<PAGE> 1
As Filed With the Securities and Exchange Commission
June 13, 1996
Registration No. 2-28097
------------------------
----------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
Registration Statement Under the Securities Act of 1933 __
Pre-Effective Amendment No. __
Post-Effective Amendment No. 45 x
and/or ----
Registration Statement Under the Investment Company Act of 1940 __
Amendment No. 31 x
(Check appropriate box or boxes)
----------------------------------
THE ENTERPRISE GROUP OF FUNDS, INC.
(Exact Name of Registrant)
Suite 450
3343 Peachtree Road
Atlanta, Georgia 30326
(Address of Principal Executive Office)
Registrant's Telephone Number: (404) 261-1116
Catherine R. McClellan
Suite 450
3343 Peachtree Road, N.E.
Atlanta, Georgia 30326-1022
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
---
on May 1, 1996 pursuant to paragraph (b)
---
x 60 days after filing pursuant to paragraph (a)
---
on (Date) pursuant to paragraph (a) of Rule 485
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DECLARATION PURSUANT TO RULE 24f-2(a)(l)
The Registrant has registered an indefinite number of shares of Common Stock,
$0.10 par value of the Registrant under the Securities Act of 1933 pursuant to
Rule 24f-2. The Rule 24f-2 Notice for the Registrant's fiscal year ended
December 31, 1995 was filed with the Securities and Exchange Commission on
February 23, 1996.
<PAGE> 2
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-lA
Item Prospectus Caption
- ------- ------------------
<S> <C> <C>
Part A
- ------
1. Cover Page ............................ The Enterprise Group of Funds, Inc.
2. Synopsis .............................. Prospectus Summary
3. Condensed Financial Information ....... Condensed Financial Information
4. General Description of Registrant...... The Enterprise Group of Funds, Inc.;
General Information - Organization of the Fund
5. Management of the Fund ................ Management of the Fund
5A. Management's Discussion
of Fund Performance ................. Refer to Annual Report
6. Capital Stock and Other Securities .... General Information - Capital Stock
7. Purchase of Securities Being Offered .. How To Purchase Portfolio Shares
8. Redemption or Repurchase .............. How to Redeem Portfolio Shares
9. Legal Proceedings ..................... Not Applicable
Statement of Additional
Part B Information Caption
- ------ -------------------
10. Cover Page ............................ Cover Page
11. Table of Contents ..................... Table of Contents
12. General Information and History ....... General Information and History
13. Investment Objectives and Policies..... Investment Objectives and Investment
Restrictions
14. Management of the Registrant........... Management of the Fund
15. Control Persons and Principal
of Securities.......................... Management of the Fund
16. Investment Advisory and
Other Services......................... Investment Advisory and Other Services
17. Brokerage Allocation and other
Practices ............................. Portfolio Transactions and Brokerage
18. Capital Stock and Other Securities .... Not Applicable
19. Purchase, Redemption and Pricing of
Securities Being Offered .............. Purchase, Redemption and Pricing of
Securities Being Offered
20. Tax Status ............................ Not Applicable
21. Underwriters........................... Purchase, Redemption and Pricing of
Securities Being Offered
22. Calculation of Yield Quotations of
Money Market Funds .................... Performance Comparisons
23. Financial Statements .................. Financial Statements
</TABLE>
Part C
- --------
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Post-Effective Amendment.
<PAGE> 3
THE ENTERPRISE GROUP OF FUNDS, INC.
Atlanta Financial Center
3343 Peachtree Road, N.E., Suite 450
Atlanta, Georgia 30326
For Shareholder Information Call 1-800-368-3527
PROSPECTUS
DATED JULY 1, 1996
The Enterprise Group of Funds, Inc. (the "Fund") is an open-end investment
management company that seeks to provide investors a broad range of investment
alternatives through its ten separate Portfolios. Each Portfolio is managed as
if it were a separate mutual fund issuing its own shares. The Fund's principal
investment adviser, Enterprise Capital Management, Inc., selects, subject to
shareholder approval, separate sub-advisers referred to as "Portfolio Managers"
that provide investment advice for the Portfolios and that are selected on the
basis of able investment performance in their respective areas of
responsibility.
This Prospectus sets forth the information about the Fund and its Portfolios
that a prospective investor should consider before investing. Investors should
read this Prospectus and retain it for future reference. Additional information,
contained in a "Statement of Additional Information," has been filed with the
Securities and Exchange Commission and is available upon request without charge
by writing or calling the Fund. The Statement of Additional Information, which
has the same date as this Prospectus, is incorporated by reference into this
Prospectus.
Equity Portfolios
Growth Portfolio
Growth and Income Portfolio
Capital Appreciation Portfolio
Small Company Portfolio
International Growth Portfolio
Income Portfolios
Government Securities Portfolio
High-Yield Bond Portfolio
Tax-Exempt Income Portfolio
Flexible Portfolio
Managed Portfolio
Money Market Portfolio
Money Market Portfolio
The Funds offer three separate classes of shares: Class A, B and Y Shares, each
with a different combination of sales charges, ongoing fees and other features.
The offering of Class A, B and Y Shares presents the investor with the
opportunity to choose the sales charge and distribution fee arrangement which is
most beneficial, depending on the amount of purchase, the length of time the
investor expects to hold the shares, and other circumstances.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTMENTS IN THE MONEY MARKET PORTFOLIO ARE NEITHER INSURED NOR GUARANTEED BY
THE U.S. GOVERNMENT. THERE IS NO ASSURANCE THAT THE MONEY MARKET PORTFOLIO WILL
BE ABLE TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
IN PURSUING ITS INVESTMENT OBJECTIVE, THE HIGH-YIELD BOND PORTFOLIO MAY INVEST
SIGNIFICANTLY IN LOWER RATED BONDS, COMMONLY REFERRED TO AS "JUNK BONDS." BONDS
OF THIS TYPE ARE CONSIDERED TO BE SPECULATIVE WITH REGARD TO THE PAYMENT OF
INTEREST AND RETURN OF PRINCIPAL. INVESTMENT IN THESE TYPES OF SECURITIES HAVE
SPECIAL RISKS AND THEREFORE, MAY NOT BE SUITABLE FOR ALL INVESTORS. INVESTORS
SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN THIS
PORTFOLIO.
<PAGE> 4
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
SMALL
GROWTH AND INCOME CAPITAL APPRECIATION COMPANY
GROWTH PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------- ---------------------- ---------------------- ----
CLASS OF SHARES: A B Y A B Y A B Y A
- ------------------------------------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on
Purchase (as a % of offering price)...... 4.75% none none 4.75% none none 4.75% none none 4.75%
Maximum Deferred Sales Load(1)............. none 5.00% none none 5.00% none none 5.00% none none
Maximum Sales Load Imposed On Reinvested
Dividends................................ none none none none none none none none none none
Exchange Fee............................... none none none none none none none none none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee............................. 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
12b-1 Fee (including service fees of
.25%)(2)................................. 0.45% 1.00% none 0.45% 1.00% none 0.45% 1.00% none 0.45%
Other Expenses............................. 0.40% 0.40% 0.40% 0.30% 0.30% 0.30% 0.55% 0.55% 0.55% 0.55%
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL FUND OPERATING EXPENSES(3)........... 1.60% 2.15% 1.15% 1.50% 2.05% 1.05% 1.75% 2.30% 1.30% 1.75%
==== ==== ==== ==== ==== ==== ==== ==== ==== ====
EXAMPLE 1: You would pay the following expense over the indicated periods in each of the Funds on a $1,000 investment assuming (a)
payment of the maximum sales charge, (b) a 5% annual return, and (c) retention of shares at the end of the time period. 10-year
figures for Class B shares assume conversion to Class A shares after eight years.
1 Year..................................... $ 63 $ 22 $ 12 $ 62 $ 21 $ 11 $ 64 $ 23 $ 13 $ 64
3 Years.................................... 96 67 37 93 64 33 100 72 41 100
5 Years.................................... 130 115 63 125 110 58 138 123 71 138
10 Years................................... 228 234 140 218 224 128 244 250 157 244
EXAMPLE 2: You would pay the following expenses over the indicated periods in each of the Funds on a $1,000 investment assuming (a)
payment of the maximum sales charge, (b) a 5% annual return, and (c) redemption at the end of the time period. 10-year figures for
Class B shares assume conversion to Class A shares after eight years.
1 Year..................................... $ 63 $ 72 $ 12 $ 62 $ 71 $ 11 $ 64 $ 73 $ 13 $ 64
3 Years.................................... 96 107 37 93 104 33 100 112 41 100
5 Years.................................... 130 135 63 125 130 58 138 143 71 138
10 Years................................... 228 234 140 218 224 128 244 250 157 244
<CAPTION>
CLASS OF SHARES: B Y
- ------------------------------------------- ---- ----
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on
Purchase (as a % of offering price)...... none none
Maximum Deferred Sales Load(1)............. 5.00% none
Maximum Sales Load Imposed On Reinvested
Dividends................................ none none
Exchange Fee............................... none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee............................. 0.75% 0.75%
12b-1 Fee (including service fees of
.25%)(2)................................. 1.00% none
Other Expenses............................. 0.55% 0.55%
---- ----
TOTAL FUND OPERATING EXPENSES(3)........... 2.30% 1.30%
==== ====
EXAMPLE 1: You would pay the following expense over the indicated periods in each of the Funds on a $1,000 investment assuming (a)
payment of the maximum sales charge, (b) a 5% annual return, and (c) retention of shares at the end of the time period. 10-year
figures for Class B shares assume conversion to Class A shares after eight years.
1 Year..................................... $ 23 $ 13
3 Years.................................... 72 41
5 Years.................................... 123 71
10 Years................................... 250 157
EXAMPLE 2: You would pay the following expenses over the indicated periods in each of the Funds on a $1,000 investment assuming (a)
payment of the maximum sales charge, (b) a 5% annual return, and (c) redemption at the end of the time period. 10-year figures for
Class B shares assume conversion to Class A shares after eight years.
1 Year..................................... $ 73 $ 13
3 Years.................................... 112 41
5 Years.................................... 143 71
10 Years................................... 250 157
</TABLE>
THE EXAMPLES SHOULD NOT BE CONSIDERED INDICATIONS OF PAST OR FUTURE EXPENSES OR
PERFORMANCE, AND ACTUAL EXPENSES OR PERFORMANCE MAY VARY FROM THOSE SHOWN.
The purpose of this table is to assist the investor in understanding the
various costs and expenses that an investor in the Portfolios will bear directly
or indirectly.
(1) Certain purchases of Class A shares of $1 million or more are not
subject to front-end sales charges, but a contingent deferred sales charge
("CDSC") is imposed on the proceeds of such shares equal to 1% if the shares are
redeemed within the first 24 months after the end of their purchase.
(2) Includes a service fee of .25% of average net assets. See "Distributor's
Agreement and Plan of Distribution." Long-term shareholders of a 12b-1 Fund may
over time pay more in 12b-1 fees than the economic equivalent of the maximum
front-end sales charges permitted by the National Association of Securities
Dealers, Inc.
2
<PAGE> 5
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH GOVERNMENT SECURITIES HIGH-YIELD BOND TAX-EXEMPT INCOME MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------------- ---------------------- ---------------------- ---------------------- -------------
A B Y A B Y A B Y A B Y A B
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4.75% none none 4.75% none none 4.75% none none 4.75% none none 4.75% none
none 5.00% none none 5.00% none none 5.00% none none 5.00% none none 5.00%
none none none none none none none none none none none none none none
none none none none none none none none none none none none none none
0.85% 0.85% 0.85% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.50% 0.50% 0.50% 0.75% 0.75%
0.45% 1.00% none 0.45% 1.00% none 0.45% 1.00% none 0.45% 1.00% none 0.45% 1.00%
0.70% 0.70% 0.70% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.30% 0.30% 0.30% 0.55% 0.55%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
2.00% 2.55% 1.55% 1.30% 1.85% 0.85% 1.30% 1.85% 0.85% 1.25% 1.80% 0.80% 1.75% 2.30%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
$ 67 $ 26 $ 16 $ 60 $ 19 $ 9 $ 60 $ 19 $ 9 $ 60 $ 18 $ 8 $ 64 $ 23
107 79 49 87 58 27 87 58 27 85 57 26 100 72
150 156 84 115 100 47 115 100 47 113 97 44 138 123
269 278 185 197 203 105 197 203 105 191 197 99 244 250
$ 67 $ 76 $ 16 $ 60 $ 69 $ 9 $ 60 $ 69 $ 9 $ 60 $ 68 $ 8 $ 64 $ 73
107 119 49 87 98 27 87 98 27 85 97 26 100 112
150 136 84 115 120 47 115 120 47 113 117 44 138 143
269 275 185 197 203 105 197 203 105 191 197 99 244 250
<CAPTION>
MONEY MARKET PORTFOLIO
----------------------
Y A B Y
---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
none none none none
none none 5.00% none
none none none none
none none none none
0.75% 0.35% 0.35% 0.35%
none 0.30% 0.85% none
0.55% 0.35% 0.35% 0.35%
---- ---- ---- ----
1.30% 1.00% 1.55% 0.70%
==== ==== ==== ====
$ 13 $ 10 $ 16 $ 7
41 32 49 22
71 55 84 39
157 122 170 87
$ 3 $ 10 $ 66 $ 7
41 32 89 22
71 55 104 39
157 122 170 87
</TABLE>
(3) The expense information set out above reflects a revised commitment of
Enterprise Capital Management, Inc. effective January 1, 1996, to reimburse to
the Fund's Portfolios a portion of the fees due it under the Investment
Adviser's Agreement. That commitment provides that the Fund's total operating
expenses for the Portfolios, on an annual basis, will not exceed the amounts set
forth in the above table. By reason of the expense reimbursement commitment
applicable in 1995, the actual expenses incurred by the Portfolios for 1995
were, on an annualized basis, Growth -- (A) 1.6% (B) 2.15%; Growth and
Income -- (A) 1.5% (B) 2.05%; Capital Appreciation -- (A) 1.65% (B) 2.08%; Small
Company -- (A) 1.75% (B) 2.30%; (Y) 1.3% International Growth -- (A) 2.0% (B)
2.55%; (Y) 1.55% Government Securities -- (A) 1.3% (B) 1.85%; High-Yield
Bond -- (A) 1.3% (B) 1.85%; Tax-Exempt Income -- (A) 1.25% (B) 1.80%;
Managed -- (A) 1.75% (B) 2.30%; (Y) 1.3% and Money Market -- (A) 1.0% (B) 1.55%.
Absent this reimbursement of fees, the ratio of expenses to average net assets
for the Portfolios for 1995 would have been as follows: Growth -- (A) 1.6% (B)
2.15%; Growth and Income -- (A) 1.78% (B) 2.23%; Capital Appreciation -- (A)
1.65% (B) 2.08%; Small Company -- (A) 2.21% (B) 2.78% (Y) 1.81%; International
Growth -- (A) 2.4% (B) 2.73% (Y) 1.75%; Government Securities -- (A) 1.44% (B)
1.93%; High-Yield Bond -- (A) 1.52% (B) 2.09%; Tax-Exempt Income -- (A) 1.42%
(B) 1.98%; Managed -- (A) 1.9% (B) 2.45% (Y) 1.41%; and Money Market -- (A)
1.35% (B) 1.88%. See "Management of the Fund," "Distributor's Agreement and Plan
of Distribution," and "Brokerage Transactions" for further information
concerning expenses. For a separate $10 charge, redemptions for a maximum of
$250,000 will be wired at your request. For redemption information, please refer
to page 36 of the Prospectus.
For accounts with a balance of $1,000 or less, as of July 31, a $25 fee per
account registration per Portfolio for maintenance will apply, excluding
Automatic Bank Draft Plan, Automatic Investment Plan, Retirement Plan and
Savings Plan Accounts.
3
<PAGE> 6
THE ENTERPRISE GROUP OF FUNDS, INC.
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Set forth below are the ten Portfolios of the Fund, their Portfolio
Managers and investment objectives. The Fund is a diversified, open-end
management investment company. Enterprise Capital Management, Inc. serves
as investment adviser. The Fund consists of common stock divided into ten
Portfolios consisting of three separate Classes for each Portfolio. Shares
are freely transferable within each Class.
<TABLE>
<CAPTION>
PORTFOLIO MANAGER INVESTMENT OBJECTIVES
------------------------------------------ -------------------------------------------------
<S> <C> <C> <C>
EQUITY PORTFOLIOS
GROWTH PORTFOLIO Capital appreciation, primarily from investments
Montag & Caldwell, Inc. in common stocks.
Atlanta, Georgia
- ------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME PORTFOLIO A combination of growth and income to achieve an
1740 Advisers, Inc. above average and consistent total return,
New York, New York primarily from investments in dividend-paying
common stocks.
- ------------------------------------------------------------------------------------------------------------
CAPITAL APPRECIATION PORTFOLIO Maximum capital appreciation, primarily through
Provident Investment Counsel, Inc. investment in common stock of companies that
Pasadena, California demonstrate accelerating earnings momentum and
consistently strong financial characteristics.
- ------------------------------------------------------------------------------------------------------------
SMALL COMPANY PORTFOLIO Maximum capital appreciation, primarily through
GAMCO Investors, Inc. investment in the equity securities of companies
Rye, New York that have a market capitalization of no more than
$1 billion.
- ------------------------------------------------------------------------------------------------------------
INTERNATIONAL GROWTH PORTFOLIO Capital appreciation, primarily through a
Brinson Partners, Inc. diversified portfolio of non-U.S. equity
Chicago, Illinois securities.
- ------------------------------------------------------------------------------------------------------------
INCOME PORTFOLIOS
GOVERNMENT SECURITIES PORTFOLIO Current income and safety of principal, primarily
TCW Funds Management, Inc. from securities that are obligations of the U.S.
Los Angeles, California Government, or its agencies, or its
instrumentalities.
- ------------------------------------------------------------------------------------------------------------
HIGH-YIELD BOND PORTFOLIO Maximum current income, primarily from debt
Caywood-Scholl Capital Management securities that are rated Ba or lower by Moody's
San Diego, California Investors Service, Inc. or BB or lower by
Standard & Poor's Corporation.
- ------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INCOME PORTFOLIO A high level of current income exempt from
Morgan Stanley Asset Management, Inc. federal income tax, with consideration given to
New York, New York preservation of principal, primarily from
investment in a diversified portfolio of long-
term investment grade municipal bonds.
- ------------------------------------------------------------------------------------------------------------
FLEXIBLE PORTFOLIO
Managed Portfolio Growth of capital over time through investment in
OpCap Advisors a portfolio consisting of common stocks, bonds
New York, New York and cash equivalents, the percentages of which
will vary based on the Portfolio Manager's
assessments of relative investment values.
- ------------------------------------------------------------------------------------------------------------
MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO The highest possible level of current income
Enterprise Capital Management, Inc. consistent with preservation of capital and
Atlanta, Georgia liquidity by investing in obligations maturing in
one year or less from the time of purchase.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4
<PAGE> 7
INVESTMENT RISK FACTORS
The risk characteristics of each Portfolio are different. In general, investors
should consider the following risks: An investment in any of the Portfolios
carries the risk that the net asset value of the Portfolio shares will fluctuate
in response to market conditions. Further, an investment in any of the Income
Portfolios carries the risk that the issuers of securities in the Income
Portfolios may default on the payment of principal and interest. An investment
in the High-Yield Bond Portfolio carries an increased risk that issuers of
securities in which the High-Yield Bond Portfolio invests may default in the
payment of principal and interest as compared to the risk of such defaults in
the other Income Portfolios. In addition, an investment in the High-Yield Bond
Portfolio may be subject to certain other risks relating to the market price,
relative liquidity in the secondary market and sensitivity to interest rate and
economic changes of the noninvestment grade securities in which the High-Yield
Bond Portfolio invests that are higher than may be associated with higher rated,
investment grade securities. The Small Company Portfolio carries an increased
risk that smaller capitalization companies may experience higher growth rates
and higher failure rates than do larger companies. The limited volume and
frequency of trading of small capitalization companies may subject their stocks
to greater price deviations than stocks of larger companies. The International
Growth Portfolio carries additional risks associated with possibly less stable
foreign securities and currencies. Because of the short-term nature of the Money
Market Portfolio's investments, an investment in shares of the Money Market
Portfolio is subject to relatively little market risk and financial risk, but is
subject to a high level of current income volatility. In addition, the Money
Market Portfolio uses the amortized cost method to value its portfolio
securities and seeks to maintain a constant net asset value of $1.00 per share.
There is no assurance that this Portfolio will be able to maintain this constant
net asset value. See "Certain Investment Techniques and Associated Risks" at
page 16.
PURCHASE ALTERNATIVES
Each Portfolio offers three Classes of shares: shares of each Class are
generally offered at the net asset value next determined after receipt of your
purchase order plus (i) an initial ("front-end") sales charge (Class A shares)
or (ii) a deferred sales charge (Class B shares). The following is a brief
description of the three Classes of shares offered by each Portfolio. For more
complete descriptions of each Class of shares, see "How to Purchase Shares," at
page 27.
CLASS A SHARES: Class A shares are sold with an initial sales charges
of up to 4.75% of the offering price (for all
Portfolios other than Money Market) and are subject
to an ongoing distribution fee of 0.45% (0.30% for
Money Market) of the Portfolio's average daily net
assets. The initial sales charge may be waived or
reduced in certain circumstances. Shares purchased
pursuant to waiver of the initial sales charge are
subject to a CDSC if redeemed within two years of
purchase in certain circumstances.
CLASS B SHARES: Class B shares do not incur an initial sales charge
when purchased but are subject to an ongoing service
fee of 0.25% and an ongoing distribution fee of 0.75%
(0.60% for Money Market) of the Portfolio's average
daily net assets, and a CDSC if they are redeemed
within six years of purchase. Class B shares
automatically convert to Class A shares (which are
subject to lower ongoing expenses) eight years after
5
<PAGE> 8
purchase. Class B shares are available only to
investors purchasing less than $250,000 in the
aggregate.
CLASS Y SHARES: CLASS Y SHARES DO NOT INCUR AN INITIAL SALES CHARGE
WHEN PURCHASED. CLASS Y SHARES ARE NOT SUBJECT TO ANY
ONGOING DISTRIBUTION FEES OR SERVICE FEES. CLASS Y
SHARES ARE AVAILABLE ONLY TO A LIMITED CLASS OF
ELIGIBLE INSTITUTIONAL INVESTORS WITH A MINIMUM
INVESTMENT OF $1,000,000.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SHAREHOLDER SERVICES
Automatic Reinvestment Plan Check Writing (Class A Money Market
Automatic Bank Draft Plan Portfolio
Investment Plan Shares Only)
Letter of Intent Bank Purchase and Redemption Plan
Right of Accumulation Systematic Withdrawal Plan
Retirement Plans
24-Hour Account Information
FOR MORE COMPLETE INFORMATION ABOUT THESE PLANS AND SERVICES,
SEE SHAREHOLDER SERVICES AT PAGE 34 OR
CALL THE ENTERPRISE GROUP OF FUNDS AT
(800) 432-4320.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
See How to Purchase Shares at page 27.
See How to Exchange Shares at page 35.
See How to Redeem Shares at page 37.
6
<PAGE> 9
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGH THE PERIODS INDICATED)
The financial highlights which follow are part of the Fund's financial
statements and are included in Fund's Annual Report to Shareholders. The Fund's
1995 Annual Report to Shareholders is incorporated by reference into the
Statement of Additional Information. Annual reports may be obtained without
charge by calling the Fund at 800-368-3527. The Report contains information
about the performances of the Portfolios.
<TABLE>
<CAPTION>
Net Gains or
Net Losses on
Asset Net Securities Total Dividends
Value Investment (Realized From from Net Distributions
Beginning Income and Investment Investment from Capital
of Period (Loss) Unrealized) Operations Income Gains Other
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH (CLASS A) FOR YEAR ENDED 12/31,
1995................................ $ 7.76 $(0.03) $ 3.13 $ 3.10 $ 0.00 $0.42 $0.00
1994................................ 8.26 (0.02) (0.06) (0.08) 0.00 0.42 0.00
1993................................ 7.96 0.01 0.84 0.85 0.01 0.54 0.00
1992+............................... 8.22 (0.02) 0.55 0.53 0.00 0.79 0.00
1991................................ 6.31 0.07 2.57 2.64 0.07 0.66 0.00
1990................................ 7.24 0.08 (0.24) (0.16) 0.09 0.68 0.00
1989................................ 6.25 0.02 1.42 1.44 0.02 0.43 0.00
1988................................ 6.02 0.07 0.67 0.74 0.07 0.44 0.00
1987................................ 6.97 0.16 0.66 0.82 0.11 1.66 0.00
1986................................ 7.21 0.06 0.85 0.91 0.23 0.92 0.00
GROWTH (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 8.69 (0.02) 2.16 2.14 0.00 0.42 0.00
GROWTH & INCOME (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 16.43 0.45 5.00 5.45 0.45 0.70 0.00
1994................................ 17.75 0.44 (0.53) (0.09) 0.44 0.79 0.00
1993................................ 16.93 0.52 1.74 2.26 0.50 0.94 0.00
1992................................ 16.00 0.43 0.92 1.35 0.41 0.01 0.00
1991................................ 13.40 0.52 2.61 3.13 0.53 0.00 0.00
1990................................ 15.26 0.61 (1.84) (1.23) 0.63 0.00 0.00
1989................................ 13.40 0.37 1.97 2.34 0.38 0.10 0.00
1988................................ 12.16 0.29 1.37 1.66 0.26 0.16 0.00
11/17 through 12/31, 1987........... 12.00 0.05 0.15 0.20 0.04 0.00 0.00
GROWTH & INCOME (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 18.12 0.29 3.40 3.69 0.44 0.70 0.00
CAPITAL APPRECIATION (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 28.54 (0.25) 7.59 7.34 0.00 3.34 0.00
1994................................ 31.10 (0.13) (0.95) (1.08) 0.00 1.48 0.00
1993................................ 29.42 (0.15) 1.83 1.68 0.00 0.00 0.00
1992+............................... 27.80 (0.04) 1.66 1.62 0.00 0.00 0.00
1991................................ 17.48 0.06 10.26 10.32 0.00 0.00 0.00
1990................................ 16.94 0.11 0.54 0.65 0.11 0.00 0.00
1989................................ 13.01 (0.03) 4.49 4.46 0.00 0.53 0.00
1988................................ 12.28 (0.03) 0.76 0.73 0.00 0.00 0.00
11/17 through 12/31, 1987........... 12.00 0.03 0.27 0.30 0.02 0.00 0.00
CAPITAL APPRECIATION (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 30.04 (0.12) 5.84 5.72 0.00 3.34 0.00
<CAPTION>
(2)
Net (1) Net
Asset Net Assets Ratio of Investment
Value End of Expenses to Income to Portfolio
Total End of Total Period Average Net Average Turnover
Distributions Period Return+++ (in thousands) Assets Net Assets Rate
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
GROWTH (CLASS A) FOR YEAR ENDED 12/31,
1995................................ $0.42 $10.44 39.99% $122,559 1.60% (0.35)% 45.30%
1994................................ 0.42 7.76 (0.99)% 88,375 1.56% (0.30)% 64.50%
1993................................ 0.55 8.26 10.59% 90,902 1.60% 0.10% 107.90%
1992+............................... 0.79 7.96 6.46% 84,200 1.60% (0.30)% 61.20%
1991................................ 0.73 8.22 41.79% 77,784 1.60% 0.90% 74.70%
1990................................ 0.77 6.31 (2.26)% 52,897 1.60% 1.00% 138.40%
1989................................ 0.45 7.24 23.05% 55,320 2.50% 0.30% 78.30%
1988................................ 0.51 6.25 12.30% 40,363 2.50% 0.80% 67.10%
1987................................ 1.77 6.02 11.53% 29,927 1.70% 0.90% 64.40%
1986................................ 1.15 6.97 12.58% 24,934 1.50% 0.80% 34.70%
GROWTH (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 0.42 10.41 24.66%** 4,572 2.15%* (0.82)%* 45.30%*
GROWTH & INCOME (CLASS A) FOR YEAR ENDED 12/13,
1995................................ 1.15 20.73 33.38% 61,906 1.50% 2.33% 25.60%
1994................................ 1.23 16.43 (0.49)% 50,926 1.50% 2.50% 41.40%
1993................................ 1.44 17.75 13.45% 49,920 1.50% 2.90% 39.90%
1992................................ 0.42 16.93 8.48% 40,918 1.50% 2.80% 38.30%
1991................................ 0.53 16.00 23.55% 33,605 1.50% 3.50% 25.90%
1990................................ 0.63 13.40 (8.20)% 29,330 1.50% 4.20% 20.80%
1989................................ 0.48 15.26 17.55% 33,402 2.50% 3.30% 9.50%
1988................................ 0.42 13.40 13.64% 10,199 2.50% 3.60% 9.70%
11/17 through 12/31, 1987........... 0.04 12.16 1.67%** 1,203 2.50%* 0.50%* 0.00%
GROWTH & INCOME (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 1.14 20.67 20.57%** 1,086 2.05%* 1.56%* 25.60%*
CAPITAL APPRECIATION (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 3.34 32.54 25.72% 121,207 1.65% (0.82)% 65.20%
1994................................ 1.48 28.54 (3.46)% 101,237 1.66% (0.50)% 74.40%
1993................................ 0.00 31.10 5.71% 103,187 1.64% (0.60)% 61.90%
1992+............................... 0.00 29.42 5.83% 72,569 1.72% (0.20)% 32.50%
1991................................ 0.00 27.80 59.04% 33,375 1.75% 0.10% 40.20%
1990................................ 0.11 17.48 3.84% 12,552 1.75% 0.70% 60.50%
1989................................ 0.53 16.94 34.27% 9,091 2.50% (0.50)% 65.80%
1988................................ 0.00 13.01 5.94% 2,825 2.50% (0.30)% 49.30%
11/17 through 12/31, 1987........... 0.02 12.28 2.50%** 1,077 2.50%* 0.20%* 0.00%
CAPITAL APPRECIATION (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 3.34 32.42 18.99%** 1,953 2.08%* (1.41)%* 65.20%*
</TABLE>
*Annualized
**Not Annualized
+Based on average monthly shares outstanding.
++Distributions in excess of net investment income.
+++Class A Total Return does not include one time sales charge;
Class B Total Return does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a portion of its fees
and reimbursed the Portfolio for a portion of its operating expenses. If
such waivers and reimbursements had not been in effect, the ratio of
operating expenses to average net assets would have been:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
----- ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Growth (Class A).................................................. 1.60% 1.56% 1.61% 1.67% 1.81% 1.75%
Growth (Class B).................................................. 2.15%
Growth and Income (Class A)....................................... 1.78% 1.73% 1.91% 1.95% 2.02% 2.01%
Growth and Income (Class B)....................................... 2.23%
Capital Appreciation (Class A).................................... 1.65% 1.66% 1.64% 1.72% 2.04% 2.27%
Capital Appreciation (Class B).................................... 2.08%
<CAPTION>
1989 1988 1987 1986
----- ----- ----- ----
<S> <C> <C> <C> <C>
Growth (Class A).................................................. 2.70% 2.60% 2.70% 1.50%
Growth (Class B)..................................................
Growth and Income (Class A)....................................... 2.80% 3.80% 2.60%
Growth and Income (Class B).......................................
Capital Appreciation (Class A).................................... 3.90% 6.00% 3.20%
Capital Appreciation (Class B)....................................
</TABLE>
(2) During the years presented above, the Advisor waived a portion of its fees
and reimbursed the Portfolio for a portion of its operating expenses. If
such waivers and reimbursements had not been in effect, the ratio of net
investment income to average net assets would have been:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991 1990
----- ----- ----- ----- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Growth (Class A).................................................. (0.35)% (0.30)% 0.06% (0.31)% 0.69% 0.89%
Growth (Class B).................................................. (0.82)%
Growth and Income (Class A)....................................... 2.06% 2.30% 2.51% 2.22% 2.84% 3.73%
Growth and Income (Class B)....................................... 1.33%
Capital Appreciation (Class A).................................... (0.82)% (0.50)% (0.60)% (0.20)% (0.44)% 0.12%
Capital Appreciation (Class B).................................... (1.41)%
<CAPTION>
1989 1988 1987 1986
----- ----- ----- ----
<S> <C> <C> <C> <C>
Growth (Class A).................................................. 0.10% 0.75% 0.74% 0.80%
Growth (Class B)..................................................
Growth and Income (Class A)....................................... 3.04% 2.28% (2.92)%
Growth and Income (Class B).......................................
Capital Appreciation (Class A).................................... (1.92)% (3.77)% (5.19)%
Capital Appreciation (Class B)....................................
</TABLE>
Note: Class B and Y shares of the Funds were initially offered on 5/1/95; Growth
and Income (Class A) and Capital Appreciation (Class A) commenced on 11/17/87.
7
<PAGE> 10
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Net Gains or
Net Losses on
Asset Net Securities Total Dividends
Value Investment (Realized From from Net Distributions
Beginning Income and Investment Investment from Capital
of Period (Loss) Unrealized) Operations Income Gains Other
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SMALL COMPANY (CLASS A) FOR YEAR ENDED 12/31,
1995................................ $ 5.17 $ 0.02 $ 0.46 $ 0.48 $ 0.02 $0.20 $0.00
1994................................ 5.29 0.03 (0.01) 0.02 0.03 0.11 0.00
For the three months ended 12/31,
1993............................... 5.00 0.01 0.29 0.30 0.01 0.00 0.00
SMALL COMPANY (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 5.28 (0.01) 0.36 0.35 0.02 0.20 0.00
SMALL COMPANY (CLASS Y) FOR THE PERIOD
5/25 through 12/31, 1995............ 5.37 0.04 0.26 0.30 0.04 0.20 0.00
INTERNATIONAL GROWTH (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 14.70 0.11 2.12 2.23 0.09 0.76 0.00
1994................................ 17.44 (0.01) (0.49) (0.50) 0.00 2.24 0.00
1993................................ 13.23 (0.02) 4.79 4.77 0.00 0.17 0.39++
1992+............................... 13.38 0.28 (0.39) (0.11) 0.04 0.00 0.00
1991................................ 11.95 0.28 1.25 1.53 0.10 0.00 0.00
1990................................ 14.53 0.04 (2.27) (2.23) 0.04 0.31 0.00
1989................................ 12.91 0.06 2.21 2.27 0.00 0.65 0.00
1988................................ 12.00 0.00 0.91 0.91 0.00 0.00 0.00
11/17 through 12/31, 1987........... 12.00 0.06 0.00 0.06 0.06 0.00 0.00
INTERNATIONAL GROWTH (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 14.82 (0.02) 2.08 2.06 0.10 0.76 0.00
INTERNATIONAL GROWTH (CLASS Y) FOR THE PERIOD
7/5/through 12/31, 1995............. 14.93 0.02 2.02 2.04 0.14 0.76 0.00
GOVERNMENT SECURITIES (CLASS A) FOR YEAR ENDED 12/31,
1995................................ $ 10.62 $ 0.76 $ 1.21 $ 1.97 $ 0.76 $0.00 $0.00
1994................................ 12.44 0.87 (1.82) (0.95) 0.87 0.00 0.00
1993................................ 12.47 0.92 0.21 1.13 0.92 0.24 0.00
1992................................ 12.40 0.99 0.19 1.18 0.98 0.13 0.00
1991................................ 11.96 1.00 0.44 1.44 1.00 0.00 0.00
1990................................ 11.92 1.01 0.05 1.06 1.02 0.00 0.00
1989................................ 11.70 0.90 0.23 1.13 0.91 0.00 0.00
1988................................ 11.96 0.79 (0.26) 0.53 0.79 0.00 0.00
11/17 through 12/31, 1987........... 12.00 0.08 (0.04) 0.04 0.08 0.00 0.00
GOVERNMENT SECURITIES (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 11.12 0.44 0.71 1.15 0.44 0.00 0.00
<CAPTION>
(2)
Net (1) Net
Asset Net Assets Ratio of Investment
Value End of Expenses to Income to Portfolio
Total End of Total Period Average Net Average Turnover
Distributions Period Return+++ (in thousands) Assets Net Assets Rate
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SMALL COMPANY (CLASS A) FOR YEAR ENDED 12/31,
1995................................ $0.22 $ 5.43 9.28% $ 19,720 1.75% 0.32% 36.50%
1994................................ 0.14 5.17 0.34% 22,120 1.75% 0.60% 16.70%
For the three months ended 12/31,
1993............................... 0.01 5.29 5.92%** 8,118 1.75%* 0.10%* 0.00%
SMALL COMPANY (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 0.22 5.41 6.87%** 862 2.30%* (0.40)%* 36.50%*
SMALL COMPANY (CLASS Y) FOR THE PERIOD
5/25 through 12/31, 1995............ 0.24 5.43 5.55%** 2,832 1.30%* 0.18%* 36.50%*
INTERNATIONAL GROWTH (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 0.85 16.08 15.17% 28,628 2.00% 0.70% 31.10%
1994................................ 2.24 14.70 (2.82)% 27,523 2.00% (0.20)% 116.10%
1993................................ 0.56 17.44 36.05% 22,900 2.00% (0.10)% 70.10%
1992+............................... 0.04 13.23 (0.93)% 11,630 2.00% 0.50% 134.90%
1991................................ 0.10 13.38 12.91% 10,736 2.00% 0.6)% 64.50%
1990................................ 0.35 11.95 (15.37)% 9,278 2.00% 0.70% 84.70%
1989................................ 0.65 14.53 17.17% 8,514 2.50% 0.60% 68.20%
1988................................ 0.00 12.91 7.58% 4,246 2.50% 0.00% 67.10%
11/17 through 12/31, 1987........... 0.06 12.00 0.50%** 1,125 2.50%* 0.60%* 0.00%
INTERNATIONAL GROWTH (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 0.86 16.02 13.88%** 1,094 2.55%* (0.65)%* 31.10%*
INTERNATIONAL GROWTH (CLASS Y) FOR THE PERIOD
7/5/through 12/31, 1995............. 0.90 16.07 13.65%** 3,109 1.55%* 0.26%* 31.10%*
GOVERNMENT SECURITIES (CLASS A) FOR YEAR ENDED 12/31,
1995................................ $0.76 $11.83 19.00% $ 86,224 1.30% 6.66% 0.00%
1994................................ 0.87 10.62 (7.81)% 84,431 1.30% 7.60% 27.20%
1993................................ 1.16 12.44 9.26% 106,541 1.30% 7.20% 90.10%
1992................................ 1.11 12.47 9.93% 71,515 1.30% 7.90% 108.40%
1991................................ 1.00 12.40 12.58% 46,480 0.90%*** 8.20% 58.60%
1990................................ 1.02 11.96 9.41% 31,535 1.00%*** 8.60% 70.00%
1989................................ 0.91 11.92 10.01% 29,897 2.10% 8.00% 85.40%
1988................................ 0.79 11.70 4.53% 3,826 2.10% 7.00% 14.30%
11/17 through 12/31, 1987........... 0.08 11.96 0.33%** 1,173 2.10%* 0.80%* 0.00%
GOVERNMENT SECURITIES (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 0.44 11.83 10.47%** 2,124 1.85%* 5.64%* 0.00%*
</TABLE>
*Annualized
**Not Annualized
***Includes amounts voluntarily reimbursed by the adviser.
+Based on average monthly shares outstanding.
++Distributions in excess of net investment income.
+++Class A Total Return does not include one time sales charge;
Class B Total Return does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a portion of its fees
and reimbursed the Portfolio for a portion of its operating expenses. If
such waivers and reimbursements had not been in effect, the ratio of
operating expenses to average net assets would have been:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Small Company (Class A)................................................... 2.21% 2.15% 4.00%
Small Company (Class B)................................................... 2.78%
Small Company (Class Y)................................................... 1.81%
International Growth (Class A)............................................ 2.40% 2.51% 3.06% 3.70% 3.59%
International Growth (Class B)............................................ 2.73%
International Growth (Class Y)............................................ 1.75%
Government Securities (Class A)........................................... 1.44% 1.35% 1.44% 1.54% 1.65%
Government Securities (Class B)........................................... 1.93%
<CAPTION>
1990 1989 1988 1987
----- ----- ----- -----
<S> <C> <C> <C> <C>
Small Company (Class A)...................................................
Small Company (Class B)...................................................
Small Company (Class Y)...................................................
International Growth (Class A)............................................ 3.85% 5.50% 8.50% 4.30%
International Growth (Class B)............................................
International Growth (Class Y)............................................
Government Securities (Class A)........................................... 1.60% 2.70% 4.50% 2.30%
Government Securities (Class B)...........................................
</TABLE>
(2) During the years presented above, the Advisor waived a portion of its fees
and reimbursed the Portfolio for a portion of its operating expenses. If
such waivers and reimbursements had not been in effect, the ratio of net
investment income to average net assets would have been:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Small Company (Class A)................................................... (0.14)% 0.18% (1.54)%
Small Company (Class B)................................................... (0.90)%
Small Company (Class Y)................................................... (0.33)%
International Growth (Class A)............................................ 0.30% (0.70)% (1.15)% (1.15)% (0.93)%
International Growth (Class B)............................................ (0.85)%
International Growth (Class Y)............................................ 0.05%
Government Securities (Class A)........................................... 6.52% 7.59% 7.03% 7.72% 7.39%
Government Securities (Class B)........................................... 5.66%
<CAPTION>
1990 1989 1988 1987
----- ----- ----- -----
<S> <C> <C> <C> <C>
Small Company (Class A)...................................................
Small Company (Class B)...................................................
Small Company (Class Y)...................................................
International Growth (Class A)............................................ (1.22)% (2.41)% (6.09)% (2.37)%
International Growth (Class B)............................................
International Growth (Class Y)............................................
Government Securities (Class A)........................................... 7.77% 7.31% 4.52% 0.79%
Government Securities (Class B)...........................................
</TABLE>
Note: Class B and Y shares of the Funds were initially offered on 5/1/95. Small
Company Portfolio (Class A) commenced on 10/1/93.
8
<PAGE> 11
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
Net Gains or
Net Losses on Total
Asset Net Securities Income Dividends
Value Investment (Realized From from Net Distributions
Beginning Income and Investment Investment from Capital
of Period (Loss) Unrealized) Operations Income Gains Other
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HIGH-YIELD BOND (CLASS A) FOR YEAR ENDED 12/31,
1995................................ $ 10.72 $ 0.99 $ 0.67 $ 1.66 $ 0.99 $0.00 $0.00
1994................................ 11.70 0.97 (0.97) 0.00 0.98 0.00 0.00
1993................................ 10.83 0.95 0.89 1.84 0.97 0.00 0.00
1992................................ 10.19 1.01 0.64 1.65 1.01 0.00 0.00
1991................................ 8.55 1.13 1.66 2.79 1.15 0.00 0.00
1990................................ 10.98 1.26 (2.43) (1.17) 1.24 0.00 0.02++
1989................................ 12.37 1.33 (1.37) (0.04) 1.35 0.00 0.00
1988................................ 12.20 1.24 0.19 1.43 1.24 0.02 0.00
11/17 through 12/31, 1987........... 12.00 0.11 0.21 0.32 0.11 0.01 0.00
HIGH-YIELD BOND (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 11.11 0.61 0.28 0.89 0.61 0.00 0.00
TAX-EXEMPT INCOME (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 12.80 0.65 1.21 1.86 0.65 0.02 0.00
1994................................ 14.31 0.67 (1.48) (0.81) 0.68 0.02 0.00
1993................................ 13.60 0.70 0.73 1.43 0.70 0.02 0.00
1992................................ 13.34 0.76 0.26 1.02 0.76 0.00 0.00
1991................................ 12.78 0.82 0.56 1.38 0.82 0.00 0.00
1990................................ 12.87 0.81 (0.10) 0.71 0.80 0.00 0.00
1989................................ 12.66 0.76 0.31 1.07 0.77 0.09 0.00
1988................................ 12.09 0.65 0.64 1.29 0.65 0.07 0.00
11/17 through 12/31, 1987........... 12.00 0.06 0.09 0.15 0.06 0.00 0.00
TAX-EXEMPT INCOME (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 13.44 0.38 0.57 0.95 0.38 0.02 0.00
MANAGED (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 4.91 0.04 1.81 1.85 0.03 0.03 0.00
10/1 through 12/31, 1994............ 5.00 0.01 (0.09) (0.08) 0.01 0.00 0.00
MANAGED (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 5.68 0.01 1.05 1.06 0.03 0.03 0.00
MANAGED (CLASS Y) FOR THE PERIOD
7/5 through 12/31, 1995............. 6.17 0.03 0.57 0.60 0.04 0.03 0.00
MONEY MARKET (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 1.00 0.05 0.00 0.05 0.05 0.00 0.00
1994................................ 1.00 0.03 0.00 0.03 0.03 0.00 0.00
1993................................ 1.00 0.02 0.00 0.02 0.02 0.00 0.00
1992+............................... 1.00 0.03 0.00 0.03 0.03 0.00 0.00
1991................................ 1.00 0.05 0.00 0.05 0.05 0.00 0.00
5/1 through 12/31, 1990............. 1.00 0.04 0.00 0.04 0.04 0.00 0.00
MONEY MARKET (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 1.00 0.03 0.00 0.03 0.03 0.00 0.00
<CAPTION>
(2)
Net (1) Net
Asset Net Assets Ratio of Investment
Value End of Expenses to Income to Portfolio
Total End of Total Period Average Net Average Turnover
Distributions Period Return+++ (in thousands) Assets Net Assets Rate
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HIGH-YIELD BOND (CLASS A) FOR YEAR ENDED 12/31,
1995................................ $0.99 $11.39 16.0% $ 52,182 1.30% 8.80% 88.50%
1994................................ 0.98 10.72 0.05% 44,822 1.30% 8.60% 113.00%
1993................................ 0.97 11.70 17.58% 44,361 1.30% 8.20% 121.20%
1992................................ 1.01 10.83 16.69% 30,851 1.30% 9.40% 121.70%
1991................................ 1.15 10.19 33.02% 24,672 1.30% 11.30% 109.30%
1990................................ 1.26 8.55 (11.55)% 19,591 1.00%*** 12.30% 67.40%
1989................................ 1.35 10.98 (0.70)% 29,144 2.10% 11.20% 61.60%
1988................................ 1.26 12.37 12.08% 15,772 2.10% 11.10% 88.6-%
11/17 through 12/31, 1987........... 0.12 12.20 2.67%** 1,127 2.10%* 1.00%* 54.80%
HIGH-YIELD BOND (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 0.61 11.39% 8.12%** 2,951 1.85%* 7.84%* 88.50%*
TAX-EXEMPT INCOME (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 0.67 13.99 14.85% 33,626 1.25% 4.82% 0.75%
1994................................ 0.70 12.80 (5.69)% 34,297 1.25% 5.00% 25.70%
1993................................ 0.72 14.31 10.76% 41,702 1.25% 4.90% 8.30%
1992................................ 0.76 13.60 7.88% 29,728 1.25% 5.60% 16.30%
1991................................ 0.82 13.34 11.13% 22,614 1.25% 6.30% 21.60%
1990................................ 0.80 12.78 5.71% 19,880 1.20%*** 6.50% 66.40%
1989................................ 0.86 12.87 8.68% 18,354 2.10% 6.00% 99.60%
1988................................ 0.72 12.66 10.90% 6,655 2.10% 5.60% 117.40%
11/17 through 12/31, 1987........... 0.06 12.09 1.25%** 1,174 2.10%* 0.50%* 116.00%
TAX-EXEMPT INCOME (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 0.40 13.99 7.18%** 912 1.80%* 4.08%* 0.75%*
MANAGED (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 0.06 6.70 37.68% 47,839 1.75% 1.09% 26.40%
10/1 through 12/31, 1994............ 0.01 4.91 (1.58)%** 7,872 1.75%* 1.30%* 27.10%*
MANAGED (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 0.06 6.68 18.38%** 16,792 2.30%* 0.31%* 26.40%*
MANAGED (CLASS Y) FOR THE PERIOD
7/5 through 12/31, 1995............. 0.07 6.70 9.80%** 26,664 1.30%* 1.39%* 26.40%*
MONEY MARKET (CLASS A) FOR YEAR ENDED 12/31,
1995................................ 0.05 1.00 5.05% 40,325 1.00% 4.92% N/A
1994................................ 0.03 1.00 3.34% 32,334 1.00% 3.30% N/A
1993................................ 0.02 1.00 2.24% 18,302 1.00% 2.20% N/A
1992+............................... 0.03 1.00 2.92% 18,932 1.00% 2.80% N/A
1991................................ 0.05 1.00 5.22% 16,710 1.00% 5.10% N/A
5/1 through 12/31, 1990............. 0.04 1.00 4.75%** 19,031 1.00%* 7.00%* N/A
MONEY MARKET (CLASS B) FOR THE PERIOD
5/1 through 12/31, 1995............. 0.03 1.00 2.95%** 394 1.55%* 4.23%* N/A
</TABLE>
*Annualized
**Not Annualized
***Includes amounts voluntarily reimbursed by the adviser.
+Based on average monthly shares outstanding.
++Distributions in excess of net investment income.
+++Class A Total Return does not include one time sales charge;
Class B Total Return does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a portion of its fees
and reimbursed the Portfolio for a portion of its operating expenses. If
such waivers and reimbursements had not been in effect, the ratio of
operating expenses to average net assets would have been:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
High-Yield Bond (Class A).................................................. 1.52% 1.45% 1.59% 1.64% 1.85%
High-Yield Bond (Class B).................................................. 2.09%
Tax-Exempt Income (Class A)................................................ 1.42% 1.28% 1.39% 1.41% 1.47%
Tax-Exempt Income (Class B)................................................ 1.98%
Managed (Class A).......................................................... 1.90% 3.71%
Managed (Class B).......................................................... 2.45%
Managed (Class Y).......................................................... 1.41%
Money Market (Class A)..................................................... 1.35% 1.33% 1.72% 1.56% 1.51%
Money Market (Class B)..................................................... 1.88%
<CAPTION>
1990 1989 1988 1987
---- ---- ---- ----
<S> <C> <C> <C> <C>
High-Yield Bond (Class A)................................................................. 1.71% 2.50% 3.10% 2.80%
High-Yield Bond (Class B).................................................................
Tax-Exempt Income (Class A)............................................................... 1.47% 2.60% 4.00% 2.10%
Tax-Exempt Income (Class B)...............................................................
Managed (Class A).........................................................................
Managed (Class B).........................................................................
Managed (Class Y).........................................................................
Money Market (Class A).................................................................... 1.38%
Money Market (Class B)....................................................................
</TABLE>
(2) During the years presented above, the Advisor waived a portion of its fees
and reimbursed the Portfolio for a portion of its operating expenses. If
such waivers and reimbursements had not been in effect, the ratio of net
investment income to average net assets would have been:
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
---- ----- ---- ---- -----
<S> <C> <C> <C> <C> <C>
High-Yield Bond (Class A).............................................................. 8.58% 8.52% 7.95% 8.95% 10.51%
High-Yield Bond (Class B).............................................................. 7.68%
Tax-Exempt Income (Class A)............................................................ 4.65% 4.97% 4.79% 5.49% 6.04%
Tax-Exempt Income (Class B)............................................................ 3.94%
Managed (Class A)...................................................................... 0.94% (0.32)%
Managed (Class B)...................................................................... 0.14%
Managed (Class Y)...................................................................... 1.28%
Money Market (Class A)................................................................. 4.57% 3.08% 1.47% 1.81% 4.62%
Money Market (Class B)................................................................. 3.90%
<CAPTION>
1990 1989 1988 1987
----- ----- ----- -----
<S> <C> <C> <C> <C>
High-Yield Bond (Class A).............................................................. 11.66% 10.76% 10.09% 1.26%
High-Yield Bond (Class B)..............................................................
Tax-Exempt Income (Class A)............................................................ 6.14% 5.53% 3.67% (2.17)%
Tax-Exempt Income (Class B)............................................................
Managed (Class A)......................................................................
Managed (Class B)......................................................................
Managed (Class Y)......................................................................
Money Market (Class A)................................................................. 6.17%
Money Market (Class B).................................................................
</TABLE>
Note: Class B and Y shares of the Funds were initially offered on 5/1/95.
Managed Portfolio (Class A) commenced on 10/1/94. Money Market Portfolio
(Class A) commenced on 5/1/90.
9
<PAGE> 12
INVESTMENT OBJECTIVES AND POLICIES OF THE PORTFOLIOS
The following descriptions of the Portfolios are intended to help you select the
Portfolio which is appropriate for your investment objective. You may wish to
pursue your objectives by investing in more than one Portfolio.
The investment objectives of each Portfolio may not be changed without approval
of a majority of the outstanding voting securities of that Portfolio.
EQUITY PORTFOLIOS
Under normal market conditions, at least 65% of the net asset value of the five
Equity Portfolios will be invested in common equity securities. The remainder of
the Equity Portfolios' assets may be invested in repurchase agreements, bankers
acceptances, bank certificates of deposit, commercial paper and similar money
market instruments, convertible bonds, convertible preferred stock, preferred
stock, corporate bonds, U.S. Treasuries, notes and bonds, American Depository
Receipts ("ADRs"), European Depository Receipts ("EDRs"), foreign stocks, rights
and warrants.
The Growth, Growth and Income, Capital Appreciation and Small Company Portfolios
invest in securities that are traded on national securities exchanges and in the
over-the-counter market. Each of these Portfolios may invest up to 10% of its
assets in securities of foreign issuers and up to 10% of its assets in illiquid,
including restricted, securities. As noted below, the International Growth
Portfolio invests principally in the securities of foreign issuers listed on
recognized foreign exchanges, but may also invest in securities traded on the
over-the-counter market.
GROWTH PORTFOLIO
The objective of the Growth Portfolio is appreciation of capital primarily
through investments in common stocks. The Portfolio's common stock selection
emphasizes those companies having growth characteristics, but the Portfolio's
investment policy recognizes that securities of other companies may be
attractive for capital appreciation purposes by virtue of special developments
or depression in price believed to be temporary. The potential for appreciation
of capital is the basis for investment decisions; any income is incidental.
GROWTH AND INCOME PORTFOLIO
The objective of the Growth and Income Portfolio is a combination of growth and
income to achieve an above average and consistent total return, primarily from
investments in dividend-paying common stocks.
The Portfolio's principal criterion in stock selection is above average yield,
and it uses this criterion as a discipline to enhance stability and reduce
market risk. Subject to this primary criterion, the Portfolio invests in stocks
that have relatively low price to earnings ratios or relatively low price to
book value ratios.
CAPITAL APPRECIATION PORTFOLIO
The objective of the Capital Appreciation Portfolio is maximum capital
appreciation, primarily through investments in common stocks of companies that
demonstrate accelerating earnings momentum and consistently strong financial
characteristics.
The Portfolio invests primarily in common stocks of companies which meet the
Portfolio Manager's criteria of: (a) steadily increasing earnings; and (b) a
five-year average performance record of sales, earnings, dividend growth, pretax
margins, return on equity and reinvestment rate at
10
<PAGE> 13
an aggregate average of 1.5 times the average performance of the Standard &
Poor's 500 common stocks ("S&P 500") for the same period. The Portfolio attempts
to invest in a range of small, medium and large companies designed to achieve an
average capitalization of the companies in which it invests that is less than
the average capitalization of the S&P 500. The potential for maximum capital
appreciation is the basis for investment decisions; any income is incidental.
SMALL COMPANY PORTFOLIO
The objective of the Small Company Portfolio is maximum capital appreciation,
primarily through investment of at least 65% of Portfolio assets in the common
equity securities of companies (based on the total outstanding common shares at
the time of investment) which have a market capitalization of no more than $1
billion (hereinafter referred to as "small cap companies").
