3. VALUE FUND

<TABLE>
<CAPTION>
Average Annual
One-Year Total Return
Total Return Since Inception
------------ ---------------
<S> <C>
26.30% 23.48%
</TABLE>

4. MID CAP FUND

<TABLE>
<CAPTION>
Average Annual
One-Year Total Return
Total Return Since Inception
------------ ---------------
<S> <C>
32.97% 22.69%
</TABLE>

-29-
<PAGE> 95
5. GLOBAL BOND FUND

<TABLE>
<CAPTION>
Average Annual
One-Year Total Return
Total Return Since Inception Yield
------------ --------------- -----
<S> <C> <C>
6.56% 6.97% 4.72%
</TABLE>

6. QUANTITATIVE EQUITY FUND

<TABLE>
<CAPTION>
Average Annual
One-Year Total Return
Total Return Since Inception
------------ ---------------
<S> <C>
32.22% 37.29%
</TABLE>

Total Return with respect to a Fund is a measure of the change in value
of an investment in such Fund over the period covered, which assumes any
dividends or capital gains distributions are reinvested immediately rather than
paid to the investor in cash. The formula for Total Return used herein includes
four steps: (1) adding to the total number of shares purchased by a hypothetical
$1,000 investment in the Fund all additional shares which would have been
purchased if all dividends and distributions paid or distributed during the
period had been immediately reinvested; (2) calculating the value of the
hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of shares owned at the end of the period by the net
asset value per share on the last trading day of the period; (3) assuming
redemption at the end of the period; and (4) dividing this account value for the
hypothetical investor by the initial $1,000 investment. Average Annual Total
Return is the annual compounded percentage change in the value of the amount
invested in the Fund from the beginning until the end of the stated period.

Yield is presented for a specified thirty-day period (the "base
period"). Yield is based on the amount determined by (i) calculating the
aggregate amount of dividends and interest earned by a Fund during the base
period less expenses for that period, and (ii) dividing that amount by the
product of (A) the average daily number of shares of the Fund outstanding during
the base period and entitled to receive dividends and (B) the net asset value on
the last day of the base period. The result is annualized on a compounding basis
to determine the yield. For this calculation, interest earned on debt
obligations held by a Fund is generally calculated using the yield to maturity
(or first expected call date) on such obligations based on their market values
(or, in the case of receivables-backed securities such as securities issued by
the Government National Mortgage Association, based on cost). Dividends on
equity securities are accrued daily at their stated dividend rates.

The inception dates for the Funds are as follows: Fixed Income Fund,
July 25, 1995; Global Small Cap Fund, July 19, 1995; Value Fund, July 25, 1995;
Mid Cap Fund, July 25, 1995; Global Bond Fund, August 26, 1996; and Quantitative
Equity Fund, August 26, 1996.

-30-
<PAGE> 96
DETERMINATION OF NET ASSET VALUE

As indicated in the Prospectus, the net asset value of each Fund share
is determined at 4:15 p.m., Eastern time, on each day on which the New York
Stock Exchange is open for trading. The Trust expects that the days, other than
weekend days, that the New York Stock Exchange will not be open are Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day, New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day and Good Friday.

EXPERTS

The financial statements of the Funds for the fiscal year ended
December 31, 1997 incorporated by reference into Statement of Additional
Information have been audited by Deloitte & Touche LLP, 125 Summer Street,
Boston, Massachusetts 02110, the Trust's independent auditors, as set forth in
each of their reports thereon appearing elsewhere herein, and are included in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.

REPORT OF INDEPENDENT AUDITORS AND FINANCIAL STATEMENTS

The Trust's audited financial statements for the fiscal year ended
December 31, 1997 included in the Trust's Annual Reports filed with the
Securities and Exchange Commission on February 27, 1998 pursuant to Section
30(d) of the Investment Company Act of 1940, as amended, and the rules
promulgated thereunder, are hereby incorporated into this Statement of
Additional Information by reference.

-31-
<PAGE> 97
THE DLB FUND GROUP

FORM N-1A

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits.

(a) Index to Financial Statements and Supporting Schedules:

See "Financial Highlights in the Prospectus and "Report of
Independent Auditors and Financial Statements" in the
Statement of Additional Information. The Financial Statements
required pursuant to Item 23 of Form N-1A are hereby
incorporated by reference to the Annual Reports to
shareholders previously filed with the Commission by means of
EDGAR pursuant to the requirements of Section 30(d) of the
1940 Act and the rules promulgated thereunder.

(b) Exhibits:

(1) (a) Agreement and Declaration of Trust**

(b) Amendment No.1 to Agreement and Declaration of
Trust**

(d) Amendment No. 3 to Agreement and Declaration of
Trust*

(2) By-Laws**

(3) Not Applicable

(4) Not Applicable

(5) Forms of Management Contracts

(a) Management Contract between the Trust and David
L. Babson and Company Incorporated (the
"Manager") on behalf of the Fixed Income Fund**

(b) Management Contract between the Trust and the
Manager on behalf of the Global Small
Capitalization Fund**

- --------

* Incorporated by reference to Registrant's Post-Effective Amendment
No. 7 filed on April 30, 1998.

