<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
THE ENTERPRISE GROUP LOGO
THE ENTERPRISE GROUP OF FUNDS, INC.
ATLANTA FINANCIAL CENTER
3343 PEACHTREE ROAD, NE, SUITE 450
ATLANTA, GEORGIA 30326
Dear Shareholders of The Enterprise Group of Funds:
Enclosed is a notice of Special Meeting of Shareholders of The Enterprise
Group of Funds, Inc. (the "Fund") to be held at the offices of the Fund, 3343
Peachtree Road, NE, Suite 450, Atlanta, Georgia on April 28, 1997, at 1:00 p.m.
(the "Meeting"). At the Meeting, Shareholders will be asked to approve three
proposals: (1) an amendment to a fundamental investment restriction with respect
to diversification; (2) an amendment to permit Enterprise Capital Management,
Inc. to enter into or amend contracts with Portfolio Managers without obtaining
Shareholder approval; (3) a new Portfolio Manager Agreement with Opcap Advisors
for the Managed Portfolio ("OpCap"), with identical terms as the existing
contract due to a proposed transaction involving its parent company which would
result in an assignment.
No change in the investment objectives of the Managed Portfolio will occur
by reason of the transaction. The new agreement embodies the same terms as the
current Portfolio Manager Agreement.
The Fund's Board of Directors has approved each of the Proposals and
recommends that the Shareholders approve the Proposals.
You are cordially invited to attend the Meeting. Since it is important that
your vote be represented whether or not you are able to attend, you are urged to
complete, date, sign and return the enclosed proxy card in the accompanying
return envelope at your earliest convenience. Of course, we hope that you will
be able to attend the Meeting, and if you wish, you may vote your shares in
person, even though you may have already returned a proxy. Please respond
promptly in order to save additional costs of proxy solicitation in order to
make sure you are represented.
Sincerely,
VICTOR UGOLYN
Chairman of the Board,
President and
Chief Executive Officer
The Enterprise Group of Funds, Inc.
<PAGE> 3
THE ENTERPRISE GROUP OF FUNDS, INC.
---------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1997
---------------------
TO THE SHAREHOLDERS:
Notice is hereby given that a special meeting of Shareholders (the
"Meeting") of THE ENTERPRISE GROUP OF FUNDS, INC., (the "Fund"), will be held at
the offices of the Fund, 3343 Peachtree Road, NE, Atlanta, Georgia 30326, on
April 28, 1997 at 1:00 p.m., Eastern Standard Time, for the following purposes:
1. For each Portfolio, to approve or disapprove a change to its
fundamental investment restriction with respect to diversification;
2. For each Portfolio, to approve or disapprove a proposal to permit
Enterprise Capital Management, Inc. ("Enterprise Capital") to enter into
new or amended contracts with Portfolio Managers without obtaining
Shareholder approval;
3. For Managed Portfolio Shareholders, to approve or disapprove a
Portfolio Manager's Agreement between the Fund and Enterprise Capital, a
wholly-owned subsidiary of The Mutual Life Insurance Company of New York,
and OpCap Advisors ("OpCap") for the Managed Portfolio; and
4. To act upon such other matters as properly may come before the
Meeting or any adjournment or adjournments thereof.
The close of business of March 12, 1997 has been fixed as the record date
for the determination of Shareholders entitled to notice of and to vote at the
Meeting and any adjournments thereof. Your attention is called to the
accompanying Proxy Statement. Regardless of whether you plan to attend the
Meeting, PLEASE COMPLETE, SIGN AND RETURN PROMPTLY THE ENCLOSED PROXY. If you
are present at the Meeting, you may change your vote, if desired, at that time.
CATHERINE R. MC CLELLAN
Secretary
March 28, 1997
PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY/PROXIES IN THE
ENCLOSED POSTAGE PAID ENVELOPE SO THAT YOU MAY BE SURE YOUR SHARES WILL BE
REPRESENTED AT THE MEETING.
