BABSON
ENTERPRISE
FUND
Semiannual Report
May 31, 1997
JONES & BABSON
MUTUAL FUNDS
MESSAGE
TO OUR SHAREHOLDERS
Babson Enterprise Fund achieved a solid total return in the first half of its
fiscal year ended May 31, 1997. The Fund rose 10.4% during this period (price
change and reinvested distributions) surpassing the 8.4% total return of the
unmanaged Russell 2000 index of small capitalization stocks. The larger
capitalization stocks making up the unmanaged Standard & Poor's 500 index
gained 13.2% for the same period.
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.
We continue to believe that small capitalization stocks are well positioned
relative to large cap stocks in coming months. Not only are small cap stocks
at very attractive valuations relative to large cap stocks, but also the
primary macroeconomic trends are very positive for the small cap stock sector.
The domestic economy continues to grow at a healthy rate which should help
sustain positive earnings comparisons in the more economically sensitive smaller
companies. Also, if the recent strength in the dollar continues, it will have
a much more negative effect on the earnings of large multinational companies
since they have a much higher proportion of international earnings than do
smaller companies.
A number of changes were made to the portfolio in the latest six months. In
keeping with our desire to find undiscovered companies, we added the following
companies to the portfolio:
Cass Commercial Corp. - provides freight payment and banking services.
Kaman Corp. - distributes industrial products; produces aerospace products.
MacNeal Schwendler Corp. - designs computer-aided engineering software
products.
Marsh Supermarkets, Inc. - operates supermarkets in Ohio and Indiana.
Terex Corp. - manufactures heavy-duty, off-highway trucks and cranes.
Tokheim Corp. - manufactures petroleum dispensing systems.
Positions liquidated during the period were the following: Dixie Yarns, Arthur
J. Gallagher, NYMAGIC, and Raymond. Also, American Recreation Centers was
bought by American Bowling Centers Inc. Our Bettis holding merged with Daniel
Industries. We received Daniel stock for our Bettis position and have decided
to hold Daniel in the portfolio.
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, 1997 (unaudited)
MARKET VALUE
SHARES COMPANY (NOTE 1-A)
COMMON STOCKS - 95.29%
BASIC MATERIALS - 8.01
133,700 Brady (W.H.) Co. Cl. A
(Identification and labeling
systems) $ 3,810,450
128,800 Furon Co.
(Polymer based products) 3,284,400
26,600 Intermet Corp.
(Auto and industrial
iron castings) 372,400
128,300 Material Sciences Corp.
(Coatings and laminates) 1,796,200
288,050 Nord Resources Corp.
(Rutile and kaolin production) 828,144
160,900 Penwest Ltd.
(Specialty starch based products) 3,016,875
208,600 Tab Products Co.
(Color-coded filing systems) 1,968,663
15,077,132
CAPITAL GOODS - 25.81%
97,600 American Precision Industries Inc.
(Heat exchangers) 1,891,000
117,200 Apogee Enterprises, Inc.
(Commercial window systems) 2,168,200
152,426 Athey Products Corp.
(Street sweepers) 647,811
183,700 Atkinson (Guy F.) Co.
(Construction) 1,294,497
157,400 Brown & Sharpe Manufacturing Co. Cl. A
(High tolerance measuring tools) 2,242,950
97,400 Congoleum Corp. New Cl. A
(Vinyl flooring) 2,245,425
228,900 Corrpro Companies, Inc.
(Corrosion control services) 1,974,263
175,504 Daniel Industries, Inc.
(Metering devices and valves) 2,347,366
248,300 Farrell Corp. New
(Rubber and plastic processing equipment) 853,531
121,300 Flir Systems, Inc.
(Night vision systems) 1,940,800
85,400 Industrial Acoustics Company, Inc.
(Noise control products) 779,275
190,100 Instron Corp.
(Materials testing instruments) 2,376,250
85,800 Kaman Corp. Cl. A
(Industrial distribution/aerospace
products) 1,174,388
117,700 K-Tron International, Inc.
