Babson Funds 485 Filing

485BPOS 1 babson485b30sept02.htm BABSON FUNDS 485B FILING 30-SEPT-2002 Babson Funds 485 Filing

Registration No. 2-15530 and 811-901

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 80 /X/

and/or

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

Amendment No. 81 /X/

DAVID L. BABSON GROWTH FUND, INC.
(Exact name of Registrant as Specified in Charter)

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

/X/ immediately upon filing pursuant to paragraph (b) of Rule 485 // on October
31, 2002 pursuant to paragraph (b) of Rule 485 /_/ 60 days after filing pursuant
to paragraph (a)(1) of Rule 485 /_/ on (date) pursuant to paragraph (a)(1) of
Rule 485 /_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485 /_/
on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registration No. 33-17762 and 811-5386

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 19 /X/

and/or

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

Amendment No. 20 /X/

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

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registration No. 33-15074 and 811-5218

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 19 /X/

and/or

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

Amendment No. 21 /X/

SHADOW STOCK FUND, INC.
(Exact name of Registrant as Specified in Charter)

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registration No. 2-85791 and 811-3823

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 23 /X/

and/or

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

Amendment No. 24 /X/

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

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

/X/ immediately upon filing pursuant to paragraph (b) of Rule 485 /_/ on October
31, 2002 pursuant to paragraph (b) of Rule 485 /_/ 60 days after filing pursuant
to paragraph (a)(1) of Rule 485 /_/ on (date) pursuant to paragraph (a)(1) of
Rule 485 /_/ 75 days after filing pursuant to paragraph (a)(2) of Rule 485 /_/
on (date) pursuant to paragraph (a)(2) of Rule 485

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registration No. 33-39321 and 811-6252

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 14 /X/

and/or

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

Amendment No. 15 /X/

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

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registration No. 2-93363 and 811-4114

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 21 /X/

and/or

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

Amendment No. 23 /X/

BABSON VALUE FUND, INC.
(Exact name of Registrant as Specified in Charter)

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registration No. 2-65761 and 811-2963

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 29 /X/

and/or

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

Amendment No. 31 /X/

D. L. BABSON MONEY MARKET FUND, INC.
(Exact name of Registrant as Specified in Charter)

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registration No. 2-65489 and 811-2948

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 29 /X/

and/or

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

Amendment No. 30 /X/

D. L. BABSON TAX-FREE INCOME FUND, INC.
(Exact name of Registrant as Specified in Charter)

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Registration No. 2-10002 and 811-495

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/

Pre-Effective Amendment No. ____ /_/

Post Effective Amendment No. 103 /X/

and/or

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

Amendment No. 103 /X/

D.L. BABSON BOND TRUST
(Exact name of Registrant as Specified in Charter)

BMA Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306
(Address of Principal Executive Offices) (Zip Code)

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

Stephen S. Soden, BMA Tower, 700 Karnes Blvd., Kansas City, MO
64108-3306
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering

It is proposed that this filing become effective check appropriate box:

If appropriate, check the following box:

/_/ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment

Babson Funds

Prospectus

September 30, 2002

Equities
Enterprise Fund
Enterprise Fund II
Growth Fund
Shadow Stock Fund
Value Fund
International Fund

Fixed Income
Bond Trust
Money Market Fund
Tax-Free Income Fund

Babson Funds

Jones & Babson, Inc. Distributors
A Member of the Generali Group

Shares of the Funds have not been approved or disapproved by the Securities and
Exchange Commission nor has the Commission passed upon the adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.

Prospectus

September 30, 2002

Equity Funds
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
David L. Babson Growth Fund, Inc.
Shadow Stock Fund, Inc.
Babson Value Fund, Inc.
Babson-Stewart Ivory
International Fund, Inc.

Fixed Income Funds
D.L. Babson Bond Trust
D.L. Babson Money Market Fund, Inc.
D.L. Babson Tax-Free Income Fund, Inc.

Babson Funds

INVESTMENT ADVISOR (THE "ADVISOR"):
David L. Babson & Company Inc.
Cambridge, Massachusetts

MANAGED AND DISTRIBUTED BY:
Jones & Babson, Inc.
Kansas City, Missouri

Table Of Contents

Information About The Funds Page

Investment Objectives and Principal Investment Strategies 2

Principal Risk Factors 5

Past Performance 7

Fees and Expenses 10

Management and Investment Advisor 11

Financial Highlights 12

Information About Investing

How to Purchase Shares 18

How to Redeem Shares 18

Shareholder Services 19

How Share Price is Determined 19

Distributions and Taxes 19

Additional Policies about Transactions 21

Conducting Business with the Babson Funds 22

INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES

BABSON FUND
Babson Enterprise Fund (BABEX)
Babson Enterprise Fund II (BAETX)
Shadow Stock Fund (SHSTX)

OBJECTIVE
Long-term growth of capital

PRINCIPAL RISKS*
Market Risks
Small Company Risks

BABSON FUND
Babson Growth Fund (BABSX)

OBJECTIVE Above average total return over longer periods of time through the
growth of both capital and dividend income

PRINCIPAL RISKS*
Market Risks

BABSON FUND
Babson Value Fund (BVALX)

OBJECTIVE
Long-term growth of capital and income

PRINCIPAL RISKS*
Market Risks

BABSON FUND
Babson-Stewart Ivory
International Fund (BAINX)

OBJECTIVE
Favorable total return (market appreciation and income)

PRINCIPAL RISKS*
Market Risks
International Risks

BABSON FUND
Babson Bond Trust
Portfolio S - Shorter Term (BBDSX)
Babson Bond Trust
Portfolio L - Longer Term (BABIX)

OBJECTIVE Maximum current income and reasonable stability of principal,
consistent with stated quality and maturity standards

PRINCIPAL RISKS*
Fixed Income Risks
Credit Risks

BABSON FUND
Babson Money Market Fund (BMMXX)

OBJECTIVE Maximizing income consistent with maintaining the safety and liquidity
of the Fund's assets and seeking to maintain a consistent net asset value of
$1.00 per share

PRINCIPAL RISKS*
Fixed Income Risks

BABSON FUND
Babson Tax-Free Income Fund (BALTX)

OBJECTIVE Providing the highest level of regular income exempt from federal
income tax consistent with stated quality and maturity standards

PRINCIPAL RISKS* Fixed Income Risks * The Principal Risks associated with each
Fund or Portfolio are described more fully in the section titled Principal Risk
Factors.

PRINCIPAL INVESTMENT STRATEGIES:

Each Fund and Portfolio (hereafter, a "Fund," or together the "Funds") normally
invests for the long-term (but may sell a security at any time that the Advisor
considers it overvalued or otherwise unfavorable). The Funds intend to pursue
their objectives by principally investing as described below.

Babson Enterprise Fund -- This Fund invests at least 80% of its net assets in
common stocks of small, faster-growing companies (referred to as micro-cap). The
small companies primarily selected for the Fund will have market capitalization
(share price multiplied by outstanding shares) at time of purchase that is below
the dollar-weighted median market capitalization of companies in the Russell
2000 index. The sub-adviser presently expects to limit this amount between $15
million and $500 million in market capitalization at time of purchase.

The Fund selects companies whose stocks are selling at prices it believes are
reasonable in relation to the company's fundamental financial characteristics
and business prospects. The primary valuation ratios used are:

o price relative to earnings
o price relative to sales
o price relative to assets as measured by book value
o price relative to cash flow

Babson Enterprise Fund II -- This Fund invests in substantially the same manner
as Babson Enterprise Fund with the exception that it targets slightly larger
companies. The Fund invests at least 80% of its net assets in common stocks of
small, faster growing companies worth between $250 million and $1 billion in
market capitalization at the time of initial purchase. The Fund generally
invests in stocks listed on national or regional exchanges or listed
over-the-counter (on NASDAQ) with prices quoted daily in the financial press.

Babson Growth Fund -- To seek above average total return, this Fund remains at
least 80% invested in a portfolio of common stocks representing companies
selected for their long-term possibilities of both capital and dividend income
growth. The Advisor defines "above average total return" as total return that is
higher than return generated by traditional investment vehicles other than
equity products over the long-term.

Babson Growth Fund will invest at time of initial purchase in stocks of
well-managed companies in growing industries that have demonstrated both a
consistent and an above average ability to increase their earnings and dividends
and which have favorable prospects of sustaining such growth. Measurements used
for selection screening include:

o earning power
o dividend paying ability
o assets of the company

Shadow Stock Fund -- This Fund invests, under normal circumstances, at least 80%
of its net assets in small company stocks called "Shadow Stocks." These stocks
combine the characteristics of "small stocks" and "neglected stocks." The Fund
defines "small stocks" as those stocks of companies that have market
capitalization at the time of initial purchase of between $20 million and the
capitalization that marks the point between the 8th and 9th deciles of the New
York Stock Exchange (the "upper limit") and that have annual net profits of at
least $1 million for the three most recent fiscal years. The Fund defines
"neglected stocks" as those that are least held by institutional investors (on
average) and are subject to below average coverage by analysts and newsletters.
It is estimated that the Shadow Stock Fund will generally contain between 200
and 300 shadow stocks at any one time in proportions approximating the market
capitalizations of the various companies when compared to each other. Rather
than constantly purchasing and selling stocks for short-term re-balancing, the
Fund performs a detailed re-balancing twice per year.

The Fund screens "small and neglected stocks" and will not buy a stock or will
sell part or all of a stock it owns, if the Advisor believes:

o that the financial condition of the company is in jeopardy
o that liquidity is insufficient
o that total acquisition costs are unreasonably high
o that the stock is selling for less than $5 per share (stock will not be
sold for this reason alone but additional stock will not be bought below $4
per share and will be sold at the semi-annual re-balancing if the stock is
selling below $4 per share)

The Fund will also sell stocks based on:

o potential negative earnings
o tenders or potential mergers
o not meeting criteria for "neglected stocks" for three semi-annual
evaluations
o not meeting criteria for "small stocks" by having market capitalization
below $10 million or above twice the "upper limit"

Babson Value Fund -- This Fund invests at least 90% of its net assets in common
stocks that are considered to be undervalued in relation to earnings, dividends
and/or assets. The Fund invests, at time of initial purchase, in stocks that
meet each of the following criteria:

o stocks that the Fund considers to be undervalued based on their earnings,
dividends and/or assets or other widely recognized stock valuation
measurements
o stocks of companies the Fund believes are sound businesses with good future
potential based on their fundamental characteristics
o stocks of companies with an investment quality rating (growth and stability
of earnings and dividends) of "B-" or better by Standard & Poor's Rating
Group ("S&P(R)") or a financial strength rating of "B" or better by Value
Line
o stocks of any price range that may or may not be paying current dividends

Babson-Stewart Ivory International Fund -- This Fund invests at least 80% of its
net assets in equity securities (common stocks and securities convertible into
common stocks) of established companies whose primary business is carried on
outside the United States. It will invest in at least three foreign countries
and will not invest more than 35% of its net assets in any one country.

Securities purchased will primarily be listed on foreign stock exchanges and
will have attractive characteristics in terms of:

o growth
o financial resources
o quality
o acceptance of products or services
o ability to generate profits and in many cases--dividends

Babson-Stewart Ivory International Fund from time to time will also purchase:

o American Depository Receipts
o European Depository Receipts
o International Depository Receipts
o foreign currency or foreign currency forwards (the latter only for hedging)
o securities not listed on an exchange (which may be more difficult to sell)
o investment grade fixed income securities of foreign governments and foreign
corporations

Babson Bond Trust - Portfolio L and portfolio S -- Babson Bond Trust offers
shares of two separate fixed income portfolios. Portfolio L (Longer Term) will
typically have an expected dollar weighted average maturity of more than five
years. Portfolio S (Shorter Term) will typically have an expected dollar
weighted average maturity of five years or less. Each Portfolio may invest at
time of purchase:

o at least 80% of its net assets in debt securities to include: (1) direct or
guaranteed obligations of the U.S. government and its agencies, and (2)
investment grade debt securities issued by corporations or other business
organizations, including notes and bonds; the Portfolios will limit its
investment in securities rated BBB or Baa to no more than 25% of their
assets;
o in debt securities secured by specific assets of the issuing corporation
(such as mortgage bonds and equipment trusts) as well as unsecured debt
securities that represent claims on the general credit of the issuer;
o up to 25% of their assets in Yankee Bonds; Yankee Bonds are issued by
foreign-domiciled entities and underwritten by a U.S. syndicate for
delivery in the U.S.;
o in cash or short-term debt obligations; and,
o in variable rate master demand notes, which represent a borrowing agreement
between an institutional lender and borrower.

The expected average weighted maturity of Portfolio L is approximately 7 years
and Portfolio S is approximately 4.5 years, but maturities may be shortened or
lengthened to respond to interest rate changes.

Babson Money Market Fund -- This Fund invests in high quality short-term debt
instruments for the purpose of maximizing income consistent with maintaining the
safety and liquidity of the Fund's assets. The primary investment is commercial
paper issued by corporations. The Fund will have an expected weighted average
maturity of 90 days or less. Net asset value is expected to remain constant at
$1.00 per share. The Fund may invest at time of purchase in:

o direct obligations of the U.S. government;
o obligations of U.S. government agencies and instrumentalities which are
secured by the full faith and credit of the U.S. Treasury such as the
Government National Mortgage Association, Export-Import Bank, or the
Student Loan Marketing Association; or which are secured by the right of
the issuer to borrow from the Treasury, such a securities issued by the
Federal Financing Bank or the U.S. Postal Service; or which are supported
by the credit of the government agency or instrumentality itself, such as
securities of the Federal Home Loan Banks, or the Federal National Mortgage
Association;
o repurchase agreements collateralized by issues of the United States
Treasury or United States government agencies;
o short-term obligations issued domestically by U.S. commercial banks or
savings and loan associations having assets of at least $1 billion, which
are members of the Federal Deposit Insurance Corporation or Federal Home
Loan Banks Association;
o high quality commercial paper or variable rate master demand notes of
corporations; and,
o high quality non-convertible short-term debt obligations.

Babson Tax-Free Income Fund -- This Fund intends to offer shares substantially
exempt from federal income tax. The Fund will have an expected weighted average
maturity between ten and twenty-five years with maturities being longer than
five years at time of purchase. The Fund may invest at time of purchase:

o at least 80% of its net assets in municipal securities, such as bonds and
other debt instruments issued by or on behalf of states, territories and
possessions of the United States, including their subdivisions,
authorities, agencies and instrumentalities and the interest they pay is
expected to be exempt from federal income tax and any alternative minimum
tax;
o at least 90% of the municipal bonds bought will be rated within the three
top rating categories of Moody's (Aaa, Aa or A) or Standard & Poor's(R)
(AAA, AA or A);
o investments in short-term municipal obligations and notes will be (1)
backed by the full faith and credit of the United States; or (2) rated
MIG-1, MIG-2 or MIG-3 by Moody's; or (3) A-1 or A-2 by Standard &
Poor's(R); or (4) if unrated short-term then the issuer's long-term bond
rating must be at least A as determined by Moody's or Standard & Poor's(R);
and,
o in cash or short-term money market obligations (including taxable money
market obligations on a temporary basis) that are rated in the top two
categories (A-1/Prime-1 or A-2/Prime-2).

PRINCIPAL RISK FACTORS

As with any mutual fund, there is a risk that you could lose money by investing
in the Funds or Portfolios. Investments are not insured or guaranteed by the
Federal Deposit Insurance Corporation (FDIC) or any other government agency.
Although the Babson Money Market Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in the
Fund.

MARKET RISKS

Equity securities are subject to market, economic and business risks that will
cause their prices to fluctuate over time. Since the Growth, Enterprise,
Enterprise II, Value, Shadow and International Funds normally invest in equity
securities, the value of these Funds will go up and down.

Each Fund's success depends largely on the ability of its Advisor to select
favorable investments. Different types of investments shift in and out of favor
depending on market and economic conditions. For example, at various times
stocks will be more or less favorable than bonds, and small company stocks will
be more or less favorable than large company stocks. Because of this, the Funds
will perform better or worse than other types of funds depending on what is in
"favor."

SMALL COMPANY RISKS

Generally, smaller and less seasoned companies have more potential for rapid
growth. However, they often involve greater risk than larger companies and these
risks are passed on to Funds that invest in them. These companies may not have
the management experience, financial resources, product diversification and
competitive strengths of larger companies. Therefore, the securities of smaller
companies tend to be more volatile than the securities of larger, more
established companies.

Smaller company stocks tend to be bought and sold less often and in smaller
amounts than larger company stocks. Because of this, if a Fund wants to sell a
large quantity of a small company stock it may have to sell at a lower price
than its Advisor might prefer, or it may have to sell in small quantities over a
period of time. Enterprise and Enterprise II Funds try to minimize this risk by
investing in stocks that are readily bought and sold. However, the lower
liquidity of the neglected stocks in which Shadow Stock Fund invests carry
greater risk in the event of a weak stock market and substantial liquidations by
the Fund.

FIXED INCOME RISKS

The yields and principal values of debt securities fluctuate. Generally, values
of debt securities change inversely with changes in interest rates. For example,
when interest rates go up, the values of debt securities tend to go down. As a
result, the values of the Portfolio L and S of Bond Trust and the value of the
Tax-Free Income Fund may go down. The fluctuations that are experienced by
Portfolio L of Bond Trust and by the Tax-Free Income Fund will likely be greater
than those of Portfolio S, since longer-term bond prices tend to fluctuate more
in response to interest rate changes. Future interest rates cannot be accurately
and consistently forecast.

The amount of the dividends paid by Bond Trust, Tax-Free Income Fund and Money
Market Fund will change based on the amount of income the Fund earns on its
investments. Also, it is possible that the issuer of a debt security may default
on the interest and principal payments due to a Fund, which may affect a Fund's
total return.

CREDIT RISKS

The Bond Trust and Tax-Free Income Funds may purchase fixed income securities
rated in the fourth classification by Moody's (Baa) and S&P(R) (BBB). These
securities have speculative characteristics and changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity of those
issuers to make principal or interest payments, as compared to issuers of more
highly rated securities.

INTERNATIONAL RISKS

International investing by Babson-Stewart Ivory International Fund poses
additional risks such as currency fluctuation and political instability. These
risks are inherently passed on to the company's shareholders and in turn, to the
Fund's shareholders.

Investing in developing countries may pose additional risks. Securities issued
by companies in developing countries may not be as liquid as those in more
developed countries. In addition, regulations in developing countries may not be
as strong nor information as readily available. The International Fund intends
to limit purchases of securities issued by developing countries to no more than
20% of the Fund.

TEMPORARY DEFENSIVE STRATEGY

Each Fund may respond to adverse market, economic, political or other conditions
by investing up to 100% of its assets in temporary defensive investments, such
as cash, short-term debt obligations or other high quality investments. During
such periods when the Funds are not investing according to their principal
investment strategies, the Funds may not achieve their investment objectives.

PAST PERFORMANCE

The tables below and on the following pages provide an indication of the risks
of investing in the Babson Funds. The tables on the left side shows changes in
the total returns generated by the respective Fund for each calendar year. The
tables on the right side include several indexes against which each Fund
compares its performance. Each table reflects all expenses of the respective
Fund and assumes that all dividends and capital gains distributions have been
reinvested in new shares of the Fund. A Fund's past performance (before and
after taxes) is not necessarily an indication of how a Fund will perform in the
future.

The table on the right side also presents the impact of taxes on the Funds'
returns. The after-tax returns are calculated using the historical highest
individual federal marginal income tax rates and do not reflect the impact of
state or local taxes. It is possible for the figure representing "Return After
Taxes on Distributions and Sale of Fund Shares" to be higher than the other
return figures for the same period. A higher after-tax return results when a
capital loss occurs upon redemption and translates into an assumed tax deduction
that benefits the shareholder. Actual after-tax returns depend on each
investor's individual tax situation and may differ from those shown in the
table. The after-tax returns shown are not relevant to investors who own a Fund
in a tax-deferred account, such as an individual retirement account or a 401(k)
plan, because such accounts are subject to special provisions of the tax code.

Babson Enterprise Fund
Annual Total Return as of December 31 of Each Year

1992 24.59%
1993 16.27%
1994 2.45%
1995 16.43%
1996 21.27%
1997 32.43%
1998 -11.36%
1999 - 7.26%
2000 12.47%
2001 29.50%

Year-to-Date Return (through June 30, 2002) 14.01%
Best Quarter: Q2 '99 = 18.90%
Worst Quarter: Q3 '98 = -20.02%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson Enterprise Fund
Return Before Taxes 29.50% 9.66% 12.76%
Return After Taxes on Distributions 28.78% 7.51% 9.84%
Return After Taxes on Distributions
and Sale of Fund Shares 18.40% 7.46% 9.66%
Russell 2000 Index+ 2.49% 7.52% 11.51%
+Reflects no deductions for fees, expenses or taxes.

Babson Enterprise Fund II
Annual Total Return as of December 31 of Each Year

1992 17.21%
1993 19.80%
1994 - 7.39%
1995 19.87%
1996 27.62%
1997 33.27%
1998 - 4.33%
1999 6.16%
2000 16.61%
2001 2.73%

Year-to-Date Return (through June 30, 2002) - 6.38%
Best Quarter: Q2 '99 = 17.47%
Worst Quarter: Q3 '98 = -18.71%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson Enterprise Fund II
Return Before Taxes 2.73% 10.15% 12.42%
Return After Taxes on Distributions 1.35% 8.75% 11.01%
Return After Taxes on Distributions
and Sale of Fund Shares 2.86% 8.12% 10.19%
Russell 2000 Index+ 2.49% 7.52% 11.51%
+Reflects no deductions for fees, expenses or taxes.

Babson Growth Fund
Annual Total Return as of December 31 of Each Year

1992 9.10%
1993 10.27%
1994 - 0.56%
1995 31.43%
1996 21.80%
1997 27.99%
1998 32.24%
1999 12.57%
2000 - 7.85%
2001 -20.47%

Year-to-Date Return (through June 30, 2002) -16.98%
Best Quarter: Q4 '98 = 26.23%
Worst Quarter: Q3 '01 = -20.46%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson Growth Fund
Return Before Taxes -20.47% 6.90% 10.34%
Return After Taxes on Distributions -20.85% 3.84% 7.49%
Return After Taxes on Distributions
and Sale of Fund Shares -12.17% 5.64% 8.09%
S&P 500 Index+ -11.88% 10.70% 12.93%
+Reflects no deductions for fees, expenses or taxes.

Shadow Stock Fund
Annual Total Return as of December 31 of Each Year

1992 17.42%
1993 15.28%
1994 - 4.30%
1995 23.64%
1996 21.37%
1997 27.61%
1998 - 1.49%
1999 4.89%
2000 11.31%
2001 22.64%

Year-to-Date Return (through June 30, 2002) 7.83%
Best Quarter: Q2 '99 = 19.40%
Worst Quarter: Q3 '98 = -14.20%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Shadow Stock Fund
Return Before Taxes 22.64% 12.47% 13.34%
Return After Taxes on Distributions 21.72% 10.25% 10.58%
Return After Taxes on Distributions
and Sale of Fund Shares 13.98% 9.65% 10.11%
Russell 2000 Index+ 2.49% 7.52% 11.51%
Russell 2000 Value Index+ 14.02% 11.20% 15.11%
+Reflects no deductions for fees, expenses or taxes.

Babson Value Fund
Annual Total Return as of December 31 of Each Year

1992 15.40%
1993 22.89%
1994 2.51%
1995 31.72%
1996 22.74%
1997 26.51%
1998 6.07%
1999 1.09%
2000 9.06%
2001 - 3.16%

Year-to-Date Return (through June 30, 2002) 3.48%
Best Quarter: Q4 '98 = 14.07%
Worst Quarter: Q3 '98 = -17.78%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson Value Fund
Return Before Taxes -3.16% 7.46% 12.91%
Return After Taxes on Distributions -4.14% 5.79% 11.06%
Return After Taxes on Distributions
and Sale of Fund Shares -1.65% 5.46% 10.08%
S&P 500 Index+ -11.88% 10.70% 12.93%
S&P 500/Barra Value Index+ -11.71% 9.49% 13.10%
Russell 1000 Value Index+ - 5.59% 11.14% 14.15%
+Reflects no deductions for fees, expenses or taxes.

Babson-Stewart Ivory International Fund
Annual Total Return as of December 31 of Each Year

1992 - 1.71%
1993 33.47%
1994 1.33%
1995 12.64%
1996 13.42%
1997 1.75%
1998 13.30%
1999 31.06%
2000 -14.48%
2001 -31.22%

Year-to-Date Return (through June 30, 2002) -3.44%
Best Quarter: Q4 '99 = 21.34%
Worst Quarter: Q1 '01 = -18.85%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson-Stewart Ivory Int'l. Fund
Return Before Taxes -31.22% -2.33% 4.20%
Return After Taxes on Distributions -31.21% -3.18% 3.22%
Return After Taxes on Distributions
and Sale of Fund Shares -19.02% -2.06% 3.14%
MSCI EAFE Index+ -21.44% 0.89% 4.46%
+Reflects no deductions for fees, expenses or taxes.

Babson Bond Trust-- Portfolio L
Annual Total Return as of December 31 of Each Year

1992 7.97%
1993 11.05%
1994 - 3.27%
1995 15.94%
1996 3.16%
1997 9.29%
1998 7.55%
1999 - 1.40%
2000 9.93%
2001 7.83%

Year-to-Date Return (through June 30, 2002) 0.74%
Best Quarter: Q2 '95 = 5.81%
Worst Quarter: Q1 '94 = -2.67%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson Bond Trust - Portfolio L
Return Before Taxes 7.83% 6.56% 6.67%
Return After Taxes on Distributions 5.50% 4.08% 3.91%
Return After Taxes on Distributions
and Sale of Fund Shares 4.74% 4.00% 3.97%
Lehman Brothers Aggregate Bond+ 8.42% 7.43% 7.23%
+Reflects no deductions for fees, expenses or taxes.

