SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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[ ] by Rule 14a-6(e)(2))
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-
Babson-Stewart Ivory International Fund, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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state how it was determined):
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the offsetting fee was paid previously. Identify the previous
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<PAGE>
July 3, 2000
Dear Shareholders:
The attached proxy statement describes an important proposal
related to the partial change in ownership of Babson-Stewart
Ivory International, the sub-adviser responsible for managing the
assets of Babson-Stewart Ivory International Fund, Inc. since its
inception. On March 20, 2000, Stewart Ivory & Company
(International) Limited, one of the two general partners of the
sub-adviser, was acquired by a subsidiary of Colonial Limited, a
large financial services organization headquartered in Australia.
On June 15, 2000, Colonial Limited was merged into the
Commonwealth Bank of Australia. As a result of these
transactions, Stewart Ivory & Company (International) Limited
became an indirect subsidiary of the Commonwealth Bank of
Australia.
The ownership change should not affect the Fund, as the
management team at Babson-Stewart Ivory International and the
portfolio managers responsible for the Fund are expected to
remain with the firm.
As a result of the ownership change, the Investment Counsel
Agreement under which Babson-Stewart Ivory International served
as sub-adviser was deemed to terminate automatically as a matter
of law. Since the termination, Babson-Stewart Ivory
International has continued to sub-advise the Fund under interim
agreements approved by the Fund's Board of Directors.
The Board of Directors has scheduled a Special Meeting of
Shareholders to be held on August 1, 2000 at which shareholders
are being asked to approve a new Investment Counsel Agreement for
the Fund with Babson-Stewart Ivory International. We hope that
you will take the time to review the attached proxy statement and
provide us with your vote on this important issue.
A Questions and Answers section is provided at the beginning of
the proxy statement to address various questions that you may
have about the change in ownership, the new agreement, the voting
process and the shareholder meeting generally. I urge you to
confirm the Board's recommendations by promptly completing,
signing and returning the enclosed proxy card(s) in the enclosed
postage-paid envelope.
Thank you for your continued support of Babson-Stewart Ivory
International Fund, Inc. If you should have any questions
regarding the proxy material or would like to vote your shares by
telephone, please call 1 (800) 207-3158 to speak to a
representative who will help you.
Sincerely,
/s/ Stephen S. Soden
Stephen S. Soden,
President and Chairman of the Board
Babson-Stewart Ivory
International Fund, Inc.
<PAGE>
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
Notice of Special Meeting
of Shareholders
to be held on August 1, 2000
A special meeting of the shareholders of Babson-Stewart
Ivory International Fund, Inc. (the "Fund"), will be held on
August 1, 2000 at 10:00 a.m. Central time at the offices of Jones
& Babson, Inc. on the 19th floor of the BMA Tower, 700 Karnes
Boulevard, Kansas City, Missouri.
During the meeting, or any adjournments thereof (the "Meeting"),
shareholders of the Fund will vote on the following Proposals:
1. To approve a new Investment Counsel Agreement between Jones
& Babson, Inc. and Babson-Stewart Ivory International with
respect to the Fund.
2. To grant the proxyholders authority to vote upon any other
business that may properly come before the Meeting
The Board of Directors has fixed June 15, 2000 as the record date
for determining the shareholders who will be entitled to vote at
the Meeting.
You are cordially invited to attend the Meeting. If you do not
expect to attend, you are requested to complete, date and sign
the enclosed proxy instruction form and return it promptly in the
envelope provided for that purpose. The enclosed proxy is being
solicited on behalf of the Board of Directors.
By Order of the Board of
Directors,
/s/ Martin A. Cramer
Martin A. Cramer
Secretary
Kansas City, Missouri
July 3, 2000
Your vote is important. Please sign and return your proxy card in the
self-addressed envelope regardless of the number of shares you own.
<PAGE>
PROXY STATEMENT
TABLE OF CONTENTS
Page
Questions and Answers 1
Proposal One: Approval of New Investment Counsel Agreement 3
Proposal Two: Other Business 10
Additional Information 10
Exhibit: Form of New Investment Counsel Agreement
<PAGE>
QUESTIONS AND ANSWERS
On what issue am I being asked to vote?
You are being asked to approve a new Investment Counsel Agreement (the
"Proposed Agreement") with Babson-Stewart Ivory International
(hereafter, "Babson-Stewart Ivory") that will allow Babson-Stewart Ivory
to continue providing advisory services to the Fund following the
acquisition of an indirect partial ownership interest in Babson-Stewart
Ivory first by Colonial Limited (together with its subsidiaries, the
"Colonial Group") and later by Commonwealth Bank of Australia
("Commonwealth Bank"). Following the ownership changes, the existing
Babson-Stewart Ivory investment professionals will continue to have a
financial interest in continuing with the firm, and the team responsible
for managing the Fund is not expected to change. Approval of the
Proposed Agreement will also have the effect of a ratification of the
interim agreements under which Babson-Stewart Ivory has continued to sub-
advise the Fund during the interim period leading up to the shareholder
meeting. The approval will allow Babson-Stewart Ivory to collect the
fees it earned during the interim period.
What are the details of the change in ownership?
