ENTERPRISE GROUP OF FUNDS INC, 497, 1997-08-25

ENTERPRISE GROUP OF FUNDS INC
497, 1997-08-25

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<PAGE> 1
Filed Pursuant to Rule 497(e)
Registration No. 2-28097

PROSPECTUS
May 1, 1997
As Supplemented on August 25, 1997

[Four Color Photograph of Keys on a Key Ring]

The Enterprise Group of Funds, Inc.

<PAGE> 2

TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Expense information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Prospectus summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Condensed financial information. . . . . . . . . . . . . . . . . . . . . . . . 7

Investment objectives and policies of the Portfolios . . . . . . . . . . . . . 17

Certain investment techniques and associated risks . . . . . . . . . . . . . . 25

Investment restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

How to purchase Portfolio shares . . . . . . . . . . . . . . . . . . . . . . . 37

Shareholder services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44

How to exchange shares among the Portfolios. . . . . . . . . . . . . . . . . . 46

How to redeem Portfolio shares . . . . . . . . . . . . . . . . . . . . . . . . 47

Distributor's Agreement and Plan of Distribution . . . . . . . . . . . . . . . 50

Performance comparisons. . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58

Dividends and distribution . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Brokerage transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
</TABLE>

<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
As Supplemented August 25, 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

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

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)....... 1.00% 1.00% 1.00%
12b-1 Fee (including
service fees of
.25%)(3)............... 0.45% 1.00% 1.00%
Other Expenses(4)....... 0.40% 0.40% 0.40%
---- ---- ----
TOTAL FUND OPERATING
EXPENSES............... 1.85% 2.40% 2.40%
==== ==== ====
EXAMPLE 1: You would pay
(a) payment of the maxi
10-year figures for Cla
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
(a) payment of the maxi
figures for Class B sha
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 for Class B and Class C
shares. 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. As for
Growth and Capital Appreciation Portfolios, expenses do not reflect a
reduction for reimbursements of .02% for brokerage credits.

THE ENTERPRISE Group of Funds, Inc.

2
<PAGE> 5

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% 0.85% 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

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 47 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>
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, Ltd. 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.
================================================================================

SHAREHOLDER SERVICES
<S> <C>
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 44 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.
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%(B)
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.
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 current price levels in the general market, and to the prices of
competing companies; projected earnings

THE ENTERPRISE Group of Funds, Inc.

17
<PAGE> 20

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 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

THE ENTERPRISE Group of Funds, Inc.

18
<PAGE> 21

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 is 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 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

THE ENTERPRISE Group of Funds, Inc.

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<PAGE> 22

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 Portfolio Manager 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 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.

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<PAGE> 23

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 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 po-

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<PAGE> 24

sition) 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 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

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<PAGE> 25

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 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

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23
<PAGE> 26

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.

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 re-

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24
<PAGE> 27

quire a sale of such security by the Money Market Portfolio. The Portfolio
Manager will consider such event in its determination of whether the Money
Market Portfolio should continue to hold the security provided that the security
presents minimal credit risks and that holding the security is in the best
interests of the Portfolio. To the extent Moody's or S&P may change their rating
systems generally (as described in the Appendix to the Statement of Additional
Information) the Money Market Portfolio will attempt to use comparable ratings
as standards for investments in accordance with investment policies contained
herein and in the Fund's Statement of Additional Information.

The dollar weighted average maturity of the Money Market Portfolio will be 90
days or less.

All investments of the Money Market Portfolio will be limited to instruments
which the Board of Directors determines are of eligible quality, which, if
instruments of foreign issuers, are United States dollar-denominated instruments
presenting minimal credit risk, and all of which are either:

1. of those rated in the two highest rating categories by any Nationally
Recognized Statistical Rating Organization (NRSRO), or

2. if the instrument is not rated, of comparable quality as determined by the
Board of Directors.

Generally, instruments with NRSRO ratings in the two highest grades are
considered "high quality." All of the money market investments will mature in
397 days or less. The Money Market Portfolio will use the amortized cost method
of securities valuation, as described more fully in the Statement of Additional
Information.

CERTAIN
INVESTMENT
TECHNIQUES AND
ASSOCIATED RISKS

Following is a description of certain investment techniques employed by the
Portfolios, and certain types of securities invested in by the Portfolios and
associated risks. Unless otherwise indicated, all of the Portfolios may use the
indicated techniques and invest in the indicated securities.

GENERAL RISKS ASSOCIATED WITH EQUITY PORTFOLIOS

The Equity Portfolios seek to reduce risk of loss of principal due to changes in
the value of individual stocks by investing in a diversified portfolio of common
stocks and through the use of options on stocks. Such investment techniques do
not, however, eliminate all risks. Investors should expect the value of the
Equity Portfolios and the net asset value of their shares to fluctuate based on
market conditions.

