BABSON
ENTERPRISE
FUND
Semiannual Report
May 31, 1996
JONES & BABSON
MUTUAL FUNDS
MESSAGE
To Our Shareholders
The small cap stocks in Babson Enterprise Fund surged ahead in the six
month period ended May 31, 1996, with a total return (price change and
reinvested distribution) of 19.1%. This compares favorably to the total
returns of 18.1% for the unmanaged Russell 2000 index of small
capitalization stocks and the 11.7% return of the unmanaged Standard &
Poor's 500 index of larger capitalization stocks.
Average annual compounded total returns for one, five and ten year
periods, as of June 30, 1996, were 24.33%, 18.06% and 12.68%,
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.
The markets have been surprisingly strong this year; even though
investor sentiment has been on the cautious side. The new year started
with fears of recession foremost in investors' minds. However, with very
strong employment statistics for February, March and again in May, the
sentiment has shifted from recession fears to worry that the economy is
growing too fast and inflation will be rising. The newly employed may be
happy, but both the stock and bond markets have reacted negatively to
these reports.
There is still a huge volume of money coming into the stock market. This
has enabled the markets to stay strong so far this year, despite
substantial concern about whether the economy can continue to walk the
tightrope between recession and inflation. For example, equity mutual
funds had approximately $70 billion in new assets in the first quarter,
which is about three times last year's inflow, and as the Wall Street
Journal pointed out, more than the total influx of funds during all of
1990 and 1991.
We continue to unearth neglect companies at reasonable valuations, and
have made the following portfolio additions in the last six months:
Corrpro Companies, Inc. - provides corrosion control services and
systems.
Congoleum Corp. - produces vinyl flooring products for commercial and
residential markets.
Fab Industries, Inc. - manufactures knitted textile fabrics.
New England Business Service, Inc. - makes business forms for small
businesses.
Sea Containers Ltd. - leases marine containers; owns or operates
passenger ferries, trains, and hotels.
U.S. Can Corp. - manufactures metal containers for a variety of end
markets.
One portfolio holding had a name change; Forschner Group, which
distributes Swiss Army knives, changed its name to a more fitting Swiss
Army Brands, Inc. And Duplex Products was acquired by Reynolds &
Reynolds. On the liquidation side, the following positions were sold:
Anacomp, AMC Entertainment, Anthony Industries (now called K2 Inc.),
Computer Products, Harris Computer, Shiloh and Tuscarora.
Thank you for your continuing interest and participation in Babson
Enterprise Fund.
Sincerely,
/s/Larry D. Armel
Larry D. Armel
President
STATEMENT OF NET ASSETS
May 31, 1996 (unaudited)
MARKET VALUE
SHARES COMPANY (NOTE 1-A)
COMMON STOCKS - 94.73%
BASIC MATERIALS - 10.11%
110,800 American Filtrona Corp.
(Bonded fiber products
and extruded plastics) $ 3,573,300
156,700 Brady (W.H.) Co. Cl. A
(Identification and labeling
systems) 4,035,025
177,600 Furon Co.
(Polymer based products) 4,240,200
130,900 Intermet Corp.
(Auto and industrial
iron castings) 2,208,938
169,500 Material Sciences Corp.
(Coatings and laminates) 2,860,313
288,050 Nord Resources Corp.
(Rutile and kaolin production) 1,728,300
135,600 Penwest Ltd.
(Specialty starch based
products) 2,610,300
208,600 Tab Products Co.
(Color-coded filing systems) 1,564,500
22,820,876
CAPITAL GOODS - 27.38%
68,800 American Precision Industries Inc.
(Heat exchangers) 868,600
164,500 Apogee Enterprises, Inc.
(Commercial window systems) 4,400,375
152,426 Athey Products Corp.
(Street sweepers) 704,970
213,500 Atkinson (Guy F.) Co.
(Construction) 2,828,875
294,100 Aviall Inc. New
(Aviation services company) 2,941,000
160,600 Bettis Corp.
(Actuators) 903,375
249,700 Brenco, Inc.
(Railroad car bearings) 3,277,313
86,500 Congoleum Corp. New Cl. A
(Vinyl flooring) 940,687
34,400 Corrpro Companies, Inc.