** Incorporated by reference to Registrant's Post-Effective Amendment
No. 5 filed on February 19, 1997.
<PAGE> 98
(c) Sub-Advisory Agreement between the Manager and
Babson-Stewart Ivory International ("BSII") on
behalf of the Global Small Capitalization Fund**

(d) Management Contract between the Trust and the
Manager on behalf of the Value Fund**

(e) Management Contract between the Trust and the
Manager on behalf of the Mid Capitalization
Fund**

(f) Management Contract between the Trust and the
Manager on behalf of the Global Bond Fund***

(g) Sub-Advisory Agreement between the Manager and
Potomac Babson Incorporated ("PBI") on behalf of
the Global Bond Fund***

(h) Management Contract between the Trust and the
Manager on behalf of the Quantitative Equity
Fund***

(i) Management Contract between the Trust and Manager
on behalf of the Micro Capitalization Fund*

(6) Not Applicable

(7) Not Applicable

(8) Form of Custodian Agreement between the Trust and
Investors Bank & Trust Company ("IBT")**

(9) Form of Transfer Agency Agreement between the Trust and
IBT**

(10) Opinion and Consent of Ropes & Gray***

(11) Consent of Deloitte & Touche LLP dated April 30, 1998

(12) Not Applicable

(13) Letter of Understanding relating to Initial Capital**

(14) Not Applicable

(15) Not Applicable

(16) Schedules for Computation of Performance

(17) Financial Data Schedules for the:

(a) Fixed Income Fund

(b) Global Small Capitalization Fund

(d) Mid Capitalization Fund

(e) Global Bond Fund

(f) Quantitative Equity Fund

- -------------------------

** Incorporated by reference to Registrant's Post-Effective Amendment
No. 5 filed on February 19, 1997.

*** Incorporated by reference to Registrant's Post-Effective Amendment
No. 4 filed on July 31, 1996.

-2-
<PAGE> 99

.. (18) Not Applicable
(19)(a) Powers of Attorney for Ronald E. Gwozdz, Charles E.
Hugel, Richard A. Nenneman, Peter S. Schliemann,
Richard J. Phelps and DeAnne B. Dupont**

(b) Power of Attorney for James B. MacAllen*

- ---------------------------
* Incorporated by reference to Registrant's Post-Effective Amendment
No. 7 filed on April 30, 1998.

** Incorporated by reference to Registrant's Post-Effective Amendment
No. 5 filed on February 19, 1997.

-3-
<PAGE> 100
- --------------------------------

Item 25. Persons Controlled by or under Common Control with Registrant.

At and as of the date of this Post-Effective Amendment, the Registrant
did not, directly or indirectly, control any Person. Massachusetts Mutual Life
Insurance Company ("MassMutual") currently owns more than 25% of the outstanding
shares of the Fixed Income Fund, the Global Small Capitalization Fund, the Mid
Capitalization Fund, the Global Bond Fund and the Quantitative Equity Fund and
therefore is deemed to "control" each such Fund within the meaning of the
Investment Company Act of 1940 (the "1940 Act"). Massachusetts Mutual Life
Insurance Company Separate Investment Account N.V. currently owns more than 25%
of the outstanding shares of the Value Fund and therefor is deemed to "control"
such Fund within the meaning of the 1940 Act. The following entities also are,
or may be deemed to be, controlled by MassMutual through the direct or indirect
ownership of such entities' stock.

1. MassMutual Holding Company, a Delaware corporation, all the stock of
which is owned by MassMutual.

2. MML Series Investment Fund, a registered open-end investment company
organized as a Massachusetts business trust, all of the shares of which
are owned by separate accounts of MassMutual and companies controlled
by MassMutual.

3. MassMutual Institutional Funds, a registered open-end investment
company organized as a Massachusetts business trust, all of the shares
of which are owned by MassMutual.

4. MML Bay State Life Insurance Company, a Connecticut life and health
insurer, all the stock of which is owned by MassMutual.

5. MassMutual of Ireland, Ltd., incorporated in the Republic of Ireland,
which formerly operated a group life and health claim office for
MassMutual, all of the stock of which is owned by MassMutual.

6. CM Assurance Company, a Connecticut life, accident, disability and
health insurer, all the stock of which is owned by MassMutual.

7. CM Benefit Insurance Company, a Connecticut life, accident, disability
and health insurer, all the stock of which is owned by MassMutual.

8. C.M. Life Insurance Company, a Connecticut life, accident, disability
and health insurer, all the stock of which is owned by MassMutual.

9. MML Distributors, LLC, formerly known as Connecticut Mutual Financial
Services, LLC, a registered broker-dealer incorporated as a limited
liability company in Connecticut.

-4-
<PAGE> 101
MassMutual has a 99% ownership interest and G.R. Phelps & Co. has a 1%
ownership interest.

10. Panorama Series Fund, Inc., a registered open-end investment company
organized as a Maryland corporation. Shares of the fund are sold only
to MassMutual and its affiliates.

11. MassMutual Holding Trust I, a Massachusetts business trust, which acts
as a holding company for certain MassMutual investment subsidiaries,
all of the stock of which is owned by MassMutual Holding Company.