Babson Bond Trust-- Portfolio S
Annual Total Return as of December 31 of Each Year

1992 6.99%
1993 8.42%
1994 - 2.09%
1995 13.61%
1996 4.42%
1997 8.21%
1998 6.81%
1999 0.37%
2000 9.62%
2001 7.18%

Year-to-Date Return (through June 30, 2002) 1.27%
Best Quarter: Q2 '95 = 4.15%
Worst Quarter: Q1 '94 = -2.04%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson Bond Trust - Portfolio S
Return Before Taxes 7.18% 6.40% 6.41%
Return After Taxes on Distributions 4.78% 3.91% 3.55%
Return After Taxes on Distributions
and Sale of Fund Shares 4.34% 3.87% 3.65%
Lehman Brothers Intermediate Govt. /Corp.+ 8.98% 7.09% 6.81%
+Reflects no deductions for fees, expenses or taxes.

Babson Money Market Fund
Annual Total Return as of December 31 of Each Year

1992 3.12%
1993 2.34%
1994 3.40%
1995 5.18%
1996 4.57%
1997 4.74%
1998 4.72%
1999 4.37%
2000 5.61%
2001 3.26%

Year-to-Date Return (through June 30, 2002) 0.45%
Best Quarter: Q4 '00 = 1.45%
Worst Quarter: Q4 '01 = 0.39%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson Money Market Fund
Return Before Taxes 3.26% 4.54% 4.13%
Return After Taxes on Distributions 3.26% 4.54% 4.13%
Return After Taxes on Distributions
and Sale of Fund Shares 3.26% 4.54% 4.13%
91 Day Treasury Bill+ 3.67% 5.03% 4.73%
+Reflects no deductions for fees, expenses or taxes.

Babson Tax-Free Income Fund
Annual Total Return as of December 31 of Each Year

1992 8.41%
1993 12.27%
1994 - 7.40%
1995 16.42%
1996 3.27%
1997 8.73%
1998 5.41%
1999 - 3.10%
2000 10.58%
2001 3.62%

Year-to-Date Return (through June 30, 2002) 4.74%
Best Quarter: Q1 '95 = 5.40%
Worst Quarter: Q2 '99 = -2.09%

Average Annual Total Return as of December 31, 2001
1 Year 5 Years 10 Years
Babson Tax-Free Income Fund
Return Before Taxes 3.62% 4.94% 5.60%
Return After Taxes on Distributions 3.62% 4.84% 5.26%
Return After Taxes on Distributions
and Sale of Fund Shares 3.62% 4.85% 5.30%
Lehman Brothers Municipal Bond+ 5.08% 5.97% 6.63%
+Reflects no deductions for fees, expenses or taxes.

FEES & EXPENSES

The following tables describe the fees and expenses that you may pay if you buy
and hold shares of the Funds.

BABSON BABSON BABSON-STEWART
BABSON-STEWART IVORY BABSON ENTERPRISE FUND GROWTH SHADOW BABSON IVORY INTERNATIONAL
INTERNATIONAL FUND ENTERPRISE FUND II FUND STOCK FUND VALUE FUND FUND
Shareholder Fees (fees paid
directly from your investment)
Maximum Sales Charge (Load) None None None None None None
Imposed on Purchases
Maximum Deferred Sales Charge None None None None None None
(Load)
Redemption Fee None* None* None* None* None* None*
Exchange Fee None None None None None None
*A $10 fee is imposed for redemptions by wire.

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

Management Fees 1.06% 1.26% .83% 1.00% .95% .95%
Distribution (12b-1) Fees None None None None None None
Other Expenses .02% .04% .02% .03% .01% .70%
Total Annual Fund Operating
Expenses 1.08% 1.30% .85% 1.03% .96% 1.65%

BABSON
BABSON BOND TRUST BABSON BOND TRUST BABSON MONEY TAX-FREE
PORTFOLIO L PORTFOLIO S MARKET FUND INCOME FUND
Shareholder Fees (fees paid directly from your
investment)
Maximum Sales Charge (Load) Imposed on Purchases None None None None
Maximum Deferred Sales Charge (Load) None None None None
Maximum Sales Charge (Load) Imposed on Reinvested None None None None
Dividends
Redemption Fee None* None* None* None*
Exchange Fee None None None None
*A $10 fee is imposed for redemptions by wire.

Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)

Management Fees .95% .95%** .85% .95%
Distribution (12b-1) Fees None None None None
Other Expenses .03% .03% .08% .04%
Total Annual Fund Operating Expenses .98% .98% .93% .99%
**The Manager has voluntarily agreed to a reduction in the management fee paid
by the portfolio to .65% through March 31, 2003.

Fee Examples

These examples are intended to help you compare the cost of investing in each
Fund with the cost of investing in other mutual funds. They assume you invest
$10,000, receive a 5% return each year, and that operating expenses for each
period remain the same. Although your actual costs may be higher or lower, based
on the assumptions below your costs would be:

1 Year 3 Years 5 Years 10 Years

Babson Enterprise Fund $ 110 $ 343 $ 595 $ 1,317
Babson Enterprise Fund II 132 412 713 1,568
Babson Growth Fund 87 271 471 1,049
Shadow Stock Fund 105 328 569 1,259
Babson Value Fund 98 306 531 1,178
Babson-Stewart Ivory International Fund 168 520 897 1,955
Babson Bond Trust-- Portfolio L 100 312 542 1,201
Babson Bond Trust-- Portfolio S 69 218 379 847
Babson Money Market 95 296 515 1,143
Babson Tax-Free Income 101 315 547 1,213

MANAGEMENT AND INVESTMENT ADVISOR

Jones & Babson, Inc. ("Jones & Babson"), founded in 1959, acts as the
Manager and Principal Underwriter for each of the Funds described in this
prospectus. Pursuant to the current Management Agreements, Jones & Babson
provides or pays the cost of all management, supervisory and administrative
services required in the normal operation of the Funds. This includes investment
management and supervision; fees of the custodian, independent auditors and
legal counsel; officers, directors and other personnel; rent; shareholder
services; and other items incidental to corporate administration.

Operating expenses not required in the normal operation of the Funds are payable
by the Funds. These expenses include taxes, interest, governmental charges and
fees, including registration of the Fund with the Securities and Exchange
Commission and various state fees, brokerage costs, dues, and all extraordinary
costs including expenses arising out of anticipated or actual litigation or
administrative proceedings. Additional operating expenses paid by the Shadow
Stock Fund and Babson-Stewart Ivory International Fund include fees for pricing
services and custodian fees.

Under the Management Agreements, Jones & Babson employs at its own expense
David L. Babson & Company Inc. ("Babson") an investment advisory firm
founded in 1940, as the Investment Advisor ("Advisor") with responsibility for
day-to-day management of the assets of all but one of the Babson Funds. For the
Babson-Stewart Ivory International Fund, Jones & Babson employs at its own
expense S.I. International Assets ("formerly Babson-Stewart Ivory
International") as the Advisor, with responsibility for day-to-day management of
the assets of that fund. S.I. International Assets is a partnership formed in
1987, between Babson and Stewart-Ivory Company (International)
Ltd.("Stewart-Ivory") a wholly-owned subsidiary of First State Investments (UK
Holdings) Limited and an indirect subsidiary of the Commonwealth Bank of
Australia. On September 20, 2002, Babson and Stewart-Ivory entered into an
agreement providing for the orderly winding-up of S.I. International Assets and
the continuation of the S.I. International Assets' advisory business by Stewart
Ivory (to be renamed First State Investments International Limited). It is
anticipated that Stewart Ivory will seek to serve under Jones & Babson as
the advisor to the Babson-Stewart Ivory International Fund going forward,
subject to approval by Jones & Babson, the Board and the Fund's
shareholders.

James B. Gribbell has been the manager of Babson Growth Fund since 1996. He is a
Chartered Financial Analyst ("CFA") Charterholder. He joined David L. Babson
& Company Inc. in 1991. Lance F. James has been the manager of Babson
Enterprise Fund II since its inception in 1991 and manager of Babson Enterprise
Fund since 1999. He joined David L. Babson & Company Inc. in 1986. Lorene K.
Heebner, who is a CFA Charterholder, acts as co-manager for the Babson
Enterprise Fund. Ms. Heebner joined David L. Babson & Company Inc. in 1987.
Anthony M. Maramarco is a CFA Charterholder, and he has been the manager of
Babson Value Fund and the Shadow Stock Fund since 1999. He joined David L.
Babson & Company Inc. in 1996 and has over 19 years investment management
experience. Mr. Maramarco was previously at Concert Capital Management, Inc., an
investment advisory firm, from 1993-1996. Thomas L. Mermagen has been the
portfolio manager for Babson-Stewart Ivory Interational Fund, Inc. since
September 2002. He joined the global equity team at S.I. International Assets as
a senior portoflio manager in August 2002. From 1992 to 2002 Mr. Mermagen was an
investment professional at Schroder Investment Management. James W. Burns, who
was the portfolio manager responsible for the Fund from 1999 to September 2002,
continues to provide the global equity team at S.I. International Assets with
analysis and research. Mr. Burns joined S.I. International Assets in 1990 and
has 20 years of investment management experience. Babson Bond Trust has been
managed by a committee of fixed income professionals since October 1999. Joanne
E. Keers, CFA Charterholder, has been the manager of Babson Tax-Free Income Fund
since 1999. She joined David L. Babson & Company Inc. in 1987.

For its services, Babson Enterprise Fund and Enterprise Fund II pay Jones &
Babson a fee at the annual rate of 1.50% of the first $30 million of average
daily net assets and 1% of amounts in excess of $30 million. Babson Growth Fund
pays Jones & Babson a fee at the annual rate of .85% of the first $250 million
and .70% of amounts in excess of $250 million of average daily net assets.
Shadow Stock Fund pays Jones & Babson a fee of 1.00% of average daily assets.
Babson Value Fund, Babson-Stewart Ivory International Fund and Babson Bond Trust
pay Jones & Babson a fee at the annual rate of .95% of average daily net assets.
However, during the period from May 1, 1988 through March 31, 2003, Jones &
Babson has agreed to voluntarily waive .30% of the fee for Portfolio S of Babson
Bond Trust bringing its total to .65%. Babson Tax-Free Income Fund pays Jones &
Babson a fee at the annual rate of .95% of average daily net assets. Babson
Money Market Fund pays Jones & Babson a fee at the annual rate of .85% of
average daily assets. The Management Agreement limits the liability of the
Manager and all Fund Advisors, as well as their officers, directors and
personnel, to acts or omissions involving willful malfeasance, bad faith, gross
negligence or reckless disregard of their duties.

Jones & Babson, Inc. is located at 700 Karnes Blvd., Kansas City, MO
64108-3306 and David L. Babson & Company Inc. is located at One Memorial
Drive, Cambridge, MA 02142-1300.

On April 30, 2002, RBC Insurance, the insurance operation of Royal Bank of
Canada, announced an agreement to acquire the parent of Jones & Babson, Business
Men's Assurance Company of America ("BMA"), exclusive of its existing
reinsurance business. Under the agreement, Jones & Babson will become part of
the asset management division of RBC Dain Rauscher Corp.

This transaction is subject to Canadian and U.S. regulatory approvals and
certain customary closing conditions.

The consumation of this transaction will result in an "assignment," as that term
is defined in the Investment Company Act of 1940, as amended (the "1940 Act"),
of the Funds' current managment and sub-advisory agrements (the "Current
Agreements"). Under the 1940 Act, the Current Agreements will automatically
terminate upon their assignment. As a result, the Board of Directors/Trustees of
the Funds met on May 30, 2002 and approved new management and sub-advisory
agreements. The new agreements, which will become effective on the date of
transaction, will be subject to shareholder approval. A shareholder meeting has
been authorized for the purpose of obtaining shareholder approval of these
agreements and other related items. Proxy materials will be mailed to
sharehoders in advance of this meeting.

FINANCIAL HIGHLIGHTS

The financial highlights tables are intended to help you understand each Fund's
financial performance for the five years ended June 30, 2002, except for Babson
Enterprise Fund, Babson Enterprise Fund II, Babson Value Fund and Babson Bond
Trust (Portfolio L & Portfolio S) which changed their fiscal year-end from
November 30 to June 30 in 1999. These Funds' financial performance are for the three
years ended June 30, 2002, the seven months ended June 30, 1999 and the two
years ended November 30, 1998, respectively. Certain information reflects
financial results for a single share of a Fund. The total returns in the tables
represent the rate that an investor would have earned on an investment in a Fund
(assuming reinvestment of all dividends and distributions). This information has
been derived from the Funds' financial statements, which have been audited by
Ernst & Young LLP, except for the financial highlights for Babson Growth Fund,
Shadow Stock Fund, Babson-Stewart Ivory International Fund, Babson Money Market
Fund and Babson Tax-Free Income Fund for the years ended on or before June 30,
1998, which have been audited by other auditors. This information, along with
the Funds' financial statements, is included in the annual report. The annual
report is available upon request.

Babson Enterprise Fund
Condensed data for a share of capital stock outstanding throughout each period.

Years Ended Years Ended November 30,
June 30 Seven Months Ended
2002 2001 2000 June 30, 1999 1998 1997
Net asset value, beginning of
period $ 15.24 $ 13.82 $ 14.72 $ 16.63 $ 21.22 $ 18.51
Income from investment
operations:
Net investment income .02 .03 .03 .03 .04 .06
Net gains (losses) on securities
(both realized and unrealized) 3.08 2.46 .18 .58 (2.15) 5.31
Total from investment operations 3.10 2.49 .21 .61 (2.11) 5.37
Less distributions:
Dividends from net investment
income (.05) (.02) (.04) (.05) (.06) --
Distributions from capital gains (.31) (1.05) (1.07) (2.47) (2.42) (2.66)
Total distributions (.36) (1.07) (1.11) (2.52) (2.48) (2.66)
Net asset value, end of period $ 17.98 $ 15.24 $ 13.82 $ 14.72 $ 16.63 $ 21.22
Total return* 20.82% 20.08% 2.84% 4.70% (11.05%) 33.49%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 370 $ 137 $ 111 $ 155 $ 179 $ 216
Ratio of expenses to average net
assets** 1.08% 1.15% 1.14% 1.11% 1.09% 1.08%
Ratio of net investment income
to average net assets** .04% .25% .15% .32% .29% .30%
Portfolio turnover rate 93% 55% 32% 12% 22% 22%

Babson Enterprise Fund II
Condensed data for a share of capital stock outstanding throughout each period.

Years Ended Seven Months Ended Years Ended November 30,
June 30
2002 2001 2000 June 30, 1999 1998 1997
Net asset value, beginning of
period $ 26.19 $ 25.18 $ 24.48 $ 23.20 $ 26.70 $ 22.75
Income from investment
operations:
Net investment income (.03) .04 .02 .03 .10 .08
Net gains (losses) on securities
(both realized and unrealized) .73 3.63 1.30 2.37 (1.50) 6.97
Total from investment operations .70 3.67 1.32 2.40 (1.40) 7.05
Less distributions:
Dividends from net investment
income (.01) (.03) (.02) (.05) (.05) (.11)
Distributions from capital gains (1.26) (2.63) (.60) (1.07) (2.05) (2.99)
Total distributions (1.27) (2.66) (.62) (1.12) (2.10) (3.10)
Net asset value, end of period $ 25.62 $ 26.19 $ 25.18 $ 24.48 $ 23.20 $ 26.70
Total return* 2.91% 15.54% 5.63% 11.03% (5.61%) 35.29%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 61 $ 60 $ 60 $ 77 $ 83 $ 82
Ratio of expenses to average net
assets** 1.30% 1.30% 1.27% 1.23% 1.22% 1.28%
Ratio of net investment income
to average net assets** (.14%) .12% .08% .11% .40% .27%
Portfolio turnover rate 37% 41% 23% 14% 25% 25%

*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year

Babson Growth Fund
Condensed data for a share of capital stock outstanding throughout each year.

Years Ended June 30,
2002 2001 2000 1999 1998
Net asset value, beginning of period $ 12.51 $ 20.87 $ 20.01 $ 20.77 $ 17.80
Income from investment operations:
Net investment income -- (.03) (.04) .02 .06
Net gains (losses) on securities
(both realized and unrealized) (3.07) (5.22) 4.00 3.25 4.41
Total from investment operations (3.07) (5.25) 3.96 3.27 4.47
Less distributions:
Dividends from net investment income -- -- -- (.02) (.06)
Distributions from capital gains (.25) (3.11) (3.10) (4.01) (1.44)
Total distributions (.25) (3.11) (3.10) (4.03) (1.50)
Net asset value, end of period $ 9.19 $ 12.51 $ 20.87 $ 20.01 $ 20.77
Total return (24.90%) (26.27%) 20.69% 17.04R% 26.73%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 226 $ 347 $ 525 $ 490 $ 451
Ratio of expenses to average net
assets .85% .80% .79% .79% .80%
Ratio of net investment income to
average net assets (.03%) (.16%) (.18%) .09% .30%
Portfolio turnover rate 31% 64% 62% 39% 35%

Shadow Stock Fund
Condensed data for a share of capital stock outstanding throughout each year.

Years Ended June 30,
2002 2001 2000 1999 1998
Net asset value, beginning of period $ 13.23 $ 12.26 $ 12.06 $ 13.24 $ 12.57
Income from investment operations:
Net investment income .03 .13 .09 .11 .08
Net gains (losses) on securities
(both realized and unrealized) 1.58 1.74 1.04 (.24) 2.54
Total from investment operations 1.61 1.87 1.13 (.13) 2.62
Less distributions:
Dividends from net investment income (.02) (.13) (.07) (.07) (.10)
Distributions from capital gains (.22) (.77) (.86) (.98) (1.85)
Total distributions (.24) (.90) (.93) (1.05) (1.95)
Net asset value, end of period $ 14.60 $ 13.23 $ 12.26 $ 12.06 $ 13.24
Total return 12.44% 16.82% 9.91% (.25%) 21.98%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 96 $ 62 $ 45 $ 50 $ 52
Ratio of expenses to average net
assets 1.03% 1.03% 1.07% 1.10% 1.16%
Ratio of net investment income to
average net assets .26% 1.20% .66% .97% .56%
Portfolio turnover rate 34% 29% 18% 21% 43%

Babson Value Fund
Condensed data for a share of capital stock outstanding throughout each year.

Years Ended Seven Months Ended Years Ended November 30,
June 30
June 30, 1999
2002 2001 2000 1998 1997
Net asset value, beginning of
period $ 45.43 $ 38.76 $ 51.36 $ 47.42 $ 47.73 $ 38.65
Income from investment
operations:
Net investment income .44 .65 1.27 .45 .62 .51
Net gains (losses) on securities
(both realized and unrealized) (1.87) 7.12 (9.35) 5.90 1.09 9.65
Total from investment operations (1.43) 7.77 (8.08) 6.35 1.71 10.16
Less distributions:
Dividends from net investment
income (.48) (.90) (.96) (.44) (.56) (.47)
Distributions from capital gains (.67) (.20) (3.56) (1.97) (1.46) (.61)
Total distributions (1.15) (1.10) (4.52) (2.41) (2.02) (1.08)
Net asset value, end of period $ 42.85 $ 45.43 $ 38.76 $ 51.36 $ 47.42 $ 47.73
Total return* (3.02%) 20.30% (15.93%) 14.14% 3.85% 26.89%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 436 $ 496 $ 528 $ 1,244 $ 1,494 $ 1,419
Ratio of expenses to average net
assets** .96% .96% .96% .96% .98% .97%
Ratio of net investment income
to average net assets** 1.02% 1.38% 2.41% 1.05% 1.28% 1.22%
Portfolio turnover rate 25% 27% 18% 13% 42% 17%

*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year

Babson-Stewart Ivory International Fund
Condensed data for a share of capital stock outstanding throughout each year.

Years Ended June 30,
2002 2001 2000 1999 1998
Net asset value, beginning of period $ 15.93 $ 23.59 $ 19.48 $ 19.65 $ 19.53
Income from investment operations:
Net investment income (.13) (.03) (.04) .03 .08
Net gains (losses) on securities
(both realized and unrealized) (2.06) (7.19) 4.45 .66 1.07
Total from investment operations (2.19) (7.22) 4.41 .69 1.15
Less distributions:
Dividends from net investment income -- -- -- (.04) (.07)
Distributions from capital gains -- (.44) (.30) (.82) (.96)
Total distributions -- (.44) (.30) (.86) (1.03)
Net asset value, end of period $ 13.74 $ 15.93 $ 23.59 $ 19.48 $ 19.65
Total return (13.72%) (30.97%) 22.64% 3.76% 6.48%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 18 $ 51 $ 85 $ 89 $ 104
Ratio of expenses to average net
assets 1.65% 1.23% 1.24% 1.23% 1.16%
Ratio of net investment income to
average net assets (.54%) (.15%) (.06%) .24% .37%
Portfolio turnover rate 48% 49% 47% 51% 48%

Babson Bond Trust - Portfolio L
Condensed data for a share of capital stock outstanding throughout each period.

Years Ended Seven Months Ended Years Ended November 30,
June 30
2002(a) 2001 2000 June 30, 1999 1998 1997
Net asset value, beginning of
period $ 1.54 $ 1.48 $ 1.52 $ 1.59 $ 1.56 $ 1.55
Income from investment
operations:
Net investment income .08 .09 .09 .05 .09 .10
Net gains (losses) on securities
(both realized and unrealized) (.01) .06 (.04) (.07) .03 .01
Total from investment operations .07 .15 .05 (.02) .12 .11
Less distributions:
Dividends from net investment
income (.08) (.09) (.09) (.05) (.09) (.10)
Distributions from capital gains -- -- -- -- -- --
Total distributions (.08) (.09) (.09) (.05) (.09) (.10)
Net asset value, end of period $ 1.53 $ 1.54 $ 1.48 $ 1.52 $ 1.59 $ 1.56
Total return* 4.81% 10.45% 3.54% (1.16%) 8.13% 7.26%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 92 $ 97 $ 100 $ 121 $ 128 $ 132
Ratio of expenses to average net
assets** .98% .98% .98% .97% .97% .97%
Ratio of net investment income
to average net assets** 5.25% 5.98% 6.14% 5.73% 5.93% 6.38%
Portfolio turnover rate 61% 38% 26% 38% 43% 59%
*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
(a)As required, effective July 1, 2001, the Fund has adopted the provisions of
the AICPA Audit and Accounting Guide for Investment Companies and began
amortizing premium on debt securities. The effect of this change for the year
ended June 30, 2002 was to decrease net investment income per share by less than
1/2of a cent, increase net realized and unrealized gains and losses per share by
less than1/2of a cent, and decrease the ratio of net investment income to
average net assets from 5.37% to 5.25%. Per share, ratios and supplemental data
for periods prior to July 1, 2001, have not been restated to reflect this change
in presentation.

Babson Bond Trust - Portfolio S
Condensed data for a share of capital stock outstanding throughout each period.

Years Ended Seven Months Ended Years Ended November 30,
June 30
2002(a) 2001 2000 June 30, 1999 1998 1997
Net asset value, beginning of
period $ 9.66 $ 9.35 $ 9.60 $ 9.91 $ 9.78 $ 9.77
Income from investment
operations:
Net investment income .54 .59 .58 .33 .58 .62
Net gains (losses) on securities
(both realized and unrealized) (.04) .31 (.25) (.31) .13 .01
Total from investment operations .50 .90 .33 .02 .71 .63
Less distributions:
Dividends from net investment
income (.55) (.59) (.58) (.33) (.58) (.62)
Distributions from capital gains -- -- -- -- -- --
Total distributions (.55) (.59) (.58) (.33) (.58) (.62)
Net asset value, end of period $ 9.61 $ 9.66 $ 9.35 $ 9.60 $ 9.91 $ 9.78
Total return* 5.21% 9.85% 3.55% .15% 7.47% 6.70%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 31 $ 30 $ 30 $ 37 $ 38 $ 41
Ratio of expenses to average net
assets** .68% .68% .68% .67% .67% .66%
Ratio of expenses to average net
assets before voluntary
reduction of management fee** .98% .98% .98% .97% .97% .97%
Ratio of net investment income
to average net assets** 5.32% 6.16% 6.12% 5.75% 5.90% 6.42%
Ratio of net investment income
to average net assets before fee
waivers and expense
reimbursements 5.02% 6.46% 6.42% 6.05% 6.20% 6.73%
Portfolio turnover rate 63% 39% 35% 54% 60% 65%

*Total return not annualized for periods less than one full year
**Annualized for periods less than one full year
(a)As required, effective July 1, 2001, the Fund adopted the provisions of the
AICPA Audit and Accounting Guide for Investment Companies and began amortizing
premium on debt securities. The effect of this change for the year ended June
30, 2002 was to decrease net investment income per share by less than1/2of a
cent for both Portfolio L and S, increase net realized and unrealized gains and
losses per share by less than1/2of a cent for both Portfolio L and S and
decrease the ratio of net investment income to average net assets from 5.37% to
5.25% for Portfolio L and 5.52% to 5.32% for Portfolio S. Per share, ratios and
supplemental data for periods prior to July 1, 2001, have not been restated to
reflect this change in presentation.

Babson Money Market Fund(a)
Condensed data for a share of capital stock outstanding throughout each year.

