Babson
Enterprise
FunD
Semiannual Report
May 31, 1995
MESSAGE
To Our Shareholders
Babson Enterprise Fund achieved a total return (price change and reinvested
distributions) of 4.9% in the three months ended May 31, 1995. This compares
with a 5.8% return for the small companies in the unmanaged Russell 2000
index and a 10.2% return for the larger capitalization companies in the
unmanaged Standard & Poor's 500 index. During the first half of
fiscal 1995, the total return for Babson Enterprise Fund was 8.2%. In the
same six month period, the Russell 2000 rose 11.7% and the S&P 500, 19.1%.
Average annual compounded total returns for one,
five and ten year periods, as of March 31, 1995, were 8.5%, 13.5% and 13.0%,
respectively. Performance data contained in this report is for past periods
only. Past performance is not predictive of future performance. Investment
return and share value will fluctuate, and redemption value may be more or
less than original cost.
Large capitalization stocks have continued to outperform in the most recent
quarter for several reasons. Fears of recession hurt smaller more economically
sensitive companies as investors have flocked to the safety of larger
companies. And, large multinational companies benefited to a much greater
extent from the weakness of the U.S. dollar. Small companies as a group have
much less overseas exposure.
In addition, one of the key drivers among both large and small capitalization
stocks has been the technology sector which is underweighted in the portfolio.
Neglected stocks, in which we invest, tend to underperform in this type of
market. This happens from time to time, but usually does not last for very
long.
The following companies were added to the portfolio in the quarter:
Instron Corp. _ makes materials testing instruments to measure strength,
elasticity, and hardness.
J & J Snack Foods Corp. _ produces soft pretzels and other snack foods.
Oregon Metallurgical Corp. _ manufactures titanium and other metal products
for aerospace, medical, and industrial markets.
You may notice than an existing holding, JB's Restaurants, has changed its
name to Summit Family Restaurant. Also during the quarter, we sold our
positions in CDI Corp. and West Co. at prices that were significantly greater
than our original cost.
Thank you for your continuing interest and participation in Babson Enterprise
Fund.
Sincerely,
Larry D. Armel
President
<PAGE>
STATEMENT OF NET ASSETS
May 31, 1995 (unaudited)
SHARES COMPANY (NOTE 1-A) MARKET VALUE
COMMON STOCKS - 92.88%
BASIC MATERIALS - 14.25%
110,800 American Filtrona Corp.
(Bonded fiber products
and extruded plastics) $ 3,351,700
69,900 Brady (W.H.) Co. Cl. A
(Identification and labeling
systems) 4,386,225
217,700 Duplex Products Inc.
(Business forms) 1,823,237
182,700 Furon Co.
(Polymer based products) 4,019,400
376,100 Intermet Corp.
(Auto and industrial
iron castings) 3,196,850
165,900 Material Sciences Corp.
(Coatings and laminates) 3,276,525
257,650 Nord Resources Corp.
(Rutile and kaolin production) 901,775
84,900 Penwest Ltd.
(Specialty starch based
products) 1,846,575
236,100 Shiloh Industries, Inc.
(Steel processor) 2,036,362
208,600 Tab Products Co.
(Color-coded filing systems) 1,329,825
120,700 Tuscarora Inc.
(Molded foam packaging
products) 2,353,650
28,522,124
CAPITAL GOODS - 21.57%
48,300 American Precision Industries Inc.
(Heat exchangers) 458,850
233,700 Apogee Enterprises, Inc.
(Commercial window systems) 3,987,506
152,426 Athey Products Corp.
(Street sweepers) 895,503
213,500 Atkinson (Guy F.) Co.
(Construction) 1,868,125
286,700 Brenco, Inc.
(Railroad car bearings) 3,655,425
248,300 Farrell Corp. New
(Rubber and plastic
processing equipment) 1,551,875
72,100 Industrial Acoustics Company, Inc.
(Noise control products) 1,045,450
14,300 Instron Corp.
(Materials testing instruments) 166,238
203,100 Interface, Inc. Cl. A
(Carpet tile) 2,843,400
133,600 K-Tron International, Inc.