12. MassMutual Holding Trust II, a Massachusetts business trust, which acts
as a holding company for certain MassMutual subsidiaries and
affiliates, all of the stock of which is owned by MassMutual Holding
Company.

13. MassMutual Holding MSC, Inc., a Massachusetts corporation, which acts
as a holding company for MassMutual positions in investment entities
organized outside the United States, all of the stock of which is owned
by MassMutual Holding Company.

14. MML Investors Services, Inc. is a registered broker-dealer incorporated
in Massachusetts. MassMutual Holding Company owns 86% of the capital
stock and G.R. Phelps & Co. owns 4% of the capital stock of MML
Investor Services, Inc.

15. G.R. Phelps & Company, Inc. is a Connecticut corporation which formerly
operated as a securities broker-dealer, all the stock of which is owned
by MassMutual Holding Company.

16. MassMutual International, Inc., a Delaware corporation then acts as a
holding company of foreign insurance companies and provides service to
international insurance companies, all of the stock of which is owned
by MassMutual Holding Company.

17. MassLife Seguros de Vida S.A. (Argentina), a life insurance company
incorporated in Argentina. MassMutual International, Inc. owns 99.99%
of the outstanding capital stock of MassLife Seguros de Vida S.A.

18. Cornerstone Real Estate Advisers, Inc., a Massachusetts equity real
estate advisory corporation, all the stock of which is owned by
MassMutual Holding Trust I.

19. DLB Acquisition Corporation ("DLB Acquisition"), a Delaware
corporation. MassMutual Holding Trust I owns 83.7% of the outstanding
capital stock of DLB Acquisition, which serves as a holding company for
David L. Babson and Company Incorporated.

-5-
<PAGE> 102

20. Oppenheimer Acquisition Corporation ("OAC") is a Delaware corporation
which serves as a holding company for OppenheimerFunds, Inc. MassMutual
Holding Trust I owns 89% of the capital stock of OAC.

21. Antares Leveraged Capital Corp., a Delaware corporation that operates
as a finance company. MassMutual Holding Trust I owns approximately 99%
of the capital stock of Antares.

22. Charter Oak Capital Management, Inc., a Delaware corporation that
operates as an investment manager. MassMutual Holding Trust I owns 80%
of the capital stock of Charter Oak.

23. MML Realty Management Corporation, a former property manager
incorporated in Massachusetts, all the stock of which is owned by
MassMutual Holding Trust II.

24. Westheimer 335 Suites, Inc. was incorporated in Delaware to serve as a
general partner of the Westheimer 335 Suites Limited Partnership.
MassMutual Holding Trust II owns all the stock of Westheimer 335
Suites, Inc.

25. CM Advantage, Inc., a Connecticut corporation that acts as a general
partner in real estate limited partnerships. MassMutual Holding Trust
II owns all of the outstanding stock.

26. CM International, Inc., a Delaware corporation that holds a mortgage
pool and issues collateralized mortgage obligations. MassMutual Holding
Trust II owns all the outstanding stock of CM International, Inc.

27. CM Property Management, Inc., a Connecticut real estate holding
company, all the stock of which is owned by MassMutual Holding Trust
II.

28. Urban Properties, Inc., a Delaware real estate holding and development
company, all the stock of which is owned by MassMutual Holding Trust
II.

29. MMHC Investment, Inc., a Delaware corporation which is a passive
investor in MassMutual/Darby CBO LLC, MassMutual High Yield Partners
LLC and other MassMutual investments. MassMutual Holding Trust II owns
all the outstanding stock of MMHC Investment, Inc.

30. HYP Management, Inc., a Delaware corporation which is the LLC Manager
for MassMutual High Yield Partners LLC and owns 1.28% of the LLC units
of such entity. MassMutual Holding Trust II owns all the outstanding
stock of HYP Management, Inc.

31. MassMutual Corporate Value Limited, a Cayman Islands corporation that
owns approximately 93% of MassMutual Corporate Value Partners Limited.
MassMutual

-6-
<PAGE> 103
Holding MSC, Inc. owns 46.19% of the outstanding capital stock of
MassMutual Corporate Value Limited.

32. MassMutual International (Bermuda) Ltd., a Bermuda life insurance
company, all of the stock of which is owned by MassMutual International
Inc.

33. MassMutual Internacional (Chile) S.A, a Chilean corporation, which
operates as a holding company. MassMutual International Inc. owns 99.9%
of the outstanding shares and MassMutual Holding Company owns the
remaining 0.1% of the shares.

34. MassMutual International (Luxembourg) S.A, a Luxembourg corporation,
which operates as an insurance company. MassMutual International Inc.
owns 99.9% of the outstanding shares and MassMutual Holding Company
owns the remaining 0.1% of the shares.

35. Mass Seguros de Vida S.A., a life insurance company incorporated in
Chile. MassMutual Internacional (Chile), S.A. owns 33.5% of the
outstanding capital stock of Mass Seguros de Vida S.A.

36. MML Insurance Agency, Inc., a licensed insurance broker incorporated in
Massachusetts, all of the stock of which is owned by MML Investors
Services, Inc.