<PAGE> 4
THE ENTERPRISE GROUP OF FUNDS, INC.
ATLANTA FINANCIAL CENTER
3343 PEACHTREE ROAD, NE, SUITE 450
ATLANTA, GEORGIA 30326
---------------------
PROXY STATEMENT
---------------------
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 28, 1997
---------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Enterprise Group of Funds, Inc.
(hereinafter called the "Fund"), to be used at a special meeting of Shareholders
(the "Meeting") of the Fund and any adjournment or adjournments thereof, to be
held at 3343 Peachtree Road, NE, Suite 450, Atlanta, Georgia on April 28, 1997
at 1:00 p.m., Eastern Time, for the purposes set forth in the accompanying
Notice of Special Meeting of Shareholders. This proxy statement was first mailed
to Shareholders on or about March 28, 1997. Proxies are being solicited for the
approval or disapproval of each Proposal described below. The Fund consists of
ten portfolios ("Portfolios"), which are being asked to vote on the proposals as
follows:
<TABLE>
<CAPTION>
PROPOSAL PORTFOLIO
-------- ---------
<S> <C> <C>
1. To approve or disapprove a change to its fundamental All Portfolios
investment restriction relating to diversification.
2. To approve or disapprove a Proposal to permit Enterprise All Portfolios
Capital Management, Inc. ("Enterprise Capital") to enter
into new or amended contracts with Portfolio Managers
without Shareholder approval.
3. To approve or disapprove a Portfolio Manager's Agreement Managed Portfolio
between the Fund, Enterprise Capital and OpCap to become
effective upon the acquisition of certain assets of OpCap's
parent, Oppenheimer Capital, by PIMCO Advisors L.P.
("PIMCO").
</TABLE>
The Board of Directors of the Fund has named Victor Ugolyn, Chairman,
President, and Chief Executive Officer; Catherine R. McClellan, Secretary; and
Herbert M. Williamson, Treasurer, and each of them with power of substitution as
attorneys and proxies. Shareholders who execute proxies retain the right to
revoke them at any time before they are voted. Shareholders may revoke proxies
by attendance at the Meeting and voting in person, by submission of a subsequent
proxy, or by giving written notice prior to the Meeting to the Fund at the
address shown above. Unless revoked, proxies will be voted, and will be voted
according to the specifications thereon. Unless otherwise specifically
instructed in the proxies, it is the intention of the persons named in the proxy
to vote all proxies received by them FOR the approval of each of the proposals.
The cost of this proxy solicitation, which will be principally by mail but
also may be by telephone or personal interview conducted by regular employees of
the Fund or Enterprise Capital Management, Inc. ("Enterprise Capital"), will be
paid by the Fund and OpCap Advisors. Banks, brokers and other custodians will be
requested to forward proxy soliciting material to their customers where
appropriate, and the Fund will reimburse such banks, brokers and custodians for
their reasonable out-of-pocket expenses in sending the proxy materials to
beneficial owners of the shares.
1
<PAGE> 5
The Fund may also arrange to have votes recorded by telephone. D.F. King &
Co. may be paid on a per call basis for vote-by-phone solicitations on behalf of
the Fund. The Fund and OpCap Advisors will bear the expenses in connection with
telephone voting. If the Fund records votes by telephone, procedures will be
used designed to authenticate Shareholders' identities, to allow Shareholders to
authorize the voting of their shares in accordance with their instructions, and
to confirm that their instructions have been properly recorded. Proxies voted by
telephone may be revoked at any time before they are voted in the same manner
that proxies voted by mail may be revoked.