(Industrial feeders and
blenders) 868,400
126,400 Kuhlman Corp.
(Electrical transformers) 1,532,600
137,800 Moog Inc. Cl. A
(High performance
control systems) 1,670,825
201,200 Newcor, Inc.
(Automobile assembly
systems) 1,332,950
41,700 Oregon Metallurgical Corp.
(Titanium) 364,875
176,600 Pacific Scientific Co.
(Aerospace and industrial
products) 3,090,500
216,829 Raymond Corp.
(Narrow-aisle lift trucks) 4,553,409
324,200 Schwitzer, Inc.
(Heavy duty engine
components) 3,687,775
65,400 SPS Technologies, Inc.
(Aerospace fasteners) 2,207,250
CAPITAL GOODS (Continued)
116,200 Starrett (L.S.) Co. Cl. A
(Tools and precision
instruments) 2,672,600
254,300 Stevens Graphics Corp. Cl. A
(Printing presses) 1,716,525
61,500 Technitrol, Inc.
(Industrial components and
assemblies) 884,063
78,800 Tennant Co.
(Floor maintenance
equipment) 2,127,600
43,181,744
CONSUMER CYCLICAL - 19.91%
157,300 AMC Entertainment, Inc.
(Movie theaters) 2,084,225
237,400 American Recreation Centers, Inc.
(Bowling centers) 1,706,313
269,083 Anthony Industries, Inc.
(Recreational and industrial
products) 4,439,869
113,000 Baldwin Piano & Organ Co.
(Keyboard instruments) 1,412,500
212,605 Chock Full o'Nuts Corp.
(Coffee processor) 1,381,933
294,750 Dixie Yarns, Inc.
(Yarns and industrial thread) 2,026,406
247,500 Falcon Products, Inc.
(Table pedestals) 3,093,750
108,000 Forschner Group, Inc.
(Swiss Army knives) 1,080,000
231,000 Forstmann & Company, Inc.
(Woolen fabrics) 808,500
130,700 Gander Mountain, Inc.
(Hunting and fishing
catalog retailer) 1,307,000
96,000 Gibson (C.R.) Co.
(Paper gift products) 732,000
178,700 Gottschalks Inc.
(Specialty-apparel stores) 1,228,563
195,450 Helen of Troy Ltd.
(Hair care appliances) 3,811,275
204,700 Jacobson Stores Inc.
(Upscale department
store chain) 1,995,825
209,800 Jay Jacobs, Inc.
(Specialty-apparel stores) 236,025
189,600 Summit Family Restaurant
(Restaurant chain) 758,400
135,775 Leslie's Poolmart
(Specialty swimming
pool stores) 2,036,625
147,500 Oneida Ltd.
(Stainless steel flatware) 2,212,500
91,500 POCI, Inc.
(Travel club) 160,125
141,050 S K I, Ltd.
(Ski resorts) 2,221,538
234,200 Shelby Williams Industries, Inc.
(Contract seating) 2,342,000
36,300 Tranzonic Cos. Cl. A
(Industrial textiles) 535,425
18,100 Tranzonic Cos. Cl. B
(Industrial textiles) 264,713
98,400 Walbro Corp.
(Auto fuel injection systems) 1,968,000
39,843,510
CONSUMER STAPLES - 7.00%
52,900 Genesee Corp. Cl. B
(Regional brewer) 2,003,588
55,800 GoodMark Foods, Inc.
(Meat snacks) 871,875
168,700 J & J Snack Foods Corp.
(Soft pretzels and other
snack foods) 2,045,488
142,400 Northland Cranberries, Inc. Cl. A
(Cranberry grower) 2,171,600
156,225 Rykoff-Sexton, Inc.
(Foodservice product
distribution) 2,831,578
163,950 Sanderson Farms, Inc.
(Chickens) 1,762,462
422,500 Stokely USA Inc.
(Canned and frozen
vegetables) 2,323,750
14,010,341
ENERGY - 4.83%
118,900 Devon Energy Corp.
