MESSAGE
To Our Shareholders
Babson Enterprise Fund achieved a total return (price change and reinvested
distributions) of 16.4% for the fiscal year ended November 30, 1995. This is
a respectable return on an absolute basis; however, on a relative basis, the
comparable indices outperformed the Fund. During the same period, the small
capitalization stocks in the unmanaged Russell 2000 index rose 28.5% while
the large capitalization stocks in the unmanaged Standard & Poor's 500 index
rose an even greater 36.8%.
Three very strong months for smaller cap stocks in June, July, and August
were not enough to make such stocks' performance equal to their larger
counterparts' this year. Factors that contributed to large cap outperformance
were a flight to quality larger companies by investors searching for stable
earnings growth and the takeover activity in the financial services sector
which benefited larger companies more than smaller ones.
As we have mentioned in previous reports, one of the key drivers among both
large and small cap stocks this year was the technology sector, underweighted
in the Fund. In our quest to find undiscovered stocks with low institutional
ownership, we naturally will not chase such stocks as they skyrocket.
Therefore, the Fund's relative performance will suffer in a technology
driven market such as the current one; the technology sector of the Russell
2000 rose 60% in the 12-month period ended November 30, 1995, contributing
significantly to the index's total return.
In the last six months, we had a significant number of portfolio changes.
The following companies were added to the portfolio during the period:
ADAC Laboratories _ designs and manufactures medical imaging systems;
American Oilfield Divers Inc. _ provides undersea construction and
maintenance services;
Aviall Inc. New _ furnishes aircraft engine overhaul and parts distribution
services;
Bettis Corp. _ manufactures actuators for industrial applications;
CSP Inc. _ makes special purpose computers;
Harris Computer _ supplies high-end real-time computer systems and computer
security products;
Lamson & Sessions Co. _ produces electrical equipment for construction and
communications markets;
Matrix Service Co. _ provides on-site maintenance and construction services
for petroleum refining and storage facilities;
Pentech International, Inc. _ produces writing instruments;
Sullivan Dental Products, Inc. _ distributes dental supplies and equipment;
Viewlogic Systems Inc. _ designs software for computer-aided engineering.
Three portfolio holdings were acquired by other companies in the latest six
month period. C.R. Gibson was bought by Thomas Nelson (a former holding in
the Fund); Schwitzer was taken over by Kuhlman Corp. (a current holding);
and Worldway Corp. was purchased by Arkansas Best. Positions liquidated in
the second half of the fiscal year were the following: GoodMark Foods, Smith
Corona, SyQuest Technology, and True North Communications (formerly Foote,
Cone and Belding).
In December 1995, the Fund distributed an ordinary income dividend and long
and short-term capital gains for a total distribution of $1.957. For
corporate shareholders, 100% of ordinary income distributions qualify for
the corporate dividends received deduction.
Sincerely,
Larry D. Armel
President
PORTFOLIO REVIEW
Babson Enterprise Fund is a no-load mutual fund invested in common stocks of
smaller, faster growing companies which at the time of purchase are
considered to be realistically valued in the smaller company sector of the
market.
With such a strong advance in the U.S. stock market in 1995, we thought it
might be worthwhile to step back and analyze small company investing because
it participated in the surge. While small company investing may seem like a
simple notion, there are currently over 350 small company mutual funds, up
from only twenty-three when we launched Enterprise Fund in 1983, and each of
these funds would argue that it is "different" from all other funds. However,
most of them have a bias toward either "growth" or "value."
In fact, Morningstar Mutual Funds, a publication devoted to the analysis of
mutual funds has begun to separate the small company funds it ranks into
growth and value categories. The differences between the two styles of
investing are quite remarkable.
First of all, the Morningstar statistics in general show a very strong
penchant for "growth" investing among small company funds. Many investors
view small company investing as synonymous with "aggressive growth" or
"emerging growth" investing. A comparison of the average small company fund
to the most popular small company index, the Russell 2000, shows that
managers are tending to buy very young companies with very high past growth
rates, and high valuations.
Morningstar
Small Co. Fund Russell
Average 2000
Age of Company 14 Years* N/A
5 Years of EPS Growth 22.2% 7.5%
Price/Book Ratio 4.2X 2.1X
Price/Earnings Ratio 25.0X 21.0X
*Largest 20 holdings
If the Russell 2000 (containing, as its name implies, 2000 small company
stocks) is a broad representation of the universe available to these funds,
it is clear that the average manager is seeking out the more rapidly growing
companies, and is willing to pay up for them.