37. MML Securities Corporation, a Massachusetts securities corporation, all
of the stock of which is owned by MML Investors Services, Inc.

38. OppenheimerFunds, Inc., a registered investment adviser incorporated in
Colorado, all of the stock of which is owned by Oppenheimer Acquisition
Corporation.

39. David L. Babson and Company Incorporated, a registered investment
adviser incorporated in Massachusetts, all of the stock of which is
owned by DLB Acquisition.

40. Cornerstone Office Management, LLC, a Delaware limited liability
company that is 50% owned by Cornerstone Real Estate Advisers, Inc. and
50% owned by MML Realty Management Corporation.

41. Westheimer 335 Suites Limited Partnership, a Texas limited partnership
of which Westheimer 335 Suites, Inc. is the general partner.

42. MassMutual High Yield Partners LLC, a Delaware limited liability
company that operates as a high yield bond fund. MassMutual holds
5.28%, MMHC Investment Inc. holds 35.99%, and HYP Management, Inc.
holds 1.28%, for a total of 42.55% of the ownership interest in this
company.

-7-
<PAGE> 104

43. MassMutual Corporate Value Partners Limited, a Cayman Islands
corporation that operates as a high yield bond fund. MassMutual
Corporate Value Limited holds approximately 93% ownership interest in
this company.

44. DISA Insurance Services Agency of America, Inc. (Alabama), a licensed
insurance broker incorporated in Alabama. MML Insurance Agency, Inc.
owns all the shares of outstanding stock.

45. Diversified Insurance Services Agency of America, Inc. (Hawaii), a
licensed insurance broker incorporated in Hawaii. MML Insurance Agency,
Inc. owns all the shares of outstanding stock.

46. MML Insurance Agency of Nevada, Inc., a Nevada corporation that
operates as an insurance broker, all of the stock of which is owned by
MML Insurance Agency, Inc.

47. MML Insurance Agency of Ohio, Inc., a subsidiary of MML Insurance
Agency, Inc. incorporated in the state of Ohio that operates as an
insurance broker. The outstanding capital stock is controlled by MML
Insurance Agency, Inc. by means of a voting trust.

48. MML Insurance Agency of Texas, Inc., a subsidiary of MML Insurance
Agency, Inc. incorporated in the state of Texas, operates as an
insurance broker. The outstanding capital stock is controlled by MML
Insurance Agency, Inc. by means of a voting trust.

49. MML Insurance Agency of Mississippi, P.C., a Mississippi professional
corporation that operates as an insurance broker, all of the stock of
which is owned by MML Insurance Agency, Inc.

50. Origen Inversiones S.A., a Chilean corporation which operates as a
holding company. MassMutual Internacional (Chile) S.A. holds a 33.5%
ownership interest in this corporation.

51. Babson Securities Corporation, a registered broker-dealer incorporated
in Massachusetts, all of the stock of which is owned by David L. Babson
and Company, Incorporated.

52. Potomac Babson Incorporated, a Massachusetts corporation that is a
registered investment adviser. David L. Babson and Company Incorporated
owns 60% of the outstanding shares of Potomac Babson Incorporated.

53. Babson-Stewart-Ivory International, a Massachusetts general
partnership, which operates as a registered investment adviser. David
L. Babson and Company Incorporated holds a 50% ownership interest in
the partnership.

-8-
<PAGE> 105

54. Oppenheimer Series Fund Inc., a Maryland corporation and a registered
open-end investment company of which MassMutual and its affiliates own
a majority of the outstanding shares of beneficial interest.

55. Centennial Asset Management Corporation, a Delaware corporation that
serves as the investment adviser and general distributor of the
Centennial Funds. OppenheimerFunds, Inc. owns all the stock of
Centennial Asset Management Corporation.

56. HarbourView Asset Management Corporation, a registered investment
adviser incorporated in New York, all the stock of which is owned by
OppenheimerFunds, Inc.

57. OppenheimerFunds Distributor, Inc., a registered broker-dealer
incorporated in New York, all the stock of which is owned by
OppenheimerFunds, Inc.

58. Oppenheimer Partnership Holdings, Inc., a Delaware holding company, all
the stock of which is owned by OppenheimerFunds, Inc.

59. Shareholder Financial Services, Inc., a transfer agent incorporated in
Colorado, all the stock of which is owned by OppenheimerFunds, Inc.

60. Shareholder Services, Inc., a transfer agent incorporated in Colorado,
all the stock of which is owned by OppenheimerFunds, Inc.

61. MultiSource Service, Inc., a Colorado corporation that is a registered
broker-dealer and operates as a clearing broker, 80% of the stock of
which is owned by OppenheimerFunds, Inc.

62. Centennial Capital Corporation, a former sponsor of unit investment
trust that is incorporated in Delaware, all the stock of which is owned
by Centennial Asset Management Corporation.

63. Cornerstone Suburban Office Investors, LP, a Delaware limited
partnership, which operates as a real estate investment company.
Cornerstone Office Management, LLC holds a 1% general partnership
interest in this fund and MassMutual holds a 99% limited partnership
interest.