Only Shareholders of record holding shares of Common Stock of the Fund (the
"Shares") at the close of business on March 12, 1997 will be entitled to vote at
the Meeting. On such date, shares outstanding as to each Portfolio were:
<TABLE>
<CAPTION>
PORTFOLIO OUTSTANDING
- --------- -----------
<S> <C>
Growth...................................................... 21,366,664
Equity Income............................................... 3,512,436
Capital Appreciation........................................ 3,379,631
Small Company............................................... 3,876,652
International Growth........................................ 2,870,655
Managed..................................................... 29,960,789
Government Securities....................................... 6,580,517
High-Yield Bond............................................. 5,592,665
Tax-Exempt Income........................................... 2,135,088
Money Market................................................ 58,093,768
</TABLE>
Each Shareholder is entitled to one vote for each full Share held, and a
proportionate vote for each fractional Share. Under Maryland law, shares owned
by two or more persons (whether as joint tenants, co-fiduciaries or otherwise)
will be voted as follows (unless a court order providing to the contrary has
been filed with the Fund): (i) if only one votes, that vote will bind all; (ii)
if more than one votes, the vote of the majority will bind all; and (iii) if
more than one votes and the vote is evenly divided, the vote will be cast
proportionately.
A quorum for the transaction of business at the Meeting is constituted by
the presence in person or by proxy of holders of the majority of the outstanding
Shares of each Portfolio entitled to vote at the Meeting. If a proxy is properly
executed and returned accompanied by instructions to withhold authority
("non-vote") or is marked with an abstention, the Shares represented thereby
will be considered to be present at the meeting for determining the existence of
a quorum. Approval of each of the Proposals requires a vote of a majority of the
outstanding voting securities of each Portfolio, which is defined as the vote of
the lesser of (i) 67% or more of the Outstanding Shares of each Portfolio
present in person or by proxy at such meeting, if the holders of more than 50%
of the outstanding Shares of each Portfolio are present or represented by proxy,
or (ii) more than 50% of the outstanding Shares of each Portfolio. Any Shares
represented by a proxy that constitutes a non-vote or abstention will have the
same effect as a vote cast against the proposal.
2
<PAGE> 6
PROPOSAL NO. 1
APPROVAL OR DISAPPROVAL OF PROPOSAL TO AMEND
FUNDAMENTAL INVESTMENT RESTRICTION
RELATING TO DIVERSIFICATION
The Meeting has been called to consider a proposal to amend a fundamental
investment restriction of each Portfolio. The Board of Directors approved this
proposal at a meeting held on February 20, 1997.
The Directors recommend that Shareholders approve the change to the Fund's
fundamental investment restriction as described below. A fundamental investment
restriction may be changed only with Shareholders' approval.
Each Portfolio of the Fund has adopted a fundamental investment policy
whereby no Portfolio will 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 ("1940 Act").
Shareholders are being asked to vote on a Proposal to modify this existing
fundamental restriction of each Portfolio to limit this policy as to 75% of the
total assets of each Portfolio. The amended restriction would read as follows:
No Portfolio will, 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).
Each Portfolio's investment restriction relating to investments in a single
issuer was initially adopted due to regulatory requirements at such time.
Current regulatory requirements no longer mandate that an investment company's
policy apply to 100% of the total assets of each Portfolio. The Directors
believe that limiting this investment restriction to 75% of the total assets of
each Portfolio would provide the Portfolios with needed flexibility to respond,
as appropriate, to beneficial investment opportunities while maintaining
diversification as to 75% of the total assets of each Portfolio.
Notwithstanding the foregoing, there is no present intention to make any
change in the way in which any Portfolio is managed; however, limiting the
diversification to 75% of the assets of each Portfolio will result in increased
risk.
If the proposed change to the Fund's investment restriction is approved by
Shareholders at the Meeting, the Fund's prospectus and statement of additional
information will be revised as appropriate to reflect those changes. This
Proposal No. 1 will not result in a change to the investment objective of any
Portfolio of the Fund.
If Proposal No. 1 is not approved by the Shareholders of any particular
Portfolio of the Fund, the existing fundamental restriction regarding investment
in a single issuer will continue in effect for that Portfolio of the Fund.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 1.
