MESSAGE
To Our Shareholders
At December 31, 1995, the net asset value of shares of Babson-Stewart Ivory
International Fund was $16.85, which represents a total return (price change
and reinvested distributions) of 8.11% for the previous six months, and
12.64% for the calendar year. Comparisons against the unmanaged Morgan
Stanley Capital International (MSCI) EAFE and other indices are as follows:
Investment Results _ Total Return
Periods Ended 12/31/95
Fourth Quarter Previous Twelve
1995 Months
BSIIF 1.61% 12.64%
MSCI EAFE* Index** 4.13% 11.54%
MSCI World Index** 4.87% 21.31%
S&P 500 Index** 6.02% 37.53%
Lipper International Funds
(avg. 296 funds) 1.93% 9.41%
*Europe, Australia, Far East
**unmanaged
The Fund's average annual compounded total returns for five years and the
life of the Fund (inception December 7, 1987) as of December 31, were 11.50%
and 9.33%, respectively. Performance data contained in this report is for
past periods only. Past performance is not predictive of future performance.
Investment return and share value will fluctuate, and redemption value may be
more or less than original cost.
While the Fund performed relatively well over the past 12 months, its
underperformance in the past quarter was mainly due to underweighted
positions in financial stocks. This was particularly the case in Japan, where
bank stocks were much stronger, but was also true in Continental Europe.
Currency movements over the past quarter were mostly adverse, with practically
all currencies weakening against the U.S. dollar. The Fund's asset allocation
mix was favorable, however, with its underweighted position in Japan an
advantage, as the yen was the weakest major currency late in 1995.
Recent portfolio activities show net additions in Europe and Latin America,
with reductions in the UK, Belgium, Italy, Spain, Sweden and Australia.
Portfolio purchases mainly reflected new cash inflows, and the Fund's cash
position was just over 4% at December 31.
The inventory-lead slowdown in global activity has continued, with downward
revisions to Gross Domestic Product forecasts in the U.S., Europe and Asia.
Such forecasts range between 2-3% for the U.S. and 1-3% for European
countries and Japan. The revised numbers could lead to more positive
assumptions for inflation and interest rate outlooks, but may result in some
downgrading of corporate profit forecasts for 1996.
Growth forecasts for Southeast Asia remain above those of the industrialized
world, although they may also face scrutiny in coming months. An inflation
rate of 6-7% compares unfavorably with the U.S., Japan and Europe, leading
to fears of overheating and of government moves to reduce excessive growth.
Mainland China's more aggressive stance towards Taiwan has also lead to fears
of increased political tension between those countries as well as elsewhere
in Asia.
We expect an improved contribution to performance from Japanese companies,
which was a major factor in our lack of progress in 1995. A more assertive
coalition government, working towards the resolution of the banking crisis,
would be positive news for the economy and market as a whole, and our
Japanese portfolio should benefit from earnings recovery by manufacturers and
consumer-oriented service sectors. Europe and the U.S. are expected to
produce more modest returns than last year, as companies become vulnerable to
correction of earnings forecasts, or otherwise fail to live up to high
investor expectations. This has especially been demonstrated recently in the
technology area, as the slow down in the cycle for semi-conductors and
cellular phones has affected U.S. and leading European players.
Fund shareholders are reminded that Jones & Babson offers a wide variety of
no-load mutual funds to meet an investor's various financial objectives. Low
cost Individual Retirement Accounts (IRA) and prototype retirement plans are
also available. It's easy to open or transfer your IRA to Jones & Babson.
Just call and ask for our free IRA Investor Kit. The kit contains an easy-to
- -complete IRA application and transfer form.
Thank you for your continuing interest in Babson-Stewart Ivory International
Fund.