Babson-Stewart Ivory is a partnership between Stewart Ivory and Company
(International) Limited in Edinburgh, Scotland (hereafter, "Stewart
Ivory") and David L. Babson & Company Inc. in Cambridge, Massachusetts
(hereafter, "Babson"). On March 20, 2000, Stewart Ivory became an
indirect wholly-owned subsidiary of the Colonial Group, a diverse
financial services group headquartered in Australia with its core
business in life insurance, banking, superannuation and fund management.
At June 30, 1999, total assets under management of the Colonial Group
were $75.8 billion (Australian). On June 15, 2000, the Colonial Group
was merged into Commonwealth Bank, a large international banking
organization headquartered in Australia, to create a single
international financial services institution with operations in sixteen
different countries.
The Colonial Group and Commonwealth Bank transactions have resulted in a
partial change in the ownership of Babson-Stewart Ivory. While Babson
remains a general partner of the advisory firm, the other general
partner, Stewart Ivory, is now indirectly owned by Commonwealth Bank.
Why am I being asked to approve a new Investment Counsel Agreement?
The Fund is registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), which requires that any
investment advisory agreement for a mutual fund terminate automatically
if the investment adviser experiences a significant change in ownership.
This provision has the effect of requiring that shareholders vote on a
new investment advisory agreement and is designed to ensure that
shareholders have a say in the company or persons that manage their
fund.
Since March 20, 2000, Babson-Stewart Ivory has been providing investment
advisory services to the Fund under interim Investment Counsel
Agreements that were approved by the Fund's Board of Directors, as
permitted by U.S. Securities and Exchange Commission rules. The first
interim agreement took effect after the Colonial Group's acquisition of
Stewart Ivory and the second interim agreement took effect after
Commonwealth's acquisition of the Colonial Group. However, in order for
Babson-Stewart Ivory to continue to provide advisory services to the
Fund on an ongoing basis, shareholders of the Fund must approve a new
Investment Counsel Agreement. Your vote to approve the new Investment
Counsel Agreement will also have the effect of an approval of the
interim Investment Counsel Agreements and the fees to be paid
thereunder.
How does the change in ownership of Babson-Stewart Ivory affect the
management of the Fund?
The persons responsible for operating Babson-Stewart Ivory and managing
the assets of the Fund are not expected to change as a result of change
in the ownership of Babson-Stewart Ivory. The ownership change may, as
anticipated, result in increased investment research capabilities that
can benefit the Fund.
Are there any differences between the original Investment Counsel
Agreement and the proposed new Investment Counsel Agreement?
The proposed new Investment Counsel Agreement is substantially identical
to the original agreement, except for the effective and termination
dates. Your approval of the proposed agreement will not increase the
management fees, sub-advisory fees or overall expenses of the Fund, or
change the level, nature or quality of services provided to the Fund.
Who is asking for my vote?
The Board of Directors of Babson-Stewart Ivory International Fund, Inc.
is requesting your vote on the proposal discussed in this proxy
statement. The Board has unanimously approved the proposal and
recommends that you vote in favor of the proposal.
Who is eligible to vote?
Shareholders of record at the close of business on June 15, 2000 are
entitled to vote at the Meeting or any adjournment thereof (the
"Meeting"). Each share of record is entitled to one vote on each matter
presented at the Meeting.
How can I vote my shares?
* By Mail: by signing, dating, voting and returning the proxy card in
the enclosed postage paid envelope.
* By Phone: with a toll-free call to 1-888-221-0697 between 9:00 a.m.
and 10:00 p.m. (Eastern time).
* By Internet: by signing onto the internet site listed on your proxy
card and entering the proper information, including the control number
also listed on your proxy card.
* In Person: by attending the meeting and voting your shares.
What will happen if there are not enough votes to approve the new
Investment Counsel Agreement?
It is important that shareholders complete and return signed proxy cards
to ensure that there is a quorum for the Meeting. If we do not receive
your proxy card after several weeks, you may be contacted by officers of
the Fund or its advisers or by our proxy solicitor, who will remind you
to vote your shares and help you return your proxy. If we don't receive
sufficient votes to approve the new Investment Counsel Agreement by the
date of the Meeting, we may adjourn the Meeting to a later date so that
we can continue to seek more votes. If enough votes are not obtained to
approve the new Investment Counsel Agreement, Babson-Stewart Ivory may
only be able to receive sub-advisory fees for its service during the
interim period equal to its costs of sub-advising the Fund during that
period (plus interest). In addition, the Fund's manager, Jones &
Babson, will be responsible for managing the Fund's assets until such
time as shareholders approve a new sub-adviser.
<PAGE>
PROPOSAL ONE
To approve a new Investment Counsel Agreement between
Jones & Babson, Inc. and Babson-Stewart Ivory International
with respect to Babson-Stewart Ivory International Fund, Inc.
The Board of Directors of the Fund is recommending that shareholders
approve a proposed new Investment Counsel Agreement (the "Proposed
Agreement") between Jones & Babson, Inc. ("Jones & Babson") and Babson-
Stewart Ivory, which would become effective immediately following
shareholder approval. The Proposed Agreement is substantially identical
to the original Investment Counsel Agreement (the "Original Agreement")
and differs only in its effectiveness and termination dates.
As described in this Proxy Statement, the Proposed Agreement is
necessary because the Original Agreement terminated as a result of a
change in ownership of Babson-Stewart Ivory. The termination and
resulting shareholder vote is required under the Investment Company Act.