However, if we delve deeper into the statistical distinctions between the
funds that Morningstar calls as "growth" and those it classifies as "value,"
the differences are even more extreme.The table below illustrates that.
Small Company Small Company
Growth Fund Value Fund
Average Average
Company Statistics
5 Year EPS Growth 33.2% 12.2%
Return on Assets 12.6% 6.9%
Price/Book Ratio 6.3X 2.3X
Price/Earnings Ratio 32.7X 17.9X
Portfolio Statistics
Annual Turnover 105% 55%
Beta 1.10 0.73
Standard Deviation (3 yr.) 15.0% 9.1%
By virtually every measure, small company growth funds are extremely
aggressively managed. The companies held by those funds have a historic
five-year average earnings growth that is almost three times that of the
small company value funds. Return on assets is almost double, and valuations
of the stocks are much higher.
The managers of the growth funds are also very quick to change holdings.
The average holding period of a stock is less than one year, whereas the
value managers hold on for an average of two years.
All this aggressiveness is reflected in much greater volatility in
performance. Whether measured by the standard deviation of results, or by
the funds' beta, the growth funds are more volatile than the value funds,
and more volatile than the market as whole. The value funds are less volatile
than the market.
However, when aggressive growth stocks are popular, as they have been in
1995, the performance can be spectacular. Helped by a 33.7% weighting in
technology stocks, small company growth funds were up 37.8% through November
30, 1995. This compares with only a 21.2% return for small company value
funds which, on average only have 11.5% of assets in technology.
But over the long term does one style outperform the other? Morningstar has
tracked performance for fifteen years and over that period there has been
only a minimal difference between the two. Small company growth funds
compounded at 12.5% annually and small company value funds compounded at
12.0% a year with more than the entire difference coming from the
outperformance of the growth style in 1995. Obviously, with such strong
performance in 1995, growth funds have been better performers over the short
term. However, Morningstar rates all funds on a risk adjusted basis
(weighting its rating 50% on the ten year record, 30% on five years, and
20% on three years), and by this measure growth and value funds end in a
virtual dead heat. Growth funds get a rating of 3.31 while value funds garner
3.30.
The significance of all this is that not all small company funds are the
same. The popular perception of small company funds being "aggressive" or
"emerging" growth funds may have some statistical support overall, but it
misses a whole category of lower risk "value" funds. The important thing is
to make sure you understand what type of fund you are invested in and that
it properly reflects your investment goals and your tolerance for performance
volatility.
We have long believed in the lower risk approach to small company investing.
We continue to adhere to that strategy, and think that a less volatile path
to performance is the best route.
David L. Babson & Co. Inc.
PORTFOLIO REVIEW
Babson Enterprise Fund versus Russell 2000
Babson Enterprise Fund's average annual compounded total returns for one,
five and ten year periods as of November 30, 1995, were 16.42%, 20.12% and
12.86%, 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.
<PAGE>
STATEMENT OF NET ASSETS
November 30, 1995
S&P MARKET VALUE
RANKING** SHARES COMPANY COST (NOTE 1-A)
COMMON STOCKS _ 95.20%
BASIC MATERIALS _ 14.51%
B+ 110,800 American Filtrona Corp.
(Bonded fiber products and
extruded plastics) $ 2,871,567 $ 4,265,800
A- 56,900 Brady (W.H.) Co. Cl. A
(Identification and labeling
systems) 1,431,414 4,381,300
C 217,700 Duplex Products Inc.*
(Business forms) 2,962,206 1,659,963
B+ 182,700 Furon Co.
(Polymer based products) 2,503,854 3,265,762
C 350,600 Intermet Corp.*
(Auto and industrial iron
castings) 2,841,745 4,207,200
B 165,900 Material Sciences Corp.*
(Coatings and laminates) 1,082,400 2,198,175
C 288,050 Nord Resources Corp.*
(Rutile and kaolin production) 1,891,266 612,106
B 107,900 PENWEST Ltd.
(Specialty starch based
products) 2,265,377 2,859,350
NR 236,100 Shiloh Industries, Inc.*
(Steel processor) 1,719,698 2,715,150
B- 208,600 Tab Products Co.
(Color-coded filing systems) 2,451,522 1,408,050
NR 70,800 Tuscarora Inc.