3
<PAGE> 7
PROPOSAL NO. 2
APPROVAL OR DISAPPROVAL OF PROPOSAL TO PERMIT
ENTERPRISE CAPITAL MANAGEMENT, INC. TO
ENTER INTO NEW OR AMENDED CONTRACTS WITH
PORTFOLIO MANAGERS WITHOUT OBTAINING
SHAREHOLDER APPROVAL
The Board of Directors of the Fund is submitting for approval by the
Shareholders of each of the Portfolios a proposal to permit Enterprise Capital
to enter into new or amended contracts with Portfolio Managers without obtaining
Shareholder approval. On February 22, 1996, the Board of Directors discussed and
approved this proposal at an in-person meeting.
The Board recommends that Shareholders of each Portfolio approve a proposal
which would permit Enterprise Capital from time to time to enter into a new or
materially amended a portfolio Manager Agreement with a Portfolio Manager (i.e.,
a subadviser) without obtaining Shareholder approval. Approval by the Directors,
including a majority of the Directors who are not parties to such contract or
agreement and who are not "interested persons" of the Fund within the meaning of
the 1940 Act ("Independent Directors"), will continue to be required to approve
any new or amended Portfolio Manager Agreement. The proposal will apply to any
Portfolio Manager Agreement entered into by Enterprise Capital with a Portfolio
Manager that is not otherwise an affiliated person (as defined in Section
2(a)(3) of the 1940 Act) of the Fund or Enterprise Capital, other than by reason
of serving as a Portfolio Manager (a "Portfolio Manager"). Among other changes,
the proposal would cover new Portfolio Manager Agreements necessitated because
the prior Portfolio Manager Agreements were terminated as a result of an
"assignment" (as defined in the 1940 Act), an amendment to a Portfolio Manager
Agreement or a new Portfolio Manager Agreement to substitute a new Portfolio
Manager for an old Portfolio Manager.
This Proposal is being submitted to Shareholders pursuant to the
requirements of an exemptive order (the "Order") obtained from the Securities
and Exchange Commission (the "Commission") on December 10, 1996. The Order
grants exemptive relief from certain provisions of the 1940 Act and certain
rules thereunder and is discussed below.
REASONS WHY SHAREHOLDER APPROVAL IS SOUGHT
Section 15 of the 1940 Act makes it unlawful for any person to act as
investment adviser to an investment company except pursuant to a written
contract which has been approved by Shareholders. For purposes of Section 15,
the term "investment adviser" includes any Portfolio Manager to an investment
company. Section 15 also requires that an investment advisory agreement provide
that it will terminate automatically upon its assignment. "Assignment," for
purposes of the 1940 Act, includes in substance the transfer of an advisory
agreement or the transfer of control of the investment adviser through the
transfer of a controlling block of the adviser's outstanding voting securities.
In conformity with Section 15 of the 1940 Act, the Fund currently obtains
Shareholders' approval of a Portfolio Manager Agreement in three general
situations:
A. The employment of a new Portfolio Manager: (i) to replace an
existing Portfolio Manager; (ii) as an additional Portfolio Manager; or
(iii) to act as Portfolio Manager for a new Portfolio;
B. A change in the terms of a Portfolio Manager Agreement; and
4
<PAGE> 8
C. The continued employment of an existing Portfolio Manager on the
same terms where there has been or is expected to be an assignment of a
Portfolio Manager Agreement as a result of a change of control of the
Portfolio Manager.
Enterprise Capital may currently terminate a Portfolio Manager Agreement
without Shareholder approval. Shareholders of a Portfolio may also currently
terminate a Portfolio Manager Agreement with respect to that Portfolio at any
time by a vote of a majority of the Portfolio's outstanding shares, as defined
in the 1940 Act. The proposed OpCap Advisors Portfolio Manager's Agreement that
is described in Proposal No. 3 is an example of the type of new or amended
Portfolio Manager Agreements that would no longer require Shareholder approval
if this Proposal No. 2 is approved, subject to compliance with the other
conditions of the Order, which are set forth below.