Babson-Stewart Ivory is currently continuing to provide advisory
services to the Fund under a temporary Interim Investment Counsel
Agreement as permitted by SEC rules.
This proposal sets forth information about the Fund's investment manager
and sub-adviser; a description of the recent changes in ownership of the
sub-adviser; a summary of the relevant Investment Counsel Agreements;
and a discussion of the factors considered by the Board when it approved
the new agreement.
Investment Manager. The Fund has entered into a Management Agreement
with Jones & Babson, an SEC-registered investment adviser and fund
underwriter with offices located in the BMA Tower, 700 Karnes Boulevard,
Kansas City, Missouri 64108-3306. Jones & Babson is a wholly-owned
subsidiary of Business Men's Assurance Company of America, in Kansas
City, which itself is indirectly owned by Assicurazioni Generali S.p.A.,
an insurance organization founded in 1831 based in Trieste, Italy.
Mediobanca is a 5% owner of Generali. Jones & Babson has served as the
Fund's manager and principal underwriter since its inception, and also
provides fund accounting and transfer agency services to the Fund.
The Fund's Management Agreement requires Jones & Babson to either
provide or obtain all investment advisory services required to manage
the Fund's portfolio of investments. At the Fund's inception, Jones &
Babson entered into an Investment Counsel Agreement with Babson-Stewart
Ivory, under which Babson-Stewart Ivory has managed the assets of the
Fund as sub-adviser.
Sub-Adviser. Babson-Stewart Ivory has been responsible for the day-to-
day management of the Fund's assets since the Fund's inception in 1988.
Babson-Stewart Ivory is an SEC-registered investment advisory firm with
over $1 billion of assets under management. The firm is a Massachusetts
general partnership with its principal place of business at One Memorial
Drive, Cambridge, Massachusetts 02142. Babson of Cambridge,
Massachusetts and Stewart Ivory of Edinburgh, Scotland are the two
general partners of Babson-Stewart Ivory.
Babson-Stewart Ivory is managed by its general partners, acting through
their designated Managing Directors. The names and principal
occupations of the Managing Directors are as follows:
Managing Director Principal Occupation
Kevin M. McClintock Director and Executive Vice President of
David L. Babson & Co.
Stephen B. O'Brien Executive Vice President of David L.
Babson & Co.
John G. L. Wright Director of Stewart Ivory
James W. Burns Director of Stewart Ivory
The address for Messrs. McClintock and O'Brien is One Memorial Drive,
Cambridge, Massachusetts 02142. The address for Messrs. Wright and
Burns is 45 Charlotte Square, Edinburgh, Scotland EH2 4HW.
Babson is an indirect, majority owned subsidiary of Massachusetts Mutual
Life Insurance Company ("MassMutual"). Specifically, Babson is a wholly-
owned subsidiary of DLB Acquisition Corp., a holding company that is a
majority owned subsidiary of MassMutual Holding Trust I, which in turn
is a holding company and wholly-owned subsidiary of MassMutual Holding
Company, a holding company and a wholly-owned subsidiary of MassMutual,
a mutual life insurance company.
Stewart Ivory is a wholly-owned subsidiary of Stewart Ivory & Company
Limited, which in turn, is a wholly-owned subsidiary of Stewart Ivory
(Holdings) Limited (hereafter, "Stewart Ivory Holdings"). As of March
20, 2000, Stewart Ivory Holdings became an indirect, wholly-owned
subsidiary of Colonial Limited, a global financial services firm
headquartered in Australia. Subsequently, on June 15, 2000, Colonial
Limited and its affiliates were acquired in a merger transaction by
Commonwealth Bank, an international banking organization also
headquartered in Australia. As a result, Babson-Stewart Ivory is
partially owned by Commonwealth Bank. Additional information about the
recent ownership changes is set forth below.
Description of Ownership Changes. On March 20, 2000, the shareholders
of Stewart Ivory Holdings sold all of the outstanding voting securities
of Stewart Ivory Holdings to Colonial First State (UK) Holdings Limited
("Colonial First State") pursuant to a Recommended Offer dated February
17, 2000 (the "Offer") by Colonial First State for all of the
outstanding share capital of Stewart Ivory Holdings. Pursuant to the
terms of the Offer, Colonial First State paid a total purchase price of
approximately (pound)76.0 million (which was equal to approximately
$119.30 million at the currency exchange rate in effect as of March 20,
2000), which consisted of an agreement to pay existing shareholders of
Stewart Ivory Holdings approximately (pound)47.2 million for 100 percent
of the outstanding share capital of Stewart Ivory Holdings, an agreement
to pay up to (pound)23.3 million for continuing existing employees of
Stewart Ivory Holdings over a period of five years and up to (pound)5.5
million in reduced management fees to a shareholder of Stewart Ivory
Holdings which is also an investment trust managed by a subsidiary of
Stewart Ivory Holdings. The payment of a portion of the purchase price
to shareholders was deferred until January 2001 and is contingent on the
satisfaction of certain conditions.
Prior to the Colonial Group's acquisition of Stewart Ivory Holdings, the
employees, officers and directors of Stewart Ivory & Company Limited
beneficially owned in excess of 78 percent of the outstanding share
capital of Stewart Ivory Holdings. In addition, two of the Managing
Directors of Babson-Stewart Ivory owned shares of Stewart Ivory Holdings
prior to the acquisition and, thus, received a portion of the purchase
price. Specifically, Mr. Wright beneficially owned more than five
percent of the outstanding share capital of Stewart Ivory Holdings, and
Mr. Burns beneficially owned more that one percent but less than five
percent of the outstanding share capital of Stewart Ivory Holdings.