(Molded foam packaging products) 899,957 1,716,900
22,921,006 29,289,756
CAPITAL GOODS _ 24.00%
B+ 48,300 American Precision Industries Inc.
(Heat exchangers) 366,497 573,563
B 233,700 Apogee Enterprises, Inc.
(Commercial window systems) 2,445,524 3,447,075
C 152,426 Athey Products Corp.*
(Street sweepers) 1,475,747 724,024
NR 213,500 Atkinson (Guy F.) Co.
(Construction) 2,254,017 2,255,094
NR 74,200 Aviall Inc. New
(Aviation services company) 634,410 630,700
NR 89,300 Bettis Corp.*
(Actuators) 370,078 479,987
CAPITAL GOODS (Continued)
B 286,700 Brenco, Inc.
(Railroad car bearings) $ 2,091,798 $ 3,010,350
NR 248,300 Farrell Corp. New
(Rubber and plastic processing
equipment) 1,655,638 869,050
NR 85,400 Industrial Acoustics Company, Inc.
(Noise control products) 1,303,450 907,375
B 141,900 Instron Corp.
(Materials testing instruments) 1,707,499 1,791,488
A- 203,100 Interface, Inc. Cl. A
(Carpet tile) 2,394,405 3,274,988
C 133,600 K-Tron International, Inc.*
(Industrial feeders and
blenders) 1,627,741 935,200
B- 438,118 Kuhlman Corp.
(Electrical transformers) 4,375,552 5,038,357
C 43,800 Lamson & Sessions Co.*
(Electrical equipment supplier) 298,069 306,600
B- 137,800 Moog Inc. Cl. A*
(High performance control
systems) 1,355,439 2,032,550
B 201,200 Newcor, Inc.
(Automobile assembly systems) 1,857,354 1,584,450
C 173,800 Oregon Metallurgical Corp.*
(Titanium) 1,598,054 1,890,075
B- 176,600 Pacific Scientific Co.
(Aerospace and industrial
products) 1,185,605 4,481,225
NR 174,929 Raymond Corp.
(Narrow-aisle lift trucks) 1,395,847 3,629,777
C 65,400 SPS Technologies, Inc.
(Aerospace fasteners) 1,451,305 2,967,525
B+ 116,200 Starrett (L.S.) Co. Cl. A
(Tools and precision
instruments) 2,989,648 2,716,175
NR 254,300 Stevens Graphics Corp. Cl. A*
(Printing presses) 1,615,664 1,764,206
B+ 61,500 Technitrol, Inc.
(Industrial components and
assemblies) 590,154 1,199,250
A- 78,800 Tennant Co.
(Floor maintenance equipment) 1,190,409 1,930,600
38,229,904 48,439,684
CONSUMER CYCLICAL _ 20.02%
B- 60,800 AMC Entertainment, Inc.
(Movie theaters) $ 416,033 $ 1,322,400
B 237,400 American Recreation Centers, Inc.
(Bowling centers) 1,558,616 1,513,425
B+ 230,483 Anthony Industries, Inc.
(Recreational and industrial
products) 2,215,416 5,157,057
B- 113,000 Baldwin Piano & Organ Co.*
(Keyboard instruments) 1,607,704 1,356,000
B- 218,983 Chock Full o'Nuts Corp.
(Coffee processor) 1,653,427 1,259,152
B- 294,750 Dixie Yarns, Inc.
(Yarns and industrial thread) 2,449,707 1,179,000
B+ 267,700 Falcon Products, Inc.
(Table pedestals) 2,366,690 3,814,725
B 167,300 Forschner Group, Inc.*
(Swiss Army knives) 1,509,283 2,049,425
NR 231,000 Forstmann & Company, Inc.*
(Woolen fabrics) 2,522,607 115,500
C 114,400 Gander Mountain, Inc.*
(Hunting and fishing catalog
retailer) 1,377,586 672,100
B- 280,700 Gottschalks Inc.*
(Specialty-apparel stores) 2,543,624 1,859,638
B 195,450 Helen of Troy Ltd.*
(Hair care appliances) 2,515,984 3,737,981
B- 204,700 Jacobson Stores Inc.
(Upscale department store
chain) 2,846,270 1,893,475
NR 209,800 Jay Jacobs, Inc.*
(Specialty-apparel stores) 1,279,640 550,725
NR 142,563 Leslie's Poolmart
(Specialty swimming pool stores) 1,570,915 1,960,241
B+ 190,700 Oneida Ltd.
