August 11, 1995
Securities and Exchange Commission
450 5th Street N.W.
Washington, D. C. 20549
RE: BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
Post-Effective Amendment No. 11 File No. 33-17762
Amendment No. 12 File No. 811-5386
Ladies and Gentlemen:
Attached hereto is Post-Effective Amendment No. 11 and Amendment No. 12
to the Registration Statements for BABSON-STEWART IVORY INTERNATIONAL
FUND, INC. on Form N-1A for filing pursuant to paragraph (a) of
rule 485.
The sole purpose of this amendment is to reflect a change in the ownership
of the Fund s investment advisor. On June 30, 1995, David L. Babson & Co.
Inc., a principal owner of the investment advisor, became a wholly-owned
subsidiary of Massachusetts Mutual Life Insurance Company headquartered
in Springfield, Massachusetts. There were no changes to the personnel of
David L. Babson & Co. Inc. or Babson-Stewart Ivory International, and no
changes in the investment policies or operations of the Fund.
The only section of the prospectus affected by this change is the caption
Management and Investment Counsel. There are no other changes included
in this amendment.
It is requested that the effective date of this amendment be October 31, 1995
in order to make it effective concurrently with an additional amendment
which it is anticipated will be filed pursuant to paragraph (b) of
rule 485 on or after October 10, 1995 to supply updated financials for
the Fund.
Thank you very much for your consideration in this matter.
Sincerely,
JGD:com John G. Dyer
Enc. Attorney
<PAGE>
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 11 File No. 33-17762 [X]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
Amendment No. 12 File No. 811-5386 [X]
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
(Exact Name of Registrant as Specified in Charter)
2440 Pershing Road, G-15 Kansas City, Missouri 64108
(Address of Principal Executive Office)
Registrant s Telephone Number, including Area Code (816)471-5200
Larry D. Armel, President, BABSON-STEWART IVORY INTERNATIONAL
FUND, INC. 2440 Pershing Road, G-15, Kansas City, Missouri 64108
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering October 31, 1995
It is proposed that this filing become effective:
X on October 31, 1995 pursuant to paragraph (a) of rule 485
Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933 pursuant to Rule
24f-2 of the Investment Company Act of 1940, and will file its
required Rule 24f-2 Notice for the Registrant s fiscal year ended
June 30, 1995, by August 30, 1995
Please address inquiries and carbon copy of all
and communications to: communications to:
John G. Dyer, Esq. Mark H. Plafker, Esq.
Babson-Stewart Ivory Stradley, Ronon, Stevens & Young
International Fund, Inc. 2600 One Commerce Square
2440 Pershing Road, G-15 Philadelphia, PA 19103-7098
Kansas City, MO 64108 Telephone: (215) 564-8024
Telephone: (816) 471-5200
<PAGE>
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
CROSS REFERENCE SHEET
Form N-1A Item Number Location in Prospectus
Item 1. Cover Page . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . Not Applicable
Item 3. Condensed Financial Information . Per Share Capital and
Income Changes
Item 4. General Description of . . . . . Investment Objective
Registrant and Portfolio
Management Policy
Item 5. Management of the Fund . . . . . Officers & Directors;
Management and
Investment Counsel
Item 6. Capital Stock and Other . . . . . How to Purchase
Securities Shares; How to Redeem
Shares; How Share
Price is Determined;
General Information
and History;
Dividends,
Distributions and
their Taxation
Item 7. Purchase of Securities . . . . . Cover Page; How to
being Offered Purchase Shares;
Shareholder Services
Item 8. Redemption or Repurchase . . . . How to Redeem Shares
Item 9. Pending Legal Proceedings . . . . Not Applicable
Location in Statement
of Additional
Form N-1A Item Number Information
Item 10. Cover Page . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . Cover Page
Item 12. General Information and . . . . General Information
History and History
Item 13. Investment Objectives and . . . Investment Objectives
Policies and Policies;
Investment
Restrictions
CROSS REFERENCE SHEET (Continued)
Item 14. Management of the Fund . . . . . Officers and
Directors; Management
and Investment
Counsel
Item 15. Control Persons and Principal . . Holders of
Securities;
Management and
Investment
Counsel; Officers and
Directors
Item 16. Investment Advisory and . . . . . Management and
other Services Investment Counsel
Item 17. Brokerage Allocation . . . . . . Portfolio
Transactions
Item 18. Capital Stock and Other . . . . . General Information;
Securities Financial Statements
Item 19. Purchase, Redemption and . . . . How Share Purchases
Pricing of Securities Being are Handled;
Offered Redemption of Shares;
Financial Statements
Item 20. Tax Status . . . . . . . . . . . Dividends,
Distributions and
their Taxation
Item 21. Underwriters . . . . . . . . . . How the Fund s Shares
are Distributed
Item 22. Calculation of Yield Quotations . Performance Measures
of Money Market Fund
Item 23. Financial Statement . . . . . . . Financial Statements
<PAGE>
PROSPECTUS
October 31, 1995
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
Managed and Distributed By:
JONES & BABSON, INC.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Toll-Free 1-800-4-BABSON
(1-800-422-2766)
In the Kansas City area 471-5200
Investment Counsel:
BABSON-STEWART IVORY INTERNATIONAL
Cambridge, Massachusetts
INVESTMENT OBJECTIVE
A no-load diversified mutual fund that seeks a favorable total
return (from market appreciation and income) by investing
primarily in a diversified portfolio of equity securities (common
stocks and securities convertible into common stocks) of
established companies whose primary business is carried on
outside the United States. The Fund diversifies its investments
among various countries and a number of different industries.
(See "Investment Objective and Portfolio Management Policy" on
page 4 of the prospectus.) There is no guarantee that the Fund's
objective will be achieved. (For a discussion of special risk
considerations see page 5 of this prospectus.)
PURCHASE INFORMATION
Minimum Investment
Initial Purchase $ 2,500
Initial IRA and Uniform Transfers (Gifts)
to Minors Purchases $ 250
Subsequent Purchase:
By Mail $ 100
By Telephone or Wire $ 1,000
All Automatic Purchases $ 100
Shares are purchased and redeemed at net asset value. There are
no sales, redemption or Rule 12b-1 distribution charges. If you
need further information, please call the Fund at the telephone
numbers indicated.
ADDITIONAL INFORMATION
This prospectus should be read and retained for future reference.
It contains the information that you should know before you
invest. A "Statement of Additional Information" of the same date
as this prospectus has been filed with the Securities and
Exchange Commission and is incorporated by reference. Investors
desiring additional information about the Fund may obtain a copy
without charge by writing or calling the Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
TABLE OF CONTENTS
Page
Fund Expenses 2
Financial Highlights 3
Investment Objective and Portfolio Management Policy 4
Special Risk Considerations 5
Investment Restrictions 6
Performance Measures 6
How to Purchase Shares 7
Initial Investments 7
Investments Subsequent to Initial Investment 8
Telephone Investment Service 8
Automatic Monthly Investment Plan 8
How to Redeem Shares 8
Systematic Redemption Plan 10
How to Exchange Shares Between Babson Funds 10
How Share Price is Determined 11
Officers and Directors 11
Management and Investment Counsel 11
Custodian 12
General Information and History 13
Dividends, Distributions and Their Taxation 13
Shareholder Services 14
Shareholder Inquiries 15
BABSON- STEWART IVORY INTERNATIONAL FUND, INC.
