<PAGE> 1
As Filed With the Securities and Exchange Commission
April 30, 1997
Registration No. 2-28097
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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. 47 x
-
and/or
Registration Statement Under the Investment Company Act of 1940_
Amendment No. 33 x
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(Check appropriate box or boxes)
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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)
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X on May 1, 1997 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)
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on May 1, 1997 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, 1996 was filed with the Securities and Exchange Commission on
February 24, 1997.
<PAGE> 2
Cross Reference Sheet
<TABLE>
<CAPTION>
Form N-lA
Item
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Prospectus Caption
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Part A
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<S> <C> <C>
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
<CAPTION>
Statement of Additional
Part B Information Caption
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<S> <C> <C>
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
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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 MAY 1, 1997
The Enterprise Group of Funds, Inc. (the "Fund") is a series of mutual funds
that seeks to provide investors a broad range of investment alternatives through
its 13 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, 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 explains concisely what you should know about the Fund and its
Portfolios before you consider investing. Please read this Prospectus and retain
it for future reference. Additional information, contained in a "Statement of
Additional Information," dated May 1, 1997 has been filed with the Securities
and Exchange Commission and is available upon request without charge by writing
or calling the Fund. It is incorporated by reference into this Prospectus (which
means that it is legally part of it).
Equity Portfolios
Growth Portfolio
Growth and Income Portfolio
Equity Portfolio
Equity Income Portfolio
Capital Appreciation Portfolio
Small Company Growth Portfolio
Small Company Value 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
LIKE ALL MUTUAL FUND SHARES, 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.
THE HIGH-YIELD BOND PORTFOLIO INVESTS 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 AND
HAVE SPECIAL RISKS. THEY MAY NOT BE SUITABLE FOR ALL INVESTORS. PLEASE READ THE
RISK INFORMATION CAREFULLY.
PLEASE NOTE THAT THESE FUNDS ARE NOT BANK DEPOSITS; ARE NOT FEDERALLY INSURED;
ARE NOT ENDORSED BY ANY BANK OR GOVERNMENT AGENCY; AND ARE NOT GUARANTEED TO
ACHIEVE THEIR GOAL(S).
THE ENTERPRISE Group of Funds, Inc.
<PAGE> 4
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
CAPITAL
GROWTH AND EQUITY INCOME APPRECIATION
GROWTH PORTFOLIO INCOME PORTFOLIO EQUITY PORTFOLIO PORTFOLIO PORTFOLIO
------------------ ------------------ ------------------ ------------------ ------------------
CLASS OF SHARES: A B C A B C A B C A B C A B C
---------------- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <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% none none 4.75% none none
Maximum Deferred Sales
Load(1)................ none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00%
Maximum Sales Load
Imposed On Reinvested
Dividends.............. none none none none none none none none none none none none none none none
Exchange Fee............ none none none none none none none none none none none none none none none
ANNUAL FUND OPERATING
EXPENSES (AS A % OF
AVERAGE NET ASSETS)
Management Fee(2)....... 0.75% 0.75% 0.75% 0.75% 0.75% 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%)(3)............... 0.45% 1.00% 1.00% 0.45% 1.00% 1.00% 0.45% 1.00% 1.00% 0.45% 1.00% 1.00% 0.45% 1.00% 1.00%
Other Expenses(4)....... 0.33% 0.35% 0.35% 0.30% 0.30% 0.30% 0.40% 0.40% 0.40% 0.30% 0.30% 0.30% 0.40% 0.39% 0.39%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL FUND OPERATING
EXPENSES............... 1.53% 2.10% 2.10% 1.50% 2.05% 2.05% 1.60% 2.15% 2.15% 1.50% 2.05% 2.05% 1.60% 2.14% 2.14%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
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.................. $ 62 $ 21 $ 21 $ 62 $ 21 $ 21 $ 63 $ 22 $ 22 $ 62 $ 21 $ 21 $ 63 $ 22 $ 22
3 Years................. 94 66 66 93 64 64 96 67 67 93 64 64 96 67 67
5 Years................. 127 113 113 125 110 110 130 115 115 125 110 110 130 115 115
10 Years................ 221 229 243 218 224 238 228 234 248 218 224 238 228 234 247
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.................. $ 62 $ 71 $ 31 $ 62 $ 71 $ 31 $ 63 $ 72 $ 32 $ 62 $ 71 $ 31 $ 63 $ 72 $ 32
3 Years................. 94 106 66 93 104 64 96 107 67 93 104 64 96 107 67
5 Years................. 127 133 113 125 130 110 130 135 115 125 130 110 130 135 115
10 Years................ 221 229 243 218 224 238 228 234 248 218 224 238 228 234 247
<CAPTION>
SMALL COMPANY
GROWTH PORTFOLIO
------------------
CLASS OF SHARES: A B C
---------------- ---- ---- ----
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES
Maximum Initial Sales
Load Imposed on
Purchase (as a % of
offering price)........ 4.75% none none
Maximum Deferred Sales
Load(1)................ none 5.00% 1.00%
Maximum Sales Load
Imposed On Reinvested
Dividends.............. none none none
Exchange Fee............ none none none
ANNUAL FUND OPERATING
EXPENSES (AS A % OF
AVERAGE NET ASSETS)
Management Fee(2)....... 0.85% 0.85% 0.85%
12b-1 Fee (including
service fees of
.25%)(3)............... 0.45% 1.00% 1.00%
Other Expenses(4)....... 0.55% 0.55% 0.55%
---- ---- ----
TOTAL FUND OPERATING
EXPENSES............... 1.85% 2.40% 2.40%
==== ==== ====
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.................. $ 65 $ 24 $ 24
3 Years................. 103 75 75
5 Years................. 143 128 128
10 Years................ 254 260 274
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.................. $ 65 $ 74 $ 34
3 Years................. 103 115 75
5 Years................. 143 148 128
10 Years................ 254 260 274
</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 Portfolio will bear directly or
indirectly.
(1) Certain purchases of Class A shares $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) These fees may be higher than that of other Funds. However, the Board of
Directors has determined that such fees are reasonable in light of the
services, investment decisions and investment techniques employed.
(3) 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.
(4) Class C shares of the Funds were initially offered on May 1, 1997.
Accordingly, expenses for Class C shares of the Funds represent estimates of
what these expenses are expected to be for the 1997 fiscal year.
THE ENTERPRISE Group of Funds, Inc.
2
<PAGE> 5
<TABLE>
<CAPTION>
GOVERNMENT
SMALL COMPANY INTERNATIONAL SECURITIES HIGH-YIELD BOND TAX-EXEMPT MANAGED
VALUE PORTFOLIO GROWTH PORTFOLIO PORTFOLIO PORTFOLIO INCOME PORTFOLIO PORTFOLIO
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
A B C A B C A B C A B C A B C A B C
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <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 4.75% none none
none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00% none 5.00% 1.00%
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 none none none none none none none none
0.75% 0.75% 0.75% 0.85% 0.85% 0.75% 0.60% 0.60% 0.60% 0.60% 0.60% 0.60% 0.50% 0.50% 0.50% 0.75% 0.75% 0.75%
0.45% 1.00% 1.00% 0.45% 1.00% 1.00% 0.45% 1.00% 1.00% 0.45% 1.00% 1.00% 0.45% 1.00% 1.00% 0.45% 1.00% 1.00%
0.55% 0.55% 0.55% 0.70% 0.70% 0.70% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.30% 0.30% 0.30% 0.37% 0.38% 0.38%
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
1.75% 2.30% 2.30% 2.00% 2.55% 2.55% 1.30% 1.85% 1.85% 1.30% 1.85% 1.85% 1.25% 1.80% 1.80% 1.57% 2.13% 2.13%
==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ==== ====
$ 64 $ 23 $ 23 $ 67 $ 26 $ 26 $ 60 $ 19 $ 19 $ 60 $ 19 $ 19 $ 60 $ 18 $ 18 $ 63 $ 22 $ 22
100 72 72 107 79 79 87 58 58 87 58 58 85 57 57 95 67 67
138 123 123 150 136 136 115 100 100 115 100 100 113 97 97 129 114 114
244 250 264 269 275 289 197 203 217 197 203 217 191 197 212 225 232 246
$ 64 $ 73 $ 33 $ 67 $ 76 $ 36 $ 60 $ 69 $ 29 $ 60 $ 69 $ 29 $ 60 $ 68 $ 28 $ 63 $ 72 $ 32
100 112 72 107 119 79 87 98 58 87 98 58 85 97 57 95 107 67
138 143 123 150 156 136 115 120 100 115 120 100 113 117 97 129 134 114
244 250 264 269 275 289 197 203 217 197 203 217 191 197 212 225 232 246
<CAPTION>
MONEY MARKET
PORTFOLIO
------------------
A B C
---- ---- ----
<S> <C> <C> <C>
none none none
none 5.00% 1.00%
none none none
none none none
0.35% 0.35% 0.35%
0.30% 0.85% 0.85%
0.35% 0.35% 0.35%
---- ---- ----
1.00% 1.55% 1.55%
==== ==== ====
$ 10 $ 16 $ 16
32 49 49
55 84 84
122 170 185
$ 10 $ 66 $ 26
32 89 49
55 104 84
122 170 185
</TABLE>
See "Management of the Fund," "Distribution Plans," 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 49 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.
THE ENTERPRISE Group of Funds, Inc.
3
<PAGE> 6
THE ENTERPRISE GROUP OF FUNDS, INC.
PROSPECTUS SUMMARY
================================================================================
Set forth below are the 13 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 13
Portfolios consisting of four separate classes for each Portfolio. Shares
are 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 Total return in excess of the total return of the
Retirement System Investors, Inc. Lipper Growth and Income Mutual Funds Average
New York, New York measured over a new period of three to five years,
by investing primarily in a broadly diversified
group of large capitalization stocks.
- ------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIO Long term capital appreciation, primarily from
OpCap Advisors investments in securities of companies that are
New York, New York believed by the Portfolio Manager to be
undervalued.
- ------------------------------------------------------------------------------------------------------------
EQUITY 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 GROWTH PORTFOLIO Capital appreciation by investing primarily in
Pilgrim Baxter & Associates common stocks of small capitalization companies
Wayne, Pennsylvania believed by the Portfolio Manager to have an
outlook for strong earnings growth and potential
for significant capital appreciation.
- ------------------------------------------------------------------------------------------------------------
SMALL COMPANY VALUE 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 federal
Morgan Stanley Asset Management, Inc. 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 and
New York, New York 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>
================================================================================
THE ENTERPRISE Group of Funds, Inc.
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 Growth and Small Company Value
Portfolios carry 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."
PURCHASE ALTERNATIVES
Each Portfolio offers four 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 and C shares). The following is a brief
description of the three Classes of shares offered by each Portfolio. Class Y
shares for institutional investors is contained in a separate prospectus. For
more complete descriptions of each Class of shares, see "How to Purchase
Shares."
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) approximately
eight years after purchase. Class B shares are
available only to investors purchasing less than
$250,000 in the aggregate.
THE ENTERPRISE Group of Funds, Inc.
5
<PAGE> 8
CLASS C SHARES: Class C shares are sold at net asset value per share
without an initial sales charge 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. If Class C
shares are redeemed within 12 months of their
purchase, a contingent deferred sales charge of 1.00%
will be deducted from the redemption proceeds. Class
C shares are available only to investors purchasing
less than $1,000,000 in the aggregate.
================================================================================
<TABLE>
<S> <C>
SHAREHOLDER SERVICES
Automatic Reinvestment Plan Check Writing (Class A Money Market
Automatic Bank Draft Plan Portfolio Shares Only)
Investment Plan Bank Purchase and Redemption Plan
Letter of Intent Systematic Withdrawal Plan
Right of Accumulation Retirement Plans
24-Hour Account Information
FOR MORE COMPLETE INFORMATION ABOUT THESE PLANS AND SERVICES,
SEE SHAREHOLDER SERVICES AT PAGE 45 OR
CALL THE ENTERPRISE GROUP OF FUNDS AT
(800) 432-4320.
</TABLE>
================================================================================
THE ENTERPRISE Group of Funds, Inc.
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
1996 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>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
GROWTH PORTFOLIO (CLASS A) 1996 1995 1994 1993 1992(G) 1991 1990
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 10.44 $ 7.76 $ 8.26 $ 7.96 $ 8.22 $ 6.31 $ 7.24
Net Investment Income (Loss)............. (0.04) (0.03) (0.02) 0.01 (0.02) 0.07 0.08
Net Realized and Unrealized Gain (Loss)
on Investments.......................... 3.44 3.13 (0.06) 0.84 0.55 2.57 (0.24)
---------------------------------------------------------------------------
Total from Investment Operations......... 3.40 3.10 (0.08) 0.85 0.53 2.64 (0.16)
---------------------------------------------------------------------------
Dividends from Net Investment Income..... 0.00 0.00 0.00 0.01 0.00 0.07 0.09
Distributions from Net Realized Capital
Gains................................... 0.74 0.42 0.42 0.54 0.79 0.66 0.68
---------------------------------------------------------------------------
Total Distributions...................... 0.74 0.42 0.42 0.55 0.79 0.73 0.77
---------------------------------------------------------------------------
Net Asset Value, End of Period........... $ 13.10 $ 10.44 $ 7.76 $ 8.26 $ 7.96 $ 8.22 $ 6.31
---------------------------------------------------------------------------
Total Return(D).......................... 32.60% 39.99% (0.99)% 10.59% 6.46% 41.79% (2.26)%
Net Assets, End of Period (in
thousands).............................. $196,752 $122,559 $88,375 $90,902 $84,200 $77,784 $52,897
Ratio of Expenses to Average Net
Assets.................................. 1.53%(F) 1.60% 1.56% 1.60% 1.60% 1.60% 1.60%
Ratio of Expenses to Average Net Assets
(Excluding Waivers)..................... 1.53%(F) 1.60% 1.56% 1.61% 1.67% 1.81% 1.75%
Ratio of Net Investment Income (Loss) to
Average Net Assets...................... (0.39)% (0.35)% (0.30)% 0.10% (0.30)% 0.90% 1.00%
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding
Waivers)................................ (0.39)% (0.35)% (0.30)% 0.06% (0.31)% 0.69% 0.89%
Portfolio Turnover....................... 29.90% 45.30% 64.50% 107.90% 61.20% 74.70% 138.40%
Average Commission Per Share(C).......... $ 0.0636
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
GROWTH PORTFOLIO (CLASS A) 1989 1988 1987
- ----------------------------------------- -----------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period..... $ 6.25 $ 6.02 $ 6.97
Net Investment Income (Loss)............. 0.02 0.07 0.16
Net Realized and Unrealized Gain (Loss)
on Investments.......................... 1.42 0.67 0.66
-----------------------------
Total from Investment Operations......... 1.44 0.74 0.82
-----------------------------
Dividends from Net Investment Income..... 0.02 0.07 0.11
Distributions from Net Realized Capital
Gains................................... 0.43 0.44 1.66
-----------------------------
Total Distributions...................... 0.45 0.51 1.77
-----------------------------
Net Asset Value, End of Period........... $ 7.24 $ 6.25 $ 6.02
-----------------------------
Total Return(D).......................... 23.05% 12.30% 11.53%
Net Assets, End of Period (in
thousands).............................. $55,320 $40,363 $29,927
Ratio of Expenses to Average Net
Assets.................................. 2.50% 2.50% 1.70%
Ratio of Expenses to Average Net Assets
(Excluding Waivers)..................... 2.70% 2.60% 1.75%
Ratio of Net Investment Income (Loss) to
Average Net Assets...................... 0.30% 0.80% 0.90%
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding
Waivers)................................ 0.10% 0.75% 0.74%
Portfolio Turnover....................... 78.30% 67.10% 64.40%
Average Commission Per Share(C)..........
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1, THROUGH
GROWTH PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period....................... $ 10.41 $ 8.69
Net Investment Income (Loss)............................... (0.06) (0.02)
Net Realized and Unrealized Gains (Losses) on
Investments............................................... 3.36 2.16
-------------------------------------
Total from Investment Operations........................... 3.30 2.14
-------------------------------------
Dividends from Net Investment Income....................... 0.00 0.00
Distributions from Net Realized Capital Gains.............. 0.74 0.42
-------------------------------------
Total Distributions........................................ 0.74 0.42
-------------------------------------
Net Asset Value, End of Period............................. $ 12.97 $10.41
-------------------------------------
Total Return(E)............................................ 31.73% 24.66%(B)
Net Assets End of Period (in thousands).................... $36,483 $4,572
Ratio of Expenses to Average Net Assets.................... 2.10%(F) 2.15%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).................................................. 2.10%(F) 2.15%(A)
Ratio of Net investment income (Loss) to average net
assets.................................................... (0.96)% (0.82)%(A)
Ratio of Net investment income (Loss) to average net assets
(Excluding Waivers)....................................... (0.96)% (0.82)%(A)
Portfolio Turnover......................................... 29.90% 45.30%(A)
Average Commission Per Share(C)............................ $0.0636
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of
equity investments on which commissions are charged during the period.
(D) Total returns do not include one time sales charge.
(E) Total return does not include contingent deferred sales charge.
(F) Effective September 1, 1995, ratio includes expenses paid indirectly.
(G) Based on average monthly shares outstanding.
THE ENTERPRISE Group of Funds, Inc.
7
<PAGE> 10
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------
EQUITY INCOME PORTFOLIO (CLASS A) 1996 1995 1994 1993 1992 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.......................... $ 20.73 $ 16.43 $ 17.75 $ 16.93 $ 16.00 $ 13.40 $ 15.26 $ 13.40 $ 12.16
Net Investment Income (Loss)..... 0.41 0.45 0.44 0.52 0.43 0.52 0.61 0.37 0.29
Net Realized and Unrealized Gain
(Loss) on Investments........... 3.27 5.00 (0.53) 1.74 0.92 2.61 (1.84) 1.97 1.37
-----------------------------------------------------------------------------------------------
Total from Investment
Operations...................... 3.68 5.45 (0.09) 2.26 1.35 3.13 (1.23) 2.34 1.66
-----------------------------------------------------------------------------------------------
Dividends from Net Investment
Income.......................... 0.40 0.45 0.44 0.50 0.41 0.53 0.63 0.38 0.26
Distributions from Capital
Gains........................... 1.57 0.70 0.79 0.94 0.01 0.00 0.00 0.10 0.16
-----------------------------------------------------------------------------------------------
Total Distributions.............. 1.97 1.15 1.23 1.44 0.42 0.53 0.63 0.48 0.42
-----------------------------------------------------------------------------------------------
Net Asset Value, End of Period... $ 22.44 $ 20.73 $ 16.43 $ 17.75 $ 16.93 $ 16.00 $ 13.40 $ 15.26 $ 13.40
--------------------------------------------------------------------------------------------
Total Return(D).................. 17.86% 33.38% (0.49)% 13.45% 8.48% 23.55% (8.20)% 17.55% 13.64%
Net Assets, End of Period (in
thousands)...................... $72,647 $61,906 $50,926 $49,920 $40,918 $33,605 $29,330 $33,402 $10,199
Ratio of Expenses to Average Net
Assets.......................... 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 1.50% 2.50% 2.50%
Ratio of Expenses to Average Net
Assets (Excluding Waivers)...... 1.68% 1.78% 1.73% 1.91% 1.95% 2.02% 2.01% 2.80% 3.80%
Ratio of Net Investment Income to
Average Net Assets.............. 1.87% 2.33% 2.50% 2.90% 2.80% 3.50% 4.20% 3.30% 3.60%
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)............. 1.69% 2.06% 2.30% 2.51% 2.22% 2.84% 3.73% 3.04% 2.28%
Portfolio Turnover Rate.......... 33.22% 25.60% 41.40% 39.90% 38.30% 25.90% 20.80% 9.50% 9.70%
Average Commission Per
Share(C)........................ $0.0615
<CAPTION>
FOR THE PERIOD
NOVEMBER 17
THROUGH
EQUITY INCOME PORTFOLIO (CLASS A) DECEMBER 31, 1987
- --------------------------------- -----------------
<S> <C>
Net Asset Value, Beginning of
Period.......................... $ 12.00
Net Investment Income (Loss)..... 0.05
Net Realized and Unrealized Gain
(Loss) on Investments........... 0.15
Total from Investment -------
Operations...................... 0.20
Dividends from Net Investment -------
Income.......................... 0.04
Distributions from Capital
Gains........................... 0.00
-------
Total Distributions.............. 0.04
-------
Net Asset Value, End of Period... $ 12.16
-------
Total Return(D).................. 1.67%(B)
Net Assets, End of Period (in
thousands)...................... $ 1,203
Ratio of Expenses to Average Net
Assets.......................... 2.50%(A)
Ratio of Expenses to Average Net
Assets (Excluding Waivers)...... 9.38%(A)
Ratio of Net Investment Income to
Average Net Assets.............. 0.50%(B)
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)............. (2.92)%(A)
Portfolio Turnover Rate.......... 0.00%
Average Commission Per
Share(C)........................
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
EQUITY INCOME (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period................... $ 20.67 $18.12
Net Investment Income (Loss)........................... 0.24 0.29
Net Gains or Losses on Securities (Realized and
Unrealized)........................................... 3.30 3.40
-------------------------------------
Total from Investment Operations....................... 3.54 3.69
-------------------------------------
Dividends from Net Investment Income................... 0.34 0.44
Distributions from Capital Gains....................... 1.57 0.70
-------------------------------------
Total Distributions.................................... 1.91 1.14
-------------------------------------
Net Asset Value, End of Period......................... $ 22.30 $20.67
-------------------------------------
Total Return(E)........................................ 17.22% 20.57%(B)
Net Assets, End of Period (in thousands)............... $ 5,615 $1,086
Ratio of Expenses to Average Net Assets................ 2.05% 2.05%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).............................................. 2.23% 2.23%(A)
Ratio of Net Investment Income to Average Net Assets... 1.32% 1.56%(A)
Ratio of Net Investment Income to Average Net Assets
(Excluding Waivers)................................... 1.14% 1.33%(A)
Portfolio Turnover Rate................................ 33.22% 25.60%(A)
Average commission per share(C)........................ $0.0615
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of
equity investments on which commissions are charged during the period.
(D) Total returns do not include one time sales charge.
(E) Total return does not include contingent deferred sales charge.
THE ENTERPRISE Group of Funds, Inc.
8
<PAGE> 11
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
CAPITAL APPRECIATION PORTFOLIO ------------------------------------------------------------------
(CLASS A) 1996 1995 1994 1993 1992(F) 1991
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 32.54 $ 28.54 $ 31.10 $ 29.42 $ 27.80 $ 17.48
Net Investment Income (Loss)....... (0.31) (0.25) (0.13) (0.15) (0.04) (0.01)
Net Realized and Unrealized Gain
(Loss) on Investments............. 5.69 7.59 (0.95) 1.83 1.66 10.33
------------------------------------------------------------------
Total from Investment Operations... 5.38 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 0.00
Distributions from Capital Gains... 3.71 3.34 1.48 0.00 0.00 0.00
------------------------------------------------------------------
Total Distributions................ 3.71 3.34 1.48 0.00 0.00 0.00
------------------------------------------------------------------
Net Asset Value, End of Period..... $ 34.21 $ 32.54 $ 28.54 $ 31.10 $ 29.42 $ 27.80
------------------------------------------------------------------
Total Return(D).................... 16.52% 25.72% (3.46)% 5.71% 5.83% 59.04%
Net Assets, End of Period (in
thousands)........................ $115,253 $121,207 $101,237 $103,187 $72,569 $33,375
Ratio of Expenses to Average Net
Assets............................ 1.60%(G) 1.65% 1.66% 1.64% 1.72% 1.75%
Ratio of Expenses to Average Net
Assets (Excluding Waivers)........ 1.60%(G) 1.65% 1.66% 1.64% 1.72% 2.04%
Ratio of Net Investment Income
(Loss) to Average Net Assets...... (0.87)% (0.82)% (0.50)% (0.60)% (0.20)% (0.10)%
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)............... (0.87)% (0.82)% (0.50)% (0.60)% (0.20)% (0.44)%
Portfolio Turnover Rate............ 66.42% 65.20% 74.40% 61.90% 32.50% 40.20%
Average Commission Per Share(C).... $ 0.0486
<CAPTION>
FOR THE PERIOD
YEAR ENDED DECEMBER 31, NOVEMBER 17
CAPITAL APPRECIATION PORTFOLIO --------------------------- THROUGH
(CLASS A) 1990 1989 1988 DECEMBER 31, 1987
- ----------------------------------- -----------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 16.94 $13.01 $12.28 $12.00
Net Investment Income (Loss)....... 0.11 (0.03) (0.03) 0.03
Net Realized and Unrealized Gain
(Loss) on Investments............. 0.54 4.49 0.76 0.27
-----------------------------------------
Total from Investment Operations... 0.65 4.46 0.73 0.30
-----------------------------------------
Dividends from Net Investment
Income............................ 0.11 0.00 0.00 0.02
Distributions from Capital Gains... 0.00 0.53 0.00 0.00
-----------------------------------------
Total Distributions................ 0.11 0.53 0.00 0.02
-----------------------------------------
Net Asset Value, End of Period..... $ 17.48 $16.94 $13.01 $12.28
-----------------------------------------
Total Return(D).................... 3.84% 34.27% 5.94% 2.50
Net Assets, End of Period (in
thousands)........................ $12,552 $9,091 $2,825 $1,077
Ratio of Expenses to Average Net
Assets............................ 1.75% 2.50% 2.50% 2.50%(A)
Ratio of Expenses to Average Net
Assets (Excluding Waivers)........ 2.27% 3.90% 6.00% 9.64%(A)
Ratio of Net Investment Income
(Loss) to Average Net Assets...... 0.70% (0.50)% (0.30)% 0.20%(B)
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)............... 0.12% (1.92)% (3.77)% (5.19)%(A)
Portfolio Turnover Rate............ 60.50% 65.80% 49.30% 0.00%(A)
Average Commission Per Share(C)....
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
CAPITAL APPRECIATION PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period............... $ 32.42 $30.04
Net Investment Income (Loss)....................... (0.35) (0.12)
Net Realized and Unrealized Gain (loss) on
Investments....................................... 5.50 5.84
-------------------------------------
Total from Investment Operations................... 5.15 5.72
-------------------------------------
Dividends from Net Investment Income............... 0.00 0.00
Distributions from Capital Gains................... 3.71 3.34
-------------------------------------
Total Distributions................................ 3.71 3.34
-------------------------------------
Net Asset Value, End of Period..................... $ 33.86 $32.42
-------------------------------------
Total Return(E).................................... 15.87% 18.99%(B)
Net Assets, End of Period (in thousands)........... $ 5,047 $1,953
Ratio of Expenses to Average Net Assets............ 2.14%(G) 2.08%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).......................................... 2.14%(G) 2.08%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets........................................ (1.43)% (1.41)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers).................... (1.43)% (1.41)%(A)
Portfolio Turnover Rate............................ 66.42% 65.20%(A)
Average Commission Per Share(C).................... $0.0486
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of
equity investments on which commissions are charged during the period. D
Total returns do not include one time sales charge.
(E) Total return does not include contingent deferred sales charge.
(F) Based on average monthly shares outstanding.
(G) Effective September 1, 1995, ratio includes expenses paid
indirectly.
THE ENTERPRISE Group of Funds, Inc.
9
<PAGE> 12
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, FOR THE PERIOD
----------------------------- OCTOBER 1 THROUGH
SMALL COMPANY VALUE PORTFOLIO (CLASS A) 1996 1995 1994 DECEMBER 31, 1993
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 5.43 $ 5.17 $ 5.29 $ 5.00
Net Investment Income (Loss)............... (0.01) 0.02 0.03 0.01
Net Realized and Unrealized Gain (Loss) on
Investments............................... 0.62 0.46 (0.01) 0.29
--------------------------------------------------
Total from Investment Operations........... 0.61 0.48 0.02 0.30
--------------------------------------------------
Dividends from Net Investment Income....... 0.00 0.02 0.03 0.01
Distributions from Capital Gains........... 0.30 0.20 0.11 0.00
--------------------------------------------------
Total Distributions........................ 0.30 0.22 0.14 0.01
--------------------------------------------------
Net Asset Value, End of Period............. $ 5.74 $ 5.43 $ 5.17 $ 5.29
--------------------------------------------------
Total Return(D)............................ 11.28% 9.28% 0.34% 5.92%(B)
Net Assets, End of Period (in thousands)... $17,308 $19,720 $22,120 $ 8,118
Ratio of Expenses to Average Net Assets.... 1.75% 1.75% 1.75% 1.75%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers)....................... 2.38% 2.21% 2.15% 4.00%(A)
Ratio of Net Investment Income to Average
Net Assets................................ (0.13)% 0.32% 0.60% 0.10%(B)
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers).... (0.76)% (0.14)% 0.18% (1.54)%(A)
Portfolio Turnover Rate.................... 143.58% 36.50% 16.70% 0.00%(A)
Average Commission Per Share(C)............ $0.0483
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
SMALL COMPANY VALUE PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period................... $ 5.41 $ 5.28
Net Investment Income (Loss)........................... (0.03) (0.01)
Net Realized and Unrealized Gain (Loss) on
Investments........................................... 0.61 0.36
--------------------------------------
Total from Investment Operations....................... 0.58 0.35
--------------------------------------
Dividends from Net Investment Income................... 0.00 0.02
Distributions from Capital Gains....................... 0.30 0.20
--------------------------------------
Total Distributions.................................... 0.30 0.22
--------------------------------------
Net Asset Value, End of Period......................... $ 5.69 $ 5.41
--------------------------------------
Total Return(E)........................................ 10.77% 6.87%(B)
Net Assets End of Period (in thousands)................ $ 2,606 $ 862
Ratio of Expenses to Average Net Assets................ 2.30% 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).............................................. 2.92% 2.78%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets................................................ (0.77)% (0.40)%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers)............................ (1.39)% (0.90)%(A)
Portfolio Turnover Rate................................ 143.58% 36.50%(A)
Average Commission Per Share(C)........................ $0.0483
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of
equity investments on which commissions are charged during the period.
(D) Total return does not include one time sales charge.
(E) Total return does not include contingent deferred sales charge.
THE ENTERPRISE Group of Funds, Inc.
10
<PAGE> 13
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
INTERNATIONAL GROWTH PORTFOLIO -----------------------------------------------------------------------------------------------
(CLASS A) 1996 1995 1994 1993 1992(F) 1991 1990 1989 1988
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................ $ 16.08 $ 14.70 $ 17.44 $ 13.23 $ 13.38 $ 11.95 $ 14.53 $ 12.91 $ 12.00
Net Investment Income (Loss)... 0.10 0.11 (0.01) (0.02) 0.28 0.28 0.04 0.06 0.00
Net Realized and Unrealized
Gain (Loss) on Investments.... 1.88 2.12 (0.49) 4.79 (0.39) 1.25 (2.27) 2.21 0.91
-----------------------------------------------------------------------------------------------
Total from Investment
Operations.................... 1.98 2.23 (0.50) 4.77 (0.11) 1.53 (2.23) 2.27 0.91
-----------------------------------------------------------------------------------------------
Dividends from Net Investment
Income........................ 0.09 0.09 0.00 0.00 0.04 0.10 0.04 0.00 0.00
Distributions from Capital
Gains......................... 0.87 0.76 2.24 0.17 0.00 0.00 0.31 0.65 0.00
Other.......................... 0.00 0.00 0.00 0.39(G) 0.00 0.00 0.00 0.00 0.00
-----------------------------------------------------------------------------------------------
Total Distributions............ 0.96 0.85 2.24 0.56 0.04 0.10 0.35 0.65 0.00
-----------------------------------------------------------------------------------------------
Net Asset Value, End of
Period........................ $ 17.10 $ 16.08 $ 14.70 $ 17.44 $ 13.23 $ 13.38 $ 11.95 $ 14.53 $ 12.91
-----------------------------------------------------------------------------------------------
Total Return(D)................ 12.32% 15.17% (2.82)% 36.05% (0.93)% 12.91% (15.37)% 17.17% 7.58%
Net Assets, End of Period (in
thousands).................... $34,837 $28,628 $27,523 $22,900 $11,630 $10,736 $ 9,278 $ 8,514 $ 4,246
Ratio of Expenses to Average
Net Assets.................... 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.50% 2.50%
Ratio of Expenses to Average
Net Assets (Excluding
Waivers)...................... 2.19% 2.40% 2.51% 3.06% 3.70% 3.59% 3.85% 5.50% 8.50%
Ratio of Net Investment Income
(Loss) to Average Net
Assets........................ 0.61% 0.70% (0.20)% (0.10)% 0.50% 0.60% 0.70% 0.60% 0.00%
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)........... 0.42% 0.30% (0.70)% (1.15)% (1.15)% (0.93)% (1.22)% (2.41)% (6.09)%
Portfolio Turnover Rate........ 23.79% 31.10% 116.10% 70.10% 134.90% 64.50% 84.70% 68.20% 67.10%
Average Commission Per
Share(C)...................... $0.0221
<CAPTION>
FOR THE PERIOD
NOVEMBER 17
INTERNATIONAL GROWTH PORTFOLIO THROUGH
(CLASS A) DECEMBER 31, 1987
- ------------------------------- -----------------
<S> <C>
Net Asset Value, Beginning of
Period........................ $ 12.00
Net Investment Income (Loss)... 0.06
Net Realized and Unrealized
Gain (Loss) on Investments.... 0.00
Total from Investment -------
Operations.................... 0.06
Dividends from Net Investment -------
Income........................ 0.06
Distributions from Capital
Gains......................... 0.00
Other.......................... 0.00
-------
Total Distributions............ 0.06
-------
Net Asset Value, End of
Period........................ $ 12.00
-------
Total Return(D)................ 0.50%(B)
Net Assets, End of Period (in
thousands).................... $ 1,125
Ratio of Expenses to Average
Net Assets.................... 2.50%(A)
Ratio of Expenses to Average
Net Assets (Excluding
Waivers)...................... 9.03%(A)
Ratio of Net Investment Income
(Loss) to Average Net
Assets........................ 0.60%(B)
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)........... (2.37)%(A)
Portfolio Turnover Rate........ 0.00%(A)
Average Commission Per
Share(C)......................
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
INTERNATIONAL GROWTH PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period.............. $ 16.02 $14.82
Net Investment Income (Loss)...................... 0.01 (0.02)
Net Realized and Unrealized Gain (Loss) on
Investments...................................... 1.87 2.08
--------------------------------------
Total from Investment Operations.................. 1.88 2.06
--------------------------------------
Dividends from Net Investment Income.............. 0.06 0.10
Distributions from Capital Gains.................. 0.87 0.76
--------------------------------------
Total Distributions............................... 0.93 0.86
--------------------------------------
Net Asset Value, End of Period.................... $ 16.97 $16.02
--------------------------------------
Total Return(E)................................... 11.72% 13.88%(B)
Net Assets End of Period (in thousands)........... $ 4,276 $1,094
Ratio of Expenses to Average Net Assets........... 2.55% 2.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)......................................... 2.75% 2.73%(A)
Ratio of Net Investment Income to Average Net
Assets........................................... 0.09% (0.65)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers)................... (0.11)% (0.85)%(A)
Portfolio Turnover Rate........................... 23.79% 31.10%(A)
Average Commission Per Share(C)................... $0.0221
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of
equity investments on which commissions are charged during the period.
(D) Total returns do not include one time sales charge.
(E) Total return does not include contingent deferred sales charge.
(F) Based on average monthly shares outstanding.
(G) Distributions in excess of net investment income.
THE ENTERPRISE Group of Funds, Inc.
11
<PAGE> 14
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO (CLASS A) 1996 1995 1994 1993 1992(E) 1991
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 11.83 $ 10.62 $ 12.44 $ 12.47 $ 12.40 $ 11.96
Net Investment Income (Loss)............... 0.74 0.76 0.87 0.92 0.99 1.00
Net realized and unrealized gain (Loss) on
investments............................... (0.03) 1.21 (1.82) 0.21 0.19 0.44
----------------------------------------------------------
Total from Investment Operations........... 0.71 1.97 (0.95) 1.13 1.18 1.44
----------------------------------------------------------
Dividends from Net Investment Income....... 0.74 0.76 0.87 0.92 0.98 1.00
Distributions from Capital Gains........... 0.00 0.00 0.00 0.24 0.13 0.00
----------------------------------------------------------
Total Distributions........................ 0.74 0.76 0.87 1.16 1.11 1.00
----------------------------------------------------------
Net Asset Value, End of Period............. $ 11.80 $ 11.83 $ 10.62 $ 12.44 $ 12.47 $ 12.40
----------------------------------------------------------
Total Return(C)............................ 6.29% 19.00% (7.81)% 9.26% 9.93% 12.58%
Net Assets, End of Period (in thousands)... $73,693 $86,224 $84,431 $106,541 $71,515 $46,480
Ratio of Expenses to Average Net Assets.... 1.30% 1.30% 1.30% 1.30% 1.30% 0.90%
Ratio of Expenses to Average Net Assets
(Excluding Waivers)....................... 1.42% 1.44% 1.35% 1.44% 1.54% 1.65%
Ratio of Net Investment Income to Average
Net Assets................................ 6.35% 6.66% 7.60% 7.20% 7.90% 8.20%
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers).... 6.23% 6.52% 7.59% 7.03% 7.72% 7.39%
Portfolio Turnover Rate.................... 0.17% 0.00% 27.20% 90.10% 108.40% 58.60%
<CAPTION>
FOR THE PERIOD
YEAR ENDED DECEMBER 31, OCTOBER 17
-------------------------- THROUGH
GOVERNMENT SECURITIES PORTFOLIO (CLASS A) 1990 1989 1988 DECEMBER 31, 1987
- ------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....... $ 11.92 $ 11.70 $11.96 $12.00
Net Investment Income (Loss)............... 1.01 0.90 0.79 0.08
Net realized and unrealized gain (Loss) on
investments............................... 0.05 0.23 (0.26) (0.04)
----------------------------------------
Total from Investment Operations........... 1.06 1.13 0.53 0.04
----------------------------------------
Dividends from Net Investment Income....... 1.02 0.91 0.79 0.08
Distributions from Capital Gains........... 0.00 0.00 0.00 0.00
----------------------------------------
Total Distributions........................ 1.02 0.91 0.79 0.08
----------------------------------------
Net Asset Value, End of Period............. $ 11.96 $ 11.92 $11.70 $11.96
----------------------------------------
Total Return(C)............................ 9.41% 10.01% 4.53% 0.33%(B)
Net Assets, End of Period (in thousands)... $31,535 $29,897 $3,826 $1,173
Ratio of Expenses to Average Net Assets.... 1.00% 2.10% 2.10% 2.10%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers)....................... 1.60% 2.70% 4.50% 7.92%(A)
Ratio of Net Investment Income to Average
Net Assets................................ 8.60% 8.00% 7.00% 0.80%(B)
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers).... 7.77% 7.31% 4.52% 0.79%(A)
Portfolio Turnover Rate.................... 70.00% 85.00% 14.30% 0.00%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
GOVERNMENT SECURITIES PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period........ $11.83 $11.12
Net Investment Income (Loss)................ 0.68 0.44
Net Realized and Unrealized Gain (Loss) on
Investments................................ (0.04) 0.71
--------------------------------------
Total from Investment Operations............ 0.64 1.15
--------------------------------------
Dividends from Net Investment Income........ 0.68 0.44
Distributions from Capital Gains............ 0.00 0.00
--------------------------------------
Total Distributions......................... 0.68 0.44
--------------------------------------
Net Asset Value, End of Period.............. $11.79 $11.83
--------------------------------------
Total Return(D)............................. 5.61% 10.47%(B)
Net Assets, End of Period (in thousands).... $5,683 $2,124
Ratio of Expenses to Average Net Assets..... 1.85% 1.85%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers)........................ 1.96% 1.91%(A)
Ratio of Net Investment Income to Average
Net Assets................................. 5.79% 5.64%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers)..... 5.68% 5.58%(A)
Portfolio Turnover Rate..................... 0.17% 0.00%(A)
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Total returns do not include one time sales charge.
(D) Total return does not include contingent deferred sales charge.
(E) Based on average monthly shares outstanding.
THE ENTERPRISE Group of Funds, Inc.