64. 505 Waterford Park Limited Partnership, a Delaware limited partnership,
which holds title to an office building in Minneapolis, Minnesota. MML
Realty Management Corporation holds a 1% general partnership interest
in this partnership and MassMutual holds a 99% limited partnership
interest.

-9-
<PAGE> 106

65. 9048-5434 Quebec, Inc., a Quebec corporation, which operates as the
owner of hotel property in Montreal, Quebec, Canada. MassMutual Holding
MSC, Inc. owns all the shares of 9048-5434 Quebec, Inc.

66. 1279342 Ontario Limited, an Ontario corporation, which operates as the
owner of a hotel property in Ontario, Canada. MassMutual Holding MSC,
Inc. owns all the shares of 1279342 Ontario Limited.

67. Oppenheimer Real Asset Management, Inc., a commodity trading adviser
incorporated in Delaware, all the stock of which is owned by
OppenheimerFunds, Inc.

68. MassMutual/Darby CBO IM Inc., a Delaware corporation which operates as
the LLC Manager of MassMutual/Darby CBO LLC. MMHC Investment, Inc. owns
50% of the capital stock of this company.

69. MassMutual/Darby CBO LLC, a Delaware limited liability company that
operates as a fund investing in high yield debt securities of U.S. and
emerging market issuers. MassMutual holds 1.79%, MMHC Investment Inc.
holds 44.91% and MassMutual High Yield Partners LLC holds 2.39% of the
ownership interest in this company.

70. MassMutual Internacional (Argentina) S.A., an Argentina corporation,
which operates as a holding company. MassMutual International Inc. owns
99.9% of the outstanding shares and MassMutual Holding Company owns the
remaining 0.1% of the shares.

71. Compania Seguros de VidaCorp, S.A. a Chilean Insurance company. Origen
Inversiones S.A. owns 99% of the outstanding shares of this company.

72. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation which
operates as a collateralized bond obligation fund. MassMutual Holding
MSC, Inc. owns 99% of the outstanding shares.

MassMutual is the investment adviser to the following investment
companies, and as such may be deemed to control them.

1. MassMutual Corporate Investors, a registered closed-end Massachusetts
business trust.

2. MassMutual Participation Investors, a registered closed-end
Massachusetts business trust.

3. MML Series Investment Fund, a registered open-end Massachusetts
business trust, all of the shares of which are owned by separate
accounts of MassMutual and companies controlled by MassMutual.

-10-
<PAGE> 107
4. MassMutual Institutional Funds, a registered open-end Massachusetts
business trust, all of the shares of which are owned by MassMutual.

5. MassMutual/Carlson CBO N.V., a Netherlands Antilles corporation that
operates as a collateralized bond obligation fund. MassMutual Holding
MSC, Inc. owns 99% of the outstanding shares.

6. MassMutual Corporate Value Partners Limited, a Cayman Islands
corporation that operates as a high-yield bond fund. MassMutual
Corporate Value Limited holds an approximately 93% ownership interest
in this company.

7. MassMutual High Yield Partners LLC, a Delaware limited liability
company, that operates as a high yield bond fund. MassMutual holds
5.28%, MMHC Investment Inc. holds 35.99%, and HYP Management, Inc.
holds 1.28% for a total of 42.55% of the ownership interest in the
company.

8. MassMutual/Darby CBO, LLC, a Delaware limited liability company that
operates as a fund investing in high yield debt securities of U.S. and
emerging market issuers. MassMutual owns 1.79%, MMHC Investment, Inc.
owns 44.91% and Mass Mutual High Yield Partners LLC owns 2.39% of the
ownership interest in this company.

Item 26. Number of Holders of Securities.

<TABLE>
<CAPTION>
Number of Record Holders
Title of Class as of March 31, 1998
-------------- ------------------------
<S> <C>
Shares of Beneficial Interest of Fixed Income Fund 14
Shares of Beneficial Interest of Global Small Cap Fund 5
Shares of Beneficial Interest of Value Fund 16
Shares of Beneficial Interest of Mid Cap Fund 5
Shares of Beneficial Interest of Global Bond Fund 5
Shares of Beneficial Interest of Quantitative Equity Fund 7
Shares of Beneficial Interest of Growth Fund 3
</TABLE>

Item 27. Indemnification.

Article VIII Sections 1, 2 and 3 of Registrant's Agreement and
Declaration of Trust provides as follows with respect to indemnification of the
Trustees and officers of Registrant against liabilities which may be incurred by
them in such capacities:

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<PAGE> 108
Section 1. Trustees, Officers, Etc. The Trust shall indemnify each of
its Trustees and officers (including persons who serve at the Trust's request as
directors, officers or trustees of another organization in which the Trust has
any interest as a shareholder, creditor or otherwise) (hereinafter referred to
as a "Covered Person") against all liabilities and expenses, including but not
limited to amounts paid in satisfaction of judgments, in compromise or as fines
and penalties, and counsel fees reasonably incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such Covered Person may be or may have
been threatened, while in office or thereafter, by reason of being or having
been such a Covered Person, except with respect to any matter as to which such
Covered Person shall have been finally adjudicated in any such action, suit or
other proceeding to be liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such Covered Person's office. Expenses,
including counsel fees so incurred by any such Covered Person (but excluding
amounts paid in satisfaction of judgments, in compromise or as fines or
penalties), shall be paid from time to time by the Trust in advance of the final
disposition of any such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such Covered Person to repay amounts so paid to
the Trust if it is ultimately determined that indemnification of such expenses
is not authorized under this Article, provided, however, that either (a) such
Covered Person shall have provided appropriate security for such undertaking,
(b) the Trust shall be insured against losses arising from any such advance
payments or (c) either a majority of the disinterested Trustees acting on the
matter (provided that a majority of the disinterested Trustees then in office
act on the matter), or independent legal counsel in a written opinion, shall
have determined, based upon a review of readily available facts (as opposed to a
full trial type inquiry) that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Article.

Section 2. Compromise Payment. As to any matter disposed of (whether by
a compromise payment, pursuant to a consent decree or otherwise) without an
adjudication by a court, or by any other body before which the proceeding was
brought, that such Covered Person is liable to the Trust or its Shareholders by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his or her office, indemnification
shall be provided if (a) approved, after notice that it involves such
indemnification, by at least a majority of the disinterested Trustees acting on
the matter (provided that a majority of the disinterested Trustees then in
office act on the matter) upon a determination, based upon a review of readily
available facts (as opposed to a full trial type inquiry), that such Covered
Person is not liable to the Trust or its Shareholders by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office, or (b) there has been obtained an
opinion in writing of independent legal counsel, based upon a review of readily
available facts (as opposed to a full trial type inquiry), to the effect that
such indemnification would not protect such Person against any liability to the
Trust to which he would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office. Any approval pursuant to this Section shall not
prevent the recovery from any Covered Person of any amount paid to such Covered
Person in

-12-
<PAGE> 109
accordance with this Section as indemnification if such Covered Person is
subsequently adjudicated by a court of competent jurisdiction to have been
liable to the Trust or its Shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office.

Section 3. Indemnification Not Exclusive. The right of indemnification
hereby provided shall not be exclusive of or affect any other rights to which
such Covered Person may be entitled. As used in this Article VIII, the term
"Covered Person" shall include such person's heirs, executors and administrators
and a "disinterested Trustee" is a Trustee who is not an "interested person" of
the Trust as defined in Section 2(a)(19) of the 1940 Act (or who has been
exempted from being an "interested person" by any rule, regulation or order of
the Commission), and against whom none of such actions, suits or other
proceedings or another action, suit or other proceeding on the same or similar
grounds is then or has been pending. Nothing contained in this Article shall
affect any rights to indemnification to which personnel of the Trust, other than
Trustees or officers, and other persons may be entitled by contract or otherwise
under law, nor the power of the Trust to purchase and maintain liability
insurance on behalf of any such person; provided, however, that the Trust shall
not purchase or maintain any such liability insurance in contravention of
applicable law, including without limitation the 1940 Act.

Item 28. Business and Other Connections of Adviser.

No director or officer of David L. Babson and Company Incorporated, the
Registrant's investment adviser, has been engaged for his own account or in the
capacity of director, officer, employee, partner or trustee in any other
business, profession, vocation or employment of a substantial nature at any time
during the past two fiscal years.

Item 29. Principal Underwriters -- Not Applicable.

Item 30. Location of Accounts and Records.

The accounts, books or other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder
will be kept by the Registrant, the Manager and BSII at their respective
principal business offices at One Memorial Drive, Cambridge, Massachusetts
02142, by PBI at its principal business office at 1290 Avenue of the Americas,
New York, New York 10019, and by IBT, the Registrant's Custodian and Transfer
Agent at its principal business office at 200 Clarendon Street, Boston,
Massachusetts 02116.

Item 31. Management Services.

There are no management-related service contracts not discussed in Part
A or Part B.

-13-
<PAGE> 110
Item 32. Undertakings.

The Registrant hereby undertakes to furnish to each person to whom a
Prospectus is delivered a copy of the Registrant's latest annual report to
shareholders containing the information required by Item 5A of Form N-1A omitted
from the Prospectus, upon request and without charge.

-14-
<PAGE> 111
NOTICE

A copy of the Agreement and Declaration of Trust of The DLB Fund Group,
as amended, is on file with the Secretary of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and the obligations of or arising out of this instrument are not binding upon
any of the Trustees or shareholders individually but are binding only upon the
assets and property of the relevant series of the Registrant.

-15-
<PAGE> 112
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
and the Investment Company Act of 1940, as amended, the Registrant certifies
that it meets all of the requirements for effectiveness of this Post-Effective
Amendment pursuant to Rule 485(b) under the Securities Act of 1933, as amended,
and has duly caused this Post-Effective Amendment to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Cambridge, The
Commonwealth of Massachusetts, on the 30th day of April, 1998.

THE DLB FUND GROUP

By: /s/ Ronald E. Gwozdz
Ronald E. Gwozdz
President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment of The DLB Fund Group has been signed below by the
following persons in the capacities and on the dates indicated.