FUND EXPENSES
Shareholder Transaction Expenses
Maximum sales load imposed on purchases None
Maximum sales load imposed on reinvested dividends None
Deferred sales load None
Redemption fee None
Exchange fee None
Annual Fund Operation Expenses
(as a percentage of average net assets)
Management fees .95%
12b-1 fees None
Other expenses ___%
Total Fund operating expenses ____%
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return and (2) redemption at the end of
each time period:
1 Year 3 Year 5 Year 10 Year
$__ $__ $__ $___
The above information is provided in order to assist you in
understanding the various costs and expenses that a shareholder
of the Fund will bear directly or indirectly. The expenses set
forth above are for the fiscal year ended June 30, 1995. The
example should not be considered a representation of past or
future expenses. Actual expenses may be greater or less than
those shown.
FINANCIAL HIGHLIGHTS
(To be supplied by further amendment)
INVESTMENT OBJECTIVE AND PORTFOLIO MANAGEMENT POLICY
Babson-Stewart Ivory International Fund is a no-load open-end,
diversified management investment company, commonly known as a
mutual fund. The Fund seeks a favorable total return (from market
appreciation and income) by investing primarily in a diversified
portfolio of equity securities (common stocks and securities
convertible into common stocks) of established companies whose
primary business is carried on outside the United States. The
Fund will use the portfolio management policies described below
to generate a favorable total return consisting of interest,
dividend and other current income and appreciation in the value
of the Fund's portfolio securities by investing in equity
securities which offer good growth potential and in many cases
pay dividends. The Fund will look at such factors as the location
of the company's assets, personnel, sales and earnings, to
determine whether a company's primary business is carried on
outside the United States. The Fund diversifies its investments
among various countries and a number of different industries.
There is no guarantee that the Fund's objective will be achieved.
Investments in international securities markets involve risks in
addition to those risks associated with investments in the United
States (See "Special Risk Considerations", page 5). Therefore,
the Fund should be considered only as a means for international
diversification and not as a complete investment program. The
Fund is designed for long-term investors who are able to accept
the risks of international investing. The Fund's investment
objective and policy as described in this section will not be
changed without approval of a majority of the Fund's outstanding
shares.
The Fund is designed to provide investors with a diversified
participation in international businesses. Over the years, some
foreign businesses have been especially successful in their
particular industries and some foreign stock markets have
out performed 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. Because the securities in which the Fund invests
trade primarily in foreign markets, any rise or fall of the U.S.
dollar in relation to foreign currencies will affect their U.S.
dollar value and thereby will affect the investment performance
of the Fund. A change in the value of any foreign currency
relative to the dollar will result in a corresponding change in
the dollar value of Fund assets denominated or traded in that
currency.
The Fund primarily invests in equity securities of seasoned
companies which are listed on foreign stock exchanges and which
the investment counsel considers to have attractive
characteristics in terms of profitability, growth and financial
resources. "Seasoned" and "established" companies are those
companies which, in the opinion of the investment counsel, are
known for the quality and acceptance of their products or
services and for their ability to generate profits and in many
cases pay dividends. The Fund may invest in fixed-income
securities of foreign governments or companies when the
investment counsel believes that prevailing market, economic,
political or currency conditions warrant such investments. While
most foreign securities are not subject to standard credit
ratings, the investment counsel intends to select "investment
grade" issues of foreign debt securities which are comparable to
a Baa or higher rating by Moody's Investors Service, Inc. or a
BBB or higher rating by Standard and Poor's Corporation, based on
available information, and taking into account liquidity and
quality issues. Securities rated BBB or Baa are considered to be
medium grade and may have speculative characteristics. From time
to time the Fund may purchase American Depository Receipts
("ADR's"), which represent foreign securities traded on U.S.
exchanges or in the over-the-counter market, European Depository
Receipts ("EDR's") and International Depository Receipts
("IDR's"), in bearer form, which are designed for use in European
and other securities markets. The Fund may invest in securities
which are not listed on an exchange. Generally, the volume of
trading in an unlisted common stock is less than the volume of
trading in a listed stock. This means that the degree of market
liquidity of some stocks in which the Fund invests may be
relatively limited. When the Fund disposes of such a stock it may
have to offer the shares at a discount from recent prices or sell
the shares in small lots over an extended period of time.
In order to expedite settlement of portfolio transactions and to
minimize currency value fluctuations, the Fund may purchase
foreign currencies and/or engage in forward foreign currency
transactions. The Fund will not engage in forward foreign
currency exchange contracts for speculative purposes. A forward
foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed
upon by the parties, at a price set at the time of the contract.
These contracts may be bought or sold to protect the Fund, to
some degree, against a possible loss resulting from an adverse
change in the relationship between foreign currencies and the
U.S. dollar. This method of protecting the value of the Fund's
investment securities against a decline in the value of a
currency does not eliminate fluctuations in the underlying prices
of the securities. It establishes a rate of exchange which one
can achieve at some future point in time. Although such contracts
tend to minimize the risk of loss due to a decline in the value
of the hedged currency, at the same time, they tend to limit any
potential gain which might result should the value of such
currency increase.
The Fund intends to diversify investments broadly among countries
and normally to have represented in the portfolio business
activities of not less than three foreign countries. Generally,
the Fund does not intend to invest more than 35% of its total
assets in any one particular country. However, the Fund may, at
times, temporarily invest a substantial portion of its assets in
one or more of such countries if economic and business conditions
warrant such investments.
From time to time, the Fund may invest in companies located in
developing countries. A developing country is generally
considered to be a country which is in the initial stages of its
industrialization cycle with a low per capita gross national
product. Compared to investment in the United States and other
developed countries, investing in the equity and fixed income
markets of developing countries involves exposure to relatively
unstable governments, economic structures that are generally less
mature and based on only a few industries and securities markets
which trade a small number of securities. Prices on securities
exchanges in developing countries tend to be more volatile than
those in developed countries. The Fund will not invest more than
20% of its total assets in companies located in developing
countries.
Under normal circumstances the Fund will invest at least 65% of
its assets in equity securities of foreign issuers. However, to
meet the liquidity needs of the Fund or when the Fund believes
that investments should be deployed in a temporary defensive
posture because of economic or market conditions, the Fund may
invest all or a major portion of its assets in short-term debt
securities denominated in U.S. dollars, including U.S. treasury
bills and other securities of the U.S. government and its
agencies, bankers acceptances and certificates of deposit,
meeting the quality ratings set forth under the heading
"Investment Objectives and Policies" in the "Statement of
Additional Information," as well as enter into repurchase
agreements maturing in seven days or less with U.S. banks and
broker-dealers which are collateralized by such securities. The
Fund may also hold cash and time deposits in foreign banks,
denominated in any major foreign currency.
Repurchase agreements involve investments in debt securities
where the seller (broker-dealer or bank) agrees to repurchase the
securities from the Fund at cost plus an agreed-to interest rate
within a specified time. A risk of repurchase agreements is that
if the seller seeks the protection of the bankruptcy laws, the
Fund's ability to liquidate the security involved could be
temporarily impaired, and it subsequently might incur a loss if
the value of the security declines or if the other party to a
repurchase agreement defaults on its obligation. There is also
the risk that the Fund may be delayed or prevented from
exercising its rights to dispose of the collateral.
For the three years ended June 30, 1995, the total dollar amount
of brokerage commissions paid by the Fund and the annual
portfolio turnover rates were as follows:
Portfolio
Fiscal Brokerage Turnover
Year Commissions Rate
1993 $ 91,419 49%
1994 $ 143,423 60%
1995 $ _______ __%
SPECIAL RISK CONSIDERATIONS
Investing in foreign securities involves special risk
considerations including those described herein which are not
normally associated with investing in United States securities.