Smaller capitalization companies may experience higher growth rates and higher
failure rates than do larger capitalization companies due to the risk related to
markets, market share, product performance and financial resources. The limited
volume and frequency of trading of small capitalization companies may subject
their stocks to greater price deviations than stocks of larger companies.

The International Growth Portfolio carries additional risks associated with
possibly less stable foreign securities and currencies. For a discussion on
these risks, please refer to "Foreign Currency Values and Transactions" at page
32.

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<PAGE> 28

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, 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

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<PAGE> 29

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.

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
associ-

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<PAGE> 30

ated 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.

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

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28
<PAGE> 31

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 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 premi-

THE ENTERPRISE Group of Funds, Inc.

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<PAGE> 32

ums 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 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

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<PAGE> 33

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 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.

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<PAGE> 34

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 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 ENTERPRISE Group of Funds, Inc.

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<PAGE> 35

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 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

THE ENTERPRISE Group of Funds, Inc.

33
<PAGE> 36

Portfolio would be required to pay upon exercise of the put.

CERTAIN OTHER SECURITIES

Except as otherwise indicated, the Portfolios may purchase the following
securities, the purchase of which involves certain risks described below. Unless
otherwise indicated, a Portfolio will not purchase a category of such securities
if the value of such category, taken at current value, would exceed 5% of the
Portfolio's total assets.

MASTER DEMAND NOTES

All Portfolios may purchase variable amount master demand notes. Variable amount
master demand notes are demand obligations that permit the investment of
fluctuating amounts at varying market rates of interest pursuant to arrangements
between the issuer and a commercial bank acting as agent for the payees of such
notes whereby both parties have the right to vary the amount of the outstanding
indebtedness on the notes. Since there is no secondary market for these notes,
the appropriate Portfolio Managers, subject to the overall review of the Fund's
Directors and Enterprise Capital Management, Inc., the adviser, monitor the
financial condition of the issuers to insure that they are able to repay the
notes.

REPURCHASE AGREEMENTS

All Portfolios may enter into repurchase agreements having maturities of seven
days or less. When a Portfolio acquires securities from a bank or broker-dealer,
it may simultaneously enter into a repurchase agreement with the same seller
pursuant to which the seller agrees at the time of sale to repurchase the
security at a mutually agreed upon time and price. In such instances, the Fund's
Custodian has possession of the security or collateral for the seller's
obligation. If the seller should default on its obligation to repurchase the
securities, the Portfolio may experience delays, difficulties or other costs
when selling the securities held as collateral and may incur a loss if the value
of the 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

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<PAGE> 37

Government Securities Portfolio, the Tax-Exempt Income Portfolio and the Money
Market Portfolio, may, subject to the 10% limitation, invest in foreign
securities as well as both sponsored and unsponsored American Depository
Receipts ("ADRs"), and European Depository Receipts ("EDRs") which are
securities of U.S. issuers backed by securities of foreign issuers. There may be
less information available about unsponsored ADRs and EDRs, and therefore, they
may carry higher credit risks. The Portfolios may also invest in securities of
foreign branches of domestic banks and domestic branches of foreign banks.

Investments in foreign equity and debt securities involve risks different from
those encountered when investing in securities of domestic issuers. The
appropriate Portfolio Managers and Enterprise Capital, subject to the overall
review of the Fund's Directors, evaluate the risks and opportunities when
investing in foreign securities. Such risks include trade balances and
imbalances and related economic policies; currency exchange rate fluctuations;
foreign exchange control policies; expropriation or confiscatory taxation;
limitations on the removal of funds or other assets; political or social
instability; the diverse structure and liquidity of securities markets in
various countries and regions; policies of governments with respect to possible
nationalization of their own industries; and other specific local, political and
economic considerations.

FORWARD COMMITMENTS

Securities may be purchased on a "when issued" or on a "forward delivery" basis,
which means it may take as long as 120 days before such obligations are
delivered to a Portfolio. The purpose of such investments is to attempt to
obtain higher rates of return or lower purchase costs than would be available
for securities purchased for immediate delivery. Securities purchased on a when
issued or forward delivery basis involve a risk that the value of the security
to be purchased may decline prior to the settlement date. In addition, if the
dealer through which the trade is made fails to consummate the transaction, the
Portfolio may lose an advantageous yield or price. The Fund does not accrue
income prior to delivery of the securities in the case of forward commitment
purchases. The 5% limitation does not apply to the International Growth,
Government 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 58. Among such requirements
is a

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<PAGE> 38

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 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.),

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<PAGE> 39

If a percentage restriction is adhered to at the time of an investment, a later
increase or decrease in the investment's percentage of the value of a
Portfolio's total assets resulting from a change in portfolio value or assets
will not constitute a violation of the percentage restrictions.