(Industrial feeders and blenders) 1,588,950
170,018 Kuhlman Corp.
(Electrical transformers) 4,696,747
313,700 Lamson & Sessions Co.
(Electrical equipment supplier) 2,431,175
105,800 Moog Inc. Cl. A
(High performance control systems) 2,658,225
177,300 Newcor, Inc.(Automobile assembly
systems) 1,551,375
138,700 Pacific Scientific Co.
(Aerospace and industrial products) 1,855,112
306,100 Schuler Homes, Inc.
(Hawaii homebuilder) 1,760,075
22,900 SPS Technologies, Inc.
(Aerospace fasteners) 1,683,150
152,600 Starrett (L.S.) Co. Cl. A
(Tools and precision instruments) 4,539,850
246,900 Terex Corp. New
(Heavy-duty off-highway trucks and cranes) 3,888,675
48,589,090
CONSUMER CYCLICAL - 17.00%
99,600 Baldwin Piano & Organ Co.
(Keyboard instruments) 1,344,600
83,700 Fab Industries, Inc.
(Textile fabrics) 2,615,625
214,070 Falcon Products, Inc.
(Table pedestals) 3,023,739
211,000 Forstmann & Company, Inc.
(Woolen fabrics) 65,937
203,100 Gottschalks Inc.
(Specialty-apparel stores) 1,167,825
134,200 Helen of Troy Ltd.
(Hair care appliances) 3,589,850
202,800 Jacobson Stores Inc.
(Upscale department
store chain) 1,850,550
75,000 Jay Jacobs, Inc.
(Specialty-apparel stores) 16,500
220,863 Leslie's Poolmart
(Specialty swimming pool stores) 3,161,102
168,900 Oneida Ltd.
(Stainless steel flatware) 4,032,487
371,300 Pentech International, Inc.
(Writing instruments) 719,394
269,500 Shelby Williams Industries, Inc.
(Contract seating) 3,503,500
236,200 Spartan Motors, Inc.
(Chassis for RV's, buses and firetrucks) 1,771,500
184,000 Swiss Army Brands, Inc.
(Swiss Army knives) 2,254,000
145,000 Walbro Corp.
(Auto fuel injection systems) 2,900,000
32,016,609
CONSUMER STAPLES - 8.52%
46,600 Genesee Corp. Cl. B
(Regional brewer) 1,904,775
271,300 J & J Snack Foods Corp.
(Soft pretzels and other snack foods) 3,866,025
26,400 Marsh Supermarkets, Inc. Cl. B
(Indiana-Ohio supermarkets) 359,700
131,300 Northland Cranberries, Inc. Cl. A
(Cranberry grower) 1,706,900
192,925 Rykoff-Sexton, Inc.
(Foodservice product distribution) 3,689,691
211,450 Sanderson Farms, Inc.
(Chickens) 3,118,888
351,700 Stokely USA Inc.
(Canned and frozen vegetables) 362,673
63,400 U.S. Can Corp. (Metal containers) 1,030,250
16,038,902
ENERGY - 6.97%
145,600 American Oilfield Divers Inc.
(Undersea construction and maintenance) 1,656,200
333,300 Matrix Service Co. (Petroleum refining
maintenance) 2,812,219
158,700 McFarland Energy, Inc.
(Oil exploration) 2,023,425
96,500 Petroleum Helicopters, Inc. (non-voting)
(Gulf of Mexico helicopter transportation) 1,556,062
78,700 Petroleum Helicopters, Inc. (voting)
(Gulf of Mexico helicopter transportation) 1,308,387
189,700 Tokheim Corp.
(Petroleum dispensing systems) 1,873,287
94,400 World Fuel Services Corp.
(Aviation fueling services) 1,899,800
13,129,380
FINANCIAL - 4.76%
164,600 AVEMCO Corp.
(Private aircraft insurance) 4,259,025
5,000 Cass Commercial Corp.