Years Ended June 30,
2002 2001 2000 1999 1998
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income .02 .05 .05 .04 .05
Less distributions:
Dividends from net investment income (.02) (.05) (.05) (.04) (.05)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Total return* 1.55% 5.13% 4.97% 4.38% 4.82%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 38 $ 40 $ 39 $ 39 $ 37
Ratio of expenses to average net
assets .93% .90% .88% .88% .91%
Ratio of net investment income to
average net assets 1.56% 5.01% 4.86% 4.30% 4.73%

Babson Tax-Free Income Fund(b)
Condensed data for a share of capital stock outstanding throughout each year.

Years Ended June 30,
2002 2001 2000 1999 1998
Net asset value, beginning of period $ 8.96 $ 8.62 $ 8.91 $ 9.22 $ 8.96
Income from investment operations:
Net investment income .36 .37 .39 .40 .40
Net gains (losses) on securities
(both realized and unrealized) .18 .38 (.21) (.24) .28
Total from investment operations .54 .75 .18 .16 .68
Less distributions:
Dividends from net investment income (.36) (.37) (.39) (.40) (.40)
Distributions from capital gains -- (.04) (.08) (.07) (.02)
Total distributions (.36) (.41) (.47) (.47) (.42)
Net asset value, end of period $ 9.14 $ 8.96 $ 8.62 $ 8.91 $ 9.22
Total return 6.12% 8.89% 2.18% 1.70% 7.82%
Ratios/Supplemental Data
Net assets, end of period (in
millions) $ 36 $ 35 $ 24 $ 26 $ 27
Ratio of expenses to average net
assets .99% 1.00% 1.01% 1.03% 1.06%
Ratio of net investment income to
average net assets 3.96% 4.19% 4.53% 4.36% 4.46%
Portfolio turnover rate 12% 27% 48% 9% 18%

(a) The financial highlights for the Babson Money Market Fund as set forth
herein evaluate the historical financial highlights of the Prime Portfolio. The
assets of the Federal Portfolio were acquired by the Prime Portfolio on October
31, 2000.

(b) The financial highlights for the Babson Tax-Free Income Fund as set forth
herein evaluate the historical financial highlights of the Portfolio L. The
assets of the Portfolio S were acquired by the Portfolio L on October 31, 2000.

HOW TO PURCHASE SHARES

No Load Funds
o There are no sales commissions or Rule 12b-1 distribution fees.

How to Buy Shares (see accompanying chart on page 22 for details)
o By phone, internet, mail or wire;
o Through Automatic Monthly Investments; and,
o Through exchanges from another Babson Fund.

Minimum Initial Investment
o $1,000 for regular accounts;
o $250 for IRA and Uniform Transfer/Gift to Minors Accounts;
o $100 with Automatic Monthly Investments; or
o $1,000 for exchanges from another Babson Fund ($100 for IRAs and Uniform
Transfers/Gifts to Minors Accounts).

Minimum Additional Investment
o $100 by phone, internet or mail;
o $1,000 by Wire;
o $50 for Automatic Monthly Investments; and,
o $1,000 for exchanges from another Babson Fund ($100 for IRAs and Uniform
Transfer/Gifts to Minors Accounts).

Automatic Monthly Investments

Automatic Monthly Investments are processed through an automated claring house
("ACH") whereby an agreed amount is credited to or debited from a shareholder's
preidentified bank account.

Minimum Account Size

You must maintain a minimum account value equal to the current minimum initial
investment, which is $1,000 for reqular shareholder accounts. If your account
falls below a minimum due to redemptions and not market action, the Funds may
ask you to increase the account size back to the minimum. If you do not bring
the account up to the minimum amount within 60 days after the Funds contact you,
the Funds may close the account and send your money to you or begin charging you
a Fee for remaining below the minimum account size.

HOW TO REDEEM SHARES

You may withdraw from your Fund's account at any time in the following amounts:

o Any amount for redemptions requested by mail;
o Any amount up to and including $50,000 for Fund web site redemptions;
o $1,000 or more for redemptions wired to a bank or similar account ($10
fee);
o $50 or more for redemptions by a systematic redemption plan (there may be a
fee);
o $1,000 or more for exchanges to another Babson Fund;
o $100 or more for redemptions by automatic monthly exchange to another
Babson Fund;
o $100 or more via ACH; there is no fee but proceeds may take 3-5 business
days to reach your account; and,
o Up to $50,000 by telephone (you must first request this option in writing
with a signature guarantee).

SHAREHOLDER SERVICES

The following services are also available to shareholders. Please call
1-800-4-BABSON (1-800-422-2766) for more information:

o Uniform Transfers/Gifts to Minors accounts.
o Transfer on Death ("TOD") Accounts.
o Accounts for corporations, partnerships and retirement plans.
o Coverdell Education Savings accounts.
o Traditional IRA accounts.
o Roth IRA accounts.
o Simplified Employee Pensions ("SEP's").

HOW SHARE PRICE IS DETERMINED

Shares of the Funds are purchased or redeemed at the net asset value per share
next calculated after your purchase order and payment (or redemption) order is
received by the Funds. In the case of certain institutions, which have made
satisfactory payment or redemption arrangements with the Funds, orders will be
processed at the net asset value per share next effective after receipt by that
institution.

The net asset value is calculated by subtracting from the Fund's total assets
any liabilities and then dividing into this amount the total outstanding shares
as of the date of the calculation. The net asset value per share (except for the
Money Market Fund) is computed once daily, Monday through Friday, at 4:00 p.m.
(Eastern Time) on days when the Funds are open for business (generally the same
days that the New York Stock Exchange is open for unrestricted trading). The net
asset value per share for the Money Market Fund is computed at 1:00 p.m.
(Eastern Time) on the same days as the other Funds. The Funds are
generally closed on weekends, national holidays and Good Friday.

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

Short-term instruments maturing within 60 days may be valued at amortized cost.
The Money Market Fund values assets on the basis of amortized cost.

DISTRIBUTIONS AND TAXES

DISTRIBUTIONS -- Bond Trust, Tax-Free Income Fund and Money Market Fund -- At
the end of each day, the Funds declare dividends from their net investment
income. These dividends are payable to those who were shareholders of record at
the end of the previous business day. On the last day of the month, all
dividends declared during that month are credited to the accounts of those
shareholders. Distributions from capital gains, if any, will be declared
annually by December 31.

Shares begin earning income on the day following the effective date of purchase.
Income earned by a Fund on weekends, holidays and other days on which the Fund
is closed for business is declared as a dividend on the next day on which the
Fund is open for business. However, on month-end such dividend is declared as of
the last day of the month.

Value Fund -- The Value Fund pays shareholder distributions from its net
investment income quarterly, usually in March, June, September and December.
Distributions from any net capital gains that it has realized on the sale of
securities will be declared and paid semiannually, usually in June and December.

Enterprise Fund, Enterprise Fund II, Growth Fund, Shadow Stock Fund and
International Fund -- Each Fund pays shareholder distributions from net
investment income and from net capital gains that it has realized on the sale of
the securities, if any, semiannually, usually in June and December.

Your distributions will be reinvested automatically in additional shares of the
same Fund, unless you have elected on your original application, or by written
instructions filed with the Funds, to have them paid in cash ($10.00 minimum
check amount). We automatically reinvest all dividends under $10.00 in
additional shares of the same Fund. There are no fees or sales charges on
reinvestments.

TAX CONSIDERATIONS -- In general, if you are a taxable investor, distributions
from a Fund are taxable to you as either ordinary income or capital gains. This
is true whether you reinvest your distributions in additional shares of a Fund
or receive them in cash. Any capital gains, which a Fund distributes as net
long-term capital gains, will be taxable to you as long-term capital gains no
matter how long you have owned your shares. If you invest in a Fund shortly
before it makes a distribution, you may receive some or all of your investment
back in the form of a taxable distribution.

When you sell your shares of a Fund, you may have a capital gain or loss. For
tax purposes, an exchange of your Fund shares for shares of a different Babson
Fund is the same as a sale. Because the Money Market Fund expects to maintain a
$1.00 net asset value per share, investors should not have any gain or loss on
the sale of such shares.

Fund distributions and gains from the sale or exchange of your shares generally
will be subject to state and local income tax. Non-U.S. investors may be subject
to U.S. withholding and estate tax and are subject to special U.S. tax
certification requirements. Any foreign taxes paid by the Babson-Stewart Ivory
International Fund on its investments may be passed through to you as a foreign
tax credit. You should consult your tax advisor about the federal, state, local
or foreign tax consequences of your investment in a Fund.

Distributions from the Tax-Free Income Fund will consist primarily of
exempt-interest dividends from interest earned on municipal securities. In
general, exempt-interest dividends are exempt from federal income tax. The Fund,
however, may invest a portion of its assets in securities that pay income that
is not tax-exempt. Exempt-interest dividends paid by the Tax-Free Income Fund
are taken into account when determining the taxable portion of an investor's
social security or railroad retirement benefits. The Fund may invest a portion
of its assets in private activity bonds. The income from these bonds will be a
preference item when determining an investor's alternative minimum tax.

Exempt-interest dividends from interest earned on municipal securities of a
state, or of its political subdivisions, generally will be exempt from that
state's personal income taxes. Most states, however, do not grant tax-free
treatment to interest on investments in municipal securities of other states.
Many states do, however, grant tax-free status to dividends paid from interest
earned on direct obligations of the U.S. government, subject to certain
restrictions.

BACKUP WITHHOLDING -- By law, the Funds must withhold a portion of your taxable
distributions and redemption proceeds unless you provide your correct social
security or taxpayer identification number, certify that this number is correct,
certify that you are not subject to backup withholding, and certify that you are
a U.S. person (including a U.S. resident alien). The Funds also must withhold if
the IRS instructs them to do so. When withholding is required, the amount will
be 30.5% of your taxable distributions or redemption proceeds for calendar year
2001 after August 6, 2001, 30% for calendar years 2002 and 2003, 29% for
calendar years 2004 and 2005, and 28% for calendar years 2006 through 2010.

Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.

ADDITIONAL POLICIES ABOUT TRANSACTIONS

We cannot process transaction requests unless they are properly completed as
described in this section. We may cancel or change our transaction policies
without notice. To avoid delays, please call us if you have any questions about
these policies. If you wish to purchase (or redeem) shares of a Babson Fund
through a broker, a fee may be charged by that broker, whereas you may contact
the Fund directly and avoid this fee. In addition, you may be subject to other
policies or restrictions of the broker such as higher minimum account value,
etc.

PURCHASES -- We may reject orders when not accompanied by payment or when in the
best interest of the Funds or its shareholders.

REDEMPTIONS -- We try to send proceeds as soon as practical. We cannot accept
requests that contain special conditions or effective dates. Examples may
include a certified copy of a death certificate or a divorce decree. We may
request additional documentation to ensure that a request is genuine. If your
redemption request is more than $250,000, we may pay you proceeds in the form of
portfolio securities owned by the Fund being redeemed. If you receive securities
instead of cash, you may incur brokerage costs when converting into cash.

If you request a redemption within 15 days of purchase, we will delay sending
your proceeds until we have collected unconditional payment, which may take up
to 15 days from the date of purchase. For your protection, if your account
address has been changed within the last 30 days, your redemption request must
be in writing and signed by each account owner, with signature guarantees. The
right to redeem shares may be temporarily suspended in emergency situations only
as permitted under federal law.

Withdrawal by Draft ("check") is limited to open account shares of the Babson
Money Market Fund. Draft amounts may range from $500 to $100,000.

MARKET TIMERS -- The Funds may refuse to sell shares to market timers. You will
be considered a market timer if you (i) request a redemption of Fund shares
within ninety days of an earlier purchase request, (ii) make investments of
large amounts of $1 million or more followed by a redemption request in close
proximity to the purchase or (iii) otherwise seem to follow a timing pattern.
Shares under common ownership or control are combined for these purposes.

SIGNATURE GUARANTEES -- You can get a signature guarantee from most banks,
credit unions, savings & loans, or securities dealers, but not a notary public.
For your protection, we require a guaranteed signature if you request:

o A redemption check sent to a different payee, bank or address than we have
on file;
o A redemption check mailed to an address that has been changed within the
last 30 days;
o A redemption for $50,000 or more in writing; and,
o A change in account registration or redemption instructions.

CORPORATIONS, TRUSTS AND OTHER ENTITIES -- Additional documentation is normally
required for corporations, fiduciaries and others who hold shares in a
representative or nominee capacity. We cannot process your request until we have
all documents in the form required. Please call us first to avoid delays.

EXCHANGES TO ANOTHER FUND -- You must meet the minimum investment requirement of
the Fund you are exchanging into. The names and registrations on the two
accounts must be identical. Your shares must have been held in an open account
for 15 days or more and we must have received good payment before we will
exchange shares. You should review the Prospectus of the Fund being purchased.
Call us for a free copy.

TELEPHONE/INTERNET SERVICES -- During periods of increased market activity, you
may have difficulty reaching the Funds by telephone. If this happens, contact
the Funds by mail or by accessing the Funds' web site, www.babsonfunds.com, on
the world wide web. The Funds may refuse a telephone request, including a
request to redeem shares of a Fund. The Funds will use reasonable procedures to
confirm that telephone or Fund web site instructions are genuine. If such
procedures are followed, neither the Funds nor any persons or entity that
provides services to the Babson Funds will be liable for any losses due to
unauthorized or fraudulent instructions. The Funds reserve the right to limit
the frequency or the amount of telephone redemption requests.

SHAREHOLDER INFORMATION -- To help lower the impact of operating costs, the
Funds attempt to eliminate mailing duplicate documents to the same address. When
two or more Babson Fund shareholders have the same last name and address, the
Funds may send only one propectus, annual report, semiannual report, general
information statement or proxy to that address rather than mailing separate
documents to each shareholder. Shareholders may opt out of this single mailing
at any time by calling the Babson Funds, 1-800-422-2766, and requesting the
additional copies of Fund documents.

CONDUCTING BUSINESS WITH THE BABSON FUNDS

By Phone or Internet

1-800-4-BABSON
(1-800-422-2766)
in the Kansas City area 816-751-5900

You must authorize each type of telephone transaction on your account
application or the appropriate form. All account owners must sign. If you call,
the Funds' representative may request personal identification and tape record
the call.

How To Open An Account

If you already have an account with us and you have authorized telephone/on-line
exchanges, you may open an account in another Babson Fund ($1,000 minimum). The
names and registrations on the accounts must be identical.

How To Add To An Account

You may make additional investments ($100 minimum) by telephone/on-line. After
the Funds' receive and accept your request, the Funds' will deduct from your
checking account the cost of the shares.

Availability of this service is subject to approval by the Funds and
participating banks.

How To Sell Shares

You may withdraw any amount up to $50,000 by telephone/on-line, provided you
have previously registered for this service. The Funds will send proceeds only
to the address of record, via ACH or by wire. You must provide the Fund's name,
your account number, the names of each account owner (exactly as registered),
and the number of shares or dollar amount to be redeemed.

How To Exchange Shares

You may exchange existing shares ($1,000 minimum or the initial minimum Fund
requirement) for shares in another Babson Fund that have been held in open
account for 15 days or more.

All account owners are automatically granted telephone/on-line exchange
privileges unless the privileges are explicitly declined in writing, either on
the account application or by writing to the Babson Funds.

By Mail

Initial Purchases, Redemptions and all Correspondence:
The Babson Fund Group
P.O. Box 219757
Kansas City, MO 64121-9757

Registered/Overnight Mail:
The Babson Fund Group
c/o DST Systems
330 W. 9th St.
Kansas City, MO 64105

Subsequent Purchases:
The Babson Fund Group
P.O. Box 219779
Kansas City, MO 64121-9779

How To Open An Account

Complete and sign the application that accompanies this Prospectus. Your initial
investment must meet the minimum amount. Make your check payable to UMB Bank,
n.a. and be sure to indicate the name of the Fund in which you are investing.

How To Add To An Account

Make your check ($100 minimum) payable to UMB Bank, n.a. and mail it to the
Funds. Always identify your account number or include the detachable investment
stub (from your confirmation statement).

How To Sell Shares

In a letter, include the genuine signature of each registered owner (exactly as
registered), the name of each account owner, the account number and the number
of shares or the dollar amount to be redeemed. The Funds will send money only to
the address of record.

How To Exchange Shares

In a letter, include the genuine signature of each registered owner, the account
number, the number of shares or dollar amount to be exchanged ($1,000 minimum)
and the name of the Babson Fund into which the amount is being transferred.

By Wire

UMB Bank, n.a.,
Kansas City, Missouri,
ABA #101000695
For __________________Fund
AC = 9870326213
Please provide:
Your account number and account name

How To Open An Account

First, contact the Funds by phone to receive your account number. you must then
complete an application and send it to the Funds via facsimile. After confirming
receipt with the Funds, contact your back to send money via wire (you must
include the Funds' banking instructions and your account number). Mail your
original application to the Babson Fund Group.

How To Add To An Account

Wire share purchases ($1,000 minimum) should include the names of each account
owner, your account number and the name of the Babson Fund in which you are
purchasing shares. You should notify the Funds by telephone that you have sent a
wire purchase order to UMB Bank, n.a.

How To Sell Shares

Redemption proceeds ($1,000 minimum) may be wired to your pre-identified bank
account. A $10 fee is deducted. If your written request is received before 4:00
P.M. (Eastern Time) the Funds will normally wire the money on the following
business day. If the Funds receive your request after 4:00 P.M. (Eastern Time),
the Funds will normally wire funds on the second business day. Contact your bank
about the time of receipt and availability.

How To Exchange Shares

Not applicable.

Through Automatic Transaction Plans

You must authorize each type of automatic transaction on your account
application or complete an authorization form, available from us upon request.
All registered owners must sign.

How To Open An Account

Not applicable.

How To Add To An Account

Automatic Monthly Investment: You may authorize automatic monthly investments in
a constant dollar amount ($50 minimum) from your checking account. The Funds
will draft your checking account on the same day each month in the amount you
authorize via ACH.

How To Sell Shares

Systematic Redemption Plan: You may specify a dollar amount ($50 minimum) to be
withdrawn monthly or quarterly or have your shares redeemed at a rate calculated
to exhaust the account at the end of a specified period. A maximum fee of $1.50
may be charged for each withdrawal. You must own shares in an open account
valued at $10,000 when you first authorize the systematic redemption plan. You
may cancel or change your plan or redeem all your shares at any time. The Funds
will continue withdrawals until your shares are gone or until the Fund or you
cancel the plan.

How To Exchange Shares

Monthly Exchanges: You may authorize monthly exchanges from your account ($100
minimum) to another Babson Fund. Exchanges will be continued until all shares
have been exchanged or until you terminate the service.

Additional Information The Statement of Additional Information (SAI) contains
additional information about the Funds and is incorporated by reference into
this Prospectus. The Funds' annual and semiannual reports to shareholders
contain additional information about each of the Babson Fund's investments. In
the annual report, you will find a discussion of the market conditions and
investment strategies that significantly affected each Fund's performance during
the last fiscal year.

You may obtain a free copy of these documents by calling, writing or e-mailing
the Funds as shown below. You also may call the toll free number given below to
request other information about the Funds and to make shareholder inquiries.

You may review and copy the SAI and other information about the Funds by
visiting the Securities and Exchange Commission's Public Reference Room in
Washington, DC (202-942-8090) or by accessing the EDGAR database on the
Commission's Internet site at http://www.sec.gov. Copies of this information
also may be obtained, upon payment of a duplicating fee, by writing to the
Public Reference Section of the Commission, Washington, DC 20549-0102, or by
sending an e-mail request to publicinfo@sec.gov.

INVESTMENT COMPANY ACT FILE NUMBERS

811-3823 Enterprise Fund
811-6258 Enterprise Fund II
811-901 Growth Fund
811-5218 Shadow Stock Fund
811-4114 Value Fund
811-5386 International Fund
811-495 Bond Trust
811-2963 Money Market Fund
811-2948 Tax-Free Income Fund

Babson Funds

Jones & Babson, Inc. Distributors
A Member of the Generali Group
P.O. Box 219757
Kansas City, MO 64121-9757

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

BABSON FUNDS
P.O. Box 219757
Kansas City, MO 64121-9757

PRSRT STD
U.S. POSTAGE
PAID
PERMIT NO. 2891
KANSAS CITY MO

JB177A (10/02) 520517

PART B

BABSON ENTERPRISE FUND, INC. D.L. BABSON BOND TRUST
BABSON ENTERPRISE FUND II, INC. D.L. BABSON MONEY MARKET FUND, INC.
DAVID L. BABSON GROWTH FUND, INC. D.L. BABSON TAX-FREE INCOME FUND, INC.
SHADOW STOCK FUND, INC. BABSON VALUE FUND, INC.
BABSON-STEWART IVORY INTERNATIONAL
FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION

September 30, 2002

This Statement of Additional Information is not a Prospectus but should be read
in conjunction with the Funds' current combined Prospectus dated September 30,
2002. To obtain the Prospectus, an Annual Report to Shareholders or a Semiannual
Report to Shareholders, free of charge, please call the Babson Funds toll-free
at 1-800-4-BABSON (1-800-422-2766), or in the Kansas City area (816) 751-5900.
Certain information from the Annual Report is incorporated by reference into
this Statement.

TABLE OF CONTENTS Page

Introduction ........................................................2
Information About The Funds' Investments.............................2
Investment Objectives, Policies and Risks............................2
Fundamental Investment Restrictions..................................9
Non-Fundamental Investment Restrictions.............................12
Portfolio Transactions..............................................12
Performance Measures................................................13
Total Return........................................................13
Performance Comparisons.............................................14
How The Funds' Shares Are Distributed...............................15
Purchasing And Selling Shares.......................................16
Purchases...........................................................16
Sales (Redemptions).................................................16
Market Timers.......................................................17
How Share Price Is Determined.......................................17
Additional Purchase and Redemption Policies.........................18
Management Of The Funds.............................................18
Manager and Investment Advisors.....................................18
Directors and Officers..............................................19
Compensation........................................................21
Code of Ethics......................................................21
Custodian...........................................................21
Independent Auditors................................................22
Control Persons and Principal Holders of the Funds..................22
Distributions And Taxes.............................................22
Financial Statements................................................25
General Information And History.....................................25
Other Jones & Babson Funds..........................................26
Appendix-Ratings Information........................................27

INTRODUCTION

The Babson Enterprise Fund, Inc., the Babson Enterprise Fund II, Inc., the David
L. Babson Growth Fund, Inc., the Shadow Stock Fund, Inc., the Babson Value Fund,
Inc., the Babson-Stewart Ivory International Fund, Inc., the D.L. Babson Trust,
the D.L. Babson Money Market Fund, Inc. and the D.L. Babson Tax-Free Income
Fund, Inc. (hereafter the "Funds" or a "Fund") are each classified as open end,
diversified management investment companies under the Investment Company Act of
1940 as amended (the "1940 Act"). This classification means that the assets of
the Funds are invested in a diversified portfolio of securities and the Funds
operate as mutual funds, allowing shareholders to buy and sell shares, as
described in the Funds' Prospectus. This Statement of Additional Information
("SAI") supplements the information contained in the Funds' Prospectus dated
September 30, 2002.

INFORMATION ABOUT THE FUNDS' INVESTMENTS

Investment Objectives, Policies and Risks. Generally, the policies and
restrictions discussed in this SAI and in the Prospectus apply when a Fund makes
an investment. In most cases, a Fund is not required to sell a security because
circumstances change and the security no longer meets one or more of the Fund's
policies or restrictions. If a percentage restriction or limitation is met at
the time of investment, a later increase or decrease in the percentage due to a
change in the value or liquidity of the security will not be considered a
violation of the restriction or limitation.

Babson Enterprise Fund and Babson Enterprise Fund II. Since the Babson
Enterprise Fund and the Babson Enterprise Fund II's focus is on smaller
companies, the overall income return on these Funds may be low. Smaller
companies frequently need to retain all or most of their profits to finance
their growth and will pay small dividend yields, or none. If the companies are
successful, the plow-back of earnings and internal financing of growth without
the need to issue additional shares should ultimately enhance the companies' per
share earnings and dividend capability and should make their shares more
attractive in the marketplace.

Effective July 1, 1999, the Babson Enterprise Fund was re-opened to new
investors. This means that investors may open new accounts with the Fund through
direct purchases, or through exchanges from any other Fund in the Babson Funds
family. Investors whose accounts were open in 1992, when the Fund was closed to
new investors, have been permitted to add to their accounts since that time.

Babson Growth Fund. The Fund generally defines "above average total return" as
total return that is higher than return generated by traditional investment
vehicles other than equity products, including but not limited to, passbook
savings accounts, certificates of deposit, bonds, U.S. government securities and
traditional insurance products, such as whole life policies and annuities. All
assets of the Fund will be invested in marketable securities composed
principally of common stocks and securities convertible into common stock.
Necessary reserves will be held in cash or high-quality short-term debt
obligations readily changeable to cash, such as treasury bills, commercial paper
or repurchase agreements. The Fund reserves the freedom to invest in preferred
stocks, high grade bonds or other defensive issues when, in management's
judgment, economic and market conditions make such a course desirable. Normally,
however, the Fund will maintain at least 80% of the portfolio in common stocks.
Current yield is a secondary objective.