Prior to the Commonwealth acquisition, Colonial Group was a diverse
international financial services group with its core business in life
insurance, banking, superannuation (retirement products) and fund
management. The Colonial Group operated in Australia, New Zealand, the
United Kingdom and the Fiji islands, as well as Asia. At June 30, 1999
total assets held and under management were $75.8 billion (Australian).
Colonial Limited had three major operating divisions:
* Australian Financial Services--a fully integrated insurance,
superannuation and banking business consisting of one of Australia's
largest life insurers and Colonial State Bank operations;
* International Financial Services--an international business operating
across ten geographic markets offering a mix of life insurance, health
insurance, retirement savings products and banking; and
* Colonial First State Investments--an international fund management
business with $47.6 billion (Australian) of funds under management as of
June 30, 1999 and operations in Australia, New Zealand, Hong Kong and
mainland China, the Philippines, Singapore and the UK. It manages funds
on behalf of both wholesale and retail clients as well as managing the
life insurance and superannuation assets of Colonial.
Commonwealth Bank is one of the top ten capitalized companies listed on
the Australian Stock Exchange. The bank operates predominantly in the
domestic Australian market and its operations cover both retail
financial services and business and corporate banking. The bank is
represented internationally through ASB Bank Limited, a successful
retail bank in New Zealand of which Commonwealth Bank is a 75%
shareholder, and through branches in London, New York, Singapore, Tokyo,
Hong Kong and Grand Cayman.
The acquisition of Colonial Group by Commonwealth Bank creates the
largest financial services group in Australia.
Original and Interim Investment Counsel Agreements. The Original
Agreement under which Babson-Stewart Ivory most recently provided sub-
advisory services to the Fund was dated June 30, 1995 and became
effective following its approval by shareholders in 1995 in connection
with MassMutual's acquisition of an ownership interest in Babson.
The Original Agreement, as required by the Investment Company Act,
provided for its automatic termination in the event of its assignment.
The Colonial Group acquisition of Babson-Stewart Ivory involved the type
of change in ownership that qualified as an assignment for Investment
Company Act purposes. As a result, the Original Agreement terminated
automatically on March 20, 2000 in connection with the Colonial Group
acquisition.
Ordinarily, shareholders of a fund must approve an advisory agreement
before it takes effect. In this case, the Fund's Board, including the
independent Directors, relied on Rule 15a-4 under the Investment Company
Act, which enabled it to approve a temporary Interim Investment Counsel
Agreement to take effect after the Colonial Group acquisition that
allowed Babson-Stewart Ivory to continue managing the Fund until
shareholders could approve a new Investment Counsel Agreement.
Similarly, the Board approved a second Interim Investment Counsel
Agreement with Babson-Stewart Ivory which took effect following the
Commonwealth merger. Under Rule 15a-4, an advisor can serve pursuant to
an interim advisory agreement for up to 150 days while the fund seeks
shareholder approval of a new investment advisory agreement. Rule 15a-4
imposes the following conditions, all of which were met in the case of
each interim Investment Counsel Agreement relating to the Fund:
(i) the compensation under the interim contract may be no greater
than under the previous contract;
(ii) the fund's board of directors, including a majority of the
independent directors, has voted in person to approve the
interim contract before the previous contract is terminated;
(iii) the fund's board of directors, including a majority of the
independent directors, determines that the scope and quality of
services to be provided to the fund under the interim contract
will be at least equivalent to the scope and quality of services
provided under the previous contract;
(iv) the interim contract provides that the fund's board of
directors or a majority of the fund's outstanding voting
securities may terminate the contract at any time, without the
payment of any penalty, on not more than 10 calendar days'
written notice to the investment adviser;
(v) the interim contract contains the same provisions as the
previous contract with the exception of effective and
termination dates, provisions required by Rule 15a-4 and other
differences determined to be immaterial by the board of the
fund; and
(vi) the interim contract provides in accordance with the
specific provisions of Rule 15a-4 for the establishment of an
escrow account for fees received under the interim contract
pending approval of a new contract by shareholders.
The sub-advisory fees earned by Babson-Stewart Ivory during the interim
period are being held in an escrow account until the shareholder
meeting. If the Proposed Agreement is approved, that approval will be
viewed as an implicit approval of each Interim Investment Counsel
Agreement by shareholders, and Babson-Stewart Ivory will receive the
escrowed fees (plus interest). If the Proposed Agreement is not
approved, Babson-Stewart Ivory may only be able to receive fees for the
interim period equal to the costs it incurred in sub-advising the Fund
for that period.
Proposed Investment Counsel Agreement. The Proposed Agreement is
substantially identical to the Original Agreement except for the
effective date and termination dates. The Proposed Agreement will take
effect immediately after it is approved by shareholders and will have an
initial term of two years. Thereafter, it can be renewed for successive
one year periods provided its renewal is approved by the Board or by a
majority of the outstanding voting securities (as defined in the
Investment Company Act) of the Fund and, in either event, by the vote
cast in person of a majority of the independent Directors.