The Portfolio intends to invest the remaining 35% of its total assets in the
same manner but reserves the right to use some or all of the 35% to invest in
equity securities of companies (based on the total outstanding common shares at
the time of investment) which have a market capitalization of more than $1
billion.
In pursuing its objective, the Portfolio's strategy will be to invest in stocks
of companies with value that may not be fully reflected by current stock price.
Since small companies tend to be less actively followed by stock analysts, the
market may overlook favorable trends and then adjust its valuation more quickly
once investor interest is surfaced. The Portfolio Manager seeks out companies in
the public market that are selling at a discount to their private market value
(PMV) measured using proprietary research techniques in areas of core
competencies. The Portfolio Manager then determines whether there is an emerging
catalyst that will focus investor attention on the underlying assets of the
company. Smaller companies may be subject to a valuation catalyst such as
increased investor attention, takeover efforts or a change in management.
INTERNATIONAL GROWTH PORTFOLIO
The objective of the International Growth Portfolio is capital appreciation,
primarily through a diversified portfolio of non-U.S. equity securities.
It is a fundamental policy of the Portfolio that it will invest at least 80% of
the value of its assets (except when maintaining a temporary defensive position)
in equity securities of companies domiciled outside the United States. That
portion of the Portfolio not invested in equity securities is, in normal
circumstances, invested in U.S. and foreign government securities, high grade
commercial paper, certificates of deposit, foreign currency, banker acceptances,
cash and cash equivalents, time deposits, repurchase agreements and similar
money market instruments, both foreign and domestic. The Portfolio may invest in
convertible debt securities of foreign issuers which are convertible into equity
securities at such time as a market for equity securities is established in the
country involved.
The Portfolio Manager's investment perspective for the Portfolio is to invest in
the equity securities of non-U.S. markets and companies which are believed to be
undervalued based upon internal research and proprietary valuation systems. This
international equity strategy reflects the Portfolio Manager's decisions
concerning the relative attractiveness of asset classes, the individual
international equity markets, industries across and within those markets, other
common risk factors within those markets and individual international companies.
The Portfolio Manager initially identifies those securities which it believes to
be undervalued in relation to the issuer's assets, cash flow, earnings and
revenues. The relative performance of foreign currencies is an important factor
in the Portfolio's perform-
11
<PAGE> 14
ance. The Portfolio Manager may manage the Portfolio's exposure to various
currencies to take advantage of different yield, risk and return
characteristics. The Portfolio Manager's proprietary valuation model determines
which securities are potential candidates for inclusion in the Portfolio.
The benchmark for the fund is the Morgan Stanley Capital International Non-U.S.
Equity (Free) Index (the "Benchmark"). The Benchmark is a market driven broad
based index which includes non-U.S. equity markets in terms of capitalization
and performance. The Benchmark is designed to provide a representative total
return for all major stock exchanges located outside the U.S. From time to time,
the Advisor may substitute securities in an equivalent index when it believes
that such securities in the index more accurately reflect the relevant
international market.
As a general matter, the Advisor will purchase for the Fund only securities
contained in the underlying index relevant to the Benchmark. Brinson Partners
will attempt to enhance the long-term return and risk performance of the Fund
relative to the Benchmark by deviating from the normal Benchmark mix of country
allocation and currencies in reaction to discrepancies between current market
prices and fundamental values. The active management process is intended to
produce a superior performance relative to the Benchmark index.
The Portfolio Manager will purchase securities of companies domiciled in a
minimum of 8 to 12 countries outside the United States.
INCOME PORTFOLIOS
Investors should refer to the Appendix to the Statement of Additional
Information for a description of the Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's ("S&P") ratings mentioned below.
GOVERNMENT SECURITIES PORTFOLIO
The objective of the Government Securities Portfolio is current income and
safety of principal primarily from securities that are obligations of the U.S.
Government, its agencies and instrumentalities ("U.S. Government Securities").
It is a fundamental policy of the Portfolio that under normal conditions at
least 80% of the value of its net assets will be invested in U.S. Government
Securities. Securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities are generally considered to be of the same or
higher credit quality as privately issued securities rated Aaa by Moody's or AAA
by S&P.
U.S. Government Securities consist of direct obligations of the U.S. Treasury
(such as treasury bills, treasury notes and treasury bonds) and securities
issued or guaranteed by agencies and instrumentalities of the United States
Government. Those securities issued by agencies or instrumentalities may or may
not be backed by the full faith and credit of the United States. An example of
full faith and credit securities is securities issued by the Government National
Mortgage Association ("GNMA Certificates"). Examples of agencies or
instrumentalities whose securities are not backed by the full faith and credit
of the United States are the Federal Farm Credit System, the Federal Home Loan
Banks, the Tennessee Valley Authority, the United States Postal Service and the
Export-Import Bank. The Portfolio may concentrate from time to time in different
securities described above in order to obtain the highest level of current
income and safety of principal.
The remainder of the Portfolio's assets may be invested in repurchase
agreements, bankers acceptances, bank certificates of deposit, commercial paper
and similar money market instruments, corporate bonds and other mortgage-related
securities (including collateralized mortgage obligations or "CMOs") rated Aaa
by Moody's or AAA by S&P
12
<PAGE> 15
at the time of the investment or determined by the Portfolio Manager to be of
comparable credit quality at the time of investment to such rated securities. In
making such investments, the Portfolio Manager seeks income but gives careful
attention to security of principal and considers such factors as marketability
and diversification. For a discussion of CMOs and related risks, see "Certain
Investment Techniques and Associated Risks," at page 16.
As described in "Certain Investment Techniques and Associated Risks," at page
16, the Portfolio may write and sell covered call option contracts on securities
that it owns (in an effort to enhance income through hedging and other
investment techniques) to the extent of 20% of the value of its net assets at
the time such option contracts are written.
HIGH-YIELD BOND PORTFOLIO
The objective of the High-Yield Bond Portfolio is maximum current income,
primarily from debt securities that are rated Ba or lower by Moody's or BB or
lower by Standard & Poor's.
It is a fundamental policy of the Portfolio that it will invest at least 80% of
the value of its total assets (except when maintaining a temporary defensive
position) in high-yielding, income-producing corporate bonds that are rated B3
or better by Moody's or B- or better by S&P. The corporate bonds in which the
Portfolio invests are high-yielding but normally carry a greater credit risk
than bonds with higher ratings. In addition, such bonds, commonly referred to as
"junk bonds", may involve greater volatility of price than higher-rated bonds.
For a discussion of High-Yield Securities and related risks, see "Certain
Investment Techniques and Associated Risks" at page 16.
The Portfolio's investments are selected by the Portfolio Manager after careful
examination of the economic outlook to determine those industries that appear
favorable for investments. Industries going through a perceived decline
generally are not candidates for selection. After the industries are selected,
bonds of issuers within those industries are selected based on their
creditworthiness, their yields in relation to their credit and the relative
strength of their common stock prices. Companies near or in bankruptcy are not
considered for investment. The Portfolio does not purchase bonds which are rated
Ca or lower by Moody's or CC or lower by S&P or which, if unrated, in the
judgment of the Portfolio Manager have characteristics of such lower-grade
bonds. Should an investment purchased with the above-described credit quality
requisites be downgraded to Ca or lower or CC or lower, the Portfolio Manager
shall have discretion to hold or liquidate the security.
Subject to the restrictions described above, under normal circumstances, up to
20% of the Portfolio's assets may include: (1) bonds rated Caa by Moody's or CCC
by S&P; (2) unrated debt securities which, in the judgment of the Portfolio
Manager have characteristics similar to those described above; (3) convertible
debt securities; (4) puts, calls and futures as hedging devices; (5) foreign
issuer debt securities; and (6) short-term money market instruments, including
certificates of deposit, commercial paper, U.S. Government Securities and other
income-producing cash equivalents. For a discussion on puts, calls, and futures
and their related risks, see "Certain Investment Techniques and Associated
Risks," at page 16.
TAX-EXEMPT INCOME PORTFOLIO
The objective of the Tax-Exempt Income Portfolio is a high level of current
income not includable in gross income for federal income tax purposes, with
consideration given to preservation of principal, primarily from investments in
a diversified portfolio of long-term investment grade municipal bonds.
It is a fundamental policy of the Portfolio that it will invest at least 80% of
its net assets (except when maintaining a
13
<PAGE> 16
temporary defensive position) in Municipal Securities (or futures contracts or
options on futures with respect thereto) which, at the time of investment, are
investment grade or in Municipal Securities which are not rated if, based upon
credit analysis by the Portfolio Manager, it is believed that such securities
are of comparable quality to such rated bonds.
The Portfolio invests primarily in investment grade "Municipal Securities" the
interest on which, in the opinion of counsel for issuers or the Portfolio, is
not includable in gross income for federal income tax purposes. Municipal
Securities are notes and bonds issued by or on behalf of states, territories and
possessions of the United States and the District of Columbia and their
political subdivisions, agencies and instrumentalities. These securities are
traded primarily in the over-the-counter market. Such securities may have fixed,
variable or floating rates of interest. See the Appendix to this Prospectus for
a further description of Municipal Securities.
Investment grade securities are: bonds rated within the three highest ratings by
Moody's (Aaa, Aa, A) or S&P (AAA, AA, A); notes given one of the three highest
ratings by Moody's (MIG1, MIG2, MIG3) for notes; commercial paper rated P-1 by
Moody's or A-1 by S&P; and variable rate securities rated VMIG1 or VMIG2 by
Moody's.
While there are no maturity restrictions on the Municipal Securities in which
the Portfolio invests, the average maturity is expected to range between 10 and
25 years. The Portfolio Manager will actively manage the Portfolio, adjusting
the average Portfolio maturity and utilizing futures contracts and options on
futures as a defensive measure according to its judgment of anticipated interest
rates. During periods of rising interest rates and falling prices, a shorter
weighted average maturity may be adopted to cushion the effect of bond price
declines on the Portfolio's net asset value. When rates are falling and prices
are rising, a longer weighted average maturity rate may be adopted. For a
discussion on futures and their related risks, see "Certain Investment
Techniques and Associated Risks," at page 16.
The Portfolio may also invest up to 20% of its net assets in cash, cash
equivalents and debt securities, the interest from which may be subject to
federal income tax. Investments in taxable securities will be limited to
investment grade corporate debt securities and U.S. Government Securities.
The Portfolio will not invest more than 20% of its net assets in Municipal
Securities the interest on which is subject to federal alternative minimum tax.
FLEXIBLE PORTFOLIO
MANAGED PORTFOLIO
The objective of the Managed Portfolio is growth of capital over time through
investment in a portfolio consisting of common stocks, bonds and cash
equivalents, the percentages of which will vary based on the Portfolio Manager's
assessments of the relative outlook for such investments. In seeking to achieve
its investment objective, the types of equity securities in which the Portfolio
may invest will be the same as those in which the Equity Portfolios invest. Debt
securities are expected to be predominantly investment grade intermediate to
long term U.S. Government and corporate debt, although the Portfolio will also
invest in high quality short term money market and cash equivalent securities
and may invest almost all of its assets in such securities when the Manager
deems it advisable in order to preserve capital. In addition, the Portfolio may
also purchase foreign securities provided that they are listed on a domestic or
foreign securities exchange or are represented by American Depository Receipts
listed on a domestic securities exchange or traded in the United States over-
the-counter market.
14
<PAGE> 17
The allocation of the Portfolio's assets among the different types of permitted
investments will vary from time to time based upon the Portfolio Manager's
evaluation of economic and market trends and its perception of the relative
values available from such types of securities at any given time. There is
neither a minimum nor a maximum percentage of the Portfolio's assets that may,
at any given time, be invested in any of the types of investments identified
above. Consequently, while the Portfolio will earn income to the extent it is
invested in bonds or cash equivalents, the Portfolio does not have any specific
income objective.
MONEY MARKET PORTFOLIO
The investment objective of the Money Market Portfolio is to provide the highest
possible level of current income, consistent with preservation of capital and
liquidity. Securities in which the Portfolio will invest may not yield as high a
level of current income as securities of lower quality and longer maturity which
generally have less liquidity and greater market risk. The Money Market
Portfolio seeks to achieve its objective by investing in a diversified portfolio
of high quality money market instruments, comprised of U.S. dollar-denominated
instruments which present minimal credit risks and are of eligible quality which
consist of the following:
1. obligations issued or guaranteed as to principal and interest by the United
States Government or any agency or authority controlled or supervised by and
acting as an instrumentality of the U.S. Government pursuant to authority
granted by Congress;
2. commercial paper, negotiable certificates of deposit, letters of credit, time
deposits and banker's acceptances, of U.S. or foreign banks, and U.S. or
foreign savings and loans associations, which at the date of investment have
capital, surplus and undistributed profits as of the date of their most
recent published financial statements of $500,000,000 or greater;
3. short-term corporate debt instruments (commercial paper or variable amount
master demand notes) rated "A-1" or "A-2" by S&P or "Prime 1" or "Prime 2" by
Moody's, or, if not rated, issued by a company rated at least "A" by S&P or
Moody's and about which the Board of Directors of the Fund has ratified the
Portfolio Manager's independent determination that the instrument presents
minimal credit risks and is of high quality; however, investments in
securities of all issuers having the second highest rating assigned shall be
limited to no more than five percent of the Portfolio's assets at the time of
purchase, with the investment of any one such issuer being limited to not
more than one percent of Portfolio assets at the time of purchase;
4. corporate obligations limited to non-convertible corporate debt securities
having one year or less remaining to maturity and which are rated "AA" or
better by S&P or "Aa" or better by Moody's; and
5. repurchase agreements with respect to any of the foregoing obligations.
The Money Market Portfolio will limit its investment in the securities of any
one issuer to no more than five percent of Portfolio assets, measured at the
time of purchase.
In addition, the Money Market Portfolio will not purchase any security,
including any repurchase agreement maturing in more than seven days, which is
subject to legal or contractual delays on resale or which is not readily
marketable if more than 10% of the net assets of the Money Market Portfolio,
taken at market value would be invested in such securities.
After purchase by the Money Market Portfolio, a security may cease to be rated
or its rating may be reduced below the minimum required for purchase by the
Money Market
15
<PAGE> 18
Portfolio. Neither event will require a sale of such security by the Money
Market Portfolio. The Portfolio Manager will consider such event in its
determination of whether the Money Market Portfolio should continue to hold the
security provided that the security presents minimal credit risks and that
holding the security is in the best interests of the Portfolio. To the extent
Moody's or S&P may change their rating systems generally (as described in the
Appendix to the Statement of Additional Information) the Money Market Portfolio
will attempt to use comparable ratings as standards for investments in
accordance with investment policies contained herein and in the Fund's Statement
of Additional Information.
The dollar weighted average maturity of the Money Market Portfolio will be 90
days or less.
All investments of the Money Market Portfolio will be limited to instruments
which the Board of Directors determines are of eligible quality, which, if
instruments of foreign issuers, are United States dollar-denominated instruments
presenting minimal credit risk, and all of which are either:
1. of those rated in the two highest rating categories by any nationally
recognized statistical rating organization (NRSRO), or
2. if the instrument is not rated, of comparable quality as determined by the
Board of Directors.
Generally, instruments with NRSRO ratings in the two highest grades are
considered "high quality." All of the money market investments will mature in
397 days or less. The Money Market Portfolio will use the amortized cost method
of securities valuation, as described more fully in the Statement of Additional
Information.
CERTAIN
INVESTMENT
TECHNIQUES AND
ASSOCIATED RISKS
Following is a description of certain investment techniques employed by the
Portfolios, and certain types of securities invested in by the Portfolios and
associated risks. Unless otherwise indicated, all of the Portfolios may use the
indicated techniques and invest in the indicated securities.
GENERAL RISKS ASSOCIATED WITH EQUITY PORTFOLIOS
The Equity Portfolios seek to reduce risk of loss of principal due to changes in
the value of individual stocks by investing in a diversified portfolio of common
stocks and through the use of options on stocks. Such investment techniques do
not, however, eliminate all risks. Investors should expect the value of the
Equity Portfolios and the net asset value of their shares to fluctuate based on
market conditions.
Smaller capitalization companies may experience higher growth rates and higher
failure rates than do larger capitalization companies due to the risk related to
markets, market share, product performance and financial resources. The limited
volume and frequency of trading of small capitalization companies may subject
their stocks to greater price deviations than stocks of larger companies.
The International Growth Portfolio carries additional risks associated with
possibly less stable foreign securities and currencies. For a discussion on
these risks, please refer to "Foreign Currency and Values" at page 23.
16
<PAGE> 19
GENERAL RISKS ASSOCIATED WITH INCOME PORTFOLIOS
Although the Income Portfolios seek to reduce credit risks, i.e., failure of
obligors to pay interest and principal, through careful selection of
investments, and they seek to reduce market risks resulting from fluctuations in
the principal value of debt obligations due to changes in prevailing interest
rates by careful timing of maturities of investments, such risks cannot be
eliminated, and these factors will affect the net asset value of shares in the
Income Portfolios. The value of debt obligations has an inverse relationship
with prevailing interest rates.
GENERAL RISKS ASSOCIATED WITH FLEXIBLE PORTFOLIO
The foregoing types of risks associated with equity and income portfolios also
apply to flexible portfolios.
U.S. GOVERNMENT SECURITIES
Although the payment of interest and principal on a security may be guaranteed
by the United States Government or one of its agencies or instrumentalities, the
value of such fixed income securities and, consequently, the yield on and net
asset value of shares of the Government Securities Portfolio are not guaranteed
by the U.S. Government. The net asset value fluctuates in response to changes in
interest rates and market valuation. During periods of declining interest rates,
prepayment of mortgages underlying mortgage-backed securities can be expected to
accelerate. As a result, the Government Securities Portfolio's ability to
maintain positions in high-yielding, mortgage-backed securities, such as GNMA
Certificates, will be affected by reductions in the principal amounts of such
securities resulting from such prepayments, and its ability to reinvest the
returns of principal at comparable yields is subject to generally prevailing
interest rates at the time.
MORTGAGE-RELATED SECURITIES AND
ASSET-BACKED SECURITIES
Up to 20% of the net assets of the Government Securities Portfolio may be
invested in assets other than U.S. Government Securities, including
collateralized mortgage related securities ("CMOs") and asset backed securities.
These securities are considered to be volatile. CMOs are obligations fully
collateralized by a portfolio of mortgages or mortgage-related securities.
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the type of CMOs in which
the Government Securities Portfolio invests, the investment may be subject to a
greater or lesser risk of prepayment than other types of mortgage-related
securities.
While there are many versions of CMOs and asset backed securities, the four most
common are "Interest Only" or "IO" -- where all interest payments go to one
class of holders, "Principal Only" or "PO" -- where all of the principal goes to
a second class of holders, "Floaters" -- where the coupon rate floats in the
same direction as interest rates and "Inverse Floaters" -- where the coupon rate
floats in the opposite direction as interest rates. All these securities are
volatile; they also have particular risks in differing interest rate
environments as described below.
The yield to maturity on an IO class is extremely sensitive to the rate of
principal payments (including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a material adverse
effect on yield to maturity and, therefore, the market value of the IO. As
interest rates rise and fall, the value of IOs tends to move in the same
direction as interest rates. Accordingly, investment in IOs can theoretically be
expected to contribute to stabilizing a Portfolio's net asset value. However, if
the underlying mortgage assets experience greater than
17
<PAGE> 20
anticipated prepayments of principal, the Portfolio may fail to fully recoup its
initial investment in these securities even if the securities are rated AAA or
the equivalent. Conversely, while the yield to maturity on a PO class is also
extremely sensitive to rate of principal payments (including prepayments) on the
related underlying mortgage assets, a slow rate of principal payments may have a
material adverse effect on yield to maturity and therefore the market value of
the PO. As interest rates rise and fall, the value of POs tends to move in the
opposite direction from interest rates. This is typical of most debt
instruments. See "General Risks Associated With Income Portfolios" on page 16.
Floaters and Inverse Floaters ("Floaters") are extremely sensitive to the rise
and fall in interest rates. The coupon rate on these securities is based on
various benchmarks, such as LIBOR ("London Inter-Bank Offered Rate") and the
11th District cost of funds (the base rate). The coupon rate on Floaters can be
affected by a variety of terms. Floaters can be reset at fixed intervals over
the life of the Floater, float with a spread to the base rate, be a certain
percentage rate minus a certain base rate. Some Floaters have floors below which
the interest rate cannot be reset and/or ceilings above which the interest rate
cannot be reset. The coupon rate and/or market value of Floaters tend to move in
the same direction as the base rate while the coupon rate and/or market value of
Inverse Floaters tend to move in the opposite direction from the base rate.
The market value of all CMOs and other asset backed securities are determined by
supply and demand in the bid/ask market, interest rate movements, the yield
curve, forward rates, prepayment assumptions and credit of the underlying
issuer. Further, the price actually received on a sale may be different from
bids when security is being priced.
CMOs and asset-backed securities trade over a bid and ask market through several
large market makers. Due to the complexity and concentration of derivative
securities, the liquidity and, consequently, the volatility of these securities
can be sharply influenced by market demand.
Asset-backed and mortgage-related securities may not be readily marketable. To
the extent any of these securities are not readily marketable in the judgment of
the Portfolio Manager (subject to the oversight of the Board of Directors), the
investment restriction limiting the Portfolio's investment in illiquid
instruments to not more than 10% of the value of its net assets will apply.
However, IOs and POs issued by the U.S. Government, its agencies and
instrumentalities, and backed by fixed-rate mortgages may be excluded from this
limit, if, in the judgment of the Portfolio Manager (subject to the oversight of
the Board of Directors) such IOs and POs are readily marketable. The Government
Securities Portfolio does not intend to invest in residual interests, privately
issued securities or subordinated classes of underlying mortgages.
HIGH-YIELD SECURITIES
Notwithstanding the investment policies and restrictions applicable to the
High-Yield Bond and Managed Portfolios which were designed to reduce risks
associated with such investments, high-yield securities may carry higher levels
of risk than many other types of income producing securities. These risks are of
three basic types: the risk that the issuer of the high-yield bond will default
in the payment of principal and interest; the risk that the value of the bond
will decline due to rising interest rates, economic conditions, or public
perception; and the risk that the investor in such bonds may not be able to
readily sell such bonds. Each of the major categories of risk are impacted by
various factors, as discussed below:
HIGH-YIELD BOND MARKET
The high-yield bond market is relatively new and has grown in the context of a
long economic expansion. Any
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<PAGE> 21
downturn in the economy may have a negative impact on the perceived ability of
the issuer to make principal and interest payments which may adversely affect
the value of outstanding high-yield securities and reduce market liquidity.
SENSITIVITY TO INTEREST RATE AND ECONOMIC CHANGES
In general, the market prices of bonds bear an inverse relationship to interest
rates; as interest rates increase, the prices of bonds decrease. The same
relationship may hold for high-yield bonds, but in the past high-yield bonds
have been somewhat less sensitive to interest rate changes than treasury and
investment grade bonds. While the price of high-yield bonds may not decline as
much, relatively, as the prices of treasury or investment grade bonds decline in
an environment of rising interest rates, the market price, or value, of a
high-yield bond will be expected to decrease in periods of increasing interest
rates, negatively impacting the net asset value of the High-Yield Bond
Portfolio. High-yield bond prices may not increase as much, relatively, as the
prices of treasury or investment grade bonds in periods of decreasing interest
rates. Payments of principal and interest on bonds are dependent upon the
issuer's ability to pay. Because of the generally lower creditworthiness of
issuers of high-yield bonds, changes in the economic environment generally, or
in an issuer's particular industry or business, may severely impact the ability
of the issuer to make principal and interest payments and may depress the price
of high-yield securities more significantly than such changes would impact
higher rated, investment grade securities.
PAYMENT EXPECTATIONS
Many high-yield bonds contain redemption or call provisions which might be
expected to be exercised in periods of decreasing interest rates. Should bonds
in which the High-Yield Bond Portfolio has invested be redeemed or called during
such an interest rate environment, the Portfolio would have to sell such
securities without reference to their investment merit and reinvest the proceeds
received in lower yielding securities, resulting in a decreased return for
investors in the High-Yield Bond Portfolio. In addition, such redemptions or
calls may reduce the High-Yield Bond Portfolio's asset base over which the
Portfolio's investment expenses may be spread.
LIQUIDITY AND VALUATION
Because of periods of relative illiquidity, many high-yield bonds may be thinly
traded. As a result, the Board of Directors' ability to accurately value
high-yield bonds and determine the net asset value of the High-Yield Bond
Portfolio, as well as the Portfolio's ability to sell such securities, may be
limited. Public perception of and adverse publicity concerning high-yield
securities may have a significant negative impact on the value and liquidity of
high-yield securities, even though not based on fundamental investment analysis.
TAX CONSIDERATIONS
To the extent that the High-Yield Bond Portfolio invests in securities
structured as zero coupon bonds, the Portfolio will be required to report
interest income even though no cash interest payment is received until maturity
of the bond. Investors in the High-Yield Bond Portfolio would be taxed on this
interest income even though no cash distribution of such interest is received in
the year in which such income is taxed.
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<PAGE> 22
PORTFOLIO COMPOSITION
As of March 31, 1996, the High-Yield Bond Portfolio consisted of securities
classified as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
CATEGORY PORTFOLIO
<S> <C>
Ba1-Ba3............................ 24%
B1-B3.............................. 71%
Caa................................ 1%
Non-rated*......................... 4%
</TABLE>
- ---------------
* Equivalent ratings for these securities would have been Caa to B3.
DEFENSIVE TACTICS
Any or all of the Portfolios may at times for defensive purposes, at the
determination of the Portfolio Manager, temporarily place all or a portion of
their assets in cash, short-term commercial paper (i.e. short-term unsecured
promissory notes issued by corporations to finance short-term credit needs),
United States Government Securities, high quality debt securities (including
"Eurodollar" and "Yankee Dollar" obligations, i.e., U.S. issuer borrowings
payable overseas in U.S. funds and obligations of foreign issuers payable in
U.S. funds), non-convertible preferred stocks and obligations of banks when in
the judgment of the Portfolio Manager such investments are appropriate in light
of economic or market conditions. The Money Market Portfolio may at times for
defensive purposes, at the determination of the Portfolio Manager, temporarily
place all or a portion of its assets in cash, when in the judgment of the
Portfolio Manager such an investment is appropriate in light of economic or
market conditions. The International Growth Portfolio may invest in all of the
above, both foreign and domestic, including foreign currency, foreign time
deposits, and foreign bank acceptances. When a Portfolio takes a defensive
position, it may not be following the fundamental investment policy of the
Portfolio.
HEDGING TRANSACTIONS
Except as otherwise indicated, the Portfolio Managers, other than for the Money
Market Portfolio, may engage in the following hedging transactions to seek to
hedge all or a portion of a Portfolio's assets against market value changes
resulting from changes in equity values, interest rates and currency
fluctuations. Hedging is a means of offsetting, or neutralizing, the price
movement of an investment by making another investment, the price of which
should tend to move in the opposite direction from the original investment.
The Portfolios will not engage in hedging transactions for speculative purposes
but only as a hedge against changes resulting from market conditions in the
values of securities owned or expected to be owned by the Portfolios. Unless
otherwise indicated, a Portfolio will not enter into a hedging transaction
(except for closing transactions) if, immediately thereafter, the sum of the
amount of the initial deposits and premiums on open contracts and options would
exceed 5% of the Portfolio's total assets taken at current value.
CERTAIN SECURITIES
The Portfolios may invest in the following described securities, except as
otherwise indicated. These securities are commonly referred to as derivatives. A
Portfolio's investment in such securities, in the aggregate, may not exceed 5%
of net assets at the time of investment; provided, however, that the
International Growth Portfolio, the High-Yield Bond Portfolio, and the
Government Securities Portfolio may invest up to 20% of their net assets in such
securities.
CALL OPTIONS
The Portfolios, other than the Money Market Portfolio, may write (sell) call
options that are listed on national
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<PAGE> 23
securities exchanges or are available in the over-the-counter market through
primary broker-dealers. Call options are short-term contracts with a duration of
nine months or less. Such Portfolios of the Fund may only write call options
which are "covered," meaning that the Portfolio either owns the underlying
security or has an absolute and immediate right to acquire that security,
without additional cash consideration, upon conversion or exchange of other
securities currently held in the Portfolio. In addition, no Portfolio will,
prior to the expiration of a call option, permit the call to become uncovered.
If a Portfolio writes a call option, the purchaser of the option has the right
to buy (and the Portfolio has the obligation to sell) the underlying security at
the exercise price throughout the term of the option. The amount paid to the
Portfolio by the purchaser of the option is the "premium." The Portfolio's
obligation to deliver the underlying security against payment of the exercise
price would terminate either upon expiration of the option or earlier if the
Portfolio were to effect a "closing purchase transaction" through the purchase
of an equivalent option on an exchange. The Portfolio would not be able to
effect a closing purchase transaction after it had received notice of exercise.
The International Growth Portfolio may purchase and write covered call options
on foreign and U.S. securities and indices and enter into related closing
transactions.
Generally, such a Portfolio intends to write listed covered calls when it
anticipates that the rate of return from so doing is attractive, taking into
consideration the premium income to be received, the risks of a decline in
securities prices during the term of the option, the probability that closing
purchase transactions will be available if a sale of the securities is desired
prior to the exercise, or expiration of the options, and the cost of entering
into such transactions. A principal reason for writing calls on a securities
portfolio is to attempt to realize, through the receipt of premium income, a
greater return than would be earned on the securities alone. A covered call
writer such as a Portfolio, which owns the underlying security, has, in return
for the premium, given up the opportunity for profit from a price increase in
the underlying security above the exercise price, but it has retained the risk
of loss should the price of the security decline.
The writing of covered call options involves certain risks. A principal risk
arises because exchange and over-the-counter markets for options may be limited;
it is impossible to predict the amount of trading interest which may exist in
such options, and there can be no assurance that viable exchange and
over-the-counter markets will develop or continue. The Portfolios will write
covered call options only if there appears to be a liquid secondary market for
such options. If, however, an option is written and a liquid secondary market
does not exist, it may be impossible to effect a closing purchase transaction in
the option. In that event, the Portfolio may not be able to sell the underlying
security until the option expires or the option is exercised, even though it may
be advantageous to sell the underlying security before that time.
PUTS
The Portfolios, except the Government Securities Portfolio and the Money Market
Portfolio, may purchase put options ("Puts") which relate to (i) securities
(whether or not they hold such securities); (ii) Index Options (described below
whether or not they hold such Options); or (iii) broadly-based stock indexes.
The Portfolios, except the Government Securities Portfolio and Money Market
Portfolio, may write covered put options. The Portfolio will receive premium
income from writing covered put options, although it may be required, when the
put is exercised, to purchase securities at higher prices than the current
market price. The High-Yield Bond Portfolio may invest up to 10% of the value of
the Portfolio in Puts.
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<PAGE> 24
ENTERING INTO FUTURES CONTRACTS
All Portfolios may, other than the Money Market Portfolio, enter into contracts
for the future acquisition or delivery of securities ("Futures Contracts")
including index contracts and foreign currencies, and may also purchase and sell
call options on Futures Contracts. These Portfolios may use this investment
technique to hedge against anticipated future adverse price changes which
otherwise might either adversely affect the value of the Portfolio's securities
or currencies held in the Portfolio, or to hedge anticipated future price
changes which adversely affect the prices of stocks, long-term bonds or
currencies which the Portfolio intends to purchase at a later date.
Alternatively, the Portfolios may enter into Futures Contracts in order to hedge
against a change in interest rates which will result in the premature call at
par value of certain securities which the Portfolio has purchased at a premium.
If stock, bond or currency prices or interest rates move in an unexpected
manner, the Portfolio would not achieve the anticipated benefits of Futures
Contracts.
The use of Futures Contracts involves special considerations or risks not
associated with the primary activities engaged in by any Portfolios. Risks of
entering into Futures Contracts include: (1) the risk that the price of the
Futures Contracts may not move in the same direction as the price of the
securities in the various markets; (2) the risk that there will be no liquid
secondary market when the Portfolio attempts to enter into a closing position;
(3) the risk that the Portfolio will lose an amount in excess of the initial
margin deposit; and (4) the fact that the success or failure of these
transactions for the Portfolio depends on the ability of the Portfolio Manager
to predict movements in stock, bond, and currency prices and interest rates.
INDEX OPTIONS
All the Equity Portfolios may invest in options on stock indexes. These options
are based on indexes of stock prices that change in value according to the
market value of the stocks they include. Some stock index options are based on a
broad market index, such as the New York Stock Exchange Composite Index or the
Standard & Poor's 500. Other index options are based on a market segment or on
stocks in a single industry. Stock index options are traded primarily on
securities exchanges.
Because the value of an index option depends primarily on movements in the value
of the index rather than in the price of a single security, whether a Portfolio
will realize a gain or loss from purchasing or writing an option on a stock
index depends on movements in the level of stock prices in the stock market
generally or, in the case of certain indexes, in an industry or market segment
rather than changes in the price of a particular security. Consequently,
successful use of stock index options by a Portfolio will depend on that
Portfolio Manager's ability to predict movements in the direction of the stock
market generally or in a particular industry. This requires different skills and
techniques than predicting changes in the value of individual securities.
INTEREST RATE SWAPS
In order to attempt to protect the Portfolio investments from interest rate
fluctuations, the Portfolios may engage in interest rate swaps. The Portfolios
tend to use interest rate swaps as a hedge and not as a speculative investment,
Interest rate swaps involve the exchange of the Portfolio with another party of
their respective rights to receive interest (e.g., an exchange of fixed rate
payments for floating rate payments). For example, if the Portfolio holds an
interest-paying security whose interest rate is reset once a year, it may swap
the right to receive interest at a rate
22
<PAGE> 25
that is reset daily. Such a swap position would offset changes in the value of
the underlying security because of subsequent changes in interest rates. This
would protect the Portfolio from a decline in the value of the underlying
security due to rising rates, but would also limit its ability to benefit from
falling interest rates.
The Portfolio will enter into interest rate swaps only on a net basis (i.e., the
two payments streams will be netted out, with Portfolio receiving or paying as
the case may be, only the net amount of the two payments). The net amount of the
excess, if any, of the Portfolio's obligations over its entitlements with
respect to each interest rate swap will be accrued on a daily basis, and an
amount of cash or liquid high grade debt securities having an aggregate net
asset value at least equal to the accrued excess, will be maintained in a
segregated account by the Portfolio's custodian bank.
The use of interest rate swaps involves investment techniques and risks
different from those associated with ordinary portfolio security transactions.
If the Portfolio Manager is incorrect in its forecasts of market values,
interest rates and other applicable factors, the investment performance of the
Portfolio will be less favorable than it would have been if this investment
technique were never used. Interest rate swaps do not involve the delivery of
securities or other underlying assets or principal. Thus, if the other party to
an interest rate swap defaults, the Portfolio's risk of loss consists of the net
amount of interest payments that the Portfolio is contractually entitled to
receive.
FOREIGN CURRENCY VALUES AND TRANSACTIONS
Investments in foreign securities will usually involve currencies of foreign
countries, and the value of the assets of the International Growth Portfolio
(and of the other Portfolios that may invest in foreign securities to a much
lesser extent) as measured in United States dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange control
regulations, and the International Growth Portfolio may incur costs in
connection with conversions between various currencies.
The normal currency allocation of the International Growth Portfolio is
identical to the currency mix of the Benchmark. The Portfolio expects to
maintain this normal currency exposure when global currency markets are fairly
priced relative to each other and relative to associated risks. The Portfolio
may actively deviate from such normal currency allocations to take advantage of
or to protect the Portfolio from risk and return characteristics of the
currencies and short-term interest rates when those prices deviate significantly
from fundamental value. Deviations from the Benchmark are determined by the
Portfolio Manager based upon its research.
To manage exposure to currency fluctuations, the Portfolio may alter equity or
money market exposures (in its normal asset allocation mix as previously
identified), enter into forward currency exchange contracts, buy or sell
options, futures or options on futures relating to foreign currencies and may
purchase securities indexed to currency baskets. The Portfolio will also use
these currency exchange techniques in the normal course of business to hedge
against adverse changes in exchange rates in connection with purchases and sales
of securities. Some of these strategies may require the Portfolio to set aside
liquid assets in a segregated custodial account to cover its obligations. These
techniques are further described below.
The Portfolio may conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency exchange
market or through entering into contracts to purchase or sell foreign currencies
at a future date (i.e., "forward foreign currency" contract or "forward"
contract). A forward contract involves an obligation to purchase or sell a
specific currency
23
<PAGE> 26
amount at a future date, which may be any fixed number of days from the date of
the contract, agreed upon by the parties, at a price set at the time of the
contract. The Portfolio will convert currency on a spot basis from time to time
and investors should be aware of the potential costs of currency conversion.
When the Portfolio Manager believes that the currency of a particular country
may suffer a significant decline against the U.S. dollar or against another
currency, the Portfolio may enter into a currency contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of the Portfolio's securities
denominated in such foreign currency.
At the maturity of a forward contract, the Portfolio may either sell a portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate its contractual obligation to deliver the foreign
currency by repurchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Portfolio may realize a gain or loss from currency
transactions.
The Portfolio also may purchase and write put and call options on foreign
currencies (traded on U.S. and foreign exchanges or over-the-counter markets) to
manage the Portfolio's exposure to changes in currency exchange rates. Call
options on foreign currency written by the Portfolio will be "covered", which
means that the Fund will own an equal amount of the underlying foreign currency.
With respect to put options on foreign currency written by the Portfolio, the
Portfolio will establish a segregated account with its custodian bank consisting
of cash, U.S. government securities or other high grade liquid debt securities
in an amount equal to the amount the Portfolio would be required to pay upon
exercise of the put.
CERTAIN OTHER SECURITIES
Except as otherwise indicated, the Portfolios may purchase the following
securities, the purchase of which involves certain risks described below. Unless
otherwise indicated, a Portfolio will not purchase a category of such securities
if the value of such category, taken at current value, would exceed 5% of the
Portfolio's total assets.
MASTER DEMAND NOTES
All Portfolios may purchase variable amount master demand notes. Variable amount
master demand notes are demand obligations that permit the investment of
fluctuating amounts at varying market rates of interest pursuant to arrangements
between the issuer and a commercial bank acting as agent for the payees of such
notes whereby both parties have the right to vary the amount of the outstanding
indebtedness on the notes. Since there is no secondary market for these notes,
the appropriate Portfolio Managers, subject to the overall review of the Fund's
Directors and Enterprise Capital Management, Inc., the adviser, monitor the
financial condition of the issuers to insure that they are able to repay the
notes.
REPURCHASE AGREEMENTS
All Portfolios may enter into repurchase agreements having maturities of seven
days or less. When a Portfolio acquires securities from a bank or broker-dealer,
it may simultaneously enter into a repurchase agreement with the same seller
pursuant to which the seller agrees at the time of sale to repurchase the
security at a mutually agreed upon time and price. In such instances, the Fund's
Custodian has possession of the security or collateral for the seller's
obligation. If the seller should default on its obligation to repurchase the
securities, the Portfolio may experience delays, difficulties or other costs
when selling the securities held as collateral and may incur a loss if the value
of the
24
<PAGE> 27
collateral declines. The appropriate Portfolio Managers, subject to the overall
review by the Fund's Directors and Enterprise Capital, monitor the value of the
collateral as to repurchase agreements, and they monitor the creditworthiness of
the seller and must find it satisfactory before engaging in repurchase
agreements. The Portfolios enter into repurchase agreements only with Federal
Reserve member banks that have net worth of at least $100,000,000 and
outstanding commercial paper of the two highest rating categories assigned by
Moody's or S&P or with broker-dealers that are registered with the Securities
and Exchange Commission, are members of the National Association of Securities
Dealers, Inc. ("NASD") and have similarly rated commercial paper outstanding.
Any repurchase agreements entered into by the Portfolios will be fully
collateralized and marked to market daily, other than those entered into by the
Money Market Portfolio, which are valued on an amortized cost basis.
RESTRICTED OR ILLIQUID SECURITIES
All of the Portfolios may invest up to 10% of the assets of the Portfolios in
restricted securities (privately placed equity or debt securities) or other
securities which are not readily marketable.
FOREIGN SECURITIES
As noted above, under normal circumstances the International Growth Portfolio
will invest primarily in foreign securities. All other Portfolios, except the
Government Securities Portfolio, the Tax-Exempt Income Portfolio and the Money
Market Portfolio, may, subject to the 10% limitation, invest in foreign
securities as well as both sponsored and unsponsored American Depository
Receipts ("ADRs"), and European Depository Receipts ("EDRs") which are
securities of U.S. issuers backed by securities of foreign issuers. There may be
less information available about unsponsored ADRs and EDRs, and therefore, they
may carry higher credit risks. The Portfolios may also invest in securities of
foreign branches of domestic banks and domestic branches of foreign banks.
Investments in foreign equity and debt securities involve risks different from
those encountered when investing in securities of domestic issuers. The
appropriate Portfolio Managers and Enterprise Capital, subject to the overall
review of the Fund's Directors, evaluate the risks and opportunities when
investing in foreign securities. Such risks include trade balances and
imbalances and related economic policies; currency exchange rate fluctuations;
foreign exchange control policies; expropriation or confiscatory taxation;
limitations on the removal of funds or other assets; political or social
instability; the diverse structure and liquidity of securities markets in
various countries and regions; policies of governments with respect to possible
nationalization of their own industries; and other specific local, political and
economic considerations.
FORWARD COMMITMENTS
Securities may be purchased on a "when issued" or on a "forward delivery" basis,
which means it may take as long as 120 days before such obligations are
delivered to a Portfolio. The purpose of such investments is to attempt to
obtain higher rates of return or lower purchase costs than would be available
for securities purchased for immediate delivery. Securities purchased on a when
issued or forward delivery basis involve a risk that the value of the security
to be purchased may decline prior to the settlement date. In addition, if the
dealer through which the trade is made fails to consummate the transaction, the
Portfolio may lose an advantageous yield or price. The Fund does not accrue
income prior to delivery of the securities in the case of forward commitment
purchases. The 5% limitation does not apply to the International Growth,
Government Securi-
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<PAGE> 28
ties and Tax-Exempt Income Portfolios which will have a 20% limitation.
PORTFOLIO TURNOVER
In carrying out the investment policies described in this Prospectus, each
Portfolio expects to engage in a substantial number of securities portfolio
transactions, and the rate of portfolio turnover will not be a limiting factor
when a Portfolio Manager deems it appropriate to purchase or sell securities for
a Portfolio. However, no Portfolio's annual portfolio turnover rate (other than
the High-Yield Bond Portfolio and the Money Market Portfolio for which, due to
the short-term nature of its investment, a portfolio turnover rate is not
applicable) is expected to exceed 100%.
A portfolio turnover rate is, in summary, the percentage computed by dividing
the lesser of a Portfolio's purchases or sales proceeds of securities by the
average investments of the Portfolio. High portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs which
are borne directly by a Portfolio. Each Portfolio intends to elect and to comply
with the various provisions of the Internal Revenue Code so as to qualify as a
"regulated investment company" thereunder. See "Taxes" at page 46. Among such
requirements is a limitation that less than 30% of the Portfolio's gross income
in each taxable year may be derived from gains (without deduction for losses)
from the sale or other disposition of stock or other securities held for less
than three months. Accordingly, the ability of each Portfolio to effect certain
transactions may be limited.
INVESTMENT
RESTRICTIONS
Except as indicated, each of the Portfolios has adopted certain investment
restrictions and limitations for the purpose of reducing their exposure in
specific situations.
No Portfolio will: (1) invest more than 5% of the value of its total assets in
the securities of any single issuer if such purchase would cause more than 5% of
the value of its assets to be invested in securities of such issuer (this
limitation does not apply to U.S. Government Securities as well as its agencies
and instrumentalities); (2) purchase more than 10% of the voting securities of
any issuer; (3) invest more than 5% of its total assets in the securities of
companies that have a continuous operating history of less than three years (the
High-Yield Bond and Tax-Exempt Income Portfolios are not subject to this
restriction); (4) except as to the Money Market Portfolio, as described below,
invest more than 25% of its total assets in any one industry, provided that: (i)
this limitation does not apply to investments in U.S. Government Securities as
well as its agencies and instrumentalities, general obligation bonds, or
Municipal Securities other than industrial development bonds issued by
non-governmental users; and (ii) utility companies will be divided according to
their services (for example, gas, gas transmission, electric, electric and gas,
and telephone will each be considered as a separate industry); (5) borrow money,
except from a bank and only for temporary or emergency purposes, and such
borrowings will not exceed 5% of the lower of the value or cost of the
Portfolio's total assets; or (6) pledge, mortgage or hypothecate its assets to
an extent greater than 5% of the value of its total assets. For purposes of
restrictions (1) and (2), each Portfolio will regard the entity which has
ultimate responsibility for the payment of interest and principal as the issuer.
Notwithstanding restriction (4), the Money Market Portfolio may invest in excess
of 25% of its
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<PAGE> 29
total assets in U.S. Government Securities as well as its agencies and
instrumentalities, and certain bank instruments issued by domestic banks. See
"Investment Restrictions" in the Statement of Additional Information.
These investment limitations, and other limitations that are fundamental
policies, that are described in greater detail in the Statement of Additional
Information, may be changed only with the approval of the holders of a majority
of the shares of a Portfolio.
In addition, management of the Fund has adopted the following restrictions which
apply to all of the Portfolios and may be changed only by the Board of Directors
of the Fund. No Portfolio will: (A) lend its assets to any person or individual,
except by the purchase of bonds or other debt obligations customarily sold to
institutional investors; (B) invest more than 5% of the value of its net assets,
valued at the lower of cost or market, in warrants (Included within that amount,
but not to exceed 2% of the value of the Portfolio's net assets, may be warrants
which are not listed on the New York or American Stock Exchange. Warrants
acquired by a Portfolio in units or attached to securities may be deemed to be
without value.), (C) invest in oil, gas, or other mineral leases, or (D) engage
in arbitrage transactions.
If a percentage restriction is adhered to at the time of an investment, a later
increase or decrease in the investment's percentage of the value of a
Portfolio's total assets resulting from a change in portfolio value or assets
will not constitute a violation of the percentage restrictions.
The Managed Portfolio will not invest more than 15% of the value of its total
assets in real estate investment trusts, commonly referred to as "REITS". The
Managed Portfolio will not invest more than 5% of the value of its total assets
in high-yield securities.
In order to qualify for federal income tax treatment as a regulated investment
company for a taxable year, each Portfolio must, among other things, (a) derive
at least 90% of its gross income during such taxable year from qualifying income
(i.e., dividends, interest, payments with respect to loans of stock and
securities, and gains from the sale or other disposition of stock or securities
or options thereon); (b) derive less than 30% of its gross income during such
taxable year from the sale or other disposition of stock or securities (or
options thereon) held less than three months; and (c) diversify its holdings so
that, at the end of each fiscal quarter of such taxable year, (i) at least 50%
of the market value of its total assets is represented by cash, cash items, U.S.
Government Securities, securities of other regulated investment companies, and
other securities limited, in the case of other securities for purposes of this
calculation, in respect of any one issuer, to an amount not greater than 5% of
the value of its total assets or 10% of the voting securities of the issuer, and
(ii) not more than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government Securities). Under current law,
compliance with the "30% test" described in clause (b) above may, in particular,
limit a Portfolio's ability to utilize options in connection with its investment
strategy.
HOW TO PURCHASE
PORTFOLIO SHARES
Enterprise Fund Distributors, Inc. ("the Distributor"), is the principal
underwriter for shares of the Fund. The Distributor, whose address is Atlanta
Financial Center, 3343 Peachtree Road, N.E., Suite 450, Atlanta, Georgia 30326,
is a subsidiary of Enterprise Capital Management, Inc. Purchases can be made
through most investment dealers who, as part of the service they provide, must
transmit orders promptly.
Each class of shares of a Portfolio represent an identical interest in the
investment portfolio of that Portfolio and
27
<PAGE> 30
has the same rights, except that (i) the Class A and B shares bear the expenses
related to distribution and servicing of such shares, (ii) the Class A and B
shares have exclusive voting rights with respect to matters related to
distribution and servicing expenditures, and (iii) and only Class B shares have
a conversion feature. The three Classes also have separate exchange privileges.
(See "How to Exchange Shares Among the Portfolios," at page 35.) The income
attributable to each class and the dividends payable on the shares of each class
will be reduced by the amount of the distribution fee or service fee, if any,
payable by that class. Class A and Class B shares bear the expenses of
distribution and service fees which will generally cause such classes to have
higher expense ratios and to pay lower dividends than Class Y shares. The
distribution related fees paid with respect to any class will not be used to
finance the distribution expenditures of another class. Sales personnel may
receive different compensation for selling different classes of shares.
The following table sets forth a summary of the distribution arrangements for
each class of shares of a Portfolio. A more detailed description of each class
is set forth below.
<TABLE>
<CAPTION>
ANNUAL 12B-1
DISTRIBUTION OTHER
SALES CHARGE AND SERVICE FEE INFORMATION
--------------- --------------- ---------------
<S> <C> <C> <C>
Class A... Maximum 4.75% 0.45% Initial sales
initial sales distribution charge may be
charge (except fee (0.30% for waived or
Money Market) Money Market) reduced in
certain
circumstances.
$1 million
purchases,
pursuant to
waiver of sales
charge, are
subject to a
CDSC if
redeemed within
two years.
<CAPTION>
ANNUAL 12B-1
DISTRIBUTION OTHER
SALES CHARGE AND SERVICE FEE INFORMATION
--------------- --------------- ---------------
<S> <C> <C> <C>
Class B... CDSC for a 0.75% Shares convert
period of six distribution to Class A
years equal to fee (0.60% for shares
5.00% during Money Market) approximately
the first year and 0.25% eight years
and declining service fee after purchase.
to 0.00% after Available only
the sixth year. to investors
purchasing less
than $250,000
in the
aggregate.
Class Y... None None Available only
to limited
group of
investors.
</TABLE>
In deciding which class of shares to purchase, you should consider, among other
things, (1) the length of time you expect to hold your shares, (2) the amount of
any applicable sales charge (whether imposed at the time of purchase or upon
redemption), (3) whether you qualify for the reduction or waiver of any
applicable sales charge, (4) the various exchange privileges among different
classes of shares and (5) the fact that Class B shares automatically convert to
Class A shares approximately eight years after purchase. In addition, you should
review certain eligibility requirements that may apply to purchasing a
particular class of shares. (See, "Buying Class A Shares," "Buying Class B
Shares" and "Buying Class Y Shares" below.)
Initial investments per Class per Portfolio are subject to a minimum of $1,000,
with subsequent investments made in amounts of $50 or more through the Fund's
Transfer Agent or through dealers, subject to the following exceptions: (a) a
lower initial minimum of $250 is accepted in connection with the Retirement
Plans, with a minimum subsequent investment of $25; and (b) a lower initial
minimum of $100 is accepted in connection with the Automatic Bank Draft Plan,
with a minimum $25 for subsequent investments.
All purchases made by check should be in U.S. dollars and made payable to The
Enterprise Group of Funds, Inc., or in the case of a retirement account, the
custodian or trustee. Third party checks will not be accepted. When
28
<PAGE> 31
purchases are made by check or periodic account investment, redemptions will not
be allowed until the investment being redeemed has been in the account for 15
calendar days.
Class A shares may be sold at net asset value, subject to appropriate
documentation, through a dealer where the amount invested represents redemption
proceeds from a registered open-end management investment company not
distributed by Enterprise Fund Distributors, Inc. or its affiliates if: (i) the
redeemed shares were subject to an initial sales charge or a deferred sales
charge (whether or not actually imposed); (ii) such redemption has occurred no
more than 90 days prior to purchase of Class A shares of the Fund; and (iii) the
Fund, Enterprise Fund Distributors, Inc. or its affiliates have not agreed with
such company or its affiliates, formally or informally, to sell Class A shares
at net asset value or provide any other incentive with respect to such
redemption and sale.
For accounts with balances under $1,000 as of July 31, an annual service charge
of $25 per account registration per Portfolio will apply, excluding Automatic
Bank Draft Plan Accounts, Automatic Investment Plan Accounts, Retirement
Accounts and Savings Plan Accounts.
From time to time, the Fund temporarily may suspend the offering of shares of
one or more of its Classes or Portfolios to new investors. During the period of
such suspension, persons who are already shareholders of any such Class or
Portfolio normally will be permitted to continue to purchase additional shares
and to have dividends reinvested.
Portfolio shares are purchased at the net asset value (plus, with the exception
of the Money Market Portfolio Class A Shares, the applicable sales charge) next
determined after the application for purchase of shares is received by the
Enterprise Shareholder Services Division of the Fund's Transfer Agent, National
Financial Data Services, Inc. (the "Transfer Agent"). The Distributor or the
Fund may reject any orders.
BUYING CLASS A. Class A Portfolio shares are offered to the public at the net
asset value next computed after receipt of the purchase order plus a maximum
sales charge as to all Portfolios, other than the Money Market Portfolio Class A
Shares, which carries no sales charge, of 4.75% of the offering price (4.99% of
the amount invested) on a single purchase of up to $100,000. The sales charge is
reduced on single purchases of $100,000 or more pursuant to the following table:
<TABLE>
<CAPTION>
SALES CHARGE DEALER DISCOUNT
SALES CHARGE AS A OR AGENCY
AS A PERCENTAGE OF FEE AS A
PERCENTAGE OF AMOUNT PERCENTAGE OF
OFFERING PRICE INVESTED OFFERING PRICE*
-------------- ------------- ---------------
<S> <C> <C> <C>
Up to $99,999............ 4.75% 4.99% 4.00%
$100,000 up to
$249,999................ 3.75 3.90 3.00
$250,000 up to
$499,999................ 2.50 2.56 2.00
$500,000 up to
$999,999................ 2.00 2.04 1.50
$1,000,000
and up.................. None None See Below
</TABLE>
- ---------------
* From time to time upon written notice to all of its dealers, Enterprise
Distributors may hold special promotions for specified periods during which
Enterprise Distributors may reallow dealers up to the full sales charges shown
above. During such periods, dealers may be deemed to have certain additional
responsibilities under the securities laws. In addition, Enterprise Distributors
may sponsor sales contests and provide to all qualifying dealers, from its own
profits and resources, additional compensation in the form of trips or
merchandise.
Purchases of $1 million or more of Class A shares have no initial sales charge
but are subject to a contingent deferred sales charge ("CDSC") if held for less
than two years. Enterprise Fund Distributors, Inc. will pay authorized dealers
an amount equal to 1% of the first $4.99 million of such purchases, plus .75 of
1% of amounts from $5-19.99 million, plus .50 of 1% of amounts in excess of $20
million. A CDSC will be imposed on the proceeds of the redemption of shares if
they are redeemed within 24 months of the end of the calendar month of their
purchase, in an amount of the lesser of (A) the net asset
29
<PAGE> 32
value of shares at the time of purchase or (B) the net value of the shares at
the time of redemption. The CDSC will be deducted from the redemption proceeds
otherwise payable to the shareholder and will be retained by Enterprise
Distributors.
In determining the amount of purchase of Class A shares, the aggregate dollars
being invested in all Portfolios excluding all dollars that have never been
subject to a sales charge at one time or pursuant to a Letter of Intent by the
investor, are aggregated to determine the applicable sales charge.
No sales charge applies to the reinvestment of dividends or capital gains
distributions, except for dividends earned on the Money Market Portfolio and
subsequently invested in a Portfolio other than the Money Market Portfolio.