(Corrosion control services) 322,500
248,300 Farrell Corp. New
(Rubber and plastic
processing equipment) 1,055,275
85,400 Industrial Acoustics Company, Inc.
(Noise control products) 928,725
215,700 Instron Corp.
(Materials testing instruments) 2,938,913
203,100 Interface, Inc. Cl. A
(Carpet tile) 2,919,562
133,600 K-Tron International, Inc.
(Industrial feeders
and blenders) 1,102,200
304,918 Kuhlman Corp.
(Electrical transformers) 5,259,836
356,000 Lamson & Sessions Co.
(Electrical equipment supplier) 4,138,500
146,300 Moog Inc. Cl. A
(High performance
control systems) 2,999,150
201,200 Newcor, Inc.
(Automobile assembly
systems) 2,238,350
155,300 Oregon Metallurgical Corp.
(Titanium) 4,814,300
151,800 Pacific Scientific Co.
(Aerospace and industrial
products) 2,903,175
157,110 Raymond Corp.
(Narrow-aisle lift trucks) 2,788,702
40,100 SPS Technologies, Inc.
(Aerospace fasteners) 2,456,125
122,100 Starrett (L.S.) Co. Cl. A
(Tools and precision
instruments) 3,144,075
CAPITAL GOODS (Continued)
254,300 Stevens Graphics Corp. Cl. A
(Printing presses) 699,325
61,500 Technitrol, Inc.
(Industrial components and
assemblies) 2,198,625
78,800 Tennant Co.
(Floor maintenance
equipment) 2,019,250
61,791,783
CONSUMER CYCLICAL - 17.75%
213,100 American Recreation Centers, Inc.
(Bowling centers) 1,385,150
113,000 Baldwin Piano & Organ Co.
(Keyboard instruments) 1,631,438
218,983 Chock Full o'Nuts Corp.
(Coffee processor) 1,122,288
213,550 Dixie Yarns, Inc.
(Yarns and industrial thread) 1,147,831
27,300 Fab Industries, Inc.
(Textile fabrics) 795,112
294,470 Falcon Products, Inc.
(Table pedestals) 4,895,564
231,000 Forstmann & Company, Inc.
(Woolen fabrics) 46,200
112,900 Gander Mountain, Inc.
(Hunting and fishing
catalog retailer) 239,912
283,000 Gottschalks Inc.
(Specialty-apparel stores) 1,910,250
195,450 Helen of Troy Ltd.
(Hair care appliances) 5,228,288
204,700 Jacobson Stores Inc.
(Upscale department
store chain) 2,456,400
209,800 Jay Jacobs, Inc.
(Specialty-apparel stores) 393,375
211,363 Leslie's Poolmart
(Specialty swimming
pool stores) 4,042,317
190,700 Oneida Ltd.
(Stainless steel flatware) 3,313,412
91,500 POCI, Inc.
(Travel club) 160,125
141,050 S K I, Ltd.
(Ski resorts) 2,441,928
234,200 Shelby Williams Industries, Inc.
(Contract seating) 2,664,025
189,600 Summit Family Restaurants
(Restaurant chain) 924,300
184,000 Swiss Army Brands, Inc.
(Swiss Army knives) 2,484,000
36,300 Tranzonic Cos. Cl. A
(Industrial textiles) 435,600
18,100 Tranzonic Cos. Cl. B
(Industrial textiles) 219,462
98,400 Walbro Corp.
(Auto fuel injection systems) 2,140,200
40,077,177
CONSUMER STAPLES - 8.52%
52,900 Genesee Corp. Cl. B
(Regional brewer) 2,354,050
268,100 J & J Snack Foods Corp.
(Soft pretzels and other
snack foods) 3,518,813
169,400 Northland Cranberries, Inc. Cl. A
(Cranberry grower) 4,743,200
192,925 Rykoff-Sexton, Inc.
(Foodservice product
distribution) 2,990,338
188,550 Sanderson Farms, Inc.
(Chickens) 2,545,425
CONSUMER STAPLES (Continued)
422,500 Stokely USA Inc.
(Canned and frozen
vegetables) 1,531,563
90,700 U.S. Can Corp.