12
<PAGE> 15
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
HIGH-YIELD BOND PORTFOLIO (CLASS A) 1996 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 11.39 $ 10.72 $ 11.70 $ 10.83 $ 10.19 $ 8.55
Net Investment Income (Loss)....... 0.94 0.99 0.97 0.95 1.01 1.13
Net Realized and Unrealized Gain
(Loss) on Investments............. 0.45 0.67 (0.97) 0.89 0.64 1.66
--------------------------------------------------------------
Total from Investment Operations... 1.39 1.66 0.00 1.84 1.65 2.79
--------------------------------------------------------------
Dividends from Net Investment
Income............................ 0.94 0.99 0.98 0.97 1.01 1.15
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................ 0.94 0.99 0.98 0.97 1.01 1.15
--------------------------------------------------------------
Net Asset Value, End of Period..... $ 11.84 $ 11.39 $ 10.72 $ 11.70 $ 10.83 $ 10.19
--------------------------------------------------------------
Total Return(C).................... 12.78% 16.00% 0.05% 17.58% 16.69% 33.02%
Net Assets, End of Period (in
thousands)........................ $54,129 $52,182 $44,822 $44,361 $30,851 $24,672
Ratio of Expenses to Average Net
Assets............................ 1.30% 1.30% 1.30% 1.30% 1.30% 1.30%
Ratio of Expenses to Average Net
Assets (Excluding Waivers)........ 1.50% 1.52% 1.45% 1.59% 1.64% 1.85%
Ratio of Net Investment Income to
Average Net Assets................ 8.21% 8.80% 8.60% 8.20% 9.40% 11.30%
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)............... 8.01% 8.58% 8.52% 7.95% 8.95% 10.51%
Portfolio Turnover Rate............ 180.13% 88.50% 113.00% 121.20% 121.70% 109.30%
<CAPTION>
FOR THE PERIOD
YEAR ENDED DECEMBER 31, NOVEMBER 17
------------------------------- THROUGH
HIGH-YIELD BOND PORTFOLIO (CLASS A) 1990 1989 1988 DECEMBER 31, 1987
- ----------------------------------- ---------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 10.98 $ 12.37 $ 12.20 $12.00
Net Investment Income (Loss)....... 1.26 1.33 1.24 0.11
Net Realized and Unrealized Gain
(Loss) on Investments............. (2.43) (1.37) 0.19 0.21
---------------------------------------------
Total from Investment Operations... (1.17) (0.04) 1.43 0.32
---------------------------------------------
Dividends from Net Investment
Income............................ 1.24 1.35 1.24 0.11
Distributions from Capital Gains... 0.00 0.00 0.02 0.01
Other.............................. 0.02(E) 0.00 0.00 0.00
---------------------------------------------
Total Distributions................ 1.26 1.35 1.26 0.12
---------------------------------------------
Net Asset Value, End of Period..... $ 8.55 $ 10.98 $ 12.37 $12.20
---------------------------------------------
Total Return(C).................... (11.55)% (0.70)% 12.08% 2.67%(B)
Net Assets, End of Period (in
thousands)........................ $19,591 $29,144 $15,772 $1,127
Ratio of Expenses to Average Net
Assets............................ 1.00% 2.10% 2.10% 2.10%(A)
Ratio of Expenses to Average Net
Assets (Excluding Waivers)........ 1.71% 2.50% 3.10% 8.79%(A)
Ratio of Net Investment Income to
Average Net Assets................ 12.30% 11.20% 11.10% 1.00%(B)
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)............... 11.66% 10.76% 10.09% 1.26%(A)
Portfolio Turnover Rate............ 67.40% 61.60% 88.60% 54.80%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
HIGH-YIELD BOND PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period....................... $11.39 $11.11
Net Investment Income (Loss)............................... 0.88 0.61
Net Realized and Unrealized Gain (Loss) on Investments..... 0.45 0.28
-------------------------------------
Total from Investment Operations........................... 1.33 0.89
-------------------------------------
Dividends from Net Investment Income....................... 0.88 0.61
Distributions from Capital Gains........................... 0.00 0.00
-------------------------------------
Total Distributions........................................ 0.88 0.61
-------------------------------------
Net Asset Value, End of Period............................. $11.84 $11.39
-------------------------------------
Total Return(D)............................................ 12.16% 8.12%(B)
Net Assets, End of Period (in thousands)................... $7,892 $2,951
Ratio of Expenses to Average Net Assets.................... 1.85% 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).................................................. 2.05% 2.09%(A)
Ratio of Net Investment Income to Average Net Assets....... 7.74% 7.84%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)....................................... 7.55% 7.68%(A)
Portfolio Turnover Rate.................................... 180.13% 88.50%(A)
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Total returns do not include one time sales charge.
(D) Total return does not include contingent deferred sales charge.
(E) Distributions in excess of net investment income.
THE ENTERPRISE Group of Funds, Inc.
13
<PAGE> 16
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
TAX-EXEMPT INCOME PORTFOLIO --------------------------------------------------------------
(CLASS A) 1996 1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 13.99 $ 12.80 $ 14.31 $ 13.60 $ 13.34 $ 12.78
Net Investment Income (Loss)....... 0.64 0.65 0.67 0.70 0.76 0.82
Net Realized and Unrealized Gain
(Loss) on Investments (0.16) 1.21 (1.48) 0.73 0.26 0.56
--------------------------------------------------------------
Total from Investment Operations... 0.48 1.86 (0.81) 1.43 1.02 1.38
--------------------------------------------------------------
Dividends from Net Investment
Income............................ 0.64 0.65 0.68 0.70 0.76 0.82
Distributions from Capital Gains... 0.00 0.02 0.02 0.02 0.00 0.00
--------------------------------------------------------------
Total Distributions................ 0.64 0.67 0.70 0.72 0.76 0.82
--------------------------------------------------------------
Net Asset Value, End of Period..... $ 13.83 $ 13.99 $ 12.80 $ 14.31 $ 13.60 $ 13.34
--------------------------------------------------------------
Total Return(C).................... 3.54% 14.85% (5.69)% 10.76% 7.88% 11.13%
Net Assets, End of Period (in
thousands)........................ $28,478 $33,626 $34,297 $41,702 $29,728 $22,614
Ratio of Expenses to Average Net
Assets............................ 1.25% 1.25% 1.25% 1.25% 1.25% 1.25%
Ratio of Expenses to Average Net
Assets (Excluding Waivers)........ 1.41% 1.42% 1.28% 1.39% 1.41% 1.47%
Ratio of Net Investment Income to
Average Net Assets................ 4.64% 4.82% 5.00% 4.90% 5.60% 6.30%
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)............... 4.48% 4.65% 4.97% 4.79% 5.49% 6.04%
Portfolio Turnover Rate............ 0.91% 0.75% 25.70% 8.30% 16.30% 21.60%
<CAPTION>
FOR THE PERIOD
YEAR ENDED DECEMBER 31, NOVEMBER 17
TAX-EXEMPT INCOME PORTFOLIO ------------------------------- THROUGH
(CLASS A) 1990 1989 1988 DECEMBER 31, 1987
- ----------------------------------- ---------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................ $ 12.87 $ 12.66 $ 12.09 $ 12.00
Net Investment Income (Loss)....... 0.81 0.76 0.65 0.06
Net Realized and Unrealized Gain
(Loss) on Investments (0.10) 0.31 0.64 0.09
----------------------------------------------
Total from Investment Operations... 0.71 1.07 1.29 0.15
----------------------------------------------
Dividends from Net Investment
Income............................ 0.80 0.77 0.65 0.06
Distributions from Capital Gains... 0.00 0.09 0.07 0.00
----------------------------------------------
Total Distributions................ 0.80 0.86 0.72 0.06
----------------------------------------------
Net Asset Value, End of Period..... $ 12.78 $ 12.87 $ 12.66 $ 12.09
----------------------------------------------
Total Return(C).................... 5.71% 8.68% 10.90% 1.25%(B)
Net Assets, End of Period (in
thousands)........................ $19,880 $18,354 $ 6,655 $ 1,174
Ratio of Expenses to Average Net
Assets............................ 1.20% 2.10% 2.10% 2.10%(A)
Ratio of Expenses to Average Net
Assets (Excluding Waivers)........ 1.47% 2.60% 4.00% 8.81%(A)
Ratio of Net Investment Income to
Average Net Assets................ 6.50% 6.00% 5.60% 0.50%(B)
Ratio of Net Investment Income
(Loss) to Average Net Assets
(Excluding Waivers)............... 6.14% 5.53% 3.67% (2.17)%(A)
Portfolio Turnover Rate............ 66.40% 99.60% 117.40% 116.00%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
TAX-EXEMPT INCOME PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period.................... $13.99 $13.44
Net Investment Income (Loss)............................ 0.56 0.38
Net Realized and Unrealized Gain (Loss) on
Investments............................................ (0.16) 0.57
-------------------------------------
Total from Investment Operations........................ 0.40 0.95
-------------------------------------
Dividends from Net Investment Income.................... 0.56 0.38
Distributions from Capital Gains........................ 0.00 0.02
-------------------------------------
Total Distributions..................................... 0.56 0.40
-------------------------------------
Net Asset Value, End of Period.......................... $13.83 $13.99
-------------------------------------
Total Return(D)......................................... 2.96% 7.18%(B)
Net Assets, End of Period (in thousands)................ $2,037 $ 912
Ratio of Expenses to Average Net Assets................. 1.80% 1.80%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)............................................... 1.96% 1.98%(A)
Ratio of Net Investment Income to Average Net Assets.... 4.07% 4.08%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers)............................. 3.92% 3.94%(A)
Portfolio Turnover Rate................................. 0.91% 0.75%(A)
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Total Returns do not include one time sales charge.
(D) Total Return does not include contingent deferred sales charge.
THE ENTERPRISE Group of Funds, Inc.
14
<PAGE> 17
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
DECEMBER 31, OCTOBER 1, 1994
------------------- THROUGH
MANAGED PORTFOLIO (CLASS A) 1996 1995 DECEMBER 31, 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $ 6.70 $ 4.91 $ 5.00
Net Investment Income (Loss)................................ 0.06 0.04 0.01
Net Realized and Unrealized Gain (Loss) on Investments...... 1.41 1.81 (0.09)
----------------------------------------
Total from Investment Operations............................ 1.47 1.85 (0.08)
----------------------------------------
Dividends from Net Investment Income........................ 0.06 0.03 0.01
Distributions from Capital Gains............................ 0.14 0.03 0.00
----------------------------------------
Total Distributions......................................... 0.20 0.06 0.01
----------------------------------------
Net Asset Value, End of Period.............................. $ 7.97 $ 6.70 $ 4.91
----------------------------------------
Total Return(E)............................................. 22.08% 37.68% (1.58)%(B)
Net Assets End of Period (In Thousands)..................... $101,022 $47,839 $7,872
Ratio of Expenses to Average Net Assets..................... 1.57% 1.75% 1.75%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 1.57% 1.90% 3.71%(A)
Ratio of Net Investment Income to Average Net Assets........ 1.12% 1.09% 1.30%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 1.12% 0.94% (0.32)%(A)
Portfolio Turnover Rate..................................... 33.21% 26.40% 27.10%(A)
Average Commission Per Share(C)............................. $ 0.0551
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 1, 1996
YEAR ENDED THROUGH
MANAGED PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period................ $ 6.68 $ 5.68
Net Investment Income (Loss)........................ 0.02 0.01
Net Realized and Unrealized Gain (Loss) on
Investments........................................ 1.41 1.05
-------------------------------------
Total from Investment Operations.................... 1.43 1.06
-------------------------------------
Dividends from Net Investment Income................ 0.04 0.03
Distributions from Capital Gains.................... 0.14 0.03
-------------------------------------
Total Distributions................................. 0.18 0.06
-------------------------------------
Net Asset Value, End of Period...................... $ 7.93 $ 6.68
-------------------------------------
Total Return(D)..................................... 21.50% 18.38%(B)
Net Assets End of Period (in thousands)............. $57,037 $16,792
Ratio of Expenses to Average Net Assets............. 2.13% 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)........................................... 2.13% 2.45%(A)
Ratio of Net Investment Income to Average Net
Assets............................................. 0.52% 0.31%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers)......................... 0.52% 0.14%(A)
Portfolio Turnover Rate............................. 33.21% 26.40%(A)
Average Commission Per Share(C)..................... $0.0551
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and Sale of
equity investments on which commissions are charged during the period.
(D) Total return does not include one time sales charge.
(E) Total return does not include contingent deferred sales charge.
THE ENTERPRISE Group of Funds, Inc.
15
<PAGE> 18
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED DECEMBER 31, MAY 1
-------------------------------------------------------------- THROUGH
MONEY MARKET PORTFOLIO (CLASS A) 1996 1995 1994 1993 1992(D) 1991 DECEMBER 31, 1990
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income (Loss).................. 0.04 0.05 0.03 0.02 0.03 0.05 0.04
Total from Investment Operations.............. 0.04 0.05 0.03 0.02 0.03 0.05 0.04
----------------------------------------------------------------------------------
Dividends from Net Investment Income.......... 0.04 0.05 0.03 0.02 0.03 0.05 0.04
----------------------------------------------------------------------------------
Total Distributions........................... 0.04 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 $ 1.00
----------------------------------------------------------------------------------
Total Return(A)............................... 4.51% 5.05% 3.34% 2.24% 2.92% 5.22% 4.75%(B)
Net Assets, End of Period (in thousands)...... $59,074 $40,325 $32,334 $18,302 $18,932 $16,710 $19,031
Ratio of Expenses to Average Net Assets....... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers).......................... 1.18% 1.35% 1.33% 1.72% 1.56% 1.51% 1.38%(A)
Ratio of Net Investment Income to Average Net
Assets....................................... 4.42% 4.92% 3.30% 2.20% 2.80% 5.10% 7.00%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers)....... 4.24% 4.57% 3.08% 1.47% 1.81% 4.62% 6.17%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
MONEY MARKET PORTFOLIO (CLASS B) DECEMBER 31, 1996 DECEMBER 31, 1995
- -----------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period... $ 1.00 $ 1.00
Net Investment Income (Loss)........... 0.04 0.03
Total from Investment Operations....... 0.04 0.03
-------------------------------------
Dividends from Net Investment Income... 0.04 0.03
-------------------------------------
Total Distributions.................... 0.04 0.03
-------------------------------------
Net Asset Value, End of Period......... $ 1.00 $ 1.00
-------------------------------------
Total Return(C)........................ 3.94% 2.95%(B)
Net Assets, End of Period (in
thousands)............................ $1,344 $ 394
Ratio of Expenses to Average Net
Assets................................ 1.55% 1.55%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers)................... 1.73% 1.88%(A)
Ratio of Net Investment Income to
Average Net Assets.................... 3.85% 4.23%(A)
Ratio of Net Investment Income (Loss)
to Average Net Assets (Excluding
Waivers).............................. 3.68% 3.90%(A)
</TABLE>
(A) Annualized
(B) Not Annualized
(C) Total Return does not include contingent deferred sales charge.
(D) Based on average monthly shares outstanding.
THE ENTERPRISE Group of Funds, Inc.
16
<PAGE> 19
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 eight
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, Equity, Equity Income, Capital Appreciation,
Small Company Growth and Small Company Value 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
The objective of the Growth and Income Portfolio is to achieve a total return in
excess of the total return of the Lipper Growth and Income Mutual Funds Average,
measured over a period of three to five years, by investing primarily in a
broadly diversified group of large capitalization companies. The Portfolio seeks
this objective primarily through capital appreciation with income as a secondary
consideration. The Portfolio will invest in securities of companies which the
Portfolio Manager believes to be financially sound and will consider such
factors as the sales, growth and profitability prospects for the economic sector
and markets in which the company operates and for the services of products it
provides; the financial condition of the company; its ability to meet its
liabilities and to provide income in the form of dividends; the prevailing price
of the security; how that price compares to historical price levels of the
security, to
THE ENTERPRISE Group of Funds, Inc.
17
<PAGE> 20
current price levels in the general market, and to the prices of competing
companies; projected earnings estimates and earnings growth rate of the company,
and the relation of those figures to the current price.
In general, the Portfolio will invest in stocks of companies with market
capitalizations in excess of $750 million. Although there is no assurance that
the Portfolio will meet its objective, the securities held in the Growth and
Income Portfolio will generally reflect the price volatility of the broad equity
market (i.e., the Standard & Poor's 500 Index).
EQUITY PORTFOLIO
The investment objective of the Equity Portfolio is long term capital
appreciation through investment in securities (primarily equity securities) of
companies that are believed by the Portfolio Manager to be undervalued in the
marketplace in relation to factors such as the companies' assets or earnings. It
is the Portfolio Manager's intention to invest in securities of companies which
in the Portfolio Manager's opinion possess one or more of the following
characteristics: undervalued assets, valuable consumer or commercial franchises,
securities valuation below peer companies, substantial and growing cash flow
and/or a favorable price to book value relationship. Investment policies aimed
at achieving the Portfolio's objective are set in a flexible framework of
securities selection which primarily includes equity securities, such as common
stocks, preferred stocks, convertible securities, rights and warrants in
proportions which vary from time-to-time. Under normal circumstances at least
65% of the Portfolio's assets will be invested in equity securities. The
Portfolio will invest primarily in stocks listed on the New York Stock Exchange.
In addition, it may also purchase securities listed on other domestic securities
exchanges, securities traded in the domestic over-the-counter market and foreign
securities provided that they are listed on a domestic or foreign securities
exchange or represented by American Depository Receipts listed on a domestic
securities exchange or traded in the United States over-the-counter market.
EQUITY INCOME PORTFOLIO
The objective of the Equity 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
three-year average performance record of sales, earnings, dividend growth,
pretax margins, return on equity and reinvestment rate at an aggregate average
of 1.5 times the average performance of the Standard & Poor's 500 common stocks
("S&P 500") for the
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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 GROWTH PORTFOLIO
The Small Company Growth Portfolio seeks capital appreciation and invests
primarily in common stocks of small capitalization companies believed by the
Portfolio Manager to have an outlook for strong earnings growth and potential
for significant capital appreciation. The Portfolio will normally be as fully
invested as practicable in common stocks and securities convertible into common
stocks, but also may invest up to 5% of its assets in warrants and rights to
purchase common stocks. In the option of the Portfolio Manager, there may be
times when the shareholder's best interests are best served and the investment
objective is more likely to be achieved by having varying amounts of the
Portfolio's assets in convertible securities. Under normal market conditions,
the Portfolio will invest at least 65% of its total assets in common stocks and
convertible securities of small capitalization companies (market capitalization
of up to $1 billion). At certain times that percentage may be substantially
higher. Securities will be sold when the Portfolio Manager believes that
anticipated appreciation no longer probable, alternative investments offer
superior appreciation prospects, or the risk of a decline in market price is too
great. Because of its policy with respect to the sales of investments, the
Portfolio may from time to time realize short-term gains or losses. The
Portfolio will likely have somewhat greater volatility than the stock market in
general, as measured by the S&P 500 Index.
The securities of the Small Company Growth Fund generally will have a higher
degree of risk and price volatility than larger growth funds and a lower income
return than those funds.
For temporary defensive purposes, the Portfolio may invest up to 100% of its
total assets in cash equivalents. The Portfolio may also pursue certain
additional investment policies and strategies including: foreign securities;
investing foreign currency transactions; investing in repurchase agreements; and
acquiring when-issue securities.
SMALL COMPANY VALUE PORTFOLIO
The objective of the Small Company Value 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
up to $1 billion.
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
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<PAGE> 22
quickly once investor interest has 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 performance. 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 Portfolio is the European, Australian, Far East ("EAFE")
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
Portfolio Manager 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 Portfolio only securities
contained in the underlying index relevant to the Benchmark. Brinson Partners
will attempt to enhance the long-term risk and return performance of the Fund
relative to the Benchmark by deviating from the normal Benchmark mix of country
allocation and currencies in reaction to dis-
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crepancies 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. Examples of
full faith and credit securities are 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 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
25.
As described in "Certain Investment Techniques and Associated Risks," at page
25, 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
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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 25.
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 25.
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 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
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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 and 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 25.
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
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securities exchange or traded in the United States over-the-counter market.
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 bankers' 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 Tier 1 by any two Nationally Recognized Statistical Rating
Organization ("NRSRO"), or, if not rated, issued by a company rated at least
"A" by any two NRSROs 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
(A-2/P-2) 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.
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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 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
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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 Values and Transactions" at page
33.
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 and may be thinly traded. 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,
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<PAGE> 29
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, some include
"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 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 26.
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 or 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 the 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.
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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 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.
THE ENTERPRISE Group of Funds, Inc.
28
<PAGE> 31
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 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.
PORTFOLIO COMPOSITION
As of March 31, 1997, the High-Yield Bond Portfolio consisted of securities
classified as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
CATEGORY PORTFOLIO
<S> <C>
BB................................. 14.1%
B.................................. 80.8%
CCC................................ 00.2%
Non-rated*......................... 04.9%
</TABLE>
- ---------------
* Equivalent ratings for these securities would have been CCC to BBB.
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
THE ENTERPRISE Group of Funds, Inc.
29
<PAGE> 32
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 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
THE ENTERPRISE Group of Funds, Inc.
30
<PAGE> 33
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.
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
THE ENTERPRISE Group of Funds, Inc.
31
<PAGE> 34
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, 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 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 ENTERPRISE Group of Funds, Inc.
32
<PAGE> 35
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., "for-
THE ENTERPRISE Group of Funds, Inc.
33
<PAGE> 36
ward foreign currency" contract or "forward" contract). A forward contract
involves an obligation to purchase or sell a specific currency 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.
THE ENTERPRISE Group of Funds, Inc.
34
<PAGE> 37
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 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
THE ENTERPRISE Group of Funds, Inc.
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<PAGE> 38
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 Securities 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 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 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 60. 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) as to 75% of the assets of each Portfolio, invest more
than 5% of the value of its total assets in the securities of any single issuer
(other than cash items and U.S. government securities, as defined in the
Investment Company Act of 1940) if such purchase would cause more than 5% of the
value of
THE ENTERPRISE Group of Funds, Inc.
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<PAGE> 39
its assets to be invested in the securities of such issuer; (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 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,
THE ENTERPRISE Group of Funds, Inc.
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<PAGE> 40
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. The Funds offer four separate Classes of shares: Class
A, B, C and Y shares, each with a different combination of sales charges,
ongoing fees and other features. The offering of Class A, B, C 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.
Each class of shares of a Portfolio represent an identical interest in the
investment portfolio of that Portfolio and has the same rights, except that (i)
the Class A, B and C shares bear the expenses related to distribution and
servicing of such shares, (ii) the Class A, B and C 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
Classes also have separate exchange privileges. (See "How to Exchange Shares
Among the Portfolios.") 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. 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 ENTERPRISE Group of Funds, Inc.
38
<PAGE> 41
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.
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
to 0.00% after purchase.
the sixth Available only
year. to investors
purchasing
less than
$250,000 in
the aggregate.
Class
C...... CDSC for a 0.75% Available only
period of one distribution to investors
year equal to fee (0.60% for purchasing
1.00% Money Market) less than
and 0.25% $1,000,000 in
service fee the aggregate.
</TABLE>
In deciding which Class of shares to purchase, you should consider, investment
goals, present and anticipated, purchase amounts, time horizons and
temperaments. In addition, consideration should be given to: (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 C 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 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
THE ENTERPRISE Group of Funds, Inc.
39
<PAGE> 42
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. Enterprise
Distributors may in its discretion compensate firms for sales of Class A shares
under this privilege at a commission rate of .50% of the amount of Class A
shares purchased subject to a minimum purchase of $10,000.
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>
DEALER
SALES CHARGE 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 of 1% 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 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 the Distributor.
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
THE ENTERPRISE Group of Funds, Inc.
40
<PAGE> 43
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 and
certain payroll deduction plans, 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 the Distributor. The
THE ENTERPRISE Group of Funds, Inc.
41
<PAGE> 44
CDSC 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 prorata 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 the Distributor 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 C SHARES. Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within
12 months of their purchase, a contingent deferred sales charge of 1.00% will be
deducted from the redemption proceeds. That sales charge will not apply to
shares purchased by the reinvestment of dividends or capital gains
distributions. The charge will be assessed on the lesser of the net asset value
of the shares at the time of redemption or the original purchase price. The
contingent deferred sales charge is not imposed on the amount of your account
value represented by the increase in net asset value over the initial purchase
price (including increased due to the reinvestment of dividends and capital
gains distributions). The Class C contingent deferred sales charge is paid to
the Distributor to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by
THE ENTERPRISE Group of Funds, Inc.
42
<PAGE> 45
reinvestment of dividends and capital gains distributions, (2) shares held for
over 12 months, and (3) shares held the longest during the 12 month period.
REINVESTMENT PRIVILEGE. A shareholder of the Fund who redeems Shares 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 shares of the same Class 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
postponement 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, B AND C CDSC. No CDSC will be imposed when a
shareholder redeems Class A, B or C 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,
Class B shares held for more than six years and Class C shares held for more
than one year.
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, B or C 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, B or C 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.
THE ENTERPRISE Group of Funds, Inc.
43
<PAGE> 46
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 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
THE ENTERPRISE Group of Funds, Inc.
44
<PAGE> 47
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. 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 telephone 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
THE ENTERPRISE Group of Funds, Inc.
45
<PAGE> 48
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.
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 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 ENTERPRISE Group of Funds, Inc.
46
<PAGE> 49
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 and C 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 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, C 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, C or Y
shares of any Enterprise Portfolio.
EXCHANGE OF CLASS C SHARES. Class C shares of all Enterprise Portfolios are
exchangeable for Class C shares of any other Enterprise Portfolio. Class C
THE ENTERPRISE Group of Funds, Inc.
47
<PAGE> 50
shares of any Enterprise Portfolio cannot be exchanged for Class A, B or Y.
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 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.
THE ENTERPRISE Group of Funds, Inc.
48
<PAGE> 51
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 always required, from corporations, executors,
administrators, trustees or guardians.
THE ENTERPRISE Group of Funds, Inc.
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<PAGE> 52
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)
redemptions under the Fund's Systematic Withdrawal Plan at a maximum of 10% per
year of the net asset value of the account.
THE ENTERPRISE Group of Funds, Inc.
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CONTINGENT DEFERRED SALES CHARGE --
CLASS B AND C SHARES
A contingent deferred sales charge may be imposed upon redemption of Class B and
C shares. There is no such charge upon redemption of any share appreciation or
reinvested dividends on Class B and C 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 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.
The CDSC charge B shares is computed at the following rates applied to the value
of the shares redeemed excluding amounts not subject to the charge.
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
YEAR OF REDEMPTION AFTER 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.
Class C shares are subject to a 1.00% CDSC for one year from the date the order
is received.
The rate of the contingent deferred sales charge 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, a Class B investment made in June, 1996
will be eligible for the 4% charge if redeemed on or after June 1, 1997. In the
event no specific order is requested, the redemption will be made first from
shares representing dividends and then from the earliest purchase of shares.
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 considera-
THE ENTERPRISE Group of Funds, Inc.
51
<PAGE> 54
tions 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.
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, Class B and Class C shares of each Portfolio have adopted a separate
Distribution Plan (the "Plans") pursuant to Rule 12b-1 under the Investment
Company Act of 1940. Under the Plans, Class A, Class B and Class C 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.
CLASS C SHARES. Class C 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 pay a
distribution fee of .60% of average daily net assets. Class C shares of each
Portfolio will also pay a service fee at the annual rate of .25% of each
Portfolio's average daily net assets.
USE OF DISTRIBUTION AND SERVICE FEES. All or a portion of the distribution fees
paid by either Class A, B or C 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, Class B or Class C Plans 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 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.
In addition to distribution and service fees paid the Fund under Class A, Class
B and Class C Plans,
THE ENTERPRISE Group of Funds, Inc.
52
<PAGE> 55
Enterprise Capital (or one of its affiliates) may make payments to dealers
(including MONY Securities Corp.) and other persons which distribute shares of
the Funds (including Class Y shares). Such payments may be calculated by
reference to the net asset value of shares sold by such persons or otherwise.
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 Mutual Funds 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,
Class C 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.
THE ENTERPRISE Group of Funds, Inc.
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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 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.
THE ENTERPRISE Group of Funds, Inc.
54
<PAGE> 57
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 25 years of experience in
evaluating investment advisers for individuals and institutional investors.
Enterprise Capital and the Fund have received an exemptive order from the
Securities and Exchange Commission which permits Enterprise, subject to, among
other things, initial shareholder authority, to thereafter enter into or amend
Portfolio Manager Agreements without obtaining shareholder approval each time.
Shareholders voted affirmatively to give the Fund this ongoing authority. With
Board approval, Enterprise Capital is permitted to employ new Portfolio Managers
for the Portfolios, change the terms of the Portfolio Manager Agreements or
enter into a new Agreement with that Portfolio Manager. Shareholders of a
Portfolio continue to have the right to terminate the Portfolio Manager's
Agreement for the Portfolio at any time by a vote of the majority of the
outstanding voting securities of the Portfolio. Shareholders will be notified of
any Portfolio Manager changes or other material amendments to Portfolio Manager
Agreements that occur under these arrangements.
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.
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 $35,000,000. 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 $280 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
THE ENTERPRISE Group of Funds, Inc.
55
<PAGE> 58
for the day to day investment management of the Portfolio and has more than 33
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 December 31, 1996,
approximated $8.5 billion. Usual investment minimum: $20 million. Representative
clients include: Alexander & Alexander Services; American Business Products; 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.
GROWTH AND INCOME PORTFOLIO
The Portfolio Manager of the Growth and Income Portfolio is Retirement System
Investors Inc. which is a subsidiary of Retirement Group Inc. Its address is 317
Madison Ave., New York, New York 10122. James P. Coughlin, President and Chief
Investment Officer, is responsible for the day-to-day management of the
Portfolio and has more than 30 years experience in the investment industry.
Total assets under management for Retirement Investors Inc. was $558 million as
of December 31, 1996. The Management Fee is .75%, and the Portfolio Manager
receives 40% of that fee for assets under management up to $100,000,000; 33% of
that fee on the next $100,000,000; and 27% for assets greater than $100,000,000.
EQUITY PORTFOLIO
The Portfolio Manager of the Equity Portfolio is OpCap Advisors which is a
subsidiary of Oppenheimer Capital, a general partnership. The Portfolio Manager
had approximately $48.3 billion under management as of December 31, 1996. Eileen
Rominger, Managing Director of Oppenheimer Capital, is responsible for the
day-to-day management of the Portfolio. Ms. Rominger has more than 18 years
experience in the investment industry. The annual Management Fee is .75% and the
Portfolio Manager receives 53% of that fee for assets under management up to
$100,000,000 and 40% of that fee thereafter. Usual investment minimum is $10
million. Representative clients include Pacific Telesis Group, Caterpillar, Inc.
and New York State Electric & Gas. OpCap's address is One World Financial
Center, New York, New York 10281.
EQUITY INCOME PORTFOLIO
The Portfolio Manager of the Equity 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 33 years
experience in the investment industry. Total assets under management (for the
Equity Income Portfolio and all other accounts managed) at December 31, 1996,
were approximately $1.2 billion. Usual investment minimum: $20 million. The
Management Fee paid by the Equity 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 and 30% thereafter.
THE ENTERPRISE Group of Funds, Inc.
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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
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 24
years experience in the investment industry. Representative clients include:
Bell Atlantic, McGraw-Hill and International Paper Co. Its address is 300 North
Lake Avenue, Pasadena, California 91101. As of December 31, 1996, total assets
under management for all clients were $18 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.
SMALL COMPANY GROWTH PORTFOLIO
The Portfolio Manager of the Small Company Growth Portfolio is Pilgrim Baxter &
Associates, Ltd. ("Pilgrim Baxter"). Its offices are at 1255 Drummers Lane,
Suite 300, Wayne, Pennsylvania 19087. Pilgrim Baxter is a wholly owned
subsidiary of United Asset Management, Inc. Gary Pilgrim, Chief Investment
Officer of the firm, is responsible for the day-to-day management of the
Portfolio. He has more than 29 years experience in the investment industry. As
of December 31, 1996, total assets under management for all clients was $14.7
billion. Usual investment minimum: $20 million. The Management Fee is 1.00% and
the Portfolio Manager receives 65% of that fee for assets under management up to
$50 million; and 55% for assets under management for the next $50 million; and
45% for assets thereafter.
SMALL COMPANY VALUE PORTFOLIO
The Portfolio Manager of the Small Company Value Portfolio is GAMCO Investors,
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 26
years of experience in the investment industry. As of December 31, 1996, total
assets under management for all clients were $5.2 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.
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, 1996, Brinson's assets under management for all
clients approximated $71.6 billion. Usual investment minimum: $25 million.
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%
THE ENTERPRISE Group of Funds, Inc.
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<PAGE> 60
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 33 years combined experience in the investment
industry. As of December 31, 1996 TCW and its affiliated companies had
approximately $54 billion under management or committed for management in
various fiduciary and advisory capacities. Usual investment minimum: $35
million. 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 1986 and is owned by its
employees. James Caywood, Managing Director and Chief Executive Officer, is
responsible for the day-to-day management of the Portfolio. He has more than 28
years of investment industry experience. Caywood-Scholl provides investment
advice exclusively with respect to high yield, low grade fixed income
instruments. As of December 31, 1996, assets under management for all clients
approximated $732 million. Usual investment minimum: $1 million. 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 13 years industry experience. Morgan Stanley is a wholly-owned
subsidiary of Morgan Stanley Group, Inc., which is a publicly owned investment
banking firm. As of December 31, 1996, Morgan Stanley managed approximately
$72.6 billion of assets for its various clients. Usual investment minimum: $25
million 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
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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 23 years of investment industry
experience. As of December 31, 1996, Oppenheimer Capital and its affiliates had
over $48.3 billion under management. Its usual investment minimum is $10
million. 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 40% of that fee for assets in excess of
$100,000,000.
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
December 31, 1996, approximated $60.4 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, 1997 and ending no earlier than
December 31, 1997, 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%; (C) 2.15%; Equity Income (A)
1.5%; (B) 2.05%; (C) 2.05%; Capital Appreciation (A) 1.75%; (B) 2.30%; (C)
2.30%; Small Company Value (A) 1.75%; (B) 2.30%; (C) 2.30%; International Growth
(A) 2.0%; (B) 2.55%; (C) 2.55%; Government Securities (A) 1.3%; (B) 1.85%; (C)
1.85%; High-Yield Bond (A) 1.3%; (B) 1.85%; (C) 1.85%; Tax-Exempt Income (A)
1.25%; (B) 1.80%; (C) 1.80%; Managed (A) 1.75%; (B) 2.30%; (C) 2.30%; and Money
Market (A) 1.0%; (B) 1.55%; (C) 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.
THE ENTERPRISE Group of Funds, Inc.
59
<PAGE> 62
Enterprise Capital and the Fund entered into five 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 Value Portfolio; $34,116 of
expanding the series to include a Managed Portfolio; and approximately $35,000
for each of the following: Equity Portfolio, Growth and Income Portfolio and
Small Company Growth 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 each 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. The Small Company Portfolio and Managed
Portfolio have commenced such payments.
TAXES
Each Portfolio of the Fund has qualified and intends to continue to qualify as a
"regulated investment company" in 1997 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.
THE ENTERPRISE Group of Funds, Inc.
60
<PAGE> 63
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
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.
THE ENTERPRISE Group of Funds, Inc.
61
<PAGE> 64
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.
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
THE ENTERPRISE Group of Funds, Inc.
62
<PAGE> 65
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 Equity Income Portfolio) and Managed Portfolio are
declared and paid annually. Dividends on the Equity 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, Enterprise 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. Conduct Rules, 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 Value Portfolio was added commencing October 1, 1993; the Managed
Portfolio was added commencing October 3, 1994; and the Growth and Income
Portfolio, Equity Portfolio and Small Company Growth Portfolio were added on May
1, 1997. Class B and Y shares were established May 1, 1995. Class C shares were
established on May 1, 1997. 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.
THE ENTERPRISE Group of Funds, Inc.
63
<PAGE> 66
OTHER CLASSES OF SHARES
Each Portfolio currently offers four classes of shares, Class A, Class B, Class
C and Class Y, and may in the future offer additional classes. Class A, Class B
and Class C shares are the only classes of shares offered by this Prospectus.
Class Y shares are only available 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 trusts, certain wrap
account clients of broker/dealers, former shareholders of Retirement System Fund
Inc. or other financial institutional buyer. Wrap account clients of
broker/dealers and former Retirement System Fund Inc. shareholders are offered
Class Y shares at a lower minimum purchase amount.
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 thirteen 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 four classes
of shares: Class A, Class B, Class C and Class Y. Class A, Class B, Class C 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, and Class C 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 ENTERPRISE Group of Funds, Inc.
64
<PAGE> 67
The Fund and its Portfolios are not required by Maryland law to hold annual
meetings of shareholders under normal 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.
THE ENTERPRISE Group of Funds, Inc.
65
<PAGE> 68
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.
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.
THE ENTERPRISE Group of Funds, Inc.
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<PAGE> 69
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 MAY 1, 1997
The Enterprise Group of Funds, Inc. (the "Fund") is a series of mutual funds
that seeks to provide investors a broad range of investment alternatives through
its 13 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 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 explains concisely what you should know about the Fund and its
Portfolios before you consider investing. Please read this Prospectus and retain
it for future reference. Additional information, contained in a "Statement of
Additional Information," dated May 1, 1997 has been filed with the Securities
and Exchange Commission and is available upon request without charge by writing
or calling the Fund. It is incorporated by reference into this Prospectus (which
means that it is legally part of it).
Equity Portfolios
Growth Portfolio
Growth and Income Portfolio
Equity Portfolio
Equity Income Portfolio
Capital Appreciation Portfolio
Small Company Growth Portfolio
Small Company Value 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
LIKE ALL MUTUAL FUND SHARES, 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.
THE HIGH-YIELD BOND PORTFOLIO INVESTS 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 AND
HAVE SPECIAL RISKS. THEY MAY NOT BE SUITABLE FOR ALL INVESTORS. PLEASE READ THE
RISK INFORMATION CAREFULLY
PLEASE NOTE THAT THESE FUNDS ARE NOT BANK DEPOSITS; ARE NOT FEDERALLY INSURED;
ARE NOT ENDORSED BY ANY BANK OR GOVERNMENT AGENCY; AND ARE NOT GUARANTEED TO
ACHIEVE THEIR GOAL(S).
THE ENTERPRISE Group of Funds, Inc.
<PAGE> 70
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
SMALL SMALL
GROWTH AND EQUITY CAPITAL COMPANY COMPANY
GROWTH INCOME EQUITY INCOME APPRECIATION GROWTH VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- --------- --------- ------------ --------- ---------
CLASS OF SHARES: Y Y Y Y Y Y Y
---------------- --------- ---------- --------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on
Purchase (as a % of offering price)..... none none none none none none none
Maximum Deferred Sales Load............... none none none none none none none
Maximum Sales Load Imposed On Reinvested
Dividends............................... none none none none none none none
Exchange Fee.............................. none none none none none none none
Redemption Fee............................ none none none none none none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee(1)......................... 0.75% 0.75% 0.75% 0.75% 0.75% 1.00% 0.75%
12b-1..................................... none none none none none none none
Other Expenses(2)......................... 0.35% 0.30% 0.40% 0.30% 0.40% 0.40% 0.55%
--- --- --- --- --- --- ---
TOTAL FUND OPERATING EXPENSES............. 1.10% 1.05% 1.15% 1.05% 1.15% 1.40% 1.30%
=== === === === === === ===
EXAMPLE 1: 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 (none), (b) a 5% annual return, and (c) redemption at the end of the time period.
1 Year.................................... $ 11 $ 11 $ 12 $ 11 $ 12 $ 14 $ 13
3 Years................................... 35 33 37 33 37 44 41
5 Years................................... 61 58 63 58 63 77 71
10 Years.................................. 134 128 140 128 140 168 157
</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) These fees may be higher than that of other funds. However, the Board of
Directors has determined that such fees are reasonable in light of the services,
investment decisions and investment techniques employed.
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 Accounts, Automatic Investment Plan Accounts, and
Retirement Plans.
(2) Expenses for Growth and Income, Equity, Equity Income, Capital
Appreciation, Small Company Growth, Government Securities, High-Yield Bond,
Tax-Exempt Income and Money Market Class Y Shares represent estimates of what
these expenses are expected to be for the 1997 fiscal year.
THE ENTERPRISE Group of Funds, Inc.
2
<PAGE> 71
SUMMARY OF FUND EXPENSES
<TABLE>
<CAPTION>
INTERNATIONAL GOVERNMENT HIGH-YIELD TAX-EXEMPT
GROWTH SECURITIES BOND INCOME MANAGED MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ---------- ---------- ---------- --------- ------------
CLASS OF SHARES: Y Y Y Y Y Y
---------------- ------------- ---------- ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Load Imposed on
Purchase (as a % of offering price)..... none none none none none none
Maximum Deferred Sales Load............... none none none none none none
Maximum Sales Load Imposed On Reinvested
Dividends............................... none none none none none none
Exchange Fee.............................. none none none none none none
Redemption Fee............................ none none none none none none
ANNUAL FUND OPERATING EXPENSES
(AS A % OF AVERAGE NET ASSETS)
Management Fee(1)......................... 0.85% 0.60% 0.60% 0.50% 0.75% 0.35%
12b-1..................................... none none none none none none
Other Expenses(2)......................... 0.70% 0.25% 0.25% 0.30% 0.37% 0.35%
--- --- --- --- --- ---
TOTAL FUND OPERATING EXPENSES............. 1.55% 0.85% 0.85% 0.80% 1.12% 0.70%
=== === === === === ===
EXAMPLE 1: 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 (none), (b) a 5% annual return, and (c) redemption at the end of the time
period.
1 Year.................................... $ 16 $ 9 $ 9 $ 8 $ 11 $ 7
3 Years................................... 49 27 27 26 36 22
5 Years................................... 84 47 47 44 62 39
10 Years.................................. 185 105 105 99 136 87
</TABLE>
THE ENTERPRISE Group of Funds, Inc.
3
<PAGE> 72
THE ENTERPRISE GROUP OF FUNDS, INC.