<TABLE>
<S> <C> <C>
* Trustee; Chairman April 30, 1998
- -------------------------
James W. MacAllen

/s/ Ronald E. Gwozdz Trustee; Principal Executive April 30, 1998
- ------------------------- Officer; President
Ronald E. Gwozdz

* Treasurer; Principal Financial April 30, 1998
- ------------------------- Officer; Principal
DeAnne B. Dupont Accounting Officer

* Trustee April 30, 1998
- -------------------------
Charles E. Hugel

* Trustee April 30, 1998
- -------------------------
Richard A. Nenneman

* Trustee April 30, 1998
- -------------------------
Richard J. Phelps

*By /s/ Ronald E. Gwozdz
Ronald E. Gwozdz
Attorney-In-Fact
</TABLE>

-16-
<PAGE> 113
EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- ----------------------------------------------------------------
<S> <C>
11 Consent of Deloitte & Touche LLP dated April 30, 1998
16 Schedules for Computations of Performance
17(a) Financial Data Schedule for the Fixed Income Fund
17(b) Financial Data Schedule for the Global Small Capitalization Fund
17(c) Financial Data Schedule for the Value Fund
17(d) Financial Data Schedule for the Mid Capitalization Fund
17(e) Financial Data Schedule for the Global Bond Fund
17(f) Financial Data Schedule for the Quantitative Equity Fund
</TABLE>

<PAGE> 1
EXHIBIT 11

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in this Post-Effective Amendment
No. 8 to the Registration Statement on Form N-1A of The DLB Fund Group (File No.
33-82366) of our reports each dated February 6, 1998 appearing in the annual
reports to shareholders for the year ended December 31, 1997, of the DLB Fixed
Income Fund, DLB Global Small Capitalization Fund, DLB Value Fund, DLB Mid
Capitalization Fund, DLB Quantitative Equity Fund, and DLB Global Bond Fund, and
to the references to us under the headings "Financial Highlights" in the
Prospectuses and "Experts" and "Report of Independent Auditors and Financial
Statements" in the Statement of Additional Information, all of which are part of
this Registration Statement.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
April 30, 1998

<PAGE> 1
EXHIBIT 16

THE DLB FUND GROUP
PERFORMANCE CALCULATION

For the period from commencement of operations to December 31, 1997

<TABLE>
<CAPTION>
Global Small Mid Quantitative
Fixed Value Capitalization Capitalization Global Bond Equity
Income Fund Fund Fund Fund Fund Fund
----------- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
Initial NAV 10.00 10.00 10.00 10.00 10.00 10.00

Initial Shares 500,001.000 1,000,001.000 1,010,000.000 1,000,001.000 2,500,001.000 1,172,892.770

Shares from
Distributions 208,745.00 309,990.59 69,029.58 236,196.70 337,868.16 116,571.39

End of Period
NAV 10.61 14.91 11.27 14.19 9.72 14.55

Total Return 7.70 23.48 7.41 22.69 6.97 37.29

</TABLE>

THE DLB FUND GROUP
PERFORMANCE CALCULATION

For the one-year period ended December 31, 1997

<TABLE>
<CAPTION>
Global Small Mid Quantitative
Fixed Value Capitalization Capitalization Global Bond Equity
Income Fund Fund Fund Fund Fund Fund
----------- ---- ---- ---- ---- ----

<S> <C> <C> <C> <C> <C> <C>
Initial NAV 10.11 12.53 11.19 11.51 9.99 11.66

Initial Shares 1,440,473.230 1,466,189.024 1,109,319.611 1,109,633.943 2,500,001.000 1,172,892.770

Shares from
Distributions 114,556.670 218,607.641 46,413.705 140,061.368 254,024.972 85,296.069

End of Period
NAV 10.61 14.91 11.27 14.19 9.72 14.55

Total Return 9.01 26.30 4.65 32.97 6.56 32.22

</TABLE>

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FUND'S
FINANCIAL STATEMENTS DATED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000927972
<NAME> The DLB Fund Group
<SERIES>
<NUMBER> 1
<NAME> The DLB Fixed Income Fund