The terms of the Original and Proposed Agreements are substantially
identical. There is no change in the sub-advisory fees paid to Babson-
Stewart Ivory, which total 0.475% of average daily net assets annually.
The Agreements each provide that Babson-Stewart Ivory will provide
research, analysis, advice and recommendations with respect to the
purchase or sale of securities and the making of investment commitments
for the Fund. The Agreements also each provide that, in the absence of
willful misfeasance, bad faith or gross negligence in the performance of
its duties, Babson-Stewart Ivory shall not be liable for errors of
judgment or losses related to its advisory services to the Fund. The
Agreements also each provide that they may be terminated without penalty
upon 60 days written notice by the Fund and the Proposed Agreement
provides that Jones & Babson can similarly terminate the Agreement.
Finally, the Agreements each contain provisions limiting the Fund's
ability to use the name "David L. Babson & Co." (or any part thereof) if
Jones & Babson or Babson-Stewart Ivory do not continue as manager or sub-
adviser to the Fund.
The Proposed Agreement is attached as an Exhibit to this proxy
statement.
Other Similar Funds Managed by Sub-Adviser. In addition to serving as
sub-adviser to the Fund, Babson-Stewart Ivory also serves as the
investment sub-adviser to Babson for the international component of the
DLB Global Small Capitalization Fund and for the portfolios of DLB
Stewart Ivory International Fund and DLB Stewart Ivory Emerging Markets
Fund. Each of the named mutual funds are part of the DLB Fund Group, a
registered investment company, and each has investment objectives and
policies that are similar to those of the Fund. Information about the
asset size of each fund and the fees paid to Babson-Stewart Ivory for
serving as sub-adviser during each fund's last fiscal year follows:
Name of Fund Approximate Net Asset Sub-Advisory Fee
Value
as of October 31, 1999
DLB Global Small [__________________] [__________________]
Capitalization Fund
(international
portion)
DLB Stewart Ivory [__________________] [__________________]
International Fund
Board of Directors Deliberations. On March 9, 2000, the Fund's Board of
Directors held a Special Meeting to consider the proposed Interim
Investment Counsel Agreement with Babson-Stewart Ivory to take effect
following the Colonial Group acquisition. At the meeting, the Board
reviewed materials furnished by Babson-Stewart Ivory and discussed the
proposed acquisition with James W. Burns, one of Babson-Stewart Ivory's
Managing Directors. Mr. Burns outlined the various reasons why Stewart
Ivory believed that the acquisition would benefit Stewart Ivory, and, as
a result, Babson-Stewart Ivory and the Fund, specifically noting that
being part of a larger international financial organization would
strengthen Stewart Ivory's technological, research and investment
capabilities. Mr. Burns also discussed the terms of the acquisition,
the anticipated logistical effects and the strong financial incentives
designed to retain key employees. He indicated that the Fund's existing
portfolio management team and supporting investment professionals were
mainly expected to remain with the firm and continue to manage the Fund.
The Board of Directors, including a majority of the independent
Directors, approved the proposed Interim Investment Counsel Agreement
with Babson-Stewart Ivory after determining that the Agreement: (1)
provided for the same compensation to Babson-Stewart Ivory as the
Original Agreement; (2) contained satisfactory terms and conditions in
view of Section 15 of the Investment Company Act and Rule 15a-4
thereunder; and (3) provided for services of at least equivalent scope
and quality as the Original Agreement.
At their next quarterly Board of Directors' Meeting held on April 27,
2000, the Fund's Board considered the further development of the
proposed merger between Commonwealth Bank and Colonial Limited. After
discussing the proposed terms of the proposed merger with
representatives from Babson, and the possible effects of the merger on
Babson-Stewart Ivory and the Fund, the Board approved a second Interim
Investment Counsel Agreement to take effect following the
Commonwealth/Colonial merger after making the same three determinations
detailed above.
At the April meeting, the Board of Directors, including a majority of
the independent Directors, also approved the form, terms and conditions
of the Proposed Agreement to be voted on by Fund shareholders under
which Babson-Stewart Ivory could continue to serve as sub-adviser to the
Fund. In approving the Proposed Agreement, the Board considered the
terms of the Proposed Agreement, the quality of services historically
provided by Babson-Stewart Ivory and the benefits of continuity of the
advisory relationship. The Board also considered the fact that
stockholder approval of the Proposed Agreement would permit Babson-
Stewart Ivory to receive payment of the fees it earned under the first
and second Interim Investment Counsel Agreements. Based on these and
other considerations, the Board unanimously determined to recommend that
shareholders approve the New Agreement.
Required Vote. Provided that a quorum is present, the approval of the
Proposed Agreement requires the affirmative vote of the lesser of: (i)
more than 50% of the outstanding voting securities of the Fund; or (ii)
67% or more of the voting securities of the Fund present at the Meeting,
if the holders of more than 50% of the Fund's outstanding voting
securities are present or represented by proxy.
The Board of Directors unanimously recommends
that you vote to approve the new Investment Counsel Agreement.
PROPOSAL TWO
To grant the proxyholders authority to vote upon any other business
that may properly come before the Meeting
The Directors do not intend to bring any matters before the Meeting
other than Proposals One and Two and are not aware of any other matters
to be brought before the Meeting by others. If any other matters do
properly come before the Meeting, the persons named in the enclosed
proxy will use their best judgment in voting on such matters.