No sales charge applies to purchases of Class A shares by any of the following:
(a) selling brokers, their employees and their registered representatives; (b)
employees, clients or direct referrals of any Portfolio Manager or of Evaluation
Associates, Inc. ("EAI"); (c) directors, former directors, employees or retirees
of the Fund or of The Mutual Life Insurance Company of New York ("MONY") and its
subsidiaries and employees of Computer Science Corporation; (d) immediate family
and employee benefit plans of any of the foregoing; (e) certain employee benefit
plans qualified under Sections 401 and 403 of the Internal Revenue Code,
including salary reduction plans qualified under Section 401(k) of the Code,
subject to minimum requirements with respect to number of participants or plan
assets which may be established by the Distributor; (f) MONY and its
subsidiaries; (g) clients of fee-based financial planners; and (h) financial
institutions and financial institutions' trust departments for funds over which
they exercise exclusive discretionary investment authority and which are held in
fiduciary, agency, advisory, custodial or similar capacity.
In addition, members of certain associations, fraternal groups, franchise
organizations and unions may enter into an agreement with the distributor which
allows members to purchase shares of the Fund Class A shares at a sales load
equal to 75% of the percentages in the above table, subject to minimum
requirements, with respect to number of participants or plan assets which may be
established by the Distributor. The Dealer Discount will also be adjusted in
like manner.
An investor seeking a reduction in sales charge with respect to a waiver of
sales charge by reason of being a member of the above-described groups, must
describe the basis for the requested reduction or waiver in documents
accompanying any new investment. The Fund may terminate, or amend the terms of,
offering shares of the Fund at net asset value or at a reduced sales charge at
any time.
BUYING CLASS B SHARES. Purchases of Class B shares will be processed at the net
asset value next determined after receipt of your purchase order for less than
$250,000. While not subject to a front-end sales charge, Class B shares may be
subject to a CDSC upon redemption. If Class B shares of any Fund are redeemed
within six years after the date on which a purchase order for Class B shares was
accepted, a CDSC will be imposed by applying the appropriate percentage
indicated below to the lesser of: (1) the net asset value of such shares at the
time of purchase or (2) the net asset value of such shares at the time of
redemption. The CDSC will be deducted from the redemption proceeds otherwise
payable to the shareholder and will be retained by Enterprise Distributors. The
CDSC
30
<PAGE> 33
to be imposed on such share redemptions will be assessed according to the
following schedule:
<TABLE>
<CAPTION>
YEARS SINCE PURCHASE ORDER OF
LESS APPLICABLE CLASS B
THAN $250,000 WAS ACCEPTED CONTINGENT DEFERRED SALES CHARGE
- ------------------------------- --------------------------------
<S> <C>
Up to one year................. 5.00%
One year or more but less than
2 years...................... 4.00
Two years or more but less than
3 years...................... 4.00
Three years or more but less
than 4 years................. 3.00
Four years or more but less
than 5 years................. 2.00
Five years or more but less
than 6 years................. 1.00
Six or more years.............. None
</TABLE>
CONVERSION OF CLASS B SHARES. Class B shares will automatically convert to
Class A shares of the same Portfolio eight years after the end of the calendar
month in which the purchase order for Class B shares was accepted, on the basis
of the relative net asset values of the two classes and subject to the following
terms: Class B shares acquired through the reinvestment of dividends and
distributions ("reinvested Class B shares") will be converted to Class A shares
on a pro-rata basis only when Class B shares not acquired through reinvestment
of dividends or distributions ("purchased Class B shares") are converted. The
portion of reinvested Class B shares to be converted will be determined by the
ratio that the purchased Class B shares eligible for conversion bear to the
total amount of purchased Class B shares eligible in the shareholder's account.
For the purposes of calculating the holding period, Class B shares will be
deemed to have been issued on the sooner of: (a) the date on which the issuance
of Class B shares occurred, or (b) for Class B shares obtained by an exchange or
series of exchanges, the date on which the issuance of the original Class B
shares occurred. This conversion to Class A shares will relieve Class B shares
that have been outstanding for at least eight years (a period of time sufficient
for Enterprise Distributors to have been compensated for distribution expenses
related to such Class B shares) from the higher ongoing distribution fee paid by
Class B shares. Only Class B shares have this conversion feature. Conversion of
Class B shares to Class A shares is contingent on the continuing availability of
a private letter revenue ruling from the Internal Revenue Service affirming that
such conversion does not constitute a taxable event for the shareholder under
the Internal Revenue Code. If such revenue ruling or an opinion of counsel is no
longer available, conversion of Class B shares to Class A shares would have to
be suspended, and Class B shares would continue to be subject to the Class B
distribution fee until redeemed.
BUYING CLASS Y SHARES. Class Y shares are offered to certain institutional
purchasers of $1 million or more and to The Mutual of New York Employee 401(k)
Plan and the Enterprise Capital Management, Inc. 401(k) Plan. Institutional
investors eligible to purchase Class Y shares include banks, savings
institutions, trust companies, insurance companies, investment companies as
defined by the Investment Company Act of 1940, pension or profit sharing trust,
or other financial institutional buyer. Purchases of Class Y shares will be
processed at the net asset value next determined after receipt of your purchase
order. Class Y shares are not subject to a front-end sales charge.
REINVESTMENT PRIVILEGE. Class A share investors are accorded a one-time
privilege of reinvesting within 180 days of redemption free of sales charge
proceeds of shares redeemed. A shareholder of the Fund who redeems Class B and
incurs a contingent deferred sales charge ("CDSC") may utilize a one-time
privilege to reinvest up to the full amount redeemed at net asset value at the
time of the reinvestment in Class A or Class B shares of the Fund within 180
days of redemption. The amount of any CDSC also will be reinvested. The
reinvested shares will retain their original cost and purchase date for the
purposes of the CDSC. If a loss is realized on the redemption, the reinvestment
may be subject to the "wash sale" rules if made within 30 days of the
redemption, resulting in postpone-
31
<PAGE> 34
ment of the recognition of such loss for federal income tax purposes. The
reinvestment privilege may be terminated or modified at any time.
EXEMPTIONS FROM CLASS A AND B CDSC. No CDSC will be imposed when a shareholder
redeems Class A or B shares in the following instances: (a) shares or amounts
representing increases in the value of an account above the net cost of the
investment due to increases in the net asset value per share; (b) shares
acquired through reinvestment of income dividends or capital gains
distributions; (c) shares acquired by exchange from any Enterprise Portfolio,
other than the Class A Money Market Fund where the exchanged shares would not
have been subject to a CDSC upon redemption; and (d) Class A shares purchased in
the amount of $1 million or more if held for more than twenty-four (24) months,
and Class B shares held for more than six years.
The CDSC does not apply to purchases of Class A shares at net asset value
described under "Net Asset Value Purchases" above and will be waived in the case
of redemptions of Class A or B shares in connection with (i) distributions to
participants or beneficiaries of plans qualified under Section 401(a) of the
Internal Revenue Code ("IRC") or from custodial accounts under the IRC Section
403(b)(7), individual retirement accounts under IRC Section 408(a), deferred
compensation plans under IRC section 457 and other employee benefit plans
("plans"), and returns of excess contributions made to these plans, (ii)
withdrawals under an automatic withdrawal plan where the annual withdrawal does
not exceed 10% of the value of the account (only for Class B shares); and (iii)
liquidation of a shareholder's account if the aggregate net asset value of
shares held in the account is less than the required minimum. A shareholder will
be credited with any CDSC paid in connection with the redemption of any Class A,
B shares if within 180 days after such redemption, the proceeds are invested in
the same Class of shares in the same and/or another Enterprise Portfolio.
In determining whether the Class A or B CDSC is payable, it will be assumed that
shares are not subject to a CDSC are redeemed first and that other shares are
then redeemed in the order purchased. No CDSC will be imposed on exchanges to
purchase shares of another Enterprise Portfolio although a CDSC will be imposed
on shares of the acquired Enterprise Portfolio purchased by exchange of shares
subject to a CDSC. The imposition of an assessment of a CDSC will occur as of
the date of the initial investment.
SPECIAL FIDUCIARY RELATIONSHIPS. The CDSC will not apply with respect to
purchase of Class A shares for which the selling dealer is not permitted to
receive a sales load or redemption fee imposed on a shareholder with whom such
dealer has a fiduciary relationship in accordance with provisions of the
Employee Retirement Income Security Act and regulations thereunder. If such
dealer agrees to the reimbursement provision described below, no sales charge
will be imposed on sales of $1,000,000 or more and Enterprise Distributors will
pay to the selling dealer a commission described above in "How to Buy Class A
Shares."
For the period of 13 months from the date of the sales referred to in the above
paragraph, the distribution fee payable by a Fund to Enterprise Distributors
pursuant to the Fund's Distribution Plan in connection with such shares will be
retained by Enterprise Distributors. In the event of a redemption of any such
shares within 24 months of purchase, the selling dealer will reimburse
Enterprise Distributors for the amount of commission paid less the amount of the
distribution fee with respect to such shares.
OTHER DEALER COMPENSATION. Enterprise Distributors will provide additional
compensation to dealers in connection with sales of shares of the Funds and
other mutual funds distributed by Enterprise Distributors ("Enterprise
32
<PAGE> 35
Funds") including promotional gifts (which may include gift certificates,
dinners and other items), financial assistance to dealers in connection with
conferences, sales or training programs for their employees, seminars for the
public and advertising campaigns. In some instances, these incentives may be
made available only to dealers whose representatives have sold or are expected
to sell significant amounts of shares.
How the Net Asset Value is Computed. The net asset value per share for each
Class of each Portfolio of the Fund is determined by dividing the total value of
the Portfolio's investments and other assets, less any liabilities, by the total
number of outstanding shares of the Portfolio for each Class. Net asset value
per share is determined at the close of trading on each day the New York Stock
Exchange is open for trading (currently 4:00 p.m., New York time) except that
net asset value per share of the International Growth Portfolio may not, in
certain circumstances, be determined on days when the New York Stock Exchange is
open for trading but one or more foreign stock exchanges are not open for
trading. The net asset value per share is effective as of the time of
computation. In determining net asset value, the price carried by the composite
tape of all national exchanges after 4:00 p.m. New York time is used.
Domestic equity securities are valued at the last sale price or, in the absence
of any sale on that date, the closing bid price. Domestic equity securities
without last trade information are valued at the last bid price. Domestic equity
securities, for which market quotations are not readily available, and other
assets are valued at fair value as determined in good faith by the Board of
Directors. Debt securities and foreign securities are valued on the basis of
independent pricing services approved by the Board of Directors, and such
pricing services generally follow the same procedures in valuing foreign equity
securities as are described above as to domestic equity securities.
Securities held by the Money Market Portfolio are valued on an amortized cost
basis. The Securities and Exchange Commission's rules relating to the amortized
cost method involve valuing a security at its cost and amortizing any discount
or premium over the period until maturity, without taking into account the
impact of fluctuating interest rates on the market value of the security unless
the deviation from net asset value as calculated by using available market
quotations exceeds 1/2 of 1%. At that point, the Board of Directors will
promptly decide what action, if any, will be initiated. The Money Market
Portfolio seeks to maintain a constant net asset value of $1.00 but there can be
no assurance that the Money Market Portfolio will be able to maintain a stable
net asset value. The Money Market Portfolio will not maintain a dollar weighted
average portfolio maturity which exceeds 90 days.
Although the legal rights of each class of shares are substantially identical,
the different expenses borne by each class will result in different net asset
values and dividends for each class. The net asset value of the Class A and
Class B shares will generally be lower than the net asset value of the Class Y
shares as a result of the distribution and service fees to which the Class A and
Class B shares are subject. It is expected, however, that the net asset values
of the three classes will tend to converge immediately after the recording of
dividends, which will differ by approximately the amount of the distribution and
service related expense accrual differential among the classes.
Share Certificates. The Fund does not ordinarily issue certificates
representing shares of the Portfolios. Instead, shares are held on deposit for
shareholders by the Fund's Transfer Agent, which sends a statement of shares
owned in each Portfolio to shareholders following each transaction in the
shareholder's account. Certificates for full shares only (other than the Money
Market Portfolio) are available at no charge at any time upon written request to
the Transfer Agent. Special shareholder services such as tele-
33
<PAGE> 36
phone redemptions, exchanges, electronic funds transfers and wire orders are not
available as to certificated shares.
SHAREHOLDER
SERVICES
For the convenience of investors, the following plans are available:
AUTOMATIC REINVESTMENT PLAN
Dividends and capital gains distributions may be automatically reinvested in the
same Class of shares or, at the investor's election, may be paid out in cash. No
sales charge is applied upon reinvestment of dividends or capital gains. This
does not apply to Money Market Portfolio dividends invested in another
Portfolio.
AUTOMATIC BANK DRAFT PLAN
An investor's bank account may be debited monthly for automatic investment into
one or more of the Portfolios for each Class.
AUTOMATIC INVESTMENT PLAN
An investor may debit any Portfolio Account of a Class on a monthly basis for
automatic investments into one or more of the other Portfolios of the same
Class. The Portfolio from which the investment will be made is subject to the
$1,000 minimum. The investor may then choose to have $50 or more transferred to
either an established Enterprise portfolio, or they may open a new account
subject to an initial minimum investment of $100.
LETTER OF INTENT INVESTMENTS
Any investor may execute a Letter of Intent covering purchases of Class A shares
of $100,000 or more, at the public offering price, of Fund shares to be made
within a period of 13 months. A reduced sales charge will be applicable to the
total dollar amount purchased in the 13-month period provided at least $100,000
is purchased. The minimum initial investment under a Letter of Intent is 5% of
the amount indicated in the Letter of Intent. Class A shares purchased with the
first 5% of such amount will be held in escrow (while remaining registered in
the name of the investor) to secure payment of the higher sales charge
applicable to the shares actually purchased if the full amount indicated is not
purchased, and such escrowed shares will be involuntarily redeemed to pay the
additional sales charge, if necessary. When the full amount indicated has been
purchased, the escrow will be released.
Class A investors wishing to enter into a Letter of Intent in conjunction with
their investment in shares of the Portfolios should complete the appropriate
portion of the new account application.
RIGHT OF ACCUMULATION DISCOUNT
Investors who make an additional purchase of Class A shares of the Fund which,
when combined with the value of their existing aggregate holdings of Class A
shares of the Portfolios of the Fund, each calculated at the then applicable net
asset value per share, at the time of the additional purchase, equals $100,000
or more, will be entitled to the reduced sales charge shown under "How to
Purchase Portfolio Shares" above on the full amount of each additional purchase.
For purposes of determining the discount, holdings of Fund shares of the
investor's spouse, immediate family or accounts controlled by the investor
whether as a single investor or trustee of a plan will be aggregated upon
notification of applicable accounts from the investor.
34
<PAGE> 37
CHECK WRITING
Investors in the Money Market Portfolio Class A Shares with opening balances in
excess of $5,000 may redeem shares by check (a Redemption Check), as described
under "Redemptions" below.
BANK PURCHASE AND REDEMPTION PLAN
Any investor may initiate an ACH (Automatic Clearing House) Purchase or
Redemption directly to a bank account when proper instructions have been
established on the account.
SYSTEMATIC WITHDRAWAL PLAN
The owner of $5,000 or more of a class of a Portfolio's shares at the offering
price net asset value plus, in the case of Class A shares, the initial sales
charge) may provide for the payment from the owner's account of any requested
dollar amount to be paid to the owner or a designated payee each monthly,
quarterly, semiannually or annually. The $5,000 minimum account size is not
applicable to Individual Retirement Accounts. The minimum periodic payment is
$100. The maximum annual rate at which Class B shares may be redeemed under a
systematic withdrawal plan is 10% of the net asset value of the account. Shares
are redeemed on the fifteenth day of the month or the preceding business day if
the fifteenth is a Saturday or Sunday. Any income or capital gain dividends will
be automatically reinvested at net asset value. A sufficient number of full and
fractional shares will be redeemed to make the designated payment. Depending
upon the size of the payments requested and fluctuations in the net asset value
of the shares redeemed, redemptions for the purpose of making such payments may
reduce or even exhaust the account.
The purchase of Class A shares while participating in a systematic withdrawal
plan will ordinarily be disadvantageous to the investor because the investor is
redeeming shares upon which a sales charge may have already been paid.
Therefore, a Fund will not knowingly permit additional investments of less than
$2,000 if the investor is at the same time making systematic withdrawals.
Enterprise will waive the contingent deferred sales charge on redemptions of
Class B shares made pursuant to a systematic withdrawal plan. The right is
reserved to amend the systematic withdrawal plan on 30 days' notice. The plan
may be terminated at any time by the investor or the Funds.
RETIREMENT PLANS
Shareholders may adopt Profit Sharing Plan, Money Purchase Plan, IRA and other
retirement plans funded by Portfolio shares and other investment which plans
have been approved by the Internal Revenue Service.
The costs of these plans (exclusive of the retirement plans on which a $10
annual custodial fee is charged) are paid by the Distributor, except for the
normal cost of issuing shares, which is paid by the Portfolios of the Fund.
Additional information concerning these plans is available from the Distributor
upon request.
HOW TO EXCHANGE
SHARES AMONG THE
PORTFOLIOS
An exchange represents the sales of shares of one fund and the purchase of
shares of another, which may produce a gain or loss for tax purposes.
Shares of a Portfolio which are not subject to a CDSC exchange will be processed
at the net asset value next determined after the Transfer Agent receives your
exchange request. Shares of a Portfolio which are subject to a
35
<PAGE> 38
CDSC will be exchangeable on the basis of the relative net asset value per share
without payment of any CDSC which might otherwise be due upon redemption of the
shares of the Portfolio. For purposes of computing the CDSC that may be payable
upon a disposition of the shares acquired in the exchange, the holding period
for the previously owned shares of the Portfolio is "tacked" to the holding
period for the newly acquired shares of other Enterprise Portfolios. The
exchange feature may be modified or discontinued at any time, upon notice to
shareholders in accordance with applicable rules adopted by the Securities and
Exchange Commission ("SEC"). Your exchange may be processed only if the shares
of the fund to be acquired are eligible for sale in your state and if the
exchange privilege may be legally offered in your state.
EXCHANGES OF CLASS A SHARES. You may exchange your Class A shares for Class A
shares of any Enterprise Portfolio. Class A shares of any Enterprise Portfolio
cannot be exchanged for Class B or Y shares of any Enterprise Portfolio.
EXCHANGES OF CLASS B SHARES. Class B shares of all Enterprise Portfolios are
exchangeable for Class B shares of any other Enterprise Portfolio. Class B
shares of any Enterprise Portfolio cannot be exchanged for Class A or Y shares
of any Enterprise Portfolio.
EXCHANGES OF CLASS Y SHARES. Class Y shares of all Enterprise Portfolios are
exchangeable for Class Y shares of any other Enterprise Portfolio. Class Y
shares of any Enterprise Portfolio cannot be exchanged for Class A or B shares
of any Enterprise Portfolio.
Exchanges may be directed by:
1. calling: Enterprise Shareholder Services
1-800-368-3527
2. writing: Enterprise Shareholder Services
P.O. Box 419731
Kansas City, MO 64141-6731
The minimum initial investment rules applicable to a Portfolio apply to any
exchange where the exchange results in a new account being opened in such
Portfolio. Exchanges into existing accounts are not subject to a minimum amount.
Original investments in the Money Market Portfolio which are transferred to
other Portfolios are not considered Portfolio exchanges but purchases.
To exchange by letter, state the name of the Portfolio you are exchanging from,
the account name(s) and address, the account number, the dollar amount or number
of shares to be exchanged, and the Portfolio into which you are exchanging. Sign
your name(s) exactly as it appears on your account statement.
The Fund reserves the right not to allow the exercise of the exchange privilege
in less than two-week intervals. The Fund reserves the right to restrict the
exchange from any Portfolio until funds have been held in that Portfolio for at
least seven days. The Fund further reserves the right to discontinue or modify
the exchange privilege on a prospective basis at any time, including a
modification of the amount or terms of a service fee.
In addition, with regard to exchange requests made by market timers on behalf of
clients, the Fund reserves the right to delay settlement up to seven days if it
is determined by the Portfolio Manager that immediate settlement would harm the
Portfolio.
Before engaging in an exchange transaction, a shareholder should read carefully
the parts of this Prospectus describing the Portfolio into which the exchange
will occur. See "Investment Objectives and Policies of the Portfolios."
Shareholders must elect to authorize the Fund's transfer agent to act upon
telephone exchange requests. Shareholders are subject to risk should they elect
to exchange by telephone in that neither the Fund nor the Transfer Agent will be
liable for properly acting upon telephone instructions believed to be genuine.
The Fund employs reasonable
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<PAGE> 39
procedures to confirm that instructions communicated by telephone are genuine,
and should the Fund or its transfer agent fail to institute such procedures, it
may be liable for any losses due to unauthorized or fraudulent instructions.
Telephone exchanges are activated by instructions received from a shareholder or
any person claiming to act as the shareholder's representative who can provide
the Transfer Agent with account registration information.
Exchanges are taxable as redemptions on which gains or losses may be recognized.
HOW TO REDEEM
PORTFOLIO SHARES
Any shareholder may require the Fund to redeem his or her shares in any
Portfolio. The redemption price will be the net asset value per share next
determined after receipt of all required information.
REDEMPTIONS
Redemptions may be made: (1) by telephone; (2) in writing; (3) by wire, if the
appropriate request forms have been submitted; or (4) as to the Class A Money
Market Portfolio, by check writing. Payment for shares redeemed will be made
within seven days after the request has been properly made and received. Shares
purchased by check may not be redeemed until such shares have been on the Fund's
books for at least 15 calendar days.
TELEPHONE REDEMPTIONS
The Fund accepts telephone requests for redemptions from shareholders who have
authorized this service. Telephone requests for redemption may be made by
calling the Transfer Agent at 1-800-368-3527. Anyone making a telephone
redemption request must furnish: (1) the name and address of record of the
registered owner(s); (2) the account number; (3) the amount to be withdrawn; and
(4) the name of the person making the request. Checks for telephone redemptions
will be issued only to the registered shareowner(s) and mailed to the last
address of record or exchanged into any other Portfolio. All telephone
redemption instructions are recorded and are limited to requests of $50,000 or
less. Shareholders also have the option to have redemption proceeds transferred
directly to a bank account through the Automatic Clearing House (ACH) system.
All applicable bank information must be established on the account before this
type of redemption is initiated. Shareholders are subject to risk should they
elect to redeem by telephone in that neither the Fund nor the Transfer Agent
will be liable for properly acting upon telephone instructions believed to be
genuine. Should the Fund or its transfer agent fail to utilize reasonable
procedures, it may be liable for any losses due to unauthorized or fraudulent
instructions.
WRITTEN REDEMPTIONS
Redemption requests may be made in writing, accompanied by any issued share
certificates, to:
Enterprise Shareholder Services
P.O. Box 419731
Kansas City, MO 64141-6731
Such written redemption requests and any share certificates or a stock power
must be endorsed by the investor. A signature guarantee is required if the
redemption proceeds exceed $50,000 or the proceeds are to be sent to an address
other than the address of record or to a person other than the registered
holder. A signature guarantee may be secured from a member firm of a domestic
securities exchange or by a commercial bank, savings and loan association,
credit union or trust company. Further documentation may be requested, and a
signature guarantee is
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<PAGE> 40
always required, from corporations, executors, administrators, trustees or
guardians.
WIRE REDEMPTIONS
For a separate $10 charge, redemptions for a maximum of $250,000 will be wired
at your request. On written requests, funds may be wired to any bank. On a
telephone request, funds may be wired only to the bank previously designated by
you in writing. If a shareholder has given authorization for expedited wire
redemption, shares can be redeemed and the proceeds sent by federal wire
transfer to a single, previously designated bank account. Requests received
prior to 4:00 p.m. (New York time) by the Fund's Transfer Agent, will result in
shares being redeemed at the next determined net asset value, and the proceeds
normally will be sent to the designated bank account the following business day.
Delivery of the proceeds of a wire redemption request may be delayed by the Fund
for up to seven days if the Fund deems it appropriate under the then current
market conditions. Once authorization is on file, the Transfer Agent will honor
requests by any authorized person at 1-800-368-3527. This privilege may not be
used to redeem shares in certificated form. To change the name of the single
designated bank account to receive wire redemption proceeds, it is necessary to
send a written request with signature(s) guaranteed to the Transfer Agent.
CHECK WRITING
A check redemption feature is available on the Money Market Portfolio Class A
shares in accounts with opening balances of more than $5,000. Redemption Checks
may be made payable to the order of any person in any amount from $500 to
$100,000. Up to five Redemption Checks per month may be written without charge.
Each additional Redemption Check over five in any given month will be subject to
a $5 fee. Redemption Checks are free and may be obtained by contacting
Enterprise Shareholder Services, at the telephone number or address set forth
above. A $25 fee will be imposed on any account for stopping payment of a
Redemption Check upon request by the shareholder. It is not possible to use a
Redemption Check to close out an account since additional shares accrue daily.
Redemptions by check writing may be subject to a contingent deferred sales
charge as described below. The amount of the check will be honored in full only
if there are sufficient funds available in the account to cover the fee amount
of the check plus applicable contingent deferred sales charge, if any.
CONTINGENT DEFERRED SALES CHARGE --
LARGE ORDER NAV PURCHASE PRIVILEGE
A contingent deferred sales charge of 1% may be imposed upon redemption of Class
A shares that are purchased in an amount in excess of $1,000,000 if they are
redeemed within two years of purchase. The charge will not be imposed upon
redemption of reinvested dividends or share appreciation. The charge is applied
to the value of the shares redeemed excluding amounts not subject to the charge.
The contingent deferred sales charge will be waived in the event of: (a)
redemptions by a participant-directed qualified retirement plan described in
Code Section 401(a) or a participant-directed non-qualified deferred
compensation plan described in Code Section 457; (b) redemption of shares of a
shareholder (including a registered joint owner) who has died; (c) redemption of
shares of a shareholder (including a registered joint owner) who after purchase
of the shares being redeemed becomes totally disabled (as evidenced by a
determination by the federal Social Security Administration); and (d) redemp-
tions under the Fund's Systematic Withdrawal Plan at a maximum of 10% per year
of the net asset value of the account.
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<PAGE> 41
CONTINGENT DEFERRED SALES CHARGE --
CLASS B SHARES
A contingent deferred sales charge may be imposed upon redemption of Class B
shares. There is no such charge upon redemption of any share appreciation or
reinvested dividends on Class B shares. Appreciation is the difference between
the share cost of the lot (net asset value at time of purchase) and the current
price at the time of redemption multiplied by the number of shares redeemed.
Redemption must occur to realize appreciation. The charge is computed at the
following rates applied to the value of the shares redeemed excluding amounts
not subject to the charge.
<TABLE>
<CAPTION>
YEAR OF REDEMPTION AFTER CONTINGENT DEFERRED
PURCHASE SALES CHARGE
- ------------------------------- -------------------
<S> <C>
First.......................... 5%
Second......................... 4%
Third.......................... 4%
Fourth......................... 3%
Fifth.......................... 2%
Sixth.......................... 1%
</TABLE>
The following example will illustrate the operation of the contingent deferred
sales charge. Assume that an investor takes a single purchase of $10,000 of the
Fund's Class B shares and that 16 months later the value of the shares has grown
by $1,000 through reinvested dividends and by an additional $1,000 in
appreciation to a total of $12,000. If the investor were then to redeem the
$6,000 in share value, the contingent deferred sales charge would be payable
only with respect to $5,000 because neither the $500 of reinvested dividends nor
the $500 of share appreciation is subject to the charge. The charge would be at
the rate of 4% ($200) because it was in the second year after the purchase was
made.
The rate of the contingent deferred sales charge under the schedule above is
determined by the length of the period of ownership. Investments are tracked on
a daily basis. The period of ownership for this purpose begins the first day in
which the order for the investment is received. For example, an investment made
in June, 1995 will be eligible for the 4% charge if redeemed on or after June 1,
1996. In the event no specific order is requested, the redemption will be made
first from Class B shares representing dividends and then from the earliest
purchase of Class B shares.
The contingent deferred sales charge will be waived: (a) in the event of total
disability (as evidenced by a determination of the federal Social Security
Administration) of the shareholder (including a registered joint owner)
occurring after the purchase of shares being redeemed; (b) in the event of the
death of the shareholder (including registered joint owner); (c) for redemptions
made pursuant to a systematic withdrawal plan (see "Special
Features -- Systematic Withdrawal Plan" above); and (d) for redemptions made
pursuant to any IRA systematic withdrawal based on the shareholder's life
expectancy including, but not limited to, substantially equal periodic payments
described in Internal Revenue Code Section 72(t)(2)(A)(iv) prior to age 59-1/2
and required minimum distributions after age 70-1/2.
REDEMPTIONS -- GENERAL
The Fund's Articles of Incorporation provide that it may redeem its shares in
cash or with a pro rata portion of the assets of the appropriate Portfolio. To
date, all redemptions have been made in cash, and the Fund anticipates that all
redemptions will be made in cash in the future, but it reserves the right to
provide redemptions in assets of a Portfolio should considerations and the size
of the Portfolio require that method of redemption. The Fund has elected to
commit itself to pay in cash all requests for redemption by any shareholder of
record, limited in amount with respect to each shareholder during any 90-day
period to the lesser of: (i) $250,000 or (ii) 1% of the net asset value of the
Portfolio at the beginning of such period.
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<PAGE> 42
The Fund reserves the right to redeem an account at its option upon not less
than 45 days' written notice if an account's net asset value is $500 or less and
remains so during the notice period.
DISTRIBUTION PLANS
Class A and Class B shares of each Portfolio have adopted a separate
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plans, Class A and B shares of each of the Funds
are authorized to pay Enterprise Distributors a distribution fee for expenses
incurred in connection with the distribution of shares of the Portfolio and a
service fee for shareholder servicing.
CLASS A SHARES. Class A shares of each Portfolio pay Enterprise Distributors a
distribution fee at the annual rates of .45% of each Portfolio's average daily
net assets with the exception of the Money Market Portfolio which pays .30% of
the average daily net assets.
CLASS B SHARES. Class B shares of each Portfolio pay Enterprise Distributors a
distribution fee at the annual rate of .75% of each Portfolio's average daily
net assets with the exception of the Money Market Portfolio which pays a
distribution fee of .60% of average daily net assets. Class B shares of each
Portfolio will also pay a service fee at the annual rate of .25% of each
Portfolio's average daily net assets. The Plan for Class B shares include a
provision which contractually obligates the Class to continue payments to
Enterprise Distributors after such Plans have been terminated for certain
unreimbursed expenses (distribution expenses not reimbursed through distribution
fees paid by the Portfolio or CDSCs paid by Fund shareholders) incurred for
distribution of Class B shares prior to the termination of the Class B Plan. In
the event that a Class B Plan is terminated, Enterprise Distributors is entitled
to continue to receive the applicable distribution fee on Class B shares sold
prior to such termination, until Enterprise Distributors has recovered such
unreimbursed Class B distribution expenses incurred prior to such termination.
The Fund believes that under current accounting practice, a Portfolio's
obligation under its Class B Plan for continued payment of distribution fees
subsequent to the termination of such Plan is not currently required to be
recognized as a liability. In the event that such accounting practice is revised
and requires this obligation to be recorded as a liability, the Class B Plan
will be amended and Enterprise Distributors has agreed to waive receipt of
certain unreimbursed expenses to avoid the resulting decrease in the net asset
value per share of Class B shares.
CLASS Y SHARES. Enterprise Fund Distributors receives no compensation from the
Fund as principal distributor for Class Y shares and pays expenses of
distribution of this Class under the distribution agreement not otherwise paid
by dealers or other financial service firms.
USE OF DISTRIBUTION AND SERVICE FEES. All or a portion of the distribution fees
paid by either Class A or B shares may be used by Enterprise Distributors to pay
costs of printing reports and prospectuses for potential investors and the costs
of other distribution expenses. All or a portion of the service fees paid by the
Class A or Class B Plan may be paid to broker-dealers or others for the
provision of personal continuing services to shareholders, including such
matters as responding to shareholder inquiries concerning the status of their
accounts and assistance in account maintenance matters such as changes in
address. Payments under the Plans are not limited to amounts actually paid or
expenses actually incurred by Enterprise Distributors but cannot exceed the
maximum rate set by the Plans or by the Board. It is, therefore, possible that
Enterprise Distributors may realize a profit in a particular year as a result of
these payments. The Plans have the effect of increasing the Fund's expenses from
what they would otherwise be. The Board reviews the Fund's distribution and
service fee
40
<PAGE> 43
payments and may reduce or eliminate the fee at any time without further
obligation of the Portfolio except for the reimbursement of certain expenses as
provided under the Plan for Class B shares. The SAI contains more information
about the Adviser's Agreement and the Plans.
PERFORMANCE
COMPARISONS
Investors may look to mutual fund reporting services such as Lipper Analytical
Services, Inc., CDA Investment Technologies, Wiesenberger Dealer Services,
Computer Directions Adviser Services, Inc., Moody's Bond Survey Index, Nelson's
Investment Manager Data Base, Morningstar, Inc., Salomon Brothers Corporate Bond
Rate-of-Return Index, Shearson Lehman Municipal Bond Index, Bond-20 Bond Index
and mortgage trade and other publications to compare the performance of each
Portfolio with other mutual funds in that Portfolio's category. Comparative
performance information from these sources may be used by the Fund in
advertising.
From time to time, articles about the Fund regarding its performance or ranking
may appear in national publications such as Kiplinger's Personal Finance
Magazine, Money Magazine, Financial World, Morningstar, Dalbar, Value Line
Mutual Fund Survey, Personal Investors, Forbes, Fortune, Business Week, Wall
Street Journal, Donaghue and Barron's. Some of these publications may publish
their own rankings or performance reviews of mutual funds, including the Fund.
Reference to or reprints of such articles may be used in the Fund's promotional
literature.
From time to time, the Fund may advertise a Portfolio's "yield" and "total
return." Total return and yield are calculated separately for Class A, Class B
and Class Y shares. For Portfolios other than the Money Market Portfolio, the
yield for any 30-day (or one month) period is computed by dividing the net
investment income per share earned during such Period by the maximum public
offering price per share on the last day of the period, and then annualizing
such 30-day (or one month) yield in accordance with a formula prescribed by the
Securities and Exchange Commission which provides for compounding on a
semiannual basis.
Current annualized yield quotations for the Money Market Portfolio are based on
the Portfolio's net investment income per share for a seven-day period and
exclude any realized or unrealized gains or losses on portfolio securities. The
yield is computed by determining the net change in value for a hypothetical
account having a balance of one share at the beginning of the period, excluding
any realized or unrealized gains or losses, and dividing by the price per share
at the beginning of the period (expected to remain constant at $1). The net
change is then annualized by multiplying it by 365/7, with the current yield
figure carried to the nearest one-hundredth of one percent. The effective yield
of the Money Market Portfolio for a seven-day period is computed by expressing
the unannualized return for that period on a compounded, annualized basis.
A Portfolio may also advertise in items of sales literature an "actual
distribution rate" which is computed in the same manner as yield except that
actual income dividends declared per share during the period in question are
substituted for net investment income per share.
Advertisements of the Portfolio's total return disclose the Portfolio's average
annual compounded total return for its most recently completed fiscal year and
the appropriate periods since the Portfolio's inception. The Portfolio's total
return for each such period is computed by finding, through the use of a formula
prescribed by the Securities and Exchange Commission, the average annual
compounded rates of return over the period that would equate an assumed initial
amount invested to the value of the investment at the end of the period. For
purposes of
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<PAGE> 44
computing total return, income dividends and capital gains distributions paid on
shares of the Portfolio are assumed to have been reinvested when received and
the front end sales charge applicable to sales of Portfolio shares (other than
the Money Market Portfolio) is assumed to have been paid.
Any distribution rate, yield or total rate of return figure should not be
considered as representative of the performance of a Portfolio in the future. In
addition, the Income Portfolios' performance figures are not directly comparable
to those of bank deposits and other similar investments, which maintain a fixed
principal value and pay a fixed yield on the principal amount. These Portfolios'
net asset values are not fixed. They vary based not only upon the type, quality
and maturities of the securities held in the Portfolio, but also on the changes
in the current value of such securities and on changes in the Portfolios'
expenses. For narrative discussions of the Fund's performance including graphs
comparing Portfolios to various securities indexes, please request a copy of an
Annual Report to Shareholders from the Fund.
The Money Market Portfolio's actual yields will fluctuate, and are not
necessarily indicative of future actual yields. Actual yields are dependent on
such variables as portfolio quality, average portfolio maturity, the type of
instruments in which investments are made, changes in interest rates on money
market instruments, portfolio expenses and other factors.
MANAGEMENT OF THE FUND
DIRECTORS
The Board of Directors of the Fund is responsible for the management of the
business of the Fund under the laws of Maryland, and it is primarily responsible
for reviewing the activities of Enterprise Capital, the various Portfolio
Managers and the Distributor under the Investment Advisory and Portfolio Manager
Agreements and the Distributor's Agreement and Plan of Distribution which relate
to the operations of the Fund and its Portfolios. Information concerning the
Directors, including their names, positions, terms of office and principal
occupations during the past five years, is contained in the Statement of
Additional Information.
INVESTMENT ADVISER ARRANGEMENTS
The Fund has entered into an Investment Adviser's Agreement with Enterprise
Capital Management, Inc. ("Enterprise Capital") which, in turn, has Portfolio
Management agreements with each of the Portfolio Managers discussed below.
Enterprise Capital acts as the Portfolio Manager for the Money Market Portfolio.
It is Enterprise Capital's responsibility to select, subject to the Board of
Directors' review and approval, Portfolio Managers who have distinguished
themselves by able performance in their respective areas of responsibility and
to review their continued performance. Enterprise Capital is assisted in this
duty by Evaluation Associates, Inc., which has had 24 years of experience in
evaluating investment advisers for individuals and institutional investors.
Enterprise Capital is also responsible for conducting all operations of the Fund
except those operations contracted to the Transfer Agent and Custodian.
Enterprise Capital is a subsidiary of The Mutual Life Insurance Company of New
York ("MONY"), one of the nation's largest insurance companies. Enterprise
Capital, which was incorporated in 1986, served as principal investment adviser
to Alpha Fund, Inc., the predecessor of the Fund's Growth Portfolio. Enterprise
Capital's address is Atlanta Financial Center, 3343 Peachtree Road, N.E., Suite
450, Atlanta, Georgia 30326.
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<PAGE> 45
PORTFOLIO MANAGERS
The following sets forth certain information about each of the Portfolio
Managers, the annual rate of compensation as a percentage of the Portfolio's net
assets paid to Enterprise Capital ("Management Fee") and the portion of the
Management Fee that Enterprise Capital pays to the respective Portfolio
Managers. Typical minimum investment requirements for the Portfolio Managers
range from $1,000,000 to $50,000,000. Due to these high minimums, this level of
professional management was previously reserved for institutional investors and
high net worth individuals. Collectively, the Portfolio Managers manage assets
in excess of $232 billion.
GROWTH PORTFOLIO
The Portfolio Manager of the Growth Portfolio is Montag & Caldwell, Inc.
("Montag & Caldwell"). It has served as investment adviser to Alpha Fund, Inc.,
the predecessor of the Growth Portfolio, since the Fund was organized in 1968.
Ronald E. Canakaris, President and Chief Investment Officer, is responsible for
the day to day investment management of the Portfolio and has more than 32 years
experience in the investment industry. Montag & Caldwell and its predecessors
have been engaged in the business of providing investment counseling to
individuals and institutions since 1945. It is controlled by Allegheny
Corporation, a holding company owning 100% of the stock of Montag & Caldwell.
Total assets under management for all clients at March 31, 1996, approximated
$6.0 billion. Usual investment minimum: $10 million. Representative clients
include: Alexander & Alexander Services; Multimedia; and Wake Forest University.
Its address is 1100 Atlanta Financial Center, 3343 Peachtree Road, N.E.,
Atlanta, Georgia 30326. The Management Fee paid by the Growth Portfolio is .75%
of net assets, and the Portfolio Manager receives 40% of that fee for assets
under management up to $100,000,000; 33% for assets from $100,000,000 to
$200,000,000; and 27% for assets greater than $200,000,000. This fee is higher
than that of other growth funds. However, the Board of Directors has determined
that such a fee is reasonable in light of the services, investment decisions and
investment techniques employed by the Portfolio.
GROWTH AND INCOME PORTFOLIO
The Portfolio Manager of the Growth and Income Portfolio is 1740 Advisers, Inc.
("1740 Advisers"). It is a subsidiary of MONY. Its address is 1740 Broadway, New
York, New York 10019. John V. Rock, President and Director, is responsible for
the day to day investment management of the Portfolio and has more than 32 years
experience in the investment industry. Total assets under management (for the
Growth and Income Portfolio and all other accounts managed) at March 31, 1996,
were approximately $1.1 billion. Usual investment minimum: $20 million.
Representative clients are not disclosed due to confidentiality agreements.
The Management Fee paid by the Growth and Income Portfolio is .75% of net
assets, and the Portfolio Manager receives 40% of that fee for assets under
management up to $100,000,000; 33% for assets from $100,000,000 to $200,000,000;
and 27% for assets greater than $200,000,000. This fee is higher than that of
other growth and income funds. However, the Board of Directors has determined
that such a fee is reasonable in light of the services, investment decisions and
investment techniques employed by the Portfolio.
CAPITAL APPRECIATION PORTFOLIO
The Portfolio Manager of the Capital Appreciation Portfolio is Provident
Investment Counsel, Inc. ("PIC"). PIC traces its origins to an investment
partnership formed in 1951. PIC is a wholly owned subsidiary of United Asset
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<PAGE> 46
Management, Inc. Jeffrey J. Miller is a Managing Director of the firm and is
responsible for the day to day management of the Portfolio. He has more than 23
years experience in the investment industry. Representative clients include:
Avon Products, McGraw-Hill and International Paper Co. Its address is 300 North
Lake Avenue, Pasadena, California 91101. As of March 31, 1996, total assets
under management for all clients were $18.2 billion. Usual investment minimum:
$5 million.
The Management Fee is .75% and the Portfolio Manager receives 66% of that fee
for assets under management up to $100 million; .60% for assets under management
for the next $100 million; and .40% for assets thereafter. This fee is higher
than that of other capital appreciation funds. However, the Board of Directors
had determined that such a fee is reasonable in light of the services,
investment decisions and investment techniques employed by the Portfolio.
SMALL COMPANY PORTFOLIO
The Portfolio Manager of the Small Company Portfolio is GAMCO Investments, Inc.
("GAMCO"). Its offices are located at One Corporate Center, Rye, New York 10580.
GAMCO is a majority owned subsidiary of Gabelli Funds, Inc. GAMCO's predecessor,
Gabelli & Company, Inc., was founded in 1977 by Mario J. Gabelli who has served
as its chief investment officer since inception. He will be responsible for the
day-to-day management of the Portfolio and has more than 25 years of experience
in the investment industry. Representative clients include: AT&T; Halliburton
Co. and ITT Corp. As of March 31, 1996, total assets under management for all
clients were $5.1 billion. Usual investment minimum is $1 million.
The Management Fee is .75% and the Portfolio Manager receives 53% of that fee
for assets under management up to $1 billion, and 40% for assets in excess of $1
billion. This fee is higher than that of other small company funds. However, the
Board of Directors has determined that such a fee is reasonable in light of
services, investment decisions, and investment techniques employed by the
Portfolio.
INTERNATIONAL GROWTH PORTFOLIO
The Portfolio Manager of the International Growth Portfolio is Brinson Partners,
Inc. ("Brinson"). Day to day management of this Portfolio is performed by a
committee. Brinson Partners is a wholly owned subsidiary of Swiss Bank
Corporation. As of December 31, 1995, Brinson's assets under management for all
clients approximated $53 billion. Usual investment minimum: $25 million.
Representative clients are not disclosed due to confidentiality agreements.
Brinson's address is 209 South LaSalle Street, Chicago, Illinois 60604.
The Management Fee is .85%, and the Portfolio Manager receives 53% of that fee
for assets under management up to $100 million; 41% of that fee for assets under
management from $100 million to $200 million; 38% of that fee for assets from
$200 million to $500 million; and 29% of that fee for assets greater than $500
million.
GOVERNMENT SECURITIES PORTFOLIO
The Portfolio Manager of the Government Securities Portfolio is TCW Funds
Management, Inc. The firm, founded in 1971, is a wholly-owned subsidiary of TCW
Management Company, a Nevada corporation, whose direct and indirect
subsidiaries, including Trust Company of the West and TCW Asset Management
Company, provide a variety of trust, investment management and investment
advisory services. Philip A. Barach, Managing Director, and Jeffrey E. Gundlach,
Managing Director, are responsible for the day to day investment management of
the Portfolio and have more than 32 years combined experience in the investment
industry. As of March 31, 1996 TCW and its
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<PAGE> 47
affiliated companies had approximately $55 billion under management or committed
for management in various fiduciary and advisory capacities. Usual investment
minimum: $50 million. Representative clients are not disclosed due to
confidentially agreements. The firm's address is 865 South Figueroa Street,
Suite 1800, Los Angeles, California 90017.
The Management Fee is .60% and the Portfolio Manager receives 50% of that fee
for assets under management up to $50,000,000 and 42% of that fee for assets
under management greater than $50,000,000.
HIGH-YIELD BOND PORTFOLIO
The Portfolio Manager of the High-Yield Bond Portfolio is Caywood-Scholl Capital
Management ("Caywood-Scholl"). This firm was formed in April 1986 and the
following individuals own its stock: James Caywood, Eric Scholl and Salim Shah.
Mr. Caywood, Managing Director and Chief Executive Officer, is responsible for
the day to day management of the Portfolio. He has more than 27 years of
investment industry experience. Caywood-Scholl provides investment advice
exclusively with respect to high yield, low grade fixed income instruments. As
of March 31, 1996, assets under management for all clients approximated $643
million. Usual investment minimum: $1 million. Representative clients include:
Hospital Corporation of America; Colonial Penn Insurance; and Golden Rule
Insurance. The address of Caywood-Scholl Capital Management is 4350 Executive
Drive, Suite 125, San Diego, California 92121.
The Management Fee is .60%, and the Portfolio Manager receives 50% of that fee
for assets up to $100,000,000 and 42% of that fee for assets above $100,000,000.
TAX-EXEMPT INCOME PORTFOLIO
The Portfolio Manager of the Tax-Exempt Income Portfolio is Morgan Stanley Asset
Management, Inc. ("Morgan Stanley"), which was founded in 1975 and serves as
investment manager to a variety of institutional investors. Gerald P. Barth,
Vice President, is responsible for the day to day management of the Portfolio
and has more than 12 years industry experience. Morgan Stanley became a
wholly-owned subsidiary in 1981 of Morgan Stanley Group, Inc., which is a
publicly owned investment banking firm. As of March 31, 1996, Morgan Stanley
managed approximately $57.5 billion of assets for its various clients. Usual
investment minimum: $25 million. Representative Fortune 1000 and institutional
clients are not disclosed due to confidentiality agreements. Its address is 1221
Avenue of the Americas, New York, New York 10020.
The Management Fee is .50%, and the Portfolio Manager receives 50% of that fee
for assets under management up to $50,000,000 and 30% of that fee for assets
above $50,000,000.
MANAGED PORTFOLIO
The Portfolio Manager of the Managed Portfolio is OpCap Advisors, a majority
owned subsidiary of Oppenheimer Capital, a general partnership. The investments
of the Managed Portfolio are managed by Richard J. Glasebrook II, Managing
Director of Oppenheimer Capital. He has more than 22 years of investment
industry experience. As of March 31, 1996, Oppenheimer Capital and its
affiliates had over $40 billion under management. Its usual investment minimum
is $10 million. Representative clients include: Pacific Telesis Group;
Caterpillar, Inc.; and NY State Electric and Gas. Its address is One World
Financial Center, New York, New York 10281.
The Management Fee is .75% and the Portfolio Manager receives 53% of that fee
for assets up to $100,000,000 and
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<PAGE> 48
40% of that fee for assets in excess of $100,000,000. This fee is higher than
that of other flexible funds. However, the Board of Directors has determined
that such a fee is reasonable in light of the services and investment decisions
and investment techniques employed by the Portfolio.
MONEY MARKET PORTFOLIO
The Portfolio Manager of the Money Market Portfolio is Enterprise Capital, a
wholly-owned subsidiary of MONY. Its address is Atlanta Financial Center, 3343
Peachtree Road, N.E., Suite 450, Atlanta, Georgia 30326. Enterprise Capital
utilizes the services of The Mutual Life Insurance Company of New York employees
for certain services relating to management of the Portfolio. Day-to-day
management of the Portfolio is performed by a committee. MONY's address is 1740
Broadway, New York, New York 10019. Enterprise Capital began operating as
Portfolio Manager on May 1, 1992. Total money market assets in the Portfolio at
March 31, 1996, approximated $44.2 million. The Management Fee is .35%.
PAYMENT OF EXPENSES
The Investment Advisory Agreement obligates Enterprise Capital to provide
investment advisory services to the Portfolios of the Fund and to furnish the
Fund with certain administrative, clerical, bookkeeping and statistical
services, office space and facilities and for paying the compensation of the
officers of the Fund. Each Portfolio pays all other expenses incurred in its
operation, and a portion of the Fund's general administrative expenses is
allocated to each Portfolio either on the basis of its asset size, on the basis
of special needs of such Portfolio, or equally, as is deemed appropriate. These
expenses include expenses such as: custodial, transfer agent, brokerage,
auditing and legal services, the printing of Prospectuses sent to existing
shareholders, expenses relating to bookkeeping and recording and determining the
net asset value of shares, and the expenses of qualification of a Portfolio's
shares under the federal and state securities laws. The Fund's Board of
Directors annually reviews allocation of expenses among the Portfolios.
Enterprise Capital has advised the Fund that it will reimburse such portion of
the fees due to it under the Investment Adviser's Agreement as is necessary to
assure, for the period commencing January 1, 1996 and ending no earlier than
December 31, 1996, that expenses incurred by the Portfolios will not exceed the
following percentages of average annual assets (annualized for periods of less
than a fiscal year): Growth (A) 1.60%; (B) 2.15%; Growth and Income (A) 1.5%;
(B) 2.05%; Capital Appreciation (A) 1.75%; (B) 2.30%; Small Company (A) 1.75%;
(B) 2.30%; (Y) 1.30%; International Growth (A) 2.0%; (B) 2.55%; (Y) 1.55%;
Government Securities (A) 1.3%; (B) 1.85%; High-Yield Bond (A) 1.3%; (B) 1.85%;
Tax-Exempt Income (A) 1.25%; (B) 1.80%; Managed (A) 1.75%; (B) 2.30%; (Y) 1.30%;
and Money Market (A) 1.0%; (B) 1.55%. The Portfolio Managers have advised the
Fund that they may assist in a portion of the above-referenced reimbursement
from time to time.
Enterprise Capital and the Fund entered into two agreements pursuant to which
Enterprise Capital advanced on behalf of the Fund; $33,748 to cover the costs of
expanding the series to include a Small Company Portfolio and $43,278 of
expanding the series to include a Managed Portfolio and completing the
appropriate registrations under the Investment Company Act of 1940, the
Securities Act of 1933, and certain state securities laws. The agreements
provide that these amounts will be repaid by the Small Company Portfolio and the
Managed Portfolio in five equal annual increments without interest, commencing
at the end of the first fiscal year at which each such Portfolio have total net
assets of $5 million or more. Both Portfolios have commenced such payments.
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<PAGE> 49
TAXES
Each Portfolio of the Fund has qualified and intends to continue to qualify as a
"regulated investment company" in 1995 under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"). For purposes of the Code, each
Portfolio is regarded as a separate regulated investment company. If any
Portfolio qualifies as a "regulated investment company" and complies with
provisions of the Code which require regulated investment companies to
distribute substantially all of their net income (both ordinary income and
capital gain), the Portfolios will be relieved of federal income tax on the
amounts distributed.
Dividends declared out of a Portfolio's net investment income, taking account of
its realized short-term capital gains to the extent that they exceed its
realized short-term capital losses but not taking account its realized long-term
capital gains and losses, are taxable to its shareholders as ordinary income,
whether such dividends are received in cash or additional shares. If, for any
taxable year, a Portfolio complies with certain requirements, some or all of the
dividends (excluding capital gain dividends, as defined in the Code) received by
the Portfolio's corporate shareholders may qualify for the 70% dividends
received deduction available to corporations.
Distributions declared out of a Portfolio's realized net capital gain (realized
net long-term capital gains in excess of realized net short-term capital losses)
and designated by the Portfolio as a capital gain dividend in a written notice
to the shareholders are taxable to such shareholders as long-term capital gain
without regard to the length of time a shareholder has held stock of the
Portfolio and regardless of whether paid in cash or additional shares.
The Portfolios may be required to withhold for federal income taxes 31%
("Back-Up Withholding") of the distributions and the proceeds of redemptions
payable to shareholders who fail to comply with regulations requiring that they
provide a correct social security or taxpayer identification number or to make
required certifications, or who have been notified by the Internal Revenue
Service that they are subject to back-up Withholding. Corporate shareholders and
certain other shareholders specified in the Code are exempt from Back-Up
Withholding.
Distributions from retirement plans are also subject to 20% federal withholding
if the shareholder fails to provide a tax identification number to the trustee
or custodian and funds are not rolled over.
No gain or loss will be recognized by Class B shareholders upon the conversion
of Class B shares into Class A shares.
TAX-EXEMPT INCOME PORTFOLIO
Dividends derived from interest on Municipal Securities and designated by the
Portfolio as exempt interest dividends by written notice to the shareholders,
under existing law, are not subject to federal income tax. Dividends derived
from net long-term capital gains realized by the Portfolio are taxable to
shareholders as a capital gain upon distribution. Any short-term capital gains
or any taxable interest income realized by the Portfolio will be distributed as
a taxable ordinary income dividend distribution. These rules apply whether such
distribution is made in cash or in additional shares. The percentage of income
that is tax-exempt is applied uniformly to all distributions made by the
Portfolio during each year. As with shares in all Portfolios, a sale, exchange
or redemption of shares in the Tax-Exempt Income Portfolio is a taxable event
and may result in capital gain or loss. In addition, generally any capital loss
realized from shares held for six months or less is disallowed to the extent of
tax-exempt dividend income received.
The Tax-Exempt Income Portfolio declares and pays dividends monthly on the last
business day of the month. When a shareholder redeems shares of the Portfolio on
47
<PAGE> 50
other than a dividend payment date, a portion of the shareholder's redemption
proceeds will represent accrued tax-exempt income which will be treated as part
of the amount realized for purposes of capital gains computations for federal
and state or local income tax purposes and will not be tax-exempt.
The Tax Reform Act of 1986 makes income from certain "private activity" bonds
issued after August 7, 1986, an item of tax preference for the alternative
minimum tax at a maximum rate of 28% for individuals and 20% for corporations.
If the Portfolio invests in private activity bonds, shareholders may be subject
to the alternative minimum tax on that part of such Portfolio distributions
derived from interest income on those bonds. The Tax-Exempt Income Portfolio
does not intend to invest more than 20% of its assets in private activity bonds.
In higher income brackets, up to 85% of an individual's Social Security benefits
may be subject to federal income tax. Along with other factors, total tax-exempt
income, including any tax-exempt dividend income from the Portfolio, is taken
into account in determining that portion of Social Security benefits which is
taxed.
The treatment for state and local tax purpose of distributions from the
Tax-Exempt Income Portfolio representing Municipal Securities interests will
vary according to the laws of state and local taxing authorities.