PROSPECTUS SUMMARY
================================================================================
Set forth below are the 13 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
thirteen Portfolios consisting of four separate Classes for each
Portfolio. Shares are 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 Total return in excess of the total return of the
Retirement System Investors, Inc. Lipper Growth and Income Mutual Funds Average
New York, New York measured over a period of three to five years, by
investing primarily in a broadly diversified group
of large capitalization stocks.
- ------------------------------------------------------------------------------------------------------------
EQUITY PORTFOLIO Long term capital appreciation, primarily from
OpCap Advisors investments in securities of companies that are
New York, New York believed by the Portfolio Manager to be
undervalued in the marketplace in relation to
factors such as the companies' assets or earnings.
- ------------------------------------------------------------------------------------------------------------
EQUITY 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 GROWTH PORTFOLIO Capital appreciation by investing primarily in
Pilgrim Baxter & Associates common stocks of small capitalization companies
Wayne, Pennsylvania believed by the Portfolio Manager to have an
outlook for strong earnings growth and potential
for significant capital appreciation.
- ------------------------------------------------------------------------------------------------------------
SMALL COMPANY VALUE 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 federal
Morgan Stanley Asset Management, Inc. 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 and
New York, New York 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>
================================================================================
THE ENTERPRISE Group of Funds, Inc.
4
<PAGE> 73
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 Growth and Small Company Value
Portfolios carry 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."
PURCHASE ALTERNATIVES
Each Portfolio offers four 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 and C shares). The following is a brief
description of the Y Class of shares offered. Class A, Class B, Class C Shares
are contained in a separate prospectus.
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 subject to an investment of $1,000,000.
Institutional investors eligible to purchases 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 trusts, certain wrap
account clients of broker/dealers, former
shareholders of Retirement System Fund, Inc. ("RSF")
whose shares were merged into The Enterprise Group of
Funds, Inc. or other financial institutional buyer.
Wrap account clients of broker/dealers and former RSF
shareholders are offered Class Y shares at a lower
minimum purchase amount.
THE ENTERPRISE Group of Funds, Inc.
5
<PAGE> 74
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
financial highlights include four Portfolios which were in operation during
1996. The Fund's 1996 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 800-432-4320. The Report contains
information about the performances of the Portfolios.
<TABLE>
<CAPTION>
FOR THE PERIOD
AUGUST 8 THROUGH
GROWTH PORTFOLIO (CLASS Y) DECEMBER 31, 1996
- ---------------------------------------------------------------------------
<S> <C>
Net Asset Value, Beginning of Period.................... $ 11.96
Net Investment Income (Loss)............................ 0.00
Net Realized and Unrealized Gains (Losses) on
Investments............................................ 1.90
------
Total from Investment Operations........................ 1.90
------
Dividends from Net Investment Income.................... 0.00
Distributions from Net Realized Capital Gains........... 0.74
------
Total Distributions..................................... 0.74
------
Net Asset Value, End of Period.......................... $ 13.12
------
Total Return............................................ 15.91%(B)
Net Assets, End of Period (in thousands)................ $ 2,339
Ratio of Expenses to Average Net Assets................. 1.10%(AD)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)............................................... 1.10%(AD)
Ratio of Net Investment Income (Loss) to Average Net
Assets................................................. 0.04%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers)............................. 0.04%(A)
Portfolio Turnover Rate................................. 29.90%
Average Commission Per Share(C)......................... $0.0636
</TABLE>
A Annualized
B Not Annualized
C Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of equity
investments on which commissions are charged during the period
D Effective September 1, 1995, ratio includes expenses paid indirectly.
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 25, THROUGH
SMALL COMPANY VALUE PORTFOLIO (CLASS Y) DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period....................... $ 5.43 $ 5.37
Net Investment Income (Loss)............................... 0.01 0.04
Net Realized and Unrealized Gains (Losses) on
Investments............................................... 0.63 0.26
-------------------------------------
Total from Investment Operations........................... 0.64 0.30
-------------------------------------
Dividends from Net Investment Income....................... 0.00 0.04
Distributions from Capital Gains........................... 0.30 0.20
-------------------------------------
Total Distributions........................................ 0.30 0.24
-------------------------------------
Net Asset Value, End of Period............................. $ 5.77 $ 5.43
-------------------------------------
Total Return............................................... 11.83% 5.55%(B)
Net Assets, End of Period (in thousands)................... $ 1,926 $2,832
Ratio of Expenses to Average Net Assets.................... 1.30% 1.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).................................................. 1.92% 1.81%(A)
Ratio of Net Investment Income to Average Net Assets....... 0.35% 0.18%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)....................................... (0.27)% (0.33)%(A)
Portfolio Turnover Rate.................................... 143.58% 36.50%(A)
Average Commission Per Share(C)............................ $0.0483
</TABLE>
AAnnualized
BNot Annualized
CDisclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of equity
investments on which commissions are charged during the period.
THE ENTERPRISE Group of Funds, Inc.
6
<PAGE> 75
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 5
YEAR ENDED THROUGH
INTERNATIONAL GROWTH PORTFOLIO (CLASS Y) DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period....................... $ 16.07 $14.93
Net Investment Income (Loss)............................... 0.14 0.02
Net Realized and Unrealized Gain (Loss) on Investments..... 1.92 2.02
-------------------------------------
Total from Investment Operations........................... 2.06 2.04
-------------------------------------
Dividends from Net Investment Income....................... 0.16 0.14
Distributions from Capital Gains........................... 0.87 0.76
-------------------------------------
Total Distributions........................................ 1.03 0.90
-------------------------------------
Net Asset Value, End of Period............................. $ 17.10 $16.07
-------------------------------------
Total Return............................................... 12.86% 13.65%(B)
Net Assets, End of Period (in thousands)................... $ 8,828 $3,109
Ratio of Expenses to Average Net Assets.................... 1.55% 1.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).................................................. 1.75% 1.75%(A)
Ratio of Net Investment Income to Average Net Assets....... 1.03% 0.26%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)....................................... 0.84% 0.05%(A)
Portfolio Turnover Rate.................................... 23.79% 31.10%(A)
Average Commission Per Share(C)............................ $0.0221
</TABLE>
A Annualized
B Not Annualized
C Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of equity
investments on which commissions are charged during the period.
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 5
YEAR ENDED THROUGH
MANAGED PORTFOLIO (CLASS Y) DECEMBER 31, 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period....................... $ 6.70 $ 6.17
Net Investment Income (Loss)............................... 0.09 0.03
Net Realized and Unrealized Gain (Loss) on Investments..... 1.42 0.57
-------------------------------------
Total from Investment Operations........................... 1.51 0.60
-------------------------------------
Dividends from Net Investment Income....................... 0.09 0.04
Distributions from Capital Gains........................... 0.14 0.03
-------------------------------------
Total Distributions........................................ 0.23 0.07
-------------------------------------
Net Asset Value, End of Period............................. $ 7.98 $ 6.70
-------------------------------------
Total Return............................................... 22.63% 9.80%(B)
Net Assets, End of Period (in thousands)................... $57,794 $26,664
Ratio of Expenses to Average Net Assets.................... 1.12% 1.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).................................................. 1.12% 1.41%(A)
Ratio of Net Investment Income to Average Net Assets....... 1.57% 1.39%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)....................................... 1.57% 1.28%(A)
Portfolio Turnover Rate.................................... 33.21% 26.40%(A)
Average Commission Per Share(C)............................ $0.0551
</TABLE>
A Annualized
B Not Annualized
C Disclosure not applicable to periods prior to 1996. Represents average
commissions rate per share charged to the fund on purchase and sales of equity
investments on which commissions are charged during the period.
THE ENTERPRISE Group of Funds, Inc.
7
<PAGE> 76
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 eight
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, Equity, Equity Income, Capital Appreciation,
Small Company Growth and Small Company Value 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
The objective of the Growth and Income Portfolio is to achieve a total return in
excess of the total return of the Lipper Growth and Income Mutual Funds Average,
measured over a period of three to five years, by investing primarily in a
broadly diversified group of large capitalization companies. The Portfolio seeks
this objective primarily through capital appreciation with income as a secondary
consideration. The Portfolio will invest in securities of companies which the
Portfolio Manager believes to be financially sound and will consider such
factors as the sales, growth and profitability prospects for the economic sector
and markets in which the company operates and for the services of products it
provides; the financial condition of the company; its ability to meet its
liabilities and to provide income in the form of dividends; the prevailing price
of the security; how that price com-
THE ENTERPRISE Group of Funds, Inc.
8
<PAGE> 77
pares to historical price levels of the security, to current price levels in the
general market, and to the prices of competing companies; projected earnings
estimates and earnings growth rate of the company, and the relation of those
figures to the current price.
In general, the Portfolio will invest in stocks of companies with market
capitalizations in excess of $750 million. Although there is no assurance that
the Portfolio will meet its objective, the securities held in the Growth and
Income Portfolio will generally reflect the price volatility of the broad equity
market (i.e., the Standard & Poor's 500 Index).
EQUITY PORTFOLIO
The investment objective of the Equity Portfolio is long term capital
appreciation through investment in securities (primarily equity securities) of
companies that are believed by the Portfolio Manager to be undervalued in the
marketplace in relation to factors such as the companies' assets or earnings. It
is the Portfolio Manager's intention to invest in securities of companies which
in the Portfolio Manager's opinion possess one or more of the following
characteristics: undervalued assets, valuable consumer or commercial franchises,
securities valuation below peer companies, substantial and growing cash flow
and/or a favorable price to book value relationship. Investment policies aimed
at achieving the Portfolio's objective are set in a flexible framework of
securities selection which primarily includes equity securities, such as common
stocks, preferred stocks, convertible securities, rights and warrants in
proportions which vary from time-to-time. Under normal circumstances at least
65% of the Portfolio's assets will be invested in equity securities. The
Portfolio will invest primarily in stocks listed on the New York Stock Exchange.
In addition, it may also purchase securities listed on other domestic securities
exchanges, securities traded in the domestic over-the-counter market and foreign
securities provided that they are listed on a domestic or foreign securities
exchange or represented by American Depository Receipts listed on a domestic
securities exchange or traded in the United States over-the-counter market.
EQUITY INCOME PORTFOLIO
The objective of the Equity 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
three-year average performance record of sales, earnings, dividend growth,
pretax margins, return on equity and reinvestment rate at an aggregate average
of 1.5 times the average performance of the Standard &
THE ENTERPRISE Group of Funds, Inc.
9
<PAGE> 78
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 GROWTH PORTFOLIO
The Small Company Growth Portfolio seeks capital appreciation and invests
primarily in common stocks of small capitalization companies believed by the
Portfolio Manager to have an outlook for strong earnings growth and potential
for significant capital appreciation. The Portfolio will normally be as fully
invested as practicable in common stocks and securities convertible into common
stocks, but also may invest up to 5% of its assets in warrants and rights to
purchase common stocks. In the option of the Portfolio Manager, there may be
times when the shareholder's best interests are best served and the investment
objective is more likely to be achieved by having varying amounts of the
Portfolio's assets in convertible securities. Under normal market conditions,
the Portfolio will invest at least 65% of its total assets in common stocks and
convertible securities of small capitalization companies (market capitalization
of up to $1 billion). At certain times that percentage may be substantially
higher. Securities will be sold when the Portfolio Manager believes that
anticipated appreciation no longer probable, alternative investments offer
superior appreciation prospects, or the risk of a decline in market price is too
great. Because of its policy with respect to the sales of investments, the
Portfolio may from time to time realize short-term gains or losses. The
Portfolio will likely have somewhat greater volatility than the stock market in
general, a measured by the S&P 500 Index.
The securities of the Small Company Growth Fund generally will have a higher
degree of risk and price volatility than larger growth funds and a lower income
return than those funds.
For temporary defensive purposes, the Portfolio may invest up to 100% of its
total assets in cash equivalents. The Portfolio may also pursue certain
additional investment policies and strategies including: foreign securities;
investing foreign currency transactions; investing in repurchase agreements; and
acquiring when-issue securities.
SMALL COMPANY VALUE PORTFOLIO
The objective of the Small Company Value 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
up to $1 billion.
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
THE ENTERPRISE Group of Funds, Inc.
10
<PAGE> 79
favorable trends and then adjust its valuation more quickly once investor
interest has 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 performance. 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 European, Australian, Far East ("EAFE") 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 Portfolio
Manager 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 Portfolio only securities
contained in the underlying index relevant to the Benchmark. Brinson Partners
will attempt to enhance the long-term risk and return performance of the Fund
relative to the Benchmark by deviating from the normal Benchmark mix of
THE ENTERPRISE Group of Funds, Inc.
11
<PAGE> 80
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. Examples of
full faith and credit securities are 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 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
THE ENTERPRISE Group of Funds, Inc.
12
<PAGE> 81
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 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
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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 and 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 (MIGl, MIG2, MIG3) for notes; commercial paper rated P-l by
Moody's or A-1 by S&P; and variable rate securities rated VMIGl 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
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securities exchange or traded in the United States over-the-counter market.
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 bankers' 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 Tier 1 by any two Nationally Recognized Statistical Rating
Organization (NRSRO), or, if not rated, issued by a company rated at least
"A" by any two NRSROs 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 overall
rating (A-2/P-2) 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.
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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 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, elimi-
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nate 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 Values and Transactions" at page
24.
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 and may be thinly traded. 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,
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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, some include
"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 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 17.
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, or 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.
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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 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.
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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 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.
PORTFOLIO COMPOSITION
As of March 31, 1997, the High-Yield Bond Portfolio consisted of securities
classified as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
CATEGORY PORTFOLIO
<S> <C>
BB................................. 14.1%
B.................................. 80.8%
CCC................................ 0.2%
Non-rated*......................... 4.9%
</TABLE>
- ---------------
* Equivalent ratings for these securities would have been CCC to B(3).
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
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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 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
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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.
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
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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 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
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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 amount at a future
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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.
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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 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
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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 Securities 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 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 41. 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) as to 75% of the assets of each Portfolio, invest more
than 5% of the value of its total assets in the securities of any single issuer
(other than cash items and U.S. government securities, as defined in the
Investment Company Act of 1940) if such
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purchase would cause more than 5% of the value of its assets to be invested in
securities of such issuer; (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 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
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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. The Funds offer four separate Classes of shares: Class
A, B, C and Y shares, each with a different combination of sales charges,
ongoing fees an other features.
The four Classes also have separate exchange privileges. (See "How to Exchange
Shares Among the Portfolios.") 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 Y shares do not bear a sales charge or distribution fee. 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,
certain wrap account clients of broker/dealers, former shareholders of
Retirement Systems Investors, Inc. ("RSI") or other financial institutional
buyer. Wrap account clients of broker/dealers and former RSI shareholders are
offered Class Y at a lower minimum purchase amount.
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 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.
For accounts with balances under $1,000 as of July 31, an annual service charge
of $25 per account registration per Portfolio will apply.
From time to time, the Fund temporarily may suspend the offering of shares of
one or more of its Classes or
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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 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.
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 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.
In addition to distribution and service fees paid the Fund under Class A, Class
B and Class C Plans, Enterprise Capital (or one of its affiliates) may make
payments to dealers (including MONY Securities Corp.) and other persons which
distribute shares of the Funds (including Class Y shares). Such payments may be
calculated by reference to the net asset value of shares sold by such persons or
otherwise.
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
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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. 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 telephone 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.
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.
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.
RETIREMENT PLANS
Shareholders may adopt Profit Sharing Plan, Money Purchase Plan and other
retirement plans funded by
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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. Class Y
shares may be exchanged for Class Y shares of any Portfolio. Class Y shares
cannot be exchanged for Class A, B or C shares.
Shares of a Portfolio will be processed at the net asset value next determined
after the Transfer Agent receives your exchange request. The exchange feature
may be modified or discontinued at any time, upon notice to shareholders.
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
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 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.
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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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; or (3) by wire, if
the appropriate request forms have been submitted. 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
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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 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.
REDEMPTIONS -- GENERAL
The Fund 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.
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.
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 per-
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formance 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,
Class C 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 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
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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 25 years of experience in
evaluating investment advisers for individuals and institutional investors.
Enterprise Capital and the Fund have received an exemptive order from the
Securities and Exchange Commission which permits Enterprise, subject to, among
other things, initial shareholder authority, to thereafter enter into or amend
Portfolio Manager Agreements without obtaining shareholder approval each time.
Shareholders voted affirmatively to give the Fund this ongoing authority. With
Board approval, Enterprise Capital is permitted to employ new Portfolio Managers
for the Portfolios, change the terms of the Portfolio Manager Agreements or
enter into a new Agreement with that Portfolio Manager. Shareholders of a
Portfolio continue to have the right to terminate the Portfolio Manager's
Agreement for the Portfolio at any time by a vote of the majority of the
outstanding voting securities of the Portfolio. Shareholders will be notified of
any Portfolio Manager
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changes or other material amendments to Portfolio Manager Agreements that occur
under these arrangements.
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.
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 $35,000,000. 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 $280 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 33 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 December 31, 1996, approximated
$8.5 billion. Usual investment minimum: $20 million. Representative clients
include: Alexander & Alexander Services; American Business Products; 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.
GROWTH AND INCOME PORTFOLIO
The Portfolio Manager of the Growth and Income Portfolio is Retirement System
Investors Inc. which is a subsidiary of Retirement Group Inc. Its address is 317
Madison Ave., New York, New York 10122. James P. Coughlin, President and Chief
Investment Officer, is responsible for the day to day management of the
Portfolio and has more than 30 years experience in the investment industry.
Total assets under management for Retirement Investors Inc. was $558 million as
of December 31, 1996. The Management Fee is .75%, and the Portfolio Manager
receives 40%
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of that fee for assets under management up to $100,000,000; and 27% for assets
greater than $100,000,000.
EQUITY PORTFOLIO
The Portfolio Manager of the Equity Portfolio is OpCap Advisors which is a
subsidiary of Oppenheimer Capital, a general partnership. The Portfolio Manager
had approximately $48.3 billion under management as of December 31, 1996. Eileen
Rominger, Managing Director of Oppenheimer Capital, is responsible for the
day-to-day management of the Portfolio. Ms. Rominger has more than 18 years
experience in the investment industry. The annual Management Fee is .75% and the
Portfolio Manager receives 53% of that fee for assets under management up to
$100,000,000 and 40% thereafter. Usual investment minimum is $10 million.
OpCap's address is One World Financial Center, New York, New York 10281.
EQUITY INCOME PORTFOLIO
The Portfolio Manager of the Equity 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 33 years
experience in the investment industry. Total assets under management (for the
Equity Income Portfolio and all other accounts managed) at December 31, 1996,
were approximately $1.2 billion. Usual investment minimum: $20 million. The
Management Fee paid by the Equity 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.
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
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 24
years experience in the investment industry. Representative clients include:
Bell Atlantic, McGraw-Hill and International Paper Co. Its address is 300 North
Lake Avenue, Pasadena, California 91101. As of December 31, 1996, total assets
under management for all clients were $18 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.
SMALL COMPANY GROWTH PORTFOLIO
The Portfolio Manager of the Small Company Growth Portfolio is Pilgrim Baxter &
Associates ("Pilgrim Baxter"). Its offices are at 1255 Drummers Lane, Suite 300,
Wayne, Pennsylvania 19087. Pilgrim Baxter is a wholly owned subsidiary of United
Asset Management, Inc. Gary Pilgrim, Chief Investment Officer of the firm, is
responsible for the day to day management of the Portfolio. He has more than
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29 years experience in the investment industry. As of December 31, 1996, total
assets under management for all clients was $14.7 billion. Usual investment
minimum: $20 million. The Management Fee is 1.00% and the Portfolio Manager
receives 65% of that fee for assets under management up to $50,000,000; and 55%
for assets under management for the next $50,000,000; and 45% for assets
thereafter.
SMALL COMPANY VALUE PORTFOLIO
The Portfolio Manager of the Small Company Value Portfolio is GAMCO Investors,
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 26
years of experience in the investment industry. As of December 31, 1996, total
assets under management for all clients were $5.2 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 $1,000,000,000 and
40% for assets in excess of $1,000,000,000.
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, 1996, Brinson's assets under management for all
clients approximated $71.6 billion. Usual investment minimum: $25 million.
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 33 years combined experience in the investment
industry. As of December 31, 1996 TCW and its affiliated companies had
approximately $54 billion under management or committed for management in
various fiduciary and advisory capacities. Usual investment minimum: $35
million. 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.
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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 1986 and is owned by its
employees. James Caywood, Managing Director and Chief Executive Officer, is
responsible for the day to day management of the Portfolio. He has more than 28
years of investment industry experience. Caywood-Scholl provides investment
advice exclusively with respect to high yield, low grade fixed income
instruments. As of December 31, 1996, assets under management for all clients
approximated $732 million. Usual investment minimum: $1 million. 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 13 years industry experience. Morgan Stanley is a wholly-owned
subsidiary of Morgan Stanley Group, Inc., which is a publicly owned investment
banking firm. As of December 31, 1996, Morgan Stanley managed approximately
$72.6 billion of assets for its various clients. Usual investment minimum: $25
million 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 23 years of investment
industry experience. As of December 31, 1996, Oppenheimer Capital and its
affiliates had over $48.3 billion under management. Its usual investment minimum
is $10 million. 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 40% of that fee for assets in excess of
$100,000,000.
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
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Portfolio at December 31, 1996, approximated $60.4 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, 1997 and ending no earlier than
December 31, 1997, that expenses incurred by the Portfolios will not exceed the
following percentages of average annual assets for the Y Class (annualized for
periods of less than a fiscal year): Growth 1.30%; Growth and Income 1.05%;
Equity 1.15%; Equity Income 1.05%; Capital Appreciation 1.30%; Small Company
Growth 1.40%; Small Company Value 1.30%; International Growth 1.55%; Government
Securities 0.85%; High-Yield Bond 0.85%; Tax-Exempt Income 1.30%; Managed 1.55%
and Money Market 0.55%. 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 five 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 Value Portfolio; $34,116 of
expanding the series to include a Managed Portfolio; and approximately $35,000
for each of the following: Equity Portfolio, Growth and Income Portfolio and
Small Company Growth 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 each 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. The Small Company Portfolio and Managed
Portfolio have commenced such payments.
TAXES
Each Portfolio of the Fund has qualified and intends to continue to qualify as a
"regulated investment company" in 1997 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 dis-
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tribute 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
other than a dividend payment date, a
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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 promul-
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gated 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.
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 Equity Income Portfolio) and Managed Portfolio are
declared and paid annually. Dividends on the Equity 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 ENTERPRISE Group of Funds, Inc.
44
<PAGE> 113
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, Enterprise 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. Conduct Rules, 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 Value Portfolio was added commencing October 1, 1993; the Managed
Portfolio was added commencing October 3, 1994; and the Growth and Income
Portfolio, Equity Portfolio and Small Company Growth Portfolio were added on May
1, 1997. Class B and Y shares were established May 1, 1995. Class C shares were
established on May 1, 1997. 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.
OTHER CLASSES OF SHARES
Each Portfolio currently offers four classes of shares, Class A, Class B, Class
C and Class Y, and may in the future offer additional classes. Class Y shares
are the only classes of shares offered by this Prospectus. Class Y shares are
only available 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 trusts, certain wrap account clients of
broker/dealers, former shareholders of Retirement System Fund Inc. or other
financial institutional buyer. Wrap account clients of broker/dealers and former
Retirement System Fund Inc. shareholders are offered Class Y shares at a lower
minimum purchase amount.
THE ENTERPRISE Group of Funds, Inc.
45
<PAGE> 114
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 13 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 four classes
of shares: Class A, Class B, Class C and Class Y. Class A, Class B, Class C 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, and Class C 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 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
THE ENTERPRISE Group of Funds, Inc.
46
<PAGE> 115
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.
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
THE ENTERPRISE Group of Funds, Inc.
47
<PAGE> 116
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.
THE ENTERPRISE Group of Funds, Inc.
48
<PAGE> 117
[ENTERPRISE LOGO]
Atlanta Financial Center
3343 Peachtree Road, Suite 450
Atlanta, Georgia 30326-1022
STATEMENT OF ADDITIONAL INFORMATION
EQUITY PORTFOLIOS:
Growth Portfolio
Growth and Income Portfolio
Equity Portfolio
Equity Income Portfolio
Capital Appreciation Portfolio
Small Company Growth Portfolio
Small Company Value 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 May 1, 1997.
The date of this Statement of Additional Information is May 1, 1997.
THE ENTERPRISE Group of Funds, Inc.
49
<PAGE> 118
APPENDIX A
Four-color photograph of keys on key ring.
<PAGE> 119
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<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>
THE ENTERPRISE Group of Funds, Inc.
50
<PAGE> 120
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 Value
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. Effective May
1, 1997 the Fund added Class C Shares and the Equity, Growth and Income and
Small Company Growth Portfolios.
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 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 ENTERPRISE Group of Funds, Inc.
51
<PAGE> 121
The "Asset Allocation Mix," set forth below, represents the asset allocation mix
based on the Benchmark as of December 31, 1996, and may shift over time as the
Benchmark index weights change.
<TABLE>
<CAPTION>
ASSET
ALLOCATION ASSET CLASS
ASSET CLASS MIX STRATEGY RANGES
- ----------- -------------- ---------------
<S> <C> <C>
Non-U.S. Equities.... 100% 80-100%
Cash and Cash
Equivalents........ 0% 0-20%
---
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.
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. As to 75% of the assets of any Portfolio, 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
THE ENTERPRISE Group of Funds, Inc.
52
<PAGE> 122
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 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
THE ENTERPRISE Group of Funds, Inc.
53
<PAGE> 123
investment criteria for the Money Market Portfolio.
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.
MANAGEMENT OF THE FUND
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 Atlanta Financial Center,
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 (73) President, ATD Advisory Services, Inc. since
Director 1996; President and Chief Chief Executive
Member of the Audit Committee 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 (45) President and Chief Operating Officer, MONY
Director 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.
</TABLE>
THE ENTERPRISE Group of Funds, Inc.
54
<PAGE> 124
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, AGE AND POSITION WITH THE FUND PAST FIVE YEARS
- ----------------------------------------------- -----------------------------------------------
<S> <C>
Arthur Howell (78) Of Counsel, law firm of Alston Director & Bird,
Atlanta, Georgia; President 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.(59) President, Carter & Associates (real estate
Director development), Atlanta, Georgia; Trustee,
Enterprise Accumulation Trust.
Lonnie H. Pope (63) President and Chief Executive Officer of AFF,
Director Inc. (creator and manufacturer of aromatics,
Member of the Audit Committee flavors and fragrances), Marietta, Georgia;
Trustee, Enterprise Accumulation Trust.
*Michael I. Roth (51) Chairman and Chief Executive Officer, MONY
Director 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 (49) Chairman, President and Chief Executive
Director 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 (41) Secretary, Enterprise Accumulation Trust;
Secretary Senior Vice President, Secretary and Chief
Counsel, Enterprise Capital Management, Inc.;
Senior Vice President, Secretary and Chief
Counsel, Enterprise Fund Distributors, Inc.
</TABLE>
THE ENTERPRISE Group of Funds, Inc.
55
<PAGE> 125
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, AGE AND POSITION WITH THE FUND PAST FIVE YEARS
- ----------------------------------------------- -----------------------------------------------
<S> <C>
Assistant Secretary and Treasurer, Enterprise
Herbert M. Williamson (46) Accumulation Trust, Enterprise Capital
Treasurer Management, Inc. and Enterprise Fund
Distributors, Inc.
Phillip G. Goff (33) Vice President and Chief Financial Officer,
Vice President Enterprise Accumulation Trust, Enterprise
Capital Management, Inc. and Enterprise Fund
Distributors, Inc. 1995 -- present; Audit
Manager, Coopers & Lybrand, L.L.P.,
1987 -- 1995.
</TABLE>
- ---------------
* 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, 1996, 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 1996:
<TABLE>
<CAPTION>
(3)
PENSION OR
RETIREMENT
BENEFITS (4)(5) TOTAL
(2) ACCRUED ESTIMATED COMPENSATION
AGGREGATE AS ANNUAL FROM REGISTRANT
COMPENSATION PART OF BENEFITS AND FUND COMPLEX
(1) FROM FUND UPON PAID TO
NAME REGISTRANT EXPENSES RETIREMENT DIRECTORS*
- ---- ------------ ---------- ---------- ----------------
<S> <C> <C> <C> <C>
Arthur T. Dietz................................... $14,500 None None $23,350
Arthur Howell..................................... $14,500 None None $23,350
William A. Mitchell, Jr........................... $13,000 None None $21,250
Lonnie H. Pope.................................... $14,500 None None $23,350
</TABLE>
- ---------
* Each Director received fees for services as a Trustee of Enterprise
Accumulation Trust.
THE ENTERPRISE Group of Funds, Inc.
56
<PAGE> 126
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 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.
THE ENTERPRISE Group of Funds, Inc.
57
<PAGE> 127
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, 1997 and ending no earlier than December 31,
1997 that expenses incurred by the Portfolios will not exceed those which appear
as part of the Expense table, page 2, to the Prospectus. This commitment was
also in effect from January 1, 1989 through December 31, 1996.
The table below sets forth a three-year 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, the Board of Directors has determined that such
fees are reasonable in light of the services, investment decisions and
investment techniques employed by the Portfolios.
1996
<TABLE>
<CAPTION>
PORTFOLIO (1) (2) (3) (4) (5)
- --------- ---------- --- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Growth............... $1,282,393 40%(1) 474,978 807,415 37,407(2)
Equity Income........ 523,261 40% 209,391 313,870 126,447
Capital
Appreciation....... 935,780 66%(3) 611,348 324,432 21,601(2)
Small Company
Value.............. 153,784 40%(4) 72,105 81,679 128,396
International
Growth............. 353,427 53% 187,181 166,246 80,932
Government
Securities......... 490,882 50%(5) 229,645 261,237 94,868
High-Yield Bond...... 339,960 50% 170,056 169,904 114,041
Tax-Exempt Income.... 162,828 50% 81,452 81,376 51,959
Managed.............. 1,164,633 53%(6) 568,181 596,452 --
Money Market......... 160,844 -- -- 160,844 82,594
</TABLE>
1995
<TABLE>
<CAPTION>
PORTFOLIO (1) (2) (3) (4) (5)
- --------- -------- --- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Growth............... $797,410 38%(1) 305,619 491,791 4,398
Equity Income........ 418,724 40% 167,490 251,234 150,764
Capital
Appreciation....... 876,619 66%(2) 562,933 313,686 --
Small Company
Value.............. 176,021 40%(3) 72,927 103,094 108,702
International
Growth............. 241,255 63% 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
Managed.............. 311,097 53% 164,881 146,216 58,261
Money Market......... 122,090 -- -- 122,090 121,372
</TABLE>
1994
<TABLE>
<CAPTION>
PORTFOLIO (1) (2) (3) (4) (5)
- --------- -------- --- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Growth...................................................... $664,475 40% 265,799 398,676 --
Equity Income............................................... 387,758 40% 154,326 233,432 111,794
Capital Appreciation........................................ 765,482 66% 510,577 254,905 --
Small Company Value......................................... 136,593 40% 53,697 82,896 72,360
International Growth........................................ 228,476 53% 133,558 94,918 136,968
Government Securities....................................... 583,032 46% 268,873 314,158 53,556
High-Yield Bond............................................. 264,828 50% 132,414 132,414 68,466
Tax-Exempt Income........................................... 193,652 50% 96,826 96,826 10,807
Managed..................................................... 9,208 53% 4,880 4,328 24,065
Money Market................................................ 93,388 -- -- 93,388 88,888
</TABLE>
- ---------------
(1) 33% of assets $100,000,001 -- $200,000,000
(2) Reflects total expenses before reduction for brokerage commission credits
which are reflected as expense reimbursement
(3) 60% of assets in excess of $100,000,001 -- $200,000,000
(4) 42% of assets in excess of $500,000,001
(5) 53% of assets in excess of $20,000,001
(6) 40% of assets in excess of $100,000,000
THE ENTERPRISE Group of Funds, Inc.
58
<PAGE> 128
PORTFOLIO MANAGERS
MONTAG & CALDWELL, INC.
Montag & Caldwell was established in 1945 as an investment adviser.
TCW FUNDS MANAGEMENT, INC.
Additional information concerning the Portfolio Managers and their annual rate
of compensation is set forth in the Prospectus.
DISTRIBUTOR'S AGREEMENTS AND
PLANS OF DISTRIBUTION
The Distributor's Agreements and Plans of Distribution (the "12b-1 Plans")
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
Plans provide for the payment by the Fund to Enterprise Distributors of a daily
distribution fee.
DISTRIBUTION FEES AND COMMISSIONS
<TABLE>
<CAPTION>
TRAVEL,
TELEPHONE
DISTRIBUTION COMMISSION & COMMISSIONS AND MARKETING & & OTHER
FEES PAID TO SALES FEES CDSC COLLECTED FEES PAID TO ADVERTISING AUTHORIZED
EFD PAID TO EFD & PAID TO EFD DEALERS FEES PAID FEES PAID
------------ ------------ -------------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996................... $3,696,663 $692,305 $131,372 $2,043,128 $1,108,160 $1,512,246
1995................... $2,487,595 $505,970 $ 3,074 $1,255,109 $ 543,135 $1,192,256
1994................... $2,189,296 $627,245 $ 23,779 $1,118,870 $ 523,800 $ 756,477
</TABLE>
MISCELLANEOUS
The terms of each of the Investment Adviser's Agreement, the Distributor's
Agreements and Plans 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 Fund's Board of Directors most
recently approved continuance of the Investment Adviser's Agreement, the
Portfolio Manager's Agreements and the Distributor's Agreements and Plans of
Distribution on February 20, 1997.
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.
THE ENTERPRISE Group of Funds, Inc.
59
<PAGE> 129
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.
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
THE ENTERPRISE Group of Funds, Inc.
60
<PAGE> 130
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 Class A shares 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.
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 portfo-
THE ENTERPRISE Group of Funds, Inc.
61
<PAGE> 131
lio 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 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 in-
THE ENTERPRISE Group of Funds, Inc.
62
<PAGE> 132
struments 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: 1994 -- $601,596; 1995 -- $489,729; 1996 -- $762,622
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
THE ENTERPRISE Group of Funds, Inc.
63
<PAGE> 133
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
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.
THE ENTERPRISE Group of Funds, Inc.
64
<PAGE> 134
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ANNUAL
REPORT
PAGE
NUMBER
------
<S> <C>
Financial Statements
Portfolios of Investment Securities, December 1, 1996.......
Statement of Assets and Liabilities, December 31, 1996......
Statements of Operations for the Year Ended December 31,
1996......................................................
Statements of Changes in Net Assets for Each of the Two
Years Ended December 31, 1995 and 1996....................
Financial Highlights........................................
Notes to Financial Statements...............................
Report of Independent Accountants...........................
</TABLE>
THE ENTERPRISE Group of Funds, Inc.
65
<PAGE> 135
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.
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.
- ---------------
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.
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.
THE ENTERPRISE Group of Funds, Inc.
66
<PAGE> 136
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.
THE ENTERPRISE Group of Funds, Inc.
67
<PAGE> 137
Appendix A
Four-color photograph of pen, ink well and paper.
<PAGE> 138
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
The audited financial statements as to the Fund are in the 1996 Annual Report to
Shareholders, a copy will be filed pursuant to a Post-Effective Amendment on or
before April 30, 1997.
Portfolio of Assets and Liabilities, December 31, 1996
Statement of Assets and Liabilities, December 31, 1996
Statement of Operations for the Year Ended December 31, 1996 Statement of
Changes in Net Assets for each of the Two Years Ended December 31, 1995 and 1996
(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 and prototype Portfolio Manager's
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) Consent of Coopers & Lybrand, L.L.P.: Filed herewith as Exhibit
11.
(12) All financial statements required to be filed under Item 23 are
included in the 1996 Annual Report to Shareholders and are incorporated
herewith.
(13) Not applicable.
(14) Not applicable.
(15) Distribution Agreements: Filed with Amendment No. 43, dated April
26, 1995 and incorporated herewith.
THE ENTERPRISE Group of Funds, Inc.
68
<PAGE> 139
(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 1996 Annual Report to Shareholders.
(18) All financial statements required to be filed under Item 23 are
included in the 1996 Annual Report to Shareholders and are incorporated
herewith.
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............... 92,410
</TABLE>
ITEM 27. INDEMNIFICATION
Reference is made to the provisions of Article Sixth 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
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
THE ENTERPRISE Group of Funds, Inc.
69
<PAGE> 140
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 of Funds, Inc. Registrant Atlanta Financial Center
3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326-1022
Enterprise Capital Management, Inc. Investment Adviser Same as above.
Enterprise Fund Distributors, Inc. Distributor Same as above.
</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 Portfolio Retirement Systems Investors, Inc.
317 Madison
New York, NY 10122
Equity Portfolio OpCap Advisors
One World Financial Center
New York, NY 10281
Equity and Income Portfolio 1740 Advisers, Inc.
1740 Broadway
New York, NY 10019
Capital Appreciation Portfolio Provident Investment Counsel
300 North Lake Avenue
Pasadena, CA 91101
Small Company Growth Portfolio Pilgrim Baxter Associates, Ltd.
1255 Drummers Lane
Ste. 300
Wayne, PA 19087
Small Company Value Portfolio GAMCO Investments, Inc.
One Corporate Center
Rye, New York 10580
International Growth Portfolio Brinson Partners, Inc.
209 South LaSalle Street
Chicago, IL 609604
Government Securities Portfolio TCW Funds Management, Inc.
865 South Figueroa Street, Suite 1800
Los Angeles, CA 90017
</TABLE>
THE ENTERPRISE Group of Funds, Inc.
70
<PAGE> 141
<TABLE>
<CAPTION>
ENTITY FUNCTION
------ --------
<S> <C>
High-Yield Bond Portfolio Caywood-Scholl Capital Management
4350 Executive Drive, Suite 125
San Diego, CA 92121
Tax-Exempt Income Portfolio Morgan Stanley Asset Management, Inc.
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
None.
THE ENTERPRISE Group of Funds, Inc.
71
<PAGE> 142
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 27th day of April, 1997.
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
--------- -------- ----
<C> <S> <C>
/s/ VICTOR UGOLYN Chairman, President and Chief April 27, 1997
- ----------------------------------------------------- Executive Officer
Victor Ugolyn
/s/ PHILLIP G. GOFF Principal Financial and April 27, 1997
- ----------------------------------------------------- Accounting Officer
Phillip G. Goff
/s/ ARTHUR T. DIETZ Director April 27, 1997
- -----------------------------------------------------
Arthur T. Dietz
/s/ SAMUAL J. FOTI Director April 27, 1997
- -----------------------------------------------------
Samuel J. Foti
/s/ ARTHUR HOWELL Director April 27, 1997
- -----------------------------------------------------
Arthur Howell
/s/ LONNIE H. POPE Director April 27, 1997
- -----------------------------------------------------
Lonnie H. Pope
/s/ WILLIAM A. MITCHELL, JR. Director April 27, 1997
- -----------------------------------------------------
William A. Mitchell, Jr.
/s/ MICHAEL I. ROTH Director April 27, 1997
- -----------------------------------------------------
Michael I. Roth
</TABLE>
THE ENTERPRISE Group of Funds, Inc.
72
<PAGE> 143
INDEX TO EXHIBITS
10 -- Opinion of Counsel
11 -- Consent of Independent Accountants
THE ENTERPRISE Group of Funds, Inc.
73
<PAGE>
ANNUAL REPORT
DECEMBER 31, 1996
[GRAPHIC]
THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
THE ENTERPRISE GROUP OF FUNDS, INC.
Enterprise Growth Portfolio
Enterprise Equity Income Portfolio
Enterprise Capital Appreciation Portfolio
Enterprise Small Company Portfolio
Enterprise International Growth Portfolio
Enterprise Government Securities Portfolio
Enterprise High-Yield Bond Portfolio
Enterprise Tax-Exempt Income Portfolio
Enterprise Managed Portfolio
Enterprise Money Market Portfolio
<PAGE>
[LOGO]
- --------------------------------------------------------------------------------
MESSAGE FROM THE CHAIRMAN
Dear Fellow Shareholder:
1996 was a tremendous year for investors in U.S. stock mutual funds.
According to Lipper Analytical Services, Inc., the average diversified U.S.
stock fund returned 19.5% last year. On the fixed income side, while Lipper
reported that the average bond fund gained a less overwhelming 4.7%, it still
surpassed the 3.3% CPI level of inflation. The Enterprise Group of Funds
shareholders, fortunately, also shared in the exuberance of the equity markets
while experiencing the relative calm of the bond marketplace.
1996 In Review
Propelled by solid earnings gains, moderate economic growth, and a record
flow of money into equity mutual funds combined with a tight trading range for
bonds, stocks produced a second consecutive year of gratifying performance for
investors. Stocks, as measured by the S&P 500 Composite Index, rose 22.9%. This
gain marked the fourteenth calendar year advance for the Index in fifteen years.
Combined with 1995's 37.6% gain, the two year cumulative return of 69.1% was the
best since the 69.8% recorded in 1975-76.
However, not all sections of the market performed equally well. Small growth
stocks, represented by the Russell 2000 Index, advanced 16.5%. This was the
third successive year that small stocks have underperformed.
Overseas, there were several impressive performances in the smaller equity
markets of Spain, Finland, the Netherlands and Sweden. Each performed better in
dollar hedged terms than the U.S. Offsetting these convincing results was the
weak performance of Japan -- the world's second largest stock market.