ADDITIONAL INFORMATION
Reports to Shareholders and Financial Statements. The Fund's last
audited financial statements and annual report, for the fiscal year
ended June 30, 1999, and the semi-annual report dated December 31, 1999,
are available free of charge. To obtain a copy, please call the Fund
toll-free at 1-800-422-2766, or in the Kansas City area at 751-5900, or
forward a written request to Babson Funds, P.O. Box 219757, Kansas City,
MO 64121-9757.
Principal Shareholders. As of June 15, 2000, the Fund had 3,684,648.006
shares outstanding and total net assets of $88,357,859.18. From time to
time, the number of shares held in "street name" accounts of various
securities dealers for the benefit of their clients may exceed 5% of the
total shares outstanding. To the knowledge of the Fund's management, as
of June 15, 2000, the following entities held beneficially or of record
more than 5% of the Fund's outstanding shares.
Name and Address of Holder Percentage of
Fund
Ownership
Quincy Mutual Fire Insurance 10.85%
Company
Quincy, MA
In addition, to the knowledge of the Fund's management, as of June 15,
2000, no Director owned 1% or more of the outstanding shares of the
Fund, and the officers and Directors of the Fund owned, as a group, less
than 1% of the Fund's outstanding shares.
Other Voting Information. You may attend the Meeting and vote in person
or you may complete and return the proxy card. Proxy cards that are
properly signed, dated and received at or prior to the Meeting will be
voted as specified. If you specify a vote for any of the Proposals One
or Two, your proxy will be voted as you indicate. If you simply sign
and date the proxy card, but don't specify a vote for any of the
Proposals One or Two, your shares will be voted FOR Proposal One and to
GRANT discretionary authority to the persons named in the proxy card as
to any other matters that properly may come before the Meeting (Proposal
Two). You may revoke your proxy at any time before it is voted by: (1)
delivering a written revocation to the Secretary of the Fund, (2)
forwarding to the Fund a later-dated proxy card that is received by the
Fund at or prior to the Meeting, or (3) attending the Meeting and voting
in person.
Solicitation of Proxies. The cost of soliciting proxies will be borne
by Babson-Stewart Ivory. Babson-Stewart Ivory reimburses brokerage
firms and others for their expenses in forwarding proxy material to the
beneficial owners and soliciting them to execute proxies. Babson-
Stewart Ivory has engaged D. F. King to solicit proxies from brokers,
banks, other institutional holders and individual shareholders for an
approximate fee, including out-of-pocket expenses, ranging between
$5,000 and $10,000. Babson-Stewart Ivory expects that the solicitation
will be primarily by mail, but also may include telephone or facsimile
solicitations. In addition to solicitations by mail, some of the
executive officers and employees of the Fund, Babson-Stewart Ivory,
Jones & Babson and any affiliates, without extra compensation, may
conduct additional solicitations by telephone, personal interviews and
other means.
The Notice of Meeting, the proxy cards, and the proxy statement were
mailed to shareholders of record on or about July 3, 2000.
Voting by Broker-Dealers. The Fund expects that, before the Meeting,
broker-dealer firms holding shares of the Fund in "street name" for
their customers will request voting instructions from their customers
and beneficial owners. If these instructions are not received by the
date specified in the broker-dealer firms' proxy solicitation materials,
the Fund understands that stock exchange rules will not permit the
broker-dealers to vote on the new Investment Counsel Agreement on behalf
of their customers and beneficial owners. Certain broker-dealers may
exercise discretion over shares held in their name for which no
instructions are received by voting those shares in the same proportion
as they vote shares for which they received instructions.
Quorum. A majority of the Fund's outstanding shares, present in person
or represented by proxy, constitutes a quorum at the Meeting. Proxies
returned for shares that represent "broker non-votes" (i.e., shares held
by brokers or nominees as to which: (i) instructions have not been
received from the beneficial owners or persons entitled to vote; and
(ii) the broker or nominee does not have discretionary voting power on a
particular matter), and shares whose proxies reflect an abstention on
any item are all counted as shares present and entitled to vote for
purposes of determining whether the required quorum of shares exists.
Abstentions and broker non-votes will be treated as votes present but
not cast.
Other Matters and Discretion of Attorneys Named in the Proxy. The Fund
is not required, and does not intend, to hold regular annual meetings of
shareholders. Shareholders wishing to submit proposals for
consideration for inclusion in a proxy statement for the next meeting of
shareholders should send their written proposals to the Fund's principal
office, BMA Tower, 700 Karnes Boulevard, Kansas City, MO 64108, so they
are received within a reasonable time before any such meeting. No
business other than the matters described above is expected to come
before the Meeting, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment or
postponement of the Meeting, the persons named on the enclosed proxy
card will vote on such matters according to their best judgment in the
interests of the Fund.
By order of the Board of Directors,
Martin A. Cramer
Secretary
Dated: July 3, 2000
Kansas City, Missouri
<PAGE>
EXHIBIT A
Form of Investment Counsel Agreement
INVESTMENT COUNSEL AGREEMENT
between
JONES & BABSON, INC.
and
BABSON-STEWART IVORY INTERNATIONAL
THIS AGREEMENT by and between JONES & BABSON, INC., a Missouri corporation
with its principal office at the BMA Tower, 700 Karnes Boulevard, Kansas
City, Missouri 64108 (hereinafter referred to as the "Manager"), and
BABSON-STEWART IVORY INTERNATIONAL, a Massachusetts general partnership
with its principal office at One Memorial Drive, Cambridge, Massachusetts
02142 (hereinafter referred to as the "Investment Counsel"), is made
pursuant to the approval and direction of the parties' respective Board of
Directors and may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall
constitute but one instrument.