DISCUSSION
As a "multi-manager" type of fund, the Fund employs Enterprise Capital
subject to the supervision of the Directors, to manage or provide for the
management of each Portfolio. Enterprise Capital selects a Portfolio Manager to
invest the assets of each Portfolio, subject to the review and approval of the
Directors, and, currently, subject to the approval of each Portfolio's
Shareholders, and on an ongoing basis reviews the Portfolio Manager's
performance. Enterprise Capital is responsible for communicating performance,
expectations and evaluations to the Portfolio Manager and for recommending to
the Directors whether the Portfolio Manager's contract should be renewed,
modified or terminated. The Portfolio Manager is entitled to receive a fee from
Enterprise Capital. Enterprise Capital and the Directors believe that requiring
Shareholders to approve changes in a Portfolio Manager and to the Portfolio
Manager Agreement (including continuation of an assigned Portfolio Manager
Agreement) not only results in unnecessary administrative expenses to each
Portfolio, but may also cause harmful delays in executing changes that
Enterprise Capital and the Directors have determined are necessary or desirable.
Enterprise Capital and the Directors believe that such expenses, and the
possibility of delays, may result in Shareholders receiving less satisfactory
service than would be the case if this proposal is implemented.
Accordingly, the Fund obtained the Order. Pursuant to the Order, subject to
receipt of approval of this Proposal 2 and the other conditions described below,
the Shareholders of each Portfolio will receive an information statement
complying with certain provisions of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules promulgated thereunder, following a
change of Portfolio Manager and/or the entry into a new or amended Portfolio
Manager Agreement that would have otherwise required Shareholder approval. The
information statement will contain substantially all of the information about
the Portfolio Manager and the Portfolio Manager Agreement that would otherwise
be contained in a written proxy statement. The information statement will
include disclosure as to the level of fees to be paid to Enterprise Capital and
the Portfolio Manager.
Enterprise Capital intends that the information statement described above,
as well as adherence to the conditions of the Order as set forth below, will
protect Shareholders of each Portfolio, including by enabling Portfolio
Shareholders to receive adequate disclosure about the Portfolio Manager. If the
Proposal No. 2 is approved, amendments to the Advisory Agreement between
Enterprise Capital and the Fund will remain subject to Shareholder and Directors
approval requirements of Section 15 of the 1940 Act and related proxy disclosure
requirements. Moreover, although approval of the proposal will generally permit
Enterprise Capital and the Directors to change the fees payable to a Portfolio
Manager without Shareholder approval, such changes will not permit Enterprise
Capital and the Directors to increase the rate of the fees payable by each
Portfolio to Enterprise Capital without first obtaining Shareholder approval.
5
<PAGE> 9
The Directors believe that approval of the proposal to permit Enterprise
Capital to enter into new or amended contracts with Portfolio Managers without
obtaining Shareholders' approval is in the best interests of the Shareholders of
each Portfolio. If this Proposal 2 is not approved by Shareholders of any
Portfolio, the Order obtained by the Fund will have no effect with respect to
that Portfolio. In such event, Shareholders of such Portfolio would continue to
have to approve any new or amended Portfolio Managers Agreements entered into by
Enterprise Capital with respect to such Portfolio.
CONDITIONS
The Order grants the Fund relief from Section 15(a) of the 1940 Act and
certain rules thereunder in order for the Fund and its Portfolios to operate in
the manner described in this Proposal, subject to certain conditions including
approval of this Proposal by Shareholders of each Portfolio. The Fund will not
rely on the Order until all such conditions have been met.