(Stainless steel flatware) 2,766,670 3,313,413
NR 91,500 POCI, Inc.*
(Travel club) 644,750 160,125
B+ 141,050 S K I, Ltd.
(Ski resorts) 1,533,777 1,868,913
CONSUMER CYCLICAL (Continued)
B 234,200 Shelby Williams Industries, Inc.
(Contract seating) $ 2,435,580 $ 2,986,050
C 189,600 Summit Family Restaurants*
(Restaurant chain) 1,315,104 948,000
NR 36,300 Tranzonic Cos. Cl. A
(Industrial textiles) 205,919 521,813
NR 18,100 Tranzonic Cos. Cl. B
(Industrial textiles) 103,864 257,925
B 98,400 Walbro Corp.
(Auto fuel injection systems) 1,081,575 1,918,800
38,520,741 40,415,883
CONSUMER STAPLES _ 7.80%
B 52,900 Genesee Corp. Cl. B
(Regional brewer) 2,183,074 2,354,050
B 243,400 J & J Snack Foods Corp.*
(Soft pretzels and other
snack foods) 2,699,692 2,981,650
NR 169,400 Northland Cranberries, Inc. Cl. A
(Cranberry grower) 2,318,020 3,218,600
B- 156,225 Rykoff-Sexton, Inc.
(Foodservice product
distribution) 2,437,289 2,987,803
B 163,950 Sanderson Farms, Inc.
(Chickens) 1,504,512 1,762,462
NR 422,500 Stokely USA Inc.*
(Canned and frozen vegetables) 2,355,617 2,429,375
13,498,204 15,733,940
ENERGY _ 5.00%
NR 7,700 American Oilfield Divers Inc.*
(Undersea construction and
maintenance) 51,012 51,013
NR 118,900 Devon Energy Corp.
(Oil and gas production) 1,128,274 2,868,462
NR 161,800 Matrix Service Co.*
(Petroleum refining maintenance) 697,133 697,762
B- 204,500 McFarland Energy, Inc.*
(Oil exploration) 1,651,364 1,533,750
NR 96,500 Petroleum Helicopters, Inc.
(non-voting) (Gulf of Mexico
helicopter transportation) 1,009,845 1,158,000
ENERGY (Continued)
NR 78,700 Petroleum Helicopters, Inc.
(voting) (Gulf of Mexico
helicopter transportation) $ 928,533 $ 905,050
B 201,800 World Fuel Services Corp.
(Aviation fueling services) 1,879,698 2,875,650
7,345,859 10,089,687
FINANCIAL _ 5.25%
B+ 168,800 AVEMCO Corp.
(Private aircraft insurance) 2,928,700 2,848,500
A- 76,500 Gallagher (Arthur J.) & Co.
(Insurance brokerage and risk
management) 1,551,378 2,505,375
B 185,900 NYMAGIC, Inc.
(Ocean and inland marine
insurance) 3,810,581 3,090,587
NR 68,000 Vermont Financial Services Corp.
(Vermont bank holding company) 1,426,684 2,142,000
9,717,343 10,586,462
HEALTH CARE _ 1.42%
B 93,000 ADAC Laboratories
(Medical imaging systems) 1,236,824 1,174,125
NR 184,200 Sullivan Dental Products, Inc.
(Dental supply distributor) 1,926,993 1,703,850
3,163,817 2,877,975
MISCELLANEOUS _ 2.89%
NR 166,300 Alltrista Corp.*
(Consumer and industrial
products) 2,489,299 3,076,550
NR 386,483 Jason Inc.*
(Nonwoven auto padding) 558,317 2,753,691
3,047,616 5,830,241
TECHNOLOGY _ 11.03%
B- 694,900 Anacomp, Inc.*
(Microfilm services) 2,179,076 304,019
B+ 148,900 CEM Corp.*
(Laboratory microwave ovens) 1,588,770 1,972,925
NR 71,400 Computer Products, Inc.*
(Electronics power supplies) 167,950 888,037
B 26,100 CSP Inc.*
(Special purpose computers) 235,398 234,900
TECHNOLOGY (Continued)
NR 379,500 ESCO Electronics Corp.*
(Defense products and systems) $ 3,972,166 $ 3,036,000
B 57,300 Fluke Corp.