FOREIGN INCOME TAXES
Investment income received by the International Growth Portfolio from sources
within foreign countries may be subject to foreign income taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries which entitle the Portfolio to a reduced rate of tax or exemption from
tax on such income. It is impossible to determine the effective rate of foreign
tax in advance since the amount of these Portfolio's assets to be invested
within various countries is not known. The Portfolio intends to operate so as to
obtain treaty-reduced rates of tax where applicable.
To the extent that this Portfolio is liable for foreign income taxes withheld at
the source, the Portfolio also intends to operate so as to meet the requirements
of the Code to "pass through" to the Portfolio's shareholders credits for
foreign income taxes paid, but there can be no assurance that the Portfolio will
be able to do so.
EXCISE TAX
The Federal tax laws impose a four percent nondeductible excise tax on each
regulated investment company with respect to the amount, if any, by which such
company does not meet distribution requirements specified in such tax laws. Each
Portfolio of the Fund intends to comply with such distribution requirements and
thus does not expect to incur the four percent nondeductible excise tax.
GENERAL
The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury Regulations in effect, as currently interpreted by the
Courts and by the Internal Revenue Service in published revenue rulings and in
private letter rulings and is only applicable to U.S. persons. These
interpretations can be changed at any time. For the complete provisions,
reference should be made to the pertinent Code sections and the Treasury
Regulations promulgated thereunder. The above discussion covers only federal
income tax considerations with respect to the Portfolios and their shareholders.
State and local tax laws vary greatly, especially with regard to the treatment
of exempt-interest dividends. Shareholders should consult their own tax advisers
for more information regarding the federal, state, and local tax treatment of
each Portfolio's shareholders.
48
<PAGE> 51
Statements indicating the tax status of distributions to each shareholder will
be mailed to each shareholder annually.
DIVIDENDS AND
DISTRIBUTIONS
It is the Fund's intention to distribute substantially all of the net investment
income and realized net capital gains, if any, of each Portfolio. The per share
dividends and distribution on each class of shares of a Portfolio will be
reduced as a result of any service fees applicable to that class. For dividend
purposes, net investment income of each Portfolio will consist of substantially
all dividends received, interest accrued, net short-term capital gains realized
by such Portfolio less the estimated expenses of such Portfolio.
Unless shareholders request otherwise, by notifying the Fund's Transfer Agent,
dividends and capital gains distributions will be automatically reinvested in
shares of the respective Portfolio at net asset value; such reinvestments
automatically occur on the payment date of such dividends and capital gains
distributions. At the election of any shareholder, dividends or capital gains
distributions, or both, will be distributed in cash to such shareholders.
However, if it is determined that the U.S. Postal Service cannot properly
deliver Fund mailings to the shareholder, the respective Portfolios will
terminate the shareholder's election to receive dividends and other
distributions in cash. Thereafter, the shareholder's subsequent dividends and
other distributions will be automatically reinvested in additional shares of the
respective Portfolios until the shareholder notifies the Transfer Agent or the
Portfolio in writing of his or her correct address and requests in writing that
the election to receive dividends and other distributions in each be reinstated.
Distributions of capital gains from each of the Portfolios, other than the Money
Market Portfolio, are made annually. Dividends from investment income of the
Equity Portfolios (except the Growth and Income Portfolio) and Managed Portfolio
are declared and paid annually. Dividends on the Growth and Income Portfolio are
paid semiannually. Dividends from investment income of the Income Portfolios are
declared daily and paid monthly. Dividends from investment income and any net
realized capital gains of the Money Market Portfolio are declared daily and
reinvested monthly in additional shares of the Money Market Portfolio at net
asset value.
BROKERAGE
TRANSACTIONS
Each Portfolio Manager selects the brokerage firms which complete portfolio
transactions for that Portfolio, subject to the overall direction and review of
Enterprise Capital and the Board of Directors of the Fund.
The initial criterion which must be met by any Portfolio Manager in selecting
brokers and dealers to effect securities transactions for a Portfolio is whether
such brokers and dealers can obtain the most favorable combination of price and
execution for the transaction. This does not mean that the execution decision
must be based solely on whether the lowest possible commission costs may be
obtained. In seeking to achieve the best combination of price and execution, the
Portfolio Managers evaluate the overall quality and reliability of
broker-dealers and the service they provide, including their general execution
capability, reliability and integrity, willingness to take positions in
securities, general operational capabilities and financial condition. All
brokerage transactions shall comply with Investment Company Act Rule 17e-1.
Subject to this primary objective, the Portfolio Managers may select for
brokerage transactions those firms which furnish brokerage and research services
to the Fund, Enter-
49
<PAGE> 52
prise Capital, and the respective Portfolio Managers, or those firms who agree
to pay certain of the Fund's expenses, including certain custodial and transfer
agent services, and, consistent with the National Association of Securities
Dealers, Inc. Rules of Fair Practice, those firms which have been active in
selling shares of the Fund.
GENERAL
INFORMATION
ORGANIZATION OF FUND
The Fund was incorporated January 2, 1968, as Alpha Fund, Inc., and its name was
changed to The Enterprise Group of Funds, Inc. on September 14, 1987, and it
expanded into a series fund and Alpha Fund became the Growth Portfolio of the
Fund. The Money Market Portfolio was added commencing May 1, 1990; the Small
Company Portfolio was added commencing October 1, 1993; and the Managed
Portfolio was added commencing October 3, 1994. Class A, B and Y shares were
established May 1, 1995. The Fund is a Maryland corporation. Each Portfolio of
the Fund is diversified, as that term is defined in the Investment Company Act
of 1940.
CAPITAL STOCK
The authorized capital stock of the Fund consists of Common Stock, par value
$0.10 per share. The shares of Common Stock are divided into ten series with
each series representing a separate Portfolio. The Board of Directors may
determine the number of authorized shares for each series and to create new
series of Common Stock. It is anticipated that new classes will be authorized by
the Board from time to time as new Portfolios with separate investment
objectives and policies are established.
Each class of shares is entitled to participate in dividends and distributions
declared by the respective Portfolios and in net assets of such Portfolios upon
liquidation or dissolution remaining after satisfaction of outstanding
liabilities, except that each Class will bear its own distribution and
shareholder servicing charges. The shares of each Portfolio, when issued, will
be fully paid and nonassessable, have no preference, preemptive, conversion,
exchange or similar rights, and will be freely transferable. Holders of shares
of any Portfolio are entitled to redeem their shares as set forth under "How to
Redeem Fund Shares."
VOTING RIGHTS
Shares of each Portfolio are entitled to one vote per share and fractional votes
for fractional shares. The Fund's shareholders have the right to vote on the
election of Directors of the Fund and on any and all other matters on which, by
law or the provisions of the Fund's bylaws, they may be entitled to vote.
Each series (i.e., Portfolio) of the Fund is further divided into three classes
of shares: Class A, Class B and Class Y. Class A, Class B and Class Y shares
represent interests in the same assets of a Portfolio and are identical in all
respects, except that Class A and Class B shares bear certain expenses related
to distribution and servicing of such shares.
On matters relating to all Portfolios or Classes of shares and affecting all
Portfolios or Class of shares in the same manner, shareholders of all Portfolios
or Classes of shares are entitled to vote. On any matters affecting only one
Portfolio, only the shareholders of that Portfolio are entitled to vote. On
matters relating to all the Portfolios but affecting the Portfolios differently,
separate votes by Portfolio are required. Each class has exclusive voting rights
with respect to matters related to distribution and servicing expenditures, as
applicable.
The Fund and its Portfolios are not required by Maryland law to hold annual
meetings of shareholders under normal
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<PAGE> 53
circumstances. The Board of Directors or the shareholders may call special
meetings of the shareholders for action by shareholder vote, including the
removal of any or all of the Directors, as may be required by either the
Articles of Incorporation or bylaws of the Fund, or the Investment Company Act
of 1940. Shareholders possess certain rights related to shareholder
communications which, if exercised, could facilitate the calling by shareholders
of a special meeting.
CUSTODIAN, TRANSFER AND DIVIDEND
DISBURSING AGENT
State Street Bank & Trust Company of Boston, Massachusetts acts as Custodian of
the Fund's assets.
National Financial Data Services, Inc. acts as the Fund's Transfer Agent and
Dividend Disbursing Agent. National Financial Data Services, Inc. is a joint
venture of State Street Bank & Trust Company of Boston, Massachusetts and DST
Systems, Inc. of Kansas City, Missouri.
REPORTS TO SHAREHOLDERS
The Fund sends to all its shareholders annual and semiannual reports, including
a list of investment securities held in the Portfolios.
APPENDIX
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Securities are notes and bonds issued by or on behalf of states,
territories and possessions of the United States and the District of Columbia
and their political subdivisions, agencies and instrumentalities, the interest
on which is exempt from federal income taxes and, in certain instances,
applicable state or local income taxes. These securities are traded primarily in
the over-the-counter market.
Municipal Securities are issued to obtain funds for various public purposes,
including the construction of a wide range of public facilities such as
airports, bridges, highways, housing, hospitals, mass transportation, schools,
streets, water and sewer works and gas and electric utilities. Municipal
Securities may also be issued in connection with the refunding of outstanding
Municipal Securities obligations, obtaining funds to lend to other public
institutions and for general operating expenses. Industrial Development Bonds
("IDBs") are issued by or on behalf of public authorities to obtain funds to
provide privately operated facilities for business and manufacturing, housing,
sports, pollution control, and for airport, mass transit, port and parking
facilities and are considered tax-exempt bonds if the interest thereon is exempt
from federal income taxes.
The two principal classifications of tax-exempt bonds are "general obligation"
and "revenue." General obligation bonds are secured by the issuer's pledge of
its full faith and credit and taxing power for the payment of principal and
interest. Revenue bonds are payable only from the revenues derived from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise tax or other specific revenue source. Although IDBs are
issued by municipal authorities, they are generally secured only by the revenues
derived from payment of the industrial user. The payment of principal and
interest on IDBs is dependent solely upon the ability of the user of the
facilities financed by the bonds to meet its financial obligations and the
pledge, if any, of real and personal property so financed as security for such
payment.
Tax-exempt notes are of short maturity, generally less than three years. They
include such securities as Project Notes, Tax Anticipation Notes, Revenue
Anticipation Notes, Bond Anticipation Notes and Construction Loan Notes.
Tax-exempt commercial paper consists of short term obligations generally having
a maturity of less than nine months.
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<PAGE> 54
New issues of Municipal Securities are normally offered on a when-issued basis,
which means that delivery and payment for these securities normally takes place
15 to 45 days after the date of commitment to purchase.
Yields of Municipal Securities depend upon a number of factors, including
economic, money and capital market conditions, the volume of Municipal
Securities available, conditions within the Municipal Securities market, and the
maturity, rating and size of individual offerings. Changes in market values of
Municipal Securities may vary inversely in relation to changes in interest
rates. The magnitude of changes in market values in response to changes in
market rates of interest typically varies in proportion to the quality and
maturity of obligations. In general, among Municipal Securities of comparable
quality, the longer the maturity, the higher the yield, and the greater
potential for price fluctuations.
FLOATING RATE AND VARIABLE RATE SECURITIES
The Tax-Exempt Income Portfolio may invest in floating rate and variable rate
tax-exempt securities. These securities are normally IDBs or revenue bonds that
provide that the rate of interest is set as a specific percentage of a
designated base rate, such as rates of treasury bills or bonds or the prime rate
at a major commercial bank and provide that the holders of the securities can
demand payment of the obligation on short notice at par plus accrued interest,
which amount may be more or less than the amount initially paid for the bonds.
Floating rate securities have an interest rate which changes whenever there is a
change in the designated base interest rate, while variable rate securities
provide for a specific periodic adjustment in the interest rate. Frequently such
securities are secured by letters of credit or other credit support arrangements
provided by banks. The quality of the underlying credit or of the bank, as the
case may be, must be equivalent to the long-term bond or commercial paper rating
stated above.
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<PAGE> 55
THE ENTERPRISE GROUP OF FUNDS, INC.
STATEMENT OF ADDITIONAL INFORMATION
-------------------------------
EQUITY PORTFOLIOS:
Growth Portfolio
Growth and Income Portfolio
Capital Appreciation Portfolio
Small Company Portfolio
International Growth Portfolio
INCOME PORTFOLIOS:
Government Securities Portfolio
High-Yield Bond Portfolio
Tax-Exempt Income Portfolio
FLEXIBLE PORTFOLIO:
Managed Portfolio
MONEY MARKET PORTFOLIO:
Money Market Portfolio
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Fund's Prospectus.
A copy of the Prospectus may be obtained by writing to the Fund at 3343
Peachtree Road, N.E., Suite 450, Atlanta, Georgia 30326, or by calling the Fund
at the following numbers:
1-800-432-4320
1-800-368-3527 (SHAREHOLDER SERVICES)
The date of the Prospectus to which this Statement of Additional
Information relates is July 1, 1996.
The date of this Statement of Additional Information is July 1, 1996.
<PAGE> 56
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
General Information and History . . . . . . . . . . . . . .
(See Prospectus - General Information)
Investment Objectives and Policies. . . . . . . . . . . . .
(See Prospectus - Investment Objectives and
Policies of the Portfolios)
Management of the Fund . . . . . . . . . . . . . . . . . .
(See Prospectus - Management of the Fund)
Investment Advisory and Other Services . . . . . . . . . .
Investment Advisory Agreement . . . . . . . . . . . .
Portfolio Managers . . . . . . . . . . . . . . . . . .
Distributor's Agreement and Plan of Distribution . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . .
(See Prospectus - Management of the Fund)
Purchase, Redemption and Pricing of Securities
Being Offered . . . . . . . . . . . . . . . . . . . . . . .
Services for Investors . . . . . . . . . . . . . . . .
(See Prospectus - How to Purchase Portfolio Shares;
How to Redeem Portfolio Shares)
Redemptions in Kind . . . . . . . . . . . . . . . . . . . .
Determination of Net Asset Value . . . . . . . . . . . . .
Portfolio Transactions and Brokerage . . . . . . . . . . .
Performance Comparisons . . . . . . . . . . . . . . . . . .
Custodian . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Accountants . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . .
Appendix . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
- 2 -
<PAGE> 57
GENERAL INFORMATION AND HISTORY
The Enterprise Group of Funds, Inc. (the "Fund") was incorporated January
2, 1968 as Alpha Fund, Inc. Its name was changed to The Enterprise Group of
Funds, Inc. on September 14, 1987, and at that same time: (i) the Fund's Board
of Directors was authorized to establish any number of series of common stock
of the Fund, each of which series would represent stock in a separate
Portfolio; (ii) each outstanding share of the common stock of Alpha Fund, Inc.
became one share of the newly established Growth Portfolio; and (iii) the Fund
was reincorporated as a Maryland corporation with the shares of the Common
Stock of the Fund divided into nine classes consisting of a separate class for
each Portfolio. On May 31, 1989, the Fund's GNMA and Corporate Portfolios were
combined with the Government Securities Portfolio reducing the number of Fund
Portfolios to eight. Effective May 1, 1990, the Fund added its Money Market
Portfolio. Effective April 21, 1993, the Fund liquidated the Precious Metals
Portfolio. Effective October 1, 1993, the Fund added its Small Company
Portfolio and effective October 3, 1994, the Fund added its Managed Portfolio.
Effective May 1, 1995, the Fund added Class B and Class Y shares.
INVESTMENT OBJECTIVES AND POLICIES
EQUITY PORTFOLIOS
GROWTH PORTFOLIO - Capital appreciation, primarily through investments in
common stocks.
GROWTH AND INCOME PORTFOLIO - A combination of growth and income to
achieve an above average and consistent total return, primarily from
investments in dividend paying common stocks.
CAPITAL APPRECIATION PORTFOLIO - Maximum capital appreciation, through
investments in common stock of companies that demonstrate accelerating earnings
momentum and consistently strong financial characteristics.
SMALL COMPANY PORTFOLIO - Maximum capital appreciation primarily,
primarily through investment in the equity securities of companies which have a
market capitalization of no more than $1 billion.
- 3 -
<PAGE> 58
INTERNATIONAL GROWTH PORTFOLIO - Capital appreciation, primarily through a
diversified portfolio of non-U.S. equity securities.
The International Growth Portfolio Manager believes that, over the long
term, investing across international equity markets based upon discrepancies
between market prices and fundamental values may achieve a positive enhancement
for the Portfolio's investment performance relative to the returns from the
Benchmark.
Fundamental value is considered to be the current value of long-term,
sustainable future cash flows derived from a given asset class or security. In
determining fundamental value, the Portfolio Manager examines the relative
price to value of the investment opportunity based upon the prospects for
relative economic growth among countries, regions or geographic areas; expected
levels of inflation; government policies influencing business conditions; and
- 4 -
<PAGE> 59
the outlook for currency relationships. Investment decisions are based on
comparisons of current market prices to fundamental values.
Although it may invest anywhere in the world, it is expected that the
Portfolio will primarily invest in the equity markets included in the Morgan
Stanley Capital International Non-U.S. Equity (Free) Index which currently are
Japan, the United Kingdom, Germany, France, Canada, Italy, the Netherlands,
Australia, Switzerland, Spain, Hong Kong, Belgium, Singapore, Malaysia, Sweden,
Denmark, Norway, New Zealand, Austria, Finland and Ireland. The composition of
the Index may change over time, according to criteria established by Morgan
Stanley.
The "Asset Allocation Mix," set forth below, represents the asset
allocation mix based on the Benchmark as of December 31, 1995, and may shift
over time as the Benchmark index weights change.
<TABLE>
<CAPTION>
Asset Class Asset Allocation Mix Asset Class Strategy Ranges
- ----------- -------------------- ---------------------------
<S> <C> <C>
Non-U.S. Equities 100% 80-100%
Cash and Cash 0% 0-20%
---
Equivalents 100%
</TABLE>
The "asset class strategy ranges" indicated above are the ranges within
which the Fund expects to make its active asset allocations to specific asset
classes. Under all but unusual market conditions, the Portfolio expects to
adhere to the strategy ranges set forth above. However, the Portfolio's
strategy ranges may be exceeded by the Portfolio under unusual market
conditions.
INCOME PORTFOLIOS
GOVERNMENT SECURITIES PORTFOLIO - Current income and safety of principal,
primarily from securities that are obligations of the U.S. Government, its
agencies, and instrumentalities.
HIGH-YIELD BOND PORTFOLIO - Maximum current income, primarily from debt
securities that are rated Ba or lower by Moody's Investors Service, Inc. or BB
or lower by Standard & Poor's Corporation.
TAX-EXEMPT INCOME PORTFOLIO - A high level of current income exempt from
Federal income tax, with consideration given to preservation of principal,
primarily from investment in a diversified portfolio of long-term investment
grade municipal bonds.
FLEXIBLE PORTFOLIO
MANAGED PORTFOLIO - Growth of capital over time through investment in a
portfolio consisting of common stocks, bonds and cash equivalents, the
percentages of which will vary based on management's assessments of relative
investment values.
- 5 -
<PAGE> 60
MONEY MARKET PORTFOLIO
MONEY MARKET PORTFOLIO - The highest possible income consistent with
preservation of capital and liquidity by investing in obligations maturing in
one year or less.
The investment policies of the Portfolios along with a description of the
securities in which the Portfolios invest, certain risks connected with
investments in the Portfolios, and a description of investment techniques used
by the Portfolios are set forth in the Prospectus.
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions which cannot be
changed as to any individual Portfolio without approval by the holders of a
majority of the outstanding shares of the relevant Portfolio. (As used - in
this Statement of Additional Information, "a majority of the outstanding shares
of the relevant Portfolio" means the lessor of (i) 67% of the shares of the
relevant Portfolio represented at a meeting at which more than 50% of the
outstanding shares of that Portfolio are represented in person or by proxy or
(ii) more than 50% of the outstanding shares of the relevant Portfolio.)
Except as otherwise set forth, none of the Portfolios may:
1. Purchase the securities of any issuer if such purchase would cause
more than 5% of the value of its assets to be invested in the securities of
such issuer (except U.S. Government securities or those of its agencies or
instrumentalities), or purchase more than 10% of the outstanding securities, or
more than 10% of the outstanding voting securities, of any issuer.
2. Purchase securities of any company with a record of less than three
years continuous operation (including that of predecessors) if such securities
would cause the Portfolio's investment in such companies taken at cost to
exceed 5% of the value of the Portfolio's total assets. (The High Yield Bond
and Tax-Exempt Income Portfolios are not subject to this restriction.)
3. Purchase securities on margin, but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities and may make initial and maintenance margin deposits in connection
with options and futures contracts as permitted by its investment program.
4. Make short sales of securities, unless at the time of such sale, it
owns, or has the right to acquire at no additional cost to the Portfolio as the
result of the ownership of convertible or exchange securities, an equal amount
of such securities, and it will retain such securities so long as it is in a
short portion as to them. In no event will a Portfolio make short sales of
securities in such a manner that the value of its net assets used to cover such
sales would exceed 15% of the value of its net assets at any time. The short
sales of the type described above, which are called "sales against the box,"
may be used by a Portfolio when management believes that they will protect
- 6 -
<PAGE> 61
profits or limit losses in investments and would be used chiefly in deferring a
tax gain or loss.
5. Borrow money, except that a Portfolio may borrow from banks as a
temporary measure for emergency purposes and not for investment, in which case
such borrowings may not be in excess of the lesser of: (a) 5% of its total
assets taken at cost; or (b) 5% of the value of its assets at the time that the
loan is made. A Portfolio will not purchase securities while borrowings are
outstanding. A Portfolio will not pledge, mortgage or hypothecate its assets
taken at market value to an extent greater than the lesser of 10% of the value
of its net assets or 15% of the value of its total assets taken at cost.
6. Purchase or retain the securities of any issuer if those officers and
directors of the Fund or of its investment advisor holding individually more
than 1/2 of 1% of the securities of such issuer together own more than 5% of
the securities of such issuer.
7. Purchase the securities of any other investment company except in the
open market in a transaction involving no commission or profit to a sponsor or
dealer (other than the customary sales load or broker's commission) or as a
part of a merger, consolidation, acquisition or reorganization.
8. Invest in real estate; this restriction does not prohibit the Fund from
investing in the securities of real estate investment trusts.
9. Invest for the purpose of exercising control of management of any
company.
10. Underwrite securities issued by others except to the extent that the
disposal of an investment position may qualify the Portfolio or the Fund as an
underwriter as that term is defined under the Securities Act of 1933, as
amended,
11. Except for the Money Market Portfolio, make any investment which would
cause more than 25% of the total assets of the Portfolio to be invested in
securities issued by companies principally engaged in any one industry;
provided, however, that: (i) this limitation does not apply to investments in
U.S. Government Securities as well as its agencies and instrumentalities,
general obligation bonds, municipal securities other than industrial
development bonds issued by non-governmental users, and (ii) utility companies
will be divided according to their services (for example, gas, gas
transmission, electric, electric and gas, and telephone will each be considered
a separate industry). The Money Market Portfolio may invest more that 25% of
its total assets in U.S. Government Securities as well as its agencies and
instrumentalities and certain bank instruments issued by domestic banks. The
instruments in which the Money Market Portfolio may invest in excess of 25%, in
the aggregate, of its total assets are letters of credit and guarantees,
negotiable certificates of deposit, time deposits, commercial paper and bankers
acceptances meeting the investment criteria for the Money Market Portfolio.
- 7 -
<PAGE> 62
12. Participate with others in any trading account. This restriction does
not prohibit the Fund or any Portfolio from combining portfolio orders with
those of other Portfolios or other clients of the investment adviser or
Portfolio Managers when to do so would permit the Fund and one or more
Portfolios to obtain a large-volume discount from ordinary brokerage
commissions when negotiated rates are available. (See "Portfolio Transactions
and Brokerage" below.)
13. Invest more than 10% of the value of its assets in securities which
are subject to legal or contractual restrictions on resale or are otherwise not
readily saleable.
In addition, management of the Fund has adopted the following restrictions
which apply to all of the Portfolios and may be changed only by the Board of
Directors of the Fund. No Portfolio will: (i) lend its assets to any person
or individual, except by the purchase of bonds or other debt obligations
customarily sold to institutional investors, (ii) invest more than 5% of the
value of its net assets, valued at the lower of cost or market, in warrants
(Included in that amount, but not to exceed 2% of the value of the Portfolio's
net assets, may be warrants which are not listed on the New York or American
Stock Exchanges. Warrants acquired by a Portfolio in units or attached to
securities may be deemed to be without value.), or (iii) invest in oil, gas, or
other mineral leases or engage in arbitrage transactions.
- 8 -
<PAGE> 63
DIRECTORS AND OFFICERS
The directors and officers of the Fund, and their principal occupations
during the past five years, are set forth below. Directors who are "interested
persons", as defined in the 1940 Act, are denoted by an asterisk. As to their
duties relative to the Fund, the address of each is 3343 Peachtree Road, N.E.,
Ste. 450, Atlanta, GA 30326.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, AGE AND POSITION WITH THE FUND PAST FIVE YEARS
- ------------------------------------ ---------------
<S> <C>
Arthur T. Dietz (72) President, ADV Advisory Services,
Director Inc. since 1996; President and Chief
Member of the Audit Committee Chief Executive Officer, Strategic Portfolio
Management, Inc., 1987-1996; Mills B.
Lane Professor of Finance and Banking,
Emory University, 1954-1988; Trustee,
Enterprise Accumulation Trust; Director,
Medical Synergies, Inc.
*Samuel J. Foti (44) President and Chief Operating
Director Officer, MONY since 1994; Executive Vice
President, MONY (1991-1994); Trustee,
MONY since 1993; Senior Vice President
and Chief Marketing Officer, MONY (1989 -
1991); Trustee, Enterprise Accumulation
Trust.
Arthur Howell (77) Of Counsel, law firm of Alston Director &
Director, Bird, Atlanta, Georgia; President
Chairman of the Audit Committee Chairman of the Audit Committee and
Chairman of the Board, Summit Industries,
Inc.; Secretary of the Executive
Committee, Crescent Banking Co., Inc.;
Trustee, Enterprise Accumulation Trust.
William A. Mitchell, Jr.(58) President, Carter & Associates
Director (real estate development), Atlanta,
Georgia; Trustee, Enterprise Accumulation
Trust.
Lonnie H. Pope (62) President and Chief Executive
Director Officer of AFF, Inc. (creator and
Member of the Audit Committee manufacturer of aromatics, flavors
and fragrances), Marietta, Georgia;
Trustee, Enterprise Accumulation
Trust.
</TABLE>
- 9 -
<PAGE> 64
<TABLE>
<S> <C>
*Michael I. Roth (50)
Director Chairman and Chief Executive
Officer, MONY since 1993; President and
Chief Executive officer, MONY (1991-1993);
Executive Vice President and Chief Financial
Officer, MONY (1989-1991); Executive Vice
President and Chief Financial Officer,
Primerica Corporation (1987); Executive
Vice President, Primerica Corporation
(1982-1987); Trustee, Enterprise Accumulation
Trust; Director, American Council of Life
Insurance (ACLI).
*Victor Ugolyn (48) Chairman, President and Chief
Director Executive Officer, The Enterprise Group
of Funds, Inc. since 1991; Chairman,
President and Chief Executive Officer,
Enterprise Capital and Enterprise Fund
Distributors, Inc. since 1991; Chairman,
President and Chief Executive Officer,
Enterprise Accumulation Trust; Vice
Chairman and Chief Marketing Officer,
Value Line Securities, Inc. (1986-1991).
Catherine R. McClellan (40) Secretary, Enterprise
Secretary Accumulation Trust; Senior Vice
President, Secretary and Chief Counsel,
Enterprise Capital Management, Inc.;
Secretary and Chief Counsel, Enterprise
Fund Distributors, Inc.
Herbert M. Williamson (44) Assistant Secretary and
Treasurer Treasurer, Enterprise Accumulation Trust,
Enterprise Capital Management, Inc. and
Enterprise Fund Distributors, Inc.
Phillip Goff (32) Vice President and Chief Financial
Officer, Enterprise Accumulation
Trust, Enterprise Capital
Management, Inc. and Enterprise Fund
Distributors, Inc. 1995 - present;
Audit Manager, Coopers & Lybrand,
L.L.P., 1986 - 1995.
</TABLE>
- 10 -
<PAGE> 65
* Messrs. Foti, Roth and Ugolyn are "interested persons" of the Fund, of
Enterprise Capital Management, Inc. (the Fund's investment adviser), and of
Enterprise Fund Distributors, Inc. (the distributor of the Fund's Shares),
as that term is defined in the Investment Company Act of 1940.
At December 31, 1995, the officers and directors of the Fund as a group
owned less than one percent of the shares of each Portfolio.
The Fund pays fees to those directors who are not "interested persons" of
the Fund at the rate of $10,000 per director per year plus $1,000 for each
special or committee meeting attended. The Fund pays no salaries, fees or
compensation to any of its officers, since these expenses are borne by the
Fund's investment adviser, Enterprise Capital Management, Inc. No fees were
paid to the "interested" directors of the Fund.
The following sets forth compensation paid to each of the Directors during
1995:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
NAME AGGREGATE PENSION OR ESTIMATED TOTAL
COMPENSA- RETIREMENT ANNUAL COMPENSATION
TION FROM BENEFITS BENEFITS FROM REGISTRANT
REGISTRANT ACCRUED AS UPON AND FUND COMPLEX
PART OF RETIREMENT PAID TO
FUND DIRECTORS*
EXPENSES
<S> <C> <C> <C> <C>
Arthur T. Dietz $13,000 None None $18,700
Arthur Howell $13,000 None None $18,700
William A. Mitchell, Jr. $11,000 None None $16,500
Lonnie H. Pope $13,000 None None $18,700
</TABLE>
* Each Director received fees for services as a Trustee of Enterprise
Accumulation Trust.
- 11 -
<PAGE> 66
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an Investment Advisory Agreement (the "Adviser's
Agreement") with Enterprise Capital Management, Inc. ("Enterprise Capital")
which, in turn, has entered into Portfolio Manager's Agreements with each of
the Portfolio Managers as discussed in the Prospectus. Enterprise Capital
functions as the adviser to the Money Market Portfolio. Enterprise Capital is
a subsidiary of The Mutual Life Insurance Company of New York ("MONY"), one of
the nation's largest insurance companies. Enterprise Capital was incorporated
in 1986. Enterprise Capital's address is Suite 450, 3343 Peachtree Road,
Atlanta, Georgia 30326. Victor Ugolyn, who is President of the Fund, is also
Chairman of the Board and President of Enterprise Capital.
The Adviser's Agreement obligates Enterprise Capital to provide investment
advisory services to the Portfolios of the Fund, to furnish the fund with
certain administrative, clerical, bookkeeping and statistical services, office
space and facilities, and to pay the compensation of the officers of the Fund.
Each Portfolio pays all other expenses incurred in its operation, and a portion
of the Fund's general administrative expenses are allocated to the Portfolios
either on the basis of their asset size, on the basis of special needs of any
Portfolio, or equally as is deemed appropriate. The Fund's Board of Directors
annually reviews allocation of expenses among the Portfolios.
The Adviser's Agreement authorizes Enterprise Capital to enter into
subadvisory agreements with various investment advisers as Portfolio Managers
for the Portfolios of the Fund. The Portfolio Manager's Agreements are
substantially the same in all material respects except for the names of the
Portfolio Managers and the rates of compensation, which consist of a portion of
the management fee that is paid by the Fund to Enterprise Capital and which
Enterprise Capital pays to the Portfolio Managers.
Enterprise Capital is the Portfolio Manager of the Money Market Portfolio.
It utilizes the services of The Mutual Life Insurance Company of New York
employees for certain services relating to management of the Portfolio. These
services include but are not limited to the initial credit review of approved
issuers and trading. All such services are provided on a cost reimbursement
basis.
Expenses that are borne directly by the Portfolios incurring such costs
include redemption expenses, expenses of portfolio transactions, shareholder
servicing costs, mailing costs, expenses of registering the shares under
federal and state securities laws, accounting and pricing costs (including the
daily calculation of net asset value and daily dividends), interest, certain
taxes, legal services, auditing services, charges of the custodian and transfer
agent, and other expenses attributable to an individual account. Expenses which
are generally allocated either on the basis of size or equally among the
respective Portfolios include director fees, legal expenses, state franchise
- 12 -
<PAGE> 67
taxes, costs of printing of proxies, prospectuses, registration statements and
shareholder reports, printing and issuance of stock certificates and other
expenses properly payable by the Fund that are allocable to the respective
Portfolios. Litigation costs, if any, may be directly allocable to the
Portfolios or allocated on the basis of the size of the respective Portfolios.
The Board of Directors has determined that this is an appropriate method of
allocation of expenses.
Enterprise Capital has advised the Fund that it will reimburse such
portion of the fees due to it under the Adviser's Agreement as is necessary to
assure, for the period commencing January 1, 1996 and ending no earlier than
December 31, 1996 that expenses incurred by the Portfolios will not exceed the
following percentages of average annual assets (annualized for periods of less
than a fiscal year): Growth - 1.6%; Growth and Income - 1.5%; Capital
Appreciation - 1.75%; Small Company - 1.75%; International Growth - 2.0%;
Government Securities - 1.3%; High-Yield Bond - 1.3%; Tax Exempt Income -
1.25%; Managed - 1.75%; and Money Market - 1.0%. This commitment was also in
effect from January 1, 1989 through December 31, 1995.
The table below sets forth the 1995 breakdown by Portfolio of (1) the
investment advisory fee paid to Enterprise Capital, (2) the percentage of the
Management Fee to be paid by Enterprise Capital to the Portfolio Manager, (3)
the portfolio management fee paid by Enterprise Capital to the Portfolio
Manager, (4) the net advisory fee left to Enterprise Capital after payment of
the portfolio management fee, and (5) the amount of the expense reimbursement
paid by Enterprise Capital to the Portfolio to assure that expenses incurred by
the Portfolio did not exceed 2.0% of average annual net assets for the Equity
Portfolios and 1.3% of average annual net assets for the Income Portfolios. To
the extent that the Management Fee equals or exceeds .75% of the average daily
net asset values of a Portfolio, such fee is higher than the fee charged to
most investment companies. However, to the extent that such fee exceeds .75%
of the average daily net asset values of the International Growth, such amount
may not necessarily be higher than the fee charged other similar type
investment companies.
<TABLE>
<CAPTION>
Portfolio (1) (2) (3) (4) (5)
- ----------
<S> <C> <C> <C> <C> <C>
Growth $797,410 40%(1) 305,619 491,791 4,398
Growth and Income 418,724 40% 167,490 251,234 150,764
Capital Appreciation 876,619 66%(2) 562,933 313,686 --
Small Company 176,021 40%(3) 72,927 103,094 108,702
International Growth 241,255 50% 120,627 120,627 109,484
Government Securities 516,491 50%(4) 258,246 258,246 117,348
High-Yield Bond 304,716 50% 152,368 152,368 113,327
Tax-Exempt Income 172,474 50% 86,237 86,237 59,601
</TABLE>
- 13 -
<PAGE> 68
<TABLE>
<S> <C> <C> <C> <C> <C>
Managed 311,097 53% 164,881 146,216 58,261
Money Market 122,090 -- -- 122,090 121,372
</TABLE>
(1) 33% of assets $100,000,001 - $200,000,000
(2) 60% of assets $100,000,001 - $200,000,000
(3) 42% of assets in excess of $500,000,001
(4) 53% of assets in excess of $20,000,001
PORTFOLIO MANAGERS
Fisher Investments, Inc.
Kenneth L. Fisher, President and Chief Investment Officer of Fisher
Investments, Inc., the Portfolio Manager of the Small Company Portfolio,
authored the following investment books: Super Stocks, The Wall Street Waltz,
and 100 Minds that Made The Market. He has authored the Forbes Magazine
"Portfolio Strategy" column since 1984.
TCW Funds Management, Inc.
TCW Funds Management, Inc. was established for the sole purpose of
managing investment portfolios. The 1996 Money Market Directory of Pension
Funds and their Investment Managers ranks TCW as the 13th largest investment
counselling firm in the United States of the 1,261 firms surveyed.
Additional information concerning the Portfolio Managers and their annual
rate of compensation is set forth in the Prospectus.
DISTRIBUTOR'S AGREEMENT AND PLAN OF DISTRIBUTION
The Distributor's Agreement and Plan of Distribution (the "12b-1 Plan")
between the Fund and Enterprise Fund Distributors, Inc. ("Enterprise
Distributors"), pursuant to which Enterprise Distributors serves as principal
underwriter of the Fund's shares, is described in the Prospectus. The 12b-1
Plan provides for the payment by the Fund to Enterprise Distributors of a daily
distribution fee.
- 14 -
<PAGE> 69
The total of daily distribution fees paid to Enterprise Distributors in
1995 was $2,487,595. Total contingent deferred sales charges collected and
paid to Enterprise Distributors in 1995 was $3,074. Enterprise Distributors
paid $1,255,109 in commissions and fees to dealers in 1995 for sales of
Fund shares. In addition, Enterprise Distributors paid $585,683 for marketing
and advertising, and $301,269 in travel, telephone, and other authorized
promotional expenses.
The total of daily distribution fees paid to Enterprise Distributors in
1994 was $2,232,408. Total contingent deferred sales charges collected and paid
to Enterprise Distributors in 1994 was $23,779. Enterprise Distributors paid
$2,322,408 in 12b-1 distributions to dealers in 1994 for sales of Fund shares.
In addition, Enterprise Distributors paid for marketing and advertising, and in
travel, telephone, and other authorized promotional expenses.
The total of daily distribution fees paid to Enterprise Distributors in
1993 was $1,378,235. Total contingent deferred sales charges collected and paid
to Enterprise Distributors in 1993 was $104,142. Enterprise Distributors paid
$839,834 in 12b-1 distributions to dealers in 1993 for sales of Fund shares.
In addition, Enterprise Distributors paid $491,684 for marketing and
advertising, and $338,892 in travel, telephone, and other authorized
promotional expenses.
MISCELLANEOUS
The terms of each of the Investment Adviser's Agreement, the Distributor's
Agreement and Plan of Distribution, the Transfer Agent Agreement, the
Accounting Agreement and the Portfolio Manager's Agreements (collectively, the
"Agreements") provide that each such Agreement: (i) will automatically
terminate upon "assignment," as such term is defined in the Investment Company
Act of 1940 (the "1940 Act"); (ii) must be approved annually by the Fund's
Board of Directors or by vote of a majority of the outstanding voting
securities; and (iii) must be approved annually in person by vote of a majority
of the directors of the Fund who are not parties to such contract or
"interested persons" (as such term is defined in the 1940 Act) of such party.
Each Agreement further provides that it can be terminated without penalty by
either party thereto upon 60 days written notice to the other party. The
Distributor's Agreement and Plan of Distribution were most recently approved by
the shareholders at the Special Meeting of Shareholders held April 26, 1995.
The Investment Adviser's Agreement and the Portfolio Manager's Agreements were
most recently approved by the shareholders at the Annual Meeting of
Shareholders held July 25, 1988. The Fund's Board of Directors most recently
approved continuance of the Investment Adviser's Agreement and the Portfolio
Manager's Agreements on February 15, 1995.
- 15 -
<PAGE> 70
PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED
Information concerning purchase and redemption of shares of the Fund's
Portfolios, as well as information concerning computation of net asset value
per share is set forth in the Fund's Prospectus.
SERVICES FOR INVESTORS
For the convenience of investors, the following plans are available.
Investors should realize that none of these plans can guarantee profit or
insure against loss. The costs of these shareholder plans (exclusive of the
employee benefit plans) are paid by Enterprise Distributors, except for the
normal cost of issuing shares, which is paid by the Fund.
AUTOMATIC REINVESTMENT PLAN. All shareholders, unless they request otherwise,
are enrolled in the Automatic Reinvestment Plan under which dividends and
capital gains distributions on their shares are automatically reinvested in
shares of the same Class of Portfolio(s) at the net asset value per share
computed on the record date of such dividends and capital gains distributions.
The Automatic Reinvestment Plan may be terminated by participants or by the
Fund at any time. No sales charge is applied upon reinvestment of dividends or
capital gains.
AUTOMATIC BANK DRAFT PLAN. An Automatic Bank Draft Plan is available for
investors who wish to purchase shares of one or more of the Portfolios in
amounts of $25 or more on a regular basis by having the amount of the
investment automatically deducted from the investor's checking account. The
minimum initial investment for this Plan is $100. Forms authorizing this
service are available from the Fund.
AUTOMATIC INVESTMENT PLAN. An investor may debit any Class of a Portfolio
Account on a monthly basis for automatic investments into one or more of the
other Portfolios of the same Class. The Portfolio from which the investment
will be made is subject to the $1,000 minimum. The investor may then choose to
have $50 or more transferred to either an established Enterprise Portfolio, or
they may open a new account subject to an initial minimum investment of $100.
LETTER OF INTENT INVESTMENTS. Any investor may execute a Letter of Intent
covering purchases of Class A shares of $100,000 or more, at the public
offering price, of Fund shares to be made within a period of 13 months. A
reduced sales charge will be applicable to the total dollar amount of Class A
shares purchased in the 13-month period provided at least $100,000 is
purchased. The minimum initial investment under a Letter of Intent is 5% of
the amount indicated in the Letter of Intent. Shares purchased with the first
5% of such amount will be held in escrow (while remaining registered in the
name of the investor) to secure payment of the higher sales charge applicable
to the shares actually purchased if the full amount indicated is not purchased,
and such escrowed shares will be involuntarily redeemed to pay the additional
sales charge, if necessary. When the full amount indicated has been purchased,
the escrow will be released.
- 16 -
<PAGE> 71
Investors wishing to enter into a Letter of Intent in conjunction with
their investment in Class A shares of the Portfolios should complete the
appropriate portion of the new account application.
RIGHT OF ACCUMULATION DISCOUNT. Investors who make an additional purchase of
Class A shares of the Fund which, when combined with the value of their
existing aggregate holdings of shares of the Portfolios of the Fund, each
calculated at the then applicable net asset value per share, at the time of the
additional purchase, equals $100,000 or more, will be entitled to the reduced
sales charge shown under "How to Purchase Portfolio Shares" in the Prospectus
on the full amount of each additional purchase. For purposes of determining
the discount, holdings of Fund shares of the investor's spouse, immediate
family or accounts controlled by the investor, whether as a single investor or
trustee of, or participant in, pooled and similar accounts, will be aggregated.
CHECKWRITING. A check redemption feature is available on the Money Market
Portfolio with opening balances of $5,000 or more. Redemption checks may be
made payable to the order of any person in any amount from $500 to $100,000.
Up to five redemption checks per month may be written without charge. Each
additional redemption check over five in a given month will be subject to a $5
fee. Redemption checks are free and may be obtained from the Transfer Agent or
by contacting Enterprise Capital Management. A $25 fee will be imposed on any
account for stopping payment of a redemption check upon request of the
shareholder. It is not possible to use a redemption check to close out an
account since additional shares accrue daily.
SYSTEMATIC WITHDRAWAL PLAN. Investors may elect a Systematic Withdrawal Plan
under which a fixed sum will be paid monthly, quarterly, or annually. There is
no minimum withdrawal payment required. Shares in the Plan are held on deposit
in noncertificate form and any capital gain distributions and dividends from
investment income are invested in additional shares of the Portfolio(s)at net
asset value. Shares in the Plan account are then redeemed at net asset value
to make each withdrawal payment. Redemptions for the purpose of withdrawals
are made on or about the 15th day of the month of payment at that day's closing
net asset value, and checks are mailed within five days of the redemption date.
Such distributions are subject to applicable taxation.
Because withdrawal payments may include a return of principal, redemptions
for the purpose of making such payments may reduce or even use up the
investment, depending upon the size of the payments and the fluctuations of the
market price of the underlying portfolio securities. For this reason, the
payments cannot be considered as a yield of income on the investment.
RETIREMENT PLANS. The Fund offers various Retirement Plans: IRA (for all
individuals with employment income); 403(b)(7) (for employees of certain
tax-exempt organizations and schools); and corporate pension and profit sharing
(including a 401(k) option) plans. For full details as to these plans, you
should request a copy of the plan document from Enterprise Distributors. After
reading the plan, you may wish to consult a competent financial or tax adviser
if you are uncertain that the plan is appropriate for your needs.
- 17 -
<PAGE> 72
REDEMPTIONS IN KIND
The Fund's Articles of Incorporation provide that it may redeem its shares
in cash or with a pro rata portion of the assets of the Fund. To date, all
redemptions have been made in cash, and the Fund anticipates that all
redemptions will be made in cash in the future. In order to meet the
requirements of certain state laws, the Fund has elected, pursuant to Rule
18f-1 under the 1940 Act, to commit itself to pay in cash all requests for
redemption by any shareholder of record, limited in amount with respect to each
shareholder during any 90-day period to the lesser of: (i) $250,000; or (ii)
1% of the net asset value of the Fund at the beginning of such period. If
shares are redeemed through a distribution of portfolio securities, the
recipient would incur brokerage commissions upon the sale of such securities.
DETERMINATION OF NET ASSET VALUE
The net asset value of each Portfolio's shares is determined once daily as
of the close of the New York Stock Exchange (usually 4 p.m. Eastern time) on
each day on which the Exchange is open for trading. The net asset value of a
share is computed by dividing the value of the net asset of the Portfolio by
the total number of shares outstanding.
Money Market Portfolio
The net asset value of the Money Market Portfolio is computed by dividing
the total value of the Portfolio's assets, less liabilities (including
dividends payable), by the number of shares outstanding. The assets are
determined by valuing the portfolio securities at amortized cost, pursuant to
Rule 2a-7. The amortized cost method of valuation involves valuing a security
at cost at the time of purchase and thereafter assuming a constant amortization
to maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument.
The purpose of the amortized cost method of valuation is to attempt to
maintain a constant net asset value per share of $1.00. While this method
provides certainty in valuation, it may result in periods during which value,
as determined by amortized cost, is higher or lower than the price the
Portfolio would receive if it sold its portfolio securities. Under the
direction of the Board of Directors, certain procedures have been adopted to
monitor and stabilize the price per share. Calculations are made to compare
the value of the portfolio securities, valued at amortized cost, with market
values. Market valuations are obtained by using actual quotations provided by
market makers, estimates of market value, or values obtained from yield data
relating to classes of money market instruments published by reputable sources
at the bid prices for those instruments. If a deviation of 1/2 of 1% or more
between the $1.00 per share net asset value and the net asset value calculated
by reference to market valuations has occurred, or if there are any other
deviations which the Board of Directors believes will result in dilution or
- 18 -
<PAGE> 73
other unfair results material to shareholders, the Board of Directors will
consider what action, if any, should be initiated.
The market value of debt securities usually reflects yields generally
available on securities of similar quality. When yields decline, the market
value of a portfolio holding higher yielding securities can be expected to
increase; when yields increase, the market value of a portfolio invested at
lower yields can be expected to decline. In addition, if the Portfolio has net
redemptions at a time when interest rates have increased, the Portfolio may be
forced to sell portfolio securities prior to maturity at a price below the
Portfolio's carrying value. Also, rather than market value, any yield quoted
may be different from the yield that would result if the entire Portfolio were
valued at market value, since the amortized cost method does not take market
fluctuations into consideration.
Other Portfolios
The net asset value of Portfolios other than the Money Market Portfolio is
computed by dividing the total value of the series' securities and other
assets, less liabilities, by the number of series shares then outstanding.
Securities other than money market instruments maturing in 60 days or less
which are traded on a national exchange are valued at the last sale price as of
the close of business on the day the securities are being valued, or, lacking
any sales, at the last bid price. Securities other than money market
instruments maturing in 60 days or less traded in the over-the-counter market
are valued at the last bid price or at yield equivalent as obtained from one or
more dealers that make markets in the securities. Securities which are traded
both in the over-the-counter market and on a national exchange are valued
according to the broadest and most representative market, and it is expected
that for debt securities this ordinarily will be the over-the-counter market.
Securities and assets for which market quotations are not readily available are
valued at fair value as determined in good faith by or under the supervision of
the Board of Directors. Money market instruments with maturities of 60 days or
less are valued using the amortized cost method of valuation.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The portfolio transactions and brokerage policies of the Fund are set
forth in the Prospectus. In the last three fiscal years ended December 31, the
Fund has paid the following aggregate amounts for brokerage commissions on
transactions in portfolio securities: 1993 - $402,000; 1994 - $601,596; 1995 -
$489,729.
- 19 -
<PAGE> 74
PERFORMANCE COMPARISONS
From time to time the Fund may advertise a Portfolio's "yield" as "total
return." See the Prospectus under "Performance Comparisons" for an explanation
of the method of calculation of "yield" or "total return."
From time to time, a portfolio's performance and performance of comparable
investments may be compared to that of the Consumer Price Index or various
unmanaged indexes such as the Dow Jones Industrial Average, the Standard &
Poor's 500 Stock Index, the Lehman Brothers Government/Corporate Bond Index,
the Salomon Brothers Low Grade Index, the Lehman Brothers Government Bond
Index, Lehman Brothers Mortgage Backed Index, Lehman Brothers Municipal Bond
Index, Morgan Stanley Goldmine Index, the Salomon Brothers Analytical Record of
Yield and Yield Spreads, and the Salomon Brothers World Money Market Index; and
it may also be compared to the performance of other appropriate fixed income or
equity mutual funds or mutual fund indexes as reported by Lipper Analytical
Services, Inc. ("Lipper") or CDA Investment Technologies, Inc. ("CDA"). Lipper
and CDA are widely recognized independent mutual fund reporting services.
Lipper and CDA performance calculations are based upon changes in net asset
value with all dividends reinvested and do not include the effect of any sales
charges. Also, a portfolio's performance may be compared to the historical
returns of various investments, performances indexes of those investments or
economic indicators, included but not limited to stocks, bonds, certificates of
deposit, money market deposit accounts, money market funds and US Treasury
Bills. Certain of these alternative investments may offer fixed rates of
return and guaranteed principal and may be insured. Betas utilized will be
calculated by CDA Investment Technologies, Inc.
The Fund's performance may be compared in advertising to the performance
of other mutual funds in general or the performance of particular types of
mutual funds, especially those with similar objectives. Lipper Analytical
Services, Inc. ("Lipper"), an independent mutual fund performance rating
service headquartered in Summit, New Jersey, provides rankings which may be
used from time to time.
The Fund may be compared in advertising to Certificates of Deposit ("CDs")
or other investments issued by banks. The Fund differs from bank investments
in that bank products offer fixed or variable rates; principal is fixed and may
be insured. Money markets seek to maintain a stable net asset value and yield
fluctuates. Further, the Fund may offer greater liquidity or higher potential
returns than CDs.
From time to time, the Fund may provide hypothetical illustrations based
on past performance for a particular time period. Performance information for
any Portfolio reflects only the performance of a hypothetical investment in the
Portfolio during a particular time period on which the calculations are based.
Performance information should be considered in light of the Portfolio's
investment objectives and policies, characteristics and qualities of the
- 20 -
<PAGE> 75
Portfolio and the market conditions during the given time period, and should
not be considered as a representation of what may be achieved in the future.
The Fund may advertise examples of the effects of periodic investment
plans, including the principal of dollar cost averaging. Dollar cost averaging
programs provide an opportunity to invest a fixed dollar amount in a fund at
periodic intervals, thereby purchasing fewer shares when the price is high and
more shares when the price is low. While such a strategy does not assure a
profit guard against loss in a declining market, the investor's cost per share
can be lower if fixed numbers of shares had been purchased at periodic
intervals. In evaluating such a plan, consideration should be given to the
shareholder's ability to continue purchasing shares through periods of low
price levels.
CUSTODIAN
State Street Bank and Trust Company of Boston, Massachusetts, has been
retained to act as custodian of the assets of the Fund.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P. whose address is 1100 Campanile Building,
Atlanta, Georgia, 30309, has been retained to serve as the Fund's independent
accountants.
TAXES
See the Prospectus for information concerning taxes.
- 21 -
<PAGE> 76
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Annual
Report
Page
Number
<S> <C>
Financial Statements
Portfolios of Investment Securities,
December 1, 1995....................................................... 4
Statement of Assets and Liabilities,
December 31, 1995 ..................................................... 50
Statements of Operations for the
Year Ended December 31, 1995 .......................................... 52
Statements of Changes in Net Assets
for Each of the Two Years Ended
December 31, 1994 and 1995 ............................................ 54
Financial Highlights........................................................ 58
Notes to Financial Statements............................................... 72
Report of Independent Accountants .......................................... 80
</TABLE>
- 22 -
<PAGE> 77
APPENDIX
RATINGS OF CORPORATE DEBT SECURITIES
MOODY'S INVESTORS SERVICE, INC.(1)
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge."
Aa - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
A - Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements: their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterize
bonds in this case.
B - Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments of or maintenance of other terms
of the contract over any long period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Ca - Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked short-comings.
- ----------------------
(1) Moody's applies numerical modifiers, 1, 2 and 3 in generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its
generic rating category; the modifier 2 indicates a mid-range ranking; and
the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
- 23 -
<PAGE> 78
STANDARD & POOR'S CORPORATION(2)
AAA - Bonds rated AAA have the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA - Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest-rated issues only in a small degree.
A - Bonds rated A have a strong capacity to pay interest and repay principal,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than bonds in higher-rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher-rated categories.
BB,B,CCC,CC - Bonds rated BB, B, CCC, and CC are regarded, on balance, as
predominately speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
- ---------------------------
(2) Plus (+) or Minus (-): The ratings from AA to BB may be modified by
the addition of a plus or minus sign to show relative standing within the
major rating categories.
- 24 -
<PAGE> 79
PART B, ITEM 23
- ------------------------------------------------------------
- --------------------
VICTOR UGOLYN
Chairman, President
and
Chief Executive
Officer
Dear Fellow Shareholder:
As we embark upon a new year, most of us like to
reflect on where we are
financially and what our investment goals are for the coming
year. Looking back,
1995 indeed was a successful period for many investors,
as well as, for The
Enterprise Group of Funds shareholders.
1995 IN REVIEW
As 1995 began, investors had more than their share of
concerns given 1994
market results. Which way would the Federal Reserve move
interest rates? How
strong was the economy and corporate profits? However,
the patient, long-term
investor was rewarded as stocks moved strongly higher with
the S&P 500 up 37.6%
marking the thirteenth calendar year advance in fourteen
years and the best year
since 1958. For bonds, 1995 saw one of the strongest
performances on record and
the best since 1985 as the Lehman Brothers
Government/Corporate Bond Index
advanced 19.2%.
The strength of stocks and bonds was reflected in
strong mutual fund
performance in most fund categories. In 1995, domestic stock
funds recorded one
of their strongest years on record, with a total return of
31.11% -- the fifth
best year since Lipper Analytical Services, Inc. began
tracking fund performance
in 1959. Further, falling interest rates propelled the
bond market giving
taxable bond funds a gain of 15.62% on average for the
year.(1)
1995 was also an especially rewarding year for
Enterprise in several new
areas. To enhance investor flexibility and service,
Enterprise successfully
introduced a turnkey 401(k) program allowing small companies
and their employees
special access to The Enterprise Group of Funds
institutional money managers
while retaining the services of a well known national third
party administrator,
or administrator of their choice. Further, investors were
given alternative ways
to purchase Enterprise shares with the introduction of B
and Y Class shares to
compliment the more standard A Class shares. On a fund
level, certain members of
the Enterprise family including the Enterprise Growth,
Capital Appreciation,
International Growth, Managed and High-Yield Bond
Portfolios received special
recognition during the year from publications such as the
WALL STREET JOURNAL,
USA TODAY, MONEY MAGAZINE, and MORNINGSTAR.