(Metal containers) 1,553,237
19,236,626
ENERGY - 5.38%
39,900 American Oilfield Divers Inc.
(Undersea construction and
maintenance) 389,025
104,700 Devon Energy Corp.
(Oil and gas production) 2,669,850
286,600 Matrix Service Co.
(Petroleum refining
maintenance) 1,683,775
204,500 McFarland Energy, Inc.
(Oil exploration) 2,019,437
96,500 Petroleum Helicopters, Inc.
(non-voting) (Gulf of Mexico
helicopter transportation) 1,423,375
78,700 Petroleum Helicopters, Inc.
(voting) (Gulf of Mexico
helicopter transportation) 1,219,850
152,800 World Fuel Services Corp.
(Aviation fueling services) 2,731,300
12,136,612
FINANCIAL - 4.79%
168,800 AVEMCO Corp.
(Private aircraft insurance) 2,637,500
76,500 Gallagher (Arthur J.) & Co.
(Insurance brokerage and risk
management) 2,457,563
185,900 NYMAGIC, Inc.
(Ocean and inland marine
insurance) 3,485,625
68,000 Vermont Financial Services Corp.
(Vermont bank holding
company) 2,227,000
10,807,688
HEALTH CARE - 1.97%
93,000 ADAC Laboratories
(Medical imaging systems) 1,522,875
254,900 Sullivan Dental Products, Inc.
(Dental supply distributor) 2,931,350
4,454,225
MISCELLANEOUS - 3.05%
166,300 Alltrista Corp.
(Consumer and industrial
products) 3,783,325
386,483 Jason Inc.
(Nonwoven auto padding) 3,091,864
6,875,189
TECHNOLOGY - 11.24%
148,900 CEM Corp.
(Laboratory microwave ovens) 2,075,294
77,800 CSP Inc.
(Special purpose computers) 748,825
159,700 ESCO Electronics Corp.
(Defense products
and systems) 2,016,213
57,300 Fluke Corp.
(Electronic test and
measurement equipment) 2,227,537
TECHNOLOGY (Continued)
129,500 Landauer Inc.
(Personal radiation exposure
monitoring) 2,670,937
90,300 New England Business Service, Inc.
(Business forms) 1,659,262
160,700 Nichols Research Corp.
(Technical and engineering
services) 5,182,575
149,400 Norstan, Inc.
(Telecommunications
equipment) 5,341,050
371,300 Pentech International, Inc.
(Writing instruments) 789,013
169,400 Viewlogic Systems Inc.
(Computer-aided engineering
software) 2,646,875
25,357,581
TRANSPORTATION & SERVICES - 4.54%
140,000 ABM Industries, Inc.
(Building maintenance
services) 5,337,500
139,500 International Shipholding Corp.
(Ocean and river freight
transportation) 2,685,375
104,300 Sea Containers Ltd. Cl. A
(Marine container leasing) 1,994,737
12,000 Sea Containers Ltd. Cl. B
(Marine container leasing) 226,500
10,244,112
TOTAL COMMON STOCKS - 94.73% 213,801,869
MARKET VALUE
FACE AMOUNT DESCRIPTION (NOTE 1-A)
SHORT-TERM CORPORATE NOTES - 3.10%
$ 2,000,000 Ford Motor Credit Co.,
5.25%, due June 5, 1996 2,000,000
1,000,000 Ford Motor Credit Co.,
5.28%, due June 19, 1996 1,000,000
2,000,000 General Motors Acceptance Corp.,
5.24%, due June 12, 1996 2,000,000
2,000,000 Sears Roebuck Acceptance Corp.,
5.29%, due June 12, 1996 2,000,000
TOTAL SHORT-TERM
CORPORATE NOTES - 3.10% 7,000,000
REPURCHASE AGREEMENT - 2.39%
5,385,000 UMB Bank, n.a.,
4.75%, due June 3, 1996
(Collateralized by U.S.