In 1996, bond price movements followed the economic climate very closely.
Throughout most of the first nine months of the year bond prices declined as
economic expansion accelerated but then rallied as growth diminished. The
volatility, however, commonly expected with these moves was limited as a
consistent thread of favorable inflationary conditions favored the fixed income
markets for the entire year.
Looking To 1997
During this successful investment period, the Enterprise Growth, Managed,
International Growth and Government Securities Portfolios, in particular,
received favorable media recognition relative to their mutual fund peer groups
due to their performance. We believe, as do our portfolio managers, that despite
the gains of the past two years, continued positive returns may still be
achievable in 1997. A cautionary warning, however, is if the economy does
demonstrate above average growth or experiences a resurgence of inflationary
pressures, a correction in the investment markets would in all likelihood occur.
The strong performance of the equity markets over the past two years emphasizes
why investors should have patience through some of the slow growth periods in
order to enjoy the expansion portion of the secular market cycle.
2 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
In this investment environment, we continue to emphasize to our shareholders
the need for long-term investment planning over short-term trading to help
achieve financial goals. No two individual's financial goals, of course, are
exactly alike. Each requires specific investment products tailored to the
investor's individual asset allocation parameters and risk tolerance level.
Enterprise provides 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 are fortunate to be able
to gain special access to several of the most
respected institutional investment management firms
in the industry, in contrast to other mutual fund
organizations who offer only in-house investment
management. Each of these asset management firms
which guide the various Enterprise portfolios is a
recognized leader in its field and each manages to a
specific investment style, whether "growth" or
"value." Collectively, they manage over $250 billion
of client assets, primarily from major institutions.
These institutional money managers' usual investment
minimums range from $1 million to $35 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 a minimum investment of only $1,000 per Portfolio. For Individual
Retirement Accounts and Automatic Bank Draft Plans, the minimums are even lower
($250 and $100, respectively).
We encourage you to review Enterprise's portfolio managers' comments in this
Annual Report. You will find insightful commentaries and a variety of investment
strategies for 1997. 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,
/s/ VICTOR UGOLYN
Victor Ugolyn
Chairman, President and Chief Executive Officer
THE ENTERPRISE GROUP OF FUNDS, INC. 3
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
-----------
<S> <C>
The Enterprise Growth Portfolio
Manager's Comments................................................................................. 4
Portfolio of Investments........................................................................... 7
The Enterprise Equity Income Portfolio
Manager's Comments................................................................................. 9
Portfolio of Investments........................................................................... 11
The Enterprise Capital Appreciation Portfolio
Manager's Comments................................................................................. 14
Portfolio of Investments........................................................................... 16
The Enterprise Small Company Portfolio
Manager's Comments................................................................................. 18
Portfolio of Investments........................................................................... 21
The Enterprise International Growth Portfolio
Manager's Comments................................................................................. 23
Portfolio of Investments........................................................................... 26
The Enterprise Government Securities Portfolio
Manager's Comments................................................................................. 30
Portfolio of Investments........................................................................... 32
The Enterprise High-Yield Bond Portfolio
Manager's Comments................................................................................. 33
Portfolio of Investments........................................................................... 36
The Enterprise Tax-Exempt Income Portfolio
Manager's Comments................................................................................. 39
Portfolio of Investments........................................................................... 41
The Enterprise Managed Portfolio
Manager's Comments................................................................................. 44
Portfolio of Investments........................................................................... 47
The Enterprise Money Market Portfolio
Manager's Comments................................................................................. 49
Portfolio of Investments........................................................................... 50
Statement of Assets and Liabilities.................................................................. 52
Statement of Operations.............................................................................. 54
Statement of Changes in Net Assets................................................................... 56
Financial Highlights................................................................................. 60
Notes to Financial Statements........................................................................ 74
</TABLE>
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.
<PAGE>
The Enterprise Growth Portfolio
Montag & Caldwell, Inc.
Atlanta, Georgia
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 & Caldwell currently manages over $8.5 billion for institutional clients.
Their normal investment minimum is $20 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Growth Portfolio is to seek appreciation of
capital primarily through investments in common stocks.
INVESTMENT PHILOSOPHY
Montag & Caldwell's equity selection process is a low risk, growth stock
approach. Valuation is the key selection criterion which makes their investment
style risk averse. Montag & Caldwell also emphasize growth characteristics
because they are seeking not only companies with shares that are attractively
priced but also those which should experience strong earnings growth relative to
other companies.
1996 PERFORMANCE REVIEW
The Enterprise Growth Portfolio had a strong year in 1996. The Portfolio's focus
on steady growth stocks such as consumer staples and multinationals as well as
technology firms contributed to its good results throughout the year. Top
holdings in the Portfolio at year end included Intel Corporation, Seagate
Technology, Procter & Gamble Company, Microsoft Corporation and Coca-Cola.
Industry concentrations targeted computer hardware, pharmaceuticals, consumer
non-durables, computer software and computer services.
FUTURE INVESTMENT STRATEGY
The outlook for the shares of growth companies continues to be particularly
good. In a steady to lower bond yield environment, the valuations of growth
companies' shares are enhanced more over time than the valuation of the
Class A
<TABLE>
<C> <S>
[GRAPH] ** The S&P 500 Index is an
unmanaged 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
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.
</TABLE>
4 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
average company's shares. Moreover, the superior earnings growth rates of these
companies will be particularly attractive in a setting of more moderate
corporate profit growth. In terms of stock selection, Montag & Caldwell
continues to emphasize the shares of global growth companies in the consumer,
healthcare and technology sectors. These companies are well positioned to
benefit from the expansion of global markets both in the period ahead and over
the long term as the triumph of capitalism continues to penetrate more of the
world's underdeveloped economies.
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. 5
<PAGE>
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Common Stocks -- 95.00% Amount Value
<S> <C> <C>
- --------------------------------------------------------
Business Services -- 4.26%
- ---------------------------------------------------------------------------------
Interpublic Group of Companies Inc..................................................................... 88,000 $ 4,180,000
Manpower Inc........................................................................................... 180,000 5,850,000
------------
10,030,000
Computer Hardware -- 15.38%
- ---------------------------------------------------------------------------------
Adaptec Inc. (a)....................................................................................... 144,000 5,760,000
Cisco Systems Inc.(a).................................................................................. 107,000 6,807,875
Compaq Computer Corporation (a)........................................................................ 92,000 6,831,000
Seagate Technology (a)................................................................................. 252,800 9,985,600
United States Robotics Corporation (a)................................................................. 95,000 6,840,000
------------
36,224,475
Computer Services -- 7.69%
- ---------------------------------------------------------------------------------
Electronic Data Systems Corporation.................................................................... 140,000 6,055,000
First Data Corporation................................................................................. 155,100 5,661,150
Solectron Corporation (a).............................................................................. 120,000 6,405,000
------------
18,121,150
Computer Software -- 7.83%
- ---------------------------------------------------------------------------------
Electronic Arts (a).................................................................................... 137,000 4,101,438
Microsoft Corporation (a).............................................................................. 102,000 8,427,750
Oracle System Corporation (a).......................................................................... 141,975 5,927,456
------------
18,456,644
Consumer Basics -- 1.77%
- ---------------------------------------------------------------------------------
Sysco Corporation...................................................................................... 128,000 4,176,000
Consumer Durables -- 1.60%
- ---------------------------------------------------------------------------------
Harley Davidson Inc.................................................................................... 80,000 3,760,000
Consumer Non-Durables -- 8.15%
- ---------------------------------------------------------------------------------
Gillette Company....................................................................................... 80,000 6,220,000
Mattel Inc............................................................................................. 150,000 4,162,500
Procter & Gamble Company............................................................................... 82,000 8,815,000
------------
19,197,500
Electrical Equipment -- 1.41%
- ---------------------------------------------------------------------------------
Duracell International Inc............................................................................. 47,400 3,312,075
Entertainment & Leisure -- 2.66%
- ---------------------------------------------------------------------------------
Walt Disney Company.................................................................................... 90,000 6,266,250
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- --------------------------------------------------------
Finance -- 4.89%
- ---------------------------------------------------------------------------------
American Express Company............................................................................... 130,000 $ 7,345,000
Federal National Mortgage Association.................................................................. 112,000 4,172,000
------------
11,517,000
Food & Beverages & Tobacco -- 7.09%
- ---------------------------------------------------------------------------------
Coca-Cola Company...................................................................................... 156,000 8,209,500
Pioneer Hi Bred International Inc...................................................................... 65,000 4,550,000
Wrigley William Junior Company......................................................................... 70,000 3,937,500
------------
16,697,000
Health Care -- 2.89%
- ---------------------------------------------------------------------------------
Medtronic Inc.......................................................................................... 100,000 6,800,000
Hotels & Restaurants -- 5.30%
- ---------------------------------------------------------------------------------
Cracker Barrel Old Country Store....................................................................... 140,000 3,552,500
Marriott International Inc............................................................................. 80,000 4,420,000
McDonalds Corporation.................................................................................. 100,000 4,525,000
------------
12,497,500
Pharmaceuticals -- 11.14%
- ---------------------------------------------------------------------------------
Johnson & Johnson...................................................................................... 135,000 6,716,250
Lilly Eli & Company.................................................................................... 90,000 6,570,000
Merck & Company Inc.................................................................................... 80,000 6,340,000
Pfizer Inc............................................................................................. 80,000 6,630,000
------------
26,256,250
Retail -- 5.95%
- ---------------------------------------------------------------------------------
Cuc International Inc. (a)............................................................................. 174,000 4,132,500
Gap Inc................................................................................................ 140,000 4,217,500
Home Depot Inc......................................................................................... 113,000 5,664,125
------------
14,014,125
Technology -- 5.00%
- ---------------------------------------------------------------------------------
Intel Corporation...................................................................................... 90,000 11,784,375
Telecommunications -- 1.99%
- ---------------------------------------------------------------------------------
Ericsson L M Tel Company (ADR)......................................................................... 155,200 4,685,100
Total Common Stocks
(Identified cost $146,299,430).......................................................................................
223,795,444
- -----------------------------------------------------------------------
Commercial Paper -- 2.12%............................................................................................
- -----------------------------------------------------------------------
Ford Motor Credit Company
5.72% due 01/03/97..................................................................................... $ 5,000,000 4,998,411
Total Commercial Paper
(Identified cost $4,998,411).........................................................................................
4,998,411
- -----------------------------------------------------------------------
</TABLE>
6 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Repurchase Agreement -- 2.40% Amount Value
<S> <C> <C>
- --------------------------------------------------------
State Street Bank & Trust Repurchase Agreement, 4.75% due 01/02/97
Collateral: U.S. Treasury Note
$5,685,000, 6.25% due 4/30/01
Value $5,763,527....................................................................................... $ 5,650,000 $ 5,650,000
------------
Total Repurchase Agreement
(Identified cost $5,650,000).........................................................................................
5,650,000
- -----------------------------------------------------------------------
Total Investments
(Identified cost $156,947,841).......................................................................................
$234,443,855
Other Assets Less Liabilities -- 0.48%...............................................................................
1,130,727
------------
Net Assets -- 100%...................................................................................................
$235,574,582
- -----------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
(ADR) American Depository Receipt
<PAGE>
The Enterprise Equity Income Portfolio
1740 Advisers, Inc.
New York, New York
INVESTMENT MANAGEMENT
1740 Advisers has been an investment adviser to the Enterprise Equity Income
Portfolio since its inception. 1740 Advisers currently manages over $1 billion
for institutional clients. Their normal investment minimum is $20 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Equity 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 stocks.
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 approach to buy and sell
decisions, enhanced stability in the portfolio and lessens overall market risk.
1996 PERFORMANCE REVIEW
Overall performance in 1996 benefited from the Portfolio's holdings of
financial, capital goods and energy stocks. Technology stocks which were strong
for most of the year were underweight in the Portfolio. Their tepid yields
prevented their inclusion and hurt relative performance. Among the top positions
in the Portfolio at year end were General Electric, Emerson Electric, Avon
Products, Bank America and McGraw Hill. Primary industry concentrations at this
time were energy, capital goods and services, pharmaceuticals, finance and
telecommunications.
Class A
<TABLE>
<C> <S>
[GRAPH] ** The S&P 500/Barra Value
Index is an unmanaged index
which excludes transaction
or holding charges. Enter-
prise 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.
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 9
<PAGE>
Class B
<TABLE>
<C> <S>
[GRAPH] ** The S&P 500/Barra Value
Index is an unmanaged index
is 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.
</TABLE>
FUTURE INVESTMENT STRATEGY
The stock market has enjoyed two very strong years in a row and expectations are
high. At the same time, if slow growth continues, earnings are at risk.
In this environment a more cautious strategy with emphasis on defensive names
seems appropriate. The Equity Income Portfolio is, by nature, defensive and
increasing the less volatile sectors can increase the downside protection.
There are several groups which may do well in both a slow growth or a stronger
economy if that occurs. For example, energy stocks began to strengthen in the
second half as oil prices rose and they finished the year strong. The
international oils are an overweight group in the Portfolio and the holdings of
natural gas pipelines and utilities have been increased.
The basic material stocks also have high relative yields and low valuations. If
the U.S. or international economies should strengthen more than currently
anticipated, these very economy sensitive names would become offensive. The
capital goods stocks outperformed last year but are not particularly extended
and could offer the same opportunity as the basic materials. Positions have
slowly been increased in aluminum, chemicals, paper and forest products stocks.
The financial area is being gradually de-emphasized. The banks have been strong
performers for five years and are at the top of their historical valuation
range. The fundamentals are good and earnings are growing but much of the good
news is already in the prices. They are being reduced in the Portfolio, while
insurance and REITs are being increased.
The Portfolio's strategy is to continue to be relatively fully invested to
respect the power of the fund inflows and "not fight the tape." At the same
time, however, this strategy recognizes that the market has already had a
substantial move and may need to consolidate. Stocks with moderate valuations
and low investor expectations could enhance the Portfolio's ability to ride out
any correction.
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.
10 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Common Stocks -- 89.75% Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Aerospace -- 3.06%
- ---------------------------------------------------------------------------------
Northrop Grumman Corporation...................... 10,000 $ 827,500
Timken Company.................................... 14,000 642,250
United Technologies Corporation................... 14,000 924,000
-------------
2,393,750
Automotive -- 1.87%
- ---------------------------------------------------------------------------------
Chrysler Corporation.............................. 10,000 330,000
Eaton Corporation................................. 7,000 488,250
Ford Motor Company Delaware....................... 8,000 255,000
General Motors Corporation........................ 7,000 390,250
-------------
1,463,500
Banking -- 5.00%
- ---------------------------------------------------------------------------------
Bankers Trust New York Corporation................ 7,000 603,750
Chase Manhattan Corporation....................... 9,000 803,250
First Union Corporation........................... 11,000 814,000
NationsBank Corporation........................... 9,000 879,750
Wells Fargo & Company............................. 3,000 809,250
-------------
3,910,000
Business Services -- 0.72%
- ---------------------------------------------------------------------------------
Ogden Corporation................................. 30,000 562,500
Capital Goods & Services -- 8.82%
- ---------------------------------------------------------------------------------
Cooper Industries Inc............................. 12,000 505,500
Deere & Company................................... 18,000 731,250
General Electric Company.......................... 20,000 1,977,500
General Signal Corporation........................ 18,000 769,500
Goulds Pumps Inc.................................. 15,000 344,062
Harsco Corporation................................ 10,000 685,000
Textron Inc....................................... 10,000 942,500
Xerox Corporation................................. 18,000 947,250
-------------
6,902,562
Chemicals -- 3.77%
- ---------------------------------------------------------------------------------
Dow Chemical Company.............................. 6,000 470,250
Du Pont E I De Nemours & Company.................. 8,000 755,000
Monsanto Company.................................. 25,000 971,875
Olin Corporation.................................. 20,000 752,500
-------------
2,949,625
Consumer Durables -- 2.52%
- ---------------------------------------------------------------------------------
Dana Corporation.................................. 25,000 815,625
Emerson Electric Company.......................... 12,000 1,161,000
-------------
1,976,625
Consumer Non-Durables -- 2.59%
- ---------------------------------------------------------------------------------
Avon Products Inc................................. 20,000 1,142,500
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Eastman Kodak Company............................. 11,000 $ 882,750
-------------
2,025,250
Consumer Products -- 1.18%
- ---------------------------------------------------------------------------------
Colgate Palmolive Company......................... 10,000 922,500
Electronics -- 1.08%
- ---------------------------------------------------------------------------------
Amp Inc........................................... 22,000 844,250
Energy -- 13.34%
- ---------------------------------------------------------------------------------
Amoco Corporation................................. 9,000 724,500
Atlantic Richfield Company........................ 5,000 662,500
British Petroleum PLC (ADR)....................... 5,545 783,924
Chevron Corporation............................... 12,000 780,000
Consolidated Natural Gas Company.................. 12,000 663,000
Dresser Industries Inc............................ 20,000 620,000
El Paso Natural Gas Company....................... 13,837 698,769
Exxon Corporation................................. 8,000 784,000
Mobil Corporation................................. 6,000 733,500
Questar Corporation............................... 16,000 588,000
Royal Dutch Petroleum Company..................... 5,000 853,750
Sonat Inc......................................... 14,000 721,000
Texaco Inc........................................ 10,000 981,250
Williams Companies Inc............................ 22,500 843,750
-------------
10,437,943
Finance -- 6.44%
- ---------------------------------------------------------------------------------
American Express Company.......................... 15,000 847,500
Banc One Corporation.............................. 17,000 731,000
Bank Of New York Company Inc...................... 20,000 675,000
BankAmerica Corporation........................... 11,000 1,097,250
Great Western Financial Corporation............... 25,000 725,000
H F Ahmanson & Company............................ 25,000 812,500
Redwood Trust Inc................................. 4,000 149,000
-------------
5,037,250
Food & Beverages & Tobacco -- 1.89%
- ---------------------------------------------------------------------------------
American Brands Inc............................... 14,000 694,750
Philip Morris Companies Inc....................... 7,000 788,375
-------------
1,483,125
Hotels & Restaurants -- 0.32%
- ---------------------------------------------------------------------------------
Felcor Suite Hotels Inc........................... 7,000 247,625
Insurance -- 3.31%
- ---------------------------------------------------------------------------------
Aetna Inc......................................... 7,000 560,000
Allstate Corporation.............................. 10,000 578,750
Cigna Corporation................................. 6,000 819,750
Lincoln National Corporation...................... 12,000 630,000
-------------
2,588,500
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 11
<PAGE>
EQUITY INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Machinery -- 1.56%
- ---------------------------------------------------------------------------------
Pitney Bowes Inc.................................. 15,000 $ 817,500
Tenneco Inc. New.................................. 9,000 406,125
-------------
1,223,625
Misc. Financial Services -- 0.71%
- ---------------------------------------------------------------------------------
Federal National Mortgage Association............. 15,000 558,750
Paper & Forest Products -- 0.98%
- ---------------------------------------------------------------------------------
Georgia Pacific Corporation....................... 5,000 360,000
International Paper Company....................... 10,000 403,750
-------------
763,750
Pharmaceuticals -- 8.71%
- ---------------------------------------------------------------------------------
American Home Products Corporation................ 16,000 938,000
Baxter International Inc.......................... 12,000 492,000
Bristol Myers Squibb Company...................... 7,000 761,250
Lilly Eli & Company............................... 12,000 876,000
Merck & Company Inc............................... 12,000 951,000
Pfizer Inc........................................ 6,000 497,250
Schering Plough Corporation....................... 7,000 453,250
Smithkline Beecham P L C (ADR).................... 14,000 952,000
Warner-Lambert Company............................ 12,000 900,000
-------------
6,820,750
Publishing -- 1.60%
- ---------------------------------------------------------------------------------
Dun & Bradstreet Corporation...................... 10,000 237,500
McGraw Hill Inc................................... 22,000 1,014,750
-------------
1,252,250
Raw Materials -- 4.40%
- ---------------------------------------------------------------------------------
Carpenter Technology Corporation.................. 10,000 366,250
Freeport McMoRan Copper & Gold Inc................ 12,000 337,500
Minnesota Mining & Manufacturing Company.......... 10,000 828,750
Phelps Dodge Corporation.......................... 4,000 270,000
Reynolds Metals Company........................... 7,000 394,625
Union Camp Corporation............................ 10,000 477,500
USX Corporation................................... 8,000 251,000
Weyerhaeuser Company.............................. 11,000 521,125
-------------
3,446,750
Real Estate -- 2.70%
- ---------------------------------------------------------------------------------
Avalon Properties Inc............................. 10,000 287,500
Bay Apartment Communities......................... 7,000 252,000
Crescent Real Estate Equities..................... 6,000 316,500
Developers Diversified Reality.................... 5,000 185,625
Equity Residential Properties Trust............... 6,000 247,500
Health Care Property Investors Inc................ 8,000 280,000
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Healthcare Realty Trust........................... 5,000 $ 132,500
Irvine Apartment Communities Inc.................. 10,000 250,000
Meditrust......................................... 4,000 160,000
-------------
2,111,625
Technology -- 2.90%
- ---------------------------------------------------------------------------------
Harris Corporation Delaware....................... 10,000 686,250
Honeywell Inc..................................... 12,000 789,000
Thomas & Betts Corporation........................ 18,000 798,750
-------------
2,274,000
Telecommunications -- 5.31%
- ---------------------------------------------------------------------------------
Ameritech Corporation............................. 10,000 606,250
Bell Atlantic Corporation......................... 8,000 518,000
BellSouth Corporation............................. 15,000 605,625
GTE Corporation................................... 12,000 546,000
Nynex Corporation................................. 7,000 336,875
Pacific Telesis Group............................. 15,000 551,250
SBC Communications Inc............................ 10,000 517,500
Sprint Corporation................................ 12,000 478,500
-------------
4,160,000
Transportation -- 2.07%
- ---------------------------------------------------------------------------------
Conrail Inc....................................... 3,827 381,265
GATX Corporation.................................. 6,000 291,000
Norfolk Southern Corporation...................... 6,000 525,000
Union Pacific Corporation......................... 7,000 420,875
-------------
1,618,140
Utilities -- 2.90%
- ---------------------------------------------------------------------------------
American Electric Power Inc....................... 12,000 493,500
Carolina Power & Light Company.................... 13,000 474,500
FPL Group Inc..................................... 10,000 460,000
Southern Company.................................. 20,000 452,500
U.S. West Communications Group.................... 12,000 387,000
-------------
2,267,500
Total Common Stocks
(Identified cost $49,745,318)....................................
70,242,145
- ---------------------------------------------------------------------------------
Commercial Paper -- 10.58%
- ---------------------------------------------------------------------------------
American Express Credit Corporation, 5.32% due
01/02/97.......................................... $ 1,000,000 999,852
American Express Credit Corporation, 5.32% due
01/06/97.......................................... 300,000 299,778
American Express Credit Corporation, 5.38% due
01/29/97.......................................... 300,000 298,745
Associates Corporation Of North America, 5.48% due
01/31/97.......................................... 600,000 597,260
Chevron Oil Finance Company 5.40% due 01/07/97.... 200,000 199,820
</TABLE>
12 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EQUITY INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
CIT Group Holdings Inc. 5.33% due 01/06/97........ 1,500,000 $ 1,498,890
CIT Group Holdings Inc. 5.35% due 02/25/97........ 400,000 396,731
CIT Group Holdings Inc. 5.48% due 01/31/97........ 500,000 497,717
General Electric Capital Corporation, 5.50% due
01/27/97.......................................... 1,000,000 996,028
Household Finance Corporation 5.45% due
01/14/97.......................................... 600,000 598,819
Merrill Lynch & Company Inc. 5.34% due 01/27/97... 1,000,000 996,143
Sears Roebuck Acceptance Corporation, 5.58% due
01/10/97.......................................... 900,000 898,744
-------------
Total Commercial Paper
(Identified cost $8,278,527).....................................
8,278,527
- ---------------------------------------------------------------------------------
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Repurchase Agreement -- 0.52%
- ---------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
2.00% due 01/02/97..Collateral: U.S. Treasury Note
$415,000, 5.625% due 11/30/98 Value $415,433 $ 405,000 $ 405,000
-------------
Total Repurchase Agreement
(Identified cost $405,000).......................................
405,000
- ---------------------------------------------------------------------------------
Total Investments
(Identified cost $58,428,845)....................................
$ 78,925,672
Other Assets Less Liabilities -- (0.85)%.........................
(663,892)
-------------
Net Assets -- 100%...............................................
$ 78,261,780
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
(ADR) American Depository Receipts
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 13
<PAGE>
The Enterprise Capital Appreciation Portfolio
Provident Investment Counsel, Inc.
Pasadena, California
INVESTMENT MANAGEMENT
Provident Investment Counsel has been investment adviser to the Enterprise
Capital Appreciation Portfolio since inception. Provident Investment Counsel
currently manages over $18 billion for institutional clients. Their 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
Provident Investment Counsel's 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. Their 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.
1996 PERFORMANCE REVIEW
The Enterprise Capital Appreciation Portfolio delivered a year of solid
performance reflecting that 1996 was a remarkable year. Throughout the year,
strong mutual fund cash flows fueled the demand for the largest capitalization,
most liquid securities. Large capitalization stocks outperformed mid and small
cap shares particularly in the second half of the year as investors sought
liquidity and were willing to pay a significant premium for it. On average,
these companies are projecting a two year earnings growth rate of a modest 14%.
In contrast, mid-capitalization growth in the Enterprise Capital Appreciation
Portfolio boast, on average, earnings growth forecasts well above 20%. These
mid-cap companies performed well, yet on a relative basis, did not advance as
much as larger capitalization names.
At year end MBNA Corp., First Data Corp., Tyco Limited, HFS Inc., and Pfizer,
Inc. were the largest positions in the Portfolio. Major sector concentrations
were in healthcare, business services, finance, communications and computer
software.
Class A
<TABLE>
<C> <S>
[GRAPH] ** The S&P 500/Barra Growth
Index is an unmanaged index
which excludes any
transaction or holding
charges. Enterprise
performance numbers in-
clude the maximum sales
charge and all fees.
Remember that historic per-
formance does not predict
future performance. Shares
may be worth more or less
at redemption than original
purchase.
</TABLE>
14 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
Class B
<TABLE>
<C> <S>
[GRAPH] ** The S&P 500/Barra Growth
Index is an unmanaged index
which excludes any
transaction or holding
charges. Enterprise
performance numbers in-
clude 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.
</TABLE>
FUTURE INVESTMENT STRATEGY
The outlook for 1997 is for less exciting returns from the overall market. While
Provident Investment Counsel does not make top down economic forecasts, the
consensus view is for a slowing economy and for slower profit growth. This
economic environment would result in relatively stable interest rates and
inflation rates. These factors would support current P/E ratios in the market.
However, the P/E ratios are not expected to continue to expand from current
levels. Therefore, the bulk of market returns will come from underlying earnings
growth. If this outlook is correct, this should be positive for high and
consistent growth companies. In this environment, a shift is expected away from
the very large but slower growing companies toward companies of smaller size but
higher growth rates -- similar to the companies held in this Portfolio.
The earnings growth in this portfolio is supported by excellent revenue growth,
high profit margins, high returns to equity and low debt levels. This type of
potential earnings growth is more visible and sustainable than that of the
average company. Despite the gains of the last two years, these companies still
offer reasonable P/E ratio valuations.
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. 15
<PAGE>
CAPITAL APPRECIATION PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Common Stocks -- 100.48% Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Apparel & Textiles -- 0.93%
- ---------------------------------------------------------------------------------
Gucci Group N V (ADR)............................. 17,500 $ 1,117,813
Broadcasting -- 2.55%
- ---------------------------------------------------------------------------------
British Sky Broadcast Group PLC (ADR) (a)......... 58,500 3,071,250
Business Services -- 11.95%
- ---------------------------------------------------------------------------------
Accustaff Inc. (a)................................ 84,731 1,789,942
Alco Standard Corporation......................... 28,200 1,455,825
Automatic Data Processing Inc..................... 10,800 463,050
Ceridian Corporation (a).......................... 40,900 1,656,450
Computer Sciences Corporation (a)................. 27,000 2,217,375
Cuc International Inc. (a)........................ 29,100 691,125
Danka Business Systems (ADR)...................... 16,800 594,300
First Data Corporation............................ 104,468 3,813,082
Paychex Inc....................................... 33,000 1,697,438
-------------
14,378,587
Capital Goods & Services -- 7.06%
- ---------------------------------------------------------------------------------
American Standard Companies Inc. (a).............. 61,900 2,367,675
Republic Industries Inc. (a)...................... 56,000 1,746,500
Tyco International Ltd............................ 67,600 3,574,350
USA Waste Services Inc. (a)....................... 25,000 796,875
-------------
8,485,400
Computer Hardware -- 2.66%
- ---------------------------------------------------------------------------------
Cisco Systems Inc. (a)............................ 45,400 2,888,575
DST Systems Inc. (a).............................. 10,000 313,750
-------------
3,202,325
Computer Services -- 2.94%
- ---------------------------------------------------------------------------------
Affiliated Computer Services Inc. (a)............. 10,000 297,500
Ascend Communications Inc. (a).................... 24,000 1,491,000
BDM International Inc. (a)........................ 14,000 759,500
Sungard Data Systems Inc. (a)..................... 25,000 987,500
-------------
3,535,500
Computer Software -- 7.98%
- ---------------------------------------------------------------------------------
Computer Associates International Inc............. 56,000 2,786,000
Microsoft Corporation (a)......................... 21,200 1,751,650
Oracle System Corporation (a)..................... 69,750 2,912,062
Parametric Technology Corporation (a)............. 28,000 1,438,500
Sterling Commerce Inc. (a)........................ 20,000 705,000
-------------
9,593,212
Consumer Non-Durables -- 3.10%
- ---------------------------------------------------------------------------------
Gillette Company.................................. 27,200 2,114,800
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Price Costco Inc. (a)............................. 64,300 $ 1,615,538
-------------
3,730,338
Drugs & Medical Products -- 1.75%
- ---------------------------------------------------------------------------------
Boston Scientific Corporation (a)................. 35,000 2,100,000
Electronics -- 1.51%
- ---------------------------------------------------------------------------------
Andrew Corporation (a)............................ 34,275 1,818,717
Energy -- 4.42%
- ---------------------------------------------------------------------------------
AES Corporation (a)............................... 35,000 1,627,500
Enron Corporation................................. 34,100 1,470,563
Global Marine Inc. (a)............................ 50,000 1,031,250
Tosco Corporation................................. 15,000 1,186,875
-------------
5,316,188
Entertainment & Leisure -- 1.00%
- ---------------------------------------------------------------------------------
Circus Circus Enterprises Inc. (a)................ 35,000 1,203,125
Finance -- 10.74%
- ---------------------------------------------------------------------------------
Associates First Capital Corporation (a).......... 44,900 1,981,212
Federal Home Loan Mortgage Corporation............ 8,700 958,088
Federal National Mortgage Association............. 55,600 2,071,100
First USA Inc..................................... 73,000 2,527,625
Green Tree Financial Corporation.................. 19,000 733,875
MBNA Corporation.................................. 92,075 3,821,112
Money Store Inc................................... 30,000 828,750
-------------
12,921,762
Health Care -- 18.12%
- ---------------------------------------------------------------------------------
Amerisource Health Corporation (a)................ 50,000 2,412,500
Amgen Inc. (a).................................... 35,000 1,903,125
Cardinal Health Inc............................... 47,400 2,761,050
Healthsouth Corporation (a)....................... 45,300 1,749,713
Idexx Labs Inc. (a)............................... 41,000 1,476,000
Medtronic Inc..................................... 35,300 2,400,400
Omnicare Inc...................................... 58,000 1,863,250
Oxford Health Plans Inc. (a)...................... 49,400 2,892,987
Pfizer Inc........................................ 39,200 3,248,700
Tenet Healthcare Corporation (a).................. 50,000 1,093,750
-------------
21,801,475
Hotels & Restaurants -- 4.21%
- ---------------------------------------------------------------------------------
HFS Inc. (a)...................................... 57,400 3,429,650
Mirage Resorts Inc. (a)........................... 27,800 601,175
Promus Hotel Corporation (a)...................... 35,000 1,036,875
-------------
5,067,700
Insurance -- 3.05%
- ---------------------------------------------------------------------------------
</TABLE>
16 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
CAPITAL APPRECIATION PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
American International Group Inc.................. 9,850 $ 1,066,263
MGIC Investment Corporation....................... 20,000 1,520,000
PMI Group Inc..................................... 19,500 1,079,812
-------------
3,666,075
Machinery -- 1.32%
- ---------------------------------------------------------------------------------
United States Filter Corporation (a).............. 50,000 1,587,500
Oil Services -- 1.16%
- ---------------------------------------------------------------------------------
Schlumberger Ltd.................................. 14,000 1,398,250
Paper Products -- 0.75%
- ---------------------------------------------------------------------------------
Staples Inc. (a).................................. 50,000 903,125
Pharmaceuticals -- 1.46%
- ---------------------------------------------------------------------------------
Elan PLC (ADR) (a)................................ 20,000 665,000
Lilly Eli & Company............................... 15,000 1,095,000
-------------
1,760,000
Retail -- 4.40%
- ---------------------------------------------------------------------------------
Home Depot Inc.................................... 32,000 1,604,000
Kohls Corporation (a)............................. 12,000 471,000
Petsmart Inc. (a)................................. 30,000 656,250
Safeway Inc. (a).................................. 35,000 1,496,250
Tiffany & Company................................. 16,000 586,000
Tommy Hilfiger Corporation (ADR) (a).............. 10,000 480,000
-------------
5,293,500
Technology -- 1.73%
- ---------------------------------------------------------------------------------
Lucent Technologies Inc........................... 45,000 2,081,250
Telecommunications -- 5.69%
- ---------------------------------------------------------------------------------
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
ADC Telecommunications Inc. (a)................... 30,000 933,750
Asia Satellite Telecom Holdings (ADR) (a)......... 30,000 $ 701,250
Aspect Telecommunications Corporation (a)......... 25,000 1,587,500
Checkpoint Systems Inc. (a)....................... 25,000 618,750
Ericsson L M Tel Company (ADR).................... 58,300 1,759,931
Worldcom Inc. (a)................................. 47,600 1,240,575
-------------
6,841,756
Total Common Stocks
(Identified cost $84,955,043)....................................
120,874,848
- ---------------------------------------------------------------------------------
Repurchase Agreement -- 0.75%
- ---------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
2.00% due 01/02/97
Collateral: U.S. Treasury Note, $930,000 5.625%
due 11/30/98 Value $930,971....................... $ 910,000 910,000
-------------
Total Repurchase Agreement
(Identified cost $910,000).......................................
910,000
- ---------------------------------------------------------------------------------
Total Investments
(Identified cost $85,865,043)....................................
$ 121,784,848
Other Assets Less Liabilities -- (1.23)%.........................
(1,484,829)
-------------
Net Assets -- 100%...............................................
$ 120,300,019
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
(ADR) American Depository Receipts
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 17
<PAGE>
The Enterprise Small Company Portfolio
GAMCO Investors, Inc.
Rye, New York
INVESTMENT MANAGEMENT
GAMCO Investors, Inc., which currently manages over $5 billion for institutional
clients, became manager of the Portfolio on July 1, 1996. Their normal
investment minimum is $1 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
GAMCO's focus is on free cash flow. They believe free cash flow is the best
barometer of a business' value. Rising free cash flow often foreshadows net
earnings improvement. They also look at long-term earnings trends and analyze on
and off balance sheet assets and liabilities. GAMCO wants to know everything
that will add to or detract from private market value estimates. Finally they
look for a catalyst: something happening in the company's industry or indigenous
to the company itself that will surface value.
1996 PERFORMANCE REVIEW
The Small Company Portfolio made substantial progress during the year without
taking on undue risk. Several themes worked well in 1996 particularly during the
second half of the year. Among the best performers during this period were
companies tied to the commercial aircraft cycle, including suppliers to Boeing.
Class A
<TABLE>
<C> <S>
[GRAPH] ** 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.
</TABLE>
18 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
Class B
<TABLE>
<C> <S>
[GRAPH] ** 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.
</TABLE>
Class Y
<TABLE>
<C> <S>
[GRAPH] ** 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 perform-
ance. Shares may be worth
more or less at redemption
than at original price.
</TABLE>
Media and communication stocks remain undervalued, as investors are focusing on
companies with visible earnings growth. Regulatory changes as well as strong
cash flows will benefit many of these companies in future quarters. Cable
stocks, for example, declined on fear of competition from direct broadcast
satellite but may enjoy strong cash flows and revenue streams from such services
as Internet access.
Top holdings in the Portfolio at year end included Wynns International, United
Television, Culbro, SPS Technologies and BHC Communications with major industry
concentrations in the broadcasting/media, aerospace, publishing, machinery and
food/beverage sectors.
FUTURE INVESTMENT STRATEGY
GAMCO will continue to focus on value. The Portfolio favors industries and
individual companies in the early stages of sustainable earnings uptrends and
other fundamentally attractive opportunities that participated only marginally
in the 1996 bull market. Aerospace component manufacturers are positioned to
post superior earnings gains for the next three to five years should airlines
throughout the world continue to rebuild and refurbish their fleets. Auto
aftermarket companies may grow earnings as the economy and new car sales slow.
As Personal Communication Services (PCS) systems come on-line in the year ahead,
cellular telephone companies, which have been under the cloud of future
competition from PCS, will have an opportunity to demonstrate the long term
viability of what GAMCO believes will remain a good growth business.
Entertainment software and cable network stocks, which were panned in 1996, may
get more favorable reviews from investors in the year ahead.
Finally, and perhaps most importantly for 1997, corporate restructurings in the
form of mergers and sales and spin-offs of assets may continue at a feverish
pace. There is strong global appetite for extending product lines and
distribution systems via acquisitions. The world is awash in liquidity and stock
is an increasingly valuable currency. In response, corporate managements that
hope to remain independent are under pressure to surface the value of their
businesses by selling underperforming divisions, spinning off undervalued assets
and repurchasing shares. Deals and corporate events of this nature may trigger
some of the biggest small company stock advances in 1997.
THE ENTERPRISE GROUP OF FUNDS, INC. 19
<PAGE>
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.
20 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Common Stocks -- 96.61% Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Advertising -- 2.69%
- ---------------------------------------------------------------------------------
Ackerley Inc...................................... 50,000 $ 587,500
Aerospace -- 12.64%
- ---------------------------------------------------------------------------------
Coltec Industries Inc............................. 25,000 471,875
Curtiss Wright Corporation........................ 4,000 201,500
Gencorp Inc....................................... 20,000 362,500
Mafco Consolidated Group Inc...................... 17,000 431,375
Sequa Corporation (a)............................. 12,000 471,000
SPS Technologies Inc.............................. 10,000 642,500
UNC Inc........................................... 15,000 180,000
-------------
2,760,750
Apparel & Textiles -- 2.20%
- ---------------------------------------------------------------------------------
Fieldcrest Cannon Inc............................. 30,000 480,000
Automotive -- 5.54%
- ---------------------------------------------------------------------------------
Scheib Earl Inc................................... 60,000 420,000
Wynns International Inc........................... 25,000 790,625
-------------
1,210,625
Broadcasting -- 15.55%
- ---------------------------------------------------------------------------------
BET Holdings Inc.................................. 12,000 345,000
BHC Communications Inc............................ 6,000 608,250
Chris Craft Industries Inc........................ 10,403 435,626
Gaylord Entertainment Company..................... 8,000 183,000
HSN Inc........................................... 25,000 593,750
International Family..............................