Shadow Stock Fund. The Fund defines "small stocks" to include stocks listed on
the NYSE, AMEX and OTC stocks that have market capitalizations, at the time of
initial purchase, of between $20 million and the capitalization that marks the
point between the 8th and 9th deciles of the New York Stock Exchange (the "upper
limit") and that have annual net profits of at least $1 million for the three
most recent fiscal years. "Neglected stocks" are those that have below average
institutional holdings and below average coverage by analysts and newsletters.
The Fund's Manager and Investment Advisor currently define "neglected stocks" as
meaning the fifty-percent of "small stocks" that have the least coverage by
institutions and analysts. The Fund's Manager and Investment Advisor will use
their judgment in determining the methods of measuring analyst and institutional
interest. It is estimated that Shadow Stock Fund's portfolio will generally
contain between 200-300 stocks at any one time.

It is the Fund's intention to maintain ownership of the Shadow Stocks
approximately in proportion to their respective market capitalizations, but this
approach may be departed from for any of the following reasons. First,
acquisition of the shares of smaller companies is sometimes difficult without
disrupting the supply/demand relationship and thereby increasing transaction
costs. For this reason, shares of companies on the buy list may be purchased
when opportunities for block trades present themselves even if purchases of such
a company's stock would not otherwise be the highest priority on a market
capitalization basis. Conversely, high priority shares might be avoided if they
cannot be acquired at the time without disrupting the market. Second, the Fund
will attempt to purchase shares in optimal lot sizes which precludes fine-tuning
of the weighting. Third, the Fund's Manager and Investment Advisor take a
long-term view and do not feel it prudent to constantly purchase and sell stocks
for short-term balancing. Guideline relative weights will be reviewed in detail
twice a year.

Shares of stock will be considered for elimination from the portfolio in the
following basis: (1) on the basis of the $5 minimum price criterion (a stock
will not be sold for this reason alone, but additional shares will not be
purchased below $4 per share, which may result in a disproportionate
representation in terms of ideal weighting, and it will be sold at the
semiannual re-balancing if the stock is selling below $4 per share); (2) on the
basis of profitability (a company's stock will be sold as soon as the Fund's
Manager and Investment Advisor feel it is highly likely that there will be
negative earnings in the current fiscal year); (3) on the basis of tenders or
potential mergers (the Fund's Manager and Investment Advisor will use their
judgment as to the best time to sell or tender); (4) on the basis of neglect
(shares will be sold when the company has been beyond the Manager and Investment
Advisor's criteria for a neglected stock for three successive semiannual
evaluation periods); (5) on the basis of price to book value (stocks will be
sold, at a semi-annual evaluation, when their price to book value exceeds two
times the upper limit used to qualify for purchase); or (6) on the basis of
capitalization a stock will be sold if, at a semiannual evaluation, either the
market capitalization is twice the "upper limit" or below $10 million. In the
case of portfolio companies whose capitalization has gone beyond the current
maximum or minimum, the Fund's Investment Advisor may keep the portfolio
weighting at the level appropriate for the current maximum or minimum. If
proceeds beyond current liquid assets are necessary to meet redemptions, stocks
not meeting current initial criteria will be liquidated first.

While the objectives of this Fund would favor a fully invested position in
Shadow Stocks, the practicality of Fund management requires liquidity. An
average of about 5% of the Fund's assets may be invested in cash or cash
equivalents including: securities that are issued or guaranteed as to principal
and interest by the U.S. government, its agencies, authorities or
instrumentalities (such as U.S. Treasury obligations, which differ only in their
interest rates, maturities and times of issuance, and obligations issued or
guaranteed by U.S. government agencies or instrumentalities that are backed by
the full faith and credit of the U.S. Treasury or supported by the right of the
issuer to borrow from the U.S. government), repurchase agreements, certificates
of deposit, time deposits, commercial paper and other high quality short-term
debt securities. The Fund may adopt a temporary defensive position by investing
its assets in debt securities, such as money market obligations, including
securities of the U.S. government and its agencies, high quality commercial
paper, bankers' acceptances and repurchase agreements with banks and brokers for
U.S. government securities.

Babson Value Fund. Under normal conditions, the Fund will invest at least 90% of
its net assets in common stocks. In addition, the Fund intends to hold a small
percentage of cash or high quality, short-term debt obligations for reserves to
cover redemptions and unanticipated expenses.

Babson-Stewart Ivory International Fund. The Fund will look at such factors as
the location of the company's assets, personnel, sales and earnings, to
determine whether a company's primary business is carried on outside the United
States. The Fund diversifies its investments among various countries and a
number of different industries. The Fund is designed to provide investors with a
diversified participation in international businesses. Over the years, some
foreign businesses have been especially successful in their particular
industries and some foreign stock markets have outperformed the American
markets. Foreign securities markets do not always move in parallel with the U.S.
securities markets, so investing in international securities can provide
diversification advantages.

The Fund primarily invests in equity securities of seasoned companies that are
listed on foreign stock exchanges, which the Investment Advisor considers to
have attractive characteristics in terms of profitability, growth and financial
resources. "Seasoned" and "established" companies are those companies that in
the opinion of the Investment Advisor are known for the quality and acceptance
of their products or services and for their ability to generate profits and in
many cases pay dividends. The Fund may invest in fixed-income securities of
foreign governments or companies when the Investment Advisor believes that
prevailing market, economic, political or currency conditions warrant such
investments. While most foreign securities are not subject to standard credit
ratings, the Investment Advisor intends to select "investment grade" issues of
foreign debt securities that are comparable to a Baa or higher rating by Moody's
Investors Service, Inc. or a BBB or higher rating by Standard and Poor's
Corporation based on available information, and taking into account liquidity
and quality issues. Securities rated BBB or Baa are considered to be medium
grade and may have speculative characteristics.

The Fund may also purchase American Depository Receipts ("ADRs"), which
represent foreign securities traded on U.S. exchanges or in the over-the-counter
market, European Depository Receipts ("EDRs"), and International Depository
Receipts ("IDRs"), in bearer form, which are designed for use in European and
other securities markets. The Fund may also invest in securities that are not
listed on an exchange. Generally, the volume of trading in an unlisted common
stock is less than the volume of trading in a listed stock. This means that the
degree of market liquidity of some stocks in which the Fund invests may be
relatively limited. When the Fund disposes of such a stock it may have to offer
the shares at a discount from recent prices or sell the shares in small lots
over an extended period of time.

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

Generally, the Fund does not intend to invest more than 35% of its total assets
in any one particular country. The Fund, however, may, at times, temporarily
invest a substantial portion of its assets in one or more of such countries if
economic and business conditions warrant such investments, although it currently
does not intend to do so to any principal extent. A developing country is
generally considered to be a country that is in the initial stages of its
industrialization cycle with a low per capita gross national product. Compared
to investment in the United States and other developed countries, investing in
the equity and fixed income markets of developing countries involves exposure to
relatively unstable governments, economic structures that are generally less
mature and based on only a few industries, and securities markets which trade a
small number of securities. Prices on securities exchanges in developing
countries tend to be more volatile than those in developed countries. The Fund
will not invest more than 20% of its total assets in companies located in
developing countries.

Under normal conditions, the Fund will invest at least 80% of its net assets in
equity securities of established companies whose primary business is carried on
outside of the United States and investment grade fixed income securities of
foreign governments and foreign corporations. However, to meet the liquidity
needs of the Fund or when the Fund believes that investments should be deployed
in a temporary defensive position because of economic or market conditions, the
Fund may invest all or a major portion of its assets in short-term debt
securities denominated in U.S. dollars, including U.S. Treasury bills and other
securities of the U.S. government and its agencies, bankers' acceptances,
certificates of deposit, and repurchase agreements maturing in seven days or
less with U.S. banks and broker-dealers. The Fund may also hold cash and time
deposits in foreign banks, denominated in any major foreign currency.

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

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

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

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

The value of the assets of the Babson-Stewart Ivory International Fund, as
measured in U.S. dollars, may be affected favorably or unfavorably by changes in
foreign currency exchange rates and exchange control regulations, and the Fund
may incur costs in connection with conversions between various currencies.

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

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

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

Babson Bond Trust. Babson Bond Trust will limit its investments in securities
rated in the fourth classification (Baa and BBB) to a maximum of 25% of its
assets, since these securities may have speculative characteristics and changes
in economic conditions or other circumstances are more likely to lead to a
weakened capacity of those issuers to make principal or interest payments.

The Portfolios may shorten or lengthen portfolio maturities as interest rates
change. If the bond rating of a security purchased by a Portfolio is
subsequently downgraded, the Portfolio will take any necessary steps designed to
bring the Portfolio into compliance with its investment policies as soon as
reasonably practicable. The Portfolios may also respond to adverse market,
economic, political or other considerations by investing up to 100% of its
assets in cash or short-term debt obligations for temporary defensive purposes.

Portfolio L holdings will generally have a duration of between 3.5 and 7 years
(excluding short-term investments). Portfolio S holdings will generally have a
duration of between 2 and 4 years (excluding short-term investments). Duration
is a portfolio management tool used to determine the price sensitivity of an
individual bond or portfolio of fixed income securities to a change in interest
rates. Unlike maturity, which only states when the final payment is received,
the duration of a fixed income security is the weighted average maturity,
expressed in years, of the present value of all future cash flows, including
coupon payments and principal repayments. The Portfolios may include securities
with maturities and durations outside these ranges.

Babson Money Market Fund. To achieve its objectives the Fund may engage in
trading activity in order to take advantage of opportunities to enhance yield,
protect principal or improve liquidity. This trading activity should not
increase the Fund's expenses since there are normally no broker's commissions
paid by the Fund for the purchase or sale of money market instruments. However,
a markup or spread may be paid to a dealer from which the Fund purchases a
security.

To assure compliance with the adopted procedures pursuant to Rule 2a-7 under the
Investment Company Act of 1940, the Fund will only invest in U.S. dollar
denominated securities with remaining maturities of 397 days or less, maintain
the dollar weighted average maturity of the securities in the Fund's portfolio
at 90 days or less and limit its investments to those instruments which the
Directors of the Fund determine to present minimal credit risks and which are
eligible investments under the rule.

Babson Tax-Free Income Fund. The Fund will have substantially all of its assets
invested in investment-grade municipal securities, the interest on which is
deemed exempt from federal income tax (including the alternative minimum tax).

During periods of normal market conditions, the Fund will invest at least 80% of
its net assets in municipal securities. The Fund may invest any remaining
balance in taxable money market instruments on a temporary basis, if management
believes this action would be in the best interest of shareholders. Included in
this category are: obligations of the U.S., its agencies or instrumentalities;
certificates of deposit; bankers' acceptances and other short-term debt
obligations of U.S. banks with total assets of $1 billion or more; and
commercial paper rated A-2 or better by Standard & Poor's Corp. ("S&P") or
Prime-2 or better by Moody's Investors Services, Inc. ("Moody's"), or certain
rights to acquire these securities.

The Fund reserves the right to deviate temporarily from this policy during
extraordinary circumstances when, in the opinion of management, it is advisable
to do so in the best interests of shareholders. At least 90% of the municipal
bonds in the Fund will be rated at the time of purchase within the top three
classifications of Moody's (Aaa, Aa and A), or by S&P (AAA, AA, and A). Any
municipal bond backed by the full faith and credit of the federal government
shall be considered to have a rating of AAA. Investments in short-term municipal
obligations and notes are limited to those obligations which at the time of
purchase: (1) are backed by the full faith and credit of the U.S.; or (2) are
rated MIG-1, MIG-2 or MIG-3 by Moody's; or (3) if the notes are not rated, then
the issuer's long-term bond rating must be at least A as determined by Moody's
or by S&P. Short-term discount notes are limited to those obligations rated A-1
or A-2 by S&P, or Prime-1 or Prime-2 by Moody's or their equivalents as
determined by the Fund's Board of Directors. With respect to short-term discount
notes which are not rated, the issuer's long-term bond rating must be at least A
by S&P or Moody's.

It is the policy of the Fund not to invest more than 25% of its assets in any
one sector of municipal securities, except tax-exempt obligations that are
backed by the U.S. government. Should the rating organizations used by the Fund
cease to exist or change their systems, the Fund will attempt to use other
comparable ratings as standards for its investments in municipal securities in
accordance with its investment policies.

Municipal securities include bonds and other debt obligations issued by or on
behalf of states, territories and possessions of the United States of America
and the District of Columbia including their political subdivisions or their
duly constituted authorities, agencies and instrumentalities, the interest on
which is exempt from federal income tax.

Municipal securities are issued to obtain proceeds for various public purposes,
including the construction of a wide range of public facilities, such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets, waterworks and sewer systems. Municipal securities also may be issued
in connection with the refunding of outstanding obligations and obtaining funds
to lend to other public institutions and facilities or for general operating
expenses.

The two principal classifications of municipal bonds are "general obligation"
and "revenue". General obligation bonds are secured by the issuer's pledge of
its full faith, credit and taxing power for the payment of principal and
interest. Revenue bonds are payable only from the revenues derived from a
particular facility or class of facilities, or in some cases, from the proceeds
of a special excise tax or other specific revenue source.

The Tax-Free Income Fund may invest in industrial development bonds, the
interest from which is exempt from federal income tax. Under certain
circumstances, "substantial users" of the facilities financed with such
obligations or persons related to "substantial users" of the facilities financed
with such obligations may be required to pay federal income tax on this
otherwise exempted interest. Such persons should consult the Internal Revenue
Code and their financial adviser to determine whether or not the Tax-Free Income
Fund is an appropriate investment for them.

There are a variety of hybrid and special types of municipal obligations, as
well as numerous differences in the security of municipal bonds, both within and
between the two principal classifications of general obligation and revenue.

Municipal notes include tax, revenue and bond anticipation notes of short
maturity, generally less than three years, which are issued to obtain temporary
funds for various public purposes. Also included in this category are
Construction Loan Notes, Short-Term Discount Notes and Project Notes issued by a
state or local housing agency but secured by the full faith and credit of the
United States.

Yields on municipal securities depend on a variety of factors, such as the size
of a particular offering, the maturity and the rating of the obligation,
economic and monetary conditions, and conditions of the municipal securities
market, including the volume of municipal securities available. Market values of
municipal securities will vary according to the relation of their yields
available. Consequently, the net asset value of the Fund and its shares can be
expected to change as the level of interest rates fluctuates.

Municipal obligations, like all other debt obligations, carry a risk of default.
Through careful selection and supervision, and concentration in the
higher-quality investment grade issues, the Tax-Free Income Fund's management
intends to reduce this risk. Prices of outstanding municipal securities will
fluctuate with changes in the interest rates on new issues. Thus, the price of
the Fund's shares will tend to increase as the rates on new issues decline, and
decrease whenever the current rate is rising. Management will seek to minimize
such share price fluctuation to the extent this can be achieved without
detracting from the Fund's primary objective of the highest quality and maturity
characteristics of the Fund.

Municipal securities are not traded as actively as other securities. Even though
municipal securities will be redeemed at face value upon maturity, from time to
time, when there has been no active trading in a particular Fund holding, its
interim pricing for the purpose of the daily valuation of the Fund shares may
have to be based on other sources of information and methods deemed fair and
reasonable by the Board of Directors. One principal method that is commonly used
by Funds and other investors who own municipal securities is called matrix
pricing, a pricing methodology that groups similarly structured securities and
applies the same relative price movements to the group.

From time to time, proposals have been introduced in Congress to restrict or
eliminate the federal income tax exemption for interest on municipal securities.
Similar proposals may be introduced in the future. If such a proposal was
enacted, the availability of municipal securities for investment by the Fund
would be adversely affected. In such event, the Fund would reevaluate its
investment objective and policies and submit possible changes in the structure
of the Fund for the consideration of the shareholders.

Cash Management. For purposes including but not limited to meeting redemptions
and unanticipated expenses, the Funds (except the Babson Money Market Fund) may
invest a portion of their assets in cash or high-quality, short-term debt
obligations readily changeable into cash such as:

(1) Certificates of deposit, bankers' acceptances and other short-term
obligations issued domestically by United States commercial banks having
assets of at least $1 billion and which are members of the Federal Deposit
Insurance Corporation or holding companies of such banks;

(2) Commercial paper of companies rated P-2/MIG-2 or higher by Moody's
Investors Service, Inc. (Moody's) or A-2 or higher by Standard and Poor's
Corporation (S&P), or if not rated by either Moody's or S&P, a company's
commercial paper may be purchased by the Fund if the company has an
outstanding bond issue rated A or higher by Moody's or A or higher by S&P;

(3) Short-term debt securities which are non-convertible, which have one year
or less remaining to maturity at the date of purchase and which are rated A
or higher by Moody's or A or higher by S&P; and,

(4) Negotiable certificates of deposit and other short-term debt obligations of
savings and loan associations having assets of at least $1 billion and
which are members of the Federal Home Loan Banks Association and insured by
the Federal Deposit Insurance Corporation.

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

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

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

Concentration. None of the Funds will invest more than 25% of its assets in a
single industry.

Borrowing. None of the Funds intend to borrow in excess of 5% of its total
assets.

Fundamental Investment Restrictions. In addition to the investment objective and
portfolio management policies set forth in the Prospectus under the caption
"Investment Objective and Principal Investment Strategies," the Funds are
subject to certain other restrictions which may not be changed without approval
of the lesser of: (1) at least 67% of the voting securities present at a meeting
if the holders of more than 50% of the outstanding securities of the Fund are
present or represented by proxy, or (2) more than 50% of the outstanding voting
securities of the Fund.

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

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

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

Babson Bond Trust will not: (1) purchase any investment security for credit or
on margin, except such short-term credits as are necessary for the clearance of
transactions; (2) participate on a joint or a joint-and-several basis in any
trading account in securities; (3) sell any securities short; (4) borrow money,
securities or other property in any event or for any purpose whatsoever, or
issue any security senior to the shares authorized by the Trust Indenture; (5)
lend money, securities or other assets of the Trust for any purpose whatsoever,
provided, however, that the acquisition of any publicly distributed securities
shall not be held or construed to be the making of a loan; (6) mortgage, pledge,
hypothecate or encumber in any manner whatsoever any investment securities at
any time owned or held by the Trust; (7) underwrite or participate in the
underwriting of any securities; (8) purchase shares of other investment
companies except in the open market at ordinary broker's commission or pursuant
to a plan of merger or consolidation; (9) acquire any security issued by any
issuer in which an officer, director or stockholder of such issuer is a Trustee
of the Trust or an officer or director of a principal underwriter (as defined in
the Investment Company Act of 1940) if after the purchase of such security one
or more of the Trustees owns beneficially more than 1/2 of 1% of the capital
stock of such issuer and such Trustees together own beneficially more than 5% of
the capital stock of such issuer; (10) acquire any security of another issuer if
immediately after and as a result of such acquisition the market value of such
securities of such other issuer shall exceed 5% of the market value of the total
assets of the Trust or the Trust shall own more than 10% of the outstanding
voting securities of such issuer (this restriction does not apply to securities
issued by the United States or any state, county or municipality thereof; (11)
invest more than 25% of the value of its assets in any one industry; (12) engage
in the purchase or sale of real estate or commodities; (13) invest in companies
for the purpose of exercising control of management; or (14) purchase any
securities which are subject to legal or contractual restrictions, i.e.,
restricted securities which may not be distributed publicly without registration
under the Securities Act of 1933.

Babson Money Market Fund will not: (1) invest in equity securities or securities
convertible into equities; (2) purchase the securities of any issuer (other than
obligations issued or guaranteed as to principal and interest by the government
of the United States, its agencies or instrumentalities), if as a result, (a)
more than 5% of the Fund's total assets (taken at current value) would be
invested in the securities of such issuer, or (b) the Fund would hold more than
10% of any class of securities of such issuer (for this purpose, all debts and
obligations of an issuer maturing in less than one year are treated as a single
class of securities); (3) borrow money in excess of 15% of its total assets
taken at market value, and then only from banks as a temporary measure for
extraordinary or emergency purposes; the Fund will not borrow to increase income
(leveraging) but only to facilitate redemption requests which might otherwise
require untimely dispositions of Fund securities; the Fund will repay all
borrowings before making additional investments, and interest paid on such
borrowings will reduce net income; (4) mortgage, pledge or hypothecate its
assets except in an amount up to 15% (10% as long as the Fund's shares are
registered for sale in certain states) of the value of its total assets but only
to secure borrowings for temporary or emergency purposes; (5) issue senior
securities, as defined in the Investment Company Act of 1940, as amended; (6)
underwrite securities issued by other persons; (7) purchase or sell real estate,
but this shall not prevent investment in obligations secured by real estate; (8)
make loans to other persons, except by the purchase of debt obligations which
are permitted under its investment policy; (9) purchase securities on margin or
sell short; (10) purchase or retain securities of an issuer if to the knowledge
of the Fund's management those directors of the Fund, each of whom owns more
than 1/2 of 1% of such securities, together own more than 5% of the securities
of such issuer; (11) purchase or sell commodities or commodity contracts; (12)
write or invest in put, call, straddle or spread options or invest in interests
in oil, gas or other mineral exploration or development programs; (13) invest in
companies for the purpose of exercising control; (14) invest in securities of
other investment companies, except as they may be acquired as part of a merger,
consolidation or acquisition of assets; (15) invest more than 5% of the value of
its total assets at the time of investment in the securities of any issuer or
issuers that have records of less than three years continuous operation,
including the operation of any predecessor, but this limitation does not apply
to securities issued or guaranteed as to interest and principal by the U.S.
government or its agencies or instrumentalities; or (16) purchase any securities
that would cause more than 25% of the Fund's value of total net assets at the
time of such purchase to be invested in any one industry.

There is no limitation with respect to investments in U.S. Treasury Bills, or
other obligations issued or guaranteed by the federal government, its agencies
and instrumentalities.

Babson Tax-Free Income Fund will not: (1) invest in equity securities or
securities convertible into equities; (2) purchase more than 10% of the
outstanding publicly issued debt obligations of any issuer; (3) borrow money
except for temporary emergency purposes, and then only in an amount not
exceeding 10% of the value of the total assets of the Fund; (4) mortgage, pledge
or hypothecate the assets of the Fund to an extent greater than 10% of the value
of the net assets of the Fund; (5) issue senior securities, as defined in the
Investment Company Act of 1940, as amended; (6) underwrite any issue of
securities; (7) purchase or sell real estate, but this shall not prevent
investment in municipal bonds secured by real estate; (8) make loans to other
persons, except by the purchase of bonds, debentures or similar obligations
which are publicly distributed; (9) purchase securities on margin or sell
short;(10) purchase or retain securities of an issuer if to the knowledge of the
Fund's management those directors of the Fund, each of whom owns more than1/2of
1% of such securities, together own more than 5% of the securities of such
issuer; (11) purchase or sell commodities or commodity contracts; (12) invest in
put, call, straddle or special options; (13) purchase securities of any issuer
(except the U.S. government, its agencies and instrumentalities, and any
municipal bond guaranteed by the U.S. government) in the Fund if, as a result,
more than 5% of the total assets of the Fund would be invested in the securities
of such issuer; for purposes of this limitation, "issuer" will be based on a
determination of the source of assets and revenues committed to meeting interest
and principal payments of each security, and a government entity which
guarantees the securities issued by another entity is also considered an issuer
of that security; (14) invest in companies for the purpose of exercising
control; (15) invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets;
(16) invest more than 5% of the value of its total assets at the time of
investment in the securities of any issuer or issuers which have records of less
than three years continuous operation, including the operation of any
predecessor, but this limitation does not apply to securities issued or
guaranteed as to interest and principal by the U.S. government or its agencies
or instrumentalities.

Non-Fundamental Investment Restrictions. In addition to the investment
objectives and policies described in the Funds' Prospectus and in this SAI, each
applicable Fund will be subject to the following non-fundamental investment
restrictions, which a Fund's Board of Directors may change without shareholder
approval.

Babson-Stewart Ivory International Fund will not engage in any of the following
activities: (1) invest directly in oil, gas, or other mineral exploration or
development programs: (2) invest more than 5% of its total assets in securities
which are restricted as to future sale; (3) invest more than 5% of its total
assets in puts, calls, straddles, spreads, and any combination thereof (the Fund
will engage in options transactions for hedging purposes only); and (4) purchase
warrants, valued at the lower of cost or market, in excess of 5% of the value of
the Fund's net assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on the New
York or American Stock Exchange. Warrants acquired by the Fund at any time in
units or attached to securities are not subject to this restriction.

Portfolio Transactions. Decisions to buy and sell securities for the Funds are
made by David L. Babson & Company, Inc. (often "David L. Babson") and S.I
International Assets (the "Investment Advisors"), under the supervision of Jones
& Babson, Inc. The Investment Advisors are generally responsible for
implementing or supervising these decisions, including allocation of portfolio
brokerage and principal business and the negotiation of commissions and/or the
price of the securities. Portfolio turnover will be no more than is necessary to
meet the Funds' investment objectives. Under normal circumstances, it is
anticipated that the Funds' portfolio turnover will not exceed 100%.

In instances where securities are purchased on a commission basis, the Funds
will seek competitive and reasonable commission rates based on circumstances of
the trade involved and to the extent that they do not detract from the quality
of the execution. The Funds, in purchasing and selling portfolio securities,
will seek the best available combination of execution and overall price (which
shall include the cost of the transaction) consistent with the circumstances
which exist at the time. The Funds do not intend to solicit competitive bids on
each transaction.

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

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

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

For the past three fiscal years each year, the total dollar amount of brokerage
commissions paid by the Funds were as follows:

Enterprise - $648,300, $172,511 and $194,880 for 2002, 2001 and 2000,
respectively; Enterprise II - $ 82,267, $87,920 and $87,374; Growth - $231,944,
$433,451 and $664,645; Shadow $117,629 $87,234 and $31,070; Value - $597,143,
$737,442 and $1,223,429; Stewart Ivory International - $139,961, $169,537 and
$236,401.