(Electronic test and
measurement equipment) 1,405,451 1,962,525
B+ 58,500 Harris Computer*
(Computer systems and
security products) 727,762 643,500
B+ 129,500 Landauer Inc.
(Personal radiation
exposure monitoring) 2,150,387 2,541,437
NR 245,700 Nichols Research Corp.*
(Technical and engineering
services) 3,240,271 5,712,525
B 149,400 Norstan, Inc.*
(Telecommunications equipment) 1,835,401 3,735,000
B 359,800 Pentech International, Inc.*
(Writing instruments) 1,118,927 944,475
NR 26,000 Viewlogic Systems Inc.*
(Computer-aided engineering
software) 279,857 282,750
18,901,416 22,258,093
TRANSPORTATION & SERVICES _ 3.28%
A 140,000 ABM Industries, Inc.
(Building maintenance services) 2,199,299 3,937,500
B+ 139,500 International Shipholding Corp.
(Ocean and river freight
transportation) 1,914,838 2,685,375
4,114,137 6,622,875
TOTAL COMMON STOCKS _ 95.20% 159,460,043 192,144,596
REPURCHASE AGREEMENT _ 3.14%
$ 6,350,000 UMB Bank, n.a.,
5.40%, due December 1, 1995
(Collateralized by $6,476,932
U.S. Treasury Notes,
7.625%, due April 30, 1996) $ 6,350,000 $ 6,350,000
TOTAL INVESTMENTS _ 98.34% $ 165,810,043 198,494,596
Other assets less liabilities _ 1.66% 3,345,351
TOTAL NET ASSETS _ 100.00%
(equivalent to $17.35 per share; 20,000,000 shares of
$1.00 par value capital shares authorized;
11,635,813 shares outstanding) $ 201,839,947
For federal income tax purposes, the identified cost of investments owned
at November 30, 1995 was $165,810,043.
Net unrealized appreciation for federal income tax purposes was $32,684,553,
which is comprised of unrealized appreciation of $52,075,905 and unrealized
depreciation of $19,391,352.
*Securities on which no cash dividends were paid during the preceding year.
**Standard & Poor's rankings are derived from statistical measurements of
past earnings and dividend stability and growth.
NR _ indicates no ranking is available. Rankings are not covered by
the report of independent auditors.
<PAGE>
STATEMENT OF OPERATIONS
Year Ended November 30, 1995
INVESTMENT INCOME:
Income:
Dividends $ 2,873,263
Interest 596,910
3,470,173
Expenses (Note 2):
Management fees 2,125,317
Registration fees and expenses 19,404
2,144,721
Net investment income (Note 1-B) 1,325,452
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 45,701,026
Cost of investments sold 24,305,172
Net realized gain from investment transactions 21,395,854
Unrealized appreciation of investments:
Beginning of year 25,431,715
End of year 32,684,553
Unrealized appreciation of investments during the year 7,252,838
Net gain on investments 28,648,692
Increase in net assets resulting from operations $ 29,974,144
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
For The Two Years Ended November 30, 1995
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 1,325,452 $ 426,000
Net realized gain from investment transactions 21,395,854 19,093,826
Unrealized appreciation (depreciation) of
investments during the year 7,252,838 (11,852,856)
Net increase in net assets resulting
from operations 29,974,144 7,666,970
Net equalization included in the price of
shares issued and redeemed (138,066) (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 11,779,300 11,843,878
Net asset value of shares issued for
reinvestment of distributions 18,718,813 13,863,792
30,498,113 25,707,670
Cost of shares repurchased (27,335,768) (47,712,322)
Net increase (decrease) from capital
share transactions 3,162,345 (22,004,652)
Total increase (decrease) in net assets 13,478,751 (28,992,981)
NET ASSETS:
Beginning of year 188,361,196 217,354,177
End of year (including undistributed net
investment income of $1,770,193 in 1995
and $1,008,102 in 1994) $201,839,947 $188,361,196
Shares issued and repurchased:
Number of shares sold 739,581 712,747
Number of shares issued for reinvestment
of distributions 1,258,831 857,908
1,998,412 1,570,655
Number of shares repurchased (1,683,462) (2,888,905)
Net increase (decrease) 314,950 (1,318,250)
Distributions to shareholders:
Income dividends per share $ .0377 $ .054
Capital gains distribution per share $ 1.6949 $ 1.1071
<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, 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. The Fund has
designated $18,782,317 as capital gain dividends.