Entertainment Inc................................. 35,000 542,500
United Television Inc............................. 8,000 689,000
-------------
3,397,126
Cable -- 1.40%
- ---------------------------------------------------------------------------------
Cablevision Systems Corporation................... 10,000 306,250
Capital Goods & Services -- 1.38%
- ---------------------------------------------------------------------------------
AAR Corporation................................... 10,000 302,500
Chemicals -- 1.95%
- ---------------------------------------------------------------------------------
Church & Dwight Inc............................... 12,000 274,500
Lawter International Inc.......................... 12,000 151,500
-------------
426,000
Consumer Durables -- 2.12%
- ---------------------------------------------------------------------------------
Dynamics Corporation of America................... 10,000 282,500
Oneida Limited.................................... 10,000 180,000
-------------
462,500
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Consumer Products -- 0.71%
- ---------------------------------------------------------------------------------
TVX Gold Inc...................................... 20,000 $ 155,000
Consumer Services -- 3.63%
- ---------------------------------------------------------------------------------
Berlitz International Inc......................... 7,500 155,625
Rollins Inc....................................... 25,000 500,000
Wackenhut Corporation............................. 8,000 138,000
-------------
793,625
Electrical Equipment -- 2.18%
- ---------------------------------------------------------------------------------
Ametek Inc........................................ 12,000 267,000
Thomas Industries Inc............................. 10,000 208,750
-------------
475,750
Entertainment & Leisure -- 5.55%
- ---------------------------------------------------------------------------------
Aztar Corporation (a)............................. 50,000 350,000
GC Companies Inc.................................. 12,000 415,500
Spelling Entertainment Group Inc.................. 50,000 368,750
Trans Lux Corporation............................. 7,000 77,000
-------------
1,211,250
Finance -- 0.49%
- ---------------------------------------------------------------------------------
Advest Group Inc.................................. 10,000 107,500
Food & Beverages & Tobacco -- 5.09%
- ---------------------------------------------------------------------------------
Celestial Seasonings Inc.......................... 15,000 296,250
Culbro Corporation................................ 10,000 648,750
Eskimo Pie Corporation............................ 15,000 166,875
-------------
1,111,875
Insurance -- 1.26%
- ---------------------------------------------------------------------------------
Liberty Corporation............................... 7,000 274,750
Machinery -- 5.60%
- ---------------------------------------------------------------------------------
Goulds Pumps Inc.................................. 15,000 344,062
Idex Corporation.................................. 7,000 279,125
Katy Industries Inc............................... 30,000 435,000
Kollmorgen Corporation............................ 15,000 165,000
-------------
1,223,187
Manufacturing -- 1.94%
- ---------------------------------------------------------------------------------
Aptargroup Inc.................................... 12,000 423,000
Misc. Financial Services -- 2.21%
- ---------------------------------------------------------------------------------
Data Broadcasting Corporation..................... 25,000 175,000
Midland Company................................... 8,000 308,000
-------------
483,000
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 21
<PAGE>
SMALL COMPANY PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Pharmaceuticals -- 2.15%
- ---------------------------------------------------------------------------------
Carter Wallace Inc................................ 30,000 $ 468,750
Printing & Publishing -- 7.67%
- ---------------------------------------------------------------------------------
Lee Enterprises Inc............................... 15,000 348,750
Media General Inc................................. 13,000 393,250
Meredith Corporation.............................. 9,000 474,750
Providence Journal Company........................ 15,000 459,375
-------------
1,676,125
Publishing -- 1.04%
- ---------------------------------------------------------------------------------
Houghton Mifflin Company.......................... 4,000 226,500
Retail -- 2.34%
- ---------------------------------------------------------------------------------
Neiman Marcus Group Inc........................... 20,000 510,000
Security & Investigation Services -- 0.98%
- ---------------------------------------------------------------------------------
Pittway Corporation Delaware...................... 4,000 214,000
Telecommunications -- 4.83%
- ---------------------------------------------------------------------------------
Aerial Communications Inc......................... 30,000 243,750
Atlantic Tele Network Inc......................... 5,000 76,250
Centennial Cellular Corporation................... 20,000 242,500
Comsat Corporation................................ 20,000 492,500
-------------
1,055,000
Transportation -- 3.47%
- ---------------------------------------------------------------------------------
GATX Corporation.................................. 11,000 533,500
Hudson General Corporation........................ 6,000 223,500
-------------
757,000
Total Common Stocks
(Identified cost $19,608,818)....................................
21,099,563
- ---------------------------------------------------------------------------------
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
U.S. Treasury Bills -- 4.85%
- ---------------------------------------------------------------------------------
United States Treasury Bill
4.25% due 01/09/97................................ $ 94,000 $ 93,911
United States Treasury Bill
4.51% due 01/23/97................................ 123,000 122,661
United States Treasury Bill
4.66% due 01/30/97................................ 24,000 23,910
United States Treasury Bill
4.94% due 01/16/97................................ 150,000 149,691
United States Treasury Bill
4.95% due 01/16/97................................ 95,000 94,804
United States Treasury Bill
4.97% due 01/16/97................................ 200,000 199,586
United States Treasury Bill
4.97% due 01/23/97................................ 150,000 149,545
United States Treasury Bill
4.98% due 01/16/97................................ 225,000 224,533
Total U.S. Treasury Bills
(Identified cost $1,058,641).....................................
1,058,641
- ---------------------------------------------------------------------------------
Repurchase Agreement -- 0.46%
- ---------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
2.00% due 01/02/97
Collateral: U.S. Treasury Note $100,000, 6.25% due
7/31/98, Value $103,333........................... 100,000 100,000
-------------
Total Repurchase Agreement
(Identified cost $100,000).......................................
100,000
- ---------------------------------------------------------------------------------
Total Investments
(Identified cost $20,767,459)....................................
$ 22,258,204
Other Assets Less Liabilities -- (1.92)%.........................
(418,599)
-------------
Net Assets -- 100%...............................................
$ 21,839,605
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
See notes to financial statements.
22 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
The Enterprise International Growth Portfolio
Brinson Partners, Inc.
Chicago, Illinois
INVESTMENT MANAGEMENT
Brinson Partners is a global investment management firm with offices in Chicago,
London and Tokyo and became manager of the Enterprise International Growth
Portfolio on October 1, 1994. Brinson Partners, Inc. currently manages over $60
billion for institutional clients. Their 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
Brinson Partners believes that discrepancies exist between prices and
fundamental values, both across and within the international equity markets. The
Portfolio takes advantage of these discrepancies by using a disciplined approach
to measure fundamental value from the perspective of the long term investor.
Brinson Partners' international equity strategy reflects their 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.
1996 PERFORMANCE REVIEW
Throughout 1996, the Enterprise International Growth Portfolio benefited from
its active strategies in currency allocation and security selection. Market
allocation slightly detracted from performance during the year. The underweight
in the Japanese yen, Swiss franc, German deutschemark and offsetting overweights
primarily in the U.S. dollar, were all successful strategies. Stock selection
was very strong within the Japanese equity market. Honda and Toyota hit record
highs in Japan in 1996. Underweighting the financials and overweighting the
pharmaceuticals, precision instruments and electrical machinery industries all
contributed to portfolio returns. The Portfolio's overweight in cash and
underweight market positions in Sweden, Hong Kong and Switzerland detracted
slightly from performance. This was partially offset by positive results from
overweights in the Netherlands, Spain, and Belgium and underweights in Japan and
Singapore.
Class A
<TABLE>
<C> <S>
[GRAPH] ** The EAFE 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.
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 23
<PAGE>
At year end the Portfolio's largest holdings included Royal Dutch Petroleum
(Netherlands), Unilever (United Kingdom and Netherlands), Telecom Corporation of
NZ (New Zealand), British Telecom (United Kingdom) and Toray Industries (Japan).
Major country concentrations focused on Japan, United Kingdom, France, Germany
and the Netherlands.
FUTURE INVESTMENT STRATEGY
While 1997 economic growth expectations are picking up for most countries,
several markets are not expected to maintain last year's strong growth into
1997. The inflation outlook remains relatively benign for most developed
markets. Despite an environment of good GDP growth, the combination of fiscal
restraint and downward wage pressures may help to keep inflation under control.
The Portfolio continues to target a 5% strategic cash position, reflecting the
view that non-U.S equity markets are overpriced. The Japanese equity market is
notably more overpriced than most of the other non-U.S. markets. Given the
valuation analysis and fundamental considerations, the Portfolio is underweight
in Japan by 6.5%.
The other non-U.S. equity markets (excluding Japan) are overweight by 1.5%.
Brinson Partners continues to emphasize New Zealand, Australia and, in Europe,
France, Netherlands, Belgium and Finland. The Portfolio remains modestly
overeweight in Spain and the United Kingdom and are neutrally positioned in
Italy. The outlook for German earnings has become more favorable. Throughout
Europe, there is growing evidence of an awareness by company managements of
shareholder value. This has been pronounced in Germany, where a number of
companies have started to restructure.
Canada has enjoyed a period of declining interest rates, an improving fiscal
picture and a somewhat undervalued Canadian dollar that has supported its
exporters. At this point, however, we view interest rates as being unsustainably
low and we find currency at or close to fair value. Fundamental analysis
indicates that this market has become more expensive. The Portfolio is invested
but quite underweight, in Hong Kong and Switzerland; with lesser underweights
held in Canada and Malaysia. Currency strategy continues to favor the U.S.
dollar over the less attractive Japanese yen, German deutschemark, Swiss franc
and French franc.
As with all international growth funds, Enterprise International Growth
Portfolio carries additional risks such as possibly less stable foreign
securities and currencies, lack of uniform accounting standards and political
instability.
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.
24 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Common Stocks -- 94.07% Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Australia -- 4.71%
- ---------------------------------------------------------------------------------
Amcor LTD......................................... 15,800 $ 101,599
Boral LTD......................................... 30,600 87,074
Broken Hill Proprietary........................... 37,500 534,139
CRA LTD........................................... 12,100 189,949
David Jones LTD................................... 61,500 85,546
Lend Lease Corporation............................ 4,665 90,475
MIM Holdings LTD.................................. 70,187 98,187
National Australia Bank........................... 20,000 235,275
News Corporation.................................. 40,064 211,450
Pacific Dunlop LTD................................ 28,500 72,490
Qantas Airways LTD................................ 40,226 67,145
Santos LTD........................................ 22,000 89,182
Westpac Bank Corporation.......................... 38,500 219,108
WMC LTD........................................... 17,000 107,154
Woolworths LTD.................................... 28,000 67,435
-------------
2,256,208
Belgium -- 3.26%
- ---------------------------------------------------------------------------------
Bruxelles Lambert Groupe.......................... 600 77,252
Delhaize Le Lion.................................. 1,650 98,030
Electrabel........................................ 1,140 269,842
Fortis AG......................................... 1,119 179,520
Fortis AG......................................... 19 9
Generale De Banque................................ 200 71,704
Generale De Banque (Wts).......................... 300 4,349
Kredietbank....................................... 580 190,119
Petrofina SA...................................... 625 198,960
Society General De Belgique....................... 1,050 82,405
Solvay............................................ 270 165,306
Tractebel CAP..................................... 300 139,705
Union Miniere (a)................................. 1,300 88,094
-------------
1,565,295
Canada -- 2.80%
- ---------------------------------------------------------------------------------
Alcan Aluminum LTD................................ 3,000 101,329
Bank Montreal Quebec.............................. 2,500 79,603
Barrick Gold Corporation.......................... 1,700 48,729
Bce Inc........................................... 1,400 67,429
Canadian National Railway Company................. 1,900 72,292
Canadian Pacific LTD.............................. 6,400 168,495
Hudson Bay Company................................ 3,900 64,938
Imperial Oil LTD.................................. 2,300 108,340
Moore Corporation LTD............................. 2,500 51,851
Noranda Inc....................................... 2,900 64,701
Northern Telecom LTD.............................. 1,100 $ 68,444
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Nova Corporation Alberta.......................... 4,700 41,704
Royal Bank Canada Montreal Quebec................. 2,800 98,357
Seagram LTD....................................... 2,600 103,009
Thomson Corporation............................... 6,300 139,177
Transcanada Pipelines LTD......................... 3,800 66,603
-------------
1,345,001
Finland -- 1.38%
- ---------------------------------------------------------------------------------
Merita A LTD (a).................................. 22,000 68,391
Nokia Oy.......................................... 5,300 307,400
Outokumpu Oy...................................... 3,400 58,022
Pohjola........................................... 1,400 31,500
Sampo Vakuutusosak................................ 900 71,022
Upm Kymmene Oy.................................... 5,900 123,772
-------------
660,107
France -- 9.47%
- ---------------------------------------------------------------------------------
Accor............................................. 1,324 167,653
Alcatel Alsthom................................... 1,452 116,641
Axa............................................... 700 44,521
Banque National Paris............................. 5,980 231,432
Cep Communications................................ 480 33,906
Cep Communications (Wts).......................... 880 1,009
Cie De St Gobain.................................. 1,951 276,001
Cie De Suez....................................... 2,266 96,344
Cie Generale Des Eaux............................. 3,005 372,403
Colas (Rts)....................................... 332 47,991
Compagnie Bancaire................................ 1,443 170,763
Credit Local de France............................ 2,512 218,835
Danone............................................ 500 69,673
L'Oreal........................................... 300 112,981
Lafarge Coppee SA................................. 1,200 71,998
LVMH Moet Hennessy................................ 1,325 370,035
Michelin (a)...................................... 3,428 185,060
Pechiney.......................................... 2,726 114,220
Peugeot SA (a).................................... 2,760 310,656
Rhone Poulenc SA.................................. 6,400 218,206
Seita............................................. 2,500 104,558
Societe Generale.................................. 2,446 264,471
Society Elf Aquitaine............................. 2,836 258,156
Total SA.......................................... 4,485 364,782
Union Assured Paris............................... 4,654 117,953
Usinor Sacilor.................................... 13,600 197,899
-------------
4,538,147
Germany -- 7.35%
- ---------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 25
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Allianz AG Holdings............................... 185 $ 336,626
BASF AG........................................... 4,800 184,913
Bayer AG.......................................... 6,500 265,272
Bayer Motoren Werk................................ 255 177,811
Commerzbank AG.................................... 5,100 129,588
Daimler Benz AG (a)............................... 2,750 189,433
Deutsche Bank AG.................................. 5,400 252,313
Deutsche Telekom.................................. 7,500 158,159
Hochtief AG....................................... 1,450 57,480
Hoechst AG........................................ 2,300 108,662
Manitoba AG....................................... 290 70,295
Mannesmann AG..................................... 470 203,724
Metro AG.......................................... 1,320 106,369
Muenchener Ruckvers............................... 80 199,896
PreussAG AG....................................... 560 126,826
Rwe AG............................................ 3,500 148,297
Schering AG....................................... 2,250 189,937
Siemens AG........................................ 1,650 77,739
Thyssen AG........................................ 900 159,670
Veba AG........................................... 4,080 235,976
Volkswagen AG..................................... 350 145,568
-------------
3,524,554
Hong Kong -- 1.23%
- ---------------------------------------------------------------------------------
Cheung Kong (Holdings)............................ 7,000 62,221
China Light & Power............................... 14,500 64,490
Guoco Group....................................... 8,000 44,786
Hang Seng Bank.................................... 5,000 60,767
Hong Kong Telecommunications...................... 20,000 32,194
Hutchison Whampoa................................. 13,000 102,108
New World Devel Company........................... 8,000 54,044
Sun Hung Kai Props................................ 4,000 49,001
Swire Pacific..................................... 7,000 66,746
Wharf Holdings.................................... 11,000 54,897
-------------
591,254
Ireland -- 0.17%
- ---------------------------------------------------------------------------------
Smurfit Jefferson................................. 29,000 83,716
Italy -- 2.73%
- ---------------------------------------------------------------------------------
Assic Generali.................................... 7,810 148,014
Danieli Di Risp................................... 10,000 41,859
Edison............................................ 9,000 56,955
Eni(ADR).......................................... 3,400 175,525
Eni SPA........................................... 15,000 76,978
IMI............................................... 19,000 162,821
INA............................................... 19,000 24,749
Italgas........................................... 11,000 $ 45,936
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Mediobanca SPA.................................... 3,000 16,187
Montedison SPA (a)................................ 179,820 122,567
Rinascente........................................ 8,000 46,407
Rinascente (Wts)*................................. 400 176
Rinascente Louisiana.............................. 14,000 35,807
SAI............................................... 7,000 24,895
Telecom Italia.................................... 92,000 179,512
Telecom Italia Mobile............................. 105,000 149,852
-------------
1,308,240
Japan -- 25.76%
- ---------------------------------------------------------------------------------
Amada Company..................................... 21,000 163,198
Asahi Glass Company............................... 25,000 235,299
Bank of Tokyo Mits................................ 20,800 386,150
Canon Inc......................................... 18,000 397,893
Canon Sales Company Inc........................... 7,700 171,540
Citizen Watch Company............................. 21,000 150,505
Dai Nippon Printing............................... 19,000 333,045
Daiichi Pharm Company............................. 15,000 240,912
Daikin Kogyo...................................... 21,000 186,771
Daiwa House Industries............................ 12,000 154,391
Fanuc............................................. 8,300 265,892
Fujitsu........................................... 14,000 130,559
Hitachi........................................... 43,000 401,002
Honda Motor Company............................... 6,000 171,488
Inax Corporation.................................. 27,000 200,035
Isetan Company.................................... 7,000 90,666
Ito Yokado Company................................ 8,000 348,156
Kaneka Corporation................................ 10,000 51,205
Keio Teito Electric Railway....................... 27,000 131,957
Kintetsu.......................................... 27,000 168,561
Kirin Brewery Company............................. 23,000 226,405
Kokuyo Company.................................... 6,000 148,174
Kuraray Company................................... 21,000 194,025
Kyocera Corporation............................... 2,000 124,687
Maeda Road Construction........................... 5,000 57,853
Matsushita Electric Industrial Indiana............ 33,000 538,555
Mitsubishi Paper.................................. 29,000 113,436
NGK Insulators.................................... 34,000 322,943
Nintendo Company.................................. 1,900 136,007
Nippon Denso...................................... 14,000 337,277
Nippon Meat Packer................................ 14,000 181,331
Nippon Steel Corporation.......................... 15,000 44,297
Okumura Corporation............................... 22,000 133,736
Osaka Gas Company................................. 86,000 235,403
Sankyo Company.................................... 15,000 424,834
Sanwa Bank........................................ 11,000 $ 150,073
</TABLE>
26 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Secom Company..................................... 5,000 302,651
Seino Transportation.............................. 7,000 77,368
Sekisui House..................................... 40,000 407,564
Shinmaywa Industries.............................. 21,000 154,676
Sony Corporation.................................. 6,400 419,446
Sumitomo Bank..................................... 22,000 317,244
Sumitomo Electric Industries...................... 19,000 265,780
Takeda Chemical Industries........................ 16,000 335,722
TDK Corporation................................... 4,000 260,772
Tokio Marine & Fire............................... 19,000 178,827
Tokyo Electric Power.............................. 9,300 203,972
Tokyo Steel Manufacturing......................... 15,700 223,685
Tonen Corporation................................. 15,000 174,855
Toray Industries Inc.............................. 88,000 543,304
Toshiba Corporation............................... 48,000 301,736
Toyo Suisan Kaisha................................ 13,000 130,213
Toyota Motor Corporation.......................... 5,000 143,770
Yamazaki Baking Company........................... 10,000 159,744
-------------
12,349,590
Malaysia -- 1.34%
- ---------------------------------------------------------------------------------
Hume Industries................................... 11,000 69,254
Kuala Lumpur Kepong............................... 21,500 54,484
Land & General.................................... 24,000 57,494
Malayan Bank Berhad............................... 4,000 44,348
Malaysia International Shipping................... 13,000 38,606
Nestle Malay Berhad............................... 2,000 16,076
Public Bank Berhad................................ 24,333 51,547
Resorts World Berhad.............................. 11,000 50,089
Sime Darby Berhad................................. 20,000 78,796
Telekom Malaysia.................................. 5,000 44,546
Tenaga Nasional................................... 23,000 110,196
YTL Corporation................................... 5,000 26,925
-------------
642,361
Netherlands -- 6.00%
- ---------------------------------------------------------------------------------
Abn Amro Holdings................................. 3,698 240,750
Akzo Nobel NV..................................... 400 54,677
DSM............................................... 950 93,762
ING NTFL.......................................... 9,827 354,034
Klm............................................... 2,200 61,929
Kon Hoogovensnv................................... 1,200 50,043
KPN............................................... 6,131 234,018
Philips Electronic................................ 3,200 129,742
Royal Dutch Petroleum............................. 5,520 968,438
Royal Dutch Petroleum Company (ADR)............... 300 51,225
Unilever.......................................... 2,240 $ 396,492
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Vendex International.............................. 3,125 133,761
Ver Ned Uitgevers................................. 5,200 108,729
-------------
2,877,600
New Zealand -- 3.13%
- ---------------------------------------------------------------------------------
Brierley Investment LTD........................... 262,000 242,644
Carter Holt Harvey................................ 89,000 201,972
Fletcher Challenge Building....................... 29,000 89,183
Fletcher Challenge Energy......................... 29,000 84,058
Fletcher Challenge Forest Division................ 64,513 108,092
Fletcher Challenge Paper.......................... 59,000 121,379
Telecom Corporation of New Zealand................ 115,000 586,992
Telecom Corporation of New Zealand (ADR).......... 800 64,800
-------------
1,499,120
Singapore -- 0.07%
- ---------------------------------------------------------------------------------
Jardine Matheson.................................. 4,800 31,680
Spain -- 3.34%
- ---------------------------------------------------------------------------------
Acerinox SA....................................... 500 72,251
Banco Bilbao Vizcaya.............................. 2,700 145,789
Banco Central Hispanoamericano.................... 2,050 52,661
Banco Intercontinental............................ 330 51,168
Banco Popular..................................... 480 94,281
Banco Santander SA................................ 1,650 105,615
Corporacion Mapfre................................ 1,200 73,114
Emp Nac Electricid................................ 2,550 181,490
Fomento De Construcciones......................... 700 65,242
Gas Natural SDG SA................................ 300 69,786
Iberdrola SA...................................... 13,900 197,004
Repsol SA (ADR)................................... 4,540 174,151
Sevillana De Electric............................. 2,165 24,597
Telefonica De Espana.............................. 9,800 227,591
Vallehermoso SA................................... 1,600 34,693
Viscofan Envoltura................................ 2,300 33,661
-------------
1,603,094
Switzerland -- 1.95%
- ---------------------------------------------------------------------------------
ABB AG............................................ 40 49,757
CS Holding........................................ 561 57,630
Nestle SA......................................... 259 278,060
Novartis AG....................................... 199 227,917
Roche Holdings AG................................. 20 155,622
Schweiz Bankgesellschaft.......................... 48 42,065
Societe General Surveillance Holding.............. 16 $ 39,327
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 27
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Zurich Verischerung............................... 302 83,933
-------------
934,311
United Kingdom -- 19.38%
- ---------------------------------------------------------------------------------
Abbey National.................................... 12,000 157,067
Bank Of Scotland.................................. 20,000 105,534
Bass.............................................. 7,200 101,395
BAT Industries.................................... 40,300 334,165
Booker............................................ 7,600 51,821
British Energy.................................... 88,000 220,113
British Gas....................................... 84,500 324,276
British Petroleum................................. 38,126 457,225
British Steel..................................... 68,000 186,397
British Telecom................................... 81,000 548,141
Charter........................................... 9,876 125,544
Coats Viyella..................................... 52,800 121,213
FKI............................................... 46,750 162,588
General Electric.................................. 79,600 522,302
Glaxo Holdings.................................... 13,200 214,836
Grand Metropolitan................................ 51,000 400,171
Guinness.......................................... 43,300 340,495
Hanson............................................ 83,500 117,303
Hillsdown Holdings................................ 61,000 209,011
House of Fraser................................... 65,500 170,567
HSBC Holdings..................................... 13,000 290,646
Imperial Chemical Industries...................... 5,000 65,916
Legal & General Group............................. 32,500 207,405
Lloyds TSB Group.................................. 68,232 503,820
Marks & Spencer................................... 33,000 278,157
Mirror Group PLC.................................. 37,800 139,232
National Power.................................... 19,500 163,029
National Westminster Bank......................... 12,000 141,031
Northern Foods.................................... 36,000 124,585
Peninsular and Oriental Steam..................... 32,500 329,065
Reckitt & Colman.................................. 6,650 82,370
Redland........................................... 12,500 79,022
RJB Mining........................................ 28,000 204,730
Royal Sun Alliance................................ 22,005 167,950
RTZ Corporation................................... 13,100 210,516
Sainsbury J....................................... 27,000 179,013
Scottish Hydro.................................... 21,500 120,447
Sears............................................. 91,200 146,870
Sedgwick Group.................................... 53,400 119,846
Smithkline Beecham................................ 15,200 210,409
TESCO............................................. 21,800 132,212
Thames Water...................................... 16,300 $ 170,624
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Unilever.......................................... 8,400 203,632
Vodafone Group.................................... 18,400 77,862
Yorkshire Water................................... 6,000 72,469
-------------
9,291,022
Total Common Stocks
(Identified cost $40,886,567)....................................
45,101,300
- ---------------------------------------------------------------------------------
Preferred Stock -- 0.51%
- ---------------------------------------------------------------------------------
Australia -- 0.09%
- ---------------------------------------------------------------------------------
News Corporation.................................. 10,000 44,512
Germany -- 0.22%
- ---------------------------------------------------------------------------------
Henkel Kgaa....................................... 2,100 105,491
Italy -- 0.20%
- ---------------------------------------------------------------------------------
Fiat SPA.......................................... 56,000 92,472
Total Preferred Stock
(Identified cost $264,125).......................................
242,475
- ---------------------------------------------------------------------------------
Commercial Paper -- 4.82%
- ---------------------------------------------------------------------------------
Browning Ferris Industries Inc.
6.40%, due 01/02/97............................... $ 1,200,000 1,199,786
Duracell
6.75%, due 01/02/97............................... 1,111,000 1,110,792
-------------
2,310,578
Total Commercial Paper
(Identified cost $2,310,578)..................................... 2,310,578
- ---------------------------------------------------------------------------------
Total Investments
(Identified cost $43,461,270)....................................
$ 47,654,353
Other Assets Less Liabilities -- 0.60%...........................
287,744
-------------
Net Assets -- 100%...............................................
$ 47,942,097
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
(Rts) Rights
(Wts) Warrants
ADR American Depository Receipts
AG Aktien Gesellschaft
CAP Only part of company's capital trades as stock
LTD Limited
SA Societe Anonyme
SDG Sociedad de Gas
SPA Societa Per Azoine
See notes to financial statements.
28 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
The Enterprise Government Securities Portfolio
TCW Funds Management, Inc.
Los Angeles, California
INVESTMENT MANAGEMENT
TCW Funds Management, a wholly owned subsidiary of TCW Management Company, has
been managing the Enterprise Government Securities Portfolio since May 1, 1992.
TCW currently manages over $54 billion for institutional clients. Their normal
investment minimum is $35 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
The investment process is grounded in long term value considerations. TCW does
not attempt to forecast short term trends in interest rates and, therefore, does
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.
1996 PERFORMANCE REVIEW
Mortgage-backed securities, which are the primary holding of the Enterprise
Government Securities Portfolio, were once again a top performing fixed income
asset in 1996. Moderately increasing interest rates, low volatility and strong
technicals pushed the total rate of return of the mortgage sector over 250 basis
points above the aggregate fixed income market. During the first six months,
news of a strengthening economy stimulated inflationary fears and drove interest
rates steadily higher. By July 1, the treasury yield curve had moved up well
over 100 basis points. However, as evidence of slowing economic growth and
minimal inflationary pressures mounted in the third quarter, interest rates
reversed. These falling interest rates during the early fall months reignited
prepayment fears among mortgage investors causing mortgages to underperform
slightly. But during December, this trend once again reversed. News of
widespread economic strength drove interest rates higher, spreads tightened and
mortgages outperformed.
Class A
<TABLE>
<C> <S>
[GRAPH] ** The Lehman Brothers
Intermediate Government
Corporate Bond Index is an
unmanaged index which
excludes transaction and
holding charges. En-
terprise performance
numbers include the maximum
sales charge and all fees.
Remember that historic
performance does not
predict future perform-
ance. Shares may be worth
more or less at redemption
than at original purchase.
</TABLE>
30 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
A number of technical factors contributed positively to the performance of the
mortgage sector in 1996. Most significantly, there was an increase in the demand
for mortgage product at the same time that the supply of new securities
decreased. The increase in investor demand was driven, at least in part, by
tight spreads in other sectors of the fixed income market. This supply/demand
imbalance was especially pronounced in the adjustable rate mortgage sector where
demand for short duration assets increased as new production declined. The
collateralized mortgage obligation sub-sector continued to revive in 1996.
Increase demand drove new issuance up but volume of new product remained well
below the levels seen three years ago.
FUTURE INVESTMENT STRATEGY
The mortgage sector ended the year on a sound note and mortgage-backed
securities may continue to be among the top performing dollar denominated fixed
income classes in 1997. Mortgages remain attractive on a relative basis in
contrast to the corporate sector, where yield spreads have been narrow for the
past few years. Strong technicals remain in place and may persist well into 1997
contributing positively to mortgage performance in the coming months. Looking
ahead, greater reliance is foreseen on fixed rate pass throughs and adjustable
rate mortgages as misvaluations in seasoning are exploited. As 1997 begins at
relatively low rate levels, the mortgage sector may continue to provide
incremental yield and credit quality. The Portfolio's goal continues to be to
reap the incremental yield of mortgage assets without taking on the full measure
of prepayment risk.
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
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
U.S. Government & Agency Obligations -- 92.01% Amount Value
<S> <C> <C>
- ----------------------------------------------------------------------------------
Federal Home Loan Participation Certificates -- 8.99%
- ----------------------------------------------------------------------------------
FHLPC 9.00%, due 10/01/22......................... $ 1,738,268 $ 1,833,455
FHLPC 10.00%, due 10/01/18........................ 1,478,549 1,600,633
FHLPC 10.00%, due 07/01/20........................ 2,484,748 2,694,261
FHLPC 10.00%, due 10/01/20........................ 929,066 1,010,898
-------------
7,139,247
Government National Mortgage Association -- 27.19%
- ----------------------------------------------------------------------------------
GNMA 6.625%, due 11/15/28......................... 4,882,505 4,667,724
GNMA 7.00%, due 10/15/33.......................... 14,980,292 14,577,172
GNMA 7.50%, due 04/15/23.......................... 776,271 776,512
GNMA 7.50%, due 05/15/23.......................... 799,175 799,423
GNMA 7.50%, due 05/15/23.......................... 748,220 748,452
GNMA 9.00%, due 08/15/16.......................... 9,319 9,778
-------------
21,579,061
Federal Housing Administration -- 43.77%
- ----------------------------------------------------------------------------------
FHA 6.75%, due 11/01/28........................... 2,247,434 2,109,778
FHA 7.00%, due 10/01/28........................... 2,346,563 2,240,967
FHA 7.18%, due 02/20/29........................... 3,445,090 3,341,737
FHA 7.625%, due 06/01/28.......................... 3,742,166 3,737,489
FHA 7.75%, due 05/01/18........................... 6,470,460 6,502,813
FHA 7.75%, due 04/01/28........................... 3,911,176 3,930,732
FHA 7.80%, due 09/01/23........................... 2,805,354 2,819,381
FHA 8.25%, due 03/01/28........................... 3,427,414 3,530,237
FHA 8.65%, due 06/01/27........................... 3,692,005 3,830,455
FHA 8.70%, due 12/01/27........................... 2,596,700 2,700,568
-------------
34,744,157
Federal National Mortgage Association -- 12.06%
- ----------------------------------------------------------------------------------
FNMA 5.50%, due 01/01/09.......................... 2,316,513 2,199,042
FNMA 5.50%, due 02/01/09.......................... 3,976,941 3,776,543
FNMA 9.50%, due 08/01/20.......................... 1,051,973 1,130,124
FNMA 9.50%, due 10/01/20.......................... 1,469,044 1,578,224
FNMA 10.00%, due 07/01/20......................... 351,919 384,647
FNMA 10.00%, due 07/01/20......................... 460,291 502,003
-------------
9,570,583
Total U.S. Government & Agency Obligations (Identified cost
$74,364,801)...................................................... 73,033,048
- ----------------------------------------------------------------------------------
<CAPTION>
Principal
Collateralized Mortgage Obligations (v) -- 3.79% Amount Value
<S> <C> <C>
- ----------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation 7.595%, due
01/01/97.......................................... $ 1,291,553 $ 975,123
Federal Home Loan Mortgage Corporation 8.80%, due
01/01/97.......................................... 2,222,727 1,933,772
Federal National Mortgage Association 15.50%, due
03/25/23.......................................... 100,127 100,127
-------------
Total Collateralized Mortgage Obligations (Identified cost
$3,413,211)....................................................... 3,009,022
- ----------------------------------------------------------------------------------
Repurchase Agreements -- 3.76%
- ----------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement
4.00%, due 01/02/97
Collateral: U.S. Treasury Note, $3,005,000 6.25%
due 4/30/01 Value $3,046,508...................... 2,985,000 2,985,000
-------------
Total Repurchase Agreements
(Identified cost $2,985,000)...................................... 2,985,000
- ----------------------------------------------------------------------------------
Total Investments
(Identified cost $80,763,012)..................................... $ 79,027,070
Other Assets Less Liabilities -- 0.44%............................ 348,506
-------------
Net Assets -- 100%................................................ $ 79,375,576
- ----------------------------------------------------------------------------------
</TABLE>
(v) Variable interest rate securities; interest rates shown are as of December
31, 1996. The maturity date shown is the next interest reset.
See notes to financial statements.
32 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
The Enterprise High-Yield Bond Portfolio
Caywood-Scholl Capital Management
San Diego, California
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
$732 million for institutional clients. Their 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
Caywood-Scholl's 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.
1996 PERFORMANCE REVIEW
Five elements helped the high yield bond market, and specifically the Enterprise
High-Yield Bond Portfolio, to post solid returns in 1996. Investors poured $16.0
billion of new money into the high yield market in 1996 which helped keep the
market technicals favorably balanced through much of the year. Secondly, for the
second year in a row the investment grade buyer was evident in the high yield
market. With spreads on investment grade bonds remaining historically tight,
corporate fixed income buyers participated heavily in many BB new issues. Also,
new issues for 1996 totaled $72 billion, more than doubling the $31 billion
issued in 1995. The quality of the new issues continued to deteriorate,
approximately 72% of the new issuance was rated single B or lower. The
telecommunications sector dominated the new issuance accounting for 28% of the
merchandise. In addition, a receptive initial public offering environment and /
or strong stock market generally is supportive to the high yield market for it
provided the ability of an issuer to improve their balance sheet through
issuance of equity. This potential financial flexibility reduces credit risk.
Finally, defaults were surprisingly light in 1996 with 16 defaults representing
$4.2 billion. This compares to 30 issues and $8.2 billion in 1995. Defaults as a
percent of the market have been less than 3% for five consecutive years. This
trend has bolstered the legitimacy of the high yield market as an asset class
for pension funds and fiduciary investors.
Class A
<TABLE>
<C> <S>
[GRAPH] ** 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.
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 33
<PAGE>
FUTURE INVESTMENT STRATEGY
In 1997, high yield bond performance may be primarily influenced by three
factors. Credit risk is expected to increase somewhat and the yield advantage of
high yield bonds over treasuries may also increase modestly. Overall growth of
corporate profitability is expected to moderate with business's experiencing
more difficulty in passing along production cost increases. Next, new issuance
for 1997 is estimated to decline to $40 to $50 billion level due to a smaller
calendar of offerings by the telecommunications industry. Finally, capital flows
into the high yield market may continue to grow contingent on the absolute yield
advantage and return over treasuries and the perceived credit risk. Interest
among pension funds and foundations has been increasing. Sales of new mutual
fund shares has brought the sector to prominence, owning approximately 20% of
the universe. During the relatively low interest rates of the past several
years, the insurance industry has also remained a steady buyer of high yield
bonds. Reinvestment of coupons has been a stabilizing factor which should repeat
in 1997.
The economic and monetary climate for high yield bonds is expected to be
somewhat less favorable in 1997 while still offering substantial relative
performance opportunities over treasuries and investment grade bonds. The
relative performance of high yield bonds is not expected to be quite as
outstanding for 1997, as was the case in 1996 but still very rewarding. High
yield bonds would not perform as well relatively if interest rates were to
substantially decline. The high yield sector has historically performed very
well during periods of moderately rising interest rates.
Managing this sector in 1997 for competitive returns could be more difficult
requiring greater scrutiny of credit quality. Caywood-Scholl's investment policy
of maintaining broad diversification among favorable industries and issuers
should help the Portfolio in seeking to capture solid risk adjusted returns in
this investment environment.
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 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 on 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 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.
34 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
HIGH-YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
Corporate Bonds, Convertible Securities & Common or Principal
Stocks -- 90.38% Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Advertising -- 0.42%
- ---------------------------------------------------------------------------------
Universal Outdoor Inc. 9.75%, due 10/15/06........ $ 250,000 $ 258,125
Aerospace -- 1.44%
- ---------------------------------------------------------------------------------
Rohr Inc. 11.625%, due 05/15/03................... 800,000 892,000
Automotive -- 1.96%
- ---------------------------------------------------------------------------------
Safelite Glass Corporation 9.875%, due 12/15/06... 350,000 359,625
Speedy Muffler King Inc. 10.875%, due 10/01/06.... 800,000 856,000
-------------
1,215,625
Basic Industries -- 1.74%
- ---------------------------------------------------------------------------------
Maxxam Group Inc. 11.25%, due 08/01/03............ 550,000 563,750
Unifrax Investment Corporation 10.50%, due
11/01/03.......................................... 500,000 516,875
-------------
1,080,625
Broadcasting -- 7.20%
- ---------------------------------------------------------------------------------
Comcast UK Cable LP Zero Coupon, due 11/15/07..... 850,000 600,312
Echostar Communications Corporation Zero Coupon,
due 06/01/04...................................... 1,000,000 830,000
Jacor Communications Company 9.75%, due
12/15/06.......................................... 250,000 256,875
Kabelmedia Holding Zero Coupon, due 08/01/06...... 750,000 418,125
Rogers Communications Inc. Zero Coupon, due
05/20/13.......................................... 1,000,000 387,500
Rogers Communications Inc. 9.125%, due 01/15/06... 250,000 246,875
Rogers Communications Inc. 10.875%, due
04/15/04.......................................... 500,000 525,000
Telewest PLC Zero Coupon, due 10/01/07............ 550,000 382,250
Telewest PLC 9.625%, due 10/01/06................. 800,000 820,000
-------------
4,466,937
Cable -- 3.44%
- ---------------------------------------------------------------------------------
Cablevision Systems Corporation 9.25%, due
11/01/05.......................................... 500,000 493,750
Century Communications Corporation 9.50%, due
03/01/05.......................................... 500,000 512,500
Century Communications Corporation 9.75%, due
02/15/02.......................................... 350,000 359,625
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Lodgenet Entertainment Corporation 10.25%, due
12/15/06.......................................... $ 450,000 $ 450,000
TCI Communications Inc. 6.875%, due 02/15/06...... 350,000 316,190
-------------
2,132,065
Chemicals -- 5.95%
- ---------------------------------------------------------------------------------
Freedom Chemical Company 10.625%, due 10/15/06.... 800,000 834,000
General Chemical Corporation 9.25%, due
08/15/03.......................................... 200,000 205,000
Pioneer Americas Acquisition Corporation 13.375%,
due 04/01/05...................................... 800,000 914,000
Rexene Corporation 11.75%, due 12/01/04........... 250,000 280,313
Terra Industries Inc. 10.50%, due 06/15/05........ 350,000 381,062
Texas Petrochemical Corporation 11.125%, due
07/01/06.......................................... 1,000,000 1,075,000
-------------
3,689,375
Conglomerates -- 0.92%
- ---------------------------------------------------------------------------------
Quixote Corporation Convertible Subordinated
Debenture 8.00%, due 04/15/11..................... 650,000 572,000
Consumer Durables -- 1.06%
- ---------------------------------------------------------------------------------
Samsonite Corporation 11.125%, due 07/15/05....... 600,000 658,500
Consumer Products -- 0.73%
- ---------------------------------------------------------------------------------
Brown Group Inc. 9.50%, due 10/15/06.............. 450,000 453,110
Containers -- 2.78%
- ---------------------------------------------------------------------------------
MVE Inc. 12.50%, due 02/15/02..................... 750,000 787,500
Plastic Containers Inc. 10.00%, due 12/15/06...... 300,000 309,750
Printpack Inc. 10.625%, due 08/15/06.............. 600,000 625,500
-------------
1,722,750
Energy -- 6.14%
- ---------------------------------------------------------------------------------
Clark USA Inc. 10.875%, due 12/01/05.............. 650,000 674,375
Kelley Oil & Gas Corporation 10.375%, due
10/15/06.......................................... 600,000 622,500
Maxus Energy Corporation 9.375%, due 11/01/03..... 900,000 915,750
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 35
<PAGE>
HIGH-YIELD BOND PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Maxus Energy Corporation 11.25%, due 05/01/13..... $ 45,000 $ 46,687
Mesa Operating Company 10.625%, due 07/01/06...... 850,000 924,375
YPF Sociedad Anonima 8.00%, due 02/15/04.......... 650,000 625,625
-------------
3,809,312
Entertainment & Leisure -- 3.89%
- ---------------------------------------------------------------------------------
AMF Group Inc. 10.875%, due 03/15/06.............. 900,000 949,500
Cobblestone Golf Group Inc. 11.50%, due
06/01/03.......................................... 400,000 417,000
E & S Holdings Corporation 10.375%, due
10/01/06.......................................... 1,000,000 1,045,000
-------------
2,411,500
Finance -- 1.51%
- ---------------------------------------------------------------------------------
First Nationwide Escrow Corporation 10.625%, due
10/01/03.......................................... 350,000 377,125
Homeside Inc. 11.25%, due 05/15/03................ 500,000 559,375
-------------
936,500
Food & Beverages & Tobacco -- 1.62%
- ---------------------------------------------------------------------------------
Cott Corporation 9.375%, due 07/01/05............. 400,000 412,000
Keebler Corporation 10.75%, due 07/01/06.......... 550,000 594,000
-------------
1,006,000
Gaming -- 1.98%
- ---------------------------------------------------------------------------------
Casino Magic Corporation 11.50%, due 10/15/01..... 350,000 315,000
Harrahs Jazz (b) 14.25%, due 11/15/01............. 250,000 123,125
Trump Atlantic City Associates 11.25%, due
05/01/06.......................................... 800,000 790,000
-------------
1,228,125
Health Care -- 6.30%
- ---------------------------------------------------------------------------------
Dade International Inc. 11.125%, due 05/01/06..... $ 600,000 648,000
Fresenius Med Care Capital Trust Trust Preferred
Securities........................................ 500 511,250
Mariner Health Group Inc. 9.50%, due 04/01/06..... $ 550,000 536,250
Maxxim Medical Inc. 144A 10.50%, due 08/01/06..... 850,000 888,250
Mediq Inc. Convertible Debenture 7.50%, due
07/15/03.......................................... 840,000 743,400
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Quest Diagnostics Inc. 10.75%, due 12/15/06....... $ 550,000 $ 577,500
-------------
3,904,650
Hotels & Restaurants -- 3.87%
- ---------------------------------------------------------------------------------
Foodmaker Corporation 9.75%, due 11/01/03......... $ 350,000 339,938
Foodmaker Inc. (Wts) (a).......................... 250 2,000
H M H Properties Inc. 9.50%, due 05/15/05......... $ 800,000 834,000
Hammon John Q. Hotels 8.875%, due 02/15/04........ 700,000 691,250
Wyndham Hotel Corporation 10.50%, due 05/15/06.... 500,000 530,000
-------------
2,397,188
Machinery -- 1.10%
- ---------------------------------------------------------------------------------
Mettler Toledo Inc. 9.75%, due 10/01/06........... 650,000 684,125
Metals & Mining -- 7.93%
- ---------------------------------------------------------------------------------
AK Steel Corporation 9.125%, due 12/15/06......... 350,000 359,625
Euramax International PLC 11.25%, due 10/01/06.... 250,000 258,750
Kaiser Aluminum & Chemical Corporation 10.875%,
due 10/15/06...................................... 500,000 528,125
Kaiser Aluminum & Chemical Corporation 12.75%, due
02/01/03.......................................... 500,000 534,375
Oregon Steel Mills Inc. 11.00%, due 06/15/03...... 900,000 951,750
United States Can Corporation 10.125%, due
10/15/06.......................................... 750,000 787,500
WCI Steel Inc. 10.00%, due 12/01/04............... 800,000 810,000
Wheeling Pittsburgh Corporation 9.375%, due
11/15/03.......................................... 700,000 689,500
-------------
4,919,625
Paper & Forest Products -- 5.66%
- ---------------------------------------------------------------------------------
Crown Paper Company 11.00%, due 09/01/05.......... 700,000 656,250
Four M Corporation 12.00%, due 06/01/06........... 750,000 789,375
Riverwood International Corporation 10.25%, due
04/01/06.......................................... 800,000 784,000
SD Warren Company 12.00%, due 12/15/04............ 650,000 702,813
</TABLE>
36 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
HIGH-YIELD BOND PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Stone Container Corporation 10.75%, due
10/01/02.......................................... $ 550,000 $ 578,875
-------------
3,511,313
Retail -- 7.15%
- ---------------------------------------------------------------------------------
Ann Taylor Inc. 8.75%, due 06/15/00............... 440,000 430,650
Brunos Inc. 10.50%, due 08/01/05.................. 500,000 528,750
Cole National Group Inc. 9.875%, due 12/31/06..... 800,000 824,000
Corporate Express Inc. 9.125%, due 03/15/04....... 650,000 662,187
Penn Traffic Company 11.50%, due 04/15/06......... 350,000 307,125
Ralphs Grocery Company 10.45%, due 06/15/04....... 750,000 796,875
Smiths Food & Drug 11.25%, due 05/15/07........... $ 800,000 886,000
-------------
4,435,587
Telecommunications -- 10.82%
- ---------------------------------------------------------------------------------
American Communications Services Inc. (Wts) (a)... 800 75,200
American Communications Services Inc. Zero Coupon,
due 11/01/05...................................... $ 1,000,000 595,000
Brooks Fiber Properties Inc. Zero Coupon, due
11/01/06.......................................... 900,000 573,750
ICG Holdings Inc. Zero Coupon, due 05/01/06....... 950,000 619,875
MFS Communications Inc. Zero Coupon, due
01/15/04.......................................... 500,000 433,750
Pagemart Zero Coupon, due 11/01/03................ $ 375,000 299,062
Pagemart (Wts) (a)................................ 3,450 24,150
Pagemart Nationwide Inc........................... 1,750 19,688
Pagemart Nationwide Units Zero Coupon, due
02/01/05.......................................... $ 500,000 337,500
Paging Network Inc. 8.875%, due 02/01/06.......... 500,000 477,500
Phonetel Technologies Inc. 12.00%, due 12/15/06... 250,000 258,750
Sprint Spectrum L P Zero Coupon, due 08/15/06..... 1,000,000 677,500
Sprint Spectrum L P 11.00%, due 08/15/06.......... 650,000 703,625
Teleport Communications Group Zero Coupon, due
07/01/07.......................................... 650,000 447,687
Teleport Communications Group 9.875%, due
07/01/06.......................................... 1,100,000 1,168,750
-------------
6,711,787
Textiles -- 1.40%
- ---------------------------------------------------------------------------------
Carter William Company 10.375%, due 12/01/06...... 850,000 871,250
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Utilities -- 1.67%
- ---------------------------------------------------------------------------------
Ferrellgas Partners L P 9.375%, due 06/15/06...... $ 550,000 $ 555,500
Midland Cogeneration Venture L P 10.33%, due
07/23/02.......................................... 216,149 231,009
Midland Funding Corporation I 10.33%, due
07/23/02.......................................... 232,745 248,747
-------------
1,035,256
Waste Management -- 1.70%
- ---------------------------------------------------------------------------------
Allied Waste North America Inc. 10.25%, due
12/01/06.......................................... 1,000,000 1,052,500
Total Corporate Bonds, Convertible Securities & Common Stocks
(Identified cost $53,890,779)....................................