These considerations include: changes in currency rates; exchange
control regulations; costs incurred in connection with
conversions between various currencies (fees may also be incurred
when converting foreign investments to U.S. dollars);
availability of less financial information than comparable United
States companies; lack of uniform accounting, auditing and
financial reporting requirements; less liquidity and more
volatility than securities listed on the New York Stock Exchange
due to substantially lower trading volume; possibly lower sales
prices in the event of forced liquidation of securities in order
to meet unanticipated cash requirements; fixed commissions on
foreign stock exchanges which are generally higher than
negotiated commissions on United States exchanges, in addition to
less supervision and regulation of such exchanges; additional
custodial costs associated with maintaining foreign portfolio
securities; and the possibility of expropriation of assets;
confiscatory taxation; imposition of withholding of taxes prior
to payment of dividends or other distributions; political or
social instability; or diplomatic developments which could affect
United States investments in those countries. The Fund may invest
in countries which are known to experience delays in settlements.
Under such circumstances, the Fund pays for securities on the
settlement date, even though physical delivery of the securities
to the Fund's custodian will occur at a later date. The delay in
settlement could result in losses to the Fund when it is unable
to sell portfolio securities because the securities have not been
delivered to the Fund.
INVESTMENT RESTRICTIONS
In addition to the investment objective and portfolio management
policies set forth under the caption "Investment Objective and
Portfolio Management Policy," the Fund is subject to certain
other restrictions which may not be changed without approval of
the lesser of: (1) at least 67% of the voting securities present
at a meeting if the holders of more than 50% of the outstanding
securities of the Fund are present or represented by proxy, or
(2) more than 50% of the outstanding voting securities of the
Fund. Among these restrictions, the more important ones are that
the Fund will not purchase the securities of any one issuer,
excluding obligations of the U.S. government, if more than 5% of
the Fund's total assets would be invested in the securities of
such issuer, or the Fund would hold more than 10% of any class of
securities of such issuer; the Fund will not make any loan (the
purchase of a security subject to a repurchase agreement or the
purchase of a portion of an issue of publicly distributed debt
securities is not considered the making of a loan); and the Fund
will not borrow or pledge its credit under normal circumstances,
except up to 10% of its total assets (computed at the lower of
fair market value or cost) for temporary or emergency purposes,
and not for the purpose of leveraging its investments; and
provided further that any borrowings shall have asset coverage of
at least 3 to 1. The Fund will not buy securities while
borrowings are outstanding. The full text of these restrictions
are set forth in the "Statement of Additional Information."
PERFORMANCE MEASURES
From time to time, the Fund may advertise its performance in
various ways, as summarized below. Further discussion of these
matters also appears in the "Statement of Additional
Information." A discussion of Fund performance is included in the
Fund's Annual Report to Shareholders which is available from the
Fund upon request at no charge.
Total Return
The Fund may advertise "average annual total return" over various
periods of time. Such total return figures show the average
percentage change in value of an investment in the Fund from the
beginning date of the measuring period to the end of the
measuring period. These figures reflect changes in the price of
the Fund's shares and assume that any income dividends and/or
capital gains distributions made by the Fund during the period
were reinvested in shares of the Fund. Figures will be given for
recent one-, five- and ten-year periods (if applicable), and may
be given for other periods as well (such as from commencement of
the Fund's operations, or on a year-by-year basis). When
considering "average" total return figures for periods longer
than one year, it is important to note that a Fund's annual total
return for any one year in the period might have been greater or
less than the average for the entire period.
Performance Comparisons
In advertisements or in reports to shareholders, the Fund may
compare its performance to that of other mutual funds with
similar investment objectives and to stock or other relevant
indices. For example, it may compare its performance to rankings
prepared by Lipper Analytical Services, Inc. (Lipper), a widely
recognized independent service which monitors the performance of
mutual funds. The Fund may compare its performance to the
Standard & Poor's 500 Stock Index (S&P 500), an index of
unmanaged groups of common stocks, the Dow Jones Industrial
Average, a recognized unmanaged index of common stocks of 30
industrial companies listed on the New York Stock Exchange, the
Morgan Stanley EAFE Index, an index of companies located in
Europe, Australia and the Far East, or the Consumer Price Index.
Performance information, rankings, ratings, published editorial
comments and listings as reported in national financial
publications such as Kiplinger's Personal Finance Magazine,
Business Week, Institutional Investor, The Wall Street Journal,
Mutual Fund Forecaster, No-Load Investor, Money, Forbes, Fortune
and Barron's may also be used in comparing performance of the
Fund. Performance comparisons should not be considered as
representative of the future performance of any Fund. Further
information regarding the performance of the Fund is contained in
the "Statement of Additional Information."
Performance rankings, recommendations, published editorial
comments and listings reported in Money, Barron's, Kiplinger's
Personal Finance Magazine, Financial World, Forbes, U.S. News &
World Report, Business Week, The Wall Street Journal, Investors
Business Daily, USA Today, Fortune and Stangers's may also be
cited (if the Fund is listed in any such publication) or used for
comparison, as well as performance listings and rankings from
Morningstar Mutual Funds, Personal Finance, Income and Safety,
The Mutual Fund Letter, No-Load Fund Investor, United Mutual
Fund Selector, No-Load Fund Analyst, No-Load Fund X, Louis
Rukeyser's Wall Street newsletter, Donoghue's Money Letter, CDA
Investment Technologies, Inc., Wiesenberger Investment Companies
Service, and Donoghue s Mutual Fund Almanac.
HOW TO PURCHASE SHARES
Shares are purchased at net asset value (no sales charge) from
the Fund through its agent, Jones & Babson, Inc., Three Crown
Center, 2440 Pershing Road, Suite G-15, Kansas City, MO 64108.
For information call toll free 1-800-4-BABSON (1-800-422-2766),
or in the Kansas City area 471-5200. If an investor wishes to
engage the services of any other broker to purchase (or redeem)
shares of the Fund, a fee may be charged by such broker. The Fund
will not be responsible for the consequences of delays including
delays in the banking or Federal Reserve wire systems.
You do not pay a sales commission when you buy shares of the
Fund. Shares are purchased at the Fund's net asset value (price)
per share next effective after a purchase order and payment have
been received by the Fund. In the case of certain institutions
which have made satisfactory payment arrangements with the Fund,
orders may be processed at the net asset value per share next
effective after a purchase order has been received by the Fund.
The Fund reserves the right in its sole discretion to withdraw
all or any part of the offering made by this prospectus or to
reject purchase orders when, in the judgment of management, such
withdrawal or rejection is in the best interest of the Fund and
its shareholders. The Fund also reserves the right at any time to
waive or increase the minimum requirements applicable to initial
or subsequent investments with respect to any person or class of
persons, which include shareholders of the Fund's special
investment programs. The Fund reserves the right to refuse to
accept orders for fund shares unless accompanied by payment,
except when a responsible person has indemnified the Fund against
losses resulting from the failure of investors to make payment.
In the event that the Fund sustains a loss as the result of
failure by a purchaser to make payment, the Fund's underwriter,
Jones & Babson, Inc. will cover the loss.
INITIAL INVESTMENTS
Initial investments - By mail. You may open an account and make
an investment by completing and signing the application which
accompanies this prospectus. Make your check ($2,500 minimum
unless your purchase is pursuant to an IRA or the Uniform
Transfers (Gifts) to Minors Act in which case the minimum initial
purchase is $250) payable to UMB Bank, n.a. Mail your application
and check to:
Babson-Stewart Ivory International Fund, Inc.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, Missouri 64108
Initial investments - By wire. You may purchase shares of the Fund
by wiring the purchase price ($2,500 minimum) through the Federal
Reserve Bank to UMB Bank, n.a. Prior to sending your money, you
must call the Fund toll free 1-800-4-BABSON (1-800-422-2766), or
in the Kansas City area 471-5200 and provide it with the identity
of the registered account owner, the registered address, the
Social Security or Taxpayer Identification Number of the
registered owner, the amount being wired, the name and telephone
number of the wiring bank and the person to be contacted in
connection with the order. You will then be provided a Fund
account number, after which you should instruct your bank to wire
the specified amount, along with the account number and the
account registration to:
UMB Bank, n.a.