(Freight payment sevices) 102,500
63,900 Trans Financial, Inc.
(Kentucky and Tennessee bank) 1,589,512
70,800 Vermont Financial Services Corp.
(Vermont bank holding company) 3,000,150
8,951,187
HEALTH CARE - 3.26%
159,700 Morrison Health Care, Inc.
(Hospital food and nutrition) 2,595,125
224,600 Sullivan Dental Products, Inc.
(Dental supply distributor) 3,537,450
6,132,575
MISCELLANEOUS - 3.03%
141,100 Alltrista Corp.
(Consumer and industrial products) 3,386,400
386,483 Jason Inc.
(Nonwoven auto padding) 2,318,898
5,705,298
TECHNOLOGY - 13.20%
173,700 CATS Software, Inc.
(Financial risk management software) 716,513
148,900 CEM Corp..
(Laboratory microwave ovens) 1,340,100
77,800 CSP Inc.
(Special purpose computers) 573,775
177,900 ESCO Electronics Corp.
(Defense products and systems) 1,845,712
45,700 Fluke Corp.
(Electronic test and measurement equipment) 2,279,287
114,100 Landauer Inc.
(Personal radiation exposure monitoring) 2,595,775
197,900 MacNeal Schwendler Corp.
(Engineering software products) 2,028,475
126,200 New England Business Service, Inc.
(Business forms) 3,675,575
187,600 Nichols Research Corp.
(Technical and engineering services) 3,658,200
212,500 Norstan, Inc.
(Telecommunications equipment) 3,081,250
204,200 Viewlogic Systems Inc.
(Computer-aided engineering software) 3,063,000
24,857,662
TRANSPORTATION & SERVICES - 4.73%
182,600 ABM Industries, Inc.
(Building maintenance services) 3,537,875
139,500 International Shipholding Corp.
(Ocean and river freight transportation) 2,388,938
137,000 Sea Containers Ltd. Cl. A
(Marine container leasing) 2,740,000
12,000 Sea Containers Ltd. Cl. B
(Marine container leasing) 238,500
8,905,313
TOTAL COMMON STOCKS - 95.29% 179,403,148
MARKET VALUE
FACE AMOUNT DESCRIPTION (NOTE 1-A)
REPURCHASE AGREEMENT - 4.10%
$7,725,000 UMB Bank, n.a.,
4.90%, due June 2, 1997
(Collateralized by U.S.
Treasury Notes, 5.00%,
due January 31, 1999) 7,725,000
TOTAL INVESTMENTS - 99.39% $ 187,128,148
Other assets less liabilities - 0.61% 1,149,881
TOTAL NET ASSETS - 100.00%
(equivalent to $17.55 per share;
20,000,000 shares of $1.00 par
value capital shares authorized;
10,729,647 shares outstanding) $ 188,278,029
STATEMENT OF ASSETS
AND LIABILITIES
May 31, 1997 (unaudited)
ASSETS:
Investments in securities:
Common stocks, at market value
(identified cost $133,945,554) $ 179,403,148
Repurchase agreement, at cost - approximates
market value 7,725,000
Total investments 187,128,148
Cash 1,123,229
Dividends receivable 43,986
Receivable for investments sold 78,442
Total assets 188,373,805
LIABILITIES AND NET ASSETS:
Payable for investments purchased 95,776
Total liabilities 95,776
NET ASSETS $ 188,278,029
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 125,777,956
Accumulated undistributed income:
Undistributed net investment income 1,349,843
Undistributed net realized gain on investment
transactions 15,692,636
Net unrealized appreciation in value of investments 45,457,594
NET ASSETS APPLICABLE TO OUTSTANDING SHARES $ 188,278,029
Capital shares, $1.00 par value
Authorized 20,000,000
Outstanding 10,729,647
NET ASSET VALUE PER SHARE $ 17.55
See accompanying Notes to Financial Statements.