56,055,830
- ---------------------------------------------------------------------------------
Foreign Bonds -- 5.93%
- ---------------------------------------------------------------------------------
Basic Industries -- 1.98%
- ---------------------------------------------------------------------------------
Cemex S A 12.75%, due 07/15/06.................... 1,100,000 1,229,250
Broadcasting -- 1.47%
- ---------------------------------------------------------------------------------
Grupo Televisa S A 11.375%, due 05/15/03.......... 850,000 909,500
Government Bond -- 1.42%
- ---------------------------------------------------------------------------------
United Mexican States 9.75%, due 02/06/01......... 850,000 880,812
Transportation -- 1.06%
- ---------------------------------------------------------------------------------
Transportacion Maritima Mexica 10.00%, due
11/15/06.......................................... 650,000 655,688
Total Foreign Bonds
(Identified cost $3,548,178).....................................
3,675,250
- ---------------------------------------------------------------------------------
Repurchase Agreement -- 1.77%
- ---------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement
4.00%, due 01/02/97
Collateral: U.S. Treasury Note $1,125,000 5.625%
due 11/30/98 Value $1,126,175..................... 1,100,000 1,100,000
-------------
Total Repurchase Agreement
(Identified cost $1,100,000).....................................
1,100,000
- ---------------------------------------------------------------------------------
Total Investments
(Identified cost $58,538,957)....................................
$ 60,831,080
Other Assets Less Liabilities -- 1.92%...........................
1,189,798
-------------
Net Assets -- 100%...............................................
$ 62,020,878
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
(b) In bankruptcy; Portfolio has ceased accrual of interest.
(Wts) Warrants
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 37
<PAGE>
The Enterprise Tax-Exempt Income Portfolio
Morgan Stanley Asset Management, Inc.
New York, New York
INVESTMENT MANAGEMENT
Morgan Stanley Asset Management, Inc. is a wholly owned subsidiary of the Morgan
Stanley Group, Inc. and has managed the Enterprise Tax-Exempt Income Portfolio
since January 1, 1992. Morgan Stanley manages over $67 billion for institutional
clients. Their 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
Morgan Stanley's management style is risk averse and conservative. Morgan
Stanley strives 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.
1996 PERFORMANCE REVIEW
The 1996 performance of the Enterprise Tax-Exempt Income Portfolio was favorably
influenced by the elimination of the threat of major tax reform, including the
potential for a consumption based or flat tax structure. This caused yield
ratios versus U.S. Treasuries to decline dramatically from January through
August. A decline in interest rates and increased supply caused the ratios to
creep slightly higher in September through the end of the year. New issue supply
topped $180 billion in 1996, the highest volume level since the peak refunding
years of 1992 and 1993. Issuers sold more new money issues than in any year
since 1985. On the demand side, insurance company interest remained strong and
individual investors continued to support the one to ten year maturity range.
Demand for long term municipal bond funds continued to wane, never quite
recovering from a combination of the poor bond market performance of 1994, the
flat tax scare of 1995 and the competition coming from the roaring U.S. equity
market.
Class A
<TABLE>
<C> <S>
[GRAPH] ** 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.
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 39
<PAGE>
Class B
<TABLE>
<C> <S>
[GRAPH] ** 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 performances. Shares
may be worth more or less
at redemption than at
original purchase.
</TABLE>
FUTURE INVESTMENT STRATEGY
Indications of a strengthening economy during the 4th quarter of 1996 cast a
cautious tone on the bond market as 1997 began. The bond markets may tread
slowly during the 1st quarter of 1997, as investors continue to wrestle with
whether recent signs of strength in the economy are a temporary aberration or a
trend that has some momentum. The focus will be on how much of an inflationary
threat the Federal Reserve perceives at current growth levels and what the
implications are for Fed policy over the next few months. If the economy does
show above trend growth, a correction in the bond markets would probably push
yields up to levels last seen during the summer of 1996. In the near term, we do
not anticipate making any major changes to the current portfolio structure.
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.
40 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
TAX-EXEMPT INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Municipal Bonds -- 98.19%
<S> <C> <C>
Principal
Amount Value
- ----------------------------------------------------------------------------------
Arizona -- 2.92%
- ----------------------------------------------------------------------------------
Salt River Project, Arizona Agriculture Import
and Power District Electric System Revenue
5.00% due 01/01/30............................ $ 1,000,000 $ 889,750
California -- 2.36%
- ----------------------------------------------------------------------------------
California State General Obligation Bonds
6.10% due 09/01/04............................ 150,000 162,981
Los Angeles County, California Sales Tax
Series A Revenue 6.75% due 07/01/18
Prerefunded 07/01/01 at 102................... 500,000 556,670
-------------
719,651
Connecticut -- 1.81%
- ----------------------------------------------------------------------------------
Connecticut State Health & Education Facility
Revenue Hospital MBIA 7.10% due 07/01/25...... 500,000 553,490
Delaware -- 2.27%
- ----------------------------------------------------------------------------------
Delaware Transportation Authority Systems
Revenue 6.50% due 07/01/11 Prerefunded
07/01/01 at 102............................... 630,000 692,332
Florida -- 9.00%
- ----------------------------------------------------------------------------------
Broward County, Broward Recovery Revenue 7.95%
due 12/01/08.................................. 325,000 357,445
Broward County, South Recovery Revenue 7.95%
due 12/01/08.................................. 175,000 192,470
Florida State Board Education Capital Outlay
Series C 5.50% due 06/01/23................... 1,500,000 1,473,570
Florida State Board Education Capital Outlay
Series A 7.25% due 06/01/23................... 170,000 186,602
<CAPTION>
Principal
Amount Value
<S> <C> <C>
Orange County, Florida Health Facilities
Authority Pooled Hospital Loan Series A
Refunding 7.875% due 12/01/25................. $ 235,000 $ 243,448
Orlando Florida Utilities Commission Water and
Electric Revenue Refunding Sub Series D 6.75%
due 10/01/17.................................. 250,000 291,488
-------------
2,745,023
Georgia -- 1.72%
- ----------------------------------------------------------------------------------
Atlanta Downtown Development Authority
Underground Atlanta Project 6.25% due
10/01/12...................................... 500,000 525,605
Idaho -- 1.36%
- ----------------------------------------------------------------------------------
Idaho Housing Agency Single Family Mortgage
Revenue Series F-2 (AMT) 7.80% due 01/01/23... 395,000 413,620
Illinois -- 2.70%
- ----------------------------------------------------------------------------------
Du Page County, Illinois Revenue 6.50% due
01/01/12 Prerefunded 01/01/02 at 102.......... 750,000 824,798
Kansas -- 1.73%
- ----------------------------------------------------------------------------------
Kansas State Department Transportation Highway
Revenue Series A 5.50% due 09/01/03........... 500,000 527,520
Louisiana -- 1.08%
- ----------------------------------------------------------------------------------
Louisiana State Offshore Term Authority
Deepwater Port Revenue Series E 7.60% due
09/01/10...................................... 300,000 329,670
Maryland -- 3.41%
- ----------------------------------------------------------------------------------
Maryland State General Obligation Bonds 5.50%
due 02/01/07.................................. 1,000,000 1,039,810
Massachusetts -- 2.61%
- ----------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 41
<PAGE>
TAX-EXEMPT INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
Massachusetts State Housing Finance Agency
Revenue Residential FNMA Collateral-A 6.90%
due 11/15/24.................................. $ 750,000 $ 796,980
Michigan -- 3.54%
- ----------------------------------------------------------------------------------
Michigan State Building Authority Revenue
Series I 6.40% due 10/01/04................... 1,000,000 1,080,440
Missouri -- 0.48%
- ----------------------------------------------------------------------------------
Missouri State Housing Development Community
Mortgage Single Family GNMA Revenue Series B
(AMT) 8.25% due 05/01/19...................... 140,000 145,461
Nebraska -- 3.31%
- ----------------------------------------------------------------------------------
Omaha Public Power District Nebraska Electric
Revenue 5.60% due 02/01/12.................... 1,000,000 1,010,990
Nevada -- 6.32%
- ----------------------------------------------------------------------------------
Clark County School District Series A MBIA
7.00% due 06/01/11............................ 750,000 871,245
Nevada State General Obligation Bonds 6.25%
due 07/01/12.................................. 1,000,000 1,056,550
-------------
1,927,795
New Mexico -- 1.47%
- ----------------------------------------------------------------------------------
New Mexico Mortgage Finance Authority Single
Family Mortgage 7.80% due 09/01/17............ 435,000 448,437
New York -- 10.94%
- ----------------------------------------------------------------------------------
New York State Local Government Assistance
Prerefunded 04/01/01 at 102 7.00% due
04/01/21...................................... 500,000 556,985
New York State Mortgage Agency Revenue 7.95%
due 10/01/14.................................. 200,000 206,656
<CAPTION>
Principal
Amount Value
<S> <C> <C>
New York State Power Authority Revenue &
General Purpose Series CC 5.00% due
01/01/09...................................... $ 1,200,000 $ 1,167,876
Triborough Bridge & Tunnel Authority, New York
General Purpose Series A 6.00% due 01/01/10... 1,300,000 1,408,485
-------------
3,340,002
Ohio -- 0.57%
- ----------------------------------------------------------------------------------
Ohio Housing Finance Agency Single Family
Mortgage Revenue GNMA 8.25% due 12/15/19...... 70,000 73,123
Ohio State Air Quality Development Authority
(Cincinnati Gas & Electric Project) Series A
Daily Variable Rate Demand Note (v) 4.70% due
01/02/97...................................... 100,000 100,000
-------------
173,123
Oklahoma -- 5.17%
- ----------------------------------------------------------------------------------
Tulsa, Oklahoma General Obligation Bonds 6.30%
due 06/01/17.................................. 1,500,000 1,576,770
Oregon -- 1.40%
- ----------------------------------------------------------------------------------
Oregon State General Obligation Bonds 7.00%
due 12/01/11.................................. 400,000 426,884
Pennsylvania -- 2.71%
- ----------------------------------------------------------------------------------
Philadelphia Pennsylvania Hospitals & Higher
Education Facilities Hospital Revenue 6.50%
due 02/15/09 Prerefunded 02/15/02 at 102...... 750,000 826,058
South Carolina -- 0.17%
- ----------------------------------------------------------------------------------
Charleston County South Carolina Resource
Recovery Revenue 9.25% due 01/01/10........... 50,000 53,458
Texas -- 9.13%
- ----------------------------------------------------------------------------------
</TABLE>
42 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
TAX-EXEMPT INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
Brazos River Authority Texas Revenue 8.25% due
05/01/15...................................... $ 150,000 $ 159,480
Harris County, Texas Health Facility Revenue
Texas Medical Center Project MBIA 7.375% due
05/15/20...................................... 500,000 555,400
Houston Texas General Obligation Bonds 6.00%
due 03/01/05.................................. 500,000 526,280
San Antonio, Revenue Refunding General
Obligation Bonds 5.75% due 08/01/13........... 975,000 985,471
Texas Housing Agency Residential Development
Revenue Series A GNMA Collateral 7.60% due
07/01/16...................................... 120,000 124,481
Texas State Department Housing Community
Affairs Home Mortgage Revenue GNMA Collateral
Series A 6.95% due 07/01/23................... 415,000 435,464
-------------
2,786,576
Utah -- 0.32%
- ----------------------------------------------------------------------------------
Utah State Housing Finance Agency Single
Family Mortgage Series E (AMT) 9.00% due
01/01/19...................................... 95,000 98,966
Virginia -- 9.95%
- ----------------------------------------------------------------------------------
Fairfax County, Virginia General Obligation
Bonds 5.40% due 05/01/11...................... 1,000,000 1,006,750
Fairfax County, Virginia Water Authority
Revenue 5.75% due 04/01/29.................... 1,000,000 993,030
Virginia State Transportation Board Revenue
6.00% due 04/01/10............................ 1,000,000 1,036,010
-------------
3,035,790
<CAPTION>
Principal
Amount Value
<S> <C> <C>
Washington -- 7.30%
- ----------------------------------------------------------------------------------
Tacoma, Washington Electric Systems Revenue
AMBAC 6.15% due 01/01/08...................... $ 1,000,000 $ 1,054,990
Washington State General Obligation Series 93A
5.75% due 10/01/17............................ 1,000,000 1,009,210
Washington State Public Power Supply (Nuclear
Project # 1) Revenue Refunding Series B 7.25%
due 07/01/15..................................
Prerefunded 01/01/00 at 102 150,000 164,696
-------------
2,228,896
West Virginia -- 0.90%
- ----------------------------------------------------------------------------------
Kanawha County Building Community Hospital
Charleston Medical Center Series A Revenue
7.50% due 11/01/08............................
Prerefunded 11/01/99 at 102 250,000 275,090
Wisconsin -- 1.54%
- ----------------------------------------------------------------------------------
Wisconsin Housing & Economic Development
Authority Home Ownership Revenue Series A
7.75% due 09/01/17............................ 450,000 469,242
Total Municipal Bonds
(Identified Cost $28,431,554).....................................
29,962,227
- ----------------------------------------------------------------------------------
Total Investments
(Identified cost $28,431,554).....................................
29,962,227
Other Assets Less Liabilities -- 1.81%............................
553,325
-------------
Net Assets -- 100%................................................
$ 30,515,552
- ----------------------------------------------------------------------------------
</TABLE>
AMT Securities subject to Alternative Minimum Tax
(v) Variable interest rate security; Interest rate is as of December 31, 1996,
and is adjusted daily. The maturity date shown is the next interest rate
reset.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 43
<PAGE>
The Enterprise Managed Portfolio
OpCap Advisors
New York, New York
INVESTMENT MANAGEMENT
OpCap Advisors, a wholly owned subsidiary of Oppenheimer Capital, became
investment adviser to this new Enterprise fund on October 1, 1994. Oppenheimer
Capital currently manages over $48 billion for institutional clients. Their
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 the assessment
of relative investment values.
INVESTMENT PHILOSOPHY
OpCap Advisors' 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.
1996 PERFORMANCE REVIEW
The strong advance of the S&P 500 Index during 1996 was a surprise to us.
Earlier in the year we had concerns about the direction of inflation and
monetary growth as well as the election results. However, in the end, the
elections ended satisfactorily, inflation stayed below the horizon, monetary
growth was about right and even international economies remained safely between
boom and bust. In this environment the Enterprise Managed Portfolio produced
solid performance lead by exposure to stocks in the financial (banks and
government sponsored entities such as Freddie Mac) and aerospace industries but
diluted by cash investments averaging somewhat in excess of 15% of asset value
during 1996.
Class A
<TABLE>
<C> <S>
[GRAPH] ** The S&P 500 Index is an
unmanaged 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
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.
</TABLE>
44 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
Year end found the Portfolio with substantial holdings of high quality financial
stocks, including banks and insurance companies. These companies included Wells
Fargo, Citicorp, Federal Home Loan Mortgage and Exel Ltd. The Portfolio also
held a significant position in McDonnell Douglas and Du Pont. Major industry
positions were in financial services, banks, aerospace, insurance and machinery.
FUTURE INVESTMENT STRATEGY
OpCap continues to focus on preservation of capital. Given the level of the
overall market, cash will generally range from the low teens to 20% in 1997.
Stock selection criteria remains unchanged targeted towards high return on
capital businesses, well protected by barriers to entry, run by managements who
consider caring for the shareholder "job #1," and OpCap wants to buy them at
prices which do not fairly reflect the foregoing attributes.
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. 45
<PAGE>
MANAGED PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Common Stocks -- 88.43% Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Aerospace -- 9.44%
Lockheed Martin Corporation....................... 53,600 $ 4,904,400
Loral Space & Communications...................... 45,000 826,875
McDonnell Douglas Corporation..................... 190,000 12,160,000
Northrop Grumman Corporation...................... 30,000 2,482,500
-------------
20,373,775
Apparel & Textiles -- 1.56%
- ---------------------------------------------------------------------------------
V F Corporation................................... 50,000 3,375,000
Automotive -- 1.70%
- ---------------------------------------------------------------------------------
LucasVarity PLC (ADR)............................. 96,600 3,670,800
Banking -- 11.76%
- ---------------------------------------------------------------------------------
Citicorp.......................................... 99,000 10,197,000
First Empire State Corporation.................... 10,900 3,139,200
Wells Fargo & Company............................. 44,633 12,039,752
-------------
25,375,952
Broadcasting -- 0.14%
- ---------------------------------------------------------------------------------
TCI Satellite Entertainment Inc................... 30,000 296,250
Building & Construction -- 0.27%
- ---------------------------------------------------------------------------------
Newport News Shipbuilding Inc..................... 39,340 590,100
Chemicals -- 6.37%
- ---------------------------------------------------------------------------------
Du Pont (E I) de Nemours & Company................ 100,000 9,437,500
Hercules Inc...................................... 54,600 2,361,450
Monsanto Company.................................. 50,000 1,943,750
-------------
13,742,700
Consumer Products -- 3.80%
- ---------------------------------------------------------------------------------
Mattel, Inc....................................... 295,600 8,202,900
Drugs & Medical Products -- 2.77%
- ---------------------------------------------------------------------------------
Becton, Dickinson & Company....................... 137,800 5,977,075
Electronics -- 4.50%
- ---------------------------------------------------------------------------------
National Semiconductor Corporation (a)............ 240,000 5,850,000
Unitrode Corporation (a).......................... 62,300 1,830,062
Varian Associates Inc............................. 40,000 2,035,000
-------------
9,715,062
Energy -- 2.05%
- ---------------------------------------------------------------------------------
Triton Energy Ltd. (a)............................ 91,000 4,413,500
Entertainment & Leisure -- 0.46%
- ---------------------------------------------------------------------------------
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Harrahs Entertainment, Inc........................ 50,000 $ 993,750
Insurance -- 7.04%
- ---------------------------------------------------------------------------------
Ace Ltd........................................... 40,000 2,405,000
EXEL Ltd.......................................... 178,800 6,772,050
Travelers Aetna Property Casualty.................
Corporation....................................... 170,000 6,013,750
-------------
15,190,800
Machinery -- 6.45%
- ---------------------------------------------------------------------------------
Caterpillar Inc................................... 66,100 4,974,025
Tenneco Inc. New.................................. 198,400 8,952,800
-------------
13,926,825
Metals & Mining -- 3.28%
- ---------------------------------------------------------------------------------
Freeport McMoRan Copper & Gold, Inc. (Class B).... 237,000 7,080,375
Misc. Financial Services -- 12.28%
- ---------------------------------------------------------------------------------
American Express Company.......................... 71,000 4,011,500
Countrywide Credit Industries, Inc................ 202,400 5,793,700
Federal Home Loan Mortgage Corporation............ 91,900 10,120,487
Federal National Mortgage Association............. 176,600 6,578,350
-------------
26,504,037
Paper Products -- 1.97%
- ---------------------------------------------------------------------------------
Champion International Corporation................ 98,300 4,251,475
Printing & Publishing -- 0.79%
- ---------------------------------------------------------------------------------
Donnelley R R & Sons Company...................... 54,600 1,713,075
Restaurants -- 3.23%
- ---------------------------------------------------------------------------------
McDonalds Corporation............................. 154,300 6,982,075
Technology -- 2.25%
- ---------------------------------------------------------------------------------
Intel Corporation................................. 37,100 4,857,781
Telecommunications -- 3.34%
- ---------------------------------------------------------------------------------
Tele-Communications, Inc. (a)..................... 551,200 7,200,050
Transportation -- 2.98%
- ---------------------------------------------------------------------------------
Union Pacific Corporation......................... 107,100 6,439,388
Total Common Stocks
(Identified cost $156,601,633)...................................
190,872,745
- ---------------------------------------------------------------------------------
Commercial Paper -- 7.85%
- ---------------------------------------------------------------------------------
</TABLE>
46 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
MANAGED PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Beneficial Corporation 5.50% due 01/27/97......... $ 6,000,000 $ 5,976,167
Ford Motor Credit Company 5.38% due 01/09/97...... 6,000,000 5,992,827
General Electric Capital Corporation, 5.35% due
01/30/97.......................................... 5,000,000 4,978,451
Total Commercial Paper
(Identified cost $16,947,445)....................................
16,947,445
- ---------------------------------------------------------------------------------
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Repurchase Agreement -- 2.94%
- ---------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
4.75% due 01/02/97
Collateral: U.S. Treasury Bond $6,465,000 5.625%
due 11/30/98 Value $6,471,749..................... $ 6,340,000 $ 6,340,000
-------------
Total Repurchase Agreement
(Identified cost $6,340,000).....................................
6,340,000
- ---------------------------------------------------------------------------------
Total Investments
(Identified cost $179,889,078)...................................
$ 214,160,190
Other Assets Less Liabilities -- 0.78%...........................
1,693,387
-------------
Net Assets -- 100%...............................................
$ 215,853,577
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
ADR American Depository Receipt
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 47
<PAGE>
The Enterprise Money Market Portfolio
Enterprise Capital Management, Inc.
Atlanta, Georgia
INVESTMENT MANAGEMENT
Enterprise Capital Management is a wholly owned subsidiary of the Mutual Life
Insurance Company of New York. They 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
The Portfolio invests primarily 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 Enterprise Capital Management
emphasizes purchases primarily in a maturity range of 60 to 120 days so as to
provide flexibility to respond to significant changes in the market.
1996 PERFORMANCE REVIEW
The Federal Reserve appears to have been very pleased with the soft landing of
the economy in 1996 that resulted from interest rate changes in 1995. With one
last tweak of interest rates in early 1996, placing the Fed Funds rate at 5.25%,
the Fed has sat back and watched the economy show overall moderate growth
throughout 1996. Employment and wages remain strong but have not skyrocketed out
of control. Consumers have generally been restrained although somewhat more
optimistic in their buying patterns this year as housing sales were sluggish
until rates dropped toward the end of 1996 and as consumers made only moderate
increases in Christmas purchases.
The economy continues on its relatively steady moderate growth path. Federal
Reserve members are watching closely for a turn in the economy but, overall,
they seem to be relatively happy with the current economic course. With no
pitfalls in sight, the Fed is expected to remain steady with interest rates
through most of 1997. Late 1997 data may provide information that will lead to a
very modest change in interest rates as another preemptive move by the Fed.
FUTURE INVESTMENT STRATEGY
The interest rate curve remains relatively flat. Investors expect a steady
course in interest rates by the Federal Reserve. The Portfolio is therefore
generally running an average portfolio maturity of 45 days, while taking
advantage of market anomalies that periodically occur in one particular maturity
or another. At year end, the average maturity was 30 days, shorter than usual to
take advantage of any year end spike in short maturity rates.
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. 49
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Certificate of Deposit -- 3.31% Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Bank Of Nova Scotia 5.50% due 01/03/97............ $ 2,000,000 $ 2,000,000
-------------
Total Certificate of Deposit
(Identified cost $2,000,000).....................................
2,000,000
Commercial Paper -- 91.43%
- ---------------------------------------------------------------------------------
American Express Credit Corporation, 5.30% due
01/27/97.......................................... 700,000 697,321
American Express Credit Corporation, 5.30% due
02/28/97.......................................... 400,000 396,584
American Express Credit Corporation, 5.32% due
01/08/97.......................................... 1,000,000 998,966
American Express Credit Corporation, 5.33% due
01/09/97.......................................... 300,000 299,645
American Telephone & Telegraph Company, 5.50% due
02/05/97.......................................... 2,700,000 2,685,563
Associates Corporation North America, 5.33% due
01/10/97.......................................... 500,000 499,334
Associates Corporation North America, 5.48% due
01/31/97.......................................... 2,000,000 1,990,867
Avco Financial Services Inc. 5.32% due 01/23/97... 1,500,000 1,495,123
Avco Financial Services Inc. 5.41% due 03/13/97... 1,000,000 989,330
Banc One Funding Corporation 5.46% due 01/06/97... 2,000,000 1,998,483
Bank of New York 5.30% due 01/10/97............... 2,000,000 1,997,350
Barclays US Funding 5.52% due 01/21/97............ 1,000,000 996,933
British Province of Columbia 5.34% due 04/01/97... 2,000,000 1,973,300
Chevron Oil Finance Company 5.40% due 01/07/97.... 1,000,000 999,100
CIT Group Holdings Inc. 5.35% due 02/25/97........ 500,000 495,913
CIT Group Holdings Inc. 5.46% due 01/24/97........ 2,000,000 1,993,023
Coca Cola Company 5.55% due 01/17/97.............. 2,000,000 1,995,067
Commercial Credit Company 5.30% due 01/06/97...... 2,500,000 2,498,160
Conagra Inc. 5.60% due 01/03/97................... 500,000 499,844
Disney Walt Company 5.31% due 02/14/97............ 1,000,000 993,510
Enterprise Funding Corporation 5.46% due
01/10/97.......................................... 560,000 559,236
Exxon Funding 5.23% due 01/13/97.................. 1,487,000 1,484,408
Ford Motor Credit Company 5.30% due 01/08/97...... 1,000,000 998,970
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Ford Motor Credit Company 5.32% due 01/23/97...... $ 1,000,000 $ 996,749
General Electric Capital Corporation, 5.31% due
01/06/97.......................................... 500,000 499,631
General Electric Capital Corporation, 5.41% due
01/09/97.......................................... 1,200,000 1,198,557
General Motors Acceptance Corporation, 5.40% due
01/13/97.......................................... 500,000 499,100
Goldman Sachs Group LP 5.32% due 04/21/97......... 2,000,000 1,967,489
Household Finance Corporation 5.29% due
02/07/97.......................................... 2,500,000 2,486,408
Merrill Lynch & Company Inc. 5.34% due 01/27/97... 1,300,000 1,294,986
Merrill Lynch & Company Inc. 5.44% due 01/21/97... 1,000,000 996,978
Metropolitan Life Funding Inc. 5.45% due
01/10/97.......................................... 1,500,000 1,497,956
National Westminster Bank PLC 5.45% due
02/28/97.......................................... 1,000,000 991,219
Norwest Corporation 5.40% due 01/09/97............ 1,300,000 1,298,440
PHH Corporation 5.68% due 01/17/97................ 800,000 797,980
Philip Morris Companies Inc. 5.30% due 01/13/97... 1,300,000 1,297,703
Province De Quebec 5.30% due 01/23/97............. 1,300,000 1,295,790
Prudential Funding Corporation 5.30% due
01/07/97.......................................... 2,000,000 1,998,233
Republic New York Corporation Discount, 5.35% due
01/08/97.......................................... 1,500,000 1,498,440
Sanwa Business Credit Corporation, 5.58% due
01/15/97.......................................... 500,000 498,915
Sears Roebuck Acceptance Corporation, 5.50% due
01/30/97.......................................... 500,000 497,785
Transamerica Finance Group Inc. 5.33% due
01/13/97.......................................... 1,000,000 998,223
Transamerica Finance Group Inc. 5.43% due
01/13/97.......................................... 500,000 499,095
Weyerhauser Mortgage 5.45% due 01/16/97........... 1,000,000 997,729
Xerox Corporation 5.30% due 01/24/97.............. 1,600,000 1,594,582
-------------
Total Commercial Paper
(Identified cost $55,238,018)....................................
55,238,018
- ---------------------------------------------------------------------------------
</TABLE>
50 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
MONEY MARKET PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number
of Shares
or Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------------------------------
Short Term Government Securities -- 1.66%
- ---------------------------------------------------------------------------------
Federal Home Loan Bank 5.85% due 11/06/97......... $ 1,000,000 $ 1,000,000
Total Short Term Government Securities
(Identified cost $1,000,000).....................................
1,000,000
- ---------------------------------------------------------------------------------
Repurchase Agreement -- 0.84%
- ---------------------------------------------------------------------------------
State Street Bank & Trust Repurchase
Agreement,.....2.00% due 01/02/97 Collateral: U.S.
Treasury Note $520,000 5.625% due 11/30/98 Value
$520,543 510,000 510,000
-------------
Total Repurchase Agreement
(Identified cost $510,000).......................................
510,000
- ---------------------------------------------------------------------------------
Total Investments
(Identified cost $58,748,018)....................................
$ 58,748,018
Other Assets Less Liabilities -- 2.76%...........................
1,669,033
-------------
Net Assets -- 100%...............................................
$ 60,417,051
- ---------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 51
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Capital Small
Growth Income Appreciation Company
Portfolio Portfolio Portfolio Portfolio
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Assets:
- --------------------------------------------------------------------------------------------
Investments at value $ 234,443,855 $ 78,925,672 $ 121,784,848 $ 22,258,204
- --------------------------------------------------------------------------------------------
Foreign currency at value
(identified cost-$294,018) -- -- -- --
- --------------------------------------------------------------------------------------------
Receivable for fund shares
sold 2,087,466 34,017 62,713 49,813
- --------------------------------------------------------------------------------------------
Receivable for investments
sold -- -- 696,456 --
- --------------------------------------------------------------------------------------------
Dividends and interest
receivable 115,348 135,867 37,590 16,649
- --------------------------------------------------------------------------------------------
Due from investment adviser -- 12,929 -- 8,611
- --------------------------------------------------------------------------------------------
Forward currency contracts
(net) receivable -- -- -- --
- --------------------------------------------------------------------------------------------
Cash and other assets 44,646 4,175 49,611 16,431
- --------------------------------------------------------------------------------------------
Total assets $ 236,691,315 $ 79,112,660 $ 122,631,218 $ 22,349,708
- --------------------------------------------------------------------------------------------
Liabilities:
- --------------------------------------------------------------------------------------------
Payable for fund shares
redeemed 68,356 3,557 1,438,896 13,866
- --------------------------------------------------------------------------------------------
Payable for investments
purchased -- 499,629 -- 281,250
- --------------------------------------------------------------------------------------------
Dividends and distributions
payable 683,494 212,614 680,798 146,385
- --------------------------------------------------------------------------------------------
Investment advisory fee
payable 149,421 49,765 78,531 13,784
- --------------------------------------------------------------------------------------------
Distribution fee payable 104,589 32,391 49,466 8,690
- --------------------------------------------------------------------------------------------
Other accrued expenses 110,873 52,924 83,508 46,128
- --------------------------------------------------------------------------------------------
Total liabilities $ 1,116,733 $ 850,880 $ 2,331,199 $ 510,103
- --------------------------------------------------------------------------------------------
Net assets $ 235,574,582 $ 78,261,780 $ 120,300,019 $ 21,839,605
- --------------------------------------------------------------------------------------------
Analysis of net assets
- --------------------------------------------------------------------------------------------
Accumulated paid-in capital 157,571,722 56,953,007 83,002,799 19,948,629
- --------------------------------------------------------------------------------------------
Undistributed net investment
income (loss) -- 20,883 -- --
- --------------------------------------------------------------------------------------------
Accumulated net realized gain
(loss) on investments 506,846 791,063 1,377,415 400,231
- --------------------------------------------------------------------------------------------
Accumulated net realized
(loss) on futures -- -- -- --
- --------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of investments
and foreign currencies
denominated amounts 77,496,014 20,496,827 35,919,805 1,490,745
- --------------------------------------------------------------------------------------------
Net assets $ 235,574,582 $ 78,261,780 $ 120,300,019 $ 21,839,605
- --------------------------------------------------------------------------------------------
Class A: Net assets $ 196,751,809 $ 72,646,889 $ 115,252,520 $ 17,308,122
- --------------------------------------------------------------------------------------------
Shares outstanding 15,023,499 3,237,312 3,368,944 3,013,526
- --------------------------------------------------------------------------------------------
Net asset value and redemption
price per share $13.10 $22.44 $34.21 $5.74
- --------------------------------------------------------------------------------------------
Sales charge per share $0.65 $1.12 $1.71 $0.29
- --------------------------------------------------------------------------------------------
Maximum offering price per
share, including sales charge
of 4.75% $13.75 $23.56 $35.92 $6.03
- --------------------------------------------------------------------------------------------
Class B: Net assets $ 36,483,336 $ 5,614,891 $ 5,047,499 $ 2,605,524
- --------------------------------------------------------------------------------------------
Shares outstanding 2,812,263 251,794 149,075 458,104
- --------------------------------------------------------------------------------------------
Net asset value and offering
price per share $12.97 $22.30 $33.86 $5.69
- --------------------------------------------------------------------------------------------
Class Y: Net assets $ 2,339,437 -- -- $ 1,925,959
- --------------------------------------------------------------------------------------------
Shares outstanding 178,301 -- -- 333,912
- --------------------------------------------------------------------------------------------
Net asset value, offering and
redemption price per share $13.12 -- -- $5.77
- --------------------------------------------------------------------------------------------
Investments at cost $ 156,947,841 $ 58,428,845 $ 85,865,043 $ 20,767,459
- --------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
52 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
<TABLE>
<CAPTION>
International Government High-Yield Tax-Exempt Money
Growth Securities Bond Income Managed Market
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
- -------------------------------------------------------------------------------------------------------------------------
Investments at value $ 47,654,353 $ 79,027,070 $ 60,831,080 $ 29,962,227 $ 214,160,190 $ 58,748,018
- -------------------------------------------------------------------------------------------------------------------------
Foreign currency at value
(identified cost-$294,018) 299,017 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Receivable for fund shares
sold 59,681 49,513 122,670 2,989 1,130,807 2,725,649
- -------------------------------------------------------------------------------------------------------------------------
Receivable for investments
sold -- -- -- -- 964,430 --
- -------------------------------------------------------------------------------------------------------------------------
Dividends and interest
receivable 148,084 577,093 1,268,098 561,471 153,452 37,115
- -------------------------------------------------------------------------------------------------------------------------
Due from investment adviser 6,415 2,868 9,884 -- -- 7,712
- -------------------------------------------------------------------------------------------------------------------------
Forward currency contracts
(net) receivable 178,957 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash and other assets 12,795 11,808 3,134 69,584 38,468 70,032
- -------------------------------------------------------------------------------------------------------------------------
Total assets $ 48,359,302 $ 79,668,352 $ 62,234,866 $ 30,596,271 $ 216,447,347 $ 61,588,526
- -------------------------------------------------------------------------------------------------------------------------
Liabilities:
- -------------------------------------------------------------------------------------------------------------------------
Payable for fund shares
redeemed 1,362 76,152 -- 7,554 60,672 973,133
- -------------------------------------------------------------------------------------------------------------------------
Payable for investments
purchased 204,806 -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
payable 91,872 95,896 114,905 24,289 176,207 129,043
- -------------------------------------------------------------------------------------------------------------------------
Investment advisory fee
payable 34,047 40,319 31,067 17,670 135,234 15,816
- -------------------------------------------------------------------------------------------------------------------------
Distribution fee payable 16,609 32,820 26,864 12,616 84,941 14,270
- -------------------------------------------------------------------------------------------------------------------------
Other accrued expenses 68,509 47,589 41,152 18,590 136,716 39,213
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 417,205 $ 292,776 $ 213,988 $ 80,719 $ 593,770 $ 1,171,475
- -------------------------------------------------------------------------------------------------------------------------
Net assets $ 47,942,097 $ 79,375,576 $ 62,020,878 $ 30,515,552 $ 215,853,577 $ 60,417,051
- -------------------------------------------------------------------------------------------------------------------------
Analysis of net assets
- -------------------------------------------------------------------------------------------------------------------------
Accumulated paid-in capital 43,271,454 85,177,352 62,248,758 28,992,587 180,787,263 60,417,051
- -------------------------------------------------------------------------------------------------------------------------
Undistributed net investment
income (loss) 5,385 6,299 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain
(loss) on investments 286,777 (4,072,133) (2,503,597) (7,708) 795,202 --
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized
(loss) on futures -- -- (16,406) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of investments
and foreign currencies
denominated amounts 4,378,481 (1,735,942) 2,292,123 1,530,673 34,271,112 --
- -------------------------------------------------------------------------------------------------------------------------
Net assets $ 47,942,097 $ 79,375,576 $ 62,020,878 $ 30,515,552 $ 215,853,577 $ 60,417,051
- -------------------------------------------------------------------------------------------------------------------------
Class A: Net assets $ 34,837,373 $ 73,692,645 $ 54,128,734 $ 28,478,453 $ 101,021,684 $ 59,073,500
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 2,036,798 6,247,610 4,570,204 2,058,828 12,671,624 59,073,500
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption
price per share $17.10 $11.80 $11.84 $13.83 $7.97 $1.00
- -------------------------------------------------------------------------------------------------------------------------
Sales charge per share $0.85 $0.59 $0.59 $0.69 $0.40 --
- -------------------------------------------------------------------------------------------------------------------------
Maximum offering price per
share, including sales charge
of 4.75% $17.95 $12.39 $12.43 $14.52 $8.37 $1.00
- -------------------------------------------------------------------------------------------------------------------------
Class B: Net assets $ 4,276,255 $ 5,682,931 $ 7,892,144 $ 2,037,099 $ 57,037,403 $ 1,343,551
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 251,937 481,863 666,355 147,266 7,192,519 1,343,551
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and offering
price per share $16.97 $11.79 $11.84 $13.83 $7.93 $1.00
- -------------------------------------------------------------------------------------------------------------------------
Class Y: Net assets $ 8,828,469 -- -- -- $ 57,794,490 --
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 516,233 -- -- -- 7,239,473 --
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, offering and
redemption price per share $17.10 -- -- -- $7.98 --
- -------------------------------------------------------------------------------------------------------------------------
Investments at cost $ 43,461,270 $ 80,763,012 $ 58,538,957 $ 28,431,554 $ 179,889,078 $ 58,748,018
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 53
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity Capital Small
Growth Income Appreciation Company
Portfolio Portfolio Portfolio Portfolio
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Investment income:
- -----------------------------------------------------------------------------------------
Dividends $ 1,479,482 $ 1,987,966 $ 560,762 $ 280,021
- -----------------------------------------------------------------------------------------
Interest 430,987 373,486 330,090 51,685
- -----------------------------------------------------------------------------------------
Total 1,910,469 2,361,452 890,852 331,706
- -----------------------------------------------------------------------------------------
Expenses:
- -----------------------------------------------------------------------------------------
Management fees 1,282,393 523,261 935,780 153,784
- -----------------------------------------------------------------------------------------
Distribution fees, Class A 690,381 299,864 544,739 75,252
- -----------------------------------------------------------------------------------------
Distribution fees, Class B 164,357 31,317 37,175 14,686
- -----------------------------------------------------------------------------------------
Transfer agent fees 357,472 183,514 320,187 111,303
- -----------------------------------------------------------------------------------------
Custodian and accounting
fees 81,399(1) 77,562 82,311(1) 69,326
- -----------------------------------------------------------------------------------------
Audit and legal fees 36,428 22,324 30,849 14,892
- -----------------------------------------------------------------------------------------
Reports to shareholders 42,734 23,755 33,957 15,273
- -----------------------------------------------------------------------------------------
Registration fees 23,343 17,505 17,436 15,711
- -----------------------------------------------------------------------------------------
Directors' fees 5,281 5,281 5,281 5,281
- -----------------------------------------------------------------------------------------
Other expenses 26,863 13,712 13,831 9,359
- -----------------------------------------------------------------------------------------
Total expenses 2,710,651 1,198,095 2,021,546 484,867
- -----------------------------------------------------------------------------------------
Less: Expense
reimbursement (37,407 (1) (126,447) (21,601 (1) (128,396)
- -----------------------------------------------------------------------------------------
Total expenses, net of
reimbursement 2,673,244 1,071,648 1,999,945 356,471
- -----------------------------------------------------------------------------------------
Net investment income (loss) (762,775) 1,289,804 (1,109,093) (24,765)
- -----------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments:
- -----------------------------------------------------------------------------------------
Net realized gain on
security transactions 11,317,236 5,664,492 10,763,909 1,473,114
- -----------------------------------------------------------------------------------------
Net realized gain of foreign
currency transactions -- -- -- --
- -----------------------------------------------------------------------------------------
Net realized (loss) from
futures transactions -- -- -- --
- -----------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments
and foreign currency
related transactions 36,890,580 4,614,269 9,326,093 795,406
- -----------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 48,207,816 10,278,761 20,090,002 2,268,520
- -----------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations $ 47,445,041 $ 11,568,565 $ 18,980,909 $ 2,243,755
- -----------------------------------------------------------------------------------------
</TABLE>
(1) Reflects total expense before reduction for brokerage commission credits
which are reflected as expense reimbursement.