Sincerely,
Larry D. Armel
President
<PAGE>
STATEMENT OF NET ASSETS
December 31, 1995 (unaudited)
Shares CompanY AND DESCRIPTION Market Value
COMMON STOCKS _ 80.74%
ARGENTINA _ 0.76%
27,700 Quilmes
(Brewing) $ 539,490
AUSTRALIA _ 3.26%
95,469 Brambles
(Transport, plant services) 955,133
62,406 Lend Lease
(Real estate) 702,086
123,750 Western Mining
(Diversified base metals) 663,634
2,320,853
BELGIUM _ 0.93%
3,200 Colruyt
(Food retailing) 658,373
BRAZIL _ 0.33%
17,750 Makro Atacadista
(Wholesale & retail warehouse) 238,969
CHILE _ 0.11%
8,500 Genesis Chile Fund
(Investment in Chile) 79,631
DENMARK _ 0.92%
10,000 Sophus Berendsen
(Environmental, industrial services) 657,552
FRANCE _ 4.68%
1,800 Carrefour
(Food retailing) 783,233
3,500 Comptoirs Modernes
(Food retailing) 906,331
9,500 Guilbert
(Office supplies, paper) 750,283
8,750 SEB
(Electrical appliances) 888,429
3,328,276
GERMANY _ 6.16%
2,500 Buderus
(Heating systems) 1,211,217
18,000 Kiekert
(Auto safety equipment) 1,120,605
1,680 Linde
(Engineering) 959,798
1,350 Rheinelektra
(Electric utility, machinery) 1,091,958
4,383,578
HONG KONG _ 4.91%
2,301,625 CDL Hotels
(Regional hotel group) 936,959
2,000,000 Gold Peak
(Batteries) 742,036
250,000 Johnson Electric
(Micro-motors) 555,612
230,000 Shaw Bros.
(T.V. network, film production and distribution) 292,054
1,690,000 South China Morning Post
(Publishing) 965,592
3,492,253
INDONESIA _ 0.54%
10,000 Indosat
(Telecommunications) 383,065
IRELAND _ 0.81%
100,000 Kerry Group
(Food manufacturing) 574,514
ITALY _ 1.77%
20,000 Luxottica
(Eyeglass frames) 543,790
23,000 Industrie Natuzzi
(Furniture manufacturing) 717,891
1,261,681
JAPAN _ 27.71%
44,000 Amada Metrecs
(Machine tools, robotics) 722,927
38,850 Canon Sales
(Distribution of Canon products) 906,566
117,000 Daicel Chemical
(Chemicals, plastics) 670,664
63,000 Hitachi Metals
(Specialty metals) 764,629
34,000 Hoya
(Optical/electronic products) 813,309
28,000 Kato Denki
(Electrical appliance retailing) 533,619
7,000 Keyence
(Sensors) 603,149
93,000 Komatsu
(Construction machinery) 755,668
JAPAN (Continued)
68,000 Kurimoto
(Cast iron & pvc pipes) 761,694
23,000 Kurita
(Water treatment equipment) 643,884
12,000 Kyocera
(Electronic components) 837,685
37,000 Mori Seiki
(Machine tools) 526,930
12,000 Murata
(Electronic components) 345,897
73,000 NEC
(Integrated electronics) 736,587
69,000 NGK Spark Plug
(Spark plugs, ceramic packaging) 619,570
10,000 Nichiei
(Consumer finance) 523,315
34,400 Nissen
(Mail order retailing) 803,263
10,000 Promise
(Consumer lending) 473,734
26,400 Rinnai
(Gas appliances) 668,686
13,000 Rohm
(Semiconductors) 545,840
10,000 Seven Eleven
(Convenience stores) 580,484
21,000 Shimamura
(Womenswear retailing) 719,962
15,000 Sony
(Consumer electronics) 825,131
76,000 Sumitomo Marine & Fire
(Fire & casualty insurance) 649,455
JAPAN (Continued)
120,000 Sumitomo Warehouse
(Warehousing, transport) 823,245
70,000 SxL
(Housebuilding) 836,113
97,000 Toshiba
(Integrated electronics) 614,273
22,000 Tostem
(Aluminum window frames) 646,919
24,800 Xebio
(Apparel, sportswear) 769,342
19,722,540
KOREA _ 0.64%
18,000 Korea Electric Power
(Electric utility) 451,912
MALAYSIA _ 0.81%
240,000 Perlis Plantations
(Trading, mining, agriculture) 576,857
MEXICO _ 0.52%
87,000 Grupo Modelo
(Brewing) 370,132
NETHERLANDS _ 6.36%
28,000 KPN
(Postal, telecom services) 993,373
47,000 Otra
(Technology wholesalers) 841,781
10,000 Nutricia
(Processed food) 767,879
20,500 Polygram
(Recorded music) 1,022,041
12,000 Wolters Kluwer
(Publishing) 900,651
4,525,725
NEW ZEALAND _ 0.78%
135,000 New Zealand Telecom
(Utility) 552,467
SINGAPORE _ 2.50%
100,000 Robinson
(Department store) 456,522
120,000 Trans-Island Bus Services
(Bus transport) 127,153
990,000 Utd Industrial
(Real estate) 948,084
160,000 United Overseas Land
(Real estate) 250,169
1,781,928
SPAIN _ 0.84%
25,000 Continente Centros Commerciales
(Hypermarkets) 597,236
SWEDEN _ 2.36%
29,500 Astra
(Pharmaceuticals) 699,469
15,000 Hennes & Mauritz
(Retailing) 978,746
1,678,215