LOOKING FORWARD
While it will be difficult to repeat this past year,
we believe further
interest rate cuts, low inflation, pending capital gains
reduction legislation
and eventually a budget agreement are still positive
indicators for the market
particularly in an election year. In fact the market has
posted double digit
gains in seven of the last eight presidential election
years since 1960. We
continue to stress to our shareholders that the
potential for successful
investing does not depend on reacting to short-term events
but rather on making
sensible long-term investments based on specific financial
needs and objectives
and sticking with them.
- ------------------------
(1) Source: Lipper Analytical Services
Enterprise continues to provide investors with a wide
selection of mutual
funds to cover the complete spectrum of investment needs.
It is particularly
important to remember to diversify your investments. An
almost certain way to
court disaster is to place all your investment dollars in
one basket. Allocating
your investment portfolio across a wide variety of stocks
and bonds both in the
U.S. and abroad may help insulate it from a downturn in any
one market.
Enterprise shareholders gain special access to several
of the most respected
institutional investment management firms in the industry
in contrast to other
mutual fund organizations who only offer in-house investment
management. Each of
these asset management firms which guide the various
Enterprise Portfolios is a
recognized leader in its field. Collectively they manage
over $200 billion of
client assets primarily from major institutions. These
institutional money
managers' usual investment minimums range from $1 million to
$50 million. It is
no wonder that their expertise has been out of reach for
the small, private
investor. However, through Enterprise, our shareholders
gain access to these
same institutional managers with only a minimum
investment of $1,000 per
portfolio. For Individual Retirement Accounts ($250) and
Automatic Bank Draft
Plans ($100), the minimum is even lower.
We encourage you to review the portfolio managers'
comments in this annual
report. You will find insightful commentaries and a
variety of investment
strategies for 1996. We continue to encourage
diversification and long-term
investment among these funds based upon your own personal
investment objectives.
Enterprise has worked diligently to create funds
that invest in market
sectors that offer our shareholders the potential for
attractive performance in
relation to their investment objectives. We are proud of our
success to date and
appreciate your confidence in The Enterprise Group of Funds
as we continue our
primary mission to add value to your investment portfolio
by providing you with
special access to some of the most accomplished
investment firms in the
industry.
Sincerely,
Victor Ugolyn
Chairman, President and Chief Executive Officer
Table of Contents
PAGE
- -----------
The Enterprise Growth Portfolio
Manager's
Comments....................................................
............................ 2
Portfolio of
Investments.................................................
......................... 4
The Enterprise Growth and Income Portfolio
Manager's
Comments....................................................
............................ 6
Portfolio of
Investments.................................................
......................... 8
The Enterprise Capital Appreciation Portfolio
Manager's
Comments....................................................
............................ 12
Portfolio of
Investments.................................................
......................... 14
The Enterprise Small Company Portfolio
Manager's
Comments....................................................
............................ 16
Portfolio of
Investments.................................................
......................... 18
The Enterprise International Growth Portfolio
Manager's
Comments....................................................
............................ 20
Portfolio of
Investments.................................................
......................... 22
The Enterprise Government Securities Portfolio
Manager's
Comments....................................................
............................ 26
Portfolio of
Investments.................................................
......................... 28
The Enterprise High-Yield Bond Portfolio
Manager's
Comments....................................................
............................ 30
Portfolio of
Investments.................................................
......................... 32
The Enterprise Tax-Exempt Income Portfolio
Manager's
Comments....................................................
............................ 36
Portfolio of
Investments.................................................
......................... 38
The Enterprise Managed Portfolio
Manager's
Comments....................................................
............................ 42
Portfolio of
Investments.................................................
......................... 45
The Enterprise Money Market Portfolio
Manager's
Comments....................................................
............................ 48
Portfolio of
Investments.................................................
......................... 49
Statement of Assets and
Liabilities.................................................
................ 50
Statement of
Operations..................................................
........................... 52
Statement of Changes in Net
Assets......................................................
............ 54
Financial
Highlights..................................................
.............................. 58
Notes to Financial
Statements..................................................
..................... 72
Returns in this report are historical and do not guarantee
future performance of
any fund. Investment return and principal value will
fluctuate so that shares,
when redeemed, may be worth more or less than their cost.
The Enterprise Growth Portfolio
INVESTMENT MANAGEMENT
Montag & Caldwell served as investment adviser to
Alpha Fund, Inc., the
predecessor of the Growth Portfolio, since the Fund was
organized in 1967.
Montag currently manages over $5 billion for institutional
clients. Our normal
investment minimum is $10 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Growth Portfolio is to
seek appreciation of
capital primarily through investments in common stocks.
INVESTMENT PHILOSOPHY
Our equity selection process is a low risk, growth stock
approach. Valuation is
our key selection criterion which makes our investment
style risk averse. We
also emphasize growth characteristics because we are
seeking not only companies
with shares that are attractively priced but also those
which should experience
strong earnings growth relative to other companies.
1995 PERFORMANCE REVIEW
1995 marked another good year for the Enterprise
Growth Portfolio. The
Portfolio's multinational holdings contributed
importantly to the good
investment performance for this period. During the
year, the Portfolio's
multinational consumer and healthcare positions and
technology holdings did
particularly well.
CLASS A
* The S&P 500 Index is an un-
managed index which includes
500 companies which tend to be
leaders in important
industries within the U.S.
economy and excludes any
transaction or holding
charges. Enterprise per-
formance numbers include the
maximum sales charge and all
fees. Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
The Enterprise Group of Funds, Inc.
2
CLASS B
** The S&P 500 Index is an un-
managed index which includes
500 companies which tend to be
leaders in important
industries within the U.S.
economy and excludes any
transaction or holding
charges. Enterprise per-
formance numbers include all
fees and CDSC charges.
Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
FUTURE INVESTMENT STRATEGY
Our forecast of sustained low inflation suggests continued
low interest rates,
which should enhance stock market valuations and our
forecast of moderate but
sustainable economic growth means corporate profits
should remain at healthy
levels. Under this scenario, shares of multinational
consumer and healthcare
companies that can prosper from the expansion of global
economies continue to be
attractive, as do globally-based technology companies
with strong proprietary
positions. We also believe that selective consumer holdings
that were penalized
by the rise in interest rates could benefit from the
decline in interest rates
that has been under way since the middle of last year.
MONTAG & CALDWELL, INC.
Atlanta, Georgia
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED
ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
3
Growth Portfolio
Portfolio of Investments
December 31, 1995
NUMBER
OF
COMMON STOCKS -- 98.76%
SHARES VALUE
- ------------------------------------------------------------
- -------------------
BUSINESS SERVICES -- 8.84%
- ------------------------------------------------------------
- -------------------
General Motors Corporation CL E...................
85,000 $ 4,420,000
Interpublic Group of Companies Inc................
55,600 2,411,650
Solectron Corporation (a).........................
100,000 4,412,500
- ------------
11,244,150
COMPUTER HARDWARE -- 16.07%
- ------------------------------------------------------------
- -------------------
Adaptec Inc. (a)..................................
88,000 3,608,000
Cisco Systems Inc. (a)............................
57,900 4,320,787
Compaq Computer Corporation (a)...................
85,000 4,080,000
Hewlett Packard Company...........................
45,300 3,793,875
Seagate Technology (a)............................
97,400 4,626,500
- ------------
20,429,162
COMPUTER SOFTWARE -- 6.33%
- ------------------------------------------------------------
- -------------------
Microsoft Corporation (a).........................
46,000 4,036,500
Oracle System Corporation (a).....................
94,650 4,010,794
- ------------
8,047,294
CONSUMER DURABLES -- 1.95%
- ------------------------------------------------------------
- -------------------
Harley Davidson Inc...............................
86,200 2,478,250
CONSUMER NON-DURABLES -- 12.40%
- ------------------------------------------------------------
- -------------------
Gillette Company..................................
96,800 5,045,700
International Flavours & Fragrances Inc...........
45,900 2,203,200
Mattel Inc........................................
115,000 3,536,250
Procter & Gamble Company..........................
60,000 4,980,000
- ------------
15,765,150
ELECTRICAL EQUIPMENT -- 3.26%
- ------------------------------------------------------------
- -------------------
Duracell International Inc........................
80,000 4,140,000
ENTERTAINMENT & LEISURE -- 2.78%
- ------------------------------------------------------------
- -------------------
Walt Disney Company...............................
60,000 3,540,000
FINANCE -- 5.13%
- ------------------------------------------------------------
- -------------------
Federal National Mortgage Association.............
36,100 4,480,913
MBNA Corporation..................................
55,200 2,035,500
- ------------
6,516,413
NUMBER
OF
SHARES VALUE
FOOD & BEVERAGES -- 11.41%
- ------------------------------------------------------------
- -------------------
Coca-Cola Company.................................
67,200 $ 4,989,600
CPC International Inc.............................
33,400 2,292,075
Kellogg Company...................................
30,100 2,325,225
Pioneer Hi Bred International Inc.................
47,800 2,658,875
Wrigley William Junior Company....................
42,700 2,241,750
- ------------
14,507,525
HOTELS & RESTAURANTS -- 1.87%
- ------------------------------------------------------------
- -------------------
Marriott International Inc........................
62,000 2,371,500
PHARMACEUTICALS -- 16.03%
- ------------------------------------------------------------
- -------------------
Abbott Laboratories...............................
89,400 3,732,450
Johnson & Johnson.................................
49,100 4,204,187
Lilly Eli & Company...............................
76,600 4,308,750
Merck & Company Inc...............................
60,800 3,997,600
Pfizer Inc........................................
65,700 4,139,100
- ------------
20,382,087
RETAIL -- 8.45%
- ------------------------------------------------------------
- -------------------
Gap Inc...........................................
96,800 4,065,600
Home Depot Inc....................................
119,400 5,716,275
Intelligent Electronics Inc.......................
160,000 960,000
- ------------
10,741,875
TECHNOLOGY -- 4.24%
- ------------------------------------------------------------
- -------------------
Intel Corporation.................................
95,000 5,391,250
TOTAL COMMON STOCKS
(IDENTIFIED COST
$84,949,222)...................................
125,554,656
REPURCHASE AGREEMENT -- 2.78%
- ------------------------------------------------------------
- -------------------
State Street Bank & Trust Repurchase Agreement,
4.25% due 01/02/96
Collateral: U.S. Treasury Bond $3,525,000, 5.75%
due 9/30/97 Value $3,610,777......................
$3,530,000 3,530,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST
$3,530,000)....................................
3,530,000
- ------------------------------------------------------------
- -------------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$88,479,222)...................................
129,084,656
OTHER ASSETS LESS LIABILITIES --
(1.54)%........................ (1,954,549)
- ------------
NET ASSETS --
100%..............................................
$127,130,107
- ------------------------------------------------------------
- -------------------
(a) Non-income Producing
See notes to financial statements.
The Enterprise Group of Funds, Inc.
4
(This page intentionally left blank)
The Enterprise Group of Funds, Inc.
5
The Enterprise Growth and Income Portfolio
INVESTMENT MANAGEMENT
1740 Advisers has been an investment adviser to the
Enterprise Growth and Income
Portfolio since its inception. 1740 Advisers currently
manages over $1 billion
for institutional clients. Our normal investment minimum is
$20 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Growth and Income
Portfolio is to seek a
combination of growth and income to achieve an above
average and consistent
total return, primarily from investments in dividend paying
common stock.
INVESTMENT PHILOSOPHY
Above average returns can be achieved by buying
undervalued, out of favored
stocks and selling them after the market has recognized
and corrected their
under valuation. Dividend yield relative to the S&P 500 is
the measure of the
value used in this strategy. It provides a disciplined
approached to buy and
sell decisions, enhanced stability in the portfolio and
lessens overall market
risk.
1995 PERFORMANCE REVIEW
The stock market's strong performance in 1995 was the
result of better than
expected earnings, the soft landing for the economy and
declining interest
rates. Portfolio performance during the year experienced
good returns from
exposure to capital goods, energy, healthcare, financial and
consumer and basic
materials sectors. The Portfolio's underweighting in
the technology sector
reflected positively on year-end results, as these stocks
underperformed during
the fourth quarter.
CLASS A
** The S&P 500/Barra Value
Index is an unmanaged index
which excludes transaction or
holding charges. Enterprise
performance numbers include
the maximum sales charge and
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than at
original purchase.
The Enterprise Group of Funds, Inc.
6
CLASS B
** The S&P 500/Barra Value
Index is an unmanaged index
which excludes transaction or
holding charges. Enterprise
performance numbers include
all fees and CDSC charges.
Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
FUTURE INVESTMENT STRATEGY
The Portfolio is emphasizing exposure to financial
stocks, telephones and
international oils. These groups have above average dividend
yields, should have
increasing earnings in 1996 and are generally less sensitive
to the economy. If
the Federal Reserve continues to ease interest rates, the
Portfolio will likely
increase exposure to cyclical stocks. The auto, credit
sensitive financials,
building related and retail stocks are among early cycle
consumer cyclicals
which generally do well when the Fed is easing. Holdings of
basic materials and
capital spending related stocks were reduced as the
economy weakened. These
groups have corrected and are once again reasonably
valued with most of the
excess expectations taken out of them. Sometime in 1996
these cyclicals should
again be emphasized in the Portfolio.
As a whole, this is a defensive strategy given the high
level of valuation for
the market. However, some of these defensive groups
(financials, utilities,
oils) have offensive characteristics in a slow-
growth, low-inflation
environment.
1740 ADVISERS, INC.
New York, New York
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED
ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
7
Growth and Income Portfolio
Portfolio of Investments
December 31, 1995
NUMBER
OF
COMMON STOCKS -- 92.73%
SHARES VALUE
- ------------------------------------------------------------
- ------------------
AEROSPACE -- 2.97%
- ------------------------------------------------------------
- ------------------
Northrop Grumman Corporation......................
10,000 $ 640,000
Timken Company....................................
12,400 474,300
United Technologies Corporation...................
8,000 759,000
- ------------
1,873,300
AUTOMOTIVE -- 1.39%
- ------------------------------------------------------------
- ------------------
Chrysler Corporation..............................
8,000 443,000
Ford Motor Company Delaware.......................
15,000 435,000
- ------------
878,000
BANKING -- 1.92%
- ------------------------------------------------------------
- ------------------
Chase Manhattan Corporation.......................
6,000 363,750
First Union Corporation...........................
9,000 500,625
NationsBank Corporation...........................
5,000 348,125
- ------------
1,212,500
BUSINESS SERVICES -- 1.02%
- ------------------------------------------------------------
- ------------------
Ogden Corporation.................................
30,000 641,250
CAPITAL GOODS AND SERVICES -- 7.66%
- ------------------------------------------------------------
- ------------------
Cooper Industries Inc.............................
10,000 367,500
Deere & Company...................................
21,000 740,250
General Electric Company..........................
14,000 1,008,000
General Signal Corporation........................
12,000 388,500
Goulds Pumps Inc..................................
15,000 375,000
Harsco Corporation................................
10,000 581,250
Textron Inc.......................................
8,000 540,000
Xerox Corporation.................................
6,000 822,000
- ------------
4,822,500
CHEMICALS -- 4.31%
- ------------------------------------------------------------
- ------------------
Dow Chemical Company..............................
2,000 140,750
Du Pont E I De Nemours & Company..................
9,000 628,875
Monsanto Company..................................
6,000 735,000
Olin Corporation..................................
2,000 148,500
W R Grace & Company...............................
12,000 709,500
Witco Corporation.................................
12,000 351,000
- ------------
2,713,625
COMMUNICATIONS -- 6.82%
- ------------------------------------------------------------
- ------------------
Ameritech Corporation.............................
10,000 590,000
Bell Atlantic Corporation.........................
8,000 535,000
BellSouth Corporation.............................
14,000 609,000
GTE Corporation...................................
13,000 572,000
Nynex Corporation.................................
8,000 432,000
Pacific Telesis Group.............................
15,000 504,375
NUMBER
OF
SHARES VALUE
SBC Communications Inc............................
10,000 $ 575,000
Sprint Corporation................................
12,000 478,500
- ------------
4,295,875
CONSUMER DURABLES -- 2.46%
- ------------------------------------------------------------
- ------------------
Dana Corporation..................................
25,000 731,250
Emerson Electric Company..........................
10,000 817,500
- ------------
1,548,750
CONSUMER NON-DURABLES -- 2.26%
- ------------------------------------------------------------
- ------------------
Avon Products Inc.................................
10,000 753,750
Eastman Kodak Company.............................
10,000 670,000
- ------------
1,423,750
ELECTRICAL EQUIPMENT -- 0.21%
- ------------------------------------------------------------
- ------------------
Hubbell Inc.......................................
2,000 131,500
ELECTRONICS -- 0.49%
- ------------------------------------------------------------
- ------------------
Amp Inc...........................................
8,000 307,000
ENERGY -- 10.97%
- ------------------------------------------------------------
- ------------------
Amoco Corporation.................................
7,000 503,125
Atlantic Richfield Company........................
5,000 553,750
British Petroleum PLC ADR.........................
4,000 408,500
Chevron Corporation...............................
12,000 630,000
Dresser Industries Inc............................
12,000 292,500
Exxon Corporation.................................
8,000 641,000
Halliburton Company...............................
7,000 354,375
McDermott International Inc.......................
6,000 132,000
Mobil Corporation.................................
6,000 672,000
Occidental Petroleum Corporation..................
10,000 213,750
Royal Dutch Petroleum Company.....................
5,000 705,625
Tenneco Inc.......................................
12,000 595,500
Texaco Inc........................................
7,000 549,500
Williams Companies Inc............................
15,000 658,125
- ------------
6,909,750
FINANCE -- 7.85%
- ------------------------------------------------------------
- ------------------
American Express Company..........................
15,000 620,625
Banc One Corporation..............................
12,000 453,000
Bank Of New York Co. Inc..........................
14,000 682,500
BankAmerica Corporation...........................
8,000 518,000
Chemical Banking Corporation......................
6,000 352,500
First Interstate Bancorp..........................
5,000 682,500
Great Western Financial Corporation...............
30,000 765,000
H F Ahmanson & Company............................
30,000 795,000
Redwood Trust Inc.................................
4,000 73,000
- ------------
4,942,125
The Enterprise Group of Funds, Inc.
8
NUMBER
OF
SHARES VALUE
FOOD & BEVERAGES -- 2.26%
- ------------------------------------------------------------
- ------------------
American Brands Inc...............................
9,000 $ 401,625
General Mills Inc.................................
2,000 115,500
Philip Morris Companies Inc.......................
10,000 905,000
- ------------
1,422,125
HEALTH CARE -- 0.92%
- ------------------------------------------------------------
- ------------------
Pharmacia & Upjohn Inc............................
15,000 581,250
HOTELS & RESTAURANTS -- 0.28%
- ------------------------------------------------------------
- ------------------
Felcor Suite Hotels Inc...........................
6,400 177,600
INSURANCE -- 5.64%
- ------------------------------------------------------------
- ------------------
Aetna Life & Casualty Company.....................
12,000 831,000
Allstate Corporation..............................
12,000 493,500
Cigna Corporation.................................
8,000 826,000
Lincoln National Corporation......................
14,000 752,500
U.S. Healthcare Inc...............................
14,000 651,000
- ------------
3,554,000
MACHINERY -- 0.83%
- ------------------------------------------------------------
- ------------------
Hardinge Brothers Inc.............................
2,000 52,000
Pitney Bowes Inc..................................
10,000 470,000
- ------------
522,000
MISC. FINANCIAL SERVICES -- 1.58%
- ------------------------------------------------------------
- ------------------
Federal National Mortgage Association.............
8,000 993,000
PHARMACEUTICALS -- 10.01%
- ------------------------------------------------------------
- ------------------
American Home Products Corporation................
9,000 873,000
Baxter International Inc..........................
20,000 837,500
Bristol Myers Squibb Company......................
8,000 687,000
Merck & Company Inc...............................
12,000 789,000
Pfizer Inc........................................
14,000 882,000
Schering Plough Corporation.......................
16,000 876,000
Smithkline Beecham PLC ADR........................
14,000 777,000
Warner-Lambert Company............................
6,000 582,750
- ------------
6,304,250
PUBLISHING -- 3.53%
- ------------------------------------------------------------
- ------------------
Dun & Bradstreet Corporation......................
10,000 647,500
McGraw Hill Inc...................................
11,000 958,375
Readers Digest Association Inc....................
12,000 615,000
- ------------
2,220,875
RAW MATERIALS -- 4.91%
- ------------------------------------------------------------
- ------------------
Carpenter Technology Corporation..................
12,000 493,500
NUMBER
OF
SHARES VALUE
Federal Paper Board Inc...........................
12,000 $ 622,500
Freeport McMoRan Copper & Gold Inc................
15,000 420,000
Minnesota Mining & Manufacturing Company..........
10,000 662,500
Union Camp Corporation............................
7,000 333,375
Weyerhaeuser Company..............................
13,000 562,250
- ------------
3,094,125
REAL ESTATE -- 1.93%
- ------------------------------------------------------------
- ------------------
Avalon Properties Inc.............................
10,000 215,000
Bay Apartment Communities.........................
7,000 169,750
Developers Diversified Realty.....................
4,000 120,000
Equity Residential Properties Trust...............
6,000 183,750
Health Care Property Investors Inc................
8,000 281,000
Healthcare Realty Trust...........................
5,000 115,000
Irvine Apartment Communities Inc..................
7,000 134,750
- ------------
1,219,250
RETAIL -- 1.16%
- ------------------------------------------------------------
- ------------------
J C Penney Inc....................................
5,000 238,125
May Department Stores Company.....................
7,000 295,750
Sears Roebuck & Company...........................
5,000 195,000
- ------------
728,875
TECHNOLOGY -- 2.67%
- ------------------------------------------------------------
- ------------------
Harris Corporation Delaware.......................
8,000 437,000
Honeywell Inc.....................................
12,000 583,500
Thomas & Betts Corporation........................
9,000 663,750
- ------------
1,684,250
TRANSPORTATION -- 2.51%
- ------------------------------------------------------------
- ------------------
Conrail Inc.......................................
8,000 560,000
GATX Corp.........................................
8,000 389,000
Norfolk Southern Corporation......................
8,000 635,000
- ------------
1,584,000
UTILITIES -- 4.17%
- ------------------------------------------------------------
- ------------------
American Electric Power Inc.......................
11,000 445,500
Carolina Power & Light Company....................
12,000 414,000
FPL Group Inc.....................................
11,000 510,125
Southern Company..................................
20,000 492,500
U.S. West Inc.....................................
12,000 228,000
U.S. West Media, Inc..............................
15,000 536,250
- ------------
2,626,375
TOTAL COMMON STOCKS
(IDENTIFIED COST
$42,529,342)................................... $
58,411,900
The Enterprise Group of Funds, Inc.
9
Growth and Income Portfolio --
(Continued)
Portfolio of Investments
December 31, 1995
PRINCIPAL
COMMERCIAL PAPER -- 7.20%
AMOUNT VALUE
- ------------------------------------------------------------
- ------------------
Associates Corporation North America,
5.71% due 01/22/96................................ $
1,000,000 $ 996,669
Chevron Oil Finance Company
5.75% due 01/12/96................................
600,000 598,946
Ford Motor Credit Company
5.92% due 01/02/96................................
200,000 199,967
Household Finance Corporation
5.75% due 01/12/96................................
200,000 199,649
National Rural Utilities Cooperative Finance,
5.63% due 02/27/96................................
1,000,000 991,086
PHH Corporation
5.68% due 01/19/96................................
253,000 252,281
Prudential Insurance Company
5.75% due 01/16/96................................
300,000 299,281
Prudential Insurance Company
5.78% due 01/12/96................................
500,000 499,117
Prudential Funding Corporation
5.55% due 01/25/96................................
500,000 498,150
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST
$4,535,146)....................................
4,535,146
PRINCIPAL
REPURCHASE AGREEMENT -- 0.71%
AMOUNT VALUE
- ------------------------------------------------------------
- ------------------
State Street Bank & Trust Repurchase Agreement,
2.25% due 01/02/96
Collateral: U.S. Treasury Bond $445,000,
5.75% due 9/30/97 Value $455,183.................. $
445,000 $ 445,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST
$445,000)......................................
445,000
- ------------------------------------------------------------
- ------------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$47,509,488)...................................
63,392,046
OTHER ASSETS LESS LIABILITIES --
(0.64)%........................ (400,653)
- ------------
NET ASSETS --
100%.............................................. $
62,991,393
- ------------------------------------------------------------
- ------------------
(a) Non-income Producing
See notes to financial statements.
The Enterprise Group of Funds, Inc.
10
(This page intentionally left blank)
The Enterprise Group of Funds, Inc.
11
The Enterprise Capital Appreciation Portfolio
INVESTMENT MANAGEMENT
Provident Investment Counsel has been investment adviser
to the Enterprise
Capital Appreciation Portfolio since inception. Provident
Investment Counsel
currently manages over $16 billion for institutional
clients. Our usual
investment minimum is $5 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Capital Appreciation
Portfolio is to seek
maximum capital appreciation, primarily through investment
in common stock of
companies that demonstrate accelerating earnings
momentum and consistently
strong financial characteristics.
INVESTMENT PHILOSOPHY
Our investment philosophy is based on the belief that, over
time, the reason the
price of a company's stock increases is because its earnings
are increasing. Our
investment strategy seeks to create a portfolio of companies
that, in aggregate,
is growing its earnings at a faster and more consistent
rate than the overall
market.
1995 PERFORMANCE REVIEW
While the market was strong overall during 1995, it was
also characterized by
severe sector rotation. Few groups held leadership roles
during the entire year.
Slow-growth, large capitalization stocks led the market
during the first few
months of the year. Subsequently, during the second
and third quarters,
investors rotated into high growth stocks, yielding strong
performance for this
Portfolio. The information technology and the specialty
finance sectors were
major contributors to the Portfolio's performance. During
the final quarter of
the year, another rapid rotation occurred in which investors
sold virtually all
technology stocks and rotated back into large capitalization
defensive stocks in
order to lock in the gains achieved in 1995. As a
result, Portfolio returns
suffered during the fourth quarter but still produced solid
performance for the
year.
CLASS A
** The S&P 500/Barra Growth
Index is an unmanaged index
which excludes any transaction
or holding charges. Enterprise
performance numbers include
the maximum sales charge and
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than
original purchase.
The Enterprise Group of Funds, Inc.
12
CLASS B
** The S&P 500/Barra Growth
Index is an unmanaged index
which excludes any transaction
or holding charges. Enterprise
performance numbers include
all fees and CDSC charges.
Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than original
purchase.
FUTURE INVESTMENT STRATEGY
We have retained certain investments in the communication
and technology areas
because of the strong prospects that abound in the
networking, client server and
database arenas. In addition to the information technology
sector, the Portfolio
is invested in a wide range of industries including
healthcare, specialty
finance and business services. We believe that
investors are rewarded for
staying with high quality stocks in these industries as
the market rotates
toward companies with consistently growing earnings and
revenues.
PROVIDENT INVESTMENT COUNSEL, INC.
Pasadena, California
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED
ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
13
Capital Appreciation Portfolio
Portfolio of Investments
December 31, 1995
COMMON AND PREFERRED NUMBER
OF
STOCKS -- 93.12%
SHARES VALUE
- ------------------------------------------------------------
- ------------------
AEROSPACE -- 2.10%
- ------------------------------------------------------------
- ------------------
Boeing Company....................................
33,000 $ 2,586,375
BUSINESS SERVICES -- 9.61%
- ------------------------------------------------------------
- ------------------
Alco Standard Corporation.........................
28,200 1,286,625
Automatic Data Processing Inc.....................
9,400 697,950
Ceridian Corporation (a)..........................
13,900 573,375
Computer Sciences Corporation (a).................
27,000 1,896,750
Cuc International Inc. (a)........................
19,400 662,025
First Data Corporation............................
67,234 4,496,273
Loewen Group Inc. ADR.............................
49,900 1,263,094
Paychex Inc.......................................
19,200 957,600
- ------------
11,833,692
CAPITAL GOODS AND SERVICES -- 4.63%
- ------------------------------------------------------------
- ------------------
American Standard Cos Inc. Delaware (a)...........
61,900 1,733,200
Applied Materials Inc. (a)........................
53,200 2,094,750
Tyco Interest Limited.............................
52,600 1,873,875
- ------------
5,701,825
CHEMICALS -- 0.46%
- ------------------------------------------------------------
- ------------------
Air Products & Chemicals Inc......................
10,800 569,700
COMMUNICATIONS -- 7.47%
- ------------------------------------------------------------
- ------------------
British Sky Broadcast Group PLC ADR (a)...........
58,500 2,201,063
Ericsson L M Tel Company ADR......................
240,800 4,695,600
Nokia Corporation Preferred ADR...................
59,200 2,301,400
- ------------
9,198,063
COMPUTER HARDWARE -- 7.52%
- ------------------------------------------------------------
- ------------------
3Com Corporation (Rts) (a)........................
51,400 2,396,525
Cabletron Systems Inc. (a)........................
22,250 1,802,250
Cisco Systems Inc. (a)............................
37,000 2,761,125
United States Robotics Corporation (a)............
26,200 2,299,050
- ------------
9,258,950
COMPUTER SOFTWARE -- 9.52%
- ------------------------------------------------------------
- ------------------
Computer Associates International Inc.............
58,800 3,344,250
Informix Corporation (a)..........................
87,000 2,610,000
Microchip Technology Inc. (a).....................
20,000 730,000
Microsoft Corporation (a).........................
10,600 930,150
Oracle System Corporation (a).....................
96,900 4,106,138
- ------------
11,720,538
NUMBER
OF
SHARES VALUE
CONSUMER NON-DURABLES -- 1.15%
- ------------------------------------------------------------
- ------------------
Gillette Company..................................
27,200 $ 1,417,800
ELECTRICAL EQUIPMENT -- 0.65%
- ------------------------------------------------------------
- ------------------
Avx Corporation...................................
30,000 795,000
ELECTRONICS -- 9.29%
- ------------------------------------------------------------
- ------------------
Altera Corporation (a)............................
13,000 646,750
Andrew Corporation (a)............................
32,850 1,256,512
Atmel Corporation (a).............................
30,000 671,250
Glenayre Technologies Inc. (a)....................
18,700 1,164,075
LAM Research Corporation (a)......................
15,000 686,250
Linear Technology Corporation.....................
25,000 981,250
LSI Logic Corporation (a).........................
28,200 923,550
Maxim Integrated Products Inc. (a)................
40,000 1,540,000
Molex Inc.........................................
23,750 727,344
Teradyne Inc. (a).................................
61,000 1,525,000
Xilinx Inc. (a)...................................
43,300 1,320,650
- ------------
11,442,631
ENERGY -- 2.17%
- ------------------------------------------------------------
- ------------------
Enron Corporation.................................
70,000 2,668,750
ENTERTAINMENT & LEISURE -- 1.64%
- ------------------------------------------------------------
- ------------------
Capital Cities ABC Inc............................
16,400 2,023,350
FINANCE -- 8.77%
- ------------------------------------------------------------
- ------------------
Federal Home Loan Mortgage Corporation............
8,700 726,450
Federal National Mortgage Association.............
26,400 3,276,900
Finova Group Inc..................................
40,100 1,934,825
First USA Inc.....................................
36,500 1,619,687
MBNA Corporation..................................
88,050 3,246,844
- ------------
10,804,706
HEALTH CARE -- 12.74%
- ------------------------------------------------------------
- ------------------
Amerisource Health Corporation (a)................
40,000 1,320,000
Cardinal Health Inc...............................
31,600 1,730,100
Genesis Health Ventures Inc. (a)..................
30,000 1,095,000
Healthsouth Corporation (a).......................
40,300 1,173,737
Idexx Labs Inc. (a)...............................
36,000 1,692,000
Medtronic Inc.....................................
64,800 3,620,700
Pfizer Inc........................................
20,200 1,272,600
Scherer R P Corporation (a).......................
14,900 731,963
St. Jude Medical Inc. (a).........................
30,450 1,309,350
United Healthcare Corporation (a).................
26,600 1,742,300
- ------------
15,687,750
The Enterprise Group of Funds, Inc.
14
NUMBER
OF
SHARES VALUE
HOTELS & RESTAURANTS -- 1.90%
- ------------------------------------------------------------
- ------------------
HFS Inc. (a)......................................
28,700 $ 2,346,225
INSURANCE -- 3.64%
- ------------------------------------------------------------
- ------------------
American International Group Inc..................
17,850 1,651,125
MGIC Investment Corporation.......................
40,000 2,170,000
PMI Group Inc.....................................
14,500 656,125
- ------------
4,477,250
RETAIL -- 2.31%
- ------------------------------------------------------------
- ------------------
Autozone Inc. (a).................................
58,400 1,686,300
Office Depot Inc. (a).............................
58,850 1,162,288
- ------------
2,848,588
TECHNOLOGY -- 5.70%
- ------------------------------------------------------------
- ------------------
Analog Devices Inc. (a)...........................
57,600 2,037,600
Hewlett Packard Company...........................
34,800 2,914,500
Intel Corporation.................................
36,400 2,065,700
- ------------
7,017,800
TELECOMMUNICATIONS -- 1.17%
- ------------------------------------------------------------
- ------------------
Frontier Corporation..............................
48,200 1,446,000
TRANSPORTATION -- 0.68%
- ------------------------------------------------------------
- ------------------
Fritz Companies Inc. (a)..........................
20,200 838,300
TOTAL COMMON AND PREFERRED STOCKS
(IDENTIFIED COST
$88,089,581)...................................
114,683,293
- ------------------------------------------------------------
- ------------------
PRINCIPAL
COMMERCIAL PAPER -- 4.06%
AMOUNT VALUE
- ------------------------------------------------------------
- ------------------
Prudential Funding Corporation 5.77% due
01/09/96.......................................... $
5,000,000 $ 5,000,000
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST
$5,000,000)....................................
5,000,000
- ------------------------------------------------------------
- ------------------
REPURCHASE AGREEMENT -- 3.91%
- ------------------------------------------------------------
- ------------------
State Street Bank & Trust Repurchase Agreement,
4.25% due 01/02/96 Collateral: U.S. Treasury Note,
$4,805,000 5.75% due 9/30/97 Value $4,925,182..... $
4,815,000 4,815,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST
$4,815,000)....................................
4,815,000
- ------------------------------------------------------------
- ------------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$97,904,581)...................................
124,498,293
OTHER ASSETS LESS LIABILITIES --
(1.09)%........................ (1,338,888)
- ------------
NET ASSETS --
100%..............................................
$123,159,405
- ------------------------------------------------------------
- ------------------
(a) Non-income Producing
See notes to financial statements.
The Enterprise Group of Funds, Inc.
15
The Enterprise Small Company Portfolio
INVESTMENT MANAGEMENT
Fisher Investments has been investment adviser to the
Enterprise Small Company
Portfolio since inception. Fisher Investments currently
manages over $1.3
billion for institutional clients. Our normal investment
minimum is $5 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Small Company Portfolio
is to seek maximum
capital appreciation, primarily through investment in the
equity securities of
companies which have a market capitalization of no more than
$1 billion.
INVESTMENT PHILOSOPHY
Our investment process is to identify, using quantitative
methods, those stocks
with good financial strength and whose growth
potential exceeds commonly
perceived expectations as measured by a low overall
price relative to
fundamental measures of growth and valuation. Individual
stock selection is
based on fundamental qualitative stock analysis which
includes identification of
core competencies and strategic attributes.
1995 PERFORMANCE REVIEW
Much of the 1995 market performance was powered by growth
stocks, in big and
small cap. Our goal is to select small company value stock
whose expected future
is greater than the markets collective expectation. Since
small value was 1995's
laggard and 1995 was so strong, we suspect more tax loss
selling occurred than
usual, driving small value stocks down further. With
large capital gains,
especially in technology stocks, and as these stocks
finally buckled in the
fourth quarter, taxable investors took profits which were
offset by realizing
small value losses. This produced artificial downward
pressure on small value.
CLASS A
** The Wilshire Small Cap
Index is an unmanaged index
which excludes any transaction
or holding charges. Enterprise
performance numbers include
the maximum sales charge and
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than at
original price.
The Enterprise Group of Funds, Inc.
16
CLASS B
** The Wilshire Small Cap
Index is an unmanaged index
which excludes any transaction
or holding charges. Enterprise
performance numbers include
all fees and CDSC charges.
Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
price.
CLASS Y
** The Wilshire Small Cap
Index is an unmanaged index
which excludes any transaction
or holding charges. Enterprise
performance numbers include
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than at
original price.
FUTURE INVESTMENT STRATEGY
Fourth quarter interest rates fell globally, renewing the
trend started in early
1995. This should help fuel global economic growth. Since
there is a lag between
interest rate shifts and economic growth, the recent cuts
and perhaps a few
future ones should provide enough stimulus to support our
economy through 1996.
We also expect politics to have a big 1996 market
impact. A Presidential
election year is almost always a good one for the stock
market. Overall, we
believe that 1996 will be a solid one for investments and
the recovery of small
cap value equities.
FISHER INVESTMENTS, INC.
Woodside, California
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED
ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED
ON MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
17
Small Company Portfolio
Portfolio of Investments
December 31, 1995
NUMBER OF
COMMON STOCKS -- 99.43%
SHARES VALUE
- ------------------------------------------------------------
- ------------------------
AEROSPACE -- 4.43%
- ------------------------------------------------------------
- ------------------------
Orbital Sciences Corporation......................
22,200 $ 283,050
Sequa Corporation (a).............................
12,700 387,350
Thiokol Corporation...............................
10,800 365,850
- -----------
1,036,250
APPAREL & TEXTILES -- 3.84%
- ------------------------------------------------------------
- ------------------------
Delta Woodside Industries Inc.....................
34,000 225,250
Guilford Mills Inc................................
15,500 315,812
Justin Industries Inc.............................
32,600 358,600
- -----------
899,662
BASIC INDUSTRIES -- 6.54%
- ------------------------------------------------------------
- ------------------------
Amcast Industrial Corporation.....................
15,100 275,575
Magma Copper Company (a)..........................
20,400 568,650
Nacco Industries Inc..............................
5,100 283,050
Texas Industries Inc..............................
7,600 402,800
- -----------
1,530,075
BUSINESS SERVICES -- 3.74%
- ------------------------------------------------------------
- ------------------------
Bowne & Company Inc...............................
18,000 360,000
Nashua Corporation................................
12,700 173,037
Standard Register.................................
17,000 342,125
- -----------
875,162
CAPITAL GOODS AND SERVICES -- 12.70%
- ------------------------------------------------------------
- ------------------------
AAR Corporation...................................
19,900 437,800
Ekco Group Inc. (a)...............................
39,100 229,713
Handleman Company.................................
31,400 180,550
Interface Inc.....................................
23,900 406,300
Marshall Industries (a)...........................
10,300 330,887
Morgan Keegan Inc.................................
35,400 446,925
Sanifill Inc......................................
8,100 270,338
SPX Corporation...................................
23,000 365,125
Wyle Laboratories.................................
8,700 305,587
- -----------
2,973,225
CHEMICALS -- 2.03%
- ------------------------------------------------------------
- ------------------------
Church & Dwight Inc...............................
3,500 64,750
H B Fuller Company................................
6,400 222,400
Hexcel Corporation (a)............................
12,000 135,000
Petrolite Corporation.............................
1,900 54,150
- -----------
476,300
COMPUTER HARDWARE -- 3.48%
- ------------------------------------------------------------
- ------------------------
AST Research Inc. (a).............................
18,796 159,766
NUMBER OF
SHARES VALUE
Cray Research Inc. (a)............................
16,000 $ 396,000
Quantum Corporation (a)...........................
16,100 259,613
- -----------
815,379
COMPUTER SOFTWARE -- 1.49%
- ------------------------------------------------------------
- ------------------------
Pyxis Corporation.................................
23,800 348,075
CONSTRUCTION -- 2.80%
- ------------------------------------------------------------
- ------------------------
Kaufman & Broad Home Corporation..................
26,200 389,725
Webb Del Corporation..............................
13,200 265,650
- -----------
655,375
CONSUMER BASICS -- 0.26%
- ------------------------------------------------------------
- ------------------------
Mid American Waste Systems Inc....................
17,200 60,200
CONSUMER NON-DURABLES -- 5.77%
- ------------------------------------------------------------
- ------------------------
CPI Corporation...................................
19,000 304,000
Haggar Corporation................................
17,100 307,800
Helene Curtis Industries Inc......................
11,600 366,850
Hunt Manufacturing Company........................
21,400 371,825
- -----------
1,350,475
ELECTRICAL EQUIPMENT -- 2.63%
- ------------------------------------------------------------
- ------------------------
Baldor Electric Company...........................
12,750 256,594
Toro Company......................................
10,900 358,337
- -----------
614,931
ELECTRONICS -- 0.97%
- ------------------------------------------------------------
- ------------------------
Dallas Semiconductor Corporation..................
11,000 228,250
ENERGY -- 2.47%
- ------------------------------------------------------------
- ------------------------
Seitel Inc........................................
8,100 286,538
Zurn Industries Inc...............................
13,700 292,837
- -----------
579,375
ENTERTAINMENT & LEISURE -- 1.09%
- ------------------------------------------------------------
- ------------------------
Huffy Corporation.................................
25,300 256,163
FOOD & BEVERAGES -- 4.29%
- ------------------------------------------------------------
- ------------------------
Adolph Coors Company..............................
15,500 342,937
International Multifoods Corporation..............
16,400 330,050
Michaels Foods....................................
28,500 331,313
- -----------
1,004,300
FOREST PRODUCTS -- 1.13%
- ------------------------------------------------------------
- ------------------------
Pope & Talbot Inc.................................
19,900 263,675
The Enterprise Group of Funds, Inc.
18
NUMBER OF
SHARES VALUE
HEALTH CARE -- 9.12%
- ------------------------------------------------------------
- ------------------------
Advanced Technology Laboratories Inc. (a).........
10,200 $ 249,900
Bindley Western Industries Inc....................
21,700 368,900
Bio Rad Laboratories Inc..........................
8,000 340,000
Coastal Physician Group Inc.......................
26,000 351,000
Horizon CMS Healthcare Corporation................
19,860 501,465
Patterson Dental Company (a)......................
12,000 324,000
- -----------
2,135,265
HOTELS & RESTAURANTS -- 4.99%
- ------------------------------------------------------------
- ------------------------
Aztar Corporation (a).............................
34,500 276,000
Primadonna Resorts Inc............................
19,800 292,050
Rio Hotel & Casino Inc. (a).......................
25,500 302,812
Sonic Corporation.................................
14,250 270,750
Vicorp Restaurants Inc. (a).......................
2,700 26,325
- -----------
1,167,937
INSURANCE -- 5.38%
- ------------------------------------------------------------
- ------------------------
Financial Security Assured Holdings Ltd...........
12,961 322,405
Guaranty National Corporation.....................
8,200 126,075
John Alden Financial Corporation..................
8,400 175,350
Liberty Corporation...............................
7,300 246,375
Selective Insurance Group Inc.....................
11,000 390,500
- -----------
1,260,705
MACHINERY -- 1.69%
- ------------------------------------------------------------
- ------------------------
Varco International Inc. (a)......................
33,000 396,000
PUBLISHING -- 2.73%
- ------------------------------------------------------------
- ------------------------
Houghton Mifflin Company..........................
5,600 240,800
Meredith Corporation..............................
9,500 397,813
- -----------
638,613
RETAIL -- 9.13%
- ------------------------------------------------------------
- ------------------------
Bradlees Inc. (a).................................
22,100 24,863
Freds Inc.........................................
21,600 162,000
Hechinger Company.................................
25,700 112,437
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT VALUE
J. Baker Inc......................................
19,600 $ 112,700
Lechters Inc. (a).................................
10,100 65,019
Ross Stores Inc. (a)..............................
24,100 460,912
Ruddick Corporation...............................
31,400 361,100
Shopko Stores Inc. (a)............................
27,100 304,875
The Good Guys Inc. (a)............................
19,000 171,000
Waban Inc. (a)....................................
19,400 363,750
- -----------
2,138,656
TRANSPORTATION -- 2.47%
- ------------------------------------------------------------
- ------------------------
American President Companies Ltd..................
13,800 317,400
Arkansas Best Holding Corporation.................
33,100 260,663
- -----------
578,063
UTILITIES -- 4.26%
- ------------------------------------------------------------
- ------------------------
Connecticut Energy Corporation....................
12,400 275,900
NUI Corporation...................................
13,700 239,750
Oneok Inc.........................................
10,300 235,612
United Illuminating Company.......................
6,600 246,675
- -----------
997,937
TOTAL COMMON STOCKS
(IDENTIFIED COST
$22,584,709)......................................
$23,280,048
REPURCHASE AGREEMENT -- 1.19%
- ------------------------------------------------------------
- ------------------------
State Street Bank & Trust Repurchase Agreement,
2.25% due 01/02/96 Collateral: U.S. Treasury Note
$280,000, 5.75% due 9/30/97, Value $286,407....... $
280,000 280,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST
$280,000).........................................
280,000
- ------------------------------------------------------------
- ------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$22,864,709)......................................
23,560,048
OTHER ASSETS LESS LIABILITIES --
(0.62)%........................... (146,082)
- -----------
NET ASSETS
100%....................................................
$23,413,966
- ------------------------------------------------------------
- ------------------------
(a) Non-income Producing
See notes to financial statements.
The Enterprise Group of Funds, Inc.
19
The Enterprise International Growth Portfolio
INVESTMENT MANAGEMENT
Brinson Partners is a global investment management firm with
offices in Chicago,
London and Tokyo. We became managers of the Enterprise
International Growth
Portfolio on October 1, 1994. Brinson Partner, Inc.,
currently manages over $50
billion for institutional clients. Our normal investment
minimum is $25 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise International Growth
Portfolio is to seek
capital appreciation, primarily through a diversified
portfolio of non-U.S.
equity securities.
INVESTMENT PHILOSOPHY
We believe that discrepancies exist between prices and
fundamental values, both
across and within the international equity markets. We take
advantage of these
discrepancies by using a disciplined approach to measure
fundamental value from
the perspective of the long term investor. Our international
equity strategy
reflects our decisions about the relative attractiveness of
the asset class, the
individual equity markets, currencies, the industries across
and within those
markets, other common risk factors within those markets and
individual
international companies.
1995 PERFORMANCE REVIEW
Over the year the Portfolio has benefited from active
strategies in market
allocation, currency allocation and security selection.The
Portfolio also was
helped because of an underweight position in the Japanese
market. This
underweight position was reduced in August to take advantage
of the number of
Japanese government measures that we felt could result in a
sharp rise in the
price of the equity market. Our underweight in Japanese yen
and Deutsche
mark-bloc currencies and overweight in the currency position
in the U.S. and
Canadian dollar continued to benefit the Portfolio. Stock
selection in Japan was
also positive over the year.
CLASS A
** The EAFE Index is an un-
managed index which excludes
transaction or holding
charges. Enterprise
performance numbers include
the maximum sales charge and
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than at
original purchase.
The Enterprise Group of Funds, Inc.
20
CLASS B
** The EAFE Index is an un-
managed index which excludes
transaction or holding
charges. Enterprise
performance numbers include
all fees and CDSC charges.
Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
CLASS Y
** The EAFE Index is an un-
managed index which excludes
transaction or holding
charges. Enterprise
performance numbers include
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than at
original purchase.
FUTURE INVESTMENT STRATEGY
We will continue to emphasize undervalued equity
markets, while protecting
against overvalued currencies. In general, we view
international equity markets
as overvalued, with expected returns in most markets
below those we normally
require as compensation for risk. While the Portfolio
currently has a modest
underweight in Japan, we see opportunities in some of the
European markets, such
as the Netherlands and Belgium. The German market, in
contrast, is likely to
perform relatively poorly, as the negative effects of the
overvalued Deutsche
mark impact corporate earnings. Outside of Europe, New
Zealand offers compelling
valuations. Through major structural reforms it has become a
competitive economy
with attractive growth prospects. In Australia, however,
economic growth is
clearly slowing and there is some uncertainty about future
inflation and the
current account deficit. Despite these characteristics,
equity valuations still
remain attractive. In southeast Asian markets, we believe
prices are very high
relative to underlying value.
BRINSON PARTNERS, INC.
Chicago, Illinois
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE
COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
21
International Growth Portfolio
Portfolio of Investments
December 31, 1995
NUMBER OF
COMMON STOCKS -- 93.10% SHARES
VALUE
- ------------------------------------------------------------
- -------------------
AUSTRALIA -- 3.96%
- ------------------------------------------------------------
- -------------------
Amcor LTD.................................... 12,800
$ 90,382
ANZ Banking Group............................ 14,201
66,603
Broken Hill Proprietary...................... 24,200
341,757
CRA LTD...................................... 8,000
117,378
David Jones LTD.............................. 30,000
45,934
Lend Lease Corporation....................... 7,091
102,776
National Australia Bank...................... 14,500
130,407
News Corporation............................. 14,020
74,821
Pacific Dunlop LTD........................... 19,500
45,656
Qantas Airways LTD........................... 26,000
43,288
Santos LTD................................... 23,000
67,184
Westpac Bank Corporation..................... 27,500
121,823
WMC LTD...................................... 8,000
51,375
- -----------
1,299,384
BELGIUM -- 2.79%
- ------------------------------------------------------------
- -------------------
Bruxelles Lambert Groupe..................... 400
54,366
Delhaize Le Lion............................. 900
37,309
Electrabel................................... 840
199,796
Fortis AG.................................... 800
97,180
Kredietbank.................................. 480
131,295
Petrofina SA................................. 350
107,153
Society General De Belgique.................. 550
45,974
Solvay....................................... 170
92,278
Tractebel CAP................................ 300
123,853
Union Miniere (a)............................ 400
26,775
- -----------
915,979
CANADA -- 3.45%
- ------------------------------------------------------------
- -------------------
Alcan Aluminum LTD........................... 3,000
93,098
Bank Montreal Quebec......................... 6,300
143,025
Barrick Gold Corporation..................... 2,300
60,637
Canadian Pacific LTD......................... 7,500
136,626
Imperial Oil LTD............................. 3,600
130,172
Moore Corporation Limited.................... 1,700
31,902
Noranda Inc.................................. 2,700
55,611
Norcen Energy Resources LTD.................. 2,500
37,532
Northern Telecom LTD......................... 1,500
64,125
Nova Corporation Alberta..................... 4,700
37,862
Royal Bank Canada Montreal Quebec............ 5,000
113,969
Seagram LTD.................................. 2,600
89,491
Thomson Corporation.......................... 6,400
89,052
Transcanada Pipelines LTD.................... 3,700
51,144
- -----------
1,134,246
FRANCE -- 8.23%
- ------------------------------------------------------------
- -------------------
Accor........................................ 900
116,520
Alcatel Alsthom.............................. 1,129
97,338
Banque National Paris........................ 3,580
161,491
Carnaudmetalbox.............................. 1,800
82,336
NUMBER OF
SHARES
VALUE
Cep Communications........................... 880
$ 72,959
Cie De St Gobain............................. 1,310
142,851
Cie De Suez.................................. 1,679
69,258
Cie Generale Des Eaux........................ 1,705
170,222
Colas (Rts).................................. 332
55,593
Compagnie Bancaire........................... 976
109,220
Credit Local de France....................... 1,962
157,056
GAN Group (a)................................ 670
24,491
LVMH Moet Hennessy........................... 1,175
244,742
Michelin (a)................................. 2,200
87,739
Pechiney..................................... 1,450
54,778
Peugeot SA (a)............................... 2,010
265,154
Sanofi....................................... 1,600
102,561
Societe Generale............................. 1,690
208,791
Society Elf Aquitaine........................ 2,136
157,376
Total SA..................................... 3,400
229,467
Union Assured Paris.......................... 3,528
92,144
- -----------
2,702,087
GERMANY -- 5.40%
- ------------------------------------------------------------
- -------------------
Allianz AG Holdings.......................... 120
233,893
BASF AG...................................... 370
82,409
Bayer AG..................................... 360
94,988
Bayer Motoren Werk........................... 155
79,418
Bayer Vereinsbk.............................. 2,130
63,254
Commerzbank AG............................... 370
87,438
Daimler Benz AG.............................. 200
100,662
Deutsche Bank AG............................. 5,100
241,650
Hoechst AG................................... 350
94,911
Kaufhof Holding AG........................... 230
70,066
Mannesmann AG................................ 450
143,266
Muenchener Ruckvers.......................... 65
141,373
Muenchener Ruckvers (a)...................... 5
10,756
Preussag AG (a).............................. 260
72,681
Rhein- Westf eleckir AG...................... 250
90,624
Schering AG.................................. 650
43,060
Veba AG...................................... 2,880
122,267
- -----------
1,772,716
ITALY -- 2.44%
- ------------------------------------------------------------
- -------------------
Assic Generali............................... 7,000
169,477
Eni (ADR).................................... 4,900
167,825
IMI.......................................... 17,000
107,044
Italgas...................................... 23,000
69,950
Mediobanca SPA............................... 3,000
20,770
Montedison SPA (a)........................... 43,000
28,809
Rinascente................................... 8,000
48,409
SAI.......................................... 7,000
29,047
Telecom Italia............................... 70,000
85,598
Telecom Italia Mobile........................ 70,000
73,609
- -----------
800,538
The Enterprise Group of Funds, Inc.