(2) Net of foreign taxes withheld of $148,756 for International Growth.
(3) Net of foreign taxes withheld of $4,769 for High-Yield Bond.
See notes to financial statements.
54 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
<TABLE>
<CAPTION>
International Government High-Yield Tax-Exempt Money
Growth Securities Bond Income Managed Market
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
------------ ------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Investment income:
- --------------------------------------------------------------------------------------------------------------------
Dividends $ 972,764(2) $ -- $ 562 $ -- $ 2,779,921 $ --
- --------------------------------------------------------------------------------------------------------------------
Interest 112,592 6,258,170 5,390,991(3) 1,919,018 1,384,914 2,488,630
- --------------------------------------------------------------------------------------------------------------------
Total 1,085,356 6,258,170 5,391,553 1,919,018 4,164,835 2,488,630
- --------------------------------------------------------------------------------------------------------------------
Expenses:
- --------------------------------------------------------------------------------------------------------------------
Management fees 353,427 490,882 339,960 162,828 1,164,633 160,844
- --------------------------------------------------------------------------------------------------------------------
Distribution fees, Class A 144,773 350,233 231,787 139,290 336,067 134,847
- --------------------------------------------------------------------------------------------------------------------
Distribution fees, Class B 26,468 39,843 51,518 16,122 359,391 8,556
- --------------------------------------------------------------------------------------------------------------------
Transfer agent fees 141,777 160,283 112,471 48,267 345,491 125,639
- --------------------------------------------------------------------------------------------------------------------
Custodian and accounting
fees 169,688 68,802 77,189 52,886 86,034 49,594
- --------------------------------------------------------------------------------------------------------------------
Audit and legal fees 18,260 23,786 20,237 15,758 34,895 16,496
- --------------------------------------------------------------------------------------------------------------------
Reports to shareholders 14,756 19,574 15,049 9,032 33,883 12,801
- --------------------------------------------------------------------------------------------------------------------
Registration fees 16,469 15,977 20,031 16,040 33,406 24,722
- --------------------------------------------------------------------------------------------------------------------
Directors' fees 5,281 5,281 5,281 5,281 5,281 5,281
- --------------------------------------------------------------------------------------------------------------------
Other expenses 5,760 5,699 5,432 2,398 43,412 8,905
- --------------------------------------------------------------------------------------------------------------------
Total expenses 896,659 1,180,360 878,955 467,902 2,442,493 547,685
- --------------------------------------------------------------------------------------------------------------------
Less: Expense
reimbursement (80,932) (94,868) (114,041) (51,959) -- (82,594)
- --------------------------------------------------------------------------------------------------------------------
Total expenses, net of
reimbursement 815,727 1,085,492 764,914 415,943 2,442,493 465,091
- --------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 269,629 5,172,678 4,626,639 1,503,075 1,722,342 2,023,539
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments:
- --------------------------------------------------------------------------------------------------------------------
Net realized gain on
security transactions 1,360,255 342,253 746,203 54,614 4,191,029 --
- --------------------------------------------------------------------------------------------------------------------
Net realized gain of foreign
currency transactions 1,296,232 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
Net realized (loss) from
futures transactions -- -- (16,406) -- -- --
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments
and foreign currency
related transactions 2,020,264 (754,744) 1,549,219 (497,297) 25,922,892 --
- --------------------------------------------------------------------------------------------------------------------
Net realized and unrealized
gain (loss) on investments 4,676,751 (412,491) 2,279,017 (442,683) 30,113,921 --
- --------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations $ 4,946,380 $ 4,760,187 $ 6,905,655 $ 1,060,392 $ 31,836,263 $ 2,023,539
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 55
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Equity
Growth Income
Portfolio Portfolio
------------------------------ ------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ (762,775) $ (378,776) $ 1,289,804 $ 1,300,216
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 11,317,236 6,794,506 5,664,492 1,598,560
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- -- -- --
- ----------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments 36,890,580 28,354,972 4,614,269 13,200,967
- ----------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 47,445,041 34,770,702 11,568,565 16,099,743
- ----------------------------------------------------------------------------------------------
Distributions to shareholders
from:
- ----------------------------------------------------------------------------------------------
Net investment income, Class
A -- -- (1,197,980) (1,306,465)
- ----------------------------------------------------------------------------------------------
Net investment income, Class
B -- -- (63,375) (12,321)
- ----------------------------------------------------------------------------------------------
Net investment income, Class
Y -- -- -- --
- ----------------------------------------------------------------------------------------------
Net realized gains on
investments Class A (10,559,038) (4,773,412) (4,726,758) (1,999,775)
- ----------------------------------------------------------------------------------------------
Net realized gains on
investments Class B (1,957,665) (178,422) (369,926) (34,959)
- ----------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y (124,046) -- -- --
- ----------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (12,640,749) (4,951,834) (6,358,039) (3,353,520)
- ----------------------------------------------------------------------------------------------
From capital share
transactions:
- ----------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------
Shares sold 106,776,181 45,641,846 9,911,599 6,311,340
- ----------------------------------------------------------------------------------------------
Reinvestment of
distributions 10,017,857 4,691,077 5,727,817 3,211,683
- ----------------------------------------------------------------------------------------------
Shares redeemed (74,805,079) (45,909,409) (10,005,618) (11,254,005)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) --
Class A 41,988,959 4,423,514 5,633,798 (1,730,982)
- ----------------------------------------------------------------------------------------------
Class B
- ----------------------------------------------------------------------------------------------
Shares sold 28,798,411 4,393,535 4,189,055 1,004,412
- ----------------------------------------------------------------------------------------------
Reinvestment of
distributions 1,812,775 173,874 392,623 47,260
- ----------------------------------------------------------------------------------------------
Shares redeemed (1,074,883) (54,414) (155,615) (1,282)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) --
Class B 29,536,303 4,512,995 4,426,063 1,050,390
- ----------------------------------------------------------------------------------------------
Class Y
- ----------------------------------------------------------------------------------------------
Shares sold 5,950,078 -- -- --
- ----------------------------------------------------------------------------------------------
Reinvestment of
distributions 124,046 -- -- --
- ----------------------------------------------------------------------------------------------
Shares redeemed (3,959,203) -- -- --
- ----------------------------------------------------------------------------------------------
Net increase (decrease) --
Class Y 2,114,921 -- -- --
- ----------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 73,640,183 8,936,509 10,059,861 (680,592)
- ----------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 108,444,475 38,755,377 15,270,387 12,065,631
- ----------------------------------------------------------------------------------------------
Net assets:
- ----------------------------------------------------------------------------------------------
Beginning of period $ 127,130,107 $ 88,374,730 $ 62,991,393 $ 50,925,762
- ----------------------------------------------------------------------------------------------
End of period $ 235,574,582 $ 127,130,107 $ 78,261,780 $ 62,991,393
- ----------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
56 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
<TABLE>
<CAPTION>
Capital Small International
Appreciation Company Growth
Portfolio Portfolio 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,
1996 1995 1996 1995 1996 1995
-------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ (1,109,093) $ (954,847) $ (24,765) $ 77,479 $ 269,629 $ 188,326
- --------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 10,763,909 14,667,515 1,473,114 540,493 2,656,487 1,144,555
- --------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments 9,326,093 11,787,574 795,406 1,467,446 2,020,264 2,852,133
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 18,980,909 25,500,242 2,243,755 2,085,418 4,946,380 4,185,014
- --------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders
from:
- --------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
A -- -- -- (58,837) (173,156) (155,426)
- --------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
B -- -- -- (2,838) (13,172) (6,393)
- --------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
Y -- -- -- (18,232) (79,688) (25,605)
- --------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class A (11,466,091) (11,321,192) (868,453) (711,443) (1,684,658) (1,283,151)
- --------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class B (501,250) (182,690) (131,977) (31,195) (208,721) (49,215)
- --------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y -- -- (100,931) (106,095) (424,530) (138,950)
- --------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (11,967,341) (11,503,882) (1,101,361) (928,640) (2,583,925) (1,658,740)
- --------------------------------------------------------------------------------------------------------------------------
From capital share
transactions:
- --------------------------------------------------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------------------------------------------------
Shares sold 19,727,741 40,980,067 4,307,659 4,616,227 9,214,469 4,583,946
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 10,709,311 10,974,833 831,465 731,050 1,776,922 1,401,593
- --------------------------------------------------------------------------------------------------------------------------
Shares redeemed (43,391,759) (46,152,644) (8,474,210) (8,913,867) (6,715,142) (7,270,812)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) --
Class A (12,954,707) 5,802,256 (3,335,086) (3,566,590) 4,276,249 (1,285,273)
- --------------------------------------------------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------------------------------------------------
Shares sold 2,946,771 1,965,319 1,845,129 875,292 3,267,075 1,030,189
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 466,933 176,796 122,778 32,375 213,154 54,311
- --------------------------------------------------------------------------------------------------------------------------
Shares redeemed (331,951) (18,795) (260,393) (15,478) (393,878) (1,195)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) --
Class B 3,081,753 2,123,320 1,707,514 892,189 3,086,351 1,083,305
- --------------------------------------------------------------------------------------------------------------------------
Class Y
- --------------------------------------------------------------------------------------------------------------------------
Shares sold -- -- 847,748 2,875,817 6,700,676 3,108,334
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions -- -- 1,728 616 504,218 164,552
- --------------------------------------------------------------------------------------------------------------------------
Shares redeemed -- -- (1,938,659) (64,876) (1,819,421) (288,315)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) --
Class Y -- -- (1,089,183) 2,811,557 5,385,473 2,984,571
- --------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions (9,872,954) 7,925,576 (2,716,755) 137,156 12,748,073 2,782,603
- --------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets (2,859,386) 21,921,936 (1,574,361) 1,293,934 15,110,528 5,308,877
- --------------------------------------------------------------------------------------------------------------------------
Net assets:
- --------------------------------------------------------------------------------------------------------------------------
Beginning of period $ 123,159,405 $ 101,237,469 $ 23,413,966 $ 22,120,032 $ 32,831,569 $ 27,522,692
- --------------------------------------------------------------------------------------------------------------------------
End of period $ 120,300,019 $ 123,159,405 $ 21,839,605 $ 23,413,966 $ 47,942,097 $ 32,831,569
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Government
Securities
Portfolio
------------------------------
Year Ended Year Ended
December 31, December 31,
1996 1995
-------------- --------------
<S> <C> <C>
From operations:
Net investment income (loss) $ 5,172,678 $ 5,727,267
- ------------------------------------------------------------------------------
Net realized gain (loss) on
investments 342,253 (108,087)
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- --
- --------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments (754,744) 9,333,710
- --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 4,760,187 14,952,890
- --------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders
from:
- --------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
A (4,942,104) (5,695,090)
- --------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
B (230,737) (32,004)
- --------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
Y -- --
- --------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class A -- --
- --------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class B -- --
- --------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y -- --
- --------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (5,172,841) (5,727,094)
- --------------------------------------------------------------------------------------------------------------------------
From capital share
transactions:
- --------------------------------------------------------------------------------------------------------------------------
Class A
- --------------------------------------------------------------------------------------------------------------------------
Shares sold 8,082,041 9,695,011
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 3,653,159 4,225,438
- --------------------------------------------------------------------------------------------------------------------------
Shares redeemed (23,815,232) (21,313,935)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) --
Class A (12,080,032) (7,393,486)
- --------------------------------------------------------------------------------------------------------------------------
Class B
- --------------------------------------------------------------------------------------------------------------------------
Shares sold 4,496,001 2,124,239
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 177,788 21,390
- --------------------------------------------------------------------------------------------------------------------------
Shares redeemed (1,153,825) (60,182)
- --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) --
Class B 3,519,964 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 (8,560,068) (5,308,039)
- --------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets (8,972,722) 3,917,757
- --------------------------------------------------------------------------------------------------------------------------
Net assets:
- --------------------------------------------------------------------------------------------------------------------------
Beginning of period $ 88,348,298 $ 84,430,541
- --------------------------------------------------------------------------------------------------------------------------
End of period $ 79,375,576 $ 88,348,298
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 57
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS -- (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
High-Yield Tax-Exempt
Bond Portfolio Income Portfolio
------------------------------ ------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ 4,626,639 $ 4,460,864 $ 1,503,075 $ 1,660,529
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 746,203 98,195 54,614 (62,322)
- ----------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options (16,406) (20,528) -- --
- ----------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments 1,549,219 2,865,091 (497,297) 3,201,486
- ----------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 6,905,655 7,403,622 1,060,392 4,799,693
- ----------------------------------------------------------------------------------------------
Distributions to shareholders
from:
- ----------------------------------------------------------------------------------------------
Net investment income, Class
A (4,227,766) (4,375,039) (1,437,694) (1,652,187)
- ----------------------------------------------------------------------------------------------
Net investment income, Class
B (398,943) (85,755) (65,432) (8,291)
- ----------------------------------------------------------------------------------------------
Net investment income, Class
Y -- -- -- --
- ----------------------------------------------------------------------------------------------
Net realized gains on
investments Class A -- -- -- (57,270)
- ----------------------------------------------------------------------------------------------
Net realized gains on
investments Class B -- -- -- (1,441)
- ----------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y -- -- -- --
- ----------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (4,626,709) (4,460,794) (1,503,126) (1,719,189)
- ----------------------------------------------------------------------------------------------
From capital share
transactions:
- ----------------------------------------------------------------------------------------------
Class A
- ----------------------------------------------------------------------------------------------
Shares sold 12,189,056 11,047,929 2,501,597 2,165,696
- ----------------------------------------------------------------------------------------------
Reinvestment of
distributions 3,065,474 3,181,327 1,077,601 1,296,292
- ----------------------------------------------------------------------------------------------
Shares redeemed (15,310,792) (9,796,098) (8,294,043) (7,202,770)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) --
Class A (56,262) 4,433,158 (4,714,845) (3,740,782)
- ----------------------------------------------------------------------------------------------
Class B
- ----------------------------------------------------------------------------------------------
Shares sold 5,149,262 2,908,963 1,482,068 897,621
- ----------------------------------------------------------------------------------------------
Reinvestment of
distributions 269,854 50,351 57,257 9,311
- ----------------------------------------------------------------------------------------------
Shares redeemed (754,001) (23,860) (403,587) (6,392)
- ----------------------------------------------------------------------------------------------
Net increase (decrease) --
Class B 4,665,115 2,935,454 1,135,738 900,540
- ----------------------------------------------------------------------------------------------
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 4,608,853 7,368,612 (3,579,107) (2,840,242)
- ----------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 6,887,799 10,311,440 (4,021,841) 240,262
- ----------------------------------------------------------------------------------------------
Net assets:
- ----------------------------------------------------------------------------------------------
Beginning of period $ 55,133,079 $ 44,821,639 $ 34,537,393 $ 34,297,131
- ----------------------------------------------------------------------------------------------
End of period $ 62,020,878 $ 55,133,079 $ 30,515,552 $ 34,537,393
- ----------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
58 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
<TABLE>
<CAPTION>
Managed Money Market
Portfolio Portfolio
----------------------------- --------------------------------
Year Ended Year Ended Year Ended Year Ended
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
From operations:
Net investment income (loss) $ 1,722,342 $ 443,577 $ 2,023,539 $ 1,715,817
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 4,191,029 845,958 -- --
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- -- -- --
- -----------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments 25,922,892 8,465,164 -- --
- -----------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 31,836,263 9,754,699 2,023,539 1,715,817
- -----------------------------------------------------------------------------------------------
Distributions to shareholders
from:
- -----------------------------------------------------------------------------------------------
Net investment income, Class
A (799,735) (214,318) (1,984,743) (1,714,261)
- -----------------------------------------------------------------------------------------------
Net investment income, Class
B (286,048) (63,848) (38,796) (1,556)
- -----------------------------------------------------------------------------------------------
Net investment income, Class
Y (643,498) (175,299) -- --
- -----------------------------------------------------------------------------------------------
Net realized gains on
investments Class A (1,790,459) (213,842) -- --
- -----------------------------------------------------------------------------------------------
Net realized gains on
investments Class B (1,012,095) (75,104) -- --
- -----------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y (1,018,912) (119,052) -- --
- -----------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (5,550,747) (861,463) (2,023,539) (1,715,817)
- -----------------------------------------------------------------------------------------------
From capital share
transactions:
- -----------------------------------------------------------------------------------------------
Class A
- -----------------------------------------------------------------------------------------------
Shares sold 48,360,893 36,943,421 155,780,333 127,849,845
- -----------------------------------------------------------------------------------------------
Reinvestment of
distributions 2,491,364 406,123 1,843,341 1,635,878
- -----------------------------------------------------------------------------------------------
Shares redeemed (10,298,814) (3,992,116) (138,874,791) (121,495,592)
- -----------------------------------------------------------------------------------------------
Net increase (decrease) --
Class A 40,553,443 33,357,428 18,748,883 7,990,131
- -----------------------------------------------------------------------------------------------
Class B
- -----------------------------------------------------------------------------------------------
Shares sold 35,850,528 16,257,715 4,456,552 604,172
- -----------------------------------------------------------------------------------------------
Reinvestment of
distributions 1,222,567 133,775 35,289 1,198
- -----------------------------------------------------------------------------------------------
Shares redeemed (2,767,399) (347,918) (3,542,604) (211,056)
- -----------------------------------------------------------------------------------------------
Net increase (decrease) --
Class B 34,305,696 16,043,572 949,237 394,314
- -----------------------------------------------------------------------------------------------
Class Y
- -----------------------------------------------------------------------------------------------
Shares sold 30,665,682 26,548,228 -- --
- -----------------------------------------------------------------------------------------------
Reinvestment of
distributions 1,662,410 294,328 -- --
- -----------------------------------------------------------------------------------------------
Shares redeemed (8,914,287) (1,714,136) -- --
- -----------------------------------------------------------------------------------------------
Net increase (decrease) --
Class Y 23,413,805 25,128,420 -- --
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 98,272,944 74,529,420 19,698,120 8,384,445
- -----------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 124,558,460 83,422,656 19,698,120 8,384,445
- -----------------------------------------------------------------------------------------------
Net assets:
- -----------------------------------------------------------------------------------------------
Beginning of period $ 91,295,117 $ 7,872,461 $ 40,718,931 $ 32,334,486
- -----------------------------------------------------------------------------------------------
End of period $ 215,853,577 $ 91,295,117 $ 60,417,051 $ 40,718,931
- -----------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 59
<PAGE>
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
Growth Portfolio (CLASS A) 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 10.44 $ 7.76 $ 8.26 $ 7.96
Net Investment Income (Loss) (0.04) (0.03) (0.02) 0.01
Net Realized and Unrealized Gain (Loss) on Investments 3.44 3.13 (0.06) 0.84
--------- --------- --------- ---------
Total from Investment Operations 3.40 3.10 (0.08) 0.85
--------- --------- --------- ---------
Dividends from Net Investment Income 0.00 0.00 0.00 0.01
Distributions from Capital Gains 0.74 0.42 0.42 0.54
--------- --------- --------- ---------
Total Distributions 0.74 0.42 0.42 0.55
--------- --------- --------- ---------
Net Asset Value End of Period $ 13.10 $ 10.44 $ 7.76 $ 8.26
--------- --------- --------- ---------
Total ReturnC 32.60% 39.99% (0.99)% 10.59%
Net Assets End of Period (in thousands) $ 196,752 $ 122,559 $ 88,375 $ 90,902
Ratio of Expenses to Average Net Assets 1.53%F 1.60% 1.56% 1.60%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.53%F 1.60% 1.56% 1.61%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.39)% (0.35)% (0.30)% 0.10%
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers) (0.39)% (0.35)% (0.30)% 0.06%
Portfolio Turnover Rate 29.90% 45.30% 64.50% 107.90%
Average commission per shareE $ 0.0636
<CAPTION>
Growth Portfolio (CLASS A) 1992G
- --------------------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period $ 8.22
Net Investment Income (Loss) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments 0.55
---------
Total from Investment Operations 0.53
---------
Dividends from Net Investment Income 0.00
Distributions from Capital Gains 0.79
---------
Total Distributions 0.79
---------
Net Asset Value End of Period $ 7.96
---------
Total ReturnC 6.46%
Net Assets End of Period (in thousands) $ 84,200
Ratio of Expenses to Average Net Assets 1.60%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.67%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.30)%
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers) (0.31)%
Portfolio Turnover Rate 61.20%
Average commission per shareE
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------ ------------------------
Growth Portfolio (CLASS B) DECEMBER 31, 1996 5/1/95 THROUGH 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 10.41 $ 8.69
Net Investment Income (Loss) (0.06) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments 3.36 2.16
------- --------
Total from Investment Operations 3.30 2.14
------- --------
Dividends from Net Investment Income 0.00 0.00
Distributions from Capital Gains 0.74 0.42
------- --------
Total Distributions 0.74 0.42
------- --------
Net Asset Value End of Period $ 12.97 $ 10.41
------- --------
Total ReturnD 31.73% 24.66%B
Net Assets End of Period (in thousands) $ 36,483 $ 4,572
Ratio of Expenses to Average Net Assets 2.10% F 2.15% A
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.10% F 2.15% A
Ratio of Net Investment Income (loss) to Average Net Assets (0.96)% (0.82)% A
Ratio of Net Investment Income (loss) to Average Net Assets (Excluding Waivers) (0.96)% (0.82)% A
Portfolio Turnover Rate 29.90% 45.30% A
Average commission per shareE $ 0.0636
<CAPTION>
Growth Portfolio (CLASS B)
- --------------------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period
Net Investment Income (Loss)
Net Realized and Unrealized Gain (Loss) on Investments
Total from Investment Operations
Dividends from Net Investment Income
Distributions from Capital Gains
Total Distributions
Net Asset Value End of Period
Total ReturnD
Net Assets End of Period (in thousands)
Ratio of Expenses to Average Net Assets
Ratio of Expenses to Average Net Assets (Excluding Waivers)
Ratio of Net Investment Income (loss) to Average Net Assets
Ratio of Net Investment Income (loss) to Average Net Assets (Excluding Waivers)
Portfolio Turnover Rate
Average commission per shareE
</TABLE>
A Annualized.
B Not Annualized.
C Total returns do not include one time sales charge.
D Total return does not include contingent deferred sales charge.
E Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions are charged during the period.
F Effective September 1, 1995, ratio includes expenses paid indirectly.
G Based on average monthly shares outstanding.
See notes to financial statements.
60 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
FOR THE PERIOD
----------------------
8/8/96 THROUGH
Growth Portfolio (CLASS Y) 12/31/96
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 11.96
Net Investment Income (Loss) 0.00
Net Realized and Unrealized Gain (Loss) on Investments 1.90
-------
Total from Investment Operations 1.90
-------
Dividends from Net Investment Income 0.00
Distributions from Capital Gains 0.74
-------
Total Distributions 0.74
-------
Net Asset Value End of Period $ 13.12
-------
Total Return 15.91%B
Net Assets End of Period (in thousands) $ 2,339
Ratio of Expenses to Average Net Assets 1.10% AD
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.10% AD
Ratio of Net Investment Income (loss) to Average Net Assets 0.04% A
Ratio of Net Investment Income (loss) to Average Net Assets (Excluding
Waivers) 0.04% A
Portfolio Turnover Rate 29.90% A
Average commission per shareC $ 0.0636
<CAPTION>
Growth Portfolio (CLASS Y)
- --------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period
Net Investment Income (Loss)
Net Realized and Unrealized Gain (Loss) on Investments
Total from Investment Operations
Dividends from Net Investment Income
Distributions from Capital Gains
Total Distributions
Net Asset Value End of Period
Total Return
Net Assets End of Period (in thousands)
Ratio of Expenses to Average Net Assets
Ratio of Expenses to Average Net Assets (Excluding Waivers)
Ratio of Net Investment Income (loss) to Average Net Assets
Ratio of Net Investment Income (loss) to Average Net Assets (Excluding
Waivers)
Portfolio Turnover Rate
Average commission per shareC
</TABLE>
A Annualized.
B Not Annualized.
C Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
D Effective September 1, 1995, ratio includes expenses paid indirectly.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 61
<PAGE>
EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
Equity Income Portfolio (CLASS A) 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 20.73 $ 16.43 $ 17.75 $ 16.93
Net Investment Income (Loss) 0.41 0.45 0.44 0.52
Net Realized and Unrealized Gain (Loss) on Investments 3.27 5.00 (0.53) 1.74
--------- --------- --------- ---------
Total from Investment Operations 3.68 5.45 (0.09) 2.26
--------- --------- --------- ---------
Dividends from Net Investment Income 0.40 0.45 0.44 0.50
Distributions from Capital Gains 1.57 0.70 0.79 0.94
--------- --------- --------- ---------
Total Distributions 1.97 1.15 1.23 1.44
--------- --------- --------- ---------
Net Asset Value End of Period $ 22.44 $ 20.73 $ 16.43 $ 17.75
--------- --------- --------- ---------
Total ReturnC 17.86% 33.38% (0.49)% 13.45%
Net Assets End of Period (in thousands) $ 72,647 $ 61,906 $ 50,926 $ 49,920
Ratio of Expenses to Average Net Assets 1.50% 1.50% 1.50% 1.50%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.68% 1.78% 1.73% 1.91%
Ratio of Net Investment Income to Average Net Assets 1.87% 2.33% 2.50% 2.90%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 1.69% 2.06% 2.30% 2.51%
Portfolio Turnover Rate 33.22% 25.60% 41.40% 39.90%
Average commission per shareE $ 0.0615
<CAPTION>
Equity Income Portfolio (CLASS A) 1992
- ----------------------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period $ 16.00
Net Investment Income (Loss) 0.43
Net Realized and Unrealized Gain (Loss) on Investments 0.92
---------
Total from Investment Operations 1.35
---------
Dividends from Net Investment Income 0.41
Distributions from Capital Gains 0.01
---------
Total Distributions 0.42
---------
Net Asset Value End of Period $ 16.93
---------
Total ReturnC 8.48%
Net Assets End of Period (in thousands) $ 40,918
Ratio of Expenses to Average Net Assets 1.50%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.95%
Ratio of Net Investment Income to Average Net Assets 2.80%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 2.22%
Portfolio Turnover Rate 38.30%
Average commission per shareE
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------ ------------------------
Equity Income Portfolio (CLASS B) DECEMBER 31, 1996 5/1/95 THROUGH 12/31/95
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 20.67 $ 18.12
Net Investment Income (Loss) 0.24 0.29
Net Realized and Unrealized Gain (Loss) on Investments 3.30 3.40
------- --------
Total from Investment Operations 3.54 3.69
------- --------
Dividends from Net Investment Income 0.34 0.44
Distributions from Capital Gains 1.57 0.70
------- --------
Total Distributions 1.91 1.14
------- --------
Net Asset Value End of Period $ 22.30 $ 20.67
------- --------
Total ReturnD 17.22% 20.57%B
Net Assets End of Period (in thousands) $ 5,615 $ 1,086
Ratio of Expenses to Average Net Assets 2.05% 2.05% A
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.23% 2.23% A
Ratio of Net Investment Income to Average Net Assets 1.32% 1.56% A
Ratio of Net Investment Income to Average Net Assets (Excluding
Waivers) 1.14% 1.33% A
Portfolio Turnover Rate 33.22% 25.60% A
Average commission per shareE $ 0.0615
<CAPTION>
Equity Income Portfolio (CLASS B)
- --------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period
Net Investment Income (Loss)
Net Realized and Unrealized Gain (Loss) on Investments
Total from Investment Operations
Dividends from Net Investment Income
Distributions from Capital Gains
Total Distributions
Net Asset Value End of Period
Total ReturnD
Net Assets End of Period (in thousands)
Ratio of Expenses to Average Net Assets
Ratio of Expenses to Average Net Assets (Excluding Waivers)
Ratio of Net Investment Income to Average Net Assets
Ratio of Net Investment Income to Average Net Assets (Excluding
Waivers)
Portfolio Turnover Rate
Average commission per shareE
</TABLE>
A Annualized.
B Not Annualized.
C Total returns do not include one time sales charge.
D Total return does not include contingent deferred sales charge.
E Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
See notes to financial statements.
62 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
CAPITAL APPRECIATION PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
Capital Appreciation Portfolio (CLASS A) 1996 1995 1994 1993 1992F
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 32.54 $ 28.54 $ 31.10 $ 29.42 $ 27.80
Net Investment Income (Loss) (0.31) (0.25) (0.13) (0.15) (0.04)
Net Realized and Unrealized Gain (Loss) on Investments 5.69 7.59 (0.95) 1.83 1.66
--------- --------- --------- --------- ---------
Total from Investment Operations $ 5.38 $ 7.34 $ (1.08) $ 1.68 $ 1.62
--------- --------- --------- --------- ---------
Dividends from Net Investment Income 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains 3.71 3.34 1.48 0.00 0.00
--------- --------- --------- --------- ---------
Total Distributions 3.71 3.34 1.48 0.00 0.00
--------- --------- --------- --------- ---------
Net Asset Value End of Period $ 34.21 $ 32.54 $ 28.54 $ 31.10 $ 29.42
--------- --------- --------- --------- ---------
Total ReturnB 16.52% 25.72% (3.46)% 5.71% 5.83%
Net Assets End of Period (in thousands) $ 115,253 $ 121,207 $ 101,237 $ 103,187 $ 72,569
Ratio of Expenses to Average Net Assets 1.60%G 1.65% 1.66% 1.64% 1.72%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.60%G 1.65% 1.66% 1.64% 1.72%
Ratio of Net Investment Income (Loss) to Average Net Assets (0.87)% (0.82)% (0.50)% (0.60)% (0.20)%
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding
Waivers) (0.87)% (0.82)% (0.50)% (0.60)% (0.20)%
Portfolio Turnover Rate 66.42% 65.20% 74.40% 61.90% 32.50%
Average commission per shareA $ 0.0486
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------- ------------------------
Capital Appreciation Portfolio (CLASS B) DECEMBER 31, 1996 5/1/95 THROUGH 12/31/95
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 32.42 $ 30.04
Net Investment Income (Loss) (0.35) (0.12)
Net Realized and Unrealized Gain (Loss) on Investments 5.50 5.84
------- --------
Total from Investment Operations 5.15 5.72
------- --------
Dividends from Net Investment Income 0.00 0.00
Distributions from Capital Gains 3.71 3.34
------- --------
Total Distributions 3.71 3.34
------- --------
Net Asset Value End of Period $ 33.86 $ 32.42
------- --------
Total ReturnC 15.87% 18.99%D
Net Assets End of Period (in thousands) $ 5,047 $ 1,953
Ratio of Expenses to Average Net Assets 2.14% G 2.08% E
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.14% G 2.08% E
Ratio of Net Investment Income (loss) to Average Net Assets (1.43)% (1.41)% E
Ratio of Net Investment Income (loss) to Average Net Assets (Excluding
Waivers) (1.43)% (1.41)% E
Portfolio Turnover Rate 66.42% 65.20% E
Average commission per shareA $ 0.0486
<CAPTION>
Capital Appreciation Portfolio (CLASS B)
- ----------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period
Net Investment Income (Loss)
Net Realized and Unrealized Gain (Loss) on Investments
Total from Investment Operations
Dividends from Net Investment Income
Distributions from Capital Gains
Total Distributions
Net Asset Value End of Period
Total ReturnC
Net Assets End of Period (in thousands)
Ratio of Expenses to Average Net Assets
Ratio of Expenses to Average Net Assets (Excluding Waivers)
Ratio of Net Investment Income (loss) to Average Net Assets
Ratio of Net Investment Income (loss) to Average Net Assets (Excluding
Waivers)
Portfolio Turnover Rate
Average commission per shareA
</TABLE>
A Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
B Total return does not include one time sales charge.
C Total return does not include contingent deferred sales charge.
D Not Annualized.
E Annualized.
F Based on average monthly shares outstanding.
G Effective September 1, 1995, ratio includes expenses paid indirectly.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 63
<PAGE>
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
Small Company Portfolio (CLASS A) 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 5.43 $ 5.17 $ 5.29
Net Investment Income (Loss) (0.01) 0.02 0.03
Net Realized and Unrealized Gain (Loss) on Investments 0.62 0.46 (0.01)
--------- --------- ---------
Total from Investment Operations 0.61 0.48 0.02
--------- --------- ---------
Dividends from Net Investment Income 0.00 0.02 0.03
Distributions from Capital Gains 0.30 0.20 0.11
--------- --------- ---------
Total Distributions 0.30 0.22 0.14
--------- --------- ---------
Net Asset Value End of Period $ 5.74 $ 5.43 $ 5.17
--------- --------- ---------
Total ReturnB 11.28% 9.28% 0.34%
Net Assets End of Period (in thousands) $ 17,308 $ 19,720 $ 22,120
Ratio of Expenses to Average Net Assets 1.75% 1.75% 1.75%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.38% 2.21% 2.15%
Ratio of Net Investment Income to Average Net Assets (0.13)% 0.32% 0.60%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) (0.76)% (0.14)% 0.18%
Portfolio Turnover Rate 143.58% 36.50% 16.70%
Average commission per shareA $ 0.0483
<CAPTION>
FOR THE PERIOD
------------------------
Small Company Portfolio (CLASS A) 10/1/93 THROUGH 12/31/93
- -----------------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period $ 5.00
Net Investment Income (Loss) 0.01
Net Realized and Unrealized Gain (Loss) on Investments 0.29
--------
Total from Investment Operations 0.30
--------
Dividends from Net Investment Income 0.01
Distributions from Capital Gains 0.00
--------
Total Distributions 0.01
--------
Net Asset Value End of Period $ 5.29
--------
Total ReturnB 5.92%D
Net Assets End of Period (in thousands) $ 8,118
Ratio of Expenses to Average Net Assets 1.75% E
Ratio of Expenses to Average Net Assets (Excluding Waivers) 4.00% E
Ratio of Net Investment Income to Average Net Assets 0.10% E
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) (1.54)% E
Portfolio Turnover Rate 0.00%
Average commission per shareA
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------ ------------------------
Small Company Portfolio (CLASS B) DECEMBER 31, 1996 5/1/95 THROUGH 12/31/95
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 5.41 $ 5.28
Net Investment Income (Loss) (0.03) (0.01)
Net Realized and Unrealized Gain (Loss) on Investments 0.61 0.36
---------- ----------
Total from Investment Operations 0.58 0.35
---------- ----------
Dividends from Net Investment Income 0.00 0.02
Distributions from Capital Gains 0.30 0.20
---------- ----------
Total Distributions 0.30 0.22
---------- ----------
Net Asset Value End of Period $ 5.69 $ 5.41
---------- ----------
Total ReturnC 10.77% 6.87%D
Net Assets End of Period (in thousands) $ 2,606 $ 862
Ratio of Expenses to Average Net Assets 2.30% 2.30% E
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.92% 2.78% E
Ratio of Net Investment Income (loss) to Average Net Assets (0.77)% (0.40)% E
Ratio of Net Investment Income (loss) to Average Net Assets (Excluding Waivers) (1.39)% (0.90)% E
Portfolio Turnover Rate 143.58% 36.50% E
Average commission per shareA $ 0.0483
</TABLE>
A Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
B Total return does not include one time sales charge.
C Total return does not include contingent deferred sales charge.
D Not Annualized.
E Annualized.
See notes to financial statements.
64 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
SMALL COMPANY PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------ ------------------------
Small Company Portfolio (CLASS Y) DECEMBER 31, 1996 5/25/95 THROUGH 12/31/95
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 5.43 $ 5.37
Net Investment Income (Loss) 0.01 0.04
Net Realized and Unrealized Gain (Loss) on Investments 0.63 0.26
-------- --------
Total from Investment Operations 0.64 0.30
-------- --------
Dividends from Net Investment Income 0.00 0.04
Distributions from Capital Gains 0.30 0.20
-------- --------
Total Distributions 0.30 0.24
-------- --------
Net Asset Value End of Period $ 5.77 $ 5.43
-------- --------
Total Return 11.83% 5.55%B
Net Assets End of Period (in thousands) $ 1,926 $ 2,832
Ratio of Expenses to Average Net Assets 1.30% 1.30%C
Ratio of Expenses to Average Net Assets (Excludung Waivers) 1.92% 1.81%C
Ratio of Net Investment Income to Average Net Assets 0.35% 0.18%C
Ratio of Net Investment Income to Average Net Assets (Excluding
Waivers) (0.27)% (0.33)%C
Portfolio Turnover Rate 143.58% 36.50%C
Average commission per shareA $ 0.0483
<CAPTION>
Small Company Portfolio (CLASS Y)
- --------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period
Net Investment Income (Loss)
Net Realized and Unrealized Gain (Loss) on Investments
Total from Investment Operations
Dividends from Net Investment Income
Distributions from Capital Gains
Total Distributions
Net Asset Value End of Period
Total Return
Net Assets End of Period (in thousands)
Ratio of Expenses to Average Net Assets
Ratio of Expenses to Average Net Assets (Excludung Waivers)
Ratio of Net Investment Income to Average Net Assets
Ratio of Net Investment Income to Average Net Assets (Excluding
Waivers)
Portfolio Turnover Rate
Average commission per shareA
</TABLE>
A Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
B Not Annualized.