Kansas City, Missouri, ABA #101000695
/CTR/BNF=State Street Bank & Trust,
Babson-Stewart Ivory International
Fund, Inc./AC=987015-6105
OBI=(assigned Fund number and name in which registered).
A completed application must be sent to the Fund as soon as
possible so the necessary remaining information can be recorded
in your account. No redemptions can occur until this is done.
INVESTMENTS SUBSEQUENT TO INITIAL INVESTMENT
You may add to your Fund account at any time in amounts of $100
or more if purchases are made by mail, or $1,000 or more if
purchases are made by wire or telephone. Automatic monthly
investments must be in amounts of $100 or more.
Checks should be mailed to the Fund at its address, but make them
payable to UMB Bank, n.a. Always identify your account number or
include the detachable reminder stub which accompanies each
confirmation.
Wire share purchases should include your account registration,
your account number and the Babson Fund in which you are
purchasing shares. It also is advisable to notify the Fund by
telephone that you have sent a wire purchase order to the bank.
TELEPHONE INVESTMENT SERVICE
To use the Telephone Investment Service, you must first establish
your Fund account and authorize telephone orders in the
application form, or, subsequently, on a special authorization
form provided upon request. If you elect the Telephone Investment
Service, you may purchase Fund shares by telephone and authorize
the Fund to draft your checking account for the cost of the
shares so purchased. You will receive the next available price
after the Fund has received your telephone call. Availability and
continuance of this privilege is subject to acceptance and
approval by the Fund and all participating banks. During periods
of increased market activity, you may have difficulty reaching
the Fund by telephone, in which case you should contact the Fund
by mail or telegraph. The Fund will not be responsible for the
consequences of delays including delays in the banking or Federal
Reserve wire systems.
The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if such
procedures are not followed, the Fund may be liable for losses
due to unauthorized or fraudulent instructions. Such procedures
may include, but are not limited to requiring personal
identification prior to acting upon instructions received by
telephone, providing written confirmations of such transactions,
and/or tape recording of telephone instructions.
The Fund reserves the right to initiate a charge for this service
and to terminate or modify any or all of the privileges in
connection with this service at any time upon 15 days written
notice to shareholders, and to terminate or modify the privileges
without prior notice in any circumstances where such termination
or modification is in the best interest of the Fund and its
investors.
AUTOMATIC MONTHLY INVESTMENT PLAN
You may elect to make monthly investments in a constant dollar
amount from your checking account ($100 minimum). The Fund will
draft your checking account on the same day each month in the
amount you authorize in your application, or, subsequently, on a
special authorization form provided upon request. Availability
and continuance of this privilege is subject to acceptance and
approval by the Fund and all participating banks. If the date
selected falls on a day upon which the Fund shares are not
priced, investment will be made on the first date thereafter upon
which Fund shares are priced. The Fund will not be responsible
for the consequences of delays including delays in the banking or
Federal Reserve wire systems.
The Fund reserves the right to initiate a charge for this service
and to terminate or modify any or all of the privileges in
connection with this service at any time upon 15 days written
notice to shareholders, and to terminate or modify the privileges
without prior notice in any circumstances where such termination
or modification is in the best interest of the Fund and its
investors.
HOW TO REDEEM SHARES
The Fund will redeem shares at the price (net asset value per
share) next computed after receipt of a redemption request in
"good order." (See "How Share Price is Determined," page 11.)
A written request for redemption, together with an endorsed share
certificate where a certificate has been issued, must be received
by the Fund in order to constitute a valid tender for redemption.
For authorization of redemptions by a corporation, it will also
be necessary to have an appropriate certified copy of resolutions
on file with the Fund before a redemption request will be
considered in "good order." In the case of certain institutions
which have made satisfactory redemption arrangements with the
Fund, redemption orders may be processed by facsimile or
telephone transmission at net asset value per share next
effective after receipt by the Fund. If an investor wishes to
engage the services of any other broker to redeem (or purchase)
shares of the Fund, a fee may be charged by such broker.
To be in "good order" the request must include the following:
(1) A written redemption request or stock assignment (stock
power) containing the genuine signature of each registered owner
exactly as the shares are registered, with clear identification
of the account by registered name(s) and account number and the
number of shares or the dollar amount to be redeemed;
(2) any outstanding stock certificates representing shares
to be redeemed;
(3) signature guarantees as required; and (See
Signature Guarantees on this page.)
(4) any additional documentation which the Fund may deem
necessary to insure a genuine redemption.
Where additional documentation is normally required to support
redemptions as in the case of corporations, fiduciaries, and
others who hold shares in a representative or nominee capacity
such as certified copies of corporate resolutions, or
certificates of incumbency, or such other documentation as may be
required under the Uniform Commercial Code or other applicable
laws or regulations, it is the responsibility of the shareholder
to maintain such documentation on file and in a current status. A
failure to do so will delay the redemption. If you have questions
concerning redemption requirements, please write or telephone the
Fund well ahead of an anticipated redemption in order to avoid
any possible delay.
Requests which are subject to special conditions or which specify
an effective date other than as provided herein cannot be
accepted. All redemption requests must be transmitted to the Fund
at Three Crown Center, 2440 Pershing Road, Suite G-15, Kansas
City, Missouri 64108. The Fund will redeem shares at the price
(net asset value per share) next computed after receipt of a
redemption request in "good order." (See "How Share Price is
Determined," page 11.)
The Fund will endeavor to transmit redemption proceeds to the
proper party, as instructed, as soon as practicable after a
redemption request has been received in "good order" and
accepted, but in no event later than the seventh day thereafter.
Transmissions are made by mail unless an expedited method has
been authorized and specified in the redemption request. The Fund
will not be responsible for the consequences of delays including
delays in the banking or Federal Reserve wire systems.
Redemptions will not become effective until all documents in the
form required have been received. In the case of redemption
requests made within 15 days of the date of purchase, the Fund
will delay transmission of proceeds until such time as it is
certain that unconditional payment in federal funds has been
collected for the purchase of shares being redeemed or 15 days
from the date of purchase. You can avoid the possibility of delay
by paying for all of your purchases with a transfer of federal
funds.
Signature Guarantees are required in connection with all
redemptions by mail or changes in share registration except as
hereinafter provided. These requirements may be waived by the
Fund in certain instances where it appears reasonable to do so
and will not unduly affect the interests of other shareholders.
Signature(s) must be guaranteed by an "eligible Guarantor
institution" as defined under Rule 17Ad-15 under the Securities
Exchange Act of 1934. Eligible guarantor institutions include:
(1) national or state banks, savings associations, savings and
loan associations, trust companies, savings banks, industrial
loan companies and credit unions; (2) national securities
exchanges, registered securities associations and clearing
agencies; or (3) securities broker/dealers which are members of a
national securities exchange or clearing agency or which have a
minimum net capital of $100,000. A notarized signature will not
be sufficient for the request to be in proper form.
Signature guarantees will be waived for mail redemptions of
$10,000 or less, but they will be required if the checks are to
be payable to someone other than the registered owner(s), or are
to be mailed to an address different from the registered address
of the shareholder(s), or where there appears to be a pattern of
redemptions designed to circumvent the signature guarantee
requirement, or where the Fund has other reason to believe that
this requirement would be in the best interests of the Fund and
its shareholders.
The right of redemption may be suspended or the date of payment
postponed beyond the normal seven-day period when the New York
Stock Exchange is closed or under emergency circumstances as
determined by the Securities and Exchange Commission. Further,
the Fund reserves the right to redeem its shares in kind under
certain circumstances. If shares are redeemed in kind, the
shareholders may incur brokerage costs when converting into cash.