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 _ 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 were 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 year ended November 30, 1995 (excluding
maturities of short-term commercial notes and repurchase agreements) are as
follows:
Purchases $ 30,778,627
Proceeds from sales 45,701,026
<PAGE>
FINANCIAL HIGHLIGHTS
Condensed data for a share of capital stock outstanding throughout each year.
<TABLE>
<CAPTION>
Years Ended November 30,
1995 1994 1993 1992 1991
</CAPTION> <C> <C> <C> <C> <C>
<S>
Net asset value, beginning of year $16.64 $17.20 $17.04 $13.94 $10.68
Income from investment operations:
Net investment income .101 .032 .057 .081 .084
Net gains or losses on securities
(both realized and unrealized) 2.342 .569 2.520 3.862 3.611
Total from investment operations 2.443 .601 2.577 3.943 3.695
Less distributions:
Dividends from net investment income (.038) (.054) (.087) (.079) (.1275)
Distributions from capital gains (1.695) (1.107) (2.330) (.764) (.3075)
Total distributions (1.733) (1.161) (2.417) (.843) (.435)
Net asset value, end of year $17.35 $16.64 $17.20 $17.04 $13.94
Total return 16% 4% 17% 30% 36%
Ratios/Supplemental Data
Net assets, end of year (in millions) $ 202 $ 188 $ 217 $ 178 $ 121
Ratio of expenses to average net assets 1.09% 1.08% 1.09% 1.11% 1.17%
Ratio of net investment income to
average net assets .67% .22% .33% .57% .66%
Portfolio turnover rate 13% 15% 17% 28% 15%
</TABLE>
<PAGE>
REPORT OF ERNST & YOUNG LLP
INDEPENDENT AUDITORS
The Board of Directors and Shareholders of
Babson Enterprise Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the statement of net assets, of Babson Enterprise Fund, Inc., as
of November 30, 1995, the related statements of operations for the year then
ended, changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
investments owned as of November 30, 1995, by correspondence with the
custodian. As to securities relating to uncompleted transactions, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Babson Enterprise Fund, Inc. at November 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended in conformity with generally
accepted accounting principles.
Kansas City, Missouri
December 28, 1995
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.
BOARD OF DIRECTORS
Larry D. Armel
Francis C. Rood
William H. Russell
H. David Rybolt
OFFICERS
Larry D. Armel
President
P. Bradley Adams
Vice President & Treasurer
Michael A. Brummel
Vice President
Martin A. Cramer
Vice President & Secretary
David G. Kirk
Vice President
Peter C. Schliemann
Vice President _ Portfolio
INVESTMENT COUNSEL
David L. Babson & Co. Inc.
Cambridge, Massachusetts
INDEPENDENT AUDITORS
Ernst & Young LLP
Kansas City, Missouri
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young
Philadelphia, Pennsylvania
John G. Dyer
Kansas City, Missouri
CUSTODIAN
UMB Bank, n.a.
Kansas City, Missouri
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000725496
<NAME> BABSON ENTERPRISE FUND INC
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> NOV-30-1995
<INVESTMENTS-AT-COST> 165810043
<INVESTMENTS-AT-VALUE> 198494596
<RECEIVABLES> 3469349
<ASSETS-OTHER> 41378
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 202005323
<PAYABLE-FOR-SECURITIES> 165376
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 165376
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 145998569
<SHARES-COMMON-STOCK> 11635813
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1770193
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 21386632
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 32684553
<NET-ASSETS> 201839947
<DIVIDEND-INCOME> 2873263
<INTEREST-INCOME> 596910
<OTHER-INCOME> 0
<EXPENSES-NET> 2144721
<NET-INVESTMENT-INCOME> 1325452
<REALIZED-GAINS-CURRENT> 21395854
<APPREC-INCREASE-CURRENT> 7252838
<NET-CHANGE-FROM-OPS> 29974144
<EQUALIZATION> (138066)
<DISTRIBUTIONS-OF-INCOME> 425295
<DISTRIBUTIONS-OF-GAINS> 19094377
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 739581
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1258831
<NET-CHANGE-IN-ASSETS> 13478751
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2125317
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2125317
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 16.64
<PER-SHARE-NII> .101
<PER-SHARE-GAIN-APPREC> 2.342
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 1.733
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.35
<EXPENSE-RATIO> 1.09
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> .67
</TABLE>