(Oil and gas production) 2,556,350
189,000 International Recovery Corp.
(Aviation fueling services) 3,945,375
204,500 McFarland Energy, Inc.
(Oil exploration) 1,431,500
96,500 Petroleum Helicopters, Inc.
(non-voting) (Gulf of Mexico
helicopter transportation) 940,875
78,700 Petroleum Helicopters, Inc.
(voting) (Gulf of Mexico
helicopter transportation) 801,756
9,675,856
FINANCIAL - 6.48%
136,400 AVEMCO Corp.
(Private aircraft insurance) 2,335,850
76,500 Gallagher (Arthur J.) & Co.
(Insurance brokerage and risk
management) 2,667,937
169,800 NYMAGIC, Inc.
(Ocean and inland marine
insurance) 2,780,475
76,500 TCF Financial Corp.
(Thrift holding company) 3,557,250
68,000 Vermont Financial Services Corp.
(Vermont bank holding
company) 1,632,000
12,973,512
MISCELLANEOUS - 3.44%
145,600 Alltrista Corp.
(Consumer and industrial
products) 3,166,800
386,483 Jason Inc.
(Nonwoven auto padding) 3,719,899
6,886,699
TECHNOLOGY - 11.22%
694,900 Anacomp, Inc.
(Microfilm services) 564,606
148,900 CEM Corp.
(Laboratory microwave ovens) 1,935,700
589,000 Computer Products, Inc.
(Electronics power supplies) 3,276,312
331,800 ESCO Electronics Corp.
(Defense products and
systems) 2,778,825
57,300 Fluke Corp.
(Electronic test and
measurement equipment) 2,399,437
TECHNOLOGY (Continued)
115,800 Landauer Inc.
(Personal radiation exposure
monitoring) 2,098,875
245,700 Nichols Research Corp.
(Technical and engineering
services) 3,808,350
149,400 Norstan, Inc.
(Telecommunications
equipment) 3,510,900
347,800 Smith Corona Corp.
(Typewriters and personal
word processors) 521,700
141,400 SyQuest Technology, Inc.
(Removable Winchester
disk drives) 1,555,400
22,450,105
TRANSPORTATION & SERVICES - 4.18%
140,000 ABM Industries, Inc.
(Building maintenance
services) 3,185,000
82,500 Carolina Freight Corp.
(General freight carrier) 804,375
111,600 International Shipholding Corp.
(Ocean and river freight
transportation) 2,259,900
106,800 True North Communications, Inc.
(Advertising agency) 2,109,300
8,358,575
TOTAL COMMON STOCKS - 92.88% 185,902,466
FACE AMOUNT DESCRIPTION (NOTE 1-A) MARKET VALUE
SHORT-TERM CORPORATE NOTES - 6.50%
$3,000,000 Ford Motor Credit Co.,
5.95%, due June 14, 1995 3,000,000
2,000,000 General Electric Capital Corp.,
5.95%, due June 7, 1995 2,000,000
3,000,000 General Motors Acceptance Corp.,
5.96%, due June 14, 1995 3,000,000
3,000,000 General Motors Acceptance Corp.,
5.98%, due June 21, 1995 3,000,000
2,000,000 Sears Roebuck Acceptance Corp.,
5.94%, due June 28, 1995 2,000,000
TOTAL SHORT-TERM
CORPORATE NOTES - 6.50% 13,000,000
REPURCHASE AGREEMENT - 0.69%
1,390,000 UMB Bank, n.a.,
5.60%, due June 1, 1995
(Collateralized by U.S.