Additional details are set forth in the "Statement of Additional
Information."
Due to the high cost of maintaining smaller accounts, the Board
of Directors has authorized the Fund to close shareholder
accounts where their value falls below the current minimum
initial investment requirement at the time of initial purchase as
a result of redemptions and not as the result of market action,
and remains below this level for 60 days after each such
shareholder account is mailed a notice of: (1) the Fund's
intention to close the account, (2) the minimum account size
requirement, and (3) the date on which the account will be closed
if the minimum size requirement is not met.
Further, the Fund reserves the right to redeem its shares in kind
under certain circumstances. The Fund has elected to be governed
by Rule 18f-1 under the Investment Company Act of 1940 pursuant
to which the Fund is obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the Fund's net asset value
during any 90-day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, the Fund
may redeem the excess in kind. If shares are redeemed in kind,
the redeeming shareholder may incur brokerage costs when
converting the assets into cash. The method of valuing securities
used to make redemptions in kind will be the same as the method
of valuing portfolio securities described under "How Share Price
is Determined" in the prospectus, and such valuation will be made
as of the same time the redemption price is determined.
Additional details are set forth in the "Statement of Additional
Information."
SYSTEMATIC REDEMPTION PLAN
If you own shares in an open account valued at $10,000 or more,
and desire to make regular monthly or quarterly withdrawals
without the necessity and inconvenience of executing a separate
redemption request to initiate each withdrawal, you may enter
into a Systematic Withdrawal Plan by completing forms obtainable
from the Fund. For this service, the manager may charge you a fee
not to exceed $1.50 for each withdrawal. Currently the manager
assumes the additional expenses arising out of this type of plan,
but it reserves the right to initiate such a charge at any time
in the future when it deems it necessary. If such a charge is
imposed, participants will be provided 30 days notice.
Subject to a $50 minimum, you may withdraw each period a
specified dollar amount. Shares also may be redeemed at a rate
calculated to exhaust the account at the end of a specified
period of time.
Dividends and capital gains distributions must be reinvested in
additional shares. Under all withdrawal programs, liquidation of
shares in excess of dividends and distributions reinvested will
diminish and may exhaust your account, particularly during a
period of declining share values.
You may revoke or change your plan to redeem all of your
remaining shares at any time. Withdrawal payments will continue
until the shares are exhausted or until the Fund or you terminate
the plan by written notice to the other.
HOW TO EXCHANGE SHARES BETWEEN BABSON FUNDS
Shareholders may exchange their Fund shares, which have been held
in open account for 30 days or more, and for which good payment
has been received, for identically registered shares of any other
Fund in the Babson Fund Group which is legally registered for
sale in the state of residence of the investor, except Babson
Enterprise Fund, Inc., provided that the minimum amount exchanged
has a value of $1,000 or more and meets the minimum investment
requirement of the Fund or Portfolio into which it is exchanged.
Effective at the close of business on January 31, 1992, the
Directors of the Babson Enterprise Fund, Inc. took action to
limit the offering of that Fund's shares. Babson Enterprise
Fund, Inc. will not accept any new accounts, including IRAs and
other retirement plans, until further notice, nor will Babson
Enterprise Fund accept transfers from shareholders of other
Babson Funds, who were not shareholders of record of Babson
Enterprise Fund at the close of business on January 31, 1992.
Investors may want to consider purchasing shares in Babson
Enterprise Fund II, Inc. as an alternative.
To authorize the Telephone/Telegraph Exchange Privilege, all
registered owners must sign the appropriate section on the
original application, or the Fund must receive a special
authorization form, provided upon request. During periods of
increased market activity, you may have difficulty reaching the
Fund by telephone, in which case you should contact the Fund by
mail or telegraph. The Fund reserves the right to initiate a
charge for this service and to terminate or modify any or all of
the privileges in connection with this service at any time or
without prior notice under any circumstances where continuance of
these privileges would be detrimental to the Fund or its
shareholders such as an emergency, or where the volume of such
activity threatens the ability of the Fund to conduct business,
or under any other circumstances, upon 60 days written notice to
shareholders. The Fund will not be responsible for the
consequences of delays including delays in the banking or Federal
Reserve wire systems.
The Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if such
procedures are not followed, the Fund may be liable for losses
due to unauthorized or fraudulent instructions. Such procedures
may include, but are not limited to requiring personal
identification prior to acting upon instructions received by
telephone, providing written confirmations of such transactions,
and/or tape recording of telephone instructions.
Exchanges by mail may be accomplished by a written request
properly signed by all registered owners identifying the account,
the number of shares or dollar amount to be redeemed for
exchange, and the Babson Fund into which the account is being
transferred.
If you wish to exchange part or all of your shares in the Fund
for shares of another Fund or Portfolio in the Babson Fund Group,
you should review the prospectus of the Fund to be purchased,
which can be obtained from Jones & Babson, Inc. Any such exchange
will be based on the respective net asset values of the shares
involved. An exchange between Funds involves the sale of an
asset. Unless the shareholder account is tax deferred, this is a
taxable event.
HOW SHARE PRICE IS DETERMINED
In order to determine the price at which new shares will be sold
and at which issued shares presented for redemption will be
liquidated, the net asset value per share is computed once daily,
Monday through Friday, at the specific time during the day that
the Board of Directors sets at least annually, except on days on
which changes in the value of portfolio securities will not
materially affect the net asset value, or days during which no
security is tendered for redemption and no order to purchase or
sell such security is received by the Fund, or customary
holidays. For a list of the holidays during which the Fund is not
open for business, see "How Share Price is Determined" in the
"Statement of Additional Information."
The price at which new shares of the Fund will be sold and at
which issued shares presented for redemption will be liquidated
is computed once daily at 4:00 P.M. (Eastern Time), except on
those days when the Fund is not open for business.
The per share calculation is made by subtracting from the Fund's
total assets any liabilities and then dividing into this amount
the total outstanding shares as of the date of the calculation.
Each security listed on a U.S. Exchange is valued at its last
sale price on the exchange on the date as of which assets are
valued. Securities listed on a foreign exchange are valued at the
latest quoted sales price available before the time when assets
are valued. Where the security is listed on more than one
exchange, the Fund will use the price of that exchange which it
generally considers to be the principal exchange on which the
stock is traded. Lacking sales, the security is valued at the
mean between the current closing bid and asked prices. An
unlisted security for which over-the-counter market quotations
are readily available is valued at the mean between the last
current bid and asked prices. When market quotations are not
readily available, any security or other asset is valued at its
fair value as determined in good faith by the Board of Directors.
For the purposes of determining the Fund s net asset value per
share, all assets and liabilities initially expressed in foreign
currencies will be translated into U.S. dollars at the exchange
rate in London last quoted by a major bank. If such quotations
are not available as of 4:00 p.m. (Eastern time), the rate of
exchange will be determined in accordance with policies
established in good faith by the Board of Directors.
OFFICERS AND DIRECTORS
The officers of the Fund manage its day-to-day operations. The
Fund's manager and its officers are subject to the supervision
and control of the Board of Directors. A list of the officers and
directors of the Fund and a brief statement of their present
positions and principal occupations during the past five years is
set forth in the "Statement of Additional Information."
MANAGEMENT AND INVESTMENT COUNSEL
Jones & Babson, Inc. was founded in 1960. It organized the Fund
in 1987, and acts as its manager and principal underwriter.
Pursuant to the current Management Agreement, Jones & Babson,
Inc. provides or pays the cost of all management, supervisory and
administrative services required in the normal operation of the
Fund. This includes investment management and supervision; fees
of the independent public accountants and legal counsel;
remuneration of officers, directors and other personnel; rent;
shareholder services, including the maintenance of the
shareholder accounting system and transfer agency; and such other
items as are incidental to corporate administration.