Treasury Notes, 7.50%,
due December 31, 1996) 5,385,000
TOTAL INVESTMENTS - 100.22% $ 226,186,869
Other assets less liabilities - (0.22%) (488,848)
TOTAL NET ASSETS - 100.00%
(equivalent to $18.35 per share;
20,000,000 shares of $1.00 par
value capital shares authorized;
12,297,623 shares outstanding) $ 225,698,021
STATEMENT OF ASSETS
AND LIABILITIES
May 31, 1996 (unaudited)
<TABLE>
<S> <C>
ASSETS:
Investments in securities:
Common stocks, at market value (identified cost $156,060,801) $ 213,801,869
Short-Term corporate notes, at cost - approximates market value 7,000,000
Repurchase agreement, at cost - approximates market value 5,385,000
Total investments 226,186,869
Dividends receivable 35,384
Interest receivable 6,161
Receivable for investments sold 577,270
Total assets 226,805,684
LIABILITIES AND NET ASSETS:
Cash overdraft 181,049
Payable for investments purchased 926,614
Total liabilities 1,107,663
NET ASSETS $ 225,698,021
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 156,097,634
Accumulated undistributed income:
Undistributed net investment income 782,331
Undistributed net realized gain on investment transactions 11,076,989
Net unrealized appreciation in value of investments 57,741,067
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 225,698,021
Capital shares, $1.00 par value
Authorized 20,000,000
Outstanding 12,297,623
NET ASSET VALUE PER SHARE $ 18.35
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1996 (unaudited)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Income:
Dividends $ 1,273,673
Interest 185,766
1,459,439
Expenses (Note 2):
Management fees 1,092,986
Registration fees and expenses 15,235
1,108,221
Net investment income (Note 1-B) 351,218
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 35,057,505
Cost of investments sold 23,974,949
Net realized gain from investment transactions 11,082,556
Unrealized appreciation of investments:
Beginning of period 32,684,553
End of period 57,741,067
Unrealized appreciation of investments during the period 25,056,514
Net gain on investments 36,139,070
Increase in net assets resulting from operations $ 36,490,288
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
May 31, 1996 November 30,
(unaudited) 1995
</CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 351,218 $ 1,325,452
Net realized gain from investment transactions 11,082,556 21,395,854
Unrealized appreciation of investments during the period 25,056,514 7,252,838
Net increase in net assets resulting from operations 36,490,288 29,974,144
Net equalization included in the price of shares issued and redeemed (19,887) (138,066)
DISTRIBUTIONS TO SHAREHOLDERS FROM:**
Net investment income (1,319,193) (425,295)
Net realized gain from investment transactions (21,392,199) (19,094,377)
Total distributions to shareholders (22,711,392) (19,519,672)
INCREASE FROM CAPITAL SHARE TRANSACTIONS:*
Proceeds from shares sold 6,470,639 11,779,300
Net asset value of shares issued for reinvestment of distributions 21,744,139 18,718,813
28,214,778 30,498,113
Cost of shares repurchased (18,115,713) (27,335,768)
Net increase from capital share transactions 10,099,065 3,162,345
Total increase in net assets 23,858,074 13,478,751
NET ASSETS:
Beginning of period 201,839,947 188,361,196
End of period (including undistributed net investment income
of $782,331 and $1,770,193, respectively) $ 225,698,021 $ 201,839,947
*Shares issued and repurchased:
Number of shares sold 388,112 739,581
Number of shares issued for reinvestment of distributions 1,403,752 1,258,831
1,791,864 1,998,412
Number of shares repurchased (1,130,054) (1,683,462)
Net increase 661,810 314,950
**Distributions to shareholders:
Income dividends per share $ .1137 $ .0377
Capital gains distribution per share $ 1.8433 $ 1.6949
</TABLE>
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
The Fund is registered under the Investment Company Act of 1940, as
amended, as a diversified open-end management investment company. The
following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements.
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.
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 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, 1996 (excluding
maturities of short-term commercial notes and repurchase agreements) are
as follows:
Purchases $ 20,575,708
Proceeds from sales 35,057,505
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.
EQUITIES
Growth Fund
Enterprise Fund*
Enterprise Fund II
Value Fund
Shadow Stock Fund
International Fund
FIXED INCOME
Bond Trust
Money Market Fund
Tax-Free Income Fund
*Closed to new investors.
JONES & BABSON
MUTUAL FUNDS
2440 Pershing Road
Kansas City, MO 64108-2518
816-471-5200
1-800-4-BABSON
(1-800-422-2766)
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