WITNESSETH:
WHEREAS, the Manager has entered into a Management Agreement with
BABSON-STEWART IVORY INTERNATIONAL FUND, INC. (Fund) to provide
management services, including investment advisory services, the
Manager desires the assistance of the Investment Counsel which can
supply the following services:
Research, analysis, advice and recommendations with respect to the
purchase and sale of securities and the making of investment
commitments; statistical information and reports as may reasonably be
required, and general assistance in the supervision of the
investments of the Fund, subject to the control of the Directors of
the Fund and the Directors of the Manager
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties agree as follows:
1. During the term of this Agreement, or any extension or
extensions thereof, the Investment Counsel will, to the best of
its ability, furnish the foregoing services.
2. As compensation, the Manager will pay Investment Counsel
for its services the following annual fee computed daily as
determined by the Fund's price make-up sheet and which shall be
payable monthly or at such other intervals as agreed by the
parties:
a. Four hundred seventy-five one-thousandths of one
percent (475/1000 of 1%) of the average daily total net
assets of the Fund.
3. This Agreement shall become effective upon its approval by
shareholders of the Fund.
4. The initial period of this Agreement shall be two years
from its effectiveness. Thereafter, or at an earlier date
determined by the Board, this Agreement may be renewed for
successive periods not exceeding one year only so long as such
renewal and 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 as
prescribed by the Investment Company Act of 1940 (Act) and
provided further that such continuance is approved at least
annually thereafter by a vote of a majority of the Directors who
are not parties to such Agreement or interested persons (as
defined by the Act) of such party, cast in person at a meeting
called for the purpose of voting on such approval. The
Investment Counsel shall provide the Manager such information as
may be reasonably necessary to assist the Directors of the Fund
to evaluate the terms of the Management Agreement. This
Agreement automatically will terminate with the Management
Agreement without the payment of any penalty, upon sixty days
written notice by the Fund to the Manager that the Board of
Directors or the shareholders by vote of a majority of the
outstanding voting securities of the Fund, as provided by the
Act, has terminated the Management Agreement. This Agreement
shall automatically terminate in the event of its assignment or
assignment of the Management Agreement unless such assignment is
approved by the Directors and the shareholders of the Fund as
herein before provided or unless an exemption is obtained from
the Securities and Exchange Commission from the provisions of
the Act pertaining to the subject matter of this paragraph. The
Manager shall promptly notify the Investment Counsel of any
notice of termination or of any circumstances which are likely
to result in a termination of the Management Agreement.
5. It is understood and agreed that the services to be
rendered by the Investment Counsel to the Manager under the
provisions of this Agreement are not to be deemed to be
exclusive, and the Investment Counsel shall be free to render
similar or different services to others so long as its ability
to render the services provided for in this Agreement shall not
be impaired thereby, and provided further that the services to
be rendered by the Investment Counsel to the Manager under this
Agreement and the compensation provided for in Paragraph 2
hereof shall be limited solely to services with reference to the
Fund.
6. The Manager agrees that it will furnish currently to
Investment Counsel all information reasonably necessary to
permit Investment Counsel to give the advice called for under
this Agreement and such information with reference to the Fund
that is reasonably necessary to permit Investment Counsel to
carry out its responsibilities under this Agreement, and the
parties agree that they will from time to time consult and make
appropriate arrangements as to specific information that is
required under this paragraph and the frequency and manner with
which it shall be supplied.
7. The Investment Counsel shall not be liable for any error of
judgment or mistake at law or for any loss suffered by Manager
of the Fund in connection with any matters to which this
Agreement relates except that nothing herein contained shall be
construed to protect the Investment Counsel against any
liability by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reckless
disregard of its obligations or duties under this Agreement.
8. In compliance with the provisions of the Management
Agreement between the Fund and the Manager, Investment Counsel
agrees with Manager that subject to the terms and conditions of
this Paragraph 8, the Fund may use the name of "David L. Babson"
(or any part thereof) as part of its name so long as the
Manager, or any successor in interest, continues as Manager and
BABSON-STEWART IVORY INTERNATIONAL, or any successor in
interest, continues as Investment Counsel. Should the Fund
terminate either the Manager, or its successor as Manager, or
BABSON-STEWART IVORY INTERNATIONAL, or its successor as
Investment Counsel, either the Manager, or BABSON-STEWART IVORY
INTERNATIONAL, or their respective successors in interest, may
elect to notify the Fund in writing that permission to use the
name "David L. Babson" (or any part thereof) has been withdrawn.
It is understood that the Fund has, in its Management Agreement
with the Manager, expressly agreed that it, its officers,
directors and shareholders will take all necessary corporate
action and proceed expeditiously to change the name of the Fund
and not use any other name or take any action which would
indicate the Fund's continued association with BABSON-STEWART
IVORY INTERNATIONAL. If the use of the name "David L. Babson"
(or any part thereof) is so withdrawn as aforesaid, it is
understood and agreed that there shall be no limitation with
respect to the future use of the name "David L. Babson" (or any
part thereof) by BABSON-STEWART IVORY INTERNATIONAL, or its
successor in interest, or by the Manager or its successor in
interest.