PERFORMANCE MEASURES

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

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

P(1+T)n = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1,000 payment made at the
beginning of the 1, 5 or 10 year (or other) periods at the end of the 1, 5
or 10 year (or other) periods (or fractional portions thereof).

From time to time, Babson Bond Trust and Babson Tax-Free Income Fund may quote
its yield in advertisements, shareholder reports or other communications to
shareholders. Yield is calculated according to the following standardized SEC
formula.

Current yield reflects the income per share earned by the Fund's investments.

Current yield is determined by dividing the net investment income per share
earned during a 30-day base period by the maximum offering price per share on
the last day of the period and annualizing the result. Expenses accrued for the
period include any fees charged to all shareholders during the base period.

The SEC standardized yield formula is as follows:

Yield = 2(((a-b)/cd+1)^6) - 1

Where:

a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share on the last day of the period.

From time to time, the Babson Money Market Fund may quote its yields in
advertisements, shareholder reports or other communications to shareholders.
Yield information is generally available by calling the Funds toll free
1-800-4-BABSON (1-800-422-2766), or in the Kansas City area (816) 751-5900. The
current annualized yield for the Money Market Fund is computed by: (a)
determining the net change in the value of a hypothetical pre-existing account
in the Fund having a balance of one share at the beginning of a seven calendar
day period for which yield is to be quoted, (b) dividing the net change by the
value of the account at the beginning of the period to obtain the base period
return, and (c) annualizing the results (i.e., multiplying the base period
return by 365/7). The net change in value of the account reflects the value of
additional shares purchased with dividends declared on the original share and
any such additional shares, but does not include realized gains and losses or
unrealized appreciation and depreciation. In addition, the Fund may calculate a
compound effective yield by adding 1 to the base period return (calculated as
described above, raising the sum to a power equal to 365/7 and subtracting 1).
For the period ended June 30, 2002, the seven-day effective yield and thirty-day
effective yield of the Money Market Fund were 0.88% and 0.85%, respectively. At
June 30, 2002, the average maturity of the Money Market Fund was 58 days.

Performance Comparisons. In advertisements or in reports to shareholders, the
Funds may compare their performance to that of other mutual funds with similar
investment objectives and to stock or other relevant indices. For example, they
may compare their performance to rankings prepared by Lipper Analytical
Services, Inc. (Lipper) or Morningstar, Inc., two widely recognized independent
services which monitor the performance of mutual funds. The Funds may compare
their performance to the Standard & Poor's 500 Stock Index ("S&P 500"), an index
of unmanaged groups of common stocks, the Dow Jones Industrial Average, a
recognized unmanaged index of common stocks of 30 industrial companies listed on
the NYSE, the MSCI/EAFE, an index of unmanaged stocks from 20 international
markets, the S&P Barra Value, a capitalization weighted index associated with
"value" stocks, the S&P Barra Growth, a capitalization weighted index associated
with "growth" stocks, the Russell 2000 Index, an index that measures the
performance of the smallest 2000 publicly traded companies, the Lehman Brothers
Aggregate Bond Index, an index of government, corporate and agency bonds, the
Lehman Brothers Intermediate Government Corporate Index, an index of government,
agency and corporate notes between 1 and 10 year maturities, or the Consumer
Price Index. Performance information, rankings, ratings, published editorial
comments and listings as reported in national financial publications such as
Barron's, Business Week, Forbes, Fortune, Institutional Investor, Investor's
Business Daily, Kiplinger's Personal Finance Magazine, Money, Morningstar Mutual
Funds, Mutual Fund Forecaster, No-Load Investor and The Wall Street Journal may
also be used in comparing performance of the Fund. Performance comparisons
should not be considered as representative of the future performance of any
Fund.

Performance rankings, recommendations, published editorial comments and listings
reported in Barron's, Business Week, Financial World, Forbes, Fortune, Investors
Business Daily, Kiplinger's Personal Finance Magazine, Money, Mutual Fund
Magazine, Smart Money, Stanger's, The Wall Street Journal, USA Today and U.S.
News & World Report may also be cited (if the Funds are listed in any such
publication) or used for comparison, as well as performance listings and
rankings from CDA Investment Technologies, Inc., Donoghue's Mutual Fund Almanac,
Donoghue's Money Letter, Income and Safety, Louis Rukeyser's Wall Street
Newsletter, Morningstar Mutual Funds, No-Load Fund Analyst, No-Load Fund
Investor, No-Load Fund X, Personal Finance, The Mutual Fund Letter, United
Mutual Fund Selector and Wiesenberger Investment Companies Service.

Average annual total return before taxes. Average annual total return before
taxes is determined by finding the average annual rates of return over the
periods indicated below that would equate an initial hypothetical $1,000
investment to its ending redeemable value. The calculation assumes income
dividends and capital gain distributions are reinvested at net asset value. The
quotation assumes the account was completely redeemed at the end of each period
and the deduction of all applicable charges and fees. If a change is made to the
sales charge structure, historical performance information will be restated to
reflect the maximum initial sales charge currently in effect. The table below
shows the average annual total return for each Fund for the specified periods.

For the one year 7/1/01-6/30/02

Enterprise 20.82%
Enterprise II 2.92%
Growth -24.90%
Shadow Stock 12.44%
Value - 3.02%
Stewart Ivory International -13.72%
Bond Trust - L 4.82%
Bond Trust - S 5.21%
Tax-Free Income 6.12%
Money Market 1.55%

For the five years 7/1/97 - 6/30/02

Enterprise 9.12%
Enterprise II 8.21%
Growth - 0.18%
Shadow Stock 11.94%
Value 5.33%
Stewart Ivory International - 4.21%
Bond Trust - L 6.17%
Bond Trust - S 6.08%
Tax-Free Income 5.30%
Money Market 4.16%

For the ten years 7/1/92 - 6/30/02

Enterprise 12.27%
Enterprise II 13.04%
Growth 8.50%
Shadow Stock 13.90%
Value 12.30%
Stewart Ivory International 3.09%
Bond Trust - L 6.40%
Bond Trust - S 6.09%
Tax-Free Income 5.67%
Money Market 3.99%

The following SEC formula was used to calculate these figures:

P(1+T)n = ERV

Where:

P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of each period at the end of each period.

Average annual total return after taxes on distributions and sale of fund
shares. Average annual total return after taxes on distributions is determined
by finding the average annual rates of return over the periods indicated below
that would equate an initial hypothetical $1,000 investment to its ending
redeemable value, after taxes on distributions. The calculation assumes that
income dividends and capital gain distributions, less the taxes due on such
distributions, are reinvested at net asset value. The quotation assumes the
account was completely redeemed at the end of each period and the deduction of
all applicable charges and fees, but assumes that the redemption itself had no
tax consequences. If a change is made to the sales charge structure, historical
performance information will be restated to reflect the maximum initial sales
charge currently in effect.

Taxes due on distributions are calculated by applying the highest individual
marginal federal income tax rates in effect on the reinvestment date, using the
rates that correspond to the tax character of each component of the
distributions (e.g., the ordinary income rate for distributions of ordinary
income and net short-term capital gains, and the long-term capital gain rate for
distributions of net long-term capital gains). The taxable amount and tax
character of a distribution may be adjusted to reflect any recharacterization of
the distribution since its original date. Distributions are adjusted to reflect
the federal tax impact the distribution would have on an individual taxpayer on
the reinvestment date; for example, no taxes are assumed to be due on the
portion of any distribution that would not result in federal income tax on an
individual (e.g., tax-exempt interest or non-taxable returns of capital). The
effect of applicable tax credits, such as the foreign tax credit, is taken into
account in accordance with federal tax law. Any potential tax liabilities other
than federal tax liabilities (e.g., state and local taxes) are disregarded, as
are the effects of phaseouts of certain exemptions, deductions, and credits at
various income levels, and the impact of the federal alternative minimum tax.
Any redemptions of shares required to pay recurring fees charged to shareholder
accounts are assumed to result in no additional taxes or tax credits. The table
below shows the average annual total return after taxes on distributions for
each Fund for the specified periods.

For the one year 7/1/01-6/30/02

Enterprise 20.14%
Enterprise II 1.78%
Growth -25.25%
Shadow Stock 11.82%
Value - 3.76%
Stewart Ivory International -12.08%
Bond Trust - L 2.66%
Bond Trust - S 2.95%
Tax-Free Income 6.12%

For the five years 7/1/97 - 6/30/02

Enterprise 6.87%
Enterprise II 6.75%
Growth - 2.98%
Shadow Stock 9.85%
Value 3.67%
Stewart Ivory International - 4.64%
Bond Trust - L 3.74%
Bond Trust - S 3.62%
Tax-Free Income 5.15%

For the ten years 7/1/92 - 6/30/02

Enterprise 10.28%
Enterprise II 11.57%
Growth 5.73%
Shadow Stock 11.15%
Value 10.64%
Stewart Ivory International 2.33%
Bond Trust - L 3.66%
Bond Trust - S 3.36%
Tax-Free Income 5.38%

The following SEC formula was used to calculate these figures:

P(1+T)n = ATVD

Where:

P = a hypothetical initial payment of $1,000
T = average annual total return (after taxes on distributions)
n = number of years
ATVD = ending redeemable value of a hypothetical $1,000 payment made at the
beginning of each period at the end of each period, after taxes on fund
distributions but not after taxes on redemption.

Average annual total return after taxes on distributions and sale of fund
shares. Average annual total return after taxes on distributions and sale of
fund shares is determined by finding the average annual rates of return over the
periods indicated below that would equate an initial hypothetical $1,000
investment to its ending redeemable value, after taxes on distributions and sale
of fund shares. The calculation assumes that income dividends and capital gain
distributions are reinvested at net asset value. The quotation assumes the
account was completely redeemed at the end of each period and the deduction of
all applicable charges and fees, including taxes upon sale of fund shares. If a
change is made to the sales charge structure, historical performance information
will be restated to reflect the maximum initial sales charge currently in
effect.

The capital gain or loss upon redemption is calculated by subtracting the tax
basis from the redemption proceeds, after deducting any nonrecurring charges
assessed at the end of the period, subtracting capital gains taxes resulting
from the redemption, or adding the tax benefit from capital losses resulting
from the redemption. In determining the basis for a reinvested distribution, the
distribution is included net of taxes assumed paid from the distribution, but
not net of any sales loads imposed upon reinvestment. Tax basis is adjusted for
any distributions representing returns of capital and any other tax basis
adjustments that would apply to an individual taxpayer, as permitted by
applicable federal law. The amount and character (e.g., short-term or long-term)
of capital gain or loss upon redemption is separately determined for shares
acquired through the initial investment and each subsequent purchase through
reinvested distributions. Shares acquired through reinvestment of distributions
are not assumed to have the same holding period as the initial investment. The
tax character of such reinvestments is determined by the length of the period
between reinvestment and the end of the measurement period in the case of
reinvested distributions. Capital gains taxes (or the benefit resulting from tax
losses) is calculated using the highest federal individual capital gains tax
rate for gains of the appropriate character in effect on the redemption date and
in accordance with federal law applicable on the redemption date. Shareholders
are assumed to have sufficient capital gains of the same character from other
investments to offset any capital losses from the redemption, so that the
taxpayer may deduct the capital losses in full.

The table below shows the average annual total return after taxes on
distributions and sale of Fund shares for each Fund for the specified periods.

For the one year 7/1/01-6/30/02

Enterprise 20.14%
Enterprise II 1.79%
Growth -25.25%
Shadow Stock 11.83%
Value - 3.76%
Stewart Ivory International -12.09%
Bond Trust - L 2.67%
Bond Trust - S 2.95%
Tax-Free Income 6.12%

For the five years 7/1/97 - 6/30/02

Enterprise 6.88%
Enterprise II 6.75%
Growth - 2.98%
Shadow Stock 9.85%
Value 3.67%
Stewart Ivory International - 4.65%
Bond Trust - L 3.75%
Bond Trust - S 3.62%
Tax-Free Income 5.16%

For the ten years 7/1/92 - 6/30/02

Enterprise 10.28%
Enterprise II 11.58%
Growth 5.73%
Shadow Stock 11.16%
Value 10.64%
Stewart Ivory International 2.33%
Bond Trust - L 3.66%
Bond Trust - S 3.37%
Tax-Free Income 5.39%

The following SEC formula was used to calculate these figures:

P(1+T)n = ATVDR

where:

P =a hypothetical initial payment of $1,000
T =average annual total return (after taxes on distributions and redemptions)
n =number of years
ATVDR= ending value of a hypothetical $1,000 payment made at the beginning of
each period at the end of each period, after taxes on fund distributions
and redemption.

HOW THE FUNDS' SHARES ARE DISTRIBUTED

Jones & Babson, as agent of the Funds has agreed to supply its best efforts as
sole distributor of the Funds' shares and, at its own expense, pay all sales and
distribution expenses in connection with their offering other than registration
fees and other government charges. The offering of the Funds' shares is on a
continuous basis. Jones & Babson is located at BMA Tower, 700 Karnes Blvd.,
Kansas City, MO 64108-3306.

Jones & Babson does not receive any fee or other compensation under the
distribution agreement which continues in effect until October 31, 2002, and
which will continue automatically for successive annual periods ending each
October 31, if approved at least annually by the Funds' Board of Directors,
including a majority of those Directors who are not parties to such agreements
or interested persons of any such party. It terminates automatically if assigned
by either party or upon 60 days written notice by either party to the other.
Jones & Babson also serves as the Funds' Transfer Agent.

PURCHASING AND SELLING SHARES

Purchases. Neither the Funds nor the entities that provide services to it (the
"Fund Complex") will be responsible for the consequences of delays, including
delays in the banking or Federal Reserve wire systems. The Fund Complex cannot
process transaction requests that are not completed properly. Examples of
improper transaction requests may include lack of a signature guarantee when
required, lack of proper signatures on a redemption request or a missing social
security or tax id number. If you use the services of any other broker to
purchase or redeem shares of the Funds, that broker may charge you a fee. Shares
of the Funds may be purchased directly from the Funds without this brokerage
fee. Each order accepted will be fully invested in whole and fractional shares,
unless the purchase of a certain number of whole shares is specified, at the net
asset value per share next effective after the order is accepted by the Funds.

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

Each statement and transaction confirmation will request that you inform the
Fund in writing of any questions about the information presented. If you do not
notify the Fund in writing of any questions within the specified time period,
the Funds will consider you to have approved the information in the statement.

Normally, the shares you purchase are held by the Funds in an open account,
thereby relieving you of the responsibility of providing for the safekeeping of
a negotiable share certificate. Should you have a special need for a
certificate, one will be issued on request for all or a portion of the whole
shares in your account. A charge of $25.00 will be made for any certificates
issued. In order to protect the interests of the other shareholders, share
certificates will be sent to those shareholders who request them only after the
Funds have determined that unconditional payment for the shares represented by
the certificate has been received by its custodian, UMB Bank, n.a. The Funds
reserve the right in their sole discretion to withdraw all or any part of the
offering made by the prospectus or to reject purchase orders when, in the
judgment of Funds' management, such withdrawal or rejection is in the best
interest of the Fund and its shareholders. The Funds also reserve the right at
any time to waive or increase the minimum requirements applicable to initial or
subsequent investments with respect to any person or class of persons, which
includes shareholders of the Funds' special investment programs.

The Funds reserve the right to refuse to accept orders for shares of a Fund
unless accompanied by payment, except when a responsible person has indemnified
the Funds against losses resulting from the failure of investors to make
payment. In the event that the Funds sustain a loss as the result of failure by
a purchaser to make payment, the Funds' underwriter, Jones & Babson, will cover
the loss. If an order to purchase shares must be canceled due to non-payment,
the purchaser will be responsible for any loss incurred by the Funds arising out
of such cancellation. To recover any such loss, the Funds reserve the right to
redeem shares by any purchaser whose order is canceled, and such purchaser may
be prohibited or restricted in the manner of placing further orders.

Sales (Redemptions). The Fund Complex will not be responsible for the
consequences of delays, including delays in the banking or Federal Reserve wire
systems. The Fund Complex cannot process transaction requests that are not
completed properly.

The Funds will transmit redemption proceeds to the proper party, as instructed,
as soon as practicable after a proper redemption request has been received
usually no later than the third business day after it is received. The Funds
must receive an endorsed share certificate with a signature guarantee, where a
certificate has been issued. Transmissions are made by mail unless an expedited
method has been authorized and properly specified in the redemption request. In
the case of redemption requests made within 15 days of the date of purchase, the
Funds may delay transmission of proceeds until such time as it is certain that
unconditional payment has been collected for the purchase of shares being
redeemed or 15 days from the date of purchase, whichever occurs first. The
Telephone/Fund Web Site Redemption Service may only be used for non certificated
shares held in an open account. The Funds reserve the right to refuse a
telephone or fund web site redemption request. At our option, the Funds may pay
such redemption by wire or check. The Funds may reduce or waive the $10 charge
for wiring redemption proceeds in connection with certain accounts. To
participate in the Systematic Redemption Plan your dividends and capital gains
distributions must be reinvested in additional shares of the Funds.

Babson Money Market Fund may accept drafts (checks) on the form provided by the
Fund without the necessity of an accompanying guarantee of signature, and drawn
on the registered shareholder account, to redeem sufficient shares in the
registered shareholder account and to deposit the proceeds in a special account
at UMB Bank, n.a. for transmission through the commercial banking system to the
credit of the draft payee. The drafts must be in at least the amount of $500
with a maximum of $100,000 total per day in drafts, and may be drawn only
against shares held in open account (no certificate outstanding). The Funds and
their Manager may refuse to honor drafts where there are insufficient open
account shares in the registered account, or where shares to be redeemed which
were purchased by check have been held for less than 15 days, and to the
specific conditions relating to this privilege as well as the general conditions
set out above.

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

The Funds may suspend the right of redemption or postpone the date of payment
beyond the normal three-day redemption period under the following conditions
authorized by the Investment Company Act of 1940: (1) for any period (a) during
which the New York Stock Exchange is closed, other than customary weekend and
holiday closing, or (b) during which trading on the New York Stock Exchange is
restricted; (2) for any period during which an emergency exists as a result of
which (a) disposal of a Fund's securities is not reasonably practical, or (b) it
is not reasonably practical for a Fund to determine the fair value of its net
assets; (3) under certain circumstances where certain shareholders are
attempting to "time the market" by purchasing and redeeming a Fund's shares on a
regular basis; or (4) for such other periods as the Securities and Exchange
Commission may by order permit for the protection of the Funds' shareholders.

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

Market Timers. The Funds do not allow market timers. The Funds may refuse to
sell shares to market timers. You will be considered a market timer if you have
(i) requested a redemption of Fund shares within two weeks of an earlier
purchase request, (ii) make investments of large amounts of $1 million or more
followed by a redemption request in close proximity to the purchase or (iii)
otherwise seem to follow a timing pattern. Shares under common ownership or
control are combined for these purposes.

How Share Price is Determined. The Funds net asset value per share is computed
once daily, Monday through Friday, at 4:00 p.m., Eastern Time except: days when
the Funds are not open for business; days on which changes in the value of
portfolio securities will not materially affect the net asset value; days during
which a Fund receives no purchase or redemption orders; and customary holidays.

The Funds do not compute its net asset value days when the New York Stock
Exchange is closed or on the following customary holidays:

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

Additional Purchase and Redemption Policies. The Funds reserve the right to:

(1) Waive or increase the minimum investment requirements with respect to any
person or class of persons, which includes shareholders that invest through
any of the Fund's special investment programs;

(2) Cancel or change the telephone/Funds' web site investment service,
redemption service, the telephone exchange service and the automatic
monthly investment plan without prior notice to you when doing so is in the
best interest of the Funds and their shareholders;

(3) Begin charging a fee for the telephone investment service or the automatic
monthly investment plan and to cancel or change these services upon 15 days
written notice to you;

(4) Begin charging a fee for the telephone/Funds' web site service and to
cancel or change the service upon 60 days written notice to you;

(5) Begin charging a fee for the systematic redemption plan upon 30 days
written notice to you;

(6) Waive signature guarantee requirements in certain instances where it
appears reasonable to do so and will not unduly affect the interests of
other shareholders; the Funds may also waive the signature guarantee
requirement if you authorize the telephone redemption method at the same
time you submit the initial application to purchase shares; and,

(7) Require signature guarantees if there appears to be a pattern of
redemptions designed to avoid the signature guarantee requirement, or if
the Funds have other reason to believe that this requirement would be in
the best interests of the Fund and its shareholders.

MANAGEMENT OF THE FUNDS

Manager and Investment Advisors. As a part of the Management Agreement, Jones
& Babson employs at its own expense David L. Babson and for the
Babson-Stewart Ivory International Fund, S.I. International Assets, as
Investment Advisors for the Funds. Analytic Systems, Inc. acts as an additional
advisor for the Shadow Stock Fund. David L. Babson, located in Cambridge,
Massachusetts, is registered with the Securities Exchange Commission and serves
individual, corporate and other institutional clients. S.I. International Assets
is a partnership formed in 1987, by David L. Babson and Stewart Ivory &
Company (International) Ltd.

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

David L. Babson is a wholly owned subsidiary of DLB Acquisition Corporation, an
indirect, majority owned subsidiary of Massachusetts Mutual Life Insurance
Company headquartered in Springfield, Massachusetts. Massachusetts Mutual Life
Insurance Company is an insurance organization founded in 1851 and is considered
to be a controlling person of David L. Babson, under the Investment Company Act
of 1940.

S.I. International Assets is a partnership formed in 1987, between David L.
Babson & Company, Inc. and Stewart-Ivory Company (International)
Ltd.("Stewart-Ivory") a wholly-owned subsidiary of First State Investments (UK
Holdings) Limited and an indirect subsidiary of the Commonwealth Bank of
Australia. On September 20, 2002, Babson and Stewart-Ivory entered into an
agreement providing for the orderly winding-up of S.I. International Assets and
the continuation of the S.I. International Assets' advisory business by Stewart
Ivory (to be renamed First State Investments International Limited). It is
anticipated that Stewart Ivory will seek to serve under Jones & Babson as
the advisor to the Babson-Stewart Ivory International Fund going forward,
subject to approval by Jones & Babson, the Board and the Fund's
shareholders.

The aggregate management fees paid to Jones & Babson by the Funds during the
three most recent fiscal years ended June 30, 2002, 2001 and 2000 (from which
Jones & Babson paid all the Funds' expenses except those payable directly by
the Funds) were $2,469,000, $1,275,000 and $1,392,000, respectively for the
Enterprise Fund; $724,000, $724,000 and $775,000 for the Enterprise Fund II;
$2,362,000, $3,415,000 and $3,815,000 for the Growth Fund; $556,000, $471,000
and $423,000 for the Shadow Stock Fund; $4,264,000, $4,782,000 and $7,928,000
for the Value Fund; $287,000, $710,000 and $838,000 for the Stewart Ivory
International Fund; $922,000, $944,000 and $1,039,000 for the Bond Trust
Portfolio L; $298,000, $289,000 and $317,000 for the Bond Trust Portfolio S
(does not include the effect of fee waiver); $327,000, $346,000 and $434,000 for
the Money Market Fund; $342,000, $306,000 and $437,000 for the Tax-Free Income
Fund. The annual fee charged by Jones & Babson covers all normal operating
costs of the Funds. The annual fee charged by Jones & Babson is higher than
the fees of most other investment advisors whose charges cover only investment
advisory services with all remaining operational expenses absorbed directly by
the Funds. Yet, it compares favorably with these other advisors when all
expenses to Funds shareholders are taken into account.

David L. Babson has an experienced investment analysis and research staff which
eliminates the need for Jones & Babson and the Funds to maintain an
extensive duplicate staff, with the consequent increase in the cost of
investment advisory service. Jones & Babson pays David L. Babson a fee of
70/100 of one percent (0.70%) of the first $30 million and 50/100 of one percent
(0.50%) of amounts in excess of $30 million of Enterprise Fund's average daily
total net assets; 70/100 of one percent (0.70%) of the first $30 million and
50/100 of one percent (0.50%) of amounts in excess of $30 million of Enterprise
Fund II's; 30/100 of one percent (0.30%) for the first $100 million, 25/100 of
one percent (0.25%) on the next $150 million and 20/100 of one percent (0.20%)
for amounts in excess of $250 million of Growth Fund's; 25/100 of one percent
(0.25%) of Shadow Stock Fund's; 35/100 of one percent (0.35%) of Value Fund's;
475/1000 of one percent (0.475%) of Stewart Ivory International Fund's; 25/100
of one percent (0.25%) of Bond Trust Portfolio L's; 15/100 of one percent
(0.15%) of Bond Trust Portfolio S's (through June 30, 2002); 20/100 of one
percent (0.20%) of Money Market Fund; 25/100 of one percent (0.25%) of Tax-Free
Income Fund, which is computed daily and paid semimonthly. The cost of the
services of David L. Babson is included in the services of Jones & Babson.
During the three most recent fiscal years ended June 30, 2002, 2001 and 2000,
Jones & Babson paid David L. Babson fees amounting to $1,285,154, $622,694
and $678,776, respectively for the Enterprise Fund; $277,466, $347,129 and
$371,379 for the Enterprise Fund II; $814,927, $1,043,618 and $1,155,760 for the
Growth Fund, $119,330, $214,410 and $189,873 for the Shadow Stock Fund;
$957,033, $1,762,057 and $2,909,143 for the Value Fund; $893,160, $355,192 and
$418,950 for the Stewart Ivory International Fund; $189,702, $248,268 and
$272,699 for the Bond Trust Portfolio L; $186,369, $45,700 and $49,848 for the
Bond Trust Portfolio S; $164,205, $87,690 and $101,003 for the Money Market
Fund; $90,010, $93,646 and $111,918 for the Tax-Free Income Fund, related to
services provided to the Funds.