Treasury Notes, 7.50%,
due February 29, 1996) 1,390,000
TOTAL INVESTMENTS - 100.07% $ 200,292,466
Other assets less liabilities - (0.07%) (144,191)
TOTAL NET ASSETS - 100.00%
(equivalent to $16.13 per share;
20,000,000 shares of $1.00 par
value capital shares authorized;
12,411,643 shares outstanding) $ 200,148,275
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
May 31, 1995 (unaudited)
ASSETS:
Investments in securities:
Common stocks, at market value (identified cost $155,341,388) $ 185,902,466
Short-Term corporate notes, at cost - approximates market value 13,000,000
Repurchase agreement, at cost - approximates market value 1,390,000
Total investments 200,292,466
Dividends receivable 57,999
Interest receivable 36,754
Receivable for investments sold 159,650
Total assets 200,546,869
LIABILITIES AND NET ASSETS:
Cash overdraft 88,606
Payable for investments purchased 309,988
Total liabilities 398,594
NET ASSETS $ 200,148,275
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 158,826,690
Accumulated undistributed income:
Undistributed net investment income 1,543,173
Undistributed net realized gain on investment transactions 9,217,334
Net unrealized appreciation in value of investments 30,561,078
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 200,148,275
Capital shares, $1.00 par value
Authorized 20,000,000
Outstanding 12,411,643
NET ASSET VALUE PER SHARE $ 16.13
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1995 (unaudited)
INVESTMENT INCOME:
Income:
Dividends $ 1,650,675
Interest 389,980
2,040,655
Expenses (Note 2):
Management fees 1,037,898
Registration fees and expenses 14,129
1,052,027
Net investment income (Note 1-B) 988,628
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Realized gain from investment transactions (excluding maturities of
short-term commercial notes and repurchase agreements):
Proceeds from sales of investments 20,906,646
Cost of investments sold 11,680,090
Net realized gain from investment transactions 9,226,556
Unrealized appreciation of investments:
Beginning of period 25,431,715
End of period 30,561,078
Unrealized appreciation of investments during the period 5,129,363
Net gain on investments 14,355,919
Increase in net assets resulting from operations $ 15,344,547
See accompanying Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
Six Months
Ended Year Ended
May 31, 1995 November 30,
(unaudited) 1994
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 988,628 $ 426,000
Net realized gain from investment transactions 9,226,556 19,093,826
Unrealized appreciation (depreciation) of
investments during the period 5,129,363 (11,852,856)
Net increase in net assets resulting from
operations 15,344,547 7,666,970
Net equalization included in the price of shares
issued and redeemed (28,262) (149,837)
DISTRIBUTIONS TO SHAREHOLDERS FROM:**
Net investment income (425,295) (675,250)
Net realized gain from investment transactions (19,094,377) (13,830,212)
Total distributions to shareholders (19,519,672) (14,505,462)
INCREASE (DECREASE) FROM CAPITAL SHARE TRANSACTIONS:*
Proceeds from shares sold 6,549,619 11,843,878
Net asset value of shares issued for reinvestment
of distributions 18,718,813 13,863,792
25,268,432 25,707,670
Cost of shares repurchased (9,277,966) (47,712,322)
Net increase (decrease) from capital share
transactions 15,990,466 (22,004,652)
Total increase (decrease) in net assets 11,787,079 (28,992,981)
NET ASSETS:
Beginning of period 188,361,196 217,354,177
End of period (including undistributed net
investment income of $1,543,173 and
$1,008,102, respectively) $ 200,148,275 $ 188,361,196
Shares issued and repurchased:
Number of shares sold 429,178 712,747
Number of shares issued for reinvestment of
distributions 1,258,830 857,908
1,688,008 1,570,655
Number of shares repurchased (597,228) (2,888,905)
Net increase (decrease) 1,090,780 (1,318,250)
Distributions to shareholders:
Income dividends per share $ .0377 $ .054
Capital gains distribution per share $ 1.6949 $ 1.1071
See accompanying Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as amended,
as a diversified open-end management investment company. The following is a
summary of significant accounting policies consistently followed by the Fund
in the preparation of its financial statements.
A. Security Valuation _ Common stocks traded on a national securities
exchange are valued at the latest sales price thereof, or if no sale was
reported on that date, the mean between the closing bid and asked price is
used. Common stocks traded over-the-counter are valued at the average of the
last reported bid and asked prices.
B. Federal and State Taxes _ It is the Fund's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of its taxable income to its shareholders.
Therefore, no provision for federal or state tax is required.