9. Although it is not anticipated, there may occur some
unforeseen reason which would prohibit BABSON-STEWART IVORY
INTERNATIONAL, as a matter of reasonable business necessity,
continuing as Investment Counsel. Should such circumstances
occur, BABSON-STEWART IVORY INTERNATIONAL, or its successor may
elect to terminate its services, even though the Fund would want
to continue to use the name "David L. Babson" (or any part
thereof) and continue to use the Manager, or its successor, as
manager with BABSON-STEWART IVORY INTERNATIONAL, or its
successor, as Investment Counsel. Upon receipt of such a
written notice, the Fund, its officers, directors and
shareholders, have agreed in the Management Agreement between
the Fund and the Manager, for the benefit of BABSON-STEWART
IVORY INTERNATIONAL, to take all necessary corporate action and
proceed expeditiously to change the name of the Fund (but if
necessary, take up to one year from the effective date of the
termination of the Management Agreement) and not use any other
name or take any other action which would indicate the Fund's
continued association with BABSON-STEWART IVORY INTERNATIONAL.
In consideration for this right, BABSON-STEWART IVORY
INTERNATIONAL agrees that should it so request the withdrawal of
the name "David L. Babson" (or any part thereof) it will not
permit another investment company, whether or not registered
under the Act, to use the name "David L. Babson" (or any part
thereof) as part of its name for a period of five years
subsequent to the effective date of the written withdrawal
request, unless this prohibition is waived or modified by a
majority vote of the Fund's shareholders entitled to vote at a
duly constituted meeting of the Fund's shareholders following
receipt of the request, and if any such action is also approved
by the majority of shares entitled to vote at a duly constituted
meeting of the shareholders of the Manager For this right to
withdraw the name "David L. Babson" (or any part thereof) from
the use of the Fund, BABSON-STEWART IVORY INTERNATIONAL agrees
that it will not compete with the Manager for the management of
the Fund during said five-year period, unless this no-compete
provision is waived by a majority of the shares entitled to vote
at a duly constituted meeting of the shareholders of the Manager
Each party hereby executes this Agreement as of the ___ day of ____, 2000,
pursuant to the authority granted by its Board of Directors.
BABSON-STEWART IVORY INTERNATIONAL
By: ________________________
ATTEST: ______________
JONES & BABSON, INC.
By:________________________
ATTEST: ______________
<PAGE>
FIRST CLASS
U.S. POSTAGE PAID
PROXY TABULATOR
From: PROXY TABULATOR P.O. BOX 9122
HINGHAM, MA 02043-9122
VOTE TODAY BY MAIL, TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL-FREE 1-888-221-0697 OR LOG ON TO WWW.PROXYWEB.COM
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE VOTE YOUR PROXY TODAY!
Please fold and detach card at perforation before mailing
PROXY SPECIAL MEETING OF SHAREHOLDERS Babson-Stewart Ivory International
Fund, Inc. August 1, 2000. The undersigned hereby revokes all previous
proxies for his or her shares and appoints Stephen S. Soden, P. Bradley Adams
and Martin A. Cramer, and each of them, proxies of the undersigned with
full power of substitution to vote all shares of Babson-Stewart Ivory
International Fund, Inc. (the "Fund") that the undersigned is entitled to
vote at the Special Meeting of Shareholders, including any adjournments
thereof (the "Meeting"), to be held at the offices of
Jones & Babson, Inc., on the 19 floor of the BMA Tower, 700
Karnes Boulevard, Kansas City, Missouri at 10:00 a.m., Central
Time on August 1, 2000, upon such business as may properly be brought
before the Meeting.
IMPORTANT: PLEASE VOTE YOUR PROXY TODAY.
You are urged to date and sign this proxy and return it promptly. This
will save the expense of follow-up letters to shareholders who have not
responded.
Note: Please sign exactly as your name appears on the
proxy. If signing for estates, trusts or corporations, title or
capacity should be stated. If shares are held jointly, each
holder must sign.
Date: Signature(s)
*IMPORTANT: PLEASE VOTE YOUR PROXY TODAY (Please see reverse side) 428
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE OR
VOTE BY PHONE OR INTERNET.
NO POSTAGE REQUIRED IFMAILED IN THE U.S.Please fold and detach
card at perforation before mailing. This proxy is solicited on
behalf of the Board of Directors of Babson-Stewart Ivory
International Fund, Inc. (the "Fund"). It will be voted as
specified. If no specification is made, this proxy shall be voted
in favor of Proposals 1 and 2. If any other matters properly
come before the Meeting aboutwhich the proxyholders were not
aware prior to the time of solicitation, Proposal 2 gives
authorization to the proxyholders to vote in accordance withthe
views of management on such matters. Management is not aware of
any such matters. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE
IN FAVOR OF PROPOSALS 1 AND 2
FOR AGAINST ABSTAIN
1. To approve a new Investment Counsel Agreement between
Jones & Babson, Inc., and Babson-Stewart Ivory International
with respect to Babson-Stewart Ivory International Fund, Inc.
2. To grant the proxyholders authority to vote upon any
other business that may properly come before the Meeting.
IMPORTANT: PLEASE VOTE YOUR PROXY TODAY 428