22
NUMBER OF
SHARES
VALUE
JAPAN -- 35.92%
- ------------------------------------------------------------
- -------------------
Amada Company................................ 18,000
$ 177,821
Asahi Glass Company.......................... 23,000
256,174
Bank of Tokyo................................ 11,000
192,833
Canon Inc.................................... 16,000
289,782
Canon Sales Company Inc...................... 5,250
139,831
Citizen Watch Company........................ 18,000
137,724
Dai Nippon Printng........................... 16,000
271,186
Daiichi Pharm Company........................ 8,000
113,898
Daikin Kogyo................................. 18,000
176,077
Daiwa House Industries....................... 9,000
148,184
Fanuc........................................ 4,500
194,818
Fujitsu...................................... 12,000
133,656
Hitachi...................................... 37,000
372,688
Honda Motor Company.......................... 11,000
226,925
Inax Corporation............................. 19,000
180,339
Isetan Company............................... 7,000
115,254
Ito Yokado Company........................... 9,000
554,383
Keio Teito Electric Railway.................. 20,000
116,416
Kintetsu..................................... 20,000
151,090
Kirin Brewery Company........................ 11,000
129,976
Kuraray Company.............................. 10,000
109,443
Maeda Road Construction...................... 4,000
73,995
Marui Company................................ 6,000
124,939
Matsushita Electric Industrial Indiana....... 30,000
488,136
Mitsubishi Bank.............................. 8,000
188,281
Mitsubishi Paper............................. 22,000
132,320
NGK Insulators............................... 30,000
299,274
Nichii Company............................... 14,000
185,763
Nintendo Company............................. 1,600
121,646
Nippon Denso................................. 13,000
243,002
Nippon Meat Packer........................... 11,000
159,806
Nippon Steel Corporation..................... 14,000
48,000
Orix Corporation............................. 2,000
82,324
Osaka Gas Company............................ 80,000
276,610
Pioneer Electronic........................... 8,000
146,441
Sankyo Company............................... 14,000
314,576
Secom Company................................ 5,000
347,700
Seino Transportation......................... 7,000
117,288
Sekisui House................................ 37,000
473,027
Shinmaywa Industries......................... 11,000
90,770
Sony Corporation............................. 4,600
275,777
Sumitomo Bank................................ 20,000
424,213
Sumitomo Electric Industries................. 15,000
180,145
Takeda Chemical Industries................... 21,000
345,763
TDK Corporation.............................. 6,000
306,247
Tokio Marine & Fire.......................... 16,000
209,201
Tokyo Electric Power......................... 7,700
205,831
Tokyo Steel Manufacturing.................... 13,300
244,746
Tonen Corporation............................ 10,000
146,247
Toray Industries Inc......................... 78,000
513,705
Toshiba Corporation.......................... 59,000
462,286
NUMBER OF
SHARES
VALUE
Toyo Suisan Kaisha........................... 11,000
$ 136,368
Toyota Motor Corporation..................... 6,000
127,264
Yamazaki Baking Company...................... 6,000
111,574
- -----------
11,791,763
MALAYSIA -- 0.83%
- ------------------------------------------------------------
- -------------------
Genting Berhad............................... 1,000
8,347
Hume Industries.............................. 4,000
19,215
Kuala Lumpur Kepg............................ 9,000
28,527
Land & General............................... 10,000
21,656
Malayan Bank Berhad.......................... 4,000
33,705
Nestle Malay Berhad.......................... 3,000
21,971
Sime Darby Berhad............................ 16,000
42,525
Telekom Malaysia............................. 7,000
54,573
Tenaga Nasional.............................. 11,000
43,312
- -----------
273,831
NETHERLANDS -- 6.34%
- ------------------------------------------------------------
- -------------------
Abn Amro Holdings............................ 5,905
268,995
DSM.......................................... 750
61,694
ING.......................................... 4,720
315,314
KPN.......................................... 3,080
111,899
Philips Electronic........................... 1,800
65,059
Royal Dutch Petroleum........................ 5,570
778,210
Royal Dutch Petroleum Company
(ADR)........................................ 500
70,562
Unilever..................................... 2,240
314,775
Ver Ned Uitgevers............................ 700
96,099
- -----------
2,082,607
NEW ZEALAND -- 2.02%
- ------------------------------------------------------------
- -------------------
Brierley Investment LTD...................... 156,000
123,405
Carter Holt Harvey........................... 66,000
142,390
Fletcher Challenge........................... 72,000
166,161
Fletcher Challenge Forest Division........... 8,513
12,133
Telecom Corporation of New Zealand........... 38,000
163,964
Telecom Corporation of New Zealand (ADR)..... 800
55,500
- -----------
663,553
SPAIN -- 2.94%
- ------------------------------------------------------------
- -------------------
Banco Bilbao Vizcaya......................... 2,700
97,271
Banco Intercontinental....................... 630
61,286
Banco Popular................................ 360
66,391
Banco Santander SA........................... 1,650
82,840
Emp Nac Electricid........................... 1,550
87,786
Iberdrola SA................................. 18,800
172,036
Repsol SA (ADR).............................. 4,540
148,776
Sevillana De Electric........................ 7,000
54,361
Telefonica De Espana......................... 12,000
166,200
The Enterprise Group of Funds, Inc.
23
International Growth Portfolio --
(Continued)
Portfolio of Investments
December 31, 1995
NUMBER OF
SHARES
VALUE
Viscofan Envoltura........................... 2,300
$ 27,304
- -----------
964,251
SWITZERLAND -- 2.21%
- ------------------------------------------------------------
- -------------------
Ciba Geigy AG................................ 90
79,194
CS Holding................................... 761
78,013
Nestle SA.................................... 189
209,072
Roche Holdings AG............................ 19
150,303
Schweiz Bankgesellschaft..................... 78
84,525
Societe General Surveillance Holding......... 30
59,558
Zurich Verischerung.......................... 222
66,398
- -----------
727,063
UNITED KINGDOM -- 16.57%
- ------------------------------------------------------------
- -------------------
Asda Group................................... 40,500
69,817
Bass......................................... 15,200
169,610
BAT Industries............................... 19,300
169,950
BET.......................................... 24,000
47,337
Booker....................................... 7,600
42,845
British Gas.................................. 61,500
242,600
British Petroleum............................ 35,507
296,397
British Telecom.............................. 59,000
323,451
Charter...................................... 7,489
100,605
Coats Viyella................................ 26,800
72,629
FKI.......................................... 31,750
81,360
General Electric............................. 78,800
433,223
Glaxo Holdings............................... 7,400
105,156
Grand Metropolitan........................... 40,000
287,933
Guinness..................................... 23,300
171,340
Hanson....................................... 36,500
108,837
Hillsdown Holdings........................... 34,000
89,766
House of Fraser.............................. 50,500
138,818
Legal & General.............................. 10,000
104,053
Lloyds Abbey Life............................ 11,700
81,767
Lloyds Tsb Group............................. 89,232
459,394
Lucas Industries............................. 19,500
54,814
Marks & Spencer.............................. 21,000
146,762
Mirror Group PLC............................. 37,800
103,320
National Power............................... 15,500
108,204
National Westminster Bank.................... 19,000
191,357
Ocean Group.................................. 12,500
75,322
Peninsular and Oriental Steam................ 13,500
99,798
Reckitt & Colman............................. 10,000
110,654
Redland...................................... 8,500
51,285
RJB Mining................................... 5,000
42,398
Rolls Royce.................................. 45,900
134,015
NUMBER OF
SHARES OR
PRINCIPAL
AMOUNT
VALUE
Royal Insurance.............................. 15,000
$ 88,873
Sears........................................ 51,200
82,696
Sedgwick Group............................... 10,400
19,543
Smith (W.H.) Group........................... 9,800
64,532
Smithkline Beecham........................... 10,200
111,204
TESCO........................................ 37,800
174,353
Thames Water................................. 12,300
107,260
Unilever..................................... 3,700
75,994
- -----------
5,439,272
TOTAL COMMON STOCKS
(IDENTIFIED COST
$28,546,914).................................
30,567,290
- ------------------------------------------------------------
- -------------------
PREFERRED STOCK -- 0.29%
- ------------------------------------------------------------
- -------------------
ITALY -- 0.29%
- ------------------------------------------------------------
- -------------------
Fiat SPA..................................... 51,000
93,129
TOTAL PREFERRED STOCK
(IDENTIFIED COST
$114,552)....................................
93,129
- ------------------------------------------------------------
- -------------------
REPURCHASE AGREEMENTS -- 4.37%
- ------------------------------------------------------------
- -------------------
State Street Bank & Trust Short Term Investor
Fund, 4.25% due 01/02/96.....................
Collateral: U.S. Treasury Bond $1,435,000,
5.75% due 9/30/97 value $1,467,837........... $1,435,000
1,435,000
TOTAL REPURCHASE AGREEMENTS
(IDENTIFIED COST
$1,435,000)..................................
1,435,000
- ------------------------------------------------------------
- -------------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$30,096,466).................................
32,095,419
OTHER ASSETS LESS LIABILITIES --
2.24%........................ 736,150
- -----------
NET ASSETS --
100%............................................
$32,831,569
- ------------------------------------------------------------
- -------------------
(a) Non-income Producing
(Rts) Rights
(Wts) Warrants
ADR American Depository Receipts
THESE ABBREVIATIONS SIGNIFY INCORPORATION:
AG Aktien Gesellschaft
LTD Limited
SA Societe Anonyme
SPA Societa Per Azoine
See notes to financial statements.
The Enterprise Group of Funds, Inc.
24
(This page intentionally left blank)
The Enterprise Group of Funds, Inc.
25
The Enterprise Government Securities Portfolio
INVESTMENT MANAGEMENT
TCW Funds Management is a wholly owned subsidiary of TCW
Management Company, a
23 year old investment advisory firm. We have been managing
the Enterprise
Government Securities Portfolio since May 1, 1992. TCW
currently manages over
$52 billion for institutional clients. Our normal investment
minimum is $50
million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Government Securities
Portfolio is to seek
current income and safety of principal, primarily from
securities that are
obligations of the U.S. Government, its agencies or its
instrumentalities.
INVESTMENT PHILOSOPHY
Our investment process is grounded in long term value
considerations. We do not
attempt to forecast short term trends in interest rates and,
therefore, do not
frequently alter average portfolio maturities. The process
focuses on
controlling the variables that are known and can be managed,
such as the term
structure of interest rates, mortgage prepayment rates and
security structure.
Portfolios remain substantially invested in mortgage-backed
products under the
great majority of market conditions.
1995 PERFORMANCE REVIEW
The highest yield of calendar year 1995 was seen in the
first week and the
lowest yield was hit on the last day. This gate-to-gate bull
market for bonds
paused only briefly in mid-summer. The decline in yields
occurred more rapidly
and to a greater extent than even the optimists expected.
In the mortgage market, the prepayment outlook reversed
trend again during 1995
as the 30 year commitment rate marched down to near 7% over
the course of the
year. Only the last leg of this move was sufficient to
increase refinancing
activity on many fixed rate loans, although adjustable rate
mortgages reached
full prepayment stride at mid-year. Assuming mortgages rates
hover near the 7%
level, we can expect substantial increases in reported
refinancing activity by
spring.
The performance of this Portfolio was strong throughout the
year, owing
particularly to our emphasis on call protection. Our goal is
to reap incremental
yield of mortgage assets without taking on the full measure
of prepayment risk.
This strategy worked particularly well in 1995.
The Enterprise Group of Funds, Inc.
26
CLASS A
** The Lehman Brothers
Intermediate Government
Corporate Bond Index is an
unmanaged index which excludes
transaction and holding
charges. Enterprise
performance numbers include
the maximum sales charge and
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than at
original purchase.
CLASS B
** The Lehman Brothers
Intermediate Government
Corporate Bond Index is an
unmanaged broad based index
which excludes transaction and
holding charges. Enterprise
performance numbers include
all fees and CDSC charges.
Remember that historic per-
formance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
FUTURE INVESTMENT STRATEGY
Looking ahead, the increased prepayment rates expected this
spring will likely
keep this Portfolio in a good position to outperform generic
mortgage
securities.The Portfolio structure will reflect this
investment sentiment with
emphasis on high quality mortgage securities with call
protection.
TCW FUNDS MANAGEMENT, INC.
Los Angeles, California
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE
COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
27
Government Securities Portfolio
Portfolio of Investments
December 31, 1995
PRINCIPAL
AMOUNT VALUE
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 89.50%
- ------------------------------------------------------------
- -----------------
FEDERAL HOME LOAN PARTICIPATION CERTIFICATES -- 9.17%
- ------------------------------------------------------------
- -----------------
FHLPC 9.00%, due 10/01/22......................... $
1,769,617 $ 1,861,266
FHLPC 10.00%, due 10/01/18........................
1,730,162 1,873,973
FHLPC 10.00%, due 07/01/20........................
2,749,717 2,983,085
FHLPC 10.00%, due 10/01/20........................
1,267,851 1,383,365
- -----------
8,101,689
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 25.76%
- ------------------------------------------------------------
- -----------------
GNMA 6.625%, due 11/15/28(v)......................
4,923,364 4,911,204
GNMA 7.00%, due 10/15/33..........................
15,058,654 15,242,069
GNMA 7.50%, due 04/15/23..........................
879,594 904,574
GNMA 7.50%, due 05/01/23..........................
854,015 878,209
GNMA 7.50%, due 05/15/23..........................
788,604 810,835
GNMA 9.00%, due 08/15/16..........................
11,821 12,480
- -----------
22,759,371
FEDERAL HOUSING ADMINISTRATION -- 39.73%
- ------------------------------------------------------------
- -----------------
FHA 6.75%, due 11/01/28...........................
2,265,736 2,168,026
FHA 7.00%, due 10/01/28...........................
2,364,776 2,292,355
FHA 7.18%, due 02/20/29...........................
3,470,787 3,381,848
FHA 7.625%, due 06/01/28..........................
3,768,198 3,765,842
FHA 7.75%, due 05/01/18...........................
6,581,816 6,618,839
FHA 7.75%, due 04/01/28...........................
3,938,030 3,960,181
FHA 7.80%, due 09/01/23...........................
2,833,993 2,853,477
FHA 8.25%, due 01/15/28...........................
3,447,674 3,527,401
FHA 8.65%, due 06/01/27...........................
3,713,023 3,831,375
FHA 8.70%, due 12/01/27...........................
2,611,600 2,698,110
- -----------
35,097,454
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 12.01%
- ------------------------------------------------------------
- -----------------
FNMA 5.50%, due 01/01/09..........................
2,537,733 2,480,076
FNMA 5.50%, due 02/01/09..........................
4,327,726 4,230,438
FNMA 9.50%, due 08/01/20..........................
1,065,887 1,131,546
FNMA 9.50%, due 10/01/20..........................
1,667,129 1,770,491
FNMA 10.00%, due 07/01/20.........................
438,489 481,206
FNMA 10.00%, due 07/01/20.........................
471,124 515,118
- -----------
10,608,875
U.S. TREASURY NOTES -- 2.83%
- ------------------------------------------------------------
- -----------------
United States Treasury Notes 5.50%, due
04/30/96..........................................
2,500,000 2,502,000
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS (IDENTIFIED COST
$79,318,069)................................................
.... 79,069,389
COLLATERALIZED MORTGAGE OBLIGATIONS(V) -- 5.89%
- ------------------------------------------------------------
- -----------------
Federal Home Loan Mortgage Corporation 5.845%, due
08/15/23..........................................
1,291,553 838,702
Federal Home Loan Mortgage Corporation 8.80%, due
12/15/23..........................................
2,052,061 1,476,201
The Enterprise Group of Funds, Inc.
28
PRINCIPAL
AMOUNT VALUE
Federal National Mortgage Association 6.978%, due
12/25/23.......................................... $
1,930,794 $ 1,477,058
Federal National Mortgage Association 11.50%, due
11/25/22..........................................
1,477,391 1,313,955
Federal National Mortgage Association 15.50%, due
03/25/23..........................................
100,127 96,059
- -----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS(V) (IDENTIFIED
COST
$5,934,493).................................................
.... 5,201,975
COMMERCIAL PAPER -- 3.39%
- ------------------------------------------------------------
- -----------------
Raytheon Company 5.80%, due 01/08/96..............
3,000,000 2,996,616
TOTAL COMMERCIAL PAPER (IDENTIFIED COST
$2,996,616)............. 2,996,616
REPURCHASE AGREEMENTS -- 1.82%
- ------------------------------------------------------------
- -----------------
State Street Bank & Trust Repurchase Agreement
4.25%, due 01/02/96 Collateral: U.S. Treasury
Note, $1,610,000, 5.75% due 9/30/97, Value
$1,646,842........................................
1,610,000 1,610,000
TOTAL REPURCHASE AGREEMENTS (IDENTIFIED COST
$1,610,000).......................................
1,610,000
- ------------------------------------------------------------
- -----------------
TOTAL INVESTMENTS (IDENTIFIED COST
$89,859,178)................. 88,877,980
OTHER ASSETS LESS LIABILITIES --
(0.60)%........................ (529,682)
- -----------
NET ASSETS --
100%..............................................
$88,348,298
- ------------------------------------------------------------
- -----------------
(v) Variable interest rate security; interest rate is as of
December 31, 1995
See notes to financial statements.
The Enterprise Group of Funds, Inc.
29
The Enterprise High-Yield Bond Portfolio
INVESTMENT MANAGEMENT
Caywood-Scholl has been investment adviser to the Enterprise
High-Yield Bond
Portfolio since its inception in 1987. Caywood-Scholl
currently manages over
$645 million for institutional clients. Our normal
investment minimum is $1
million.
INVESTMENT OBJECTIVE
The objective of the Enterprise High-Yield Bond Portfolio is
to seek maximum
current income, primarily from debt securities that are
rated Ba or lower by
Moody's Investors Service or BB or lower by Standard &
Poor's Corporation.
INVESTMENT PHILOSOPHY
Our investment philosophy of seeking relative value and
avoiding risk is credit
research driven. The discipline of credit research
facilitates the informed use
of a variety of lower rated securities in aggressive fixed
income investing.
1995 PERFORMANCE REVIEW
Four dominant themes influenced Portfolio performance in
1995:
- Mutual Fund Inflows -- The stream of new money into
mutual funds kept
market technicals favorably balanced through much of
the year.
- Crossover-Buyers -- Investment grade corporate fixed
income buyers have
begun to venture down the credit spectrum to the
higher quality portion of
the high yield market. This marginal source of demand
caused this sector
of the market to enjoy both strong performance and
liquidity.
- New Issue Calendar -- According to Chemical Bank, new
issues for 1995
decreased to $30.7 billion from $35 billion in 1994.
- Defaults -- During the year, 30 issues representing
$8.2 billion defaulted
versus $2.3 billion in 1994, according to Merrill
Lynch. The acceleration
in default activity did not have a significant impact
upon the market.
For 1995, longer duration issues led the high-yield bond
market. The Portfolio's
duration was shorter than the Lehman BB Index and therefore
hurt its relative
performance.
The Enterprise Group of Funds, Inc.
30
CLASS A
** The Lehman BB Index is an
unmanaged index which excludes
transaction and holding
charges. Enterprise
performance numbers include
the maximum sales charge and
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than at
original purchase.
CLASS B
** The Lehman BB Index is an
unmanaged index which excludes
transaction and holding
charges. Enterprise
performance numbers include
all fees and CDSC charges.
Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
FUTURE INVESTMENT STRATEGY
High-yield bonds should perform relatively well in 1996,
providing Congress
produces on its promise of bringing the government towards
fiscal responsibility
and inflation remains restrained. Portfolio structure will
maintain a balance
between credit and duration risk in order to maximize risk
adjusted returns with
more emphasis on intermediate maturities until some of the
political and
economic risks are identified more clearly.
CAYWOOD-SCHOLL CAPITAL MANAGEMENT
San Diego, California
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE
COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
31
High-Yield Bond Portfolio
Portfolio of Investments
December 31, 1995
CORPORATE BONDS,
CONVERTIBLE SECURITIES &
PRINCIPAL
COMMON STOCK -- 94.50%
AMOUNT VALUE
- ------------------------------------------------------------
- -----------------
APPAREL & TEXTILES -- 0.55%
- ------------------------------------------------------------
- -----------------
Westpoint Stevens Inc.
8.75%, due 12/15/01............................... $
300,000 $ 301,125
BASIC INDUSTRIES -- 5.08%
- ------------------------------------------------------------
- -----------------
American Standard Inc. Zero Coupon, due
06/01/98..........................................
1,000,000 855,000
Maxxam Group Inc.
11.25%, due 08/01/03..............................
500,000 495,625
Maxxam Inc.
14.00%, due 05/20/00..............................
360,000 376,200
Rohr Inc.
11.625%, due 05/15/03.............................
800,000 864,000
Westinghouse Air Brake Company
9.375%, due 06/15/05..............................
200,000 208,500
- -----------
2,799,325
CABLE -- 9.65%
- ------------------------------------------------------------
- -----------------
Century Communications Corporation
9.50%, due 03/01/05...............................
800,000 822,000
Century Communications Corporation
9.75%, due 02/15/02...............................
350,000 363,125
Comcast Corporation
9.375%, due 05/15/05..............................
1,000,000 1,055,000
Comcast Corporation
10.25%, due 10/15/01..............................
400,000 433,500
Comcast UK Cable LP Zero Coupon, due 11/15/07.....
300,000 175,500
Jones Intercable Inc.
9.625%, due 03/15/02..............................
500,000 537,500
Lenfest Communications Inc.
8.375%, due 11/01/05..............................
500,000 501,875
Rogers Cablesystems Ltd.
10.00%, due 03/15/05..............................
200,000 215,000
Telewest PLC
9.625%, due 10/01/06..............................
750,000 765,000
Turner Broadcasting Systems Inc. Convertible Deb
Zero Coupon,
due 02/13/07......................................
1,000,000 450,000
- -----------
5,318,500
CAPITAL GOODS AND SERVICES -- 1.54%
- ------------------------------------------------------------
- -----------------
Waters Corporation
12.75%, due 09/30/04..............................
750,000 847,500
CHEMICALS -- 6.29%
- ------------------------------------------------------------
- -----------------
Agriculture Minerals and Chemicals
10.75%, due 09/30/03..............................
500,000 550,000
NUMBER
OF
SHARES
OR
PRINCIPAL
AMOUNT VALUE
General Chemical Corporation
9.25%, due 08/15/03............................... $
1,000,000 $ 1,010,000
Huntsman Corporation
10.625%, due 04/15/01.............................
650,000 726,375
Pioneer American Acquisition Corporation
13.375%, due 04/01/05.............................
600,000 628,500
Terra Industries Inc.
10.50%, due 06/15/05..............................
500,000 551,250
- -----------
3,466,125
CONGLOMERATES -- 1.04%
- ------------------------------------------------------------
- -----------------
Quixote Corporation
Convertible Subordinated Debenture 8.00%, due
04/15/11..........................................
650,000 575,250
CONSUMER DURABLES -- 1.38%
- ------------------------------------------------------------
- -----------------
Sealy Corporation
9.50%, due 05/01/03...............................
750,000 761,250
CONSUMER NON-DURABLES -- 3.69%
- ------------------------------------------------------------
- -----------------
American Safety Razor Company
9.875%, due 08/01/05..............................
450,000 457,875
Herff Jones Inc.
11.00%, due 08/15/05..............................
400,000 428,000
Playtex Family Products Corporation
9.00%, due 12/15/03...............................
750,000 660,000
Samsonite Corporation
11.125%, due 07/15/05.............................
500,000 490,000
- -----------
2,035,875
CONTAINERS -- 3.93%
- ------------------------------------------------------------
- -----------------
Buckeye Cellulose Corporation
8.50%, due 12/15/05............................... $
200,000 206,250
MVE Holding Inc. (Wts) (a)........................
750 18,750
MVE Inc.
12.50%, due 02/15/02.............................. $
750,000 780,000
Owens Illinois Inc.
10.25%, due 04/01/99..............................
150,000 154,688
Owens Illinois Inc.
10.50%, due 06/15/02..............................
150,000 159,375
Owens Illinois Inc.
11.00%, due 12/01/03..............................
750,000 847,500
- -----------
2,166,563
ENERGY -- 4.43%
- ------------------------------------------------------------
- -----------------
Clark USA Inc.
10.875%, due 12/01/05.............................
550,000 576,125
The Enterprise Group of Funds, Inc.
32
NUMBER
OF
SHARES
OR
PRINCIPAL
AMOUNT VALUE
Kenetech Corporation (c)
12.75%, due 12/15/02.............................. $
700,000 $ 285,250
Maxus Energy Corporation
9.375%, due 11/01/03..............................
750,000 731,250
Maxus Energy Corporation
11.25%, due 05/01/13..............................
45,000 45,450
Noble Drilling Corporation
9.25%, due 10/01/03...............................
250,000 262,500
Santa Fe Energy Resources Inc.
11.00%, due 05/15/04..............................
150,000 165,562
YPF Sociedad Anonima
8.00%, due 02/15/04...............................
400,000 376,000
- -----------
2,442,137
ENTERTAINMENT & LEISURE -- 1.60%
- ------------------------------------------------------------
- -----------------
Imax Corporation
7.00%, due 03/01/97...............................
750,000 744,375
Roadmaster Industries Inc.
11.75%, due 07/15/02..............................
200,000 139,000
- -----------
883,375
FOOD & BEVERAGES -- 1.18%
- ------------------------------------------------------------
- -----------------
Cott Corporation
9.375%, due 07/01/05..............................
650,000 650,000
GAMING -- 5.58%
- ------------------------------------------------------------
- -----------------
Ballys Grand Inc.
10.375%, due 12/15/03.............................
750,000 765,000
Casino Magic Corporation
11.50%, due 10/15/01.............................. $
650,000 562,250
Casino Magic Finance Corporation
(Wts) (a).........................................
3,000 3,000
Harrahs Jazz (b)
14.25%, due 11/15/01.............................. $
600,000 166,500
Harrahs Operating Inc.
10.875%, due 04/15/02.............................
550,000 594,000
Trump Plaza Funding Inc.
10.875%, due 06/15/01.............................
950,000 983,250
- -----------
3,074,000
HEALTH CARE -- 8.75%
- ------------------------------------------------------------
- -----------------
American Medical International Inc.
13.50%, due 08/15/01..............................
500,000 556,875
Healthsouth Rehabilitation Corporation
9.50%, due 04/01/01...............................
700,000 749,000
Integrated Health Services Inc.
9.625%, due 05/31/02..............................
250,000 253,750
Ivac Corporation
9.25%, due 12/01/02...............................
650,000 672,750
NUMBER
OF
SHARES
OR
PRINCIPAL
AMOUNT VALUE
Mediq Inc.
7.50%, due 07/15/03............................... $
850,000 $ 668,312
Regency Health Services Inc.
9.875%, due 10/15/02..............................
750,000 744,375
Tenet Healthcare Corporation
8.625%, due 12/01/03..............................
600,000 629,250
Tenet Healthcare Corporation
9.625%, due 09/01/02.............................. $
500,000 550,000
- -----------
4,824,312
HOTELS & RESTAURANTS -- 3.38%
- ------------------------------------------------------------
- -----------------
Foodmaker Inc. (Wts) (a)..........................
250 1,969
H M H Properties Inc.
9.50%, due 05/15/05............................... $
1,000,000 1,022,500
Hammon John Q. Hotels
8.875%, due 02/15/04..............................
700,000 687,750
La Quinta Inns Inc.
7.40%, due 09/15/05...............................
150,000 154,125
- -----------
1,866,344
INSURANCE -- 1.49%
- ------------------------------------------------------------
- -----------------
Leucadia National Corporation
10.375%, due 06/15/02.............................
750,000 824,318
METALS & MINING -- 6.21%
- ------------------------------------------------------------
- -----------------
AK Steel Corporation
10.75%, due 04/01/04..............................
1,150,000 1,269,312
Armco Inc.
9.375%, due 11/01/00..............................
300,000 297,000
Kaiser Aluminum & Chemical Corporation
12.75%, due 02/01/03..............................
1,000,000 1,100,000
Wheeling Pittsburgh Corporation
9.375%, due 11/15/03..............................
800,000 756,000
- -----------
3,422,312
PAPER & FOREST PRODUCTS -- 4.60%
- ------------------------------------------------------------
- -----------------
Crown Paper Company
11.00%, due 09/01/05..............................
650,000 568,750
Pacific Lumber Company
10.50%, due 03/01/03..............................
150,000 141,750
Riverwood International Corporation
11.25%, due 06/15/02..............................
250,000 271,250
SD Warren Company
12.00%, due 12/15/04..............................
850,000 936,062
Stone Container Corporation
10.75%, due 10/01/02..............................
600,000 619,500
- -----------
2,537,312
The Enterprise Group of Funds, Inc.
33
High-Yield Bond Portfolio -- (Continued)
Portfolio of Investments
December 31, 1995
NUMBER
OF
SHARES
OR
PRINCIPAL
AMOUNT VALUE
RETAIL -- 7.74%
- ------------------------------------------------------------
- -----------------
Barnes & Noble Inc.
11.875%, due 01/15/03............................. $
750,000 $ 836,250
Brunos Inc.
10.50%, due 08/01/05..............................
1,000,000 985,000
Corporate Express Inc.
9.125%, due 03/15/04..............................
900,000 911,250
Ralphs Grocery Company
10.45%, due 06/15/04..............................
500,000 507,500
Ralphs Grocery Company
11.00%, due 06/15/05..............................
600,000 594,000
Thrifty Payless Inc.
11.75%, due 04/15/03..............................
400,000 434,000
- -----------
4,268,000
TELECOMMUNICATIONS -- 10.85%
- ------------------------------------------------------------
- -----------------
American Communications Services Inc.
Zero Coupon, due 11/01/05.........................
800,000 440,000
MFS Communication Inc.
Zero Coupon, due 01/15/04.........................
500,000 402,500
Mobile Telecommunication Technologies
13.50%, due 02/15/02.............................. $
1,000,000 1,112,500
Mobile Telecommunication Technologies Preferred
Convertible.......................................
250 10,313
Pagemart Zero Coupon, due 11/01/03................ $
375,000 282,656
Pagemart (Wts) (a)................................
3,450 13,800
Pagemart Nationwide Inc...........................
1,750 2,975
Pagemart Nationwide Inc.
Zero Coupon, due 02/01/05......................... $
250,000 163,750
Pagemart Nationwide Units
Zero Coupon, due 02/01/05.........................
500,000 327,500
Paging Network Inc.
8.875%, due 02/01/06..............................
650,000 666,250
Paging Network Inc.
10.125%, due 08/01/07.............................
350,000 380,188
Panamsat L P
9.75%, due 08/01/00...............................
400,000 424,000
Panamsat L P
Zero Coupon, due 08/01/03.........................
250,000 204,375
Rogers Cantel Mobile Inc.
10.75%, due 11/01/01..............................
400,000 421,500
Rogers Communications Inc.
10.875%, due 04/15/04.............................
650,000 679,250
Rogers Communications Inc.
Covertible Deb Zero Coupon,
due 05/20/13......................................
1,250,000 451,562
- -----------
5,983,119
PRINCIPAL
AMOUNT VALUE
TRANSPORTATION -- 3.02%
- ------------------------------------------------------------
- -----------------
Delta Air Lines Inc.
10.125%, due 05/15/10............................. $
250,000 $ 307,195
United Air Lines Inc.
9.02%, due 04/19/12...............................
288,641 314,405
United Air Lines Inc.
10.67%, due 05/01/04..............................
650,000 787,196
Viking Star Shipping Inc.
9.625%, due 07/15/03..............................
250,000 257,500
- -----------
1,666,296
UTILITIES -- 2.52%
- ------------------------------------------------------------
- -----------------
Amerigas Partners L P
10.125%, due 04/15/07.............................
800,000 866,000
Midland Cogeneration Venture L P
10.33%, due 07/23/02..............................
241,227 250,877
Midland Funding Corporation I
10.33%, due 07/23/02..............................
259,749 270,139
- -----------
1,387,016
TOTAL CORPORATE BONDS, CONVERTIBLE SECURITIES & COMMON
STOCKS
(IDENTIFIED COST
$51,364,206)................................... 52,100,054
U.S. TREASURY NOTES -- 1.39%
- ------------------------------------------------------------
- -----------------
United States Treasury Notes
5.875%, due 11/15/05..............................
750,000 $ 766,665
TOTAL U.S. TREASURY NOTES
(IDENTIFIED COST
$759,609)...................................... 766,665
REPURCHASE AGREEMENT -- 2.48%
- ------------------------------------------------------------
- -----------------
State Street Bank & Trust Repurchase Agreement
4.25%, due 01/02/96 Collateral: U.S. Treasury Note
$1,370,000, 5.75%, due 9/30/97 Value $1,401,350...
1,370,000 $ 1,370,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST
$1,370,000).................................... 1,370,000
- ------------------------------------------------------------
- -----------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$53,493,815)................................... $54,236,719
OTHER ASSETS LESS LIABILITIES --
1.63%.......................... 896,360
- -----------
NET ASSETS --
100%..............................................
$55,133,079
- ------------------------------------------------------------
- -----------------
(a) Non-income Producing
(b) In bankruptcy; Portfolio has ceased accrual of interest.
(c) Portfolio has ceased accrual of income due to
uncertainty of collection.
(Wts) Warrants
See notes to financial statements.
The Enterprise Group of Funds, Inc.
34
(This page intentionally left blank)
The Enterprise Group of Funds, Inc.
35
The Enterprise Tax-Exempt Income Portfolio
INVESTMENT MANAGEMENT
Morgan Stanley Asset Management, Inc, is a wholly owned
subsidiary of the Morgan
Stanley Group, Inc. We have managed the Enterprise Tax-
Exempt Income Portfolio
since January 1, 1992. Morgan Stanley manages over $55
billion for institutional
clients. Our normal investment minimum is $25 million.
INVESTMENT OBJECTIVE
The investment objective of the Enterprise Tax-Exempt Income
Portfolio is to
seek a high level of current income exempt from federal
income tax, with
consideration given to preservation of principal, primarily
from investment in a
diversified portfolio of long term investment grade
municipal bonds.
INVESTMENT PHILOSOPHY
Our management style is risk averse and conservative. We
strive to add value by
concentrating on high quality tax exempt municipal
securities and capitalizing
on investment opportunities that arise because of
volatility, changes in the
yield curve and sector analysis that reveals pricing
inefficiencies.
1995 PERFORMANCE REVIEW
The markets started out 1995 with the belief that the
economy was going to
continue growing at the strong pace seen during the 4th
quarter of 1994, that
inflation was a real threat and that the Federal Reserve was
going to continue
on a severe tightening path all leading to dire consequences
for fixed income
markets. In reality, economic growth did continue, albeit at
a moderate pace,
inflation remained in check and the Fed actually ended 1995
with a bias towards
easing. Although there were volatile periods during the
course of the year, 1995
proved overall to be a very good year for the municipal bond
market. However,
the Portfolio's duration was shorter than the Lehman
Municipal Bond Index which
hurt relative performance as longer duration issues were the
best performers in
the municipal market.
CLASS A
** The Lehman Municipal Bond
Index is an unmanaged index
which excludes transaction and
holding charges. Enterprise
performance numbers include
the maximum sales charge and
all fees. Remember that
historic performance does not
predict future performance.
Shares may be worth more or
less at redemption than at
original purchase.
The Enterprise Group of Funds, Inc.
36
CLASS B
** The Lehman Municipal Bond
Index is an unmanaged index
which excludes transaction and
holding charges. Enterprise
performance numbers include
all fees and CDSC charges.
Remember that historic per-
formance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
FUTURE INVESTMENT STRATEGY
The markets will be closely watching the outcome and actual
details if and when
a final deficit reduction agreement is reached. The first
quarter of 1996 will
be closely monitored to determined what the current level of
growth is in the
U.S. economy. If the Federal Reserve perceives growth to be
slowing, further Fed
Funds rate cuts will happen early on, fueling a continued
bond market rally. If
the Fed perceives growth to be moderate to gathering steam,
the Fed's easing
bias will probably be put on hold, putting some pressure on
the fixed income
markets. In this environment, the Portfolio will continue to
be structured with
emphasis on high quality, intermediate term municipal
securities.
MORGAN STANLEY ASSET MANAGEMENT, INC.
New York, New York
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE
COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
37
Tax-Exempt Income Portfolio
Portfolio of Investments
December 31, 1995
PRINCIPAL
AMOUNT VALUE
MUNICIPAL BONDS -- 97.52%
- ------------------------------------------------------------
- -----------------
ARIZONA -- 2.69%
- ------------------------------------------------------------
- -----------------
Salt River Project, Arizona Agriculture Import
and Power District Electric System Revenue
5.00% due 01/01/30............................ $
1,000,000 $ 929,450
- -----------
929,450
CALIFORNIA -- 2.12%
- ------------------------------------------------------------
- -----------------
California State 6.10% due 09/01/04...........
150,000 164,411
Los Angeles County, California Sales Tax
Series A Revenue 6.75% due 07/01/18...........
500,000 567,265
- -----------
731,676
CONNECTICUT -- 1.61%
- ------------------------------------------------------------
- -----------------
Connecticut State Health & Education Facility
Revenue Hospital 7.10% due 07/01/25...........
500,000 557,755
- -----------
557,755
DELAWARE -- 2.05%
- ------------------------------------------------------------
- -----------------
Delaware Transportation Authority Systems
Revenue 6.50% due 07/01/11....................
630,000 707,125
- -----------
707,125
FLORIDA -- 7.30%
- ------------------------------------------------------------
- -----------------
Broward County, Broward Waste Energy LP North
Recovery Revenue 7.95% due 12/01/08...........
340,000 381,650
Broward County, South Recovery Revenue 7.95%
due 12/01/08..................................
180,000 202,050
Florida State Board Education Capital Outlay
5.50% due 06/01/23............................
1,500,000 1,497,165
Florida State Board Education Capital Outlay
Series A 7.25% due 06/01/23...................
170,000 191,020
Orange County, Florida Health Facilities
Authority Pooled Hospital Loan Series A
Refunding 7.875% due 12/01/25.................
235,000 249,704
- -----------
2,521,589
GEORGIA -- 1.70%
- ------------------------------------------------------------
- -----------------
Atlanta Downtown Development Authority 6.25%
due 10/01/12..................................
500,000 533,390
Burke County, Georgia Development Authority
Pollution Control Revenue 8.00% due
10/01/16......................................
50,000 52,357
- -----------
585,747
IDAHO -- 1.41%
- ------------------------------------------------------------
- -----------------
Idaho Housing Agency Single Family Mortgage
Revenue Series F-2 (AMT) 7.80% due 01/01/23...
460,000 488,221
- -----------
488,221
ILLINOIS -- 2.44%
- ------------------------------------------------------------
- -----------------
Du Page County, Illinois Revenue 6.50% due
01/01/12......................................
750,000 841,605
- -----------
841,605
INDIANA -- 0.37%
- ------------------------------------------------------------
- -----------------
Indiana State Housing Finance Authority Single
Family Mortgage Revenue Series A 10.20% due
01/01/16......................................
125,000 128,125
- -----------
128,125
KANSAS -- 1.56%
- ------------------------------------------------------------
- -----------------
Kansas State Department Transportation Highway
Revenue Series A 5.50% due 09/01/03...........
500,000 538,815
- -----------
538,815
The Enterprise Group of Funds, Inc.
38
PRINCIPAL
AMOUNT VALUE
LOUISIANA -- 0.97%
- ------------------------------------------------------------
- -----------------
Louisiana State Offshore Term Authority
Deepwater Port Revenue Series E 7.60% due
09/01/10...................................... $
300,000 $ 333,918
- -----------
333,918
MARYLAND -- 3.05%
- ------------------------------------------------------------
- -----------------
Maryland State 5.50% due 02/01/07.............
1,000,000 1,052,840
- -----------
1,052,840
MASSACHUSETTS -- 2.33%
- ------------------------------------------------------------
- -----------------
Massachusetts State Housing Finance Agency
Revenue Residential FNMA Collateral-A 6.90%
due 11/15/24..................................
750,000 803,932
- -----------
803,932
MICHIGAN -- 3.19%
- ------------------------------------------------------------
- -----------------
Michigan State Building Authority Revenue
Series I 6.40% due 10/01/04...................
1,000,000 1,100,600
- -----------
1,100,600
MISSOURI -- 0.53%
- ------------------------------------------------------------
- -----------------
Missouri State Housing Development Community
Mortgage GNMA Revenue Series B (AMT) 8.25% due
05/01/19......................................
175,000 184,338
- -----------
184,338
NEBRASKA -- 2.94%
- ------------------------------------------------------------
- -----------------
Omaha Public Power District Nebraska Electric
Revenue 5.60% due 02/01/12....................
1,000,000 1,015,770
- -----------
1,015,770
NEVADA -- 5.63%
- ------------------------------------------------------------
- -----------------
Clark County School District Series A 7.00%
due 06/01/11..................................
750,000 885,585
Nevada State 6.25% due 07/01/12...............
1,000,000 1,057,930
- -----------
1,943,515
NEW JERSEY -- 3.10%
- ------------------------------------------------------------
- -----------------
Union County, New Jersey Import Authority
Revenue 5.60% due 06/15/02....................
1,000,000 1,070,570
- -----------
1,070,570
NEW MEXICO -- 1.42%
- ------------------------------------------------------------
- -----------------
New Mexico Mortgage Finance Authority 7.80%
due 09/01/17..................................
470,000 491,291
- -----------
491,291
NEW YORK -- 10.63%
- ------------------------------------------------------------
- -----------------
New York State Local Government Assistance
7.00% due 04/01/21............................
500,000 571,980
New York State Mortgage Agency Revenue 7.95%
due 10/01/14..................................
200,000 210,994
New York State Power Authority Series V 8.00%
due 01/01/17..................................
200,000 218,864
New York State Power Authority Revenue &
General Series Cc 5.00% due 01/01/09..........
1,300,000 1,284,907
Triborough Bridge & Tunnel Authority New York
General Purpose Series A 6.00% due 01/01/10...
1,300,000 1,383,499
- -----------
3,670,244
OHIO -- 3.36%
- ------------------------------------------------------------
- -----------------
Columbus Ohio G.O. Category I Limited 6.75%
due 07/01/10..................................
1,000,000 1,082,010
The Enterprise Group of Funds, Inc.
39
Tax-Exempt Income Portfolio --
(Continued)
Portfolio of Investments
December 31, 1995
PRINCIPAL
AMOUNT VALUE
Ohio Housing Finance Agency Single Family
Mortgage Revenue (AMT) 8.25% due 12/15/19..... $
75,000 $ 79,331
- -----------
1,161,341
OKLAHOMA -- 4.58%
- ------------------------------------------------------------
- -----------------
Tulsa, Oklahoma 6.30% due 06/01/17............
1,500,000 1,581,135
- -----------
1,581,135
OREGON -- 1.27%
- ------------------------------------------------------------
- -----------------
Oregon State 7.00% due 12/01/11...............
400,000 437,660
- -----------
437,660
PENNSYLVANIA -- 2.44%
- ------------------------------------------------------------
- -----------------
Philadelphia Pennsylvania Hospitals & High
Education Facilities Hospital 6.50% due
02/15/09......................................
750,000 842,925
- -----------
842,925
SOUTH CAROLINA -- 0.16%
- ------------------------------------------------------------
- -----------------
Charleston County South Carolina Residential
Development (AMT) 9.25% due 01/01/10..........
50,000 55,092
- -----------
55,092
TENNESSEE -- 0.70%
- ------------------------------------------------------------
- -----------------
Tennessee Housing Development Agency (AMT)
8.125% due 07/01/21...........................
240,000 241,786
- -----------
241,786
TEXAS -- 8.31%
- ------------------------------------------------------------
- -----------------
Brazos River Authority Texas Revenue 8.25% due
05/01/15......................................
150,000 164,136
Harris County, Texas Health Facility Revenue
Texas Medical Center Project 7.375% due
05/15/20......................................
500,000 561,195
Houston Texas Revenue 6.00% due 03/01/05......
500,000 534,225
San Antonio, Revenue Refunding Series Texas
5.75% due 08/01/13............................
975,000 990,649
Texas Housing Agency Residential Development
Revenue Series A 7.60% due 07/01/16...........
155,000 163,076
Texas State Department Housing Community
Affairs Home Mortgage Revenue Collateral
Series A 6.95% due 07/01/23...................
430,000 458,401
- -----------
2,871,682
UTAH -- 1.16%
- ------------------------------------------------------------
- -----------------
Intermountain Power Agency Utah Power Revenue
First Crossover Series 86 B 7.875% due
07/01/14......................................
250,000 259,570
Utah State Housing Finance Agency Single
Family Mortgage Series E (AMT) 9.00% due
01/01/19......................................
135,000 142,719
- -----------
402,289
VIRGINIA -- 9.65%
- ------------------------------------------------------------
- -----------------
Fairfax County, Virginia Water Authority
Revenue 5.75% due 04/01/29....................
1,000,000 1,004,680
Fairfax County Virginia 5.40% due 05/01/11....
1,000,000 1,014,270
Virginia State Transportation Board Revenue
6.00% due 04/01/10............................
1,250,000 1,315,512
- -----------
3,334,462
WASHINGTON -- 6.51%
- ------------------------------------------------------------
- -----------------
Tacoma, Washington Electric Systems Revenue
6.15% due 01/01/08............................
1,000,000 1,068,230
Washington State General Obligation Series 93A
5.75% due 10/01/17............................
1,000,000 1,011,110
Washington State Public Power Supply (Nuclear
Project # 1) Revenue Refunding Series B 7.25%
due 07/01/15..................................
150,000 168,897
- -----------
2,248,237
The Enterprise Group of Funds, Inc.
40
PRINCIPAL
AMOUNT VALUE
WEST VIRGINIA -- 0.82%
- ------------------------------------------------------------
- -----------------
Kanawha County Building Community Hospital
Charleston Medical Center Series A Revenue
7.50% due 11/01/08............................ $
250,000 $ 282,165
- -----------
282,165
WISCONSIN -- 1.52%
- ------------------------------------------------------------
- -----------------
Wisconsin Housing & Economic Development
Authority Home Ownership Revenue Series A
7.75% due 09/01/17............................
495,000 523,725
- -----------
523,725
TOTAL MUNICIPAL BONDS (IDENTIFIED COST
$31,651,655)............. $33,679,625
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 0.58%
VARIABLE RATE DEMAND BONDS (V)
- ------------------------------------------------------------
- -----------------
NEW YORK -- 0.29%
- ------------------------------------------------------------
- -----------------
New York City Municipal Water Finance
Authority Systems Revenue Series C 5.90% due
06/15/22...................................... $
100,000 $ 100,000
- -----------
100,000
WYOMING -- 0.29%
- ------------------------------------------------------------
- -----------------
Lincoln County Wyoming Pollution Control Dated
11/01/84 Floating Rate Exxon Project D 5.90%
due 11/01/14..................................
100,000 100,000
- -----------
100,000
TOTAL SHORT-TERM TAX-EXEMPT INVESTMENTS (IDENTIFIED COST
$200,000)...................................................
.... $ 200,000
TOTAL INVESTMENTS (IDENTIFIED COST
$31,851,655)................. $33,879,625
OTHER ASSETS LESS LIABILITIES --
1.90%.......................... 657,768
- -----------
NET ASSETS --
100%..............................................
$34,537,393
- ------------------------------------------------------------
- -----------------
AMT Securities subject to Alternative Minimum Tax
(v) Variable interest rate security; Interest rate
is as of December 31, 1995, and is adjusted daily.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
41
The Enterprise Managed Portfolio
INVESTMENT MANAGEMENT
OpCap Advisors (formerly known as Quest for Value Advisors),
a subsidiary of
Oppenheimer Capital, has served as investment advisor to the
Enterprise Managed
Portfolio since inception on October 1, 1994. OpCap Advisors
currently manages
over $37 billion for institutional clients. Our normal
investment minimum is $10
million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Managed Portfolio is to seek
growth of capital
over time through investment in a portfolio consisting of
common stocks, bonds
and cash equivalents, the percentages of which will vary
based on our assessment
of the relative investment values.
INVESTMENT PHILOSOPHY
Our investment process allows us to take advantage of
opportunities in all
market sectors by shifting the investment mix among stock,
bonds and money
market instruments. The focus of our investment process is
to identify quality
companies that are undervalued in the market. The average
annual return on
equity of these companies is in excess of the average return
on equity of the
companies in the S&P 500 Index, while the average price-
earnings ratio of these
companies is significantly below the price-earnings ratio
for those companies.
This combination of high returns on equity and low security
valuations helps
preserve capital in down markets and provides opportunity
for investment profit
over time.
1995 PERFORMANCE REVIEW
1995 was an excellent year for the stock market. Inflation
was below
expectations, long term interest rates declined and economic
growth moderated.
The reduction in long rates helped propel impressive flows
into equity mutual
funds, which provided the fire power, along with heavy
merger and acquisition
activity, to drive the stock market to new highs. The
market's total return of
37.6%, as measured by the S&P 500 Index, was the best in 20
years.
The Enterprise Managed Portfolio, which invests in stocks,
bonds and cash
equivalents, continued its outstanding performance in 1995.
Although the
Portfolio can buy bonds and money market securities, in
practice it invests
primarily in common stocks based on the premise that stocks
provide the best
returns over time. As of December 31, 1995, 87% of the
Portfolio's assets were
invested in equities and 13% in money market securities.
The Enterprise Group of Funds, Inc.
42
CLASS A
** The S&P 500 Index is an un-
managed index which includes
500 companies which tend to be
leaders in important
industries within the U.S.
economy and excludes any
transaction or holding
charges. Enterprise per-
formance numbers include the
maximum sales charge and all
fees. Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
CLASS B
** The S&P 500 Index is an un-
managed index which includes
500 companies which tend to be
leaders in important
industries within the U.S.
economy and excludes any
transaction or holding
charges. Enterprise per-
formance numbers include all
fees and CDSC charges.
Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
The Enterprise Group of Funds, Inc.
43
CLASS Y
** The S&P 500 Index is an un-
managed index which includes
500 companies which tend to be
leaders in important
industries within the U.S.
economy and excludes any
transaction or holding
charges. Enterprise per-
formance numbers include all
fees. Remember that historic
performance does not predict
future performance. Shares may
be worth more or less at
redemption than at original
purchase.
FUTURE INVESTMENT STRATEGY
We believe the probabilities favor modest if subdued market
gains in 1996.
Earnings disappointments will become more prevalent after
five years of growth
and expanding profit margins. We expect S&P 500 earnings to
be relatively flat,
compared to an increase of about 15% in 1995, making stock
selection even more
important. However, we do not foresee the ingredients for a
major bear market,
especially if inflation and short term interest rates move
lower. In fact, a
sharp decline in short rates could unlock the large amounts
of assets in money
market mutual funds, time deposits and CDs and actually
accelerate inflows into
stock mutual funds.
OPCAP ADVISORS
New York, New York
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE
COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
44
Managed Portfolio
Portfolio of Investments
December 31, 1995
NUMBER
OF
COMMON STOCKS -- 87.52%
SHARES VALUE
- ------------------------------------------------------------
- -----------------
AEROSPACE & DEFENSE -- 7.95%
- ------------------------------------------------------------
- -----------------
Lockheed Martin Corporation.......................
15,000 $ 1,185,000
McDonnell Douglas Corporation.....................
49,000 4,508,000
Northrop Grumman Corporation......................
24,500 1,568,000
- -----------
7,261,000
APPAREL & TEXTILES -- 6.71%
- ------------------------------------------------------------
- -----------------
Reebok International Ltd..........................
74,800 2,113,100
Shaw Industries Inc...............................
93,100 1,373,225
V F Corporation...................................
50,000 2,637,500
- -----------
6,123,825
AUTOMOTIVE -- 1.33%
- ------------------------------------------------------------
- -----------------
General Motors Corporation........................
22,900 1,210,838
BANKING -- 23.28%
- ------------------------------------------------------------
- -----------------
Citicorp..........................................
58,000 3,900,500
First Bank System Inc.............................
50,000 2,481,250
First Empire State Corporation....................
7,100 1,547,800
First Interstate Bancorp..........................
51,000 6,961,500
Mellon Bank Corporation...........................
40,000 2,150,000
Wells Fargo & Company.............................
19,500 4,212,000
- -----------
21,253,050
CHEMICALS -- 6.11%
- ------------------------------------------------------------
- -----------------
Du Pont (E I) De Nemours & Company................
50,000 3,493,750
Freeport McMoRan, Inc.............................
1,666 61,642
Hercules Inc......................................
29,000 1,634,875
Monsanto Company..................................
3,200 392,000
- -----------
5,582,267
CONSUMER NON-DURABLES -- 4.28%
- ------------------------------------------------------------
- -----------------
Avon Products, Inc................................
11,000 829,125
Mattel, Inc.......................................
100,000 3,075,000
- -----------
3,904,125
ELECTRONICS -- 0.62%
- ------------------------------------------------------------
- -----------------
Unitrode Corporation (a)..........................
20,000 565,000
ENERGY -- 3.68%
- ------------------------------------------------------------
- -----------------
MAPCO, Inc........................................
15,000 819,375
Tenneco, Inc......................................
44,300 2,198,387
Triton Energy Corporation (a).....................
6,000 344,250
- -----------
3,362,012
NUMBER
OF
SHARES
OR
PRINCIPAL
AMOUNT VALUE
ENTERTAINMENT & LEISURE -- 1.38%
- ------------------------------------------------------------
- -----------------
Harrahs Entertainment, Inc........................
52,000 $ 1,261,000
HEALTH CARE -- 2.81%
- ------------------------------------------------------------
- -----------------
Becton, Dickinson & Company.......................
34,200 2,565,000
Laboratory Corporation Of America Holdings (a)
(Wts).............................................
244 168
- -----------
2,565,168
INSURANCE -- 2.18%
- ------------------------------------------------------------
- -----------------
EXEL Ltd..........................................
18,100 1,104,100
Transport Holdings Inc. (Class A).................
80 3,260
Travelers Group, Inc..............................
14,000 880,250
- -----------
1,987,610
METALS & MINING -- 4.31%
- ------------------------------------------------------------
- -----------------
Freeport McMoRan Copper & Gold, Inc. (Class B)....
140,000 3,937,500
MISC. FINANCIAL SERVICES -- 12.62%
- ------------------------------------------------------------
- -----------------
American Express Company..........................
54,400 2,250,800
Countrywide Credit Industries, Inc................
70,000 1,522,500
Federal Home Loan Mortgage Corporation............
53,400 4,458,900
Federal National Mortgage Association.............
26,500 3,289,312
- -----------
11,521,512
PAPER PRODUCTS -- 5.38%
- ------------------------------------------------------------
- -----------------
Champion International Corporation................
80,000 3,360,000
Kimberly Clark Corporation........................
18,720 1,549,080
- -----------
4,909,080
TECHNOLOGY -- 4.04%
- ------------------------------------------------------------
- -----------------
Intel Corporation.................................
65,000 3,688,750
TELECOMMUNICATIONS -- 0.84%
- ------------------------------------------------------------
- -----------------
Sprint Corporation................................
19,300 769,588
TOTAL COMMON STOCKS
(IDENTIFIED COST
$71,554,105)................................... 79,902,325
SHORT TERM INSTRUMENTS -- 12.01%
- ------------------------------------------------------------
- -----------------
Federal Home Loan Mortgage Discount Note, 5.48%
due 01/29/96...................................... $
2,000,000 1,991,476
Federal Home Loan Mortgage Discount Note, 5.49%
due 01/18/96......................................
3,500,000 3,490,926
Federal Home Loan Mortgage Discount Note, 5.58%
due 01/22/96......................................
1,500,000 1,495,117
The Enterprise Group of Funds, Inc.
45
Managed Portfolio -- (Continued)
Portfolio of Investments
December 31, 1995
PRINCIPAL
AMOUNT VALUE
Federal National Mortgage Association Discount
Note, 5.50% due 01/19/96.......................... $
2,000,000 $ 1,994,500
Tennessee Valley Authority Discount Note, 5.59%
due 01/18/96......................................
2,000,000 1,994,721
TOTAL SHORT TERM INSTRUMENTS (IDENTIFIED COST
$10,966,740)...... 10,966,740
REPURCHASE AGREEMENT -- 0.80%
- ------------------------------------------------------------
- -----------------
State Street Bank & Trust Repurchase Agreement,
2.25% due 01/02/96................................
Collateral: U.S. Treasury Bond $730,000, 5.75% due
9/30/97 Value $746,705............................
730,000 730,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST
$730,000)...................................... 730,000
- ------------------------------------------------------------
- -----------------
NUMBER
OF
SHARES
OR
PRINCIPAL
AMOUNT VALUE
TOTAL INVESTMENTS
(IDENTIFIED COST
$83,250,845)................................... $91,599,065
OTHER ASSETS LESS LIABILITIES --
(0.33)%........................ (303,948)
- -----------
NET ASSETS --
100%..............................................
$91,295,117
- ------------------------------------------------------------
- -----------------
(a) Non-income Producing
(Wts) Warrants
See notes to financial statements.
The Enterprise Group of Funds, Inc.
46
(This page intentionally left blank)
The Enterprise Group of Funds, Inc.
47
The Enterprise Money Market Portfolio
INVESTMENT MANAGEMENT
Enterprise Capital Management is a wholly owned subsidiary
of the Mutual Life
Insurance Company of New York. We have managed the
Enterprise Money Market
Portfolio since May 1, 1992.
INVESTMENT OBJECTIVE
The objective of the Enterprise Money Market Portfolio is
the highest possible
level of current income consistent with the preservation of
capital and
liquidity in obligations maturing in one year or less from
the time of purchase.
INVESTMENT PHILOSOPHY
We invest in high quality (A-1/P-1) short term money market
instruments,
principally commercial paper. While interest rate projection
is not a key
component of our management style we do emphasize purchases
primarily in a
maturity range of 30 to 90 days so as to provide flexibility
to respond to
significant changes in the market.