SWITZERLAND _ 1.89%
2,000 Phoenix Meccano
(Customized electric casings) 504,009
1,300 Sandoz
(Pharmaceuticals and chemicals) 839,421
1,343,430
UNITED KINGDOM _ 11.15%
93,000 Argos
(Mail order, retailing) 520,670
138,000 Bowthorpe
(Electronics components, instruments) 604,847
125,000 British Sky Broadcast
(Satellite TV broadcasting) 486,900
104,324 Cadbury Schweppes
(Food, soft drinks) 690,630
182,000 Electrocomponents
(Electronics) 678,830
72,000 Granada
(Hotels, leisure) 452,644
161,000 Hays
(Business services) 704,815
UNITED KINGDOM (Continued)
237,000 MacFarlane
(Printing, packaging) 378,147
103,000 Marks & Spencer
(Retailing) 654,210
343,000 Morrison Supermarket
(Supermarkets) 700,433
38,000 Reed International
(Publishing) 503,019
103,000 Reuters
(News, data services) 801,174
93,000 SmithKline Beecham
(Pharmaceuticals) 760,344
7,936,663
TOTAL COMMON STOCKS _ 80.74% 57,455,340
Short-Term Investments _ 19.71% 14,027,879
TOTAL INVESTMENTS _ 100.45% $ 71,483,219
Other assets less liabilities _ (0.45%) (318,087)
TOTAL NET ASSETS _ 100.00%
(equivalent to $16.85 per share;
10,000,000 shares of $1.00 par value
capital shares authorized;
4,223,284 shares outstanding) $ 71,165,132
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
December 31, 1995 (unaudited)
ASSETS:
Investments, at market value (identified cost $59,836,009) $ 71,483,219
Cash held in United States depositories 846
Receivable for investments sold 121,213
Dividends receivable 53,046
Interest receivable 495
Receivable for shares sold 23,421
Foreign tax receivable 77,880
Total assets 71,760,120
LIABILITIES AND NET ASSETS:
Payable for investments purchased 324,915
Accrued expenses 69,210
Payable for shares repurchased 197,340
Foreign tax withholding liability 3,523
Total liabilities 594,988
NET ASSETS $ 71,165,132
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 59,722,627
Accumulated undistributed income (loss):
Undistributed net investment income (16,847)
Accumulated net realized loss from investments and
foreign currency transactions (190,203)
Net unrealized appreciation on investments and
translation of assets and liabilities in foreign
currencies 11,649,555
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 71,165,132
Capital shares, $1.00 par value
Authorized 10,000,000
Outstanding 4,223,284
NET ASSET VALUE PER SHARE $ 16.85
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended December 31, 1995 (unaudited)
INVESTMENT INCOME:
Income:
Dividends (net of foreign taxes withheld) $ 377,467
Interest 28,846
Foreign exchange gain 48,122
454,435
Expenses:
Custodian fees 91,863
Registration fees 19,320
Management fees (Note 3) 325,872
437,055
Net investment income 17,380
REALIZED AND UNREALIZED GAIN ON INVESTMENTS
AND FOREIGN CURRENCY (Note 1):
Net realized gain from:
Investments 858,371
Foreign currency transactions 754,931
Net increase (decrease) in unrealized appreciation on:
Investments 3,636,407
Translation of assets and liabilities in foreign currencies (8,193)
Net realized and unrealized gain from investments and
foreign currency 5,241,516
Increase in net assets resulting from operations $ 5,258,896
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
SIX MONTHS
ENDED YEAR ENDED
DECEMBER 31, 1995 JUNE 30,
(UNAUDITED) 1995
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 17,380 $ 640,917
Net realized gain from investments and foreign
currency transactions 1,613,302 1,084,264
Net increase (decrease) in unrealized
appreciation on investments and translation of
assets and liabilities in foreign currencies 3,628,214 (19,949)
Net increase in net assets resulting from
operations 5,258,896 1,705,232
DISTRIBUTIONS TO SHAREHOLDERS FROM:*
Net investment income (90,578) (666,630)
Net realized gain from investment transactions (1,505,101) (2,304,439)
Total distributions to shareholders (1,595,679) (2,971,069)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from 1,413,538 and 3,240,782 shares
sold 23,721,535 51,468,851
Net asset value of 84,444 and 173,600 shares
issued for reinvestment of distributions 1,411,897 2,673,863