The conditions for the relief are as follows:
1. Enterprise Capital will provide general management and
administrative services to the Fund, including overall supervisory
responsibility for the general management and investment of the Fund's
securities portfolios, and, subject to review and approval by the Board
with respect to each Portfolio, will (a) set a Portfolio's overall
investment strategies; (b) select Portfolio Managers; (c) monitor and
evaluate the performance of Portfolio Managers; (d) allocate and, when
appropriate, reallocate a Portfolio's assets among its Portfolio Managers
in those cases where a Portfolio has more than one Portfolio Manager; and
(e) implement procedures reasonably designed to ensure that the Portfolio
Managers comply with the Fund's and each Portfolio's investment objectives,
policies, and restrictions.
2. Before a Portfolio may rely on the Order, the operation of the
Portfolio in the manner described in the application will be approved by a
majority of the Shareholders of any separate account for which the Fund
serves as a funding medium, as defined in the 1940 Act, or, in the case of
a new Portfolio whose public Shareholders purchased shares on the basis of
a prospectus containing the disclosure contemplated by condition 4 below,
by the sole Shareholder before the offer of shares of such Portfolio to the
public.
3. The Fund will furnish to its Shareholders all information about a
new Portfolio Manager or Portfolio Manager Agreement for a Portfolio that
would be included in a proxy statement. Such information will include
disclosure as to the level of fees to be paid to Enterprise Capital and the
Portfolio Managers of such Portfolio and any change in such disclosure
caused by the addition of a new Portfolio Manager or any material change in
a Portfolio Manager Agreement. The Fund will meet this condition by
providing its Shareholders with an informal information statement complying
with the provisions of regulation 14C under the Exchange Act and Schedule
14C thereunder. With respect to the newly retained Portfolio Manager, or a
change in a Portfolio Manager Agreement, this information statement will be
provided to Shareholders of the Portfolio a maximum of sixty (60) days
after the addition of the new Portfolio Manager, or the implementation of
any change in a Portfolio Manager Agreement. The information statement will
also meet the requirements of Schedule 14A under the Exchange Act. The Fund
will ensure that the information statement is furnished to Shareholders of
any separate account for which the Fund serves as a funding medium.
4. The Fund will disclose in its prospectus the existence, substance
and effect of the Order. In addition, each Portfolio will hold itself out
to the public as employing the "manager of managers" approach described in
the application. The prospectus and any sales materials or other
Shareholder communications relating to a Portfolio of the Fund will
prominently disclose that Enterprise Capital has
6
<PAGE> 10
ultimate responsibility for investment performance of the Portfolio due to
its responsibility to oversee Portfolio Managers and recommend their
hiring, termination and replacement.
5. No Director or officer of the Fund or director or officer of
Enterprise Capital will own directly or indirectly (other than through a
pooled investment vehicle that is not controlled by any such Director or
officer) any interest in any Portfolio Manager except for (a) ownership of
interests in Enterprise Capital or any entity that controls, is controlled
by or is under common control with Enterprise Capital; or (b) ownership of
less than 1% of the outstanding securities of any class of equity or debt
of a publicly-traded company that is either a Portfolio Manager or any
entity that controls, is controlled by or is under common control with a
Portfolio Manager.
6. Enterprise Capital will not enter into a Portfolio Manager
Agreement with any Affiliated Portfolio Manager without such agreement,
including the compensation to be paid thereunder, being approved by the
Shareholders of the applicable Portfolio.
7. At all times, a majority of the members of the Board will be
persons each of whom is an Independent Director of the Fund, as defined in
Section 2(a) (19) of the 1940 Act, and the nomination of new or additional
Independent Directors will be placed within the discretion of the then
existing Independent Directors.
8. When a Portfolio Manager change is proposed for a Portfolio with an
Affiliated Portfolio Manager, the Board, including a majority of the
Independent Directors, will make a separate finding, reflected in the
Board's minutes, that such change is in the best interest of the Portfolio
and the Shareholders of any separate account for which the Fund serves as a
funding medium and does not involve a conflict of interest from which
Enterprise Capital or the Affiliated Portfolio Manager derives an
inappropriate advantage.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2.