1995 PERFORMANCE REVIEW
The Federal Reserve successfully achieved its soft landing-
slow growth goals in
1995. Their proactive moves in 1994 to stem inflation were
successful and
created a strong level of confidence in the Fed's ability to
keep inflation
under control. This created an atmosphere that allowed long
term interest rates
to drop. And as the Fed became comfortable that balance was
achieved, they
reduced the Fed Fund rate from 6.0% to 5.75% signaling a
more neutral policy. As
the end of 1995 approached, economic signs pointed to a
sluggish economy and the
Federal Reserve eased rates another 25 basis points in
December to end the year
with a Fed funds rate of 5.50%.
From slow Christmas sales and other generally sluggish
economic indicators, it
appears that 1996 will be at the slower end of the slow
growth goal, making it
likely that the Fed will continue to ease short term rates
in 1996. Most likely
the economy will continue sluggish for all of 1996 and the
Fed will ease rates
through the end of the year. Currently, the interest rate
curve remains
inverted, with one month maturity investments yielding more
than six month
investments.
FUTURE INVESTMENT STRATEGY
The fear of interest rate reductions creates the need to
manage the Portfolio on
a balanced basis. Short maturity investments take advantage
of current higher
interest rates, while longer term investments, when not
fully pricing in
anticipated Fed easings, are purchased to protect against
rates falling even
more precipitously.
ENTERPRISE CAPITAL MANAGEMENT, INC.
Atlanta, Georgia
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE
PORTFOLIO MANAGER, ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE
COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON
MARKET AND OTHER
CONDITIONS.
The Enterprise Group of Funds, Inc.
48
Money Market Portfolio
Portfolio of Investments
December 31, 1995
PRINCIPAL
COMMERCIAL PAPER -- 96.84%
AMOUNT VALUE
- ------------------------------------------------------------
- -----------------
American Express Credit Corporation,
5.60% due 02/08/96................................ $
1,500,000 $ 1,491,133
American Express Credit Corporation,
5.65% due 01/29/96................................
200,000 199,121
Associates Corporation North America,
5.65% due 01/26/96................................
1,500,000 1,494,115
Avco Financial Services Inc.
5.76% due 01/05/96................................
1,000,000 999,360
Banc One Corporation
5.72% due 01/12/96................................
1,000,000 998,252
Barclays Bank PLC
5.75% due 01/17/96................................
1,000,000 1,000,000
Bell Atlantic Financial Services
5.95% due 01/09/96................................
600,000 599,207
Bellsouth Telecommunications Inc.
5.67% due 02/09/96................................
1,700,000 1,689,558
British Province of Columbia
5.67% due 02/01/96................................
1,000,000 995,118
Canadian Wheat Board
5.75% due 01/16/96................................
1,700,000 1,695,927
Chevron Oil Finance Company
5.50% due 01/29/96................................
1,500,000 1,493,583
CIT Group Holdings Inc.
5.70% due 02/09/96................................
1,200,000 1,192,590
Colonial Pipeline Company
5.67% due 02/16/96................................
1,500,000 1,489,132
Consolidation Coal Company
5.76% due 01/04/96................................
1,000,000 999,520
Dupont E I De Nemours & Company
5.52% due 03/08/96................................
1,500,000 1,484,590
Ford Motor Credit Company
5.70% due 01/09/96................................
1,000,000 998,733
General Electric Capital Corporation,
5.55% due 03/18/96................................
1,400,000 1,383,381
Goldman Sachs Group LP
5.68% due 01/12/96................................
1,500,000 1,497,397
Household Finance Corporation
5.71% due 01/29/96................................
900,000 896,003
Merrill Lynch & Company Inc.
5.73% due 01/31/96................................
1,500,000 1,492,837
Metropolitan Life Funding Inc.
5.72% due 01/10/96................................
1,000,000 998,570
National Rural Utilities Cooperative Finance,
5.63% due 02/27/96................................
700,000 693,760
PRINCIPAL
AMOUNT VALUE
National Rural Utilities Cooperative Finance,
5.65% due 02/26/96................................ $
1,000,000 $ 991,211
National Westminster Bank PLC
5.73% due 01/08/96................................
1,000,000 998,886
Norwest Corporation
5.72% due 01/26/96................................
400,000 398,411
Paccar Financial Corporation
5.63% due 02/27/96................................
500,000 495,543
Paccar Financial Corporation
5.75% due 01/09/96................................
1,000,000 998,722
Pepsico Inc.
5.73% due 02/01/96................................
1,700,000 1,691,612
PHH Corporation
5.68% due 01/19/96................................
1,300,000 1,296,308
Prudential Funding Corporation
5.73% due 01/12/96................................
1,300,000 1,297,724
Republic New York
5.53% due 02/01/96................................
1,000,000 995,238
Toronto Dominion Holdings
5.68% due 01/08/96................................
1,400,000 1,398,454
Transamerica Finance Group Inc.
5.71% due 01/25/96................................
1,500,000 1,494,290
Xerox Credit Corporation
5.68% due 01/19/96................................
1,600,000 1,595,456
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST
$39,433,742)................................... $39,433,742
REPURCHASE AGREEMENT -- 1.39%
- ------------------------------------------------------------
- -----------------
State Street Bank & Trust Repurchase Agreement,
2.25% due 01/02/96 Collateral: U.S. Treasury Note
$565,000 5.75% due 9/30/97, Value $577,929........
565,000 565,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST
$565,000)...................................... 565,000
- ------------------------------------------------------------
- -----------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$39,998,742)................................... 39,998,742
OTHER ASSETS LESS LIABILITIES --
1.77%.......................... 720,189
- -----------
NET ASSETS --
100%..............................................
$40,718,931
- ------------------------------------------------------------
- -----------------
See notes to financial statements.
The Enterprise Group of Funds, Inc.
49
Statement of Assets and Liabilities
December 31, 1995
GROWTH
CAPITAL SMALL
GROWTH AND INCOME
APPRECIATION COMPANY
PORTFOLIO PORTFOLIO
PORTFOLIO PORTFOLIO
------------- ------------
- ------------- ------------
ASSETS:
- ------------------------------------------------------------
- -------------------------------
Investments at value $ 129,084,656 $63,392,046
$124,498,293 $ 23,560,048
- ------------------------------------------------------------
- -------------------------------
Foreign currency at value
(identified cost-$450,953) -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Receivable for fund shares
sold 228,550 32,835
48,626 23,989
- ------------------------------------------------------------
- -------------------------------
Receivable for investments
sold -- --
- -- 98,920
- ------------------------------------------------------------
- -------------------------------
Dividends and interest
receivable 94,012 129,022
70,619 30,370
- ------------------------------------------------------------
- -------------------------------
Due from investment adviser -- --
- -- 3,989
- ------------------------------------------------------------
- -------------------------------
Forward currency contracts
(net) receivable -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Cash and other assets 58,425 8,290
46,214 25,716
- ------------------------------------------------------------
- -------------------------------
Total assets $ 129,465,643 $63,562,193
$124,663,752 $ 23,743,032
- ------------------------------------------------------------
- -------------------------------
LIABILITIES:
- ------------------------------------------------------------
- -------------------------------
Payable for fund shares
redeemed 855,013 256,833
789,583 87,020
- ------------------------------------------------------------
- -------------------------------
Payable for investments
purchased 1,029,403 128,690
- -- --
- ------------------------------------------------------------
- -------------------------------
Dividends and distributions
payable 244,014 72,881
511,198 167,035
- ------------------------------------------------------------
- -------------------------------
Investment advisory fee
payable 91,808 43,164
79,185 15,214
- ------------------------------------------------------------
- -------------------------------
Distribution fee payable 50,658 24,534
48,342 8,378
- ------------------------------------------------------------
- -------------------------------
Other payables 64,640 44,698
76,039 51,419
- ------------------------------------------------------------
- -------------------------------
Total liabilities $ 2,335,536 $ 570,800
$ 1,504,347 $ 329,066
- ------------------------------------------------------------
- -------------------------------
NET ASSETS $ 127,130,107 $62,991,393
$123,159,405 $ 23,413,966
- ------------------------------------------------------------
- -------------------------------
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------
- -------------------------------
Accumulated paid-in capital,
Class A 79,437,800 45,842,994
91,891,026 18,962,265
- ------------------------------------------------------------
- -------------------------------
Accumulated paid-in capital,
Class B 4,493,739 1,050,152
2,101,164 891,777
- ------------------------------------------------------------
- -------------------------------
Accumulated paid-in capital,
Class Y -- --
- -- 2,811,342
- ------------------------------------------------------------
- -------------------------------
Undistributed net investment
income (loss) -- 1,845
- -- --
- ------------------------------------------------------------
- -------------------------------
Accumulated net realized gain
(loss) on investments and
futures 2,593,134 213,844
2,573,503 53,243
- ------------------------------------------------------------
- -------------------------------
Unrealized appreciation
(depreciation) of investments
and translation of foreign
currencies denominated
amounts 40,605,434 15,882,558
26,593,712 695,339
- ------------------------------------------------------------
- -------------------------------
NET ASSETS $ 127,130,107 $62,991,393
$123,159,405 $ 23,413,966
- ------------------------------------------------------------
- -------------------------------
CLASS A: NET ASSETS $ 122,558,541 $61,905,746
$121,206,631 $ 19,719,829
- ------------------------------------------------------------
- -------------------------------
Shares outstanding 11,737,551 2,986,798
3,724,459 3,632,373
- ------------------------------------------------------------
- -------------------------------
Net asset value and redemption
price per share $10.44 $20.73
$32.54 $5.43
- ------------------------------------------------------------
- -------------------------------
Sales charge per share $0.52 $1.03
$1.62 $0.27
- ------------------------------------------------------------
- -------------------------------
Maximum offering price per
share, including sales charge
of 4.75% $10.96 $21.76
$34.16 $5.70
- ------------------------------------------------------------
- -------------------------------
CLASS B: NET ASSETS $ 4,571,566 $ 1,085,647
$ 1,952,774 $ 862,380
- ------------------------------------------------------------
- -------------------------------
Shares outstanding 439,342 52,534
60,238 159,470
- ------------------------------------------------------------
- -------------------------------
Net asset value and offering
price per share $10.41 $20.67
$32.42 $5.41
- ------------------------------------------------------------
- -------------------------------
CLASS Y: NET ASSETS -- --
- -- $ 2,831,757
- ------------------------------------------------------------
- -------------------------------
Shares outstanding -- --
- -- 521,865
- ------------------------------------------------------------
- -------------------------------
Net asset value and
offering/redemption price per
share -- --
- -- $5.43
- ------------------------------------------------------------
- -------------------------------
INVESTMENTS AT COST $ 88,479,222 $47,509,488
$ 97,904,581 $ 22,864,709
- ------------------------------------------------------------
- -------------------------------
See notes to financial statements.
The Enterprise Group of Funds, Inc.
50
INTERNATIONAL
GOVERNMENT HIGH-YIELD TAX-EXEMPT
MONEY
GROWTH
SECURITIES BOND INCOME MANAGED
MARKET
PORTFOLIO PORTFOLIO
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ----------
- -- ------------ ------------ ------------ ----------
- --
ASSETS:
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Investments at value $ 32,095,419
$88,877,980 $ 54,236,719 $33,879,625 $ 91,599,065
$ 39,998,742
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Foreign currency at value
(identified cost-$450,953) 450,536 -
- - -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Receivable for fund shares
sold 25,821
99,595 6,384 114,290 372,272
1,722,984
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Receivable for investments
sold 196,439 -
- - -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Dividends and interest
receivable 105,836
594,012 1,121,348 643,897 68,098
6,815
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Due from investment adviser -- -
- - 5,841 663 42,354
9,286
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Forward currency contracts
(net) receivable 359,681 -
- - -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Cash and other assets 8,177
66,906 4,139 15,781 44,761
215,966
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Total assets $ 33,241,909
$89,638,493 $ 55,374,431 $34,654,256 $ 92,126,550
$ 41,953,793
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
LIABILITIES:
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Payable for fund shares
redeemed 127,789
1,048,354 58,765 29,227 627,824
1,151,405
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Payable for investments
purchased 160,653 -
- - -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Dividends and distributions
payable 38,589
109,458 96,292 38,764 27,774
25,610
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Investment advisory fee
payable 23,754
50,240 27,948 14,625 56,080
12,237
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Distribution fee payable 11,569
34,881 22,292 13,508 30,886
10,582
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Other payables 47,986
47,262 36,055 20,739 88,869
35,028
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Total liabilities $ 410,340 $
1,290,195 $ 241,352 $ 116,863 $ 831,433 $
1,234,862
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
NET ASSETS $ 32,831,569
$88,348,298 $ 55,133,079 $34,537,393 $ 91,295,117
$ 40,718,931
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
ANALYSIS OF NET ASSETS
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Accumulated paid-in capital,
Class A 26,398,353
91,651,454 54,692,995 31,669,327 41,342,379
40,324,617
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Accumulated paid-in capital,
Class B 1,098,528
2,085,965 2,946,910 902,258 16,043,552
394,314
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Accumulated paid-in capital,
Class Y 3,026,502 -
- - -- -- 25,128,388
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Undistributed net investment
income (loss) --
88,107 70 160 --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Accumulated net realized gain
(loss) on investments and
futures (50,031 )
(4,496,030) (3,249,800) (62,322) 432,578
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Unrealized appreciation
(depreciation) of investments
and translation of foreign
currencies denominated
amounts 2,358,217
(981,198) 742,904 2,027,970 8,348,220
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
NET ASSETS $ 32,831,569
$88,348,298 $ 55,133,079 $34,537,393 $ 91,295,117
$ 40,718,931
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
CLASS A: NET ASSETS $ 28,628,296
$86,224,182 $ 52,182,201 $33,625,865 $ 47,839,067
$ 40,324,617
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Shares outstanding 1,780,653
7,290,191 4,581,923 2,402,910 7,142,032
40,324,617
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Net asset value and redemption
price per share $16.08
$11.83 $11.39 $13.99 $6.70
$1.00
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Sales charge per share $0.80
$0.59 $0.57 $0.70 $0.33
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Maximum offering price per
share, including sales charge
of 4.75% $16.88
$12.42 $11.96 $14.69 $7.03
$1.00
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
CLASS B: NET ASSETS $ 1,094,024 $
2,124,116 $ 2,950,878 $ 911,528 $ 16,791,717 $
394,314
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Shares outstanding 68,307
179,617 259,107 65,138 2,513,411
394,314
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Net asset value and offering
price per share $16.02
$11.83 $11.39 $13.99 $6.68
$1.00
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
CLASS Y: NET ASSETS $ 3,109,249 -
- - -- -- $ 26,664,333
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Shares outstanding 193,508 -
- - -- -- 3,980,368
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Net asset value and
offering/redemption price per
share $ 16.07 -
- - -- -- $ 6.70
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
INVESTMENTS AT COST $ 30,096,466
$89,859,178 $ 53,493,815 $31,851,655 $ 83,250,845
$ 39,998,742
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
The Enterprise Group of Funds, Inc.
51
Statement of Operations
For the Year Ended December 31, 1995
GROWTH
CAPITAL SMALL
GROWTH AND INCOME
APPRECIATION COMPANY
PORTFOLIO PORTFOLIO
PORTFOLIO PORTFOLIO
------------- -----------
- ------------ -----------
INVESTMENT INCOME:
- ------------------------------------------------------------
- ----------------------------
Dividends $ 1,226,809 $1,791,587
$ 729,970 $ 463,271
- ------------------------------------------------------------
- ----------------------------
Interest 101,450 351,247
226,493 18,663
- ------------------------------------------------------------
- ----------------------------
Total 1,328,259 2,142,834
956,463 481,934
- ------------------------------------------------------------
- ----------------------------
EXPENSES:
- ------------------------------------------------------------
- ----------------------------
Management fees 797,410 418,724
867,619 176,021
- ------------------------------------------------------------
- ----------------------------
Distribution fees, Class A 473,255 249,988
518,186 96,758
- ------------------------------------------------------------
- ----------------------------
Distribution fees, Class B 11,535 2,769
5,300 2,594
- ------------------------------------------------------------
- ----------------------------
Transfer agent fees 238,823 163,093
315,180 105,769
- ------------------------------------------------------------
- ----------------------------
Custodian and accounting
fees 59,689 64,564
51,059 61,328
- ------------------------------------------------------------
- ----------------------------
Audit and legal fees 43,959 28,694
47,766 18,350
- ------------------------------------------------------------
- ----------------------------
Reports to shareholders 46,975 27,725
57,842 15,949
- ------------------------------------------------------------
- ----------------------------
Registration fees 21,792 21,471
21,573 21,713
- ------------------------------------------------------------
- ----------------------------
Directors' fees 5,000 5,000
5,000 5,000
- ------------------------------------------------------------
- ----------------------------
Other expenses 12,995 11,354
21,785 9,675
- ------------------------------------------------------------
- ----------------------------
Total expenses 1,711,433 993,382
1,911,310 513,157
- ------------------------------------------------------------
- ----------------------------
Less: Expense
reimbursement (4,398) (150,764)
- -- (108,702)
- ------------------------------------------------------------
- ----------------------------
Total expenses, net of
reimbursement 1,707,035 842,618
1,911,310 404,455
- ------------------------------------------------------------
- ----------------------------
Net investment income (loss) (378,776) 1,300,216
(954,847) 77,479
- ------------------------------------------------------------
- ----------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------
- ----------------------------
Net realized gain (loss) on
investments 6,794,506 1,598,560
14,667,515 540,493
- ------------------------------------------------------------
- ----------------------------
Net realized loss from
futures transactions -- --
- -- --
- ------------------------------------------------------------
- ----------------------------
Change in unrealized
appreciation of investments
and translation of foreign
currencies denominated
amounts 28,354,972 13,200,967
11,787,574 1,467,446
- ------------------------------------------------------------
- ----------------------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 35,149,478 14,799,527
26,455,089 2,007,939
- ------------------------------------------------------------
- ----------------------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 34,770,702 $16,099,743
$25,500,242 $ 2,085,418
- ------------------------------------------------------------
- ----------------------------
* Net of foreign taxes withheld of $105,154 for
International Growth.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
52
INTERNATIONAL GOVERNMENT
HIGH-YIELD TAX-EXEMPT MONEY
GROWTH SECURITIES
BOND INCOME MANAGED MARKET
PORTFOLIO PORTFOLIO
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -----------
- - ----------- ----------- ----------- -----------
INVESTMENT INCOME:
- ------------------------------------------------------------
- ---------------------------------------------------------
Dividends $ 706,381* $ --
$ 5,942 $ -- $ 583,511 $ --
- ------------------------------------------------------------
- ---------------------------------------------------------
Interest 45,626 6,849,452
5,121,156 2,092,832 567,172 2,064,849
- ------------------------------------------------------------
- ---------------------------------------------------------
Total 752,007 6,849,452
5,127,098 2,092,832 1,150,683 2,064,849
- ------------------------------------------------------------
- ---------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------
- ---------------------------------------------------------
Management fees 241,255 516,491
304,716 172,474 311,097 122,090
- ------------------------------------------------------------
- ---------------------------------------------------------
Distribution fees, Class A 120,979 384,814
223,616 154,313 119,767 104,538
- ------------------------------------------------------------
- ---------------------------------------------------------
Distribution fees, Class B 2,766 5,675
10,937 2,031 48,105 313
- ------------------------------------------------------------
- ---------------------------------------------------------
Transfer agent fees 113,260 160,523
96,804 46,433 132,726 109,208
- ------------------------------------------------------------
- ---------------------------------------------------------
Custodian and accounting
fees 130,876 66,269
66,551 53,876 61,151 49,540
- ------------------------------------------------------------
- ---------------------------------------------------------
Audit and legal fees 19,563 39,944
26,781 21,992 16,589 19,470
- ------------------------------------------------------------
- ---------------------------------------------------------
Reports to shareholders 16,740 26,735
15,654 9,904 15,362 20,275
- ------------------------------------------------------------
- ---------------------------------------------------------
Registration fees 21,144 22,539
22,261 20,839 27,896 27,051
- ------------------------------------------------------------
- ---------------------------------------------------------
Directors' fees 5,000 5,000
5,000 5,000 5,000 5,000
- ------------------------------------------------------------
- ---------------------------------------------------------
Other expenses 1,582 11,543
7,241 5,042 27,674 12,919
- ------------------------------------------------------------
- ---------------------------------------------------------
Total expenses 673,165 1,239,533
779,561 491,904 765,367 470,404
- ------------------------------------------------------------
- ---------------------------------------------------------
Less: Expense
reimbursement (109,484)
(117,348) (113,327) (59,601) (58,261)
(121,372)
- ------------------------------------------------------------
- ---------------------------------------------------------
Total expenses, net of
reimbursement 563,681 1,122,185
666,234 432,303 707,106 349,032
- ------------------------------------------------------------
- ---------------------------------------------------------
Net investment income (loss) 188,326 5,727,267
4,460,864 1,660,529 443,577 1,715,817
- ------------------------------------------------------------
- ---------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------
- ---------------------------------------------------------
Net realized gain (loss) on
investments 1,144,555
(108,087) 98,195 (62,322) 845,958
- --
- ------------------------------------------------------------
- ---------------------------------------------------------
Net realized loss from
futures transactions -- --
(20,528) -- -- --
- ------------------------------------------------------------
- ---------------------------------------------------------
Change in unrealized
appreciation of investments
and translation of foreign
currencies denominated
amounts 2,852,133 9,333,710
2,865,091 3,201,486 8,465,164 --
- ------------------------------------------------------------
- ---------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS 3,996,688 9,225,623
2,942,758 3,139,164 9,311,122 --
- ------------------------------------------------------------
- ---------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 4,185,014 $14,952,890
$7,403,622 $4,799,693 $ 9,754,699 $ 1,715,817
- ------------------------------------------------------------
- ---------------------------------------------------------
The Enterprise Group of Funds, Inc.
53
Statement of Changes in Net Assets
GROWTH PORTFOLIO
GROWTH AND INCOME PORTFOLIO
----------------------------
- ----------------------------
YEAR ENDED YEAR ENDED
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
DECEMBER 31, DECEMBER 31,
1995 1994
1995 1994
------------- ------------
- ------------- ------------
FROM OPERATIONS:
- ------------------------------------------------------------
- -------------------------------
Net investment income (loss) $ (378,776) $ (304,324)
$ 1,300,216 $ 1,300,617
- ------------------------------------------------------------
- -------------------------------
Net realized gain (loss) on
investments 6,794,506 5,517,226
1,598,560 2,726,695
- ------------------------------------------------------------
- -------------------------------
Net realized gain (loss) on
futures and options -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Change in unrealized
appreciation (depreciation) 28,354,972 (5,902,466)
13,200,967 (4,306,207)
- ------------------------------------------------------------
- -------------------------------
Increase (decrease) in net
assets resulting from
operations 34,770,702 (689,564)
16,099,743 (278,895)
- ------------------------------------------------------------
- -------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- ------------------------------------------------------------
- -------------------------------
Net investment income, Class
A -- --
(1,306,465) (1,285,880)
- ------------------------------------------------------------
- -------------------------------
Net investment income, Class
B -- --
(12,321) --
- ------------------------------------------------------------
- -------------------------------
Net investment income, Class
Y -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
In excess of net investment
income -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Net realized gains (losses)
on investments Class A (4,773,412) (4,533,501)
(1,999,775) (2,321,329)
- ------------------------------------------------------------
- -------------------------------
Net realized gains (losses)
on investments Class B (178,422) --
(34,959) --
- ------------------------------------------------------------
- -------------------------------
Net realized gains (losses)
on investments Class Y -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Total dividends and
distributions to shareholders (4,951,834) (4,533,501)
(3,353,520) (3,607,209)
- ------------------------------------------------------------
- -------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- ------------------------------------------------------------
- -------------------------------
CLASS A
- ------------------------------------------------------------
- -------------------------------
Shares sold 45,641,846 23,065,010
6,311,340 9,945,659
- ------------------------------------------------------------
- -------------------------------
Reinvestment of
distributions 4,691,077 4,305,754
3,211,683 3,490,634
- ------------------------------------------------------------
- -------------------------------
Shares redeemed (45,909,409) (24,674,856)
(11,254,005) (8,544,557)
- ------------------------------------------------------------
- -------------------------------
Net increase (decrease) -
Class A 4,423,514 2,695,908
(1,730,982) 4,891,736
- ------------------------------------------------------------
- -------------------------------
CLASS B
- ------------------------------------------------------------
- -------------------------------
Shares sold 4,393,535 --
1,004,412 --
- ------------------------------------------------------------
- -------------------------------
Reinvestment of
distributions 173,874 --
47,260 --
- ------------------------------------------------------------
- -------------------------------
Shares redeemed (54,414) --
(1,282) --
- ------------------------------------------------------------
- -------------------------------
Net increase (decrease) -
Class B 4,512,995 --
1,050,390 --
- ------------------------------------------------------------
- -------------------------------
CLASS Y
- ------------------------------------------------------------
- -------------------------------
Shares sold -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Reinvestment of
distributions -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Shares redeemed -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Net increase (decrease) -
Class Y -- --
- -- --
- ------------------------------------------------------------
- -------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 8,936,509 2,695,908
(680,592) 4,891,736
- ------------------------------------------------------------
- -------------------------------
Total increase (decrease) in
net assets 38,755,377 (2,527,157)
12,065,631 1,005,632
- ------------------------------------------------------------
- -------------------------------
NET ASSETS:
- ------------------------------------------------------------
- -------------------------------
Beginning of period $ 88,374,730 $90,901,887
$ 50,925,762 $49,920,130
- ------------------------------------------------------------
- -------------------------------
End of period $127,130,107 $88,374,730
$ 62,991,393 $50,925,762
- ------------------------------------------------------------
- -------------------------------
See notes to financial statements.
The Enterprise Group of Funds, Inc.
54
CAPITAL
SMALL
APPRECIATION
COMPANY INTERNATIONAL
PORTFOLIO
PORTFOLIO GROWTH PORTFOLIO
----------------------------
- --------------------------- ---------------------------
YEAR ENDED YEAR ENDED
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994
1995 1994 1995 1994
------------- ------------
- ------------ ------------ ------------ ------------
FROM OPERATIONS:
- ------------------------------------------------------------
- ------------------------------------------------------------
Net investment income (loss) $ (954,847) $ (466,361)
$ 77,479 $ 105,662 $ 188,326 $ (50,685)
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gain (loss) on
investments 14,667,515 5,212,591
540,493 837,704 1,144,555 4,402,358
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gain (loss) on
futures and options -- --
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Change in unrealized
appreciation (depreciation) 11,787,574 (8,210,938)
1,467,446 (1,114,878) 2,852,133 (5,160,954)
- ------------------------------------------------------------
- ------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 25,500,242 (3,464,708)
2,085,418 (171,512) 4,185,014 (809,281)
- ------------------------------------------------------------
- ------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- ------------------------------------------------------------
- ------------------------------------------------------------
Net investment income, Class
A -- --
(58,837) (104,803) (155,426) --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net investment income, Class
B -- --
(2,838) -- (6,393) --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net investment income, Class
Y -- --
(18,232) -- (25,605) --
- ------------------------------------------------------------
- ------------------------------------------------------------
In excess of net investment
income -- --
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gains (losses)
on investments Class A (11,321,192) (5,014,411)
(711,443) (473,793) (1,283,151) (3,677,945)
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gains (losses)
on investments Class B (182,690) --
(31,195) -- (49,215) --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gains (losses)
on investments Class Y -- --
(106,095) -- (138,950) --
- ------------------------------------------------------------
- ------------------------------------------------------------
Total dividends and
distributions to shareholders (11,503,882) (5,014,411)
(928,640) (578,596) (1,658,740) (3,677,945)
- ------------------------------------------------------------
- ------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- ------------------------------------------------------------
- ------------------------------------------------------------
CLASS A
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares sold 40,980,067 29,705,089
4,616,227 23,859,279 4,583,946 13,327,269
- ------------------------------------------------------------
- ------------------------------------------------------------
Reinvestment of
distributions 10,974,833 4,759,475
731,050 541,261 1,401,593 3,525,913
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares redeemed (46,152,644) (27,934,844)
(8,913,867) (9,648,427) (7,270,812) (7,742,857)
- ------------------------------------------------------------
- ------------------------------------------------------------
Net increase (decrease) -
Class A 5,802,256 6,529,720
(3,566,590) 14,752,113 (1,285,273) 9,110,325
- ------------------------------------------------------------
- ------------------------------------------------------------
CLASS B
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares sold 1,965,319 --
875,292 -- 1,030,189 --
- ------------------------------------------------------------
- ------------------------------------------------------------
Reinvestment of
distributions 176,796 --
32,375 -- 54,311 --
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares redeemed (18,795) --
(15,478) -- (1,195) --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net increase (decrease) -
Class B 2,123,320 --
892,189 -- 1,083,305 --
- ------------------------------------------------------------
- ------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares sold -- --
2,875,817 -- 3,108,334 --
- ------------------------------------------------------------
- ------------------------------------------------------------
Reinvestment of
distributions -- --
616 -- 164,552 --
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares redeemed -- --
(64,876) -- (288,315) --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net increase (decrease) -
Class Y -- --
2,811,557 -- 2,984,571 --
- ------------------------------------------------------------
- ------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 7,925,576 6,529,720
137,156 14,752,113 2,782,603 9,110,325
- ------------------------------------------------------------
- ------------------------------------------------------------
Total increase (decrease) in
net assets 21,921,936 (1,949,399)
1,293,934 14,002,005 5,308,877 4,623,099
- ------------------------------------------------------------
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
- ------------------------------------------------------------
Beginning of period $101,237,469 $103,186,868
$22,120,032 $ 8,118,027 $27,522,692 $22,899,593
- ------------------------------------------------------------
- ------------------------------------------------------------
End of period $123,159,405 $101,237,469
$23,413,966 $22,120,032 $32,831,569 $27,522,692
- ------------------------------------------------------------
- ------------------------------------------------------------
GOVERNMENT SECURITIES
PORTFOLIO
---------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1994
------------ ------------
FROM OPERATIONS:
- ------------------------------
Net investment income (loss) $ 5,727,267 $ 7,430,968
- ------------------------------
Net realized gain (loss) on
investments (108,087) (4,592,913)
- ------------------------------
Net realized gain (loss) on
futures and options -- --
- ------------------------------
Change in unrealized
appreciation (depreciation) 9,333,710 (11,160,191)
- ------------------------------
Increase (decrease) in net
assets resulting from
operations 14,952,890 (8,322,136)
- ------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- ------------------------------
Net investment income, Class
A (5,695,090) (7,138,063)
- ------------------------------
Net investment income, Class
B (32,004) --
- ------------------------------
Net investment income, Class
Y -- --
- ------------------------------
In excess of net investment
income -- --
- ------------------------------
Net realized gains (losses)
on investments Class A -- (296,875)
- ------------------------------
Net realized gains (losses)
on investments Class B -- --
- ------------------------------
Net realized gains (losses)
on investments Class Y -- --
- ------------------------------
Total dividends and
distributions to shareholders (5,727,094) (7,434,938)
- ------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- ------------------------------
CLASS A
- ------------------------------
Shares sold 9,695,011 23,375,959
- ------------------------------
Reinvestment of
distributions 4,225,438 5,660,965
- ------------------------------
Shares redeemed (21,313,935) (35,390,455)
- ------------------------------
Net increase (decrease) -
Class A (7,393,486) (6,353,531)
- ------------------------------
CLASS B
- ------------------------------
Shares sold 2,124,239 --
- ------------------------------
Reinvestment of
distributions 21,390 --
- ------------------------------
Shares redeemed (60,182) --
- ------------------------------
Net increase (decrease) -
Class B 2,085,447 --
- ------------------------------
CLASS Y
- ------------------------------
Shares sold -- --
- ------------------------------
Reinvestment of
distributions -- --
- ------------------------------
Shares redeemed -- --
- ------------------------------
Net increase (decrease) -
Class Y -- --
- ------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions (5,308,039) (6,353,531)
- ------------------------------
Total increase (decrease) in
net assets 3,917,757 (22,110,605)
- ------------------------------
NET ASSETS:
- ------------------------------
Beginning of period $84,430,541 $106,541,146
- ------------------------------
End of period $88,348,298 $84,430,541
- ------------------------------
The Enterprise Group of Funds, Inc.
55
Statement of Changes in Net Assets
HIGH-YIELD TAX-EXEMPT
BOND PORTFOLIO INCOME PORTFOLIO
- ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1995 1994
- ------------- ------------ ------------- ------------
FROM OPERATIONS:
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net investment income (loss)
$ 4,460,864 $ 3,828,094 $ 1,660,529 $ 1,934,227
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net realized gain (loss) on investments
98,195 346,901 (62,322) 129,459
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net realized gain (loss) on futures and options
(20,528) 209,010 -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Change in unrealized appreciation (depreciation)
2,865,091 (4,349,010) 3,201,486 (4,484,094)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Increase (decrease) in net assets resulting from operations
7,403,622 34,995 4,799,693 (2,420,408)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
DISTRIBUTIONS TO SHAREHOLDERS FROM:
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net investment income, Class A
(4,375,039) (3,863,285) (1,652,187) (1,978,763)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net investment income, Class B
(85,755) -- (8,291) --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net investment income, Class Y
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
In excess of net investment income
- -- (1,430) -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net realized gains (losses) on investments Class A
- -- (12,749) (57,270) (50,034)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net realized gains (losses) on investments Class B
- -- -- (1,441) --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net realized gains (losses) on investments Class Y
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Total dividends and distributions to shareholders
(4,460,794) (3,877,464) (1,719,189) (2,028,797)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
FROM CAPITAL SHARE TRANSACTIONS:
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
CLASS A
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Shares sold
11,047,929 12,990,290 2,165,696 6,066,113
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Reinvestment of distributions
3,181,327 2,811,852 1,296,292 1,583,109
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Shares redeemed
(9,796,098) (11,498,716) (7,202,770) (10,604,438)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net increase (decrease) - Class A
4,433,158 4,303,426 (3,740,782) (2,955,216)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
CLASS B
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Shares sold
2,908,963 -- 897,621 --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Reinvestment of distributions
50,351 -- 9,311 --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Shares redeemed
(23,860) -- (6,392) --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net increase (decrease) - Class B
2,935,454 -- 900,540 --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
CLASS Y
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Shares sold
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Reinvestment of distributions
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Shares redeemed
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Net increase (decrease) - Class Y
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Total increase (decrease) in net assets resulting from
capital share transactions
7,368,612 4,303,426 (2,840,242) (2,955,216)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Total increase (decrease) in net assets
10,311,440 460,957 240,262 (7,404,421)
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
NET ASSETS:
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
Beginning of period
$ 44,821,639 $44,360,682 $ 34,297,131 $41,701,552
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
End of period
$ 55,133,079 $44,821,639 $ 34,537,393 $34,297,131
- ------------------------------------------------------------
- ------------------------------------------------------------
- -
See notes to financial statements.
The Enterprise Group of Funds, Inc.
56
MANAGED MONEY MARKET
PORTFOLIO PORTFOLIO
- ---------------------------- ---------------------------
FOR THE
PERIOD
YEAR ENDED 10/1/94 YEAR ENDED YEAR ENDED
DECEMBER 31, THROUGH DECEMBER 31, DECEMBER 31,
1995 12/31/94 1995 1994
- ------------- ------------ ------------ ------------
FROM OPERATIONS:
- ------------------------------------------------------------
- ------------------------------------------------------------
Net investment income (loss)
$ 443,577 $ 20,094 $ 1,715,817 $ 910,397
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gain (loss) on investments
845,958 2,190 -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gain (loss) on futures and options
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Change in unrealized appreciation (depreciation)
8,465,164 (116,944) -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Increase (decrease) in net assets resulting from operations
9,754,699 (94,660) 1,715,817 910,397
- ------------------------------------------------------------
- ------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
- ------------------------------------------------------------
- ------------------------------------------------------------
Net investment income, Class A
(214,318) (17,880) (1,714,261) (910,397)
- ------------------------------------------------------------
- ------------------------------------------------------------
Net investment income, Class B
(63,848) -- (1,556) --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net investment income, Class Y
(175,299) -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
In excess of net investment income
- -- -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gains (losses) on investments Class A
(213,842) -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gains (losses) on investments Class B
(75,104) -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net realized gains (losses) on investments Class Y
(119,052) -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Total dividends and distributions to shareholders
(861,463) (17,880) (1,715,817) (910,397)
- ------------------------------------------------------------
- ------------------------------------------------------------
FROM CAPITAL SHARE TRANSACTIONS:
- ------------------------------------------------------------
- ------------------------------------------------------------
CLASS A
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares sold
36,943,421 8,402,778 127,849,845 93,446,839
- ------------------------------------------------------------
- ------------------------------------------------------------
Reinvestment of distributions
406,123 16,567 1,635,878 868,036
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares redeemed
(3,992,116) (434,344) (121,495,592) (80,282,550)
- ------------------------------------------------------------
- ------------------------------------------------------------
Net increase (decrease) - Class A
33,357,428 7,985,001 7,990,131 14,032,325
- ------------------------------------------------------------
- ------------------------------------------------------------
CLASS B
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares sold
16,257,715 -- 604,172 --
- ------------------------------------------------------------
- ------------------------------------------------------------
Reinvestment of distributions
133,775 -- 1,198 --
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares redeemed
(347,918) -- (211,056) --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net increase (decrease) - Class B
16,043,572 -- 394,314 --
- ------------------------------------------------------------
- ------------------------------------------------------------
CLASS Y
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares sold
26,548,228 -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Reinvestment of distributions
294,328 -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Shares redeemed
(1,714,136) -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Net increase (decrease) - Class Y
25,128,420 -- -- --
- ------------------------------------------------------------
- ------------------------------------------------------------
Total increase (decrease) in net assets resulting from
capital share transactions
74,529,420 7,985,001 8,384,445 14,032,325
- ------------------------------------------------------------
- ------------------------------------------------------------
Total increase (decrease) in net assets
83,422,656 7,872,461 8,384,445 14,032,325
- ------------------------------------------------------------
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
- ------------------------------------------------------------
Beginning of period
$ 7,872,461 $ -- $32,334,486 $18,302,161
- ------------------------------------------------------------
- ------------------------------------------------------------
End of period
$91,295,117 $ 7,872,461 $40,718,931 $32,334,486
- ------------------------------------------------------------
- ------------------------------------------------------------
The Enterprise Group of Funds, Inc.
57
Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31,
--------
- -------------------------------------------
GROWTH PORTFOLIO (CLASS A) 1995
1994 1993 1992+ 1991
- ------------------------------------------------------------
- -------------------------------------------
Net asset value, beginning of period $
7.76 $ 8.26 $ 7.96 $ 8.22 $ 6.31
Net investment income (loss)
(0.03) (0.02) 0.01 (0.02) 0.07
Net realized and unrealized capital gains/(losses)
on investments
3.13 (0.06) 0.84 0.55 2.57
--------
- --- -------- -------- --------- -------
Total from investment operations
3.10 (0.08) 0.85 0.53 2.64
--------
- --- -------- -------- --------- -------
Dividends from net investment income
0.00 0.00 0.01 0.00 0.07
Distributions from net realized capital gains
0.42 0.42 0.54 0.79 0.66
Other
0.00 0.00 0.00 0.00 0.00
--------
- --- -------- -------- --------- -------
Total distributions
0.42 0.42 0.55 0.79 0.73
--------
- --- -------- -------- --------- -------
Net asset value, end of period $
10.44 $ 7.76 $ 8.26 $ 7.96 $ 8.22
--------
- --- -------- -------- --------- -------
Total return++
39.99% (0.99)% 10.59% 6.46% 41.79%
Net assets end of period (in thousands) $
122,559 $ 88,375 $ 90,902 $ 84,200 $77,784
Ratio of expenses to average net assets (1)
1.60% 1.56% 1.60% 1.60% 1.60%
Ratio of net investment income (loss) to average
net assets (1)
(00.35)% (0.30)% 0.10% (0.30)% 0.90%
Portfolio turnover
45.30% 64.50% 107.90% 61.20% 74.70%
FOR
THE PERIOD
--------
- -----------------
GROWTH PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- --------------------------------------------------
Net asset value, beginning of period
$ 8.69
Net investment income (loss)
(0.02)
Net realized and unrealized capital gains/(losses)
on investments
2.16
- --------
Total from investment operations
2.14
- --------
Dividends from net investment income
0.00
Distributions from net realized capital gains
0.42
Other
0.00
- --------
Total distributions
0.42
- --------
Net asset value, end of period
$ 10.41
- --------
Total return+++
24.66%**
Net assets end of period (in thousands)
$ 4,572
Ratio of expenses to average net assets
2.15%*
Ratio of net investment income (loss) to average
net assets
(0.82)%*
Portfolio turnover
45.30%*
* Annualized.
** Not Annualized.
+ Based on average monthly shares outstanding.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.61% and
0.06%, respectively,
in 1993; 1.67% and (0.31%), respectively, in 1992; and
1.81 and 0.69%,
respectively, in 1991.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
58
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31,
--------
- ------------------------------------
GROWTH AND INCOME PORTFOLIO (CLASS A) 1995
1994 1993 1992 1991
- ------------------------------------------------------------
- ------------------------------------
Net asset value, beginning of period $ 16.43
$ 17.75 $ 16.93 $ 16.00 $ 13.40
Net investment income (loss) 0.45
0.44 0.52 0.43 0.52
Net realized and unrealized gain (loss) on
investments 5.00
(0.53) 1.74 0.92 2.61
-------
- -------- ------- ------- -------
Total from investment operations 5.45
(0.09) 2.26 1.35 3.13
-------
- -------- ------- ------- -------
Dividends from net investment income 0.45
0.44 0.50 0.41 0.53
Distributions from capital gains 0.70
0.79 0.94 0.01 0.00
Other 0.00
0.00 0.00 0.00 0.00
-------
- -------- ------- ------- -------
Total distributions 1.15
1.23 1.44 0.42 0.53
-------
- -------- ------- ------- -------
Net asset value, end of period $ 20.73
$ 16.43 $ 17.75 $ 16.93 $ 16.00
-------
- -------- ------- ------- -------
Total return++ 33.38%
(0.49)% 13.45% 8.48% 23.55%
Net assets end of period (in thousands) $61,906
$ 50,926 $49,920 $40,918 $33,605
Ratio of expenses to average net assets (1) 1.50%
1.50% 1.50% 1.50% 1.50%
Ratio of net investment income to average net
assets (1) 2.33%
2.50% 2.90% 2.80% 3.50%
Portfolio turnover rate 25.60%
41.40% 39.90% 38.30% 25.90%
FOR
THE PERIOD
--------
- -----------------
GROWTH AND INCOME PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- --------------------------------------------------
Net asset value, beginning of period
$ 18.12
Net investment income (loss)
0.29
Net realized and unrealized gain (loss) on
investments
3.40
- -------
Total from investment operations
3.69
- -------
Dividends from net investment income
0.44
Distributions from capital gains
0.70
Other
0.00
- -------
Total distributions
1.14
- -------
Net asset value, end of period
$ 20.67
- -------
Total return+++
20.57%**
Net assets end of period (in thousands)
$ 1,086
Ratio of expenses to average net assets (2)
2.05%*
Ratio of net investment income to average net
assets (2)
1.56%*
Portfolio turnover rate
25.60%*
* Annualized.
** Not Annualized.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.78% and
2.06%, respectively,
in 1995; 1.73% and 2.3%, respectively, in 1994; and
1.91% and 2.51%,
respectively, in 1993; 1.95% amd 2.22%, respectively,
in 1992; and 2.02%
and 2.84%, respectively, in 1991.
(2) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 2.23% and
1.33%, respectively,
in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
59
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31,
--------
- ------------------------------------------
CAPITAL APPRECIATION PORTFOLIO (CLASS A) 1995
1994 1993 1992+ 1991
- ------------------------------------------------------------
- ------------------------------------------
Net asset value, beginning of period $ 28.54
$ 31.10 $ 29.42 $ 27.80 $ 17.48
Net investment income (loss)
(0.25) (0.13) (0.15) (0.04) 0.06
Net realized and unrealized gain (loss) on
investments 7.59
(0.95) 1.83 1.66 10.26
--------
- --------- --------- -------- --------
Total from investment operations 7.34
(1.08) 1.68 1.62 10.32
--------
- --------- --------- -------- --------
Dividends from net investment income 0.00
0.00 0.00 0.00 0.00
Distributions from capital gains 3.34
1.48 0.00 0.00 0.00
Other 0.00
0.00 0.00 0.00 0.00
--------
- --------- --------- -------- --------
Total distributions 3.34
1.48 0.00 0.00 0.00
--------
- --------- --------- -------- --------
Net asset value, end of period $ 32.54
$ 28.54 $ 31.10 $ 29.42 $ 27.80
--------
- --------- --------- -------- --------
Total return++ 25.72%
(3.46)% 5.71% 5.83% 59.04%
Net assets end of period (in thousands) $121,207
$ 101,237 $ 103,187 $ 72,569 $ 33,375
Ratio of expenses to average net assets (1) 1.65%
1.66% 1.64% 1.72% 1.75%
Ratio of net investment income (loss) to average
net assets (1) (0.82)%
(0.50)% (0.60)% (0.20)% 0.10%
Portfolio turnover rate 65.20%
74.40% 61.90% 32.50% 40.20%
FOR
THE PERIOD
--------
- -----------------
CAPITAL APPRECIATION PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- ------------------------------------------------
Net asset value, beginning of period
$ 30.04
Net investment income (loss)
(0.12)
Net realized and unrealized gain (loss) on
investments
5.84
- --------
Total from investment operations
5.72
- --------
Dividends from net investment income
0.00
Distributions from capital gains
3.34
Other
0.00
- --------
Total distributions
3.34
- --------
Net asset value, end of period
$ 32.42
- --------
Total return+++
18.99%**
Net assets end of period (in thousands)
$ 1,953
Ratio of expenses to average net assets
2.08%*
Ratio of net investment income (loss) to average
net assets
(1.41)%*
Portfolio turnover rate
65.20%*
* Annualized.
** Not Annualized.
+ Based on average monthly shares outstanding.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 2.04% and
(0.44%),
respectively, in 1991.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
60
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31, FOR THE PERIOD
--------
- -------------------------------- -------------------------
SMALL COMPANY PORTFOLIO (CLASS A)
1995 1994 10/1/93 THROUGH 12/31/93
- ------------------------------------------------------------
- ------------------------------------------------------------
Net asset value, beginning of period
$ 5.17 $ 5.29 $ 5.00
Net investment income (loss)
0.02 0.03 0.01
Net realized and unrealized gain (loss) on
investments
0.46 (0.01) 0.29
- ------- ------------ ------
Total from investment operations
0.48 0.02 0.30
- ------- ------------ ------
Dividends from net investment income
0.02 0.03 0.01
Distributions from capital gains
0.20 0.11 0.00
Other
0.00 0.00 0.00
- ------- ------------ ------
Total distributions
0.22 0.14 0.01
- ------- ------------ ------
Net asset value, end of period
$ 5.43 $ 5.17 $ 5.29
- ------- ------------ ------
Total return++
9.28% 0.34% 5.92%**
Net assets end of period (in thousands)
$19,720 $22,120 $8,118
Ratio of expenses to average net assets (1)
1.75% 1.75% 1.75%*
Ratio of net investment income to average net
assets (1)
0.32% 0.60% 0.10%*
Portfolio turnover rate
36.50% 16.70% 0.00%
FOR
THE PERIOD
--------
- -----------------
SMALL COMPANY PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- --------------------------------------------------
Net asset value, beginning of period
$ 5.28
Net investment income (loss)
(0.01)
Net realized and unrealized gain (loss) on
investments
0.36
- -------
Total from investment operations
0.35
- -------
Dividends from net investment income
0.02
Distributions from capital gains
0.20
Other
0.00
- -------
Total distributions
0.22
- -------
Net asset value, end of period
$ 5.41
- -------
Total return+++
6.87%**
Net assets end of period (in thousands)
$ 862
Ratio of expenses to average net assets (2)
2.30%*
Ratio of net investment income to average net
assets (2)
(0.40)%*
Portfolio turnover rate
36.50%*
* Annualized.
** Not Annualized.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in
effect, the ratio of net
operating expenses to average net assets and the
ratio of net investment
income to average net assets would have been
2.21% and (0.14%),
respectively, in 1995; 2.15% and 0.18%, respectively,
in 1994; and 4.00%
and (1.54%), respectively, in 1993.
(2) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in
effect, the ratio of net
operating expenses to average net assets and the
ratio of net investment
income to average net assets would have been
2.78% and (0.90%),
respectively, in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
61
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
FOR
THE PERIOD
--------
- -----------------
SMALL COMPANY PORTFOLIO (CLASS Y) 5/25/95
THROUGH 12/31/95
- ------------------------------------------------------------
- --------------------------------------------------
Net asset value, beginning of period
$ 5.37
Net investment income (loss)
0.04
Net realized and unrealized gain (loss) on
investments
0.26
- -------
Total from investment operations
0.30
- -------
Dividends from net investment income
0.04
Distributions from capital gains
0.20
Other
0.00
- -------
Total distributions
0.24
- -------
Net asset value, end of period
$ 5.43
- -------
Total return
5.55%**
Net assets end of period (in thousands)
$ 2,832
Ratio of expenses to average net assets (3)
1.30%*
Ratio of net investment income to average net
assets (3)
0.18%*
Portfolio turnover rate
36.50%*
* Annualized.
** Not Annualized.
(3) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in
effect, the ratio of net
operating expenses to average net assets and the
ratio of net investment
income to average net assets would have been
1.81% and (0.33%),
respectively, in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
62
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31,
--------
- -----------------------------------------
INTERNATIONAL GROWTH PORTFOLIO (CLASS A) 1995
1994 1993 1992+ 1991
- ------------------------------------------------------------
- -----------------------------------------
Net asset value, beginning of period $ 14.70
$ 17.44 $ 13.23 $ 13.38 $ 11.95
Net investment income (loss) 0.11
(0.01) (0.02) 0.28 0.28
Net realized and unrealized gain (loss) on
investments 2.12
(0.49) 4.79 (0.39) 1.25
--------
- --------- -------- --------- -------
Total from investment operations 2.23
(0.50) 4.77 (0.11) 1.53
--------
- --------- -------- --------- -------
Dividends from net investment income 0.09
0.00 0.00 0.04 0.10
Distributions from capital gains 0.76
2.24 0.17 0.00 0.00
Other! 0.00
0.00 0.39 0.00 0.00
--------
- --------- -------- --------- -------
Total distributions 0.85
2.24 0.56 0.04 0.10
--------
- --------- -------- --------- -------
Net asset value, end of period $ 16.08
$ 14.70 $ 17.44 $ 13.23 $ 13.38
--------
- --------- -------- --------- -------
Total return++ 15.17%
(2.82)% 36.05% (0.93)% 12.91%
Net assets end of period (in thousands) $ 28,628
$ 27,523 $ 22,900 $ 11,630 $10,736
Ratio of expenses to average net assets (1) 2.00%
2.00% 2.00% 2.00% 2.00%
Ratio of net investment income (loss) to average
net assets (1) 0.70%
(0.20)% (0.10)% 0.50% 0.60%
Portfolio turnover rate 31.10%
116.10% 70.10% 134.90% 64.50%
FOR
THE PERIOD
--------
- -----------------
INTERNATIONAL GROWTH PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- ------------------------------------------------
Net asset value, beginning of period
$ 14.82
Net investment income (loss)
(0.02)
Net realized and unrealized gain (loss) on
investments
2.08
- --------
Total from investment operations
2.06
- --------
Dividends from net investment income
0.10
Distributions from capital gains
0.76
Other
0.00
- --------
Total distributions
0.86
- --------
Net asset value, end of period
$ 16.02
- --------
Total return+++
13.88%**
Net assets end of period (in thousands)
$ 1,094
Ratio of expenses to average net assets (2)
2.55%*
Ratio of net investment income to average net
assets (2)
(0.65)%*
Portfolio turnover rate
31.10%*
* Annualized.
** Not Annualized.
+ Based on average monthly shares outstanding.
! Distributions in excess of net investment income.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in
effect, the ratio of net
operating expenses to average net assets and the
ratio of net investment
income to average net assets would have been 2.40% and
0.30%, respectively,
in 1995; 2.51% and (0.70%), respectively, in 1994;
3.06% and (1.15%),
respectively, in 1993; 3.70% and (1.15%), respectively,
in 1992; and 3.59%
and (0.93%), respectively, in 1991.
(2) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in
effect, the ratio of net
operating expenses to average net assets and the
ratio of net investment
income to average net assets would have been
2.73% and (0.85%),
respectively, in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
63
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
FOR
THE PERIOD
--------
- -----------------
INTERNATIONAL GROWTH PORTFOLIO (CLASS Y) 7/5/95
THROUGH 12/31/95
- ------------------------------------------------------------
- ------------------------------------------------------------
- -----
Net asset value, beginning of period
$ 14.93
Net investment income (loss)
0.02
Net realized and unrealized gain (loss) on
investments
2.02
- -------
Total from investment operations
2.04
- -------
Dividends from net investment income
0.14
Distributions from capital gains
0.76
Other
0.00
- -------
Total distributions
0.90
- -------
Net asset value, end of period
$ 16.07
- -------
Total return
13.65%**
Net assets end of period (in thousands) $
3,109
Ratio of expenses to average net assets (3)
1.55% *
Ratio of net investment income to average net
assets (3)
0.26% *
Portfolio turnover rate
31.10% *
* Annualized.
** Not Annualized.
(3) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in
effect, the ratio of net
operating expenses to average net assets and the
ratio of net investment
income to average net assets would have been 1.75% and
0.05%, respectively,
in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
64
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31,
- ------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO (CLASS A)
1995 1994 1993 1992+
- ------------------------------------------------------------
- ------------------------------------------------------------
- -----------
Net asset value, beginning of period
$ 10.62 $ 12.44 $ 12.47 $ 12.40
Net investment income (loss)
0.76 0.87 0.92 0.99
Net realized and unrealized gain (loss) on investments
1.21 (1.82) 0.21 0.19
- --------- --------- --------- ---------
Total from investment operations
1.97 (0.95) 1.13 1.18
- --------- --------- --------- ---------
Dividends from net investment income
0.76 0.87 0.92 0.98
Distributions from capital gains
0.00 0.00 0.24 0.13
Other
0.00 0.00 0.00 0.00
- --------- --------- --------- ---------
Total distributions
0.76 0.87 1.16 1.11
- --------- --------- --------- ---------
Net asset value, end of period
$ 11.83 $ 10.62 $ 12.44 $ 12.47
- --------- --------- --------- ---------
Total return ++
19.00% (7.81)% 9.26% 9.93%
Net assets end of period (in thousands)
$ 86,224 $ 84,431 $ 106,541 $ 71,515
Ratio of expenses to average net assets (1)
1.30% 1.30% 1.30% 1.30%
Ratio of net investment income to average net assets (1)
6.66% 7.60% 7.20% 7.90%
Portfolio turnover rate
0.00% 27.20% 90.10% 108.40%
GOVERNMENT SECURITIES PORTFOLIO (CLASS A)
1991
- ------------------------------------------------------------
- ---------------------------
Net asset value, beginning of period
$ 11.96
Net investment income (loss)
1.00
Net realized and unrealized gain (loss) on investments
0.44
- ---------
Total from investment operations
1.44
- ---------
Dividends from net investment income
1.00
Distributions from capital gains
0.00
Other
0.00
- ---------
Total distributions
1.00
- ---------
Net asset value, end of period
$ 12.40
- ---------
Total return ++
12.58%
Net assets end of period (in thousands)
$ 46,480
Ratio of expenses to average net assets (1)
0.90%
Ratio of net investment income to average net assets (1)
8.20%
Portfolio turnover rate
58.60%
FOR
THE PERIOD
--------
- -----------------
GOVERNMENT SECURITIES PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- ------------------------------------------------
Net asset value, beginning of period
$ 11.12
Net investment income (loss)
0.44
Net realized and unrealized gain (loss) on
investments
0.71
- -------
Total from investment operations
1.15
- -------
Dividends from net investment income
0.44
Distributions from capital gains
0.00
Other
0.00
- -------
Total distributions
0.44
- -------
Net asset value, end of period
$ 11.83
- -------
Total return +++
10.47%**
Net assets end of period (in thousands)
$ 2,124
Ratio of expenses to average net assets (2)
1.85%*
Ratio of net investment income to average net
assets (2)
5.64%*
Portfolio turnover rate
0.00%*
* Annualized.