The Managed Portfolio will not invest more than 15% of the value of its total
assets in real estate investment trusts, commonly referred to as "REITS". The
Managed Portfolio will not invest more than 5% of the value of its total assets
in high-yield securities.

In order to qualify for federal income tax treatment as a regulated investment
company for a taxable year, each Portfolio must, among other things, (a) derive
at least 90% of its gross income during such taxable year from qualifying income
(i.e., dividends, interest, payments with respect to loans of stock and
securities, and gains from the sale or other disposition of stock or securities
or options thereon); (b) derive less than 30% of its gross income during such
taxable year from the sale or other disposition of stock or securities (or
options thereon) held less than three months; and (c) diversify its holdings so
that, at the end of each fiscal quarter of such taxable year, (i) at least 50%
of the market value of its total assets is represented by cash, cash items, U.S.
Government Securities, securities of other regulated investment companies, and
other securities limited, in the case of other securities for purposes of this
calculation, in respect of any one issuer, to an amount not greater than 5% of
the value of its total assets or 10% of the voting securities of the issuer, and
(ii) not more than 25% of the value of its assets is invested in the securities
of any one issuer (other than U.S. Government Securities). Under current law,
compliance with the "30% test" described in clause (b) above may, in particular,
limit a Portfolio's ability to utilize options in connection with its investment
strategy.

HOW TO PURCHASE
PORTFOLIO SHARES

Enterprise Fund Distributors, Inc. ("the Distributor"), is the principal
underwriter for shares of the Fund. The Distributor, whose address is Atlanta
Financial Center, 3343 Peachtree Road, N.E., Suite 450, Atlanta, Georgia 30326,
is a subsidiary of Enterprise Capital Management, Inc. Purchases can be made
through most investment dealers who, as part of the service they provide, must
transmit orders promptly. 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

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<PAGE> 40

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 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

THE ENTERPRISE Group of Funds, Inc.

38
<PAGE> 41

investment company not distributed by Enterprise Fund Distributors, Inc. or its
affiliates if: (i) the redeemed shares were subject to an initial sales charge
or a deferred sales charge (whether or not actually imposed); (ii) such
redemption has occurred no more than 90 days prior to purchase of Class A shares
of the Fund; and (iii) the Fund, Enterprise Fund Distributors, Inc. or its
affiliates have not agreed with such company or its affiliates, formally or
informally, to sell Class A shares at net asset value or provide any other
incentive with respect to such redemption and sale. 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

THE ENTERPRISE Group of Funds, Inc.

39
<PAGE> 42

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
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.

40
<PAGE> 43

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 reinvestment of dividends and capital gains distribu-

THE ENTERPRISE Group of Funds, Inc.

41
<PAGE> 44

tions, (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.

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

THE ENTERPRISE Group of Funds, Inc.

42
<PAGE> 45

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 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

THE ENTERPRISE Group of Funds, Inc.

43
<PAGE> 46

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
within a period of 13 months. A reduced sales charge

THE ENTERPRISE Group of Funds, Inc.

44
<PAGE> 47

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.

45
<PAGE> 48

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.

46
<PAGE> 49

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.

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

THE ENTERPRISE Group of Funds, Inc.

47
<PAGE> 50

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.

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

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<PAGE> 51

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.

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

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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 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.

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

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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, 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

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<PAGE> 54

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.

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

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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 changes or other material amendments to Portfolio Manager
Agreements that occur under these arrangements.

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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. Portfolio Managers typically manage assets for institutional investors
and high net worth individuals. Collectively, the Portfolio Managers manage
assets in excess of $300 billion for all clients, including The Enterprise Group
of Funds.

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 June 30, 1997, approximated $12
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 10017. 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 $545 million as
of June 30, 1997. 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 $200,000,000.

EQUITY PORTFOLIO

The Portfolio Manager of the Equity Portfolio is OpCap Advisors which is a
subsidiary of Oppenheimer Capital, a general partnership. Eileen Rom-

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<PAGE> 57

inger, 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. The Portfolio Manager had
approximately $57 billion under management as of June 30, 1997. 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 June 30, 1997, were
approximately $1.3 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.

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 June 30, 1997, total assets under
management for all clients were $19 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, and Michael D. Jones, Portfolio Manager/Analyst, are
responsible for the day-to-day management of the Portfolio and have more than 40
years combined experience in the investment industry. As of June 30, 1997, total
assets under management for all clients were $14.2 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.

