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
STATEMENT OF NET ASSETS
December 31, 1995 (unaudited)
Shares CompanY AND DESCRIPTION Market Value
COMMON STOCKS - 96.26%
ARGENTINA - 0.61%
27,700 Quilmes
(Brewing) $ 432,120
AUSTRALIA - 3.88%
95,469 Brambles
(Transport, plant services) 1,064,393
62,406 Lend Lease
(Real estate) 904,502
123,750 Western Mining
(Diversified base metals) 794,708
2,763,603
BELGIUM - 1.24%
3,200 Colruyt
(Food retailing) 879,647
BRAZIL - 0.14%
17,750 Makro Atacadista
(Wholesale & retail warehouse) 100,820
CHILE - 0.48%
8,500 Genesis Chile Fund
(Investment in Chile) 340,000
DENMARK - 1.58%
10,000 Sophus Berendsen
(Environmental, industrial services) 1,125,619
FRANCE - 6.19%
1,800 Carrefour
(Food retailing) 1,092,056
3,500 Comptoirs Modernes
(Food retailing) 1,136,410
9,500 Guilbert
(Office supplies, paper) 1,115,479
8,750 SEB
(Electrical appliances) 1,063,151
4,407,096
GERMANY - 5.69%
2,500 Buderus
(Heating systems) 972,464
18,000 Kiekert
(Auto safety equipment) 1,069,083
1,680 Linde
(Engineering) 980,244
1,350 Rheinelektra
(Electric utility, machinery) 1,025,793
4,047,584
HONG KONG - 5.46%
2,301,625 CDL Hotels
(Regional hotel group) 1,160,858
2,000,000 Gold Peak
(Batteries) 989,331
250,000 Johnson Electric
(Micro-motors) 446,169
230,000 Shaw Bros.
(T.V. network, film production
and distribution) 252,829
1,690,000 South China Morning Post
(Publishing) 1,032,687
3,881,874
INDONESIA - 0.51%
10,000 Indosat
(Telecommunications) 365,000
IRELAND - 1.08%
100,000 Kerry Group
(Food manufacturing) 768,753
ITALY - 3.11%
20,000 Luxottica
(Eyeglass frames) 1,170,000
23,000 Industrie Natuzzi
(Furniture manufacturing) 1,043,625
2,213,625
JAPAN - 31.17%
44,000 Amada Metrecs
(Machine tools, robotics) 703,148
38,850 Canon Sales
(Distribution of Canon
products) 1,034,746
117,000 Daicel Chemical
(Chemicals, plastics) 665,172
63,000 Hitachi Metals
(Specialty metals) 787,119
34,000 Hoya
(Optical/electronic products) 1,169,007
28,000 Kato Denki
(Electrical appliance
retailing) 726,780
7,000 Keyence
(Sensors) 806,780
93,000 Komatsu
(Construction machinery) 765,617
JAPAN (Continued)
68,000 Kurimoto
(Cast iron & pvc pipes) 691,525
23,000 Kurita
(Water treatment equipment) 612,591
12,000 Kyocera
(Electronic components) 891,429
37,000 Mori Seiki
(Machine tools) 834,964
12,000 Murata
(Electronic components) 441,646
73,000 NEC
(Integrated electronics) 890,847
69,000 NGK Spark Plug
(Spark plugs, ceramic
packaging) 868,765
10,000 Nichiei
(Consumer finance) 745,763
34,400 Nissen
(Mail order retailing) 806,276
10,000 Promise
(Consumer lending) 481,356
26,400 Rinnai
(Gas appliances) 616,213
13,000 Rohm
(Semiconductors) 734,044
10,000 Seven Eleven
(Convenience stores) 705,085
21,000 Shimamura
(Womenswear retailing) 811,525
15,000 Sony
(Consumer electronics) 899,274
76,000 Sumitomo Marine & Fire
(Fire & casualty insurance) 624,194
JAPAN (Continued)
120,000 Sumitomo Warehouse
(Warehousing, transport) 772,881
70,000 SxL
(Housebuilding) 725,424
97,000 Toshiba
(Integrated electronics) 760,029
22,000 Tostem
(Aluminum window frames) 730,847
24,800 Xebio
(Apparel, sportswear) 876,707
22,179,754
KOREA - 1.00%
18,000 Korea Electric Power
(Electric utility) 714,663
MALAYSIA - 1.06%
240,000 Perlis Plantations
(Trading, mining, agriculture) 751,270
MEXICO - 0.57%
87,000 Grupo Modelo
(Brewing) 405,962
NETHERLANDS - 6.86%
28,000 KPN
(Postal, telecom services) 1,017,262
47,000 Otra
(Technology wholesalers) 834,735
10,000 Nutricia
(Processed food) 808,874
20,500 Polygram
(Recorded music) 1,088,428
12,000 Wolters Kluwer
(Publishing) 1,135,165
4,884,464
NEW ZEALAND - 0.82%
135,000 New Zealand Telecom
(Utility) 582,505
SINGAPORE - 2.79%
100,000 Robinson
(Department store) 417,109
120,000 Trans-Island Bus Services
(Bus transport) 293,531
990,000 Utd Industrial
(Real estate) 972,853
160,000 United Overseas Land
(Real estate) 304,277
1,987,770
SPAIN - 0.79%
25,000 Continente Centros
Commerciales
(Hypermarkets) 564,716
SWEDEN - 2.83%
29,500 Astra
(Pharmaceuticals) 1,177,388
15,000 Hennes & Mauritz
(Retailing) 835,881
2,013,269
SWITZERLAND - 3.09%
2,000 Phoenix Meccano
(Customized electric casings) 1,002,167
1,300 Sandoz
(Pharmaceuticals and
chemicals) 1,196,879
2,199,046
UNITED KINGDOM - 15.31%
93,000 Argos
(Mail order, retailing) 860,095
138,000 Bowthorpe
(Electronics components,
instruments) 900,140
125,000 British Sky Broadcast
(Satellite TV broadcasting) 789,137
104,324 Cadbury Schweppes
(Food, soft drinks) 861,131
182,000 Electrocomponents
(Electronics) 1,016,136
72,000 Granada
(Hotels, leisure) 721,230
161,000 Hays
(Business services) 940,146
UNITED KINGDOM (Continued)
237,000 MacFarlane
(Printing, packaging) 795,030
103,000 Marks & Spencer
(Retailing) 719,832
343,000 Morrison Supermarket
(Supermarkets) 745,768
38,000 Reed International
(Publishing) 579,236
103,000 Reuters
(News, data services) 942,980
93,000 SmithKline Beecham
(Pharmaceuticals) 1,025,470
10,896,331
TOTAL COMMON STOCKS - 96.26% 68,505,491
Short-Term Investments - 4.18% 2,977,728
TOTAL INVESTMENTS - 100.44% $ 71,483,219
Other assets less liabilities - (0.44%) (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
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
See accompanying Notes to Financial Statements.
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.
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
See accompanying Notes to Financial Statements.
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 exdividend
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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