** Not Annualized.
+ Based on average monthly shares outstanding.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.44% and
6.52%, respectively,
in 1995; 1.35% and 7.59%, respectively, in1994; 1.44%
and 7.03%,
respectively, in 1993; 1.54% and 7.72%, respectively,
in 1992; and 1.65%
and 7.39%, respectively, in 1991.
(2) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.93% and
5.66%, respectively,
in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
65
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31,
--------
- ---------------------------------------
HIGH-YIELD BOND PORTFOLIO (CLASS A) 1995
1994 1993 1992 1991
- ------------------------------------------------------------
- ---------------------------------------
Net asset value, beginning of period $ 10.72
$ 11.70 $ 10.83 $ 10.19 $ 8.55
Net investment income (loss) 0.99
0.97 0.95 1.01 1.13
Net realized and unrealized gain (loss) on
investments 0.67
(0.97) 0.89 0.64 1.66
-------
- -------- -------- -------- --------
Total from investment operations 1.66
0.00 1.84 1.65 2.79
-------
- -------- -------- -------- --------
Dividends from net investment income 0.99
0.98 0.97 1.01 1.15
Distributions from capital gains 0.00
0.00 0.00 0.00 0.00
Other 0.00
0.00 0.00 0.00 0.00
-------
- -------- -------- -------- --------
Total distributions 0.99
0.98 0.97 1.01 1.15
-------
- -------- -------- -------- --------
Net asset value, end of period $ 11.39
$ 10.72 $ 11.70 $ 10.83 $ 10.19
-------
- -------- -------- -------- --------
Total return ++ 16.00%
0.05% 17.58% 16.69% 33.02%
Net assets end of period (in thousands) $52,182
$ 44,822 $ 44,361 $ 30,851 $ 24,672
Ratio of expenses to average net assets (1) 1.30%
1.30% 1.30%+ 1.30% 1.30%
Ratio of net investment income to average net
assets (1) 8.80%
8.60% 8.20% 9.40% 11.30%
Portfolio turnover rate 88.50%*
113.00% 121.20% 121.70% 109.30%
FOR
THE PERIOD
--------
- -----------------
HIGH-YIELD BOND PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- ------------------------------------------------
Net asset value, beginning of period
$ 11.11
Net investment income (loss)
0.61
Net realized and unrealized gain (loss) on
investments
0.28
- -------
Total from investment operations
0.89
- -------
Dividends from net investment income
0.61
Distributions from capital gains
0.00
Other
0.00
- -------
Total distributions
0.61
- -------
Net asset value, end of period
$ 11.39
- -------
Total return +++
8.12%**
Net assets end of period (in thousands)
$ 2,951
Ratio of expenses to average net assets (2)
1.85%*
Ratio of net investment income to average net
assets (2)
7.84%*
Portfolio turnover rate
88.50%*
* Annualized.
** Not Annualized.
+ Based on average monthly shares outstanding.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.52% and
8.58%, respectively,
in 1995; 1.45% and 8.52%, respectively, in 1994; 1.59%
and 7.95%,
respectively, in 1993; 1.64% and 8.95%, respectively,
in 1992; and 1.85%
and 10.51%, respectively, in 1991.
(2) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 2.09% and
7.68%, respectively,
in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
66
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31,
--------
- ------------------------------------
TAX-EXEMPT INCOME PORTFOLIO (CLASS A) 1995
1994 1993 1992 1991
- ------------------------------------------------------------
- ------------------------------------
Net asset value, beginning of period $ 12.80
$ 14.31 $ 13.60 $ 13.34 $ 12.78
Net investment income (loss) 0.65
0.67 0.70 0.76 0.82
Net realized and unrealized gain (loss) on
investments 1.21
(1.48) 0.73 0.26 0.56
-------
- -------- ------- ------- -------
Total from investment operations 1.86
(0.81) 1.43 1.02 1.38
-------
- -------- ------- ------- -------
Dividends from net investment income 0.65
0.68 0.70 0.76 0.82
Distributions from capital gains 0.02
0.02 0.02 0.00 0.00
Other 0.00
0.00 0.00 0.00 0.00
-------
- -------- ------- ------- -------
Total distributions 0.67
0.70 0.72 0.76 0.82
-------
- -------- ------- ------- -------
Net asset value, end of period $ 13.99
$ 12.80 $ 14.31 $ 13.60 $ 13.34
-------
- -------- ------- ------- -------
Total return ++ 14.85%
(5.69)% 10.76% 7.88% 11.13%
Net assets end of period (in thousands) $33,626
$ 34,297 $41,702 $29,728 $22,614
Ratio of expenses to average net assets (1) 1.25%
1.25% 1.25% 1.25% 1.25%
Ratio of net investment income to average net
assets (1) 4.82%
5.00% 4.90% 5.60% 6.30%
Portfolio turnover rate 0.75%
25.70% 8.30% 16.30% 21.60%
FOR
THE PERIOD
--------
- -----------------
TAX-EXEMPT INCOME PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- ------------------------------------------------
Net asset value, beginning of period
$ 13.44
Net investment income (loss)
0.38
Net realized and unrealized gain (loss) on
investments
0.57
- -------
Total from investment operations
0.95
- -------
Dividends from net investment income
0.38
Distributions from capital gains
0.02
Other
0.00
- -------
Total distributions
0.40
- -------
Net asset value, end of period
$ 13.99
- -------
Total return +++
7.18%**
Net assets end of period (in thousands)
$ 912
Ratio of expenses to average net assets (2)
1.80%*
Ratio of net investment income to average net
assets (2)
4.08%*
Portfolio turnover rate
0.75%*
* Annualized.
** Not Annualized.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.42% and
4.65%, respectively,
in 1995; 1.28% and 4.97%, respectively, in 1994; 1.39%
and 4.79%,
respectively, in 1993; 1.41% and 5.49%, respectively,
in 1992; and 1.47%
and 6.04%, respectively, in 1991.
(2) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.98% and
3.94%, respectively,
in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
67
Financial Highlights -- (Continued)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED FOR THE PERIOD
--------
- --------------- ------------------------
MANAGED PORTFOLIO (CLASS A)
DECEMBER 31, 1995 10/1/94 THROUGH 12/31/94
- ------------------------------------------------------------
- ------------------------------------------------------------
- ---
Net asset value, beginning of period
$ 4.91 $ 5.00
Net investment income (loss)
0.04 0.01
Net realized and unrealized gain (loss) on
investments
1.81 (0.09)
- ------- --------
Total from investment operations
1.85 (0.08)
- ------- --------
Dividends from net investment income
0.03 0.01
Distributions from capital gains
0.03 0.00
Other
0.00 0.00
- ------- --------
Total distributions
0.06 0.01
- ------- --------
Net asset value, end of period
$ 6.70 $ 4.91
- ------- --------
Total return ++
37.68% (1.58)%**
Net assets end of period (in thousands)
$47,839 $ 7,872
Ratio of expenses to average net assets (1)
1.75% 1.75%*
Ratio of net investment income to average net
assets (1)
1.09% 1.30%*
Portfolio turnover rate
26.40% 27.10%*
FOR THE PERIOD
------------------
- -----
MANAGED PORTFOLIO (CLASS B) 5/1/95 THROUGH
12/31/95
- ------------------------------------------------------------
- --------------------------
Net asset value, beginning of period $ 5.68
Net investment income (loss) 0.01
Net realized and unrealized gain (loss)
on investments 1.05
-------
Total from investment operations 1.06
-------
Dividends from net investment income 0.03
Distributions from capital gains 0.03
Other 0.00
-------
Total distributions 0.06
-------
Net asset value, end of period $ 6.68
-------
Total return +++ 18.38%
Net assets end of period (in thousands) $16,792
Ratio of expenses to average net
assets (2) 2.30%*
Ratio of net investment income to
average net assets (2) 0.31%*
Portfolio turnover rate 26.40%*
* Annualized.
** Not Annualized.
++ Does not include one time sales charge.
+++ Does not include contingent deferred sales charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.90% and
0.94%, respectively,
in 1995; and 3.71% and (0.32%), respectively, in 1994.
(2) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 2.45% and
0.14%, respectively,
in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
68
Financial Highlights -- (Continued)
FOR
THE PERIOD
--------
- ---------------
MANAGED PORTFOLIO (CLASS Y) 7/5/95
THROUGH 12/31/95
- ------------------------------------------------------------
- ------------------------------------------------
Net asset value, beginning of period
$ 6.17
Net investment income (loss)
0.03
Net realized and unrealized gain (loss) on
investments
0.57
- -------
Total from investment operations
0.60
- -------
Dividends from net investment income
0.04
Distributions from capital gains
0.03
Other
0.00
- -------
Total distributions
0.07
- -------
Net asset value, end of period
$ 6.70
- -------
Total return
9.80%**
Net assets end of period (in thousands)
$26,664
Ratio of expenses to average net assets (3)
1.30%*
Ratio of net investment income to average net
assets (3)
1.39%*
Portfolio turnover rate
26.40%*
* Annualized.
** Not Annualized.
(3) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.41% and
1.28%, respectively,
in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
69
Financial Highlights -- (Concluded)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS
FOLLOWS:
- ------------------------------------------------------------
- --------------------
YEAR ENDED DECEMBER 31, FOR THE PERIOD
--------
- ----------------------------------- -----------------------
- --
MONEY MARKET PORTFOLIO (CLASS A) 1995
1994 1993 1992+ 1991 5/1/90 THROUGH 12/31/90
- ------------------------------------------------------------
- ------------------------------------------------------------
- --
Net asset value, beginning of period $ 1.00
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income (loss) 0.05
0.03 0.02 0.03 0.05 0.04
Net realized and unrealized gain (loss) on
investments 0.00
0.00 0.00 0.00 0.00 0.00
-------
- ------- ------- ------- ------- -------
Total from investment operations 0.05
0.03 0.02 0.03 0.05 0.04
-------
- ------- ------- ------- ------- -------
Dividends from net investment income 0.05
0.03 0.02 0.03 0.05 0.04
Distributions from capital gains 0.00
0.00 0.00 0.00 0.00 0.00
Other 0.00
0.00 0.00 0.00 0.00 0.00
-------
- ------- ------- ------- ------- -------
Total distributions 0.05
0.03 0.02 0.03 0.05 0.04
-------
- ------- ------- ------- ------- -------
Net asset value, end of period $ 1.00
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------
- ------- ------- ------- ------- -------
Total return 5.05%
3.34% 2.24% 2.92% 5.22% 4.75%**
-------
- ------- ------- ------- ------- -------
Net assets end of period (in thousands) $40,325
$32,334 $18,302 $18,932 $16,710 $19,031
Ratio of expenses to average net assets (1) 1.00%
1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net
assets (1) 4.92%
3.30% 2.20% 2.80% 5.10% 7.00%
Portfolio turnover rate N/A
N/A N/A N/A N/A N/A
FOR
THE PERIOD
--------
- -----------------
MONEY MARKET PORTFOLIO (CLASS B) 5/1/95
THROUGH 12/31/95
- ------------------------------------------------------------
- ------------------------------------------------
Net asset value, beginning of period
$ 1.00
Net investment income (loss)
0.03
Net realized and unrealized gain (loss) on
investments
0.00
- -------
Total from investment operations
0.03
- -------
Dividends from net investment income
0.03
Distributions from capital gains
0.00
Other
0.00
- -------
Total distributions
0.03
- -------
Net asset value, end of period
$ 1.00
- -------
Total return +++
2.95%**
- -------
Net assets end of period (in thousands)
$ 394
Ratio of expenses to average net assets (2)
1.55%*
Ratio of net investment income to average net
assets (2)
4.23%*
Portfolio turnover rate
N/A
* Annualized.
** Not Annualized.
+ Based on average monthly shares outstanding.
+++ Return does not include contingent deferred sales
charge.
(1) During the years presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.35% and
4.57%, respectively,
in 1995; 1.33% and 3.08%, respectively, in 1994; 1.72%
and 1.47%,
respectively, in 1993; 1.56% and 1.81%, respectively,
in 1992; and 1.51%
and 4.62%, respectively, in 1991.
(2) During the period presented above, the Advisor waived a
portion of its fees
and reimbursed the Portfolio for a portion of its
operating expenses. If
such waivers and reimbursements had not been in effect,
the ratio of net
operating expenses to average net assets and the ratio
of net investment
income to average net assets would have been 1.88% and
3.90%, respectively,
in 1995.
See notes to financial statements.
The Enterprise Group of Funds, Inc.
70
(This page intentionally left blank)
The Enterprise Group of Funds, Inc.
71
Notes To Financial Statements
December 31, 1995
1. ORGANIZATION OF THE FUND
The Enterprise Group of Funds, Inc. (the "Fund") is
registered under The
Investment Company Act of 1940 as an open-end management
investment company and
consists of the Growth, Growth and Income, Capital
Appreciation, Small Company,
International Growth, Government Securities, High-Yield
Bond, Tax-Exempt Income,
Managed and Money Market Portfolios. Prior to May 1, 1995,
the Fund only issued
one class of shares which were redesignated Class A shares.
On that date, the
Fund began issuing Class A, B and Y shares. Shares of each
Class represent an
identical interest in the investments of their respective
portfolios and
generally have the same rights, but are offered with
different sales charge and
distribution fee arrangements. Upon redemption, Class B
shares are subject to a
maximum contingent sales charge of 5%, which declines to
zero after six years
and which is based on the lesser of net asset value at the
time of purchase or
sale. Class B shares will automatically convert to Class A
shares of the same
fund eight years after purchase. Class Y shares are not
subject to sales
charges.
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION -- Domestic equity securities are valued
at the last sale
price or, in the absence of any sale on that date, the
closing bid price.
Domestic equity securities without last trade information
are valued at the last
bid price. Equity securities for which market quotations are
not readily
available and other securities are valued at fair value as
determined in good
faith by the Board of Directors. Debt securities and foreign
securities are
valued on the basis of independent pricing services approved
by the Board of
Directors, and such pricing services generally follow the
same procedures in
valuing foreign equity securities as are described above as
to domestic equity
securities. Securities held by the Money Market Portfolio
are valued on an
amortized cost basis. Under the amortized cost method, a
security is valued at
its cost and any discount or premium is amortized over the
period until
maturity, without taking into account the impact of
fluctuating interest rates
on the market value of the security unless the deviation
from net asset value as
calculated by using available market quotations exceeds 1/2
of 1%.
REPURCHASE AGREEMENTS -- Each portfolio may acquire
securities subject to
repurchase agreements. Under a typical repurchase agreement,
a Portfolio would
acquire a debt security for a relatively short period
(usually for one day and
not more than one week) subject to an obligation of the
seller to repurchase and
of the Portfolio to resell the debt security at an agreed-
upon higher price,
thereby establishing a fixed investment return during the
Portfolio's holding
period. Under each repurchase agreement, the Portfolio
receives, as collateral,
securities whose market value is at least equal to the
repurchase price.
FOREIGN CURRENCY TRANSLATION -- Securities, other assets and
liabilities of the
International Growth Portfolio whose values are initially
expressed in foreign
currencies are translated to U.S. dollars at the bid price
of such currency
against U.S. dollars last quoted by a major bank. Dividend
and interest income
and certain expenses denominated in foreign currencies are
marked-to-market
daily based on daily exchange rates and exchange gains and
losses are realized
upon ultimate receipt or disbursement. The fund does not
isolate that portion of
its realized and unrealized gains on investments from
changes in foreign
exchange rates from fluctuations arising from changes in the
market prices of
the investments.
FUTURES CONTRACTS -- A futures contract is an agreement
between two parties to
buy and sell a financial instrument at a set price on a
future date. Upon
entering into such a contract a Portfolio is required to
pledge to the broker an
amount of cash or securities equal to the minimum "initial
margin" requirements
of the exchange. Pursuant to the contract, the Portfolio
agrees to receive from
or pay to the broker an amount of cash equal to the daily
fluctuation in value
of the contract. Such receipts or
The Enterprise Group of Funds, Inc.
72
payments are known as "variation margin" and are recorded by
the Portfolio as
unrealized appreciation or depreciation. When the contract
is closed the
Portfolio records a realized gain or loss equal to the
difference between the
value of the contract at the time it was opened and the
value at the time it was
closed and reverses any unrealized appreciation or
depreciation previously
recorded.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are
accounted for on the trade date. Realized gains and losses
from investment
transactions are determined on the basis of identified cost
and realized gains
and losses from currency transactions are determined on the
basis of average
cost. Dividend income and distributions to shareholders are
recognized on the
ex-dividend date, and interest income is recognized on the
accrual basis.
Premium and discounts on securities are amortized for both
financial and tax
purposes.
FEDERAL INCOME TAXES -- No provision for federal income or
excise taxes is
required, because the Fund intends to continue to qualify as
a regulated
investment company and distribute all of its taxable income
to shareholders.
OTHER -- As part of its investment program, the Government
Securities Portfolio
invests in collateralized mortgage obligations ("CMOs").
Payments of principal
and interest on the mortgages are passed through to the
holders of the CMOs on
the same schedule as they are received, although certain
classes of CMOs have
priority over others with respect to the receipt of
prepayments on the
mortgages. Therefore, depending on the type of CMOs in which
the Government
Securities Portfolio invests, the investment may be subject
to a greater
valuation risk due to prepayment than other types of
mortgage-related
securities.
The high-yield securities in which the High-Yield Bond
Portfolio may invest may
be considered speculative in regard to the issuer's
continuing ability to meet
principal and interest payments. The value of the lower
rated securities in
which the High-Yield Bond Portfolio may invest will be
affected by the
creditworthiness of individual issuers, general economic and
specific industry
conditions, and will fluctuate inversely with changes in
interest rates. In
addition, the secondary trading market for lower quality
bonds may be less
active and less liquid than the trading market for higher
quality bonds.
3. TRANSACTIONS WITH AFFILIATES
The Portfolios are charged management fees by Enterprise
Capital Management,
Inc. ("Enterprise Capital") for furnishing management and
administrative
services. Enterprise Capital has also agreed to reimburse
the Portfolios for
expenses incurred in excess of a percentage of average net
assets. Enterprise
Fund Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of
Enterprise Capital, serves as principal underwriter for
shares of the Fund. The
Directors of the Fund have adopted a Distributor's Agreement
and Plan of
Distribution (the "Plan") pursuant to rule 12b-1 under the
Investment Company
Act of
The Enterprise Group of Funds, Inc.
73
Notes To Financial Statements --
(Continued)
December 31, 1995
1940. The Plan provides that each Portfolio will pay the
Distributor a
distribution fee, accrued daily and payable monthly. The
management fee,
distribution fee, and maximum expense amounts are equal to
the following annual
percentage of average net assets for each class of shares:
MAXIMUM
MANAGEMENT FEE
DISTRIBUTION FEE EXPENSE AMOUNTS
------------------ -------
- ------------ ---------------------
PORTFOLIO A B Y A
B Y A B Y
- ------------------------------ ---- ---- ---- ----
- ----- ---- ----- ----- -----
Growth .75% .75% .75% .45%
1.00% none 1.60% 2.15% 1.15%
Growth and Income .75% .75% .75% .45%
1.00% none 1.50% 2.05% 1.05%
Capital Appreciation .75% .75% .75% .45%
1.00% none 1.75% 2.30% 1.30%
Small Company .75% .75% .75% .45%
1.00% none 1.75% 2.30% 1.30%
International Growth .85% .85% .85% .45%
1.00% none 2.00% 2.55% 1.55%
Government Securities .60% .60% .60% .45%
1.00% none 1.30% 1.85% .85%
High-Yield Bond .60% .60% .60% .45%
1.00% none 1.30% 1.85% .85%
Tax-Exempt Income .50% .50% .50% .45%
1.00% none 1.25% 1.80% .80%
Managed .75% .75% .75% .45%
1.00% none 1.75% 2.30% 1.30%
Money Market .35% .35% .35% .30%
.85% none 1.00% 1.55% .70%
Enterprise Capital is a wholly-owned subsidiary of the
Mutual Life Insurance
Company of New York ("MONY"). MONY and its subsidiaries had
the following
investments in the portfolios as of December 31, 1995,
Growth and Income
Portfolio, Class A -- $134,178, Small Company Portfolio,
Class A -- $113,429,
International Growth Portfolio, Class A -- $1,831,717
Government Securities
Portfolio, Class A -- $760,945 and Managed Portfolio, Class
A -- $1,735,992.
Enterprise Capital has subadvisory agreements with various
investment advisors
as Portfolio Managers for the Portfolios of the Fund. The
management fee, as a
percentage of average net assets of a Portfolio, is paid to
Enterprise Capital
which pays a portion of the fee to the Portfolio Manager.
1740 Advisers, Inc., a
wholly-owned subsidiary of MONY, is the Portfolio Manager
for the Growth and
Income Portfolio. For the year ended December 31, 1995,
Enterprise Capital
incurred management fees for 1740 Advisers, Inc. related to
the Growth and
Income Portfolio of $167,489.
The portion of sales charges paid to MONY Securities
Corporation, a wholly-owned
subsidiary of MONY, from the proceeds of the sale of fund
shares was $2,131,278
for the year ended December 31, 1995. The portion of sales
charges paid to
Enterprise Fund Distributors was $455,955 for the year ended
December 31, 1995.
4. FINANCIAL INSTRUMENTS
As part of its investment program, the International Growth
Portfolio utilizes
forward currency exchange contracts to manage exposure to
currency fluctuations
and hedge against adverse changes in connection with
purchases and sales of
securities. The Portfolio will enter into forward contracts
only for hedging
purposes. The Portfolio may be required to set aside liquid
assets in a
segregated custodial account to cover its obligations. At
December 31, 1995, the
International Growth Portfolio had entered
The Enterprise Group of Funds, Inc.
74
into various forward currency exchange contracts under which
it is obligated to
exchange currencies at specified future dates. Risks arise
from the possible
inability of counterparties to meet the terms of their
contracts and from
movements in currency values. Outstanding contracts at
December 31, 1995 are as
follows:
CONTRACT TO
NET UNREALIZED
SETTLEMENT ---------------------------------------------
APPRECIATION/
DATE RECEIVE DELIVER
(DEPRECIATION)
- ---------- ---------------------- --------------------- -
- --------------
1/19/96 USD 604,666 BEL 18,400,000
$ (21,288)
1/19/96 CAD 5,450,000 USD 4,046,629
(55,563)
1/19/96 USD 1,386,457 CAD 1,900,000
(4,924)
1/19/96 USD 1,010,968 CHF 1,200,000
(31,120)
1/19/96 CHF 500,000 USD 439,792
(5,339)
1/19/96 USD 1,502,123 DEM 2,200,000
(33,260)
1/19/96 USD 2,374,111 FRF 12,000,000
(77,454)
1/19/96 USD 1,655,460 GBP 1,070,000
(5,453)
1/19/96 GBP 846,228 SEK 8,750,000
16,262
1/19/96 SEK 8,750,000 USD 1,197,154
118,281
1/19/96 GBP 846,228 SEK 8,750,000
(18,136)
1/19/96 ITL 1,700,000,000 USD 1,032,618
34,708
1/19/96 USD 12,142,985 JPY 1,195,000,000
533,679
1/19/96 JPY 375,000,000 USD 3,689,129
(46,042)
1/19/96 USD 1,764,811 NLG 2,900,000
(44,692)
- -------
$ 359,659
- -------
- -------
Net unrealized appreciation on these contracts at December
31, 1995 is included
in the accompanying financial statements.
As part of its investment program, the High-Yield Bond
Portfolio enters into
futures contracts to hedge against anticipated future price
and interest rate
changes. Risks of entering into futures contracts include:
(1) the risk that the
price of the futures contracts may not move in the same
direction as the price
of the securities in the various markets; (2) the risk that
there will be no
liquid secondary market when the Portfolio attempts to enter
into a closing
position, (3) the risk that the Portfolio will lose an
amount in excess of the
initial margin deposit; and (4) the fact that the success or
failure of these
transactions for the Portfolio depends on the ability of the
Portfolio Manager
to predict movements in stock, bond, and currency prices and
interest rates.
There were no open futures contracts at December 31, 1995 in
the High-Yield Bond
Portfolio.
The Enterprise Group of Funds, Inc.
75
Notes To Financial Statements --
(Continued)
December 31, 1995
For the year ended December 31, 1995, purchases and sales
proceeds of
investments, other than short-term investments, were as
follows:
OTHER INVESTMENT
U.S.
GOVERNMENT SECURITIES SECURITIES
----
- ---------------------- ------------------------------
PURCHASES SALES PURCHASES SALES
----
- -------- ------------ -------------- --------------
Growth Portfolio
- -- -- $ 48,909,881 $ 47,280,100
Growth and Income Portfolio
- -- -- 12,900,958 12,726,102
Capital Appreciation Portfolio
- -- -- 72,410,820 75,326,723
Small Company Portfolio
- -- -- 8,379,702 8,628,336
International Portfolio
- -- -- 10,795,659 8,366,216
Government Securities Portfolio
- -- $ 995,156 -- 4,471,355
High-Yield Bond Portfolio $
5,611,250 4,919,516 44,083,717 38,253,401
Tax-Exempt Income Portfolio
- -- -- 250,800 2,864,435
Managed Portfolio
- -- -- 74,562,477 8,625,092
5. FUND SHARES TRANSACTIONS
At December 31, 1995, The Fund has 300,000,000 authorized
shares at $.10 par
value and an additional 500,000,000 authorized shares at
$.10 par value for the
Money Market Portfolio. The following tables summarize the
fund share activity
for the years ended December 31, 1995 and 1994:
GROWTH AND INCOME CAPITAL APPRECIATION SMALL
COMPANY
GROWTH PORTFOLIO
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------ --
- ------------------ ---------------------- ----------------
- --------
YEAR YEAR
YEAR YEAR YEAR YEAR YEAR
YEAR
ENDED ENDED
ENDED ENDED ENDED ENDED ENDED
ENDED
DEC. 31, DEC. 31,
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
DEC. 31,
1995 1994
1995 1994 1995 1994 1995
1994
----------- ----------- --
- ------- --------- ----------- --------- ----------- ---
- --------
CLASS A
Shares sold 4,788,089 2,811,935
330,132 559,842 1,229,985 975,981 851,253
4,458,110
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Reinvestment of Distribution 449,283 554,826
158,379 210,354 336,750 166,760 134,635
104,690
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Shares Redeemed (4,885,863) (2,987,714)
(601,132) (482,476) (1,389,942) (913,294) (1,634,212)
(1,816,503)
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Net Increase (Decrease) 351,509 379,047
(112,621) 287,720 176,793 229,447 (648,324)
2,746,297
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
CLASS B
Shares sold 427,735 --
50,306 -- 55,311 -- 156,252
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Reinvestment of Distribution 16,702 --
2,294 -- 5,453 -- 5,984
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Shares Redeemed (5,095) --
(66) -- (526) -- (2,766)
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Net Increase 439,342 --
52,534 -- 60,238 -- 159,470
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
CLASS Y
Shares sold -- --
- -- -- -- -- 533,065
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Reinvestment of Distribution -- --
- -- -- -- -- 113
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Shares Redeemed -- --
- -- -- -- -- (11,313)
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Net Increase -- --
- -- -- -- -- 521,865
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Total Net Increase (Decrease) 790,851 379,047
(60,087) 287,720 237,031 229,447 33,011
2,746,297
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
The Enterprise Group of Funds, Inc.
76
INTERNATIONAL GROWTH
GOVERNMENT SECURITIES HIGH-YIELD BOND TAX-
EXEMPT INCOME
PORTFOLIO
PORTFOLIO PORTFOLIO PORTFOLIO
---------------------- ----
- ---------------------- ---------------------- ------------
- --------
YEAR YEAR
YEAR YEAR YEAR YEAR YEAR
YEAR
ENDED ENDED
ENDED ENDED ENDED ENDED ENDED
ENDED
DEC. 31, DEC. 31,
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
DEC. 31,
1995 1994
1995 1994 1995 1994 1995
1994
---------- ---------- ----
- -------- ------------ --------- ----------- --------- -
- --------
CLASS A
Shares sold 304,077 768,403
850,363 2,028,243 992,706 1,161,070 159,901
442,343
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Reinvestment of Distribution 87,155 239,863
370,574 502,120 284,035 253,119 95,017
118,796
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Shares Redeemed (483,305) (448,614)
(1,881,468) (3,142,914) (874,861) (1,024,358) (532,434)
(795,011)
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Net Increase (Decrease) (92,073) 559,652
(660,531) (612,551) 401,880 389,831 (277,516)
(233,872)
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
CLASS B
Shares sold 64,994 --
182,937 -- 256,766 -- 64,926
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Reinvestment of Distribution 3,390 --
1,824 -- 4,434 -- 671
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Shares Redeemed (77) --
(5,144) -- (2,093) -- (459)
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Net Increase 68,307 --
179,617 -- 259,107 -- 65,138
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
CLASS Y
Shares sold 201,020 --
- -- -- -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Reinvestment of Distribution 10,240 --
- -- -- -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Shares Redeemed (17,752) --
- -- -- -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Net Increase 193,508 --
- -- -- -- -- --
- --
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
Total Net Increase (Decrease) 169,742 559,652
(480,914) (612,551) 660,987 389,831 (212,378)
(233,872)
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------
MONEY MARKET
MANAGED PORTFOLIO
PORTFOLIO
------------------------- -
- --------------------------
YEAR PERIOD
YEAR YEAR
ENDED OCT 1 -
ENDED ENDED
DEC. 31, DEC. 31,
DEC. 31, DEC. 31,
1995 1994
1995 1994
----------- ------------ -
- ------------ ------------
CLASS A
Shares sold 6,115,394 1,687,804
127,849,845 93,446,839
- ------------------------------------------------------------
- --------------------------
Reinvestment of Distribution 60,640 3,374
1,635,878 868,036
- ------------------------------------------------------------
- --------------------------
Shares Redeemed (636,867) (88,313)
(121,495,592) (80,282,550)
- ------------------------------------------------------------
- --------------------------
Net Increase 5,539,167 1,602,865
7,990,131 14,032,325
- ------------------------------------------------------------
- --------------------------
CLASS B
Shares sold 2,547,396 --
604,172 --
- ------------------------------------------------------------
- --------------------------
Reinvestment of Distribution 20,026 --
1,198 --
- ------------------------------------------------------------
- --------------------------
Shares Redeemed (54,011) --
(211,056) --
- ------------------------------------------------------------
- --------------------------
Net Increase 2,513,411 --
394,314 --
CLASS Y
Shares sold 4,200,659 --
- -- --
- ------------------------------------------------------------
- --------------------------
Reinvestment of Distribution 43,930 --
- -- --
- ------------------------------------------------------------
- --------------------------
Shares Redeemed (264,221) --
- -- --
- ------------------------------------------------------------
- --------------------------
Net Increase 3,980,368 --
- -- --
- ------------------------------------------------------------
- --------------------------
Total Net Increase 12,032,946 1,602,865
8,384,445 14,032,325
- ------------------------------------------------------------
- --------------------------
The Enterprise Group of Funds, Inc.
77
Notes To Financial Statements --
(Continued)
December 31, 1995
6. TAX BASIS UNREALIZED APPRECIATION (DEPRECIATION) OF
INVESTMENTS AND
DISTRIBUTIONS
At December 31, 1995, the cost of securities for federal
income tax purposes,
the aggregate gross unrealized appreciation for all
securities for which there
was an excess of value over tax cost and the aggregate gross
unrealized
depreciation for all securities for which there was an
excess of tax cost over
value were as follows:
NET
UNREALIZED
TAX UNREALIZED
UNREALIZED APPRECIATION
COST APPRECIATION
DEPRECIATION (DEPRECIATION)
----------- ------------
- ------------ --------------
Growth Portfolio $88,479,222 $ 41,439,715
$ (834,281) $ 40,605,434
- ------------------------------------------------------------
- -----------------------------
Growth and Income Portfolio 47,509,488 16,081,181
(198,623) 15,882,558
- ------------------------------------------------------------
- -----------------------------
Capital Appreciation Portfolio 97,904,581 29,724,143
(3,130,431) 26,593,712
- ------------------------------------------------------------
- -----------------------------
Small Company Portfolio 22,864,709 3,461,062
(2,765,723) 695,339
- ------------------------------------------------------------
- -----------------------------
International Growth Portfolio 30,187,368 3,052,565
(1,144,514) 1,908,051
- ------------------------------------------------------------
- -----------------------------
Government Securities
Portfolio 89,859,178 683,314
(1,664,512) (981,198)
- ------------------------------------------------------------
- -----------------------------
High-Yield Bond Portfolio 53,520,453 2,230,688
(1,514,422) 716,266
- ------------------------------------------------------------
- -----------------------------
Tax-Exempt Income Portfolio 31,851,655 2,136,406
(108,436) 2,027,970
- ------------------------------------------------------------
- -----------------------------
Managed Portfolio 83,252,162 9,670,863
(1,323,960) 8,346,903
- ------------------------------------------------------------
- -----------------------------
Income and capital gain distributions are determined in
accordance with income
tax regulations which may differ from generally accepted
accounting principles.
These differences are primarily due to differing treatments
for futures and
options transactions, foreign currency transactions, pay
downs on mortgage
backed securities, losses deferred due to wash sales, and
excise tax
regulations.
Permanent book and tax basis differences relating to
shareholder distributions
will result in reclassifications to paid in capital. Any
taxable gain remaining
at fiscal year end is distributed in the following year.
The Tax-Exempt Income Portfolio has designated all income
dividends paid as
exempt interest dividends. Thus 100% of the net investment
income distributions
are exempt from federal income tax.
The Enterprise Group of Funds, Inc.
78
At December 31, 1995, the following Portfolios had capital
loss carryforwards
for federal tax purposes of:
EXPIRING
BALANCE
THROUGH
------------ ---
- ---------
Government Securities Portfolio $ 4,495,519
2003
- ------------------------------------------------------------
- ---------
High-Yield Bond Portfolio 3,223,162
2000
- ------------------------------------------------------------
- ---------
Tax-Exempt Income Portfolio 57,884
2003
- ------------------------------------------------------------
- ---------
Money Market Portfolio 2,151
2003
- ------------------------------------------------------------
- ---------
The capital gains distribution paid to shareholders for
1995, whether taken in
additional shares or cash, is as follows:
LONG
TERM
CAPITAL
GAINS
--------
- ----
Growth Portfolio $
4,951,834
- ------------------------------------------------------------
- ----
Growth and Income Portfolio
2,040,031
- ------------------------------------------------------------
- ----
Capital Appreciation Portfolio
11,503,882
- ------------------------------------------------------------
- ----
Small Company Portfolio
528,311
- ------------------------------------------------------------
- ----
International Growth Portfolio
160,877
- ------------------------------------------------------------
- ----
Tax-Exempt Income Portfolio
58,711
- ------------------------------------------------------------
- ----
The Enterprise Group of Funds, Inc.
79
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of
The Enterprise Group of Funds, Inc.:
We have audited the accompanying statements of assets and
liabilities, including
the portfolios of investments, of each of the portfolios of
The Enterprise Group
of Funds, Inc. (Growth, Growth and Income, Capital
Appreciation, Small Company,
International Growth, Government Securities, High-Yield
Bond, Tax-Exempt Income,
Managed and Money Market Portfolios) as of December 31, 1995
and the related
statements of operations for the year then ended, the
statements of 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
securities owned as of
December 31, 1995 by correspondence with the custodian and
brokers. 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 the
Growth, Growth and Income, Capital Appreciation, Small
Company, International
Growth, Government Securities, High-Yield Bond, Tax-Exempt
Income, Managed and
Money Market Portfolios of The Enterprise Group of Funds,
Inc. as of December
31, 1995, and the results of their operations, changes in
their net assets, and
their financial highlights for each of the respective
periods stated in the
first paragraph, in conformity with general accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
February 22, 1996
The Enterprise Group of Funds, Inc.
80
DIRECTORS
Victor Ugolyn
Chairman and Director
Arthur T. Dietz Arthur Howell
Director Director
William A. Mitchell, Lonnie H. Pope
Jr.
Director Director
Samuel J. Foti Michael I. Roth
Director Director
OFFICERS
Victor Ugolyn
President and Chief Executive Officer
Phillip G. Goff
Vice President
Herbert M. Williamson Catherine R.
McClellan
Treasurer and Secretary
Assistant Secretary
INVESTMENT ADVISER
Enterprise Capital Management, Inc.
3343 Peachtree Road
Suite 450
Atlanta, Georgia 30326
Telephone:
1-800-432-4320 (Toll Free)
DISTRIBUTOR
Enterprise Fund Distributors, Inc.
3343 Peachtree Road
Suite 450
Atlanta, Georgia 30326
Telephone:
1-800-432-4320 (Toll Free)
TRANSFER AGENT
National Financial Data Services, Inc.
1004 Baltimore Ave., 2nd Floor
Kansas City, MO 64105-2112
Telephone:
1-800-368-3527 (Toll Free)
MEMBER -- INVESTMENT COMPANY INSTITUTE
THIS REPORT IS NOT TO BE USED IN CONNECTION WITH THE
OFFERING OF SHARES OF THE
FUND UNLESS ACCOMPANIED OR PRECEDED BY AN EFFECTIVE
PROSPECTUS.
The Enterprise Group
of Funds
Annual Report
DECEMBER 31, 1995
GROWTH PORTFOLIO
GROWTH AND INCOME PORTFOLIO
CAPITAL APPRECIATION PORTFOLIO
SMALL COMPANY PORTFOLIO
INTERNATIONAL GROWTH PORTFOLIO
GOVERNMENT SECURITIES PORTFOLIO
HIGH-YIELD BOND PORTFOLIO
TAX-EXEMPT INCOME PORTFOLIO
MANAGED PORTFOLIO
MONEY MARKET PORTFOLIO
Statement of Changes in Net Assets
HIGH-YIELD
TAX-EXEMPT
BOND PORTFOLIO
INCOME PORTFOLIO
------------------------- -
- ------------------------
YEAR ENDED YEAR ENDED
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER
DECEMBER 31, DECEMBER
1995 31, 1994
1995 31, 1994
------------ ----------- -
- ----------- -----------
FROM OPERATIONS:
- ------------------------------------------------------------
- ------------------------
Net investment income (loss) 4,460,864 3,828,094
1,660,529 1,934,227
- ------------------------------------------------------------
- ------------------------
Net realized gain (loss) on
investments 98,195 346,901
(62,322 ) 129,459
- ------------------------------------------------------------
- ------------------------
Net realized gain (loss) on
futures and options (20,528 ) 209,010
- -- --
- ------------------------------------------------------------
- ------------------------
Change in unrealized
appreciation (depreciation) 2,865,091 (4,349,010 )
3,201,486 (4,484,094 )
- ------------------------------------------------------------
- ------------------------
Increase (decrease) in net
assets resulting from
operations 7,403,622 34,995
4,799,693 (2,420,408 )
- ------------------------------------------------------------
- ------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- ------------------------------------------------------------
- ------------------------
Net investment income, Class
A (4,375,039 ) (3,863,285 )
(1,652,187 ) (1,978,763 )
- ------------------------------------------------------------
- ------------------------
Net investment income, Class
B (85,755 ) --
(8,291 ) --
- ------------------------------------------------------------
- ------------------------
Net investment income, Class
Y -- --
- -- --
- ------------------------------------------------------------
- ------------------------
In excess of net investment
income -- (1,430 )
- ------------------------------------------------------------
- ------------------------
Net realized gains (losses)
on investments Class A -- (12,749 )
(57,270 ) (50,034 )
- ------------------------------------------------------------
- ------------------------
Net realized gains (losses)
on investments Class B -- --
(1,441 ) --
- ------------------------------------------------------------
- ------------------------
Net realized gains (losses)
on investments Class Y -- --
- -- --
- ------------------------------------------------------------
- ------------------------
Total dividends and
distributions to shareholders (4,460,794 ) (3,877,464 )
(1,719,189 ) (2,028,797 )
- ------------------------------------------------------------
- ------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- ------------------------------------------------------------
- ------------------------
CLASS A
- ------------------------------------------------------------
- ------------------------
Shares sold 11,047,929 12,990,290
2,165,696 6,066,113
- ------------------------------------------------------------
- ------------------------
Reinvestment of
distributions 3,181,327 2,811,852
1,296,292 1,583,109
- ------------------------------------------------------------
- ------------------------
Shares redeemed (9,796,098 ) (11,498,716)
(7,202,770 ) 10,604,438
- ------------------------------------------------------------
- ------------------------
Net increase (decrease) -
Class A 4,433,158 4,303,426
(3,740,782 ) (2,955,216 )
- ------------------------------------------------------------
- ------------------------
CLASS B
- ------------------------------------------------------------
- ------------------------
Shares sold 2,908,963 --
897,621 --
- ------------------------------------------------------------
- ------------------------
Reinvestment of
distributions 50,351 --
9,311 --
- ------------------------------------------------------------
- ------------------------
Shares redeemed (23,860 ) --
(6,392 ) --
- ------------------------------------------------------------
- ------------------------
Net increase (decrease) -
Class B 2,935,454 --
900,540 --
- ------------------------------------------------------------
- ------------------------
CLASS Y
- ------------------------------------------------------------
- ------------------------
Shares sold -- --
- -- --
- ------------------------------------------------------------
- ------------------------
Reinvestment of
distributions -- --
- -- --
- ------------------------------------------------------------
- ------------------------
Shares redeemed -- --
- -- --
- ------------------------------------------------------------
- ------------------------
Net increase (decrease) -
Class Y -- --
- -- --
- ------------------------------------------------------------
- ------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 7,368,612 4,303,426
(2,840,242 ) (2,955,216 )
- ------------------------------------------------------------
- ------------------------
Total increase (decrease) in
net assets 10,311,440 460,957
240,262 (7,404,421 )
- ------------------------------------------------------------
- ------------------------
NET ASSETS:
- ------------------------------------------------------------
- ------------------------
Beginning of period 44,821,639 44,360,682
34,297,131 41,701,552
- ------------------------------------------------------------
- ------------------------
End of period 55,133,079 44,821,639
34,537,393 34,297,131
- ------------------------------------------------------------
- ------------------------
See notes to financial statements.
The Enterprise Group of Funds, Inc.
1
MANAGED
PORTFOLIO
MONEY MARKET
---------------------------
PORTFOLIO
FOR THE
- ------------------------
PERIOD
YEAR ENDED 10/1/94
YEAR ENDED YEAR ENDED
DECEMBER 31, THROUGH
DECEMBER DECEMBER
1995 12/31/94
31, 1995 31, 1994
------------- -----------
- ----------- -----------
FROM OPERATIONS:
- ------------------------------------------------------------
- -------------------------
Net investment income (loss) 443,577 20,094
1,715,817 910,397
- ------------------------------------------------------------
- -------------------------
Net realized gain (loss) on
investments 845,958 2,190
- -- --
- ------------------------------------------------------------
- -------------------------
Net realized gain (loss) on
futures and options -- --
- -- --
- ------------------------------------------------------------
- -------------------------
Change in unrealized
appreciation (depreciation) 8,465,164 (116,944 )
- -- --
- ------------------------------------------------------------
- -------------------------
Increase (decrease) in net
assets resulting from
operations 9,754,699 (94,660 )
1,715,817 910,397
- ------------------------------------------------------------
- -------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- ------------------------------------------------------------
- -------------------------
Net investment income, Class
A (214,318) (17,880 )
(1,714,261 ) (910,397 )
- ------------------------------------------------------------
- -------------------------
Net investment income, Class
B (63,848) --
(1,556 ) --
- ------------------------------------------------------------
- -------------------------
Net investment income, Class
Y (175,299) --
- -- --
- ------------------------------------------------------------
- -------------------------
In excess of net investment
income
- ------------------------------------------------------------
- -------------------------
Net realized gains (losses)
on investments Class A (213,842) --
- -- --
- ------------------------------------------------------------
- -------------------------
Net realized gains (losses)
on investments Class B (75,104) --
- -- --
- ------------------------------------------------------------
- -------------------------
Net realized gains (losses)
on investments Class Y (119,052) --
- -- --
- ------------------------------------------------------------
- -------------------------
Total dividends and
distributions to shareholders (861,463) (17,880 )
(1,715,817 ) (910,397 )
- ------------------------------------------------------------
- -------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- ------------------------------------------------------------
- -------------------------
CLASS A
- ------------------------------------------------------------
- -------------------------
Shares sold 36,943,421 8,402,778
127,849,845 93,446,839
- ------------------------------------------------------------
- -------------------------
Reinvestment of
distributions 406,123 16,567
1,635,878 868,036
- ------------------------------------------------------------
- -------------------------
Shares redeemed (3,992,116) (434,344 )
(121,495,592) (80,282,550)
- ------------------------------------------------------------
- -------------------------
Net increase (decrease) -
Class A 33,357,428 7,985,001
7,990,131 14,032,325
- ------------------------------------------------------------
- -------------------------
CLASS B
- ------------------------------------------------------------
- -------------------------
Shares sold 16,257,715 --
604,172 --
- ------------------------------------------------------------
- -------------------------
Reinvestment of
distributions 133,775 --
1,198 --
- ------------------------------------------------------------
- -------------------------
Shares redeemed (347,918) --
(211,056 ) --
- ------------------------------------------------------------
- -------------------------
Net increase (decrease) -
Class B 16,043,572 --
394,314 --
- ------------------------------------------------------------
- -------------------------
CLASS Y
- ------------------------------------------------------------
- -------------------------
Shares sold 26,548,228 --
- -- --
- ------------------------------------------------------------
- -------------------------
Reinvestment of
distributions 294,328 --
- -- --
- ------------------------------------------------------------
- -------------------------
Shares redeemed (1,714,136) --
- -- --
- ------------------------------------------------------------
- -------------------------
Net increase (decrease) -
Class Y 25,128,420 --
- -- --
- ------------------------------------------------------------
- -------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 74,529,420 7,985,001
8,384,445 14,032,325
- ------------------------------------------------------------
- -------------------------
Total increase (decrease) in
net assets 83,422,656 7,872,461
8,384,445 14,032,325
- ------------------------------------------------------------
- -------------------------
NET ASSETS:
- ------------------------------------------------------------
- -------------------------
Beginning of period 7,872,461 --
32,334,486 18,302,161
- ------------------------------------------------------------
- -------------------------
End of period 91,295,117 7,872,461
40,718,931 32,334,486
- ------------------------------------------------------------
- -------------------------
The Enterprise Group of Funds, Inc.
2
<PAGE> 80
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
The audited financial statements as to the Fund are in the 1995
Annual Report to Shareholders, a copy of which is enclosed
herewith and incorporated herein by reference.
Portfolio of Assets and Liabilities, December 31, 1995
Statement of Assets and Liabilities, December 31, 1995
Statement of Operations for the Year Ended December 31, 1995
Statement of Changes in Net Assets for each of the Two Years
Ended December 31, 1994 and 1995
(b) Exhibits:
(1) Registrant's charter: Filed with Amendment No. 39, dated
April 28, 1994, and incorporated herewith; Amendment to
Charter dated April 26, 1995 filed with Amendment No. 43
dated April 26, 1995, and incorporated herewith.
(2) By-Laws: Filed with Amendment No. 39, dated April 28, 1994,
and incorporated herewith; Amendment to By-Laws, dated
November 17, 1994 filed with Amendment No. 43 dated April
26, 1995, and incorporated herewith.
(3) Not applicable.
(4) Specimen share certificate: Filed with Amendment No. 29,
dated November 27, 1987 and incorporated herewith.
(5) Investment Advisory Agreement: Filed with Amendment No. 39,
dated April 28, 1994, and incorporated herewith.
(6) (i) General Distributor's Agreement: Filed with Amendment
No. 39, and dated April 28, 1994, and incorporated
herewith; Addendum to Distributor's Agreement, filed
April 26, 1995, and incorporated herewith.
(ii) Prototype Soliciting Broker/Dealer Agreement: Filed
with Amendment No. 39, dated April 28, 1994, and
incorporated herewith; Addendum to the Soliciting
Broker/Dealer Agreement, filed with Amendment No. 43
dated April 26, 1995 and incorporated herewith.
(7) Not applicable.
(8) Form of Custodian Contract: Filed with Amendment No. 39,
dated April 28, 1994, and incorporated herewith.
(9) Not applicable.
(10) Opinion of Counsel: Filed herewith as Exhibit 10.
(11) Independent Auditors Consent Filed herewith as Exhibit 11.
<PAGE> 81
(12) All financial statements required to be filed under Item 23
are included in the 1995 Annual Report to Shareholders.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Agreements: Filed with Amendment No. 43, dated
April 26, 1995 and incorporated herewith.
(16) Computation of performance: Included in Part A herein and
incorporated by reference.
(17) All financial statements required to be filed under Item 23
are included in the 1995 Annual Report to Shareholders.
(18) Not applicable.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
Number of Record Holders
as of the date of this
Statement of Additional
Title of Class Information
-------------- -----------
<S> <C>
Shares of Beneficial Interest 67,090
</TABLE>
ITEM 27. INDEMNIFICATION
Reference is made to the provisions of Article Six of Registrant's
Articles of Incorporation filed as Exhibit 24(b)(1) to this
Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing provision
or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment of
Registrant of expenses incurred or paid by a director, officer or
controlling person of Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
ITEM 28. (a) Business and Other Connections of Investment Adviser
Enterprise Capital Management, Inc. is the investment adviser of
the Registrant.
(b) Business and Other Connections of Officers and Directors of
Investment Adviser
<PAGE> 82
For information as the business, profession, vocation or
employment of a substantial nature of each of the officers and
directors of Enterprise Capital Management, Inc. reference is
made to Part B of this Registration Statement and to the
registration of Form ADV of Enterprise Capital Management, Inc.
filed under the Investment Adviser Act of 1940, which is
incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Enterprise Fund Distributors, Inc. is the general distributor of
Registrant's shares.
(b) The information contained in the registration on Form BD of
Enterprise Fund Distributors, Inc., filed under the Securities
Exchange Act of 1934, is incorporated herein by reference.
(c) Not Applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
<TABLE>
<CAPTION>
Entity Function Address
- ------ -------- -------
<S> <C> <C>
The Enterprise Group Registrant Atlanta Financial Center
of Funds, Inc. 3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326-1022
Enterprise Capital Investment Same as above.
Management, Inc. Adviser
Enterprise Fund Distributor Same as above.
Distributors, Inc.
</TABLE>
THE RECORDS OF THE PORTFOLIO MANAGERS ARE KEPT AT THE FOLLOWING LOCATIONS:
<TABLE>
<S> <C>
Growth Portfolio Montag & Caldwell, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, GA 30326-1450
Growth and Income 1740 Advisers, Inc.
Portfolio 1740 Broadway
New York, NY 10019
Capital Appreciation Provident Investment Counsel
Portfolio 300 North Lake Avenue
Pasadena, CA 91101
Small Company GAMCO Investors, Inc.
Portfolio One Corporate Center
Rye, New York, 10580
International Growth Brinson Partners, Inc.
Portfolio 290 South LaSalle Street
Chicago, IL 609604
Government Securities TCW Funds Management, Inc.
Portfolio 865 South Figueroa Street, Suite 1800
Los Angeles, CA 90017
High-Yield Bond Caywood-Scholl Capital Management
Portfolio 4350 Executive Drive, Suite 125
San Diego, CA 92121
Tax-Exempt Income Morgan Stanley Asset Management, Inc.
Portfolio 1221 Avenue of the Americas
New York, NY 10020
Managed Portfolio OpCap Advisors
One World Financial Center
New York, New York 10281
Money Market Portfolio Enterprise Capital Management, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326
</TABLE>
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Not applicable.
<PAGE> 83
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia on the 12th day of June, 1996.
THE ENTERPRISE GROUP OF FUNDS, INC.
By: /s/ Victor Ugolyn
--------------------------------------------
Victor Ugolyn, Chairman, President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of the Registrant has
been signed below by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ Victor Ugolyn Chairman, President and June 12, 1996
- ---------------------------------- Chief Executive Officer
Victor Ugolyn
/s/ Phillip G. Goff Principal Financial and June 12, 1996
- ---------------------------------- Accounting Officer
Phillip G. Goff
/s/ Arthur T. Dietz Director June 12, 1996
- ----------------------------------
Arthur T. Dietz
/s/ Arthur Howell Director June 12, 1996
- ----------------------------------
Arthur Howell
/s/ Lonnie H. Pope Director June 12, 1996
- ----------------------------------
Lonnie H. Pope
/s/ William A. Mitchell, Jr. Director June 12, 1996
- ----------------------------------
William A. Mitchell, Jr.
/s/ Michael I. Roth Director June 12, 1996
- ----------------------------------
Michael I. Roth
</TABLE>
<PAGE> 84
INDEX TO EXHIBITS
10 Opinion of Counsel
11 Consent of Independent Accountants
<PAGE> 1
EXHIBIT 10
ENTERPRISE
[LOGO] GROUP OF FUNDS
- --------------------------------------------------------------------------------
June 13, 1996
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Re: The Enterprise Group of Funds, Inc.
Registration Statement No. 2-28097
Dear Sir or Madam:
I am counsel to The Enterprise Group of Funds, Inc., (the "Fund"), and in so
acting, have reviewed Post-Effective Amendment No. 44 (the "Post Effective
Amendment") to the Fund's Registration Statement on Form N-1A, Registration
File No. 2-28097. Representatives of the Fund have advised that the Fund will
file the Post-Effective Amendment pursuant to paragraph (a) of Rule 485 ("Rule
485") promulgated under the Securities Act of 1933. In connection therewith,
the Fund has requested that I provide this letter.
In my examination of the Post-Effective Amendment, I have assumed the
conformity to the originals of all documents submitted to me as copies.
Based upon the foregoing, I hereby advise you that:
(1) the Fund is a corporation duly incorporated and validly
existing in good standings under the laws of the State of Maryland;
(2) the Common Stock to be offered has been duly authorized and,
when sold as contemplated in the Amendments, will be validly issued, fully paid
and nonassessable; and
Very truly yours,
Catherine R. McClellan
Senior Vice President and Chief Counsel
CRM/sm
Atlanta Financial Center - 3343 Peachtree Road NE, Suite 450 - Atlanta, Georgia
30326-1022 - 404-261-1116 - 1-800-432-4320 - 404-261-1118 (fax)
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 45 to the
registration statement under the Securities Act of 1933 (file number 2-28097)
of our report dated February 22, 1996 on our audit of the financial statements
and financial highlights of The Enterprise Group of Funds, Inc. appearing in
the Registrant's 1995 Annual Report. We also consent to the reference to our
Firm under the caption "Independent Accountants."
COPPERS & LYBRAND L.L.P.
Atlanta, Georgia
June 7, 1996