PROPOSAL NO. 3
APPROVAL OR DISAPPROVAL OF NEW PORTFOLIO MANAGER'S
AGREEMENT BETWEEN THE FUND, THE ADVISER AND OPCAP
BACKGROUND
GENERAL. The Meeting has been called for the purpose of considering a new
Portfolio Manager's Agreement for the Managed Portfolio as a result of a
proposed transaction (The "Proposed Transaction"), whereby PIMCO Advisors L.P.
would acquire substantially all of the assets of Oppenheimer Capital, the parent
of Opcap. Accordingly, Shareholders are being asked to approve a new Portfolio
Manager's Agreement (the "New Portfolio Manager's Agreement") embodying exactly
the same terms. The Fund's Board of Directors has approved the New Portfolio
Manager's Agreement, subject to approval by the Shareholders of the Portfolio.
7
<PAGE> 11
EXISTING PORTFOLIO MANAGER'S AGREEMENT
OpCap currently serves as Portfolio Manager for the Portfolio under a
Portfolio Manager's Agreement (the "Existing Portfolio Manager's Agreement")
dated May 31, 1996. The Board of Directors, including a majority of the
Directors who are not "interested persons" of the Fund or any party to the
Agreement, most recently voted to renew the Existing Portfolio Manager's
Agreement on February 20, 1997. Under the Existing Portfolio Manager's
Agreement, OpCap is entitled to receive Portfolio Manager's fees at the annual
rate of 0.40% of the average of the daily closing net asset values of the
Portfolio per year, paid monthly for assets up to $100,000,000; and 0.30%
thereafter.
NEW PORTFOLIO MANAGER'S AGREEMENT
The terms of the New Portfolio Manager's Agreement are identical in all
respects to the terms of the Existing Portfolio Manager's Agreement. A form of
the New Portfolio Manager's Agreement is attached to this Proxy Statement as
Exhibit A, and the description set forth in this Proxy Statement of the New
Portfolio Manager's Agreement is qualified in its entirety by reference to
Exhibit A.
Under the New Portfolio Manager's Agreement, the Portfolio Manager will
provide certain investment advisory services to the Portfolio, including
deciding what securities will be purchased and sold by the Portfolio, when such
purchases and sales are to be made, and arranging for such purchases and sales,
all in accordance with the provisions of the 1940 Act, and any rules thereunder,
the governing documents of the Fund, the fundamental policies of the Fund and
Portfolio, as reflected in its registration statement, and any policies and
determinations of the Board of Directors of the Fund.
As compensation for its services to the Managed Portfolio under the New
Portfolio Manager's Agreement, the Portfolio Manager will be entitled to receive
from Enterprise Capital fees calculated at the following rates based upon
average daily net assets: 0.40% for the first $100,000,000 under management and
0.30% thereafter. The New Portfolio Manager's Agreement will continue in effect
for two years from its effective date, and will continue in effect thereafter
for successive annual periods, provided its continuance is specifically approved
at least annually by (1) a majority vote, cast in person at a meeting called for
that purpose, of the Fund's Board of Directors or (2) a vote of the holders of a
majority (as defined in the Investment Company Act and the rules thereunder) of
the outstanding voting securities of the Portfolio, and (3) in either event by a
majority of the Directors who are not parties to the New Portfolio Manager's
Agreement or interested persons of the Fund or of any such party. The New
Portfolio Manager's Agreement provides that it may be terminated at any time,
without penalty, by either party or by the Fund upon 60 days written notice,
provided that such termination by the Portfolio shall be directed or approved by
a vote of the Directors of the Fund, or by a vote of holders of a majority of
the shares of the Portfolio.