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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 and is
responsible for the day-to-day management of the Portfolio and has more than 26
years of experience in the investment industry. As of June 30, total assets
under management for all clients were $5.4 billion. Usual investment minimum is
$.5 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 March 31, 1997, Brinson's assets under management for all
clients approximated $75 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 March 31, 1997 TCW and its affiliated companies had
approximately $50.5 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 June 30, 1997, assets under management for all clients
approximated $795 million. Usual investment minimum: $1

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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 June 30, 1997, Morgan Stanley managed approximately $83.1
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 June 30, 1997, Oppenheimer Capital and its affiliates
had over $57 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
June 30, 1997, approximated $67.5 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

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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%; Growth and Income
(A) 1.50%; (B) 2.05%; (C) 2.05%; Equity (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 Growth (A) 1.85%; (B) 2.40%; (C) 2.40%; 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.

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 $40,378 for expanding
the series to include an Equity 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
Value 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

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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 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

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does not intend to invest more than 20% of its assets in private activity bonds.
In higher income brackets, up to 85% of an individual's Social Security benefits
may be subject to federal income tax. Along with other factors, total tax-exempt
income, including any tax-exempt dividend income from the Portfolio, is taken
into account in determining that portion of Social Security benefits which is
taxed.

The treatment for state and local tax purpose of distributions from the
Tax-Exempt Income Portfolio representing Municipal Securities interests will
vary according to the laws of state and local taxing authorities.

FOREIGN INCOME TAXES

Investment income received by the International Growth Portfolio from sources
within foreign countries may be subject to foreign income taxes withheld at the
source. The United States has entered into tax treaties with many foreign
countries which entitle the Portfolio to a reduced rate of tax or exemption from
tax on such income. It is impossible to determine the effective rate of foreign
tax in advance since the amount of these Portfolio's assets to be invested
within various countries is not known. The Portfolio intends to operate so as to
obtain treaty-reduced rates of tax where applicable.

To the extent that this Portfolio is liable for foreign income taxes withheld at
the source, the Portfolio also intends to operate so as to meet the requirements
of the Code to "pass through" to the Portfolio's shareholders credits for
foreign income taxes paid, but there can be no assurance that the Portfolio will
be able to do so.

EXCISE TAX

The Federal tax laws impose a four percent nondeductible excise tax on each
regulated investment company with respect to the amount, if any, by which such
company does not meet distribution requirements specified in such tax laws. Each
Portfolio of the Fund intends to comply with such distribution requirements and
thus does not expect to incur the four percent nondeductible excise tax.

GENERAL

The foregoing is a general and abbreviated summary of the applicable provisions
of the Code and Treasury Regulations in effect, as currently interpreted by the
Courts and by the Internal Revenue Service in published revenue rulings and in
private letter rulings and is only applicable to U.S. persons. These
interpretations can be changed at any time. For the complete provisions,
reference should be made to the pertinent Code sections and the Treasury
Regulations promulgated thereunder. The above discussion covers only federal
income tax considerations with respect to the Portfolios and their shareholders.
State and local tax laws vary greatly, especially with regard to the treatment
of exempt-interest dividends. Shareholders should consult their own tax advisers
for more information regarding the federal, state, and local tax treatment of
each Portfolio's shareholders.

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

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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 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 cus-

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todial 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 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."

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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
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 out-

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standing 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 individual offerings. Changes in market values of
Municipal Securities may vary inversely in relation to changes in interest
rates. The magnitude of changes in market values in response to changes in
market rates of interest typically varies in proportion to the quality and
maturity of obligations. In general, among Municipal Securities of comparable
quality, the longer the maturity, the higher the yield, and the greater
potential for price fluctuations.

FLOATING RATE AND VARIABLE RATE SECURITIES

The Tax-Exempt Income Portfolio may invest in floating rate and variable rate
tax-exempt securities. These securities are normally IDBs or revenue bonds that
provide that the rate of interest is set as a specific percentage of a
designated base rate, such as rates of treasury bills or bonds or the prime rate
at a major commercial bank and provide that the holders of the securities can
demand payment of the obligation on short notice at par plus accrued interest,
which amount may be more or less than the amount initially paid for the bonds.
Floating rate securities have an interest rate which changes whenever there is a
change in the designated base interest rate, while variable rate securities
provide for a specific periodic adjustment in the interest rate. Frequently such
securities are secured by letters of credit or other credit support arrangements
provided by banks. The quality of the underlying credit or of the bank, as the
case may be, must be equivalent to the long-term bond or commercial paper rating
stated above.

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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

[Enterprise Group of Funds(TM) Logo]

1-800-432-4320