SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant
Filed by a Party other than the Registrant Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-12
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)
Payment of Filing Fee (Check the appropriate box):
No fee required.
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- -----------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- -----------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
- -----------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- -----------------------------------------------------------
5) Total fee paid:
- -----------------------------------------------------------
______Fee paid previously with preliminary materials
______Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
- -----------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
- -----------------------------------------------------------
3) Filing Party:
- -----------------------------------------------------------
4) Date Filed:
- -----------------------------------------------------------
BABSON-STEWART IVORY INTERNATIONAL FUND, INC.
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.
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,
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.
PROXY STATEMENT
TABLE OF CONTENTS
Page
Questions and Answers 1
Proposal One: Approval of New Investment Counsel Agreement 3
Proposal Two: Other Business 8
Additional Information 9
Exhibit: Form of New Investment Counsel Agreement 11
QUESTIONS AND ANSWERS On what issue am I being asked to vote?
You are being asked to approve a new Investment Counsel Agreement (the "New
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 New 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 within 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 the New
Agreement. Your vote to approve the New 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 Agreement is substantially identical to the original agreement
(the "Original Agreement"), except for the effective and termination dates. Your
approval of the New 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?
o By Mail: by signing, dating, voting and returning the proxy card in the
enclosed postage paid envelope.
o By Phone: with a toll-free call to 1-888-221-0697 between 9:00 a.m. and
10:00 p.m. (Eastern time).
o 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.
o 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 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 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.
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 "New Agreement") between Jones &
Babson, Inc. ("Jones & Babson") and Babson-Stewart Ivory, which would become
effective immediately following shareholder approval. The New 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 New 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:
o 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;
o 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
o 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 the New Agreement.
Similarly, the Board approved a second Interim Investment Counsel Agreement with
Babson-Stewart Ivory which took effect following the Commonwealth Bank 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 New
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 New 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 NEW Investment Counsel Agreement. The New Agreement is substantially
identical to the Original Agreement except for the effective date and
termination dates. The New 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 New 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 New 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 New 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:
Approximate Net Asset Value
Name of Fund as of October 31, 1999 Sub-Advisory Fee
DLB Global Small
Capitalization Fund $15,615,456 $123,274
(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. In approving the
proposed interim Investment Counsel Agreement, the Board emphasized its approval
of the anticipated technological, research and investment capabilities.
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 New
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 New
Agreement, the Board considered the terms of the New 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 New 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 New
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 Company 10.85%
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
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 Fund
Attest:
By:
Jones & Babson, Inc.
Attest:
By:
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE VOTE YOUR
PROXY TODAY!
Please fold and detach card at perforation before mailing
PROXY 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 19th 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.
____________________________________
Signature(s)
____________________________________
Date
IMPORTANT: PLEASE VOTE YOUR PROXY...TODAY
(Please see reverse side)
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE OR VOTE BY PHONE
OR INTERNET. NO POSTAGE REQUIRED IF MAILED 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 about which the
proxyholders were not aware prior to the time of the solicitation, Proposal 2
gives authorization to the proxyholders to vote in accordance with the 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