Not considered normal operating expenses, and therefore payable
by the Fund, are fees for pricing services, custodian fees,
taxes, interest, governmental charges and fees, including
registration of the Fund and its shares with the Securities and
Exchange Commission and the Securities Departments of the various
States, brokerage costs, dues, and all extraordinary costs and
expenses including but not limited to legal and accounting fees
incurred in anticipation of or arising out of litigation or
administrative proceedings to which the Fund, its officers or
directors may be subject or a party thereto.
As a part of the Management Agreement, Jones & Babson, Inc.
employs at its own expense Babson-Stewart Ivory International, a
partnership formed in 1987 by David L. Babson & Co. of Cambridge,
Massachusetts and Stewart Ivory & Company (International) Ltd., a
wholly owned subsidiary of Stewart Ivory (Holdings), Ltd., of
Edinburgh, Scotland, as its investment counsel to assist in the
investment advisory function.
On June 30, 1995, David L. Babson & Co. Inc. became a
wholly-owned subsidiary, of Massachusetts Mutual Life
Insurance Company headquartered in Springfield, Massachusetts.
It serves a broad variety of individual, corporate and other
institutional clients by maintaining an extensive research
and analytical staff. David L. Babson & Co. Inc. was founded in 1940
Stewart Ivory & Company (International) Ltd. and its
predecessor organizations have been managing investments
internationally from Edinburgh since 1873, when the first
Scottish investment trust, The Scottish American Investment
Company, PLC, was formed. It remains a client of the present day
Stewart Ivory & Company Ltd. The partnership, Babson-Stewart
Ivory International, has an experienced investment management
staff which eliminates the need for Jones & Babson, Inc. and the
Fund to maintain an extensive duplicate staff, with the
consequent increase in the cost of investment advisory service.
The cost of its services is included in the fee of Jones &
Babson, Inc. The Management Agreement limits the liability of the
Manager and its investment counsel, as well as their officers,
directors and personnel, to acts or omissions involving willful
malfeasance, bad faith, gross negligence, or reckless disregard
of their duties. John G.L. Wright has been the portfolio manager
of Babson-Stewart Ivory International Fund since its inception in
1988. He joined Stewart Fund Managers (which became
Stewart-Ivory) in 1971 and has 26 years of international
investment management experience.
As compensation for the services provided by Jones & Babson,
Inc., the Fund pays Jones & Babson, Inc. a fee at the annual rate
of 95/100 of one percent (.95%) of its average daily net assets.
The annual fee charged by Jones & Babson, Inc. is higher than the
fees of most other investment advisers whose charges cover only
investment advisory services with all remaining operational
expenses absorbed directly by the Fund. Yet, it compares
favorably with these other advisers when all expenses to Fund
shareholders are taken into account. The fee, from which Jones &
Babson, Inc. pays Babson-Stewart Ivory International a fee of
475/1000 of one percent (.475%) of average daily total net
assets, is computed daily and paid semimonthly. The total
expenses of the Fund for the fiscal year ended June 30, 1995,
amounted to _______ of one percent (____%) of the average net
assets. The cost of the services of Babson-Stewart Ivory
International is included in the fee of Jones & Babson, Inc.
Certain officers and directors of the Fund are also officers or
directors or both of other Babson Funds, Jones & Babson, Inc.,
David L. Babson & Co. Inc., Babson-Stewart Ivory International or
Stewart Ivory (Holdings) Ltd. or its subsidiaries.
Jones & Babson, Inc. is a wholly-owned subsidiary of Business
Men's Assurance Company of America which is considered to be a
controlling person under the Investment Company Act of 1940.
Assicurazioni Generali S.p.A., an insurance organization founded
in 1831 based in Trieste, Italy, is considered to be a
controlling person and is the ultimate parent of Business Men's
Assurance Company of America. Mediobanca is a 5% owner of
Generali.
David L. Babson & Co. Inc. and Stewart Ivory (Holdings) Ltd. are
closely held corporations and have limitations in the ownership
of their stock designed to maintain control in those who are
active in management.
The current Management Agreement between the Fund and Jones &
Babson, Inc., which includes the Investment Counsel Agreement
between Jones & Babson, Inc. and Babson-Stewart Ivory
International, will continue in effect until October 31, 1996,
and will continue automatically for successive annual periods
ending each October 31 so long as such continuance is
specifically approved at least annually by the Board of Directors
of the Fund or by a vote of the majority of the outstanding
voting securities of the Fund, and, provided also that such
continuance is approved by the vote of a majority of the
directors who are not parties to the Agreements or interested
persons of any such party at a meeting held in person and called
specifically for the purpose of evaluating and voting on such
approval. Each Agreement provides that either party may terminate
by giving the other 60 days written notice. The Agreements
terminate automatically if assigned by either party.
CUSTODIAN
State Street Bank and Trust Company of Boston, Massachusetts is
the custodian of the assets of the Fund. The names of the
sub-custodians for foreign securities and a description of how
they were selected are set forth under the heading "Custodian" in
the "Statement of Additional Information."
GENERAL INFORMATION AND HISTORY
The Fund, incorporated in Maryland on October 2, 1987, and has a
present authorized capitalization of 10,000,000 shares of $1 par
value common stock. All shares are of the same class with like
rights and privileges. Each full and fractional share, when
issued and outstanding, has: (1) equal voting rights with respect
to matters which affect the Fund, and (2) equal dividend,
distribution and redemption rights to assets of the Fund. Shares
when issued are fully paid and non-assessable. The Fund may
create other series of stock but will not issue any senior
securities. Shareholders do not have pre-emptive or conversion
rights.
Non-cumulative voting -- These shares have noncumulative voting
rights, which means that the holders of more than 50% of the
shares voting for the election of directors can elect 100% of the
directors, if they choose to do so, and in such event, the
holders of the remaining less than 50% of the shares voting will
not be able to elect any directors. The Maryland Statutes permit
registered investment companies, such as the Fund, to operate
without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the
Investment Company Act of 1940. There are procedures whereby the
shareholders may remove directors. These procedures are described
in the "Statement of Additional Information" under the caption
"Officers and Directors." The Fund has adopted the appropriate
provisions in its By-Laws and may not, at its discretion, hold
annual meetings of shareholders for the following purposes unless
required to do so: (1) election of directors; (2) approval of any
investment advisory agreement; (3) ratification of the selection
of independent public accountants; and (4) approval of a
distribution plan. As a result, the Fund does not intend to hold
annual meetings.
The Fund may use "Babson-Stewart Ivory" in its name so long as
Babson-Stewart Ivory International, or an affiliate thereof, acts
as its investment counsel. Complete details with respect to the
use of the name are set out in the Management Agreement between
the Fund and Jones & Babson, Inc.
This prospectus omits certain of the information contained in the
registration statement filed with the Securities and Exchange
Commission, Washington, D.C. These items may be inspected at the
offices of the Commission or obtained from the Commission upon
payment of the fee prescribed.
DIVIDENDS, DISTRIBUTIONS AND THEIR TAXATION
The Fund pays dividends from net investment income, usually in
June. Any capital gains realized during a fiscal year will be
distributed with the fiscal year-end dividend in June. Dividend
and capital gains distributions will be reinvested automatically
in additional shares at the net asset value per share next
computed and effective at the close of business on the day after
the record date, unless the shareholder has elected on the
original application, or by written instructions filed with the
Fund, to have them paid in cash.