Directors and Officers. Each of the Funds are governed by a Board of Directors
(or Trustees), which is responsible for protecting the interests of the
shareholders. The Directors are experienced business persons, who meet
throughout the year to oversee the Funds' activities, review contractual
arrangements with companies that provide services to the Funds and to review
performance. Certain officers and directors of the Funds are also officers or
directors of Jones & Babson, Babson-Stewart Ivory International or David L.
Babson.

The officers of the Funds are responsible for supervising the Funds' business
operations. The Funds' business operations are subject to the supervision and
control of the Funds' Boards. The following lists the officers and directors of
the Funds and their ages. Unless noted otherwise, the address of each officer
and director is BMA Tower, 700 Karnes Blvd., Kansas City, Missouri 64108-3306.
Except as indicated, each has been an employee of Jones & Babson for more than
five years.

Name, Age and Address
Stephen S. Soden (57)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Director, President and Principal Executive Officer

Term of Office and Length of Time Served
One year term and two years of service

Principal Occupation(s) During Past 5 Years
President, Chief Executive Officer and Director, Jones & Babson, Inc.
(management company); Director, Babson Enterprise Fund II, Inc.; President,
Investors Mark Advisors, LLC ("IMA") (management company); President and
Principal Executive Officer, Investors Mark Series Fund, Inc. (one fund with
nine portfolios); President and Director/Trustee, Buffalo Fund Complex (seven
funds)4; President and Trustee, J&B Funds (three funds)5; Senior Vice President
of Business Men's Assurance Company of America ("BMA") (insurance company); and,
formerly, President and Chief Executive Officer of BMA Financial Services, Inc.
("BMAFS") (broker/dealer) until December 31, 2001 when BMAFS ceased operations.

Number of Portfolios in Fund Complex Overseen by Director
Eleven

Other Directorships Held By Director
None

Name, Age and Address
Edward S. Ritter (47)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Director

Term of Office and Length of Time Served
One year term and no years of service

Principal Occupation(s) During Past 5 Years
Senior Vice President of Corporate Development, Business Mens Assurance Company
of America ("BMA") (insurance company); Director, Jones & Babson, Inc.
(management company); Director, Investors Mark Advisors, LLC ("IMA") (management
company); Director of each Babson Fund described in this prospectus except
Babson Enterprise Fund II (nine funds)

Number of Portfolios in Fund Complex Overseen by Director
Nine

Other Directorships Held By Director
None

Non-Interested Directors

Name, Age and Address
James T. Jensen (73)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Director

Term of Office and Length of Time Served
One year term and fifteen years of service

Principal Occupation(s) During Past 5 Years
Chief Executive Officer, Jensen Associates, Inc. (consulting)

Number of Portfolios in Fund Complex Overseen by Director
One1

Other Directorships Held By Director
None

Name, Age and Address
William H. Russell (79)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Director

Term of Office and Length of Time Served
One year term and seventeen years of service

Principal Occupation(s) During Past 5 Years
Financial consultant

Number of Portfolios in Fund Complex Overseen by Director
Nineteen2

Other Directorships Held By Director
None

Name, Age and Address
H. David Rybolt (60)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Director

Term of Office and Length of Time Served
One year term and eleven years of service

Principal Occupation(s) During Past 5 Years
Consultant, HDR Associates (management consulting)

Number of Portfolios in Fund Complex Overseen by Director
Eighteen3

Other Directorships Held By Director
None

Officers of the Funds

Name, Age and Address
P. Bradley Adams (41)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Vice President, Treasurer, Principal Financial Officer and Principal Accounting
Officer

Term of Office and Length of Time Served
One year term and eleven years of service

Principal Occupation(s) During Past 5 Years
Vice President Finance and Operations and Chief Operations Officer, Jones &
Babson, Inc. (management company); Treasurer, IMA (management company);
Principal Financial Officer and Principal Accounting Officer, Investors Mark
Series Fund; Vice President and Treasurer, Buffalo Fund Complex; Vice President,
Chief Financial Officer and Trustee, J&B Funds; and, Treasurer and Chief
Financial Officer, Gold Bank Funds (two funds)6.

Name, Age and Address
W. Guy Cooke (41)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Vice President and Chief Compliance Officer

Term of Office and Length of Time Served
One year term and three years of service

Principal Occupation(s) During Past 5 Years
Chief Compliance Officer, Jones & Babson, Inc. (management company); Vice
President and Chief Compliance Officer, Buffalo Fund Complex and J&B Funds.

Name, Age and Address
Martin A. Cramer (52)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Vice President and Secretary

Term of Office and Length of Time Served
One year term and eleven years of service

Principal Occupation(s) During Past 5 Years
Legal and Regulatory Affairs Vice President and Secretary, Jones & Babson, Inc.
(management company); Secretary, IMA (management company); Vice President and
Secretary, Buffalo Fund Complex; Assistant Vice President and Secretary, J&B
Funds; and, Secretary, Gold Bank Funds (two funds).

Name, Age and Address
Constance E. Martin (40)
BMA Tower
700 Karnes Boulevard
Kansas City, Missouri 64108

Positions(s) Held with Funds
Vice President

Term of Office and Length of Time Served
One year term and six years of service

Principal Occupation(s) During Past 5 Years
Vice President and Director Mutual Fund Client Relations, Jones & Babson, Inc.
(management company); Vice President, Buffalo Fund Complex and J&B Funds.

1 Director, Babson-Stewart Ivory International Fund, Inc.

2 Director, each Fund described in this Prospectus; also, Director, Investors
Mark Series Fund, Inc. ("Investors Mark Series Fund"), which consists of
the following nine portfolios: Balanced, Global Fixed Income, Growth &
Income, Intermediate Fixed Income, Large Cap Value, Large Cap Growth, Small
Cap Equity, Mid Cap Equity, and Money Market.

3 Director, each Fund described in this Prospectus, except Babson-Stewart
Ivory International Fund, Inc.; also, Director, Investors Mark Series Fund,
Inc.

4 The Buffalo Fund Complex consists of Buffalo Balanced Fund, Inc., Buffalo
Large Cap Fund, Inc., Buffalo High Yield Fund, Inc., Buffalo Small Cap
Fund, Inc., Buffalo USA Global Fund, Inc. and the Buffalo Funds, which is a
series fund consisting of Buffalo Science & Technology Fund and Buffalo Mid
Cap Fund. Jones & Babson, Inc. serves as Principal Underwriter and
Registered Transfer Agent for each fund in the Buffalo Fund Complex.

5 The J&B Funds is a series fund consisting of J&B Mid-Cap Aggressive Growth
Fund, J&B Small-Cap Aggressive Growth Fund and J&B Small-Cap International
Fund. Jones & Babson, Inc. serves as Investment Advisor, Principal
Underwriter and Registered Transfer Agent for each of the J&B Funds.

6 Gold Bank Funds is a series fund consisting of Gold Bank Equity and Gold
Bank Money Market Fund. Jones & Babson, Inc. serves as Registered Transfer
Agent for each of the Gold Bank Funds.

As of December 31, 2001, the Directors held the following interests in the
Funds' securities:

------------------------------- ------------------------------------------------ -------------------------------------
Aggregate Dollar Range of Equity
Name of Director/Trustee Dollar Range of Equity Securities in Each Fund Securities in all Registered
Investment Companies Overseen by
Director/Trustee in Family of
Investment Companies
------------------------------- ------------------------------------------------ -------------------------------------
------------------------------- ------------------------------------------------ -------------------------------------

William H. Russell Money Market: None $50,001-$100,000
Tax-Free Income: $50,001-$100,000
Bond Trust (L): None
Bond Trust (S): None
Enterprise: None
Enterprise II: None
Growth: None
Shadow Stock: None
Value: None
International: None

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

H. David Rybolt Money Market: None Over $100,000
Tax-Free Income: None
Bond Trust (L): $10,001-$50,000
Bond Trust (S): $1-$10,000
Enterprise: $10,001-$50,000
Enterprise II: None
Growth: None
Shadow Stock: $1-$10,000
Value: $10,001-$50,000
International: None

Stephen S. Soden Money Market: None $10,001-$50,000
Tax-Free Income: None
Bond Trust (L): None
Bond Trust (S): None
Enterprise: None
Enterprise II: None
Growth: None
Shadow Stock: None
Value: $10,001-$50,000
International: None

James T. Jensen Money Market: None $10,001-$50,000
Tax-Free Income: None
Bond Trust (L): None
Bond Trust (S): None
Enterprise: None
Enterprise II: None
Growth: None
Shadow Stock: None
Value: $1-$10,000
International: $10,001-$50,000
------------------------------- ------------------------------------------------ -------------------------------------
------------------------------- ------------------------------------------------ -------------------------------------

Edward S. Ritter Money Market: None $10,001-$50,000
Tax-Free Income: None
Bond Trust (L): None
Bond Trust (S): None
Enterprise: None
Enterprise II: None
Growth: None
Shadow Stock: $10,001-$50,000
Value: None
International: None

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

Audit Committee. Each Fund has an Audit Committee that assists the Fund's Board
in fulfilling its duties relating to the Fund's accounting and financial
reporting practices, and also serves as a direct line of communication between
the Board and the independent accountants. The Audit Committee of each Board is
composed of its independent Directors. The independent Directors have no
financial interest in, nor are they affiliated with either Jones & Babson, Inc.,
the manager of each Fund, or David L. Babson & Company Inc., the investment
counsel to each Fund. The specific functions of each Audit Committee include
recommending the engagement or retention of the independent accountants,
reviewing with the independent accountants the plan and results of the auditing
engagement, approving professional services provided by the independent
accountants prior to the performance of such services, considering the range of
audit and non-audit fees, reviewing the independence of the independent
accountants, reviewing the scope and results of the Fund's procedures for
internal auditing, and reviewing the Fund's system of internal accounting
controls.

Compensation of Directors. The Funds do not directly compensate any Director or
officer for their normal duties and services. The Directors' fees, including
travel and other expenses related to the Board meetings, are paid by Jones &
Babson, Inc. pursuant to the provisions of the Management Agreements with the
Funds which require Jones & Babson, Inc. to bear the operating costs of the
Funds out of its management fee. Mr. Ritter, as an interested Director, will not
be compensated for serving as a Director of the Funds.

Each independent Director receives an annual retainer for serving as a Director
for at least one of the Funds. Messrs. Russell and Rybolt each receive an annual
retainer of $7,000. Mr. Jensen receives an annual retainer of $4,000. The
independent Directors also receive $125 for each Fund's Board meeting attended.
During the last fiscal year, each Board held five meetings, except for Babson
Enterprise Fund, Inc., which held six meetings. No Director attended less than
75% of the applicable meetings, including Committee meetings. The following
chart sets forth each Director's annual compensation:

------------------------------- ---------------------------- ---------------------------- ----------------------------
Name of Director Compensation for Serving Pension or Retirement Total Compensation from
on the Boards Benefits Accrued all Babson Funds*
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
William H. Russell $5,750 n.a. $12,750
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
H. David Rybolt $5,125 n.a. $12,125
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
James T. Jensen $500 n.a. $4,500
------------------------------- ---------------------------- ---------------------------- ----------------------------
------------------------------- ---------------------------- ---------------------------- ----------------------------
Stephen S. Soden $500 n.a. $4,500
------------------------------- ---------------------------- ---------------------------- ----------------------------

*The amounts reported in this column reflect the total compensation paid to Mr.
Russell as Director of all nine Babson Funds. Mr. Rybolt is compensated for
services as Director of eight of the Babson Funds, including Babson Enterprise
Fund II, Inc. Mr. Rybolt does not serve as a Director of the International Fund.
Mr. Jensen is compensated for his services as Directors of the International
Fund only. Compensation is for the fiscal year that ended June 30, 2002.
Director fees are paid by the Funds' manager and not by the Funds themselves.

Code of Ethics. The Funds, their Manager, the Investment Advisors and principal
underwriter have each adopted a code of ethics, as required by federal
securities laws. Under each entity's code of ethics, persons who are designated
as access persons may engage in personal securities transactions, including
transactions involving securities that may be purchased or sold by any Fund,
subject to certain restrictions and procedures. Each code of ethics also
contains provisions designed to substantially comply with the recommendations
contained in the Investment Company Institute's 1994 Report of the Advisory
Group on Personal Investing. The codes of ethics are on file with the Securities
and Exchange Commission.

Custodian. Except for the Babson-Stewart Ivory International Fund, Inc., the
Funds' assets are held for safekeeping by an independent custodian, UMB Bank,
n.a. This means that UMB Bank, n.a., rather than the Funds, has possession of
the Funds' cash and securities. UMB Bank, n.a. is not responsible for the Funds'
investment management or administration. But, as directed by the Funds'
officers, it delivers cash to those who have sold securities to the Funds in
return for such securities, and to those who have purchased portfolio securities
from the Funds, it delivers such securities in return for their cash purchase
price. It also collects income directly from issuers of securities owned by the
Funds and holds this for payment to shareholders after deduction of the Funds'
expenses. Jones & Babson compensates UMB Bank, n.a. for its services. There is
no separate charge to the Funds.

The Babson-Stewart Ivory International Fund's assets are held for safekeeping by
an independent custodian, State Street Bank and Trust Company of Boston,
Massachusetts and foreign subcustodians as discussed below. This means that
State Street Bank and Trust Company, rather than the Fund, has possession of the
Fund's cash and securities. State Street Bank and Trust Company is not
responsible for the Fund's investment management or administration. But, as
directed by the Fund's officers, it delivers cash to those who have sold
securities to the Fund in return for such securities, and to those who have
purchased portfolio securities from the Fund, it delivers such securities in
return for their cash purchase price. It also collects income directly from
issuers of securities owned by the Fund and holds this for payment to
shareholders after deduction of the Fund's expenses.

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

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

Control Persons and Principal Holders of the Funds. As of June 30, 2002 the
Funds had the following control persons and principal holders.

Fund Name Percent
Stewart Ivory International College of Aeronautics 5.34%
Enterprise Quincy Mutual Fire Insurance Co 5.75%
Enterprise Fund II Donald A. Pels 9.62%
Enterprise IMS & Co. 10.63%
Tax-Free Income Bowen, David & Co. 5.69%

Control Persons are persons deemed to control a fund because the own
beneficially over 25% of the outstanding equity securities. Principal holders
are persons that own beneficially 5% or more of a fund's outstanding equity
securities. The officers, directors and trustees of the Funds as a group own
less than 1% of any Fund.

DISTRIBUTIONS AND TAXES

Distributions of Net Investment Income. The Funds receive income generally in
the form of dividends and interest on their investments. This income, less
expenses incurred in the operation of a Fund, constitutes a Fund's net
investment income from which dividends may be paid to shareholders. If you are a
taxable investor, any income the Funds pay will be taxable as ordinary income,
whether you take the income in cash or in additional shares.

By meeting certain requirements of the Internal Revenue Code, the Tax-Free
Income Fund has qualified and continues to qualify to pay exempt-interest
dividends. These dividends are derived from interest income exempt from regular
federal income tax, and are not subject to regular federal income tax when they
are distributed. In addition, to the extent that exempt-interest dividends are
derived from interest on obligations of a state or its political subdivisions,
or from interest on qualifying U.S. territorial obligations (including
qualifying obligations of Puerto Rico, the U.S. Virgin Islands or Guam), they
also will be exempt from such state's personal income taxes. A state generally
does not grant tax-free treatment to interest on state and municipal securities
of other states.

The Tax-Free Income Fund may earn taxable income on any temporary investments,
on the discount from stripped obligations or their coupons, on income from
securities loans or other taxable transactions, or on ordinary income derived
from the sale of market discount bonds. Any Fund distributions from such income
will be taxable as ordinary income, whether received by investors in cash or in
additional shares.

The Money Market Fund and Portfolios S and L of the Bond Trust declare dividends
for each day that their net asset value is calculated. These dividends will
equal all of the daily net income payable to shareholders of record as of the
close of business the preceding day. The daily net income includes accrued
interest and any original issue or acquisition discount, plus or minus any gain
or loss on the sale of portfolio securities and changes in unrealized
appreciation or depreciation in portfolio securities (to the extent required to
maintain a constant net asset value per share in the Money Market Fund), less
the estimated expenses of the Funds.

Distributions of Capital Gains. In general, the Funds may derive capital gains
and losses in connection with sales or other dispositions of their portfolio
securities. Distributions from net short-term capital gains will be taxable to
you as ordinary income. Distributions from net long-term capital gains will be
taxable to you as long-term capital gains, regardless of how long you have held
your shares in the Fund. Any net capital gains realized by a Fund generally will
be distributed once each year, but they may be distributed more frequently, if
necessary to reduce or eliminate excise or income taxes on the Fund. Because the
Money Market Fund is a money market fund, it does not anticipate realizing any
long-term capital gains.

Taxation of Five Year Gains (shareholders in the 10 and 15% federal brackets).
If you are in the 10 or 15% individual income tax bracket, capital gain
distributions are generally subject to a maximum rate of tax of 10%. However, if
you receive distributions from the Fund's sale of securities held for more than
five years, these gains are subject to a maximum rate of tax of 8%. The Funds
will inform you in January of the portion of any capital gain distributions you
received for the previous year that were five year gains qualifying for this
reduced tax rate.

Taxation of Five Year Gains (shareholders in higher federal brackets). If you
are in a higher individual income tax bracket (for example, the 25, 28, 33 or
35% brackets when these brackets are fully phased-in in the year 2006) capital
gain distributions are generally subject to a maximum rate of tax of 20%.
Beginning in the year 2006, any distributions from a Fund's sale of securities
purchased after January 1, 2001 and held for more than five years will be
subject to a maximum rate of tax of 18%.

You may, however, elect to mark shares of a Fund that you purchase to market as
of January 2, 2001. If you make this election, any Fund shares that you acquired
before this date will also be eligible for the 18% maximum rate of tax,
beginning in 2006. However, in making the election, you are required to pay a
tax on any appreciation in the value of your Fund shares as of January 2, 2001,
and to restart your holding period in the shares as of that date. The election
does not apply to Fund shares redeemed on or before January 2, 2002.

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

The Funds may be subject to foreign withholding taxes on income from certain of
their foreign securities. If more than 50% of a Fund's total assets at the end
of the fiscal year are invested in securities of foreign corporations, the Fund
may elect to pass-through each investor's pro rata share of foreign taxes paid
by the Fund. If this election is made, the year-end statement that investors
receive from the Fund will show more taxable income than was actually
distributed. However, investors will be entitled to either deduct their share of
such taxes in computing their taxable income or (subject to limitations) claim a
foreign tax credit for such taxes against their U.S. federal income tax. The
Fund will provide investors with the information necessary to complete their
individual income tax returns if it makes this election. Information on the
Amount and Tax Character of Distributions. The Funds will inform you of the
amount of your ordinary income dividends and capital gains distributions at the
time they are paid, and will advise you of their tax status for federal income
tax purposes shortly after the close of each calendar year. If you have not held
Fund shares for a full year, a Fund may designate and distribute to you, as
ordinary income or capital gains, a percentage of income that is not equal to
the actual amount of such income earned during the period of your investment in
the Fund.

Election To Be Taxed as a Regulated Investment Company. Each Fund has elected to
be treated as a regulated investment company under Subchapter M of the Internal
Revenue Code and intends to so qualify during the current fiscal year. As
regulated investment companies, the Funds generally do not pay federal income
tax on the income and gains they distribute to you. The Funds' Boards reserve
the right not to maintain a Fund's qualification as a regulated investment
company, if it determines this course of action to be beneficial to
shareholders. In that case, a Fund will be subject to federal, and possibly
state, corporate taxes on its taxable income and gains, and distributions to you
will be taxed as ordinary dividend income to the extent of such Fund's earnings
and profits.

Excise Tax Distribution Requirements. To avoid federal excise taxes, the
Internal Revenue Code requires a Fund to distribute to you by December 31 of
each year, at a minimum, the following amounts: 98% of its taxable ordinary
income earned during the calendar year; 98% of its capital gain net income
earned during the twelve month period ending October 31; and 100% of any
undistributed amounts from the prior year. Each Fund intends to declare and pay
these amounts in December (or in January that are treated by you as received in
December) to avoid these excise taxes, but can give no assurances that its
distributions will be sufficient to eliminate all taxes.

Redemption of Fund Shares. Redemptions, including redemptions in-kind, and
exchanges of Fund shares are taxable transactions for federal and state income
tax purposes. If you redeem your Fund shares, or exchange your Fund shares for
shares of a different Babson Fund, the IRS will require that you report a gain
or loss on your redemption or exchange. If you hold your shares as a capital
asset, any gain or loss that you realize will be capital gain or loss and will
be long-term or short-term, generally depending on how long you hold your
shares. Any loss incurred on the redemption or exchange of shares held for six
months or less will be treated as a long-term capital loss to the extent of any
long-term capital gains distributed to you by the Fund on those shares.

Beginning after the year 2005 (2000 for certain shareholders), gain in a sale or
redemption of Fund shares held for more than five years may be subject to a
reduced rate of tax. Any loss incurred on the redemption or exchange of shares
held for six months or less will be treated as a long-term capital loss to the
extent of any long-term capital gains distributed to you by the Fund on those
shares. All or a portion of any loss that you realize upon the redemption of
your Fund shares will be disallowed to the extent that you buy other shares in
such Fund, through reinvestment of dividends or otherwise, within 30 days before
or after your share redemption. Any loss disallowed under these rules will be
added to your tax basis in the new shares you buy.

As to the Tax-Free Income Fund, any loss incurred on the redemption or exchange
of shares held for six months or less will be disallowed to the extent of any
exempt-interest dividends distributed to investors with respect to his or her
Fund shares and any remaining loss will be treated as a long-term capital loss
to the extent of any long-term capital gains distributed to the investor by the
Fund on those shares. As to the Money Market Fund, because the Fund seeks to
maintain a constant $1.00 per share net asset value, investors should not expect
to realize a capital gain or loss upon redemption or exchange of Fund shares.

U.S. Government Obligations. Income earned on certain U.S. government
obligations is exempt from state and local personal income taxes if earned
directly by you. States also grant tax-free status to dividends paid to you from
interest earned on direct obligations of the U.S. government, subject in some
states to minimum investment or reporting requirements that must be met by the
Fund. Income on Fund investments in other certain obligations, such as
repurchase agreements collateralized by U.S. government obligations, commercial
paper and federal agency-backed obligations, for example Government National
Mortgage Association ("GNMA") or Federal National Mortgage Association ("FNMA")
obligations, generally does not qualify for tax-free treatment. The rules on
exclusion of this income are different for corporations.

Dividends-Received Deduction for Corporations. If you are a corporate
shareholder, you should note that some of the Funds will pay dividends that may
qualify for the dividends-received deduction. Qualifying dividends generally are
limited to dividends of domestic corporations. In some circumstances, you may be
allowed to deduct these qualified dividends, thereby reducing the tax that you
would otherwise be required to pay on these dividends. The dividends-received
deduction will be available only with respect to dividends designated by a Fund
as eligible for this treatment. All dividends, including the deducted portion,
must be included in your calculation of alternative minimum taxable income.

Because the Stewart Ivory International Fund's income is derived primarily from
investments in foreign rather than domestic U.S securities, no portion of its
distributions will generally be eligible for the dividends-received deduction.
Because the Money Market Fund, the Tax-Free Income Fund and the Bond Trust's
(Portfolios S and L) income consists of interest rather than dividends, no
portion of their distributions will generally be eligible for the
dividends-received deduction. None of the dividends paid by these Funds for the
most recent calendar year qualified for such deduction, and it is anticipated
that none of the current year's dividends will so qualify.

Investment in Complex Securities. The Funds may invest in complex securities,
such as covered call options, that could affect whether gains and losses it
recognizes are treated as ordinary income or capital gains, or could affect the
amount, timing and/or tax character of income distributed to you. The Funds may
also invest in securities issued or purchased at a discount, such as zero coupon
securities, that could require it to accrue and distribute income not yet
received. In order to generate sufficient cash to make these distributions, the
Funds could be required to sell securities in their portfolios that they
otherwise might have continued to hold. These rules could affect the amount,
timing and/or tax character of income distributed to you.

FINANCIAL STATEMENTS

The audited financial statements of the Funds, which are contained in the June
30, 2002, Annual Report to Shareholders are incorporated herein by reference.
Unaudited reports to shareholders will be published at least semiannually.

GENERAL INFORMATION AND HISTORY

The Babson Bond Trust was organized in Kansas City, Missouri, as a common law
trust under an Agreement and Declaration of Trust dated November 2, 1944, which
was amended and restated on February 24, 1989. It originally was known as Mutual
Trust. When it came under the management of Jones & Babson, its name was changed
to Babson (D.L.) Income Trust. On February 14, 1984, shareholders changed its
name to D.L. Babson Bond Trust. On March 31, 1988, the issued and outstanding
shares of beneficial interest of the Trust were redesignated as "Portfolio L"
(longer term) and a second class or series of shares known as "Portfolio S"
(shorter term) was created. Each full and fractional share, when issued and
outstanding, has: (1) equal voting rights with respect to matters which affect
the Trust in general and with respect to matters relating solely to the
interests of the Portfolio for which issued, and (2) equal dividend,
distribution and redemption rights to the assets of the Portfolio for which
issued and to general assets, if any, of the Trust which are not specifically
allocated to either Portfolio. Shares when issued are fully paid and
non-assessable. Except for the priority of each share in the assets of its
Portfolio, the Trust will not issue any class of securities senior to any other
class. The initial par value of the shares was $1.00 each. On September 30,
1955, this was changed to $0.25 each, and three additional shares at that time
were issued for each share then outstanding. Shareholders do not have
pre-emptive or conversion rights.