25,133,432 54,142,714
Cost of 1,326,462 and 2,251,582 shares redeemed (22,278,416) (35,632,490)
Net increase from capital share transactions 2,855,016 18,510,224
Total increase in net assets 6,518,233 17,244,387
NET ASSETS:
Beginning of period 64,646,899 47,402,512
End of period (including undistributed net
investment income of ($16,847) and $56,351,
respectively) $ 71,165,132 $ 64,646,899
Distributions to shareholders:
Income dividends per share $ .022 $ .17
Capital gains distribution per share $ .368 $ .67
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified open-end management investment company. The following is a
summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements.
Investments _ Common stocks are valued at the latest sales price or mean
between the bid and asked price on the last business day of the period as
reported by the principal securities exchange on which traded or, if no sale
was reported on that date, at the mean between the latest reported bid and
asked prices. Common stocks traded over-the-counter are valued at the mean
between the last reported bid and asked prices. Investment transactions are
recorded on the trade date. Dividend income is recorded on the ex-dividend
date and interest income is recorded on the accrual basis net of unrecoverable
foreign taxes withheld at the applicable country rates. Distributions to
shareholders are recorded on the ex-dividend dates. Realized gains and losses
from investment transactions and unrealized appreciation and depreciation of
investments are reported on the identified cost basis.
The investments of the Fund are subject to the risk of restrictions imposed
by foreign governments and to political or economic uncertainties.
Federal and State Taxes _ The Fund's policy is to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Therefore, no provision for federal or state tax is required.
Foreign Currency Translation _ All assets and liabilities expressed in
foreign currencies are converted into U.S. dollars at the exchange rate last
quoted by a major bank in London on the last business day of the period. The
cost of portfolio securities is translated at the rates of exchange
prevailing when acquired. Income is translated at the rate of exchange on the
ex-dividend date. The resulting transaction exchange gain or loss has been
included in the results of operations with the type of transaction giving
rise to the gain or loss.
2. PURCHASES AND SALES OF SECURITIES:
The aggregate amounts of security transactions (exclusive of short-term
investments and currency transactions) during the period ended December 31,
1995, were as follows:
Purchases $ 12,825,977
Proceeds from sales 11,112,365
3. MANAGEMENT FEES:
Management fees, which include all normal expenses of the Fund other than
taxes, fees and other charges of governmental agencies (including State and
Federal registration fees), dues, interest, brokerage commissions, fees for
pricing services, custodian fees and any extraordinary costs, are paid to
Jones & Babson, Inc., an affiliated company. These fees are based on average
daily net assets of the Fund at the annual rate of 95/100 of 1% (0.95%).
A partnership formed by David L. Babson & Co. Inc. and Stewart Ivory &
Company, Ltd. is the investment counsel of the Fund. The investment counsel
of the Fund is compensated by Jones & Babson, Inc. at an annual rate of
475/1000 of 1% (0.475%) of the average daily total net assets of the Fund.
Certain officers and/or directors of the Fund are also officers and/or
directors of Jones & Babson, Inc., David L. Babson & Co. Inc. and/or Stewart
Ivory & Company, Ltd.
This report has been prepared for the information of the Shareholders of
Babson-Stewart Ivory International Fund, Inc., and is not to be construed as
an offering of the shares of the Fund. Shares of this Fund and of the other
Babson Funds are offered only by the Prospectus, a copy of which may be
obtained from Jones & Babson, Inc.
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