The Fund has qualified and intends to continue to qualify for
taxation as a "regulated investment company" under the Internal
Revenue Code so that the Fund will not be subject to Federal
income tax to the extent that it distributes its income to its
shareholders. Dividends, either in cash or reinvested in shares,
paid by the Fund from net investment income will be taxable to
shareholders as ordinary income, and may generally qualify in
part for the 70% dividends-received deduction for corporations.
The portion of the dividends so qualified depends on the
aggregate taxable qualifying dividend income received by the Fund
from domestic (U.S.) sources. The Fund will send to shareholders
a statement each year advising the amount of the dividend income
which qualifies for such treatment.
Whether paid in cash or additional shares of the Fund, and
regardless of the length of time Fund shares have been owned by
the shareholder, distributions from long-term capital gains are
taxable to shareholders as such, but are not eligible for the
dividends-received deduction for corporations. Shareholders are
notified annually by the Fund as to the federal tax status of
dividends and distributions paid by the Fund. Such dividends and
distributions may also be subject to state and local taxes.
Exchange and redemption of Fund shares are taxable events for
federal income tax purposes. Shareholders may also be subject to
state and municipal taxes on such exchanges and redemptions. You
should consult your tax adviser with respect to the tax status of
distributions from the Fund in your state and locality.
The Fund intends to declare and pay dividends and capital gains
distributions so as to avoid imposition of the federal excise
tax. To do so, the Fund expects to distribute during each
calendar year an amount equal to: (1) 98% of its calendar year
ordinary income; (2) 98% of its capital gain net income (the
excess of short- and long-term capital gain over short- and
long-term capital loss) for the one-year period ending each
October 31; and (3) 100% of any undistributed ordinary or capital
gain net income from the prior fiscal year. Dividends declared in
December will be deemed to have been paid by the Fund and
received by shareholders on the record date provided that the
dividends are paid before February 1 of the following year.
To comply with IRS regulations, the Fund is required by federal
law to withhold 31% of reportable payments (which may include
dividends, capital gains distributions, and redemptions) paid to
shareholders who have not complied with IRS regulations. In order
to avoid this withholding requirement, shareholders must certify
on their Application, or on a separate form supplied by the Fund,
that their Social Security or Taxpayer Identification Number
provided is correct and that they are not currently subject to
backup withholding, or that they are exempt from backup
withholding.
The federal income tax status of all distributions will be
reported to shareholders each January as a part of the annual
statement of shareholder transactions. Shareholders not subject
to tax on their income will not be required to pay tax on amounts
distributed to them.
Foreign Income Taxes. The investment income received by the Fund
from sources within foreign countries may be subject to foreign
income taxes withheld at the source. The U.S. has entered into
tax treaties with many foreign countries which entitle the Fund
to a reduced rate of tax or exemption from tax on such income. It
is impossible to determine the effective rate of foreign tax in
advance since the amount of the Fund's assets to be invested
within various countries is not known. The Fund intends to
operate so as to qualify for treaty-reduced rates of tax where
applicable. A full description of foreign income taxes is
contained in the "Statement of Additional Information" under the
heading "Foreign Income Taxes."
THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED HEREIN FOR GENERAL
INFORMATION ONLY. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN
TAX ADVISERS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF AN
INVESTMENT IN THE FUND.
SHAREHOLDER SERVICES
The Fund and its manager offer shareholders a broad variety of
services described throughout this prospectus. In addition, the
following services are available:
Automatic Monthly Investment - You may elect to make monthly
investments in a constant dollar amount from your checking
account ($100 minimum). The Fund will draft your checking account
on the same day each month in the amount you authorize in your
application, or, subsequently, on a special authorization form
provided upon request.
Automatic Reinvestment - Dividends and capital gains
distributions may be reinvested automatically, or shareholders
may elect to have dividends paid in cash and capital gains
reinvested, or to have both paid in cash.
Telephone Investments - You may make investments of $1,000 or
more by telephone if you have authorized such investments in your
application, or, subsequently, on a special authorization form
provided upon request. See "Telephone Investment Service."
Automatic Exchange - You may exchange shares from your account
($100 minimum) in any of the Babson Funds to an identically
registered account in any other fund in the Babson Group except
Babson Enterprise Fund, Inc. according to your instructions.
Monthly exchanges will be continued until all shares have been
exchanged or until you terminate the Automatic Exchange
authorization. A special authorization form will be provided upon
request.
Transfer of Ownership - A shareholder may transfer shares to
another shareholder account. The requirements which apply to
redemptions apply to transfers. A transfer to a new account must
meet initial investment requirements.
Systematic Redemption Plan - Shareholders who own shares in open
account valued at $10,000 or more may arrange to make regular
withdrawals without the necessity of executing a separate
redemption request to initiate each withdrawal.
Sub-Accounting - Keogh and corporate tax qualified retirement
plans, as well as certain other investors who must maintain
separate participant accounting records, may meet these needs
through services provided by the Fund's manager, Jones & Babson,
Inc. Investment minimums may be met by accumulating the separate
accounts of the group. Although there is currently no charge for
sub-accounting, the Fund and its manager reserve the right to
make reasonable charges for this service.
Prototype Retirement Plans - Jones & Babson, Inc. offers a
defined contribution prototype plan - The Universal Retirement
Plan - which is suitable for all who are self-employed, including
sole proprietors, partnerships, and corporations. The Universal
Prototype includes both money purchase pension and profit-sharing
plan options.
Individual Retirement Accounts - Also available is an Individual
Retirement Account (IRA). The IRA uses the IRS model form of plan
and provides an excellent way to accumulate a retirement fund
which will earn tax-deferred dollars until withdrawn. An IRA may
also be used to defer taxes on certain distributions from
employer-sponsored retirement plans. You may contribute up to
$2,000 of compensation each year ($2,250 if a spousal IRA is
established), some or all of which may be deductible. Consult
your tax adviser concerning the amount of the tax deduction, if
any.
Simplified Employee Pensions (SEPs) - The Jones & Babson IRA may
be used with IRS Form 5305-SEP to establish a SEP-IRA, to which
the self-employed individual may contribute up to 15% of net
earned income or $30,000, whichever is less. A SEP-IRA offers the
employer the ability to make the same level of deductible
contributions as a Profit-Sharing Plan with greater ease of
administration, but less flexibility in plan coverage of
employees.
SHAREHOLDER INQUIRIES
Telephone inquiries may be made toll free to the Fund,
1-800-4-BABSON (1-800-422-2766), or in the Kansas City area
471-5200.
Shareholders may address written inquiries to the Fund at:
Babson-Stewart Ivory International Fund, Inc.
Three Crown Center
2440 Pershing Road, Suite G-15
Kansas City, MO 64108
AUDITORS
ARTHUR ANDERSEN LLP
Kansas City, Missouri
LEGAL COUNSEL
STRADLEY, RONON, STEVENS & YOUNG
Philadelphia, Pennsylvania
JOHN G. DYER
Kansas City, Missouri
CUSTODIAN
STATE STREET BANK AND TRUST COMPANY
Boston, Massachusetts
TRANSFER AGENT
JONES & BABSON, INC.
Kansas City, Missouri
<PAGE>
PART B
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
OCTOBER 31, 1995
This Statement is not a Prospectus but should be read in conjunction
with the Fund s current Prospectus dated October 31, 1995. To obtain
the Prospectus please call the Fund toll-free 1-800-4-BABSON
(1-800-422-2766), or in the Kansas City area 471-5200.
TABLE OF CONTENTS
Page
Investment Objective and Policies
Portfolio Transactions
Investment Restrictions
Performance Measures
How the Fund's Shares Are Distributed
How Share Purchases Are Handled
Redemption of Shares
Signature Guarantees
Dividends, Distributions and Their Taxation
Management and Investment Counsel
How Share Price is Determined
Officers and Directors
Custodian
Independent Public Accountants
Other Jones & Babson Funds
Financial Statements
INVESTMENT OBJECTIVES AND
POLICIES
The following policies supplement the Fund's
investment objective and policies set forth in the
Prospectus.