The other Babson Funds were incorporated in Maryland as follows: The Enterprise
Fund on July 5, 1983, has a present authorized capitalization of 20,000,000
shares of $1 par value common stock; the Enterprise Fund II on February 5, 1991,
has a present authorized capitalization of 10,000,000 shares of $1 par value
common stock; the Growth Fund, originally incorporated in Delaware in 1959 and
was merged into a Maryland corporation in 1978, has a present authorized
capitalization of 100,000,000 shares of $1 par value common stock; the Shadow
Stock Fund on June 3, 1987, has a present authorized capitalization of
10,000,000 shares of $1 par value common stock; the Value Fund on July 24, 1984,
has a present authorized capitalization of 50,000,000 shares of $1 par value
common stock; the Stewart Ivory International Fund on October 2, 1987, has a
present authorized capitalization of 10,000,000 shares of $1 par value common
stock; the Money Market Fund on October 19, 1979, has a present authorized
capitalization of 2,000,000,000 shares of $.01 par value common stock; and the
Tax-Free Income Fund on August 22, 1979, has a present authorized capitalization
of 200,000,000 shares of $.10 par value common stock. All shares are of the same
class unless otherwise stated and with like rights and privileges. Each full and
fractional share, when issued and outstanding, has: (1) equal voting rights with
respect to matters which affect the Fund, and (2) equal dividend, distribution
and redemption rights to the assets of the Fund. Shares when issued are fully
paid and non-assessable. The Funds may create other series of stock but will not
issue any senior securities. Shareholders do not have pre-emptive or conversion
rights.

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

The Funds may, at their discretion, hold annual meetings of shareholders for the
following purposes: (1) election of directors; (2) approval of continuance of
any investment advisory agreement; (3) ratification of the selection of
independent auditors; and (4) approval of a distribution plan. At the current
time, the Funds do not intend to hold such annual meetings, except as required
by the Investment Company Act of 1940 and other applicable laws.

A special meeting of shareholders of the Funds must be held if the Fund receives
the written request for a meeting from the shareholders entitled to cast at
least 25% of all the votes entitled to be cast at the meeting. The Funds have
undertaken that their Directors will call a meeting of shareholders if such a
meeting is requested in writing by the holders of not less than 10% of the
outstanding shares of each Fund. To the extent required by the undertaking, the
Funds will assist shareholder communications in such matters.

The Funds may use the name "Babson" in their names so long as Jones & Babson,
Inc. continues as manager and David L. Babson & Company Inc. continues to serve
as Investment Advisor for the Funds. Complete details with respect to the use of
the name are set out in the Management Agreement between the Funds and Jones &
Babson, Inc.

Shadow Stock Fund has an exclusive and perpetual license to use the name "Shadow
Stock" in its name so long as Analytic Systems, Inc. or an affiliate thereof or
of James B. Cloonan, acts as an advisor to the Fund. Complete details with
respect to the use of the name are set out in the Management Agreement between
the Fund and Jones & Babson, Inc.

OTHER JONES & BABSON FUNDS

Jones & Babson, Inc. also distributes the Buffalo Group of Mutual Funds
("Buffalo Funds"), which are the Buffalo Balanced Fund, Buffalo Equity Fund,
Buffalo High Yield Fund, Buffalo USA Global Fund, Buffalo Science & Technology
Fund and Buffalo Small Cap Fund. In addition, Jones & Babson manages and
distributes the J&B Funds, which are the J&B Mid-Cap Aggressive Growth Fund, J&B
Small-Cap Aggressive Growth Fund, and J&B Small-Cap International Fund. A
prospectus for any of these Funds may be obtained from Jones & Babson, Inc., BMA
Tower, 700 Karnes Blvd., Kansas City, MO 64108-3306.

APPENDIX-RATINGS INFORMATION

Description of Stock Ratings. The Funds use S&P's Earnings and Dividend Rankings
for Common Stocks. Growth and stability of earnings and dividends are deemed key
elements in establishing S&P's earnings and dividend rankings for common stocks.
Basic scores are computed for earnings and dividends, then adjusted by a set of
predetermined modifiers for growth, stability within long-term trend, and
cyclically. Adjusted scores for earnings and dividends are then combined to
yield a final score. The final score is measured against a scoring matrix
determined by an analysis of the scores of a large and representative sample of
stocks. The rankings are:

A+ Highest
A High
A- Above Average
B+ Average
B Below Average
B- Lower
C Lowest
D In Reorganization

The Funds also use the Value Line Ratings of Financial Strength. The financial
strength of each of the companies reviewed by Value Line is rated relative to
all the others. The ratings are:

A++ The very highest relative financial strength.
A+ Excellent financial position relative to other companies.
A High grade relative financial strength.
B++ Superior financial health on a relative basis.
B+ Very good relative financial structure.
B Good overall relative financial structure.
C++ Satisfactory finances relative to other companies.
C+ Below-average relative financial position.
C Poorest financial strength relative to other major companies.

Value Line's ratings are based upon computer analysis of a number of key
variables that determine: (a) financial leverage, (b) business risk and (c)
company size plus the judgment of their analysts and senior editors regarding
factors that cannot be quantified across-the-board for all stocks. The primary
variables that are indexed and studied include equity coverage of debt, equity
coverage of intangibles, "quick ratio" accounting methods, variability of
return, quality of fixed charge coverage, stock price stability and company
size.

Bond Ratings.

S&P Moody's Descriptions

AAA Aaa These are the highest ratings assigned by
S&P and Moody's to a debt obligation.
They indicate an extremely strong capacity to
pay interest and repay principal.

AA Aa Debt rated in this category is considered
to have a very strong capacity to pay
interest and repay principal and differs
from AAA/Aaa issues only in a small degree.

A A Debt rated A has a strong capacity to pay
interest and repay principal, although it is
somewhat more susceptible to the adverse
effects of changes in circumstances and
economic conditions than debt in higher-rated
categories.

BBB Baa Debt rated BBB/Baa is regarded as having an
adequate capacity to pay interest and
repay principal. Whereas it normally
exhibits adequate protection parameters,
adverse economic conditions or changing
circumstances are more likely to lead to
a weakened capacity to pay interest and
repay principal for debt in this category
than in higher-rated categories. Debt
rated below BBB/Baa is regarded as having
significant speculative characteristics.

BB Ba Debt rated BB/Ba has less near-term
vulnerability to default than other
speculative issues. But it faces major
ongoing uncertainties or exposure to
adverse business, financial or economic
conditions that could lead to inadequate
capacity to meet timely interest and
principal payments. The BB rating category
also is used for debt subordinated to
senior debt that is assigned an actual or
implied BBB- rating.

B B Debt rated B has a greater vulnerability
to default but currently has the
capacity to meet interest payments and
principal repayments. Adverse business,
financial or economic conditions will
likely impair capacity or willingness to
pay interest and repay principal. The B
rating category is also used for debt
subordinated to senior debt that is
assigned an actual or implied BB/Ba or
BB-/Ba3 rating.

CCC Caa Debt rated CCC/Caa has a currently
identifiable vulnerability to default and
is dependent upon favorable business,
financial and economic conditions to meet
timely payment of interest and repayment
of principal. In the event of adverse
business, financial or economic conditions,
it is not likely to have the capacity
to pay interest and repay principal. The
CCC/Caa rating category is also used
for debt subordinated to senior debt that
is assigned an actual or implied B or
B-/B3 rating.

CC Ca The rating CC/Ca typically is applied to
debt subordinated to senior debt that is
assigned an actual or implied CCC/Caa rating.

C C The rating C typically is applied to debt
subordinated to senior debt, which is
assigned an actual or implied CCC/Caa3 debt
rating. The C rating may be used to cover a
situation where a bankruptcy petition has
been filed, but debt service payments are
continued.

CI N/A The rating CI is reserved for income bonds
on which no interest is being paid.

D D Debt rated D is in payment default. The D
rating category is used when interest
payments or principal payments are not
made on the date due even if the
applicable grace period has not expired
unless S&P believes that such
payments will be made during such grace
period. The D rating also will be used
upon the filing of bankruptcy petition if
debt service payments are jeopardized.

To provide more detailed indications of credit quality, the Standard & Poor's
ratings from AA to CCC may be modified by the addition of a plus or minus sign
to show relative standing within these major rating categories. Similarly,
Moody's adds numerical modifiers (1,2,3.) to designate relative standing within
its major bond rating categories. Pitch Investors Service, Inc. also rates bonds
and uses a ratings system that is substantially similar to that used by Standard
& Poor's. With regard to S&P's ratings, bonds rated BB, B, CCC and CC are
usually considered predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms of the
obligations. BB indicates the lowest degree of speculation and CC the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, they are outweighed by large uncertainties or major
risk exposures to adverse conditions.

Note Ratings.

S&P MOODY'S DESCRIPTIONS

SP-1 G-1; VMIG-1 Notes are of the highest
quality enjoying strong protection from
established cash flows of funds for their
servicing or from established and
broad-based access to the market for
refinancing, or both.

SP-2 MIG-2; VMIG-2 Notes are of high quality
with margins of protection ample, although
not so large as in the preceding group.

SP-3 MIG-3; VMIG-3 Notes are of favorable
quality with all security elements
accounted for, but lacking the undeniable
strength of the preceding grades. Market
access for refinancing, in particular, is
likely to be less well established.

SP-4 MIG-4; VMIG-4 Notes are of adequate
quality, carrying specific risk but having
protection and not distinctly or
predominantly speculative.

Moody's uses the "MIG" designation specifically for municipal notes.

Commercial Paper Ratings.

S&P Moody's Description

A-1 Prime-1 (P-1) This indicates that the degree
of safety regarding timely payments is
strong. Standard & Poor's rates those
issues determined to possess extremely strong
safety characteristics as A-1+.

A-2 Prime-2 (P-2) Capacity for timely payment on commercial
paper is satisfactory, but the relative
degree of safety is not as high as for issues
designated A-1. Earnings trends and
coverage ratios, while sound will be more
subject to variation. Capitalization
characteristic while still appropriated,
may be more affected by external
conditions. Ample alternate liquidity is
maintained.

A-3 Prime-3 Satisfactory capacity for timely
repayment. Issues that carry this rating
are (P-3) somewhat more vulnerable to the
adverse changes in circumstances than
obligations carrying the higher designations.

B N/A Issues rated "B" are regarded as having
only an adequate capacity for timely payment.
Furthermore, such capacity may be damaged by
changing conditions or short-term
adversities.

C N/A This rating is assigned to short-term debt
obligations with a doubtful capacity
for payment.

D N/A This rating indicates that the issuer is
either in default or is expected to be
in default upon maturity.

Moody's commercial paper rating is an opinion of the ability of an issuer to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's only rating, prime, means that it believes that
the commercial paper note will be redeemed as agreed. The criteria used by
Moody's for rating a commercial paper issuer under this graded system include,
but are not limited to the following factors: (1) evaluation of the management
of the issuer; (2) economic evaluation of the issuer's industry or industries
and an appraisal of speculative type risks which may be inherent in certain
areas; (3) evaluation of the issuer's products in relation to competition and
customer acceptance; (4) liquidity; (5) amount and quality of long-term debt;
(6) trend of earnings over a period of ten years; (7) financial strength of a
parent company and relationships which exist with the issuer; and (8)
recognition by the management of obligations which may be present or may arise
as a result of public interest questions and preparations to meet such
obligations. S&P's commercial paper rating is a current assessment of the
likelihood of timely repayment of debt having an original maturity of no more
than 270 days.

Municipal Securities Ratings. The ratings of bonds by Moody's and S&P's
represent their opinions of quality of the municipal bonds they undertake to
rate. These ratings are general and are not absolute standards. Consequently,
municipal bonds with the same maturity, coupon and rating may have different
yields, while municipal bonds of the same maturity and coupon with different
ratings may have the same yield.

Both Moody's and S&P's Municipal Bond Ratings cover obligations of states and
political subdivisions. Ratings are assigned to general obligation and revenue
bonds. General obligation bonds are usually secured by all resources available
to the municipality and the factors outlined in the rating definitions below are
weighted in determining the rating. Because revenue bonds in general are payable
from specifically pledged revenues, the essential element in the security for a
revenue bond is the quantity and quality of the pledged revenues available to
pay debt service.

BABSON FUND GROUP

PART C

OTHER INFORMATION

ITEM 23. EXHIBITS.

(a) Articles of Incorporation

(1) David L. Babson Growth Fund, Inc.

(A) Articles of Incorporation of the Registrant as filed in Maryland on
August 17, 1978 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 77 on Form N-1A (File Nos.
002-15530 and 811-00901) as filed with the U.S. Securities and
Exchange Commission ("SEC") via EDGAR on August 30, 1999.

(B) Articles of Amendment and Restatement of the Registrant as filed in
Maryland on October 3, 1978 are incorporated herein by reference to
the Registrant's Post-Effective Amendment No. 77 on Form N-1A (File
Nos. 002-15530 and 811-00901) as filed with the SEC via EDGAR on
August 30, 1999.

(C) Articles of Merger of the Registrant as filed in Maryland on October
31, 1978 are incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 77 on Form N-1A (File Nos. 002-15530 and
811-00901) as filed with the SEC via EDGAR on August 30, 1999.

(D) Articles of Amendment of the Registrant as filed in Maryland on
October 3, 1983 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 77 on Form N-1A (File Nos.
002-15530 and 811-00901) as filed with the SEC via EDGAR on August 30,
1999.

(2) D. L. Babson Money Market Fund, Inc.

(A) Articles of Incorporation of the Registrant as filed in Maryland on
October 19, 1979 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 26 on Form N-1A (File Nos.
002-65761 and 811-02963) as filed with the SEC via EDGAR on August 30,
1999.

(B) Articles of Amendment of the Registrant as filed in Maryland on April
15, 1982 are incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 26 on Form N-1A (File Nos. 002-65761 and
811-02963) as filed with the SEC via EDGAR on August 30, 1999.

(C) Articles Supplementary of the Registrant as filed in Maryland on April
22, 1982 are incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 26 on Form N-1A (File Nos. 002-65761 and
811-02963) as filed with the SEC via EDGAR on August 30, 1999.

(3) D. L. Babson Tax-Free Income Fund, Inc.

(A) Articles of Incorporation of the Registrant as filed in Maryland on
August 22, 1979 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 26 on Form N-1A (File Nos.
002-65489 and 811-02948) as filed with the SEC via EDGAR on August 30,
1999.

(B) Articles of Amendment of the Registrant as filed in Maryland on
November 30, 1979 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 26 on Form N-1A (File Nos.
002-65489 and 811-02948) as filed with the SEC via EDGAR on August 30,
1999.

(C) Articles of Amendment of the Registrant as filed in Maryland on
January 2, 1981 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 26 on Form N-1A (File Nos.
002-65489 and 811-02948) as filed with the SEC via EDGAR on August 30,
1999.

(4) Babson-Stewart Ivory International Fund, Inc.

(A) Articles of Incorporation of the Registrant as filed in Maryland on
October 2, 1987 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 16 on Form N-1A (File Nos.
033-17762 and 811-05386) as filed with the SEC via EDGAR on August 30,
1999.

(B) Articles of Amendment of the Registrant as filed in Maryland on
December 10, 1987 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 16 on Form N-1A (File Nos.
033-17762 and 811-05386) as filed with the SEC via EDGAR on August 30,
1999.

(5) Shadow Stock Fund, Inc.

(A) Articles of Incorporation of the Registrant as filed in Maryland on
June 3, 1987 are incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 16 on Form N-1A (File Nos. 033-15074 and
811-05218) as filed with the SEC via EDGAR on August 30, 1999.

(6) Babson Enterprise Fund, Inc.

(A) Articles of Incorporation of the Registrant as filed in Maryland on
July 5, 1983 are incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 19 on Form N-1A (File Nos. 002-85791 and
811-03823) as filed with the SEC via EDGAR on January 22, 1999.

(B) Articles Supplementary of the Registrant as filed in Maryland on
October 14, 1983 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 19 on Form N-1A (File Nos.
002-85791 and 811-03823) as filed with the SEC via EDGAR on January
22, 1999.

(C) Articles Supplementary of the Registrant as filed in Maryland on April
24, 1991 are incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 19 on Form N-1A (File Nos. 002-85791 and
811-03823) as filed with the SEC via EDGAR on January 22, 1999.

(D) Articles Supplementary of the Registrant as filed in Maryland on March
13, 2002 are electronically filed herewith as Exhibit EX-99.a.6.D.

(7) Babson Enterprise Fund II, Inc.

(A) Articles of Incorporation of the Registrant as filed in Maryland on
February 4, 1991 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 10 on Form N-1A (File Nos.
033-39321 and 811-06252) as filed with the SEC via EDGAR on January
22, 1999.

(B) Articles of Amendment of the Registrant as filed in Maryland on May 2,
1991 are incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 10 on Form N-1A (File Nos. 033-39321 and
811-06252) as filed with the SEC via EDGAR on January 22, 1999.

(8) Babson Value Fund, Inc.

(A) Articles of Incorporation of the Registrant as filed in Maryland on
July 24, 1984 are incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 17 on Form N-1A (File Nos. 033-93363 and
811-04114) as filed with the SEC via EDGAR on January 22, 1999.

(B) Articles Supplementary of the Registrant as filed in Maryland on
September 25, 1984 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 17 on Form N-1A (File Nos.
033-93363 and 811-04114) as filed with the SEC via EDGAR on January
22, 1999.

(C) Articles Supplementary of the Registrant as filed in Maryland on
February 9, 1996 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 17 on Form N-1A (File Nos.
033-93363 and 811-04114) as filed with the SEC via EDGAR on January
22, 1999.

(D) Articles Supplementary of the Registrant as filed in Maryland on
October 30, 1996 are incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 17 on Form N-1A (File Nos.
033-93363 and 811-04114) as filed with the SEC via EDGAR on January
22, 1999.

(9) D. L. Babson Bond Trust

(A) Amended and Restated Agreement and Declaration of Trust of the
Registrant dated November 2, 1944, as restated on March 31, 1988, is
electronically filed herewith as Exhibit No. EX-99.a.9.A.

(B) Provisions of Supplementary to the Agreement and Declaration of Trust
of the Registrant adopted March 31, 1988 are incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 99 on Form
N-1A (File Nos. 002-10002 and 811-00495) as filed with the SEC via
EDGAR on January 22, 1999.

(b) By-laws

(1) David L. Babson Growth Fund, Inc.

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.1.

(A) Amendment effective May 30, 2002 to the Amended and Restated
By-laws of the Registrant effective October 28, 1999, is
electronically filed herewith as Exhibit No. EX-99.b.1.A.

(2) D. L. Babson Money Market Fund, Inc.

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.2.

(A) Amendment effective May 30, 2002 to the Amended and Restated
By-laws of the Registrant effective October 28, 1999 is
electronically filed herewith as Exhibit No. EX-99.b.2.A.

(3) D. L. Babson Tax-Free Income Fund, Inc.

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.3.

(A) Amendment effective May 30, 2002 to the Amended and Restated
By-laws of the Registrant effective October 28, 1999 is
electronically filed herewith as Exhibit No. EX-99.b.3.A.

(4) Babson-Stewart Ivory International Fund, Inc.

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.4.

(A) Amendment effective May 30, 2002 to the Amended and Restated
By-laws of the Registrant effective October 28, 1999 is
electronically filed herewith as Exhibit No. EX-99.b.4.A.

(5) Shadow Stock Fund, Inc.

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.5.

(A) Amendment effective May 30, 2002 to the Amended and Restated
By-laws of the Registrant effective October 28, 1999 is
electronically filed herewith as Exhibit No. EX-99.b.5.A.

(6) Babson Enterprise Fund, Inc.

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.6.

(A) Amendment effective May 30, 2002 to the Amended and Restated
By-laws of the Registrant effective October 28, 1999 is
electronically filed herewith as Exhibit No. EX-99.b.6.A.

(7) Babson Enterprise Fund II, Inc.

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.7.

(A) Amendment effective May 30, 2002 to the Amended and Restated
By-laws of the Registrant effective October 28, 1999 is
electronically filed herewith as Exhibit No. EX-99.b.7.A.

(8) Babson Value Fund, Inc.

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.8.

(A) Amendment effective May 30, 2002 to the Amended and Restated
By-laws of the Registrant effective October 28, 1999 is
electronically filed herewith as Exhibit No. EX-99.b.8.A.

(9) D. L. Babson Bond Trust

Amended and Restated By-laws for the Registrant effective as of
October 28, 1999 are electronically filed herewith as Exhibit No.
EX-99.b.9.

(1) D. L. Babson Money Market Fund, Inc., D. L. Babson Tax-Free Income
Fund, Inc., Babson-Stewart Ivory International Fund, Inc., Shadow
Stock Fund, Inc., Babson Enterprise Fund, Inc., Babson Enterprise Fund
II, Inc. and Babson Value Fund, Inc.

See Article Fifth of the Registrants' Articles of Incorporation. See
also Article II, "Meetings of Stockholders," and Article IX, "Stock,"
of the Registrants' By-Laws. The Articles of Incorporation and By-laws
of the Registrants are incorporated herein by reference.

(2) David L. Babson Growth Fund, Inc.

See Articles Sixth and Thirteenth of the Registrant's Articles of
Amendment and Restatement. See also Article II, "Meetings of
Stockholders," and Article IX, "Stock," of the Registrant's By-Laws.
The Articles of Incorporation and By-laws of the Registrant are
incorporated herein by reference.

(3) D. L. Babson Bond Trust

See Articles III, IV and VI of the Registrant's Agreement and
Declaration of Trust. See also Article II, "Meetings of Stockholders,"
and Article IX, "Stock," of the Registrant's By-Laws. The Agreement
and Declaration of Trust and By-laws of the Registrant are
incorporated herein by reference.

(d) Investment Advisory Contracts

(1) David L. Babson Growth Fund, Inc.

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 77 on
Form N-1A (File Nos. 002-15530 and 811-00901) as filed with the
SEC via EDGAR on August 30, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated June 30, 1995 is incorporated
herein by reference to the Registrant's Post-Effective Amendment
No. 77 on Form N-1A (File Nos. 002-15530 and 811-00901) as filed
with the SEC via EDGAR on August 30, 1999.

(2) D. L. Babson Money Market Fund, Inc.

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 26 on
Form N-1A (File Nos. 002-65761 and 811-02963) as filed with the
SEC via EDGAR on August 30, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated June 30, 1995 is incorporated
herein by reference to the Registrant's Post-Effective Amendment
No. 26 on Form N-1A (File Nos. 002-65761 and 811-02963) as filed
with the SEC via EDGAR on August 30, 1999.

(3) D. L. Babson Tax-Free Income Fund, Inc.

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 26 on
Form N-1A (File Nos. 002-65489 and 811-02948) as filed with the
SEC via EDGAR on August 30, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated June 30, 1995 is incorporated
herein by reference to the Registrant's Post-Effective Amendment
No. 26 on Form N-1A (File Nos. 002-65489 and 811-02948) as filed
with the SEC via EDGAR on August 30, 1999.

(4) Babson-Stewart Ivory International Fund, Inc.

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 16 on
Form N-1A (File Nos. 033-17762 and 811-05386) as filed with the
SEC via EDGAR on August 30, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
Babson-Stewart Ivory International dated as of August 1, 2000, is
electronically filed herewith as Exhibit No. EX-99.d.4.B.

(5) Shadow Stock Fund, Inc.

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 16 on
Form N-1A (File Nos. 033-15074 and 811-05218) as filed with the
SEC via EDGAR on August 30, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated June 30, 1995 is incorporated
herein by reference to the Registrant's Post-Effective Amendment
No. 16 on Form N-1A (File Nos. 033-15074 and 811-05218) as filed
with the SEC via EDGAR on August 30, 1999.

(C) Investment Counsel Agreement between Jones & Babson, Inc. and
Analytic Systems, Inc. dated June 30, 1995 is incorporated herein
by reference to the Registrant's Post-Effective Amendment No. 16
on Form N-1A (File Nos. 033-15074 and 811-05218) as filed with
the SEC via EDGAR on August 30, 1999.

(6) Babson Enterprise Fund, Inc.

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 19 on
Form N-1A (File Nos. 002-85791 and 811-03823) as filed with the
SEC via EDGAR on January 22, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated June 30, 1995 is incorporated
herein by reference to the Registrant's Post-Effective Amendment
No. 19 on Form N-1A (File Nos. 002-85791 and 811-03823) as filed
with the SEC via EDGAR on January 22, 1999.

(7) Babson Enterprise Fund II, Inc.

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 10 on
Form N-1A (File Nos. 033-39321 and 811-06252) as filed with the
SEC via EDGAR on January 22, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated June 30, 1995 is incorporated
herein by reference to the Registrant's Post-Effective Amendment
No. 10 on Form N-1A (File Nos. 033-39321 and 811-06252) as filed
with the SEC via EDGAR on January 22, 1999.

(8) Babson Value Fund, Inc.

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 17 on
Form N-1A (File Nos. 033-93363 and 811-04114) as filed with the
SEC via EDGAR on January 22, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated June 30, 1995 is incorporated
herein by reference to the Registrant's Post-Effective Amendment
No. 17 on Form N-1A (File Nos. 033-93363 and 811-04114) as filed
with the SEC via EDGAR on January 22, 1999.

(9) D. L. Babson Bond Trust

(A) Investment Management Agreement between Registrant and Jones &
Babson, Inc. dated June 30, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 99 on
Form N-1A (File Nos. 002-10002 and 811-00495) as filed with the
SEC via EDGAR on January 22, 1999.