C. Equalization _ The Fund uses the accounting practice of equalization, by
which a portion of the proceeds from sales and costs of redemption of capital
shares, equivalent on a per share basis to the amount of undistributed net
investment income on the date of the transactions, is credited or charged to
undistributed income. As a result, undistributed net investment income per
share is unaffected by sales or redemptions of capital shares.
D. Other _ As is common in the industry, security transactions are accounted
for on the date the securities are purchased or sold. Dividend income and
distributions to shareholders are recorded on the ex-dividend date. Realized
gains and losses from investment transactions and unrealized appreciation and
depreciation of investments are reported on the identified cost basis.
2. MANAGEMENT FEES:
Management fees are paid to Jones & Babson, Inc. at the rate of 1.5% per
annum of the average daily net asset value of the Fund up to $30,000,000 and
1% per annum of net assets in excess of that amount. Such fees are paid for
services which include administration, and all other operating expenses of
the Fund except the cost of acquiring and disposing of portfolio securities,
the taxes, if any, imposed directly on the Fund and its shares and the cost
of qualifying the Fund's shares for sale in any jurisdiction. Certain
officers and/or directors of the Fund are also officers and/or directors of
Jones & Babson, Inc.
3. INVESTMENT TRANSACTIONS:
Investment transactions for the period ended May 31, 1995 (excluding
maturities of short-term commercial notes and repurchase agreements) are as
follows:
Purchases $ 14,034,890
Proceeds from sales 20,906,646
This report has been prepared for the information of the Shareholders of
Babson Enterprise Fund, Inc. and is not to be construed as an offering of the =
shares of the Fund. Shares of this Fund and of the other Babson Funds are
offered only by the Prospectus, a copy of which may be obtained from Jones &
Babson, Inc.
<PAGE>
THE BABSON FUNDS
Equities
Shadow Stock Fund - designed to achieve long-term growth of capital by
investing in common stocks of small, established, profitable companies
presently neglected by analysts and institutional investors.
David L. Babson Growth Fund - invested in common stocks selected for their
long-term possibilities of both capital and income growth.
Babson Enterprise Fund - closed to new investors as of January 31, 1992.
Babson Enterprise Fund II - designed to achieve growth with greater price
stability than many small stock funds by investing in undervalued small
companies with higher market capitalizations. A good choice for long-term
growth, Enterprise II seeks out profitable, established small companies that
are dominant in their industries.
Babson Value Fund - seeks long-term growth of capital and income by investing
in a diversified portfolio of common stocks which are considered to be
undervalued in relation to earnings, dividends and/or assets.
Babson-Stewart Ivory International Fund - for investors seeking international
diversification and favorable total return, this Fund includes equities of
various developed investment markets in the free world, principally Western
Europe and certain areas of the Pacific Basin.
Fixed Income
D.L. Babson Bond Trust - emphasizes current income return and relative
stability of principal by investing in corporate bonds, U.S. government
issues and other fixed-income securities of high quality. The Fund offers
two portfolios: Portfolio S with average maturities of less than 5 years,
and Portfolio L with average maturities of more than 5 years.
D.L. Babson Money Market Fund - provides investors the opportunity to manage
their money over the short-term by investing in high-quality, domestic,
short-term debt instruments for the purpose of maximizing income to the
extent consistent with safety of principal and maintenance of liquidity.
It offers two portfolios, Prime and Federal.
D.L. Babson Tax-Free Income Fund - invests principally in quality municipal
securities, the income from which is judged exempt from federal income tax.
The Fund offers a choice among three separate portfolios of investment-grade
securities, differing only in average length of maturity - Longer Term
(Portfolio L), Shorter Term (Portfolio S) and Money Market (Portfolio MM).
For a free prospectus kit, which contains more complete information,
including all charges and expenses, write or call Jones & Babson at
1-800-4-BABSON. Please read the prospectus carefully before you invest or
send money. Money market funds are neither insured nor guaranteed by the U.S.
Government and there is no assurance that the funds will maintain a stable
net asset value.