C Annualized.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 65
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
International Growth Portfolio (CLASS A) 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 16.08 $ 14.70 $ 17.44 $ 13.23
Net Investment Income (Loss) 0.10 0.11 (0.01) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments 1.88 2.12 (0.49) 4.79
--------- --------- --------- ---------
Total from Investment Operations $ 1.98 $ 2.23 $ (0.50) $ 4.77
--------- --------- --------- ---------
Dividends from Net Investment Income 0.09 0.09 0.00 0.00
Distributions from Capital Gains 0.87 0.76 2.24 0.17
OtherG 0.00 0.00 0.00 0.39
--------- --------- --------- ---------
Total Distributions 0.96 0.85 2.24 0.56
--------- --------- --------- ---------
Net Asset Value End of Period $ 17.10 $ 16.08 $ 14.70 $ 17.44
--------- --------- --------- ---------
Total ReturnB 12.32% 15.17% (2.82)% 36.05%
Net Assets End of Period (in thousands) $ 34,837 $ 28,628 $ 27,523 $ 22,900
Ratio of Expenses to Average Net Assets 2.00% 2.00% 2.00% 2.00%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.19% 2.40% 2.51% 3.06%
Ratio of Net Investment Income (Loss) to Average Net Assets 0.61% 0.70% (0.20)% (0.10)%
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers) 0.42% 0.30% (0.70)% (1.15)%
Portfolio Turnover Rate 23.79% 31.10% 116.10% 70.10%
Average commission per shareA $ 0.0221
<CAPTION>
International Growth Portfolio (CLASS A) 1992F
- --------------------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period $ 13.38
Net Investment Income (Loss) 0.28
Net Realized and Unrealized Gain (Loss) on Investments (0.39)
---------
Total from Investment Operations $ (0.11)
---------
Dividends from Net Investment Income 0.04
Distributions from Capital Gains 0.00
OtherG 0.00
---------
Total Distributions 0.04
---------
Net Asset Value End of Period $ 13.23
---------
Total ReturnB (0.93)%
Net Assets End of Period (in thousands) $ 11,630
Ratio of Expenses to Average Net Assets 2.00%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 3.70%
Ratio of Net Investment Income (Loss) to Average Net Assets 0.50%
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers) (1.15)%
Portfolio Turnover Rate 134.90%
Average commission per shareA
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
-------------------
International Growth Portfolio (CLASS B) DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 16.02
Net Investment Income (Loss) 0.01
Net Realized and Unrealized Gain (Loss) on Investments 1.87
-------
Total from Investment Operations 1.88
-------
Dividends from Net Investment Income 0.06
Distributions from Capital Gains 0.87
-------
Total Distributions 0.93
-------
Net Asset Value End of Period $ 16.97
-------
Total ReturnC 11.72%
Net Assets End of Period (in thousands) $ 4,276
Ratio of Expenses to Average Net Assets 2.55%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.75%
Ratio of Net Investment Income (Loss) to Average Net Assets 0.09%
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers) (0.11)%
Portfolio Turnover Rate 23.79%
Average commission per shareA $ 0.0221
<CAPTION>
FOR THE PERIOD
------------------------
International Growth Portfolio (CLASS B) 5/1/95 THROUGH 12/31/95
- --------------------------------------------------------------------------------------
<S> <C> <C>
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
--------
Total Distributions 0.86
--------
Net Asset Value End of Period $ 16.02
--------
Total ReturnC 13.88%D
Net Assets End of Period (in thousands) $ 1,094
Ratio of Expenses to Average Net Assets 2.55%E
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.73%E
Ratio of Net Investment Income (Loss) to Average Net Assets (0.65)%E
Ratio of Net Investment Income (Loss) to Average Net Assets (Excluding Waivers) (0.85)%E
Portfolio Turnover Rate 31.10%E
Average commission per shareA
</TABLE>
A Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
B Total returns do not include one time sales charge.
C Total return does not include contingent deferred sales charge.
D Not Annualized.
E Annualized.
F Based on average monthly shares outstanding.
G Distributions in excess of net investment income.
See notes to financial statements.
66 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED
-------------------
International Growth Portfolio (CLASS Y) DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 16.07
Net Investment Income (Loss) 0.14
Net Realized and Unrealized Gain (Loss) on Investments 1.92
-------
Total from Investment Operations 2.06
-------
Dividends from Net Investment Income 0.16
Distributions from Capital Gains 0.87
-------
Total Distributions $ 1.03
-------
Net Asset Value End of Period 17.10
-------
Total Return 12.86%
Net Assets End of Period (in thousands) $ 8,828
Ratio of Expenses to Average Net Assets 1.55%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.75%
Ratio of Net Investment Income to Average Net Assets 1.03%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 0.84%
Portfolio Turnover Rate 23.79%
Average commission per shareA $ 0.0221
<CAPTION>
FOR THE PERIOD
------------------------
International Growth Portfolio (CLASS Y) 7/5/95 THROUGH 12/31/95
- --------------------------------------------------------------------------------------
<S> <C> <C>
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
--------
Total Distributions $ 0.90
--------
Net Asset Value End of Period 16.07
--------
Total Return 13.65%B
Net Assets End of Period (in thousands) $ 3,109
Ratio of Expenses to Average Net Assets 1.55%C
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.75%C
Ratio of Net Investment Income to Average Net Assets 0.26%C
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 0.05%C
Portfolio Turnover Rate 31.10%C
Average commission per shareA
</TABLE>
A Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
B Not Annualized.
C Annualized.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 67
<PAGE>
ENTERPRISE GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
Enterprise Government Securities Portfolio (CLASS A) 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 11.83 $ 10.62 $ 12.44 $ 12.47
Net Investment Income (Loss) 0.74 0.76 0.87 0.92
Net Realized and Unrealized Gain (Loss) on Investments (0.03) 1.21 (1.82) 0.21
--------- --------- --------- ---------
Total from Investment Operations 0.71 1.97 (0.95) 1.13
--------- --------- --------- ---------
Dividends from Net Investment Income 0.74 0.76 0.87 0.92
Distributions from Capital Gains 0.00 0.00 0.00 0.24
--------- --------- --------- ---------
Total Distributions 0.74 0.76 0.87 1.16
--------- --------- --------- ---------
Net Asset Value End of Period $ 11.80 $ 11.83 $ 10.62 $ 12.44
--------- --------- --------- ---------
Total ReturnC 6.29% 19.00% (7.81)% 9.26%
Net Assets End of Period (in thousands) $ 73,693 $ 86,224 $ 84,431 $ 106,541
Ratio of Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.42% 1.44% 1.35% 1.44%
Ratio of Net Investment Income to Average Net Assets 6.35% 6.66% 7.60% 7.20%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 6.23% 6.52% 7.59% 7.03%
Portfolio Turnover Rate 0.17% 0.00% 27.20% 90.10%
<CAPTION>
Enterprise Government Securities Portfolio (CLASS A) 1992E
- --------------------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period $ 12.40
Net Investment Income (Loss) 0.99
Net Realized and Unrealized Gain (Loss) on Investments 0.19
---------
Total from Investment Operations 1.18
---------
Dividends from Net Investment Income 0.98
Distributions from Capital Gains 0.13
---------
Total Distributions 1.11
---------
Net Asset Value End of Period $ 12.47
---------
Total ReturnC 9.93%
Net Assets End of Period (in thousands) $ 71,515
Ratio of Expenses to Average Net Assets 1.30%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.54%
Ratio of Net Investment Income to Average Net Assets 7.90%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 7.72%
Portfolio Turnover Rate 108.40%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
-------------------
Enterprise Government Securities Portfolio (CLASS B) DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 11.83
Net Investment Income (Loss) 0.68
Net Realized and Unrealized Gain (Loss) on Investments (0.04)
------
Total from Investment Operations 0.64
------
Dividends from Net Investment Income 0.68
Distributions from Capital Gains 0.00
------
Total Distributions 0.68
------
Net Asset Value End of Period $ 11.79
------
Total ReturnD 5.61%
Net Assets End of Period (in thousands) $ 5,683
Ratio of Expenses to Average Net Assets 1.85%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.96%
Ratio of Net Investment Income to Average Net Assets 5.79%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 5.68%
Portfolio Turnover Rate 0.17%
<CAPTION>
FOR THE PERIOD
------------------------
Enterprise Government Securities Portfolio (CLASS B) 5/1/95 THROUGH 12/31/95
- --------------------------------------------------------------------------------------
<S> <C>
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
--------
Total Distributions 0.44
--------
Net Asset Value End of Period $ 11.83
--------
Total ReturnD 10.47%A
Net Assets End of Period (in thousands) $ 2,124
Ratio of Expenses to Average Net Assets 1.85%B
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.91%B
Ratio of Net Investment Income to Average Net Assets 5.64%B
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 5.58%B
Portfolio Turnover Rate 0.00%B
</TABLE>
A Not Annualized.
B Annualized.
C Total returns do not include one time sales charge.
D Total return does not include contingent deferred sales charge.
E Based on average monthly shares outstanding.
See notes to financial statements.
68 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
ENTERPRISE HIGH-YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
Enterprise High-Yield Bond Portfolio (CLASS A) 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 11.39 $ 10.72 $ 11.70 $ 10.83
Net Investment Income (Loss) 0.94 0.99 0.97 0.95
Net Realized and Unrealized Gain (Loss) on Investments 0.45 0.67 (0.97) 0.89
--------- --------- --------- ---------
Total from Investment Operations 1.39 1.66 0.00 1.84
--------- --------- --------- ---------
Dividends from Net Investment Income 0.94 0.99 0.98 0.97
Distributions from Capital Gains 0.00 0.00 0.00 0.00
--------- --------- --------- ---------
Total Distributions 0.94 0.99 0.98 0.97
--------- --------- --------- ---------
Net Asset Value End of Period $ 11.84 $ 11.39 $ 10.72 $ 11.70
--------- --------- --------- ---------
Total ReturnC 12.78% 16.00% 0.05% 17.58%
Net Assets End of Period (in thousands) $ 54,129 $ 52,182 $ 44,822 $ 44,361
Ratio of Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30%E
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.50% 1.52% 1.45% 1.59%
Ratio of Net Investment Income to Average Net Assets 8.21% 8.80% 8.60% 8.20%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 8.01% 8.58% 8.52% 7.95%
Portfolio Turnover Rate 180.13% 88.50% 113.00% 121.20%
<CAPTION>
Enterprise High-Yield Bond Portfolio (CLASS A) 1992
- -----------------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period $ 10.19
Net Investment Income (Loss) 1.01
Net Realized and Unrealized Gain (Loss) on Investments 0.64
---------
Total from Investment Operations 1.65
---------
Dividends from Net Investment Income 1.01
Distributions from Capital Gains 0.00
---------
Total Distributions 1.01
---------
Net Asset Value End of Period $ 10.83
---------
Total ReturnC 16.69%
Net Assets End of Period (in thousands) $ 30,851
Ratio of Expenses to Average Net Assets 1.30%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.64%
Ratio of Net Investment Income to Average Net Assets 9.40%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 8.95%
Portfolio Turnover Rate 121.70%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------- ------------------------
Enterprise High-Yield Bond Portfolio (CLASS B) DECEMBER 31, 1996 5/1/95 THROUGH 12/31/95
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 11.39 $ 11.11
Net Investment Income (Loss) 0.88 0.61
Net Realized and Unrealized Gain (Loss) on Investments 0.45 0.28
------- --------
Total from Investment Operations 1.33 0.89
------- --------
Dividends from Net Investment Income 0.88 0.61
Distributions from Capital Gains 0.00 0.00
------- --------
Total Distributions 0.88 0.61
------- --------
Net Asset Value End of Period $ 11.84 $ 11.39
------- --------
Total ReturnD 12.16% 8.12%B
Net Assets End of Period (in thousands) $ 7,892 $ 2,951
Ratio of Expenses to Average Net Assets 1.85% 1.85%A
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.05% 2.09%A
Ratio of Net Investment Income to Average Net Assets 7.74% 7.84%A
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 7.55% 7.68%A
Portfolio Turnover Rate 180.13% 88.50%A
</TABLE>
A Not Annualized.
B Annualized.
C Total returns do not include one time sales charge.
D Total return does not include contingent deferred sales charge.
E Based on average monthly shares outstanding.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 69
<PAGE>
ENTERPRISE TAX-EXEMPT INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
Enterprise Tax-Exempt Income Portfolio (CLASS A) 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 13.99 $ 12.80 $ 14.31 $ 13.60
Net Investment Income (Loss) 0.64 0.65 0.67 0.70
Net Realized and Unrealized Gain (Loss) on Investments (0.16) 1.21 (1.48) 0.73
--------- --------- --------- ---------
Total from Investment Operations 0.48 1.86 (0.81) 1.43
--------- --------- --------- ---------
Dividends from Net Investment Income 0.64 0.65 0.68 0.70
Distributions from Capital Gains 0.00 0.02 0.02 0.02
--------- --------- --------- ---------
Total Distributions 0.64 0.67 0.70 0.72
--------- --------- --------- ---------
Net Asset Value End of Period $ 13.83 $ 13.99 $ 12.80 $ 14.31
--------- --------- --------- ---------
Total ReturnC 3.54% 14.85% (5.69)% 10.76%
Net Assets End of Period (in thousands) $ 28,478 $ 33,626 $ 34,297 $ 41,702
Ratio of Expenses to Average Net Assets 1.25% 1.25% 1.25% 1.25%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.41% 1.42% 1.28% 1.39%
Ratio of Net Investment Income to Average Net Assets 4.64% 4.82% 5.00% 4.90%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 4.48% 4.65% 4.97% 4.79%
Portfolio Turnover Rate 0.91% 0.75% 25.70% 8.30%
<CAPTION>
Enterprise Tax-Exempt Income Portfolio (CLASS A) 1992
- -----------------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period $ 13.34
Net Investment Income (Loss) 0.76
Net Realized and Unrealized Gain (Loss) on Investments 0.26
---------
Total from Investment Operations 1.02
---------
Dividends from Net Investment Income 0.76
Distributions from Capital Gains 0.00
---------
Total Distributions 0.76
---------
Net Asset Value End of Period $ 13.60
---------
Total ReturnC 7.88%
Net Assets End of Period (in thousands) $ 29,728
Ratio of Expenses to Average Net Assets 1.25%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.41%
Ratio of Net Investment Income to Average Net Assets 5.60%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 5.49%
Portfolio Turnover Rate 16.30%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------- -----------------------
Enterprise Tax-Exempt Income Portfolio (CLASS B) DECEMBER 31, 1996 5/1/95 THROUGH 12/31/95
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 13.99 $ 13.44
Net Investment Income (Loss) 0.56 0.38
Net Realized and Unrealized Gain (Loss) on Investments (0.16) 0.57
------ ------
Total from Investment Operations 0.40 0.95
------ ------
Dividends from Net Investment Income 0.56 0.38
Distributions from Capital Gains 0.00 0.02
------ ------
Total Distributions 0.56 0.40
------ ------
Net Asset Value End of Period $ 13.83 $ 13.99
------ ------
Total ReturnD 2.96% 7.18%A
Net Assets End of Period (in thousands) $ 2,037 $ 912
Ratio of Expenses to Average Net Assets 1.80% 1.80%B
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.96% 1.98%B
Ratio of Net Investment Income to Average Net Assets 4.07% 4.08%B
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 3.92% 3.94%B
Portfolio Turnover Rate 0.91% 0.75%B
</TABLE>
A Not Annualized.
B Annualized.
C Total returns do not include one time sales charge.
D Total return does not include contingent deferred sales charge.
See notes to financial statements.
70 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
ENTERPRISE MANAGED PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER FOR THE PERIOD
31, -----------------------
-------------------- 10/1/94 THROUGH
Enterprise Managed Portfolio (CLASS A) 1996 1995 12/31/94
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 6.70 $ 4.91 $ 5.00
Net Investment Income (Loss) 0.06 0.04 0.01
Net Realized and Unrealized Gain (Loss) on Investments 1.41 1.81 (0.09)
--------- --------- --------
Total from Investment Operations 1.47 1.85 (0.08)
--------- --------- --------
Dividends from Net Investment Income 0.06 0.03 0.01
Distributions from Capital Gains 0.14 0.03 0.00
--------- --------- --------
Total Distributions 0.20 0.06 0.01
--------- --------- --------
Net Asset Value End of Period $ 7.97 $ 6.70 $ 4.91
--------- --------- --------
Total ReturnB 22.08% 37.68% (1.58)%D
Net Assets End of Period (in thousands) $ 101,022 $ 47,839 $ 7,872
Ratio of Expenses to Average Net Assets 1.57% 1.75% 1.75%E
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.57% 1.90% 3.71%E
Ratio of Net Investment Income to Average Net Assets 1.12% 1.09% 1.30%E
Ratio of Net Investment to Average Net Assets (Excluding Waivers) 1.12% 0.94% (0.32)%E
Portfolio Turnover Rate 33.21% 26.40% 27.10%E
Average commission per shareA $ 0.0551
<CAPTION>
Enterprise Managed Portfolio (CLASS A)
- ----------------------------------------------------------------------------
<S> <C>
Net Asset Value Beginning of Period
Net Investment Income (Loss)
Net Realized and Unrealized Gain (Loss) on Investments
Total from Investment Operations
Dividends from Net Investment Income
Distributions from Capital Gains
Total Distributions
Net Asset Value End of Period
Total ReturnB
Net Assets End of Period (in thousands)
Ratio of Expenses to Average Net Assets
Ratio of Expenses to Average Net Assets (Excluding Waivers)
Ratio of Net Investment Income to Average Net Assets
Ratio of Net Investment to Average Net Assets (Excluding Waivers)
Portfolio Turnover Rate
Average commission per shareA
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------- -----------------------
Enterprise Managed Portfolio (CLASS B) DECEMBER 31, 1996 5/1/95 THROUGH 12/31/95
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 6.68 $ 5.68
Net Investment Income (Loss) 0.02 0.01
Net Realized and Unrealized Gain (Loss) on Investments 1.41 1.05
------- -------
Total from Investment Operations 1.43 1.06
------- -------
Dividends from Net Investment Income 0.04 0.03
Distributions from Capital Gains 0.14 0.03
------- -------
Total Distributions 0.18 0.06
------- -------
Net Asset Value End of Period $ 7.93 $ 6.68
------- -------
Total ReturnC 21.50% 18.38%D
Net Assets End of Period (in thousands) $ 57,037 $ 16,792
Ratio of Expenses to Average Net Assets 2.13% 2.30%E
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.13% 2.45%E
Ratio of Net Investment Income to Average Net Assets (1) 0.52% 0.31%E
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 0.52% 0.14%E
Portfolio Turnover Rate 33.21% 26.40%E
Average commission per shareA $ 0.0551
<CAPTION>
Enterprise Managed Portfolio (CLASS B)
- ----------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period
Net Investment Income (Loss)
Net Realized and Unrealized Gain (Loss) on Investments
Total from Investment Operations
Dividends from Net Investment Income
Distributions from Capital Gains
Total Distributions
Net Asset Value End of Period
Total ReturnC
Net Assets End of Period (in thousands)
Ratio of Expenses to Average Net Assets
Ratio of Expenses to Average Net Assets (Excluding Waivers)
Ratio of Net Investment Income to Average Net Assets (1)
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers)
Portfolio Turnover Rate
Average commission per shareA
</TABLE>
A Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
B Total return does not include one time sales charge.
C Total return does not include contingent deferred sales charge.
D Not Annualized.
E Annualized.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 71
<PAGE>
ENTERPRISE MANAGED PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
------------------- -----------------------
Enterprise Managed Portfolio (CLASS Y) DECEMBER 31, 1996 7/5/95 THROUGH 12/31/95
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 6.70 $ 6.17
Net Investment Income (Loss) 0.09 0.03
Net Realized and Unrealized Gain (Loss) on Investments 1.42 0.57
------- -------
Total from Investment Operations 1.51 0.60
------- -------
Dividends from Net Investment Income 0.09 0.04
Distributions from Capital Gains 0.14 0.03
------- -------
Total Distributions 0.23 0.07
------- -------
Net Asset Value End of Period $ 7.98 $ 6.70
------- -------
Total Return 22.63% 9.80%B
Net Assets End of Period (in thousands) $ 57,794 $ 26,664
Ratio of Expenses to Average Net Assets 1.12% 1.30%C
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.12% 1.41%C
Ratio of Net Investment Income to Average Net Assets 1.57% 1.39%C
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 1.57% 1.28%C
Portfolio Turnover Rate 33.21% 26.40%C
Average commission per shareA $ 0.0551
</TABLE>
A Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of equity
investments on which commissions were charged during the period.
B Not Annualized.
C Annualized.
72 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
ENTERPRISE MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:___________________
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------
Enterprise Money Market Portfolio (CLASS A) 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income (Loss) 0.04 0.05 0.03 0.02
Net Realized and Unrealized Gain (Loss) on Investments 0.00 0.00 0.00 0.00
--------- --------- --------- ---------
Total from Investment Operations 0.04 0.05 0.03 0.02
--------- --------- --------- ---------
Dividends from Net Investment Income 0.04 0.05 0.03 0.02
Distributions from Capital Gains 0.00 0.00 0.00 0.00
--------- --------- --------- ---------
Total Distributions 0.04 0.05 0.03 0.02
--------- --------- --------- ---------
Net Asset Value End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- --------- --------- ---------
Total ReturnB 4.51% 5.05% 3.34% 2.24%
Net Assets End of Period (in thousands) $ 59,074 $ 40,325 $ 32,334 $ 18,302
Ratio of Expenses to Average Net Assets 1.00% 1.00% 1.00% 1.00%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.18% 1.35% 1.33% 1.72%
Ratio of Net Investment Income to Average Net Assets 4.42% 4.92% 3.30% 2.20%
Ratio of Net Investment to Average Net Assets (Excluding Waivers) 4.24% 4.57% 3.08% 1.47%
<CAPTION>
Enterprise Money Market Portfolio (CLASS A) 1992D
- -------------------------------------------------------------------------------------
<S> <C>
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
---------
Total Distributions 0.03
---------
Net Asset Value End of Period $ 1.00
---------
Total ReturnB 2.92%
Net Assets End of Period (in thousands) $ 18,932
Ratio of Expenses to Average Net Assets 1.00%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.56%
Ratio of Net Investment Income to Average Net Assets 2.80%
Ratio of Net Investment to Average Net Assets (Excluding Waivers) 1.81%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
-------------------
Enterprise Money Market Portfolio (CLASS B) DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 1.00
Net Investment Income (Loss) 0.04
Net Realized and Unrealized Gain (Loss) on Investments 0.00
-------
Total from Investment Operations 0.04
-------
Dividends from Net Investment Income 0.04
Distributions from Capital Gains 0.00
-------
Total Distributions 0.04
-------
Net Asset Value End of Period $ 1.00
-------
Total ReturnC 3.94%
Net Assets End of Period (in thousands) $ 1,344
Ratio of Expenses to Average Net Assets 1.55%
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.73%
Ratio of Net Investment Income to Average Net Assets 3.85%
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 3.68%
<CAPTION>
FOR THE PERIOD
-----------------------
Enterprise Money Market Portfolio (CLASS B) 5/1/95 THROUGH 12/31/95
- --------------------------------------------------------------------------------------------------
<S> <C>
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
-------
Total Distributions 0.03
-------
Net Asset Value End of Period $ 1.00
-------
Total ReturnC 2.95%A
Net Assets End of Period (in thousands) $ 394
Ratio of Expenses to Average Net Assets 1.55%B
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.88%B
Ratio of Net Investment Income to Average Net Assets 4.23%B
Ratio of Net Investment Income to Average Net Assets (Excluding Waivers) 3.90%B
</TABLE>
A Not Annualized.
B Annualized.
C Total return does not include contingent deferred sales charge.
D Based on average monthly shares outstanding.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 73
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
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, Equity 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 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
redemption. 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 aggregate deviation from net
asset value as calculated by using available market quotations exceeds 1/2 of
1%.
Special Valuation Risks -- 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.
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
74 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS-- (Continued)
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
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.
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 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.
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.
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 received 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.
Expenses -- Each portfolio and class bears expenses incurred specifically on its
behalf as well as a portion of the common expenses of the Fund. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
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.
Use of Estimates in Preparation of Financial Statements -- Preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that may affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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
THE ENTERPRISE GROUP OF FUNDS, INC. 75
<PAGE>
NOTES TO FINANCIAL STATEMENTS-- (Continued)
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
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 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:
<TABLE>
<CAPTION>
Maximum
Expense
Management Fee Distribution Fee Amounts
------------------------------------- ----------------------------------- -----------
Portfolio A B Y A B Y A
- ------------------------------------------- ----------- ----------- ----------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Growth .75% .75% .75% .45% 1.00% none 1.60%
Equity Income .75% .75% .75% .45% 1.00% none 1.50%
Capital Appreciation .75% .75% .75% .45% 1.00% none 1.75%
Small Company .75% .75% .75% .45% 1.00% none 1.75%
International Growth .85% .85% .85% .45% 1.00% none 2.00%
Government Securities .60% .60% .60% .45% 1.00% none 1.30%
High-Yield Bond .60% .60% .60% .45% 1.00% none 1.30%
Tax-Exempt Income .50% .50% .50% .45% 1.00% none 1.25%
Managed .75% .75% .75% .45% 1.00% none 1.75%
Money Market .35% .35% .35% .30% .85% none 1.00%
<CAPTION>
Portfolio B Y
- ------------------------------------------- ----------- -----------
<S> <C> <C>
Growth 2.15% 1.15%
Equity Income 2.05% 1.05%
Capital Appreciation 2.30% 1.30%
Small Company 2.30% 1.30%
International Growth 2.55% 1.55%
Government Securities 1.85% .85%
High-Yield Bond 1.85% .85%
Tax-Exempt Income 1.80% .80%
Managed 2.30% 1.30%
Money Market 1.55% .70%
</TABLE>
Enterprise Capital is a wholly-owned subsidiary of The Mutual Life Insurance
Company of New York, Inc. ("MONY"). MONY and its subsidiaries had the following
investments in the portfolios as of December 31, 1996, Equity Income Portfolio,
Class A -- $556,885, Small Company Portfolio, Class A -- $119,905, International
Growth Portfolio, Class A -- $2,267,160, Government Securities Portfolio, Class
A -- $800,423 and Managed Portfolio, Class A -- $2,119,374.
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 Equity Income
Portfolio. For the year ended December 31, 1996 Enterprise Capital incurred
subadvisory fees payable to 1740 Advisers, Inc. related to the Equity Income
Portfolio of $209,391.
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 $3,998,170
for the year ended December 31, 1996. The portion of sales charges paid to the
Distributor was $684,645 for the year ended December 31, 1996.
The Distributor uses its distribution fee from the Fund to pay expenses on
behalf of the Fund related to the distribution and servicing of its shares.
These expenses include a service fee to securities dealers that enter into a
sales agreement with the Distributor. During 1996, the Distributor incurred
$810,637 of services fees payable to MONY Securities Corporation.
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
76 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS-- (Continued)
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
sales of securities. The Portfolio will enter into forward contracts only for
hedging purposes. At December 31, 1996, the International Growth Portfolio had
entered 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, 1996
are as follows:
<TABLE>
<CAPTION>
Contract to Net Unrealized
Settlement --------------------------------------------------- Appreciation/
Date Receive Deliver (Depreciation)
- ------------ ------------------------ ------------------------- --------------
<C> <S> <C> <C>
1/17/97 USD 825,720 AUD 1,050,000 $ (8,674)
1/17/97 USD 1,063,005 BEL 32,900,000 24,784
1/17/97 BEL 6,600,000 USD 218,182 (9,907)
1/17/97 CAD 620,000 DEM 698,027 (832)
1/17/97 CHF 790,000 USD 664,312 (73,070)
1/17/97 USD 1,536,610 CHF 1,890,000 122,119
1/17/97 USD 2,524,643 DEM 3,800,000 52,440
1/17/97 DEM 1,250,000 USD 851,499 (38,274)
1/17/97 USD 636,942 ESP 81,000,000 13,302
1/17/97 USD 3,964,723 FRF 20,200,000 67,584
1/17/97 USD 646,779 GBP 420,000 (72,520)
1/17/97 USD 452,555 HKD 3,500,000 16
1/17/97 ITL 2,260,000,000 USD 1,457,030 31,377
1/17/97 USD 1,466,723 ITL 2,260,000 (21,685)
1/17/97 JPY 340,000,000 USD 3,236,246 (293,331)
1/17/97 USD 4,912,571 JPY 529,000,000 333,741
1/17/97 NLG 300,000 USD 182,637 (8,680)
1/17/97 USD 2,843,876 NLG 4,800,000 60,567
--------------
$ 178,957
--------------
--------------
</TABLE>
Net unrealized appreciation on these contracts at December 31, 1996 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, 1996 in the High-Yield Bond
Portfolio.
THE ENTERPRISE GROUP OF FUNDS, INC. 77
<PAGE>
NOTES TO FINANCIAL STATEMENTS-- (Continued)
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
For the year ended December 31, 1996, purchases and sales proceeds of
investments, other than short-term investments, were as follows:
<TABLE>
<CAPTION>
U.S. Government Other Investment
Obligations Securities
-------------------------------- ----------------------------------
Portfolio Purchases Sales Purchases Sales
- -------------------------------------------- --------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Growth -- -- $ 98,882,165 $ 48,849,194
Equity Income -- -- 22,418,484 20,867,089
Capital Appreciation -- -- 78,568,857 92,467,303
Small Company -- -- 28,840,840 33,291,036
International Growth -- -- 20,540,346 9,277,748
Government Securities $ 136,746 $ 7,953,548 -- --
High-Yield Bond 1,666,192 2,418,234 100,410,800 95,505,081
Tax-Exempt Income -- -- 289,443 3,650,783
Managed -- -- 123,947,769 43,091,033
</TABLE>
78 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS-- (Continued)
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
5. Fund Share Transactions
At December 31, 1996, the Fund, excluding the Money Market Portfolio, has
300,000,000 authorized shares at $.10 par value. The Money Market Portfolio has
500,000,000 authorized shares at $.10 par value. The following tables summarize
the fund share activity for the years ended December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Equity 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,
1996 1995 1996 1995 1996 1995 1996 1995
------------ ------------ ---------- ---------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A
Shares sold 8,738,168 4,788,089 445,852 330,132 575,596 1,229,985 747,903 851,253
- ------------------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 764,679 449,283 255,843 158,379 312,878 336,750 144,852 134,635
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (6,216,899) (4,885,863) (451,181) (601,132) (1,243,989) (1,389,942) (1,511,602) (1,634,212)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 3,285,948 351,509 250,514 (112,621) (355,515) 176,793 (618,847) (648,324)
- ------------------------------------------------------------------------------------------------------------------------------------
Class B
Shares sold 2,318,350 427,735 188,604 50,306 84,267 55,311 323,495 156,252
- ------------------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 139,776 16,702 17,631 2,294 13,789 5,453 21,578 5,984
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (85,206) (5,095) (6,975) (66) (9,219) (526) (46,439) (2,766)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 2,372,920 439,342 199,260 52,534 88,837 60,238 298,634 159,470
- ------------------------------------------------------------------------------------------------------------------------------------
Class Y
Shares sold 467,776 -- -- -- -- -- 150,961 533,065
- ------------------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 9,455 -- -- -- -- -- 293 113
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (298,930) -- -- -- -- -- (339,207) (11,313)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 178,301 -- -- -- -- -- (187,953) 521,865
- ------------------------------------------------------------------------------------------------------------------------------------
Total Net Increase
(Decrease) 5,837,169 790,851 449,774 (60,087) (266,678) 237,031 (508,166) 33,011
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 79
<PAGE>
NOTES TO FINANCIAL STATEMENTS-- (Continued)
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
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,
1996 1995 1996 1995 1996 1995 1996 1995
----------- ----------- ------------- ------------- ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Class A
Shares sold 547,159 304,077 693,755 850,363 1,061,881 992,706 182,258 159,901
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 103,914 87,155 314,104 370,524 266,718 284,035 78,413 95,017
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (394,928) (483,305) (2,050,440) (1,881,468) (1,340,318) (874,861) (604,753) (532,434)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 256,145 (92,073) (1,042,581) (660,531) (11,719) 401,880 (344,082) (277,516)
- -----------------------------------------------------------------------------------------------------------------------------------
Class B
Shares sold 194,193 64,994 385,535 182,937 449,539 256,766 107,623 64,926
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 12,561 3,390 15,300 1,824 23,405 4,434 4,171 671
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (23,124) (77) (98,589) (5,144) (65,696) (2,093) (29,665) (459)
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 183,630 68,307 302,246 179,617 407,248 259,107 82,129 65,138
- -----------------------------------------------------------------------------------------------------------------------------------
Class Y
Shares sold 399,982 201,020 -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 29,486 10,240 -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (106,743) (17,752) -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 322,725 193,508 -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total Net Increase
(Decrease) 762,500 169,742 (740,335) (480,914) 395,529 660,987 (261,953) (212,378)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
80 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS-- (Continued)
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market
Managed Portfolio Portfolio
---------------------------- --------------------------------
Year Year Year Year
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1996 1995 1996 1995
------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class A
Shares sold 6,602,960 6,115,394 155,780,333 127,849,845
- -------------------------------------------------------------------------------------------
Reinvestment of Distributions 312,623 60,640 1,843,341 1,635,878
- -------------------------------------------------------------------------------------------
Shares Redeemed (1,385,991) (636,867) (138,874,791) (121,495,592)
- -------------------------------------------------------------------------------------------
Net Increase (Decrease) 5,529,592 5,539,167 18,748,883 7,990,131
- -------------------------------------------------------------------------------------------
Class B
Shares sold 4,899,330 2,547,396 4,456,552 604,172
- -------------------------------------------------------------------------------------------
Reinvestment of Distributions 154,174 20,026 35,289 1,198
- -------------------------------------------------------------------------------------------
Shares Redeemed (374,396) (54,011) (3,542,604) (211,056)
- -------------------------------------------------------------------------------------------
Net Increase (Decrease) 4,679,108 2,513,411 949,237 394,314
- -------------------------------------------------------------------------------------------
Class Y
Shares sold 4,254,875 4,200,659 -- --
- -------------------------------------------------------------------------------------------
Reinvestment of Distributions 208,342 43,930 -- --
- -------------------------------------------------------------------------------------------
Shares Redeemed (1,204,112) (264,221) -- --
- -------------------------------------------------------------------------------------------
Net Increase (Decrease) 3,259,105 3,980,368 -- --
- -------------------------------------------------------------------------------------------
Total Net Increase (Decrease) 13,467,805 12,032,946 19,698,120 8,384,445
- -------------------------------------------------------------------------------------------
</TABLE>
6. Tax Basis Unrealized Gain (Loss) of Investments and Distributions
At December 31, 1996, the cost of securities for federal income tax purposes,
the aggregate gross unrealized gain for all securities for which there was an
excess of value over tax cost and the aggregate gross unrealized loss for all
securities for which there was an excess of tax cost over value were as follows:
<TABLE>
<CAPTION>
Tax Unrealized Unrealized
Portfolio Cost Gain Loss
- --------------------------------------------------------------- ------------------ ---------------- ----------------
<S> <C> <C> <C>
Growth $ 156,947,841 $ 78,282,226 $ (786,212)
- -----------------------------------------------------------------------------------------------------------------------
Equity Income 58,441,581 20,869,439 (385,348)
- -----------------------------------------------------------------------------------------------------------------------
Capital Appreciation 85,865,043 37,759,928 (1,840,123)
- -----------------------------------------------------------------------------------------------------------------------
Small Company 20,779,006 1,985,638 (506,440)
- -----------------------------------------------------------------------------------------------------------------------
International Growth 43,576,739 6,612,592 (2,534,978)
- -----------------------------------------------------------------------------------------------------------------------
Government Securities 80,763,012 339,229 (2,075,171)
- -----------------------------------------------------------------------------------------------------------------------
High-Yield Bond 58,546,544 2,614,492 (329,956)
- -----------------------------------------------------------------------------------------------------------------------
Tax-Exempt Income 28,431,554 1,626,681 (96,008)
- -----------------------------------------------------------------------------------------------------------------------
Managed 179,891,876 36,930,853 (2,662,539)
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Net
Unrealized
Portfolio Gain (Loss)
- --------------------------------------------------------------- ----------------
<S> <C>
Growth $ 77,496,014
- ---------------------------------------------------------------
Equity Income 20,484,091
- ---------------------------------------------------------------
Capital Appreciation 35,919,805
- ---------------------------------------------------------------
Small Company 1,479,198
- ---------------------------------------------------------------
International Growth 4,077,614
- ---------------------------------------------------------------
Government Securities (1,735,942)
- ---------------------------------------------------------------
High-Yield Bond 2,284,536
- ---------------------------------------------------------------
Tax-Exempt Income 1,530,673
- ---------------------------------------------------------------
Managed 34,268,314
- ---------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 81
<PAGE>
NOTES TO FINANCIAL STATEMENTS-- (Continued)
- --------------------------------------------------------------------------------
December 31, 1996
- --------------------------------------------------------------------------------
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, market
discounts, losses deferred due to wash sales, investments in passive foreign
investment companies, 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.
At December 31, 1996, the following Portfolios had capital loss carryforwards
for federal tax purposes of:
<TABLE>
<CAPTION>
Balance
---------------
<S> <C>
Government Securities Portfolio $ 4,071,570
- ---------------------------------------------------------------------------------------------------------------------------------
High-Yield Bond Portfolio 2,512,416
- ---------------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Income Portfolio 7,708
- ---------------------------------------------------------------------------------------------------------------------------------
Money Market Portfolio 3,065
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Expiring
through
-----------
<S> <C>
Government Securities Portfolio 2002
- ----------------------------------------------------------------------------------------------------------------
High-Yield Bond Portfolio 2002
- ----------------------------------------------------------------------------------------------------------------
Tax-Exempt Income Portfolio 2002
- ----------------------------------------------------------------------------------------------------------------
Money Market Portfolio 2004
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
The capital gains distribution paid to shareholders for 1996, whether taken in
additional shares or cash, is as follows:
<TABLE>
<CAPTION>
<S> <C>
Growth Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Small Company Portfolio
- --------------------------------------------------------------------------------------------------------------------------
International Growth Portfolio
- --------------------------------------------------------------------------------------------------------------------------
Managed Portfolio
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Long Ter
m
Capital
Gains
--------
- -
<S> <C>
Growth Portfolio $11,922,
241
- --------------------------------------------------------------------------------------------------------------------------
Equity Income Portfolio 4,494,91
1
- --------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Portfolio 11,967,3
41
- --------------------------------------------------------------------------------------------------------------------------
Small Company Portfolio 392,49
7
- --------------------------------------------------------------------------------------------------------------------------
International Growth Portfolio 852,67
3
- --------------------------------------------------------------------------------------------------------------------------
Managed Portfolio 2,433,92
5
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
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.
82 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
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, Equity Income (formerly 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, 1996 and the related statements of operations for the year then
ended, the statements of changes in net assets for each of the two years (or
periods) in the period then ended, and the financial highlights for each of the
five years (or periods) 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, 1996 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, Equity Income (formerly 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, 1996, 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 generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
February 20, 1997
THE ENTERPRISE GROUP OF FUNDS, INC. 83
<PAGE>
DIRECTORS AND OFFICERS
DIRECTORS
Victor Ugolyn
CHAIRMAN AND DIRECTOR
Arthur T. Dietz Arthur Howell
DIRECTOR DIRECTOR
William A. Mitchell, Jr. Lonnie H. Pope
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
<PAGE>
INVESTMENT ADVISER
Enterprise Capital Management, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E.
Suite 450
Atlanta, GA 30326-1022
DISTRIBUTOR
Enterprise Fund Distributors, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E.
Suite 450
Atlanta, GA 30326-1022
Telephone: 1-800-432-4320 (Toll Free)
CUSTODIAN
State Street Bank and Trust Company
Boston, MA
TRANSFER AGENT
National Financial Data Services, Inc.
1004 Baltimore Ave., 2nd Floor
Kansas City, MO 64105-2112
Telephone: 1-800-368-3527 (Toll Free)
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Atlanta, GA
MEMBER - INVESTMENT COMPANY INSTITUTE
[LOGO]
1-800-432-4320
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.
<PAGE> 1
EXHIBIT 10
April 29, 1997
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. 47 (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 (b) 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
(3) the prospectus included as part of the Post-Effective Amendment
does not include disclosure which I believe would render it ineligible to
become effective purusant to Paragraph (b) of Rule 485.
Very truly yours,
Catherine R. McClellan
CRM/slc
<PAGE> 1
EXHIBIT 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Port-Effective Amendment No. 47 to the
registration statement under the Securities Act of 1933 (file number 2-28097) of
our report dated February 24, 1996 on our audit of the financial statements and
financial highlights of The Enterprise Group of Funds, Inc. appearing in the
Registrant's 1996 Annual Report. We also consent to the reference to our Firm
under the caption "Independent Accountants."
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
April 29, 1997