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 31,085,647
<INVESTMENTS-AT-VALUE> 31,708,934
<RECEIVABLES> 504,350
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 32,213,284
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58,331
<TOTAL-LIABILITIES> 58,331
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 31,516,786
<SHARES-COMMON-STOCK> 3,030,691
<SHARES-COMMON-PRIOR> 2,207,257
<ACCUMULATED-NII-CURRENT> 22,557
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,677)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 623,287
<NET-ASSETS> 32,154,953
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,359,601
<OTHER-INCOME> 0
<EXPENSES-NET> 118,689
<NET-INVESTMENT-INCOME> 1,240,912
<REALIZED-GAINS-CURRENT> 26,429
<APPREC-INCREASE-CURRENT> 715,791
<NET-CHANGE-FROM-OPS> 1,983,132
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,212,212
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,635,464
<NUMBER-OF-SHARES-REDEEMED> 197,835
<SHARES-REINVESTED> 83,908
<NET-CHANGE-IN-ASSETS> 16,894,408
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (34,783)
<OVERDISTRIB-NII-PRIOR> 5,666
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 86,512
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 229,866
<AVERAGE-NET-ASSETS> 28,729,928
<PER-SHARE-NAV-BEGIN> 10.11
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> 0.30
<PER-SHARE-DIVIDEND> 0.41
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.61
<EXPENSE-RATIO> 0.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 12,173,387
<INVESTMENTS-AT-VALUE> 13,986,481
<RECEIVABLES> 22,912
<ASSETS-OTHER> 8,145
<OTHER-ITEMS-ASSETS> 4,679
<TOTAL-ASSETS> 14,022,217
<PAYABLE-FOR-SECURITIES> 74,477
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 60,598
<TOTAL-LIABILITIES> 135,075
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,109,247
<SHARES-COMMON-STOCK> 1,231,899
<SHARES-COMMON-PRIOR> 1,124,924
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 26,926
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 7,988
<ACCUM-APPREC-OR-DEPREC> 1,812,809
<NET-ASSETS> 13,887,142
<DIVIDEND-INCOME> 209,041
<INTEREST-INCOME> 17,958
<OTHER-INCOME> 0
<EXPENSES-NET> 197,826
<NET-INVESTMENT-INCOME> 29,173
<REALIZED-GAINS-CURRENT> 27,312
<APPREC-INCREASE-CURRENT> 572,764
<NET-CHANGE-FROM-OPS> 629,249
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 9,121
<DISTRIBUTIONS-OF-GAINS> 37,118
<DISTRIBUTIONS-OTHER> 474,986
<NUMBER-OF-SHARES-SOLD> 81,079
<NUMBER-OF-SHARES-REDEEMED> 20,517
<SHARES-REINVESTED> 46,413
<NET-CHANGE-IN-ASSETS> 1,301,538
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 354
<OVERDIST-NET-GAINS-PRIOR> 44,806
<GROSS-ADVISORY-FEES> 131,927
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 282,495
<AVERAGE-NET-ASSETS> 13,886,671
<PER-SHARE-NAV-BEGIN> 11.19
<PER-SHARE-NII> 0.02
<PER-SHARE-GAIN-APPREC> 0.50
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 0.03
<RETURNS-OF-CAPITAL> 0.40
<PER-SHARE-NAV-END> 11.27
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 50,376,730
<INVESTMENTS-AT-VALUE> 58,564,553
<RECEIVABLES> 440,041
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59,004,594
<PAYABLE-FOR-SECURITIES> 2,492,088
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63,395
<TOTAL-LIABILITIES> 2,555,483
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 48,510,539
<SHARES-COMMON-STOCK> 3,786,510
<SHARES-COMMON-PRIOR> 1,534,983
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 249,251
<ACCUM-APPREC-OR-DEPREC> 8,187,823
<NET-ASSETS> 56,449,111
<DIVIDEND-INCOME> 676,355
<INTEREST-INCOME> 119,368
<OTHER-INCOME> 0
<EXPENSES-NET> 268,098
<NET-INVESTMENT-INCOME> 528,025
<REALIZED-GAINS-CURRENT> 2,487,991
<APPREC-INCREASE-CURRENT> 5,222,346
<NET-CHANGE-FROM-OPS> 8,238,362
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 520,799
<DISTRIBUTIONS-OF-GAINS> 2,716,780
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,546,356
<NUMBER-OF-SHARES-REDEEMED> 513,437
<SHARES-REINVESTED> 218,608
<NET-CHANGE-IN-ASSETS> 37,221,009
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 27,688
<GROSS-ADVISORY-FEES> 207,027
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 346,736
<AVERAGE-NET-ASSETS> 49,087,812
<PER-SHARE-NAV-BEGIN> 12.53
<PER-SHARE-NII> 0.15
<PER-SHARE-GAIN-APPREC> 3.15
<PER-SHARE-DIVIDEND> 0.15
<PER-SHARE-DISTRIBUTIONS> 0.77
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.91
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 22,745,670
<INVESTMENTS-AT-VALUE> 27,382,376
<RECEIVABLES> 190,343
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,572,719
<PAYABLE-FOR-SECURITIES> 157,727
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57,302
<TOTAL-LIABILITIES> 215,029
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,717,039
<SHARES-COMMON-STOCK> 1,928,534
<SHARES-COMMON-PRIOR> 1,189,227
<ACCUMULATED-NII-CURRENT> 3,910
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 35
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,636,706
<NET-ASSETS> 27,357,690
<DIVIDEND-INCOME> 258,003
<INTEREST-INCOME> 50,079
<OTHER-INCOME> 0
<EXPENSES-NET> 164,395
<NET-INVESTMENT-INCOME> 143,687
<REALIZED-GAINS-CURRENT> 1,834,448
<APPREC-INCREASE-CURRENT> 3,124,915
<NET-CHANGE-FROM-OPS> 5,103
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 139,420
<DISTRIBUTIONS-OF-GAINS> 1,834,045
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 659,292
<NUMBER-OF-SHARES-REDEEMED> 60,046
<SHARES-REINVESTED> 140,061
<NET-CHANGE-IN-ASSETS> 13,667,975
<ACCUMULATED-NII-PRIOR> 0
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