(B) Investment Counsel Agreement between Jones & Babson, Inc. and
David L. Babson & Co., Inc. dated June 30, 1995 is incorporated
herein by reference to the Registrant's Post-Effective Amendment
No. 99 on Form N-1A (File Nos. 002-10002 and 811-00495) as filed
with the SEC via EDGAR on January 22, 1999.

(e) Underwriting Contracts between:

(1) David L. Babson Growth Fund, Inc. and Jones & Babson, Inc. dated
September 30, 1993 is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 77 on Form N-1A (File Nos.
002-15530 and 811-00901) as filed with the SEC via EDGAR on August 30,
1999.

(2) D. L. Babson Money Market Fund, Inc. and Jones & Babson, Inc. dated
September 30, 1993 is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 26 on Form N-1A (File Nos.
002-65761 and 811-02963) as filed with the SEC via EDGAR on August 30,
1999.

(3) D. L. Babson Tax-Free Income Fund, Inc. and Jones & Babson, Inc. dated
September 30, 1993 is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 26 on Form N-1A (File Nos.
002-65489 and 811-02948) as filed with the SEC via EDGAR on August 30,
1999.

(4) Babson-Stewart Ivory International Fund, Inc. and Jones & Babson, Inc.
dated September 30, 1993 is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 16 on Form N-1A (File Nos.
033-17762 and 811-05386) as filed with the SEC via EDGAR on August 30,
1999.

(5) Shadow Stock Fund, Inc. and Jones & Babson, Inc. dated September 30,
1993 is incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 16 on Form N-1A (File Nos. 033-15074 and
811-05218) as filed with the SEC via EDGAR on August 30, 1999.

(6) Babson Enterprise Fund, Inc. and Jones & Babson, Inc. dated September
30, 1993 is incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 19 on Form N-1A (File Nos. 002-85791 and
811-03823) as filed with the SEC via EDGAR on January 22, 1999.

(7) Babson Enterprise Fund II, Inc. and Jones & Babson, Inc. dated
September 30, 1993 is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 10 on Form N-1A (File Nos.
033-39321 and 811-06252) as filed with the SEC via EDGAR on January
22, 1999.

(8) Babson Value Fund, Inc. and Jones & Babson, Inc. dated September 30,
1993 is incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 17 on Form N-1A (File Nos. 033-93363 and
811-04114) as filed with the SEC via EDGAR on January 22, 1999.

(9) D. L. Babson Bond Trust and Jones & Babson, Inc. dated September 30,
1993 is incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 99 on Form N-1A (File Nos. 002-10002 and
811-00495) as filed with the SEC via EDGAR on January 22, 1999.

(f) Bonus or Profit Sharing Contracts

Not Applicable.

(g) Custodian Agreement between:

(1) David L. Babson Growth Fund, Inc. and UMB Bank, n.a. dated May 5, 1997
is incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 77 on Form N-1A (File Nos. 002-15530 and 811-00901) as
filed with the SEC via EDGAR on August 30, 1999.

(2) D. L. Babson Money Market Fund, Inc. and UMB Bank, n.a. dated May 5,
1997 is incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 26 on Form N-1A (File Nos. 002-65761 and
811-02963) as filed with the SEC via EDGAR on August 30, 1999.

(3) D. L. Babson Tax-Free Income Fund, Inc. and UMB Bank, n.a. dated May
5, 1997 is incorporated herein by reference to the Registrant's
Post-Effective Amendment No. 26 on Form N-1A (File Nos. 002-65489 and
811-02948) as filed with the SEC via EDGAR on August 30, 1999.

(4) Babson-Stewart Ivory International Fund, Inc. and State Street Bank
and Trust Company dated December 14, 1987 is electronically filed
herewith as Exhibit No. EX-99.g.4.

(A) Amendment dated October 26, 2000 to Custodian Contract between
Babson-Stewart Ivory International Fund, Inc. and State Street
Bank and Trust Company dated December 14, 1987 is electronically
filed herewith as Exhibit No. EX-99.g.4.A.

(B) Subcustodian Agreement between State Street Bank and Trust
Company and State Street Trust Company Canada dated as of
February 23, 1998 is electronically filed herewith as Exhibit No.
EX-99.g.4.B.

(5) Shadow Stock Fund, Inc. and UMB Bank, n.a. dated May 5, 1997 is
incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 16 on Form N-1A (File Nos. 033-15074 and 811-05218) as
filed with the SEC via EDGAR on August 30, 1999.

(6) Babson Enterprise Fund, Inc. and UMB Bank, n.a. dated May 5, 1997 is
incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 20 on Form N-1A (File Nos. 002-85791 and 811-03823) as
filed with the SEC via EDGAR on August 30, 1999.

(7) Babson Enterprise Fund II, Inc. and UMB Bank, n.a. dated May 5, 1997
is incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 11 on Form N-1A (File Nos. 033-39321 and 811-06252) as
filed with the SEC via EDGAR on August 30, 1999.

(8) Babson Value Fund, Inc. and UMB Bank, n.a. dated May 5, 1997 is
incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 18 on Form N-1A (File Nos. 033-93363 and 811-04114) as
filed with the SEC via EDGAR on August 30, 1999.

(9) D. L. Babson Bond Trust and UMB Bank, n.a. dated May 5, 1997 is
incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 100 on Form N-1A (File Nos. 002-10002 and 811-00495) as
filed with the SEC via EDGAR on August 30, 1999.

(h) Other Material Contracts

(1) Transfer Agency Agreement between David L. Babson Growth Fund, Inc.
and Jones & Babson, Inc. dated October 31, 1994 is incorporated herein
by reference to the Registrant's Post-Effective Amendment No. 77 on
Form N-1A (File Nos. 002-15530 and 811-00901) as filed with the SEC
via EDGAR on August 30, 1999.

(2) Transfer Agency Agreement between D. L. Babson Money Market Fund, Inc.
and Jones & Babson, Inc. dated October 31, 1994 is incorporated herein
by reference to the Registrant's Post-Effective Amendment No. 26 on
Form N-1A (File Nos. 002-65761 and 811-02963) as filed with the SEC
via EDGAR on August 30, 1999.

(3) Transfer Agency Agreement between D. L. Babson Tax-Free Income Fund,
Inc. and Jones & Babson, Inc. dated October 31, 1994 is incorporated
herein by reference to the Registrant's Post-Effective Amendment No.
26 on Form N-1A (File Nos. 002-65489 and 811-02948) as filed with the
SEC via EDGAR on August 30, 1999.

(4) Transfer Agency Agreement between Babson-Stewart Ivory International
Fund, Inc. and Jones & Babson, Inc. dated October 31, 1994 is
incorporated herein by reference to the Registrant's Post-Effective
Amendment No. 16 on Form N-1A (File Nos. 033-17762 and 811-05386) as
filed with the SEC via EDGAR on August 30, 1999.

(5) Transfer Agency Agreement between Shadow Stock Fund, Inc. and Jones &
Babson, Inc. dated October 31, 1994 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 16 on Form
N-1A (File Nos. 033-15074 and 811-05218) as filed with the SEC via
EDGAR on August 30, 1999.

(6) Transfer Agency Agreement between Babson Enterprise Fund, Inc. and
Jones & Babson, Inc. dated March 31, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 19 on Form
N-1A (File Nos. 002-85791 and 811-03823) as filed with the SEC via
EDGAR on January 22, 1999.

(7) Transfer Agency Agreement between Babson Enterprise Fund II, Inc. and
Jones & Babson, Inc. dated March 31, 1995 is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 10 on Form
N-1A (File Nos. 033-39321 and 811-06252) as filed with the SEC via
EDGAR on January 22, 1999.

(8) Transfer Agency Agreement between Babson Value Fund, Inc. and Jones &
Babson, Inc. dated March 31, 1995 is incorporated herein by reference
to the Registrant's Post-Effective Amendment No. 17 on Form N-1A (File
Nos. 033-93363 and 811-04114) as filed with the SEC via EDGAR on
January 22, 1999.

(9) Transfer Agency Agreement between D. L. Babson Bond Trust and Jones &
Babson, Inc. dated March 31, 1995 is incorporated herein by reference
to the Registrant's Post-Effective Amendment No. 99 on Form N-1A (File
Nos. 002-10002 and 811-00495) as filed with the SEC via EDGAR on
January 22, 1999.

(i) Opinion and Consent of Counsel as to the legality of the securities issued
for:

(1) David L. Babson Growth Fund, Inc. is incorporated herein by reference
to the Registrant's Post-Effective Amendment No. 77 on Form N-1A (File
Nos. 002-15530 and 811-00901) as filed with the SEC via EDGAR on
August 30, 1999.

(2) D. L. Babson Money Market Fund, Inc. is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 26 on Form
N-1A (File Nos. 002-65761 and 811-02963) as filed with the SEC via
EDGAR on August 30, 1999.

(3) D. L. Babson Tax-Free Income Fund, Inc. is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 26 on Form
N-1A (File Nos. 002-65489 and 811-02948) as filed with the SEC via
EDGAR on August 30, 1999.

(4) Babson-Stewart Ivory International Fund, Inc. is incorporated herein
by reference to the Registrant's Post-Effective Amendment No. 16 on
Form N-1A (File Nos. 033-17762 and 811-05386) as filed with the SEC
via EDGAR on August 30, 1999.

(5) Shadow Stock Fund, Inc. is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 17 on Form N-1A (File Nos.
033-15074 and 811-05218) as filed with the SEC via EDGAR on October
30, 2001.

(6) Babson Enterprise Fund, Inc. is electronically filed herewith as
Exhibit No. EX-99.i.6.

(7) Babson Enterprise Fund II, Inc. is incorporated herein by reference to
the Registrant's Post-Effective Amendment No. 10 on Form N-1A (File
Nos. 033-39321 and 811-06252) as filed with the SEC via EDGAR on
January 22, 1999.

(8) Babson Value Fund, Inc. is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 17 on Form N-1A (File Nos.
033-93363 and 811-04114) as filed with the SEC via EDGAR on January
22, 1999.

(9) D. L. Babson Bond Trust is incorporated herein by reference to the
Registrant's Post-Effective Amendment No. 99 on Form N-1A (File Nos.
002-10002 and 811-00495) as filed with the SEC via EDGAR on January
22, 1999.

(j) Other Opinions

(1) Consent of Independent Auditors for:

(A) David L. Babson Growth Fund, Inc. is electronically filed
herewith as Exhibit No. EX-99.j.1.A.

(B) D. L. Babson Money Market Fund, Inc. is electronically filed
herewith as Exhibit No. EX-99.j.1.B.

(D) Babson-Stewart Ivory International Fund, Inc. is electronically
filed herewith as Exhibit No. EX-99.j.1.D.

(E) Shadow Stock Fund, Inc. is electronically filed herewith as
Exhibit No. EX-99.j.1.E.

(F) Babson Enterprise Fund, Inc. is electronically filed herewith as
Exhibit No. EX-99.j.1.F.

(G) Babson Enterprise Fund II, Inc. is electronically filed herewith
as Exhibit No. EX-99.j.1.G.

(H) Babson Value Fund, Inc. is electronically filed herewith as
Exhibit No. EX-99.j.1.H.

(I) D. L. Babson Bond Trust is electronically filed herewith as
Exhibit No. EX-99.j.1.I.

(2) Power of Attorney for:

(A) David L. Babson Growth Fund, Inc. is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 78 on
Form N-1A (File Nos. 002-15530 and 811-00901) as filed with the
SEC via EDGAR on October 30, 2000.

(B) D. L. Babson Money Market Fund, Inc. is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 27 on
Form N-1A (File Nos. 002-65761 and 811-02963) as filed with the
SEC via EDGAR on October 30, 2000.

(C) D. L. Babson Tax-Free Income Fund, Inc. is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 27 on
Form N-1A (File Nos. 002-65489 and 811-02948) as filed with the
SEC via EDGAR on October 30, 2000.

(D) Babson-Stewart Ivory International Fund, Inc. is electronically
filed herewith as Exhibit No. EX-99.j.2.D.

(E) Shadow Stock Fund, Inc. is incorporated herein by reference to
the Registrant's Post-Effective Amendment No. 17 on Form N-1A
(File Nos. 033-15074 and 811-05218) as filed with the SEC via
EDGAR on October 30, 2000.

(F) Babson Enterprise Fund, Inc. is incorporated herein by reference
to the Registrant's Post-Effective Amendment No. 21 on Form N-1A
(File Nos. 002-85791 and 811-03823) as filed with the SEC via
EDGAR on October 30, 2000.

(G) Babson Enterprise Fund II, Inc. is incorporated herein by
reference to the Registrant's Post-Effective Amendment No. 12 on
Form N-1A (File Nos. 033-39321 and 811-06252) as filed with the
SEC via EDGAR on October 30, 2000.

(H) Babson Value Fund, Inc. is incorporated herein by reference to
the Registrant's Post-Effective Amendment No. 19 on Form N-1A
(File Nos. 033-93363 and 811-04114) as filed with the SEC via
EDGAR on October 30, 2000.

(I) D. L. Babson Bond Trust is incorporated herein by reference to
the Registrant's Post-Effective Amendment No. 101 on Form N-1A
(File Nos. 002-10002 and 811-00495) as filed with the SEC via
EDGAR on October 30, 2000.

(k) Omitted Financial Statements

Not Applicable.

(l) Initial Capital Agreements

Not Applicable.

(m) Rule 12b-1 Plan

Not Applicable.

(n) Rule 18f-3 Plan

Not Applicable.

(p) Codes of Ethics

(1) The joint Code of Ethics of each Registrant, the investment manager
and the underwriter is electronically filed herewith as Exhibit No.
EX-99.p.1.

(2) The Code of Ethics of the sub-advisor, David L. Babson Co., Inc., is
electronically filed herewith as Exhibit No. EX-99.p.2.

(3) The Code of Ethics of the sub-advisor, Babson-Stewart Ivory
International, is electronically filed herewith as Exhibit No.
EX-99.p.3.

ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE REGISTRANT.

None

ITEM 25. INDEMNIFICATION.

For each Registrant organized as a Maryland Corporation, under the terms of
the Maryland General Corporation Law and the Registrants' governing documents,
the Registrants shall indemnify any person who was or is a director, officer, or
employee of each Registrant to the maximum extent permitted by the Maryland
General Corporation Law; provided however, that any such indemnification (unless
ordered by a court) shall be made by such Registrant only as authorized in the
specific case upon a determination that indemnification of such person is proper
in the circumstances. Such determination shall be made:

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

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

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

Also, according to the Articles of Incorporation of the David L. Babson
Growth Fund, Inc., provided that reasonable care has been exercised in the
selection of the officers, other employees, investment advisers and service
providers, no director shall be responsible or liable in any event for any
neglect or wrongdoing, nor shall any director be responsible or liable for the
acts or omissions of any other director.

For the indemnification provisions of the D. L. Babson Bond Trust, a common
law Missouri Trust, see Article VIII, "Concerning the Investment and Management
of the Trust Assets," Section 2, and Article IX, "Concerning the Trustees,"
Section 10, of the Registrant's Agreement and Declaration of Trust as
incorporated herein by reference.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER.

The principal business of Jones & Babson, Inc. is the management of the J&B
Funds and Babson Funds families of mutual funds. It also provides fund
accounting, fund administration and fund transfer agency services for
non-affiliated mutual funds, and has expertise in the tax and pension plan
field. It supervises a number of prototype and profit-sharing plan programs
sponsored by various organizations eligible to be prototype plan sponsors. The
principal business of each sub-adviser is to provide investment counsel and
advice to a wide variety of clients.

For information as to any other business, profession, vocation or employment of
a substantial nature in which each director or officer of Jones & Babson, Inc.
is or has been engaged for his own account or in the capacity of director,
officer, employee, partner or trustee within the last two fiscal years, Jones &
Babson, Inc.'s Form ADV (File #801-7330), which is currently on file with the
SEC as required by the Investment Advisers Act of 1940, as amended, (the
"Advisers Act") is hereby incorporated by reference.

For information as to any other business, profession, vocation or employment of
a substantial nature in which each director or officer of David L. Babson & Co.,
Inc. is or has been engaged for his own account or in the capacity of director,
officer, employee, partner or trustee within the last two fiscal years, David L.
Babson & Co., Inc.'s Form ADV (File #801-241), which is currently on file with
the SEC as required by the Advisers Act, is hereby incorporated by reference.

For information as to any other business, profession, vocation or employment of
a substantial nature in which each director or officer of Babson-Stewart Ivory
International is or has been engaged for his own account or in the capacity of
director, officer, employee, partner or trustee within the last two fiscal
years, Babson-Stewart Ivory International's Form ADV (File #801-30247), which is
currently on file with the SEC as required by the Advisers Act, is hereby
incorporated by reference.

ITEM 27. PRINCIPAL UNDERWRITER.

(a) Jones & Babson, Inc., the only principal underwriter of the
Registrants, also acts as principal underwriter for the following:

J&B Funds
-J&B Small Cap International Fund
-J&B Small Cap Aggressive Growth Fund
-J&B Mid Cap Aggressive Growth Fund
Buffalo Balanced Fund, Inc.
Buffalo Large Cap Fund, Inc.
Buffalo High Yield Fund, Inc.
Buffalo Small Cap Fund, Inc.
Buffalo USA Global Fund, Inc.
Buffalo Funds
-Buffalo Science & Technology Fund
-Buffalo Mid Cap Fund
Investors Mark Series Fund, Inc.
-Balanced Portfolio
-Global Fixed Income Portfolio
-Growth & Income Portfolio
-Intermediate Fixed Income Portfolio
-Large Cap Value Portfolio
-Large Cap Growth Portfolio
-Mid Cap Equity Portfolio
-Money Market Portfolio
-Small Cap Equity Portfolio
BMA Variable Annuity Account A
BMA Variable Life Account A

(b) Herewith is the information required by the following table with
respect to each director, officer or partner of the underwriter named
in answer to Item 20 of Part B:

Name and Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrants
Stephen S. Soden President, Chief Executive Director of Babson Enterprise
700 Karnes Blvd. Officer, and Director Fund II, Inc., President and
Kansas City, MO Principal Executive Officer
64108-3306 of all Funds

David L. Higley Director None
700 Karnes Blvd.
Kansas City, MO
64108-3306

Edward S. Ritter Director Director/Trustee of all
700 Karnes Blvd. Funds except Babson
Kansas City, MO Enterprise Fund II, Inc.
64108-3306

David A. Gates Director None
700 Karnes Blvd.
Kansas City, MO
64108-3306

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

Michael K. Deardorff Director None
700 Karnes Blvd.
Kansas City, MO
64108-3306

P. Bradley Adams Vice President, Chief Vice President, Treasurer,
700 Karnes Blvd. Financial Officer, Principal Financial Officer
Kansas City, MO Treasurer and Director and Principal Accounting
64108-3306 Officer of all Funds

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

William G. Cooke Vice President and Vice President and Chief
700 Karnes Blvd. Chief Compliance Officer Compliance Officer
Kansas City, MO of all Funds
64108-3306

Constance E. Martin Vice President and Director Vice President of
700 Karnes Blvd. all Funds
Kansas City, MO
64108-3306

ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.

Each account, book or other document required to be maintained by Section
31(a) of the Investment Company Act of 1940, as amended and Rules (17 CFR
270-31a-1 to 31a-3) promulgated thereunder, is in the physical possession
of Jones and Babson, Inc., at BMA Tower, 700 Karnes Blvd., Kansas City,
Missouri 64108-3306.

ITEM 29. MANAGEMENT SERVICES.

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

ITEM 30. UNDERTAKINGS.

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

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for effectiveness of
this Registration Statement under Rule 485(b) under the Securities Act and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Kansas City, and the State of
Missouri on the ____ day of September, 2002.

David L. Babson Growth Fund, Inc.
Babson Enterprise Fund, Inc.
Babson Enterprise Fund II, Inc.
D. L. Babson Money Market Fund, Inc.
D. L. Babson Tax-Free Income Fund, Inc.
D. L. Babson Bond Trust
Babson Value Fund, Inc.
Shadow Stock Fund, Inc.
Babson-Stewart Ivory International Fund, Inc.

Stephen S. Soden
Chairman and President

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed below by the following persons in the capacities and
the date(s) indicated.

Signature Title Date

Director of Babson Enterprise September __, 2002
Stephen S. Soden Fund II, Inc. only, President
and Principal Executive Officer
of all Funds

Director/Trustee of all Funds except September __, 2002
Edward S. Ritter Babson Enterprise Fund II, Inc.

Director/Trustee of all Funds September __, 2002
William H. Russell*

Director/Trustee of all Funds except September __, 2002
H. David Rybolt* Babson-Stewart Ivory International
Fund, Inc.

Director of Babson-Stewart September __, 2002
James T. Jensen* Ivory International Fund, Inc. only

Vice President, Treasurer, September __, 2002
P. Bradley Adams* Principal Financial Officer and
Principal Accounting Officer
of all Funds

* By
Stephen S. Soden
Pursuant to Powers of Attorney previously filed.

EXHIBIT INDEX

EXHIBITS EXHIBIT NO.
Articles Supplementary of Babson Enterprise Fund, Inc. EX-99.a.6.D
filed in Maryland on March 13, 2002
Amended and Restated Agreement and Declaration of Trust EX-99.a.9.A
of D. L. Babson Bond Trust dated November 2, 1944,
as restated on March 31, 1988
Amended and Restated By-laws for David L. Babson Growth EX-99.b.1
Fund, Inc., effective as of October 28, 1999
Amendment, effective May 30, 2002, to the Amended and EX-99.b.1.A
Restated By-laws for David L. Babson Growth Fund, Inc.
Amended and Restated By-laws for D. L. Babson Money Market EX-99.b.2
Fund, Inc., effective as of October 28, 1999
Amendment, effective May 30, 2002, to the Amended and EX-99.b.2.A
Restated By-laws for D. L. Babson Money Market Fund, Inc.
Amended and Restated By-laws for D. L. Babson Tax-Free EX-99.b.3
Income Fund, Inc., effective as of October 28, 1999
Amendment, effective May 30, 2002, to the Amended and EX-99.b.3.A
Restated By-laws for D.L. Babson Tax-Free Income Fund, Inc.
Amended and Restated By-laws for Babson-Stewart Ivory EX-99.b.4
International Fund, Inc., effective as of October 28, 1999
Amendment, effective May 30, 2002, to the Amended and Restated EX-99.b.4.A
By-laws for Babson-Stewart Ivory International Fund, Inc.
Amended and Restated By-laws for Shadow Stock Fund, Inc., EX-99.b.5
effective as of October 28, 1999
Amendment, effective May 30, 2002, to the Amended and EX-99.b.5.A
Restated By-laws for Shadow Stock Fund, Inc.
Amended and Restated By-laws for Babson Enterprise Fund, EX-99.b.6
Inc., effective as of October 28, 1999
Amendment, effective May 30, 2002, to the Amended and EX-99.b.6.A
Restated By-laws for Babson Enterprise Fund, Inc.
Amended and Restated By-laws for Babson Enterprise Fund II, EX-99.b.7
Inc., effective as of October 28, 1999
Amendment, effective May 30, 2002, to the Amended and EX-99.b.7.A
Restated By-laws for Babson Enterprise Fund II, Inc.
Amended and Restated By-laws for Babson Value Fund, Inc., EX-99.b.8
effective as of October 28, 1999
Amendment, effective May 30, 2002, to the Amended and EX-99.b.8.A
Restated By-laws for Babson Value Fund, Inc.
Amended and Restated By-laws for D. L. Babson Bond Trust, EX-99.b.9
effective as of October 28, 1999
Investment Counsel Agreement between Jones & Babson, Inc. EX-99.d.4.B
and Babson-Stewart Ivory International dated as
of August 1, 2000
Custodian Agreement between Babson-Stewart Ivory EX-99.g.4
International Fund, Inc. and State Street Bank
and Trust Company dated December 14, 1987
Amendment, dated October 26, 2000, to Custodian Contract between
Babson-Stewart Ivory International Fund, Inc. and State EX-99.g.4.A
Street Bank and Trust Company
Subcustodian Agreement between State Street Bank and Trust EX-99.g.4.B
Company and State Street Trust Company Canada,
dated as of February 23, 1998
Legal Opinion for Babson Enterprise Fund, Inc. EX-99.i.6
Consent of Independent Auditor for David L. Babson EX-99.j.1.A
Growth Fund, Inc.
Consent of Independent Auditor for D. L. Babson Money EX-99.j.1.B
Market Fund, Inc.
Consent of Independent Auditor for D. L. Babson EX-99.j.1.C
Tax-Free Income Fund, Inc.
Consent of Independent Auditor for Babson-Stewart EX-99.j.1.D
Ivory International Fund, Inc.
Consent of Independent Auditor for Shadow Stock Fund, Inc. EX-99.j.1.E
Consent of Independent Auditor for Babson Enterprise Fund, Inc. EX-99.j.1.F
Consent of Independent Auditor for Babson Enterprise Fund II, Inc. EX-99.j.1.G
Consent of Independent Auditor for Babson Value Fund, Inc. EX-99.j.1.H
Consent of Independent Auditor for D. L. Babson Bond Trust EX-99.j.1.I
Power of Attorney for Babson-Stewart Ivory International Fund, Inc. EX-99.j.2.D
The joint Code of Ethics of each Registrant, the investment EX-99.p.1
manager and the underwriter, Jones & Babson, Inc.
The Code of Ethics of the sub-advisor, David L. Babson Co., Inc. EX-99.p.2
The Code of Ethics of the sub-advisor, Babson-Stewart EX-99.p.3
Ivory International