Although Babson-Stewart Ivory International
Fund intends to invest its assets primarily in
equity securities, for liquidity purposes, or if, in
the judgment of the Investment Counsel,
extremely abnormal conditions persist in the
markets for such securities, management retains
the authority to adopt a temporary defensive
posture by investing in short-term debt securities,
including securities of the U.S. government, its
agencies, authorities or instrumentalities (such as
U.S. treasury obligations, which differ only in
their interest rates, maturities and times of
issuance, and obligations issued or guaranteed by
U.S. government agencies or instrumentalities
which are backed by the full faith and credit of the
U.S. treasury or which are supported by the right
of the issuer to borrow from the U.S. government),
high quality commercial paper, bankers
acceptances and repurchase agreements with
banks and brokers for U.S. government securities.
Any repurchase agreements entered into by the
Fund will be fully collateralized and marked-to-
market daily.
Foreign Investments. Investors should
recognize that investing in foreign companies
involves certain special considerations which are
not typically associated with investing in U.S.
companies. Since the stocks of foreign companies
are frequently denominated in foreign currencies,
and since the Fund may temporarily hold
uninvested reserves in bank deposits in foreign
currencies, the Fund will be affected favorably or
unfavorably by changes in currency rates and in
exchange control regulations, and may incur costs
in connection with conversions between various
currencies. The investment policies of the Fund
permit it to enter into forward foreign currency
exchange contracts in order to hedge the Fund's
holdings and commitments against changes in the
level of future currency rates. Such contracts
involve an obligation to purchase or sell a specific
currency at a future date at a price set at the time
of the contract.
As foreign companies are not generally subject
to uniform accounting, auditing and financial
reporting standards and practices comparable to
those applicable to domestic companies, there may
be less publicly available information about
certain foreign companies than about domestic
companies. Securities of some foreign companies
are generally less liquid and more volatile than
securities of comparable domestic companies.
There is generally less government supervision
and regulation of stock exchanges, brokers and
listed companies than in the U.S. In addition,
with respect to certain foreign countries, there is
the possibility of expropriation or confiscatory
taxation, political or social instability, or
diplomatic developments which could affect U.S.
investments in those countries.
Although the Fund will endeavor to achieve
most favorable execution costs in its portfolio
transactions, fixed commissions on many foreign
stock exchanges are generally higher than
negotiated commissions on U.S. exchanges. In
addition, it is expected that the expenses of
custodian arrangements of the Fund's foreign
securities will be somewhat greater than the
expenses for the custodian arrangements for
handling the Fund's securities of equal value.
Certain foreign governments levy withholding
taxes against dividend and interest income.
Although in some countries a portion of these
taxes are recoverable, the nonrecovered portion of
foreign withholding taxes will reduce the income
received from the companies comprising the
Fund's portfolio.
Repurchase Agreements. The Fund may
invest in repurchase agreements with commercial
banks, brokers or dealers either for defensive
purposes due to market conditions or to generate
income from its excess cash balances. A
repurchase agreement is an agreement under
which the Fund acquires a money market
instrument (generally a security issued by the U.S.
government or an agency thereof, a banker's
acceptance or a certificate of deposit) from a
commercial bank, broker or dealer, subject to
resale to the seller at an agreed upon price and
date (normally, the next business day). A
repurchase agreement may be considered a loan
collateralized by securities. The resale price
reflects an agreed upon interest rate effective for
the period the instrument is held by the Fund and
is unrelated to the interest rate on the underlying
instrument. In these transactions, the securities
acquired by the Fund (including accrued interest
earned thereon) must have a total value in excess
of the value of the repurchase agreements and are
held by the Fund's custodian bank until
repurchased. In addition, the Fund's Board of
Directors will monitor the Fund's repurchase
agreement transactions generally and will
establish guidelines and standards for review by
the investment counsel of the creditworthiness of
any bank, broker or dealer party to a repurchase
agreement with the Fund. No more than an
aggregate of 10% of the Fund's assets, at the time
of investment, will be invested in repurchase
agreements having maturities longer than seven
days and securities subject to legal or contractual
restrictions on resale, or for which there are no
readily available market quotations.
The use of repurchase agreements involves
certain risks. For example, if the other party to
the agreement defaults on its obligations to
repurchase the underlying securities at a time
when the value of the securities has declined, the
Fund may incur a loss upon disposition of them.
If the seller becomes insolvent and subject to
liquidation or reorganization under the applicable
bankruptcy or other laws, a bankruptcy court may
determine that the underlying security is collateral
for a loan by the Fund not within the control of
the Fund and therefore subject to sale by the
trustee in bankruptcy. Finally, it is possible that
the Fund may not be able to substantiate its
interest in the underlying securities. While the
Fund's management acknowledges these risks, it
is expected that they can be controlled through
careful monitoring procedures.
Foreign Currency Transactions. The value of
the assets of the Fund as measured in United
States dollars may be affected favorably or
unfavorably by changes in foreign currency
exchange rates and exchange control regulations,
and the Fund may incur costs in connection with
conversions between various currencies.
The Fund will conduct its foreign currency
exchange transactions either on a spot (i.e., cash)
basis at the spot rate prevailing in the foreign
currency exchange market, or through the use of
forward contracts to purchase or sell foreign
currencies. A forward foreign currency exchange
contract will involve an obligation by the Fund to
purchase or sell a specific amount of currency at a
future date, which may be any fixed number of
days, from the date of the contract agreed upon by
the parties, at a price set at the time of the
contract. These contracts are transferable in the
interbank market conducted directly between
currency traders (usually large commercial banks)
and their customers. A forward contract generally
has no deposit requirements, and no commissions
are charged at any stage for trades. Neither type
of foreign currency transaction will eliminate
fluctuations in the prices of the Fund's portfolio
securities or prevent loss if the prices of such
securities should decline.
The Fund may enter into forward foreign
currency exchange contracts only under two
circumstances. First, when the Fund enters into a
contract for the purchase or sale of a security
denominated in a foreign currency, it may desire
to "lock in" the U.S. dollar price of the security.
The Fund will then enter into a forward contract
for the purchase or sale, for a fixed amount of
dollars, of the amount of foreign currency
involved in the underlying securities transaction;
in this manner the Fund will be better able to
protect itself against a possible loss resulting from
an adverse change in the relationship between the
U.S. dollar and the subject foreign currency
during the period between the date the securities
are purchased or sold and the date on which
payment is made or received.
Second, when the Investment Counsel believes
that the currency of a particular foreign country
may suffer a substantial decline against the U.S.
dollar, it may enter into a forward contract to sell,
for a fixed amount of dollars, the amount of
foreign currency approximating the value of some
or all of the Fund's securities denominated in such
foreign currency. The precise matching of the
forward contract amounts and the value of the
securities involved will not generally be possible
since the future value of such securities in foreign
currencies will change as a consequence of market
movements in the value of those securities
between the date the forward contract is entered
into and the date it matures. The projection of
short-term currency market movement is
extremely difficult, and the successful execution of
a short-term hedging strategy is highly uncertain.
The Investment Counsel does not intend to enter
into such forward contracts under this s
Stephen W. Harris*
James T. Jensen Director August 11, 1995
James T. Jensen*
Richard J. Phelps Director August 11, 1995
Richard J. Phelps*
William H. Russell Director August 11, 1995
William H. Russell*
P. Bradley Adams Treasurer and August 11, 1995
P. Bradley Adams Principal Financial and
Accounting Officer
*Signed pursuant to Power of Attorney
By Larry D. Armel
Attorney-in Fact