STATEMENT OF OPERATIONS
Six Months Ended May 31, 1997 (unaudited)
INVESTMENT INCOME:
Income:
Dividends $ 1,186,425
Interest 155,932
1,342,357
Expenses (Note 2):
Management fees 1,005,689
Registration fees and expenses 18,818
1,024,507
Net investment income (Note 1-B) 317,850
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 37,419,861
Cost of investments sold 26,178,118
Net realized gain from investment transactions 11,241,743
Unrealized appreciation of investments:
Beginning of period 38,466,662
End of period 45,457,594
Unrealized appreciation of investments during
the period 6,990,932
Net gain on investments 18,232,675
Increase in net assets resulting
from operations $ 18,550,525
See accompanying Notes to Financial Statements.
STATEMENTS OF CHANGES
IN NET ASSETS
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
May 31, 1997 November 30,
(unaudited) 1996
</CAPTION>
<S> <C> <C>
INCREASE IN NET ASSETS FROM OPERATIONS:
Net investment income $ 317,850 $ 742,501
Net realized gain from investment transactions 11,241,743 31,521,775
Unrealized appreciation of investments
during the period 6,990,932 5,782,109
Net increase in net assets resulting from operations 18,550,525 38,046,385
Net equalization included in the price of shares
issued and redeemed 2,523 (157,879)
DISTRIBUTIONS TO SHAREHOLDERS FROM:**
Net investment income - (1,319,193)
Net realized gain from investment transactions (27,062,211) (22,711,199)
Total distributions to shareholders (27,062,211) (22,711,392)
DECREASE FROM CAPITAL SHARE TRANSACTIONS:*
Proceeds from shares sold 4,300,708 13,034,598
Net asset value of shares issued for
reinvestment of distributions 25,690,076 21,744,139
29,990,784 34,778,737
Cost of shares repurchased (34,983,187) (50,016,203)
Net decrease from capital share transactions (4,992,403) (15,237,466)
Total decrease in net assets (13,501,566) (60,352)
NET ASSETS:
Beginning of period 201,779,595 201,839,947
End of period (including undistributed net investment
income of $1,349,843 and $1,029,470, respectively) $ 188,278,029 $ 201,779,595
*Shares issued and repurchased:
Number of shares sold 268,042 759,602
Number of shares issued for reinvestment of
distributions 1,587,767 1,403,753
1,855,809 2,163,355
Number of shares repurchased (2,026,954) (2,898,376)
Net increase (171,145) (735,021)
**Distributions to shareholders:
Income dividends per share $ - $ .1137
Capital gains distribution per share $ 2.66 $ 1.8433
</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, 1997 (excluding
maturities of short-term commercial notes and repurchase agreements) are as
follows:
Purchases $ 11,756,717
Proceeds from sales 37,419,861
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 64108-2561
816-471-5200
1-800-4-BABSON
(1-800-422-2766)
http://www.jbfunds.com
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 133945554
<INVESTMENTS-AT-VALUE> 187128148
<RECEIVABLES> 122428
<ASSETS-OTHER> 1123229
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 188373805
<PAYABLE-FOR-SECURITIES> 95776
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 95776
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 125777956
<SHARES-COMMON-STOCK> 10729647
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 1349843
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 15692636
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 45457594
<NET-ASSETS> 188278029
<DIVIDEND-INCOME> 1186425
<INTEREST-INCOME> 155932
<OTHER-INCOME> 0
<EXPENSES-NET> 1024507
<NET-INVESTMENT-INCOME> 317850
<REALIZED-GAINS-CURRENT> 11241743
<APPREC-INCREASE-CURRENT> 6990932
<NET-CHANGE-FROM-OPS> 18550525
<EQUALIZATION> 2523
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 27062211
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 268042
<NUMBER-OF-SHARES-REDEEMED> 2026954
<SHARES-REINVESTED> 1587767
<NET-CHANGE-IN-ASSETS> (13501566)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1005689
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1024507
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 2.66
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