DIRECTORS' CONSIDERATION
The Board of Directors believes that the terms of the New Portfolio
Manager's Agreement are fair to, and in the best interests of, the Fund, the
Portfolio, and their Shareholders. The Board of Directors, including all of the
Independent Directors, recommends approval by the Shareholders of the New
Agreement among OpCap Advisors, Enterprise Capital and the Fund. In making this
recommendation, the Directors have been advised by OpCap that the senior
management team will continue in their present capacities and that OpCap will be
able to continue to provide advisory and management services with no material
changes in operating conditions. The Board also carefully evaluated the
experience of the Portfolio Manager's key personnel in institutional investing,
the quality of services the Portfolio Manager has provided and is expected to
provide to
8
<PAGE> 12
the Portfolio, and the compensation proposed to be paid to the Portfolio
Manager, and have given careful consideration to all factors deemed to be
relevant to the Portfolio, including, but not limited to: (1) the fee and
expense ratios of comparable mutual funds; (2) the performance of the Portfolio
since commencement of operations; (3) the nature and quality of the services
expected to be rendered to the Portfolio by the Portfolio Manager; (4) that the
terms of the Existing Portfolio Manager's Agreement will be unchanged under the
New Portfolio Manager's Agreement; (5) the history, reputation, qualification
and background of the Portfolio Manager, as well as the qualifications of its
personnel and their respective financial conditions; and (6) other factors
deemed relevant.
INFORMATION ABOUT OPCAP
OpCap is a majority-owned subsidiary of Oppenheimer Capital, a registered
investment adviser with approximately $50.6 billion in assets under management
on January 31, 1997. Oppenheimer Financial Corp. ("Opfin"), a holding company,
is a 1.0% general partner of OpCap Advisors. Opfin also holds a one-third
managing general partner interest in Oppenheimer Capital, and Oppenheimer
Capital, L.P., a Delaware limited partnership whose units are traded on the New
York Stock Exchange and of which Opfin is the sole 1.0% general partner, owns
the remaining two-thirds interest.
On February 13, 1997, PIMCO Advisors L.P. ("PIMCO Advisors"), a registered
investment adviser with approximately $110 billion in assets under management
through various subsidiaries, signed an Agreement and Plan of Merger with
Oppenheimer Group, Inc. ("OGI") and its subsidiary Opfin pursuant to which PIMCO
Advisors and its affiliate, Thomson Advisory Group Inc. ("TAG"), will acquire
the one-third managing general partner interest in Oppenheimer Capital, its 1.0%
general partnership interest in OpCap Advisors, and its 1.0% general partner
interest in Oppenheimer Capital L.P. (the "Transaction") and OGI will be merged
with and into TAG. The aggregate purchase price is approximately $265 million in
convertible preferred stock of TAG and assumption of certain indebtedness. The
amount of TAG preferred stock comprising the purchase price is subject to
reduction in certain circumstances. The Transaction is subject to certain
conditions being satisfied prior to closing, including consents from certain
lenders, approvals from regulatory authorities, including a favorable tax ruling
from the Internal Revenue Service, and consents of certain clients, which are
expected to take up to six months to obtain. If the Transaction is consummated,
it will involve a change in control of Oppenheimer Capital and its subsidiary
OpCap Advisors.
The principal business address of OpCap Advisors, Oppenheimer Capital and
their affiliates is Oppenheimer Tower, 200 Liberty Street, One World Financial
Center, New York, New York 10281. The principal business address of OpCap
Advisors would not change following the Transaction. Joseph La Motta is Chairman
of Oppenheimer Capital and OpCap Advisors. George Long is President of
Oppenheimer Capital and Bernard H. Garil is President of OpCap Advisors.
EFFECTS OF THE TRANSACTION
Upon consummation of the Transaction, Oppenheimer Capital and OpCap will be
controlled by PIMCO Advisors. PIMCO Advisors has advised OGI that it anticipates
that the senior portfolio management team of Oppenheimer Capital will continue
in their present capacities; that the eligibility of OpCap to serve as an
investment adviser or Portfolio Manager will not be affected by the Transaction;
and that Oppenheimer Capital and OpCap will be able to continue to provide
advisory and management services with no material changes in operating
conditions. PIMCO has further advised OGI that it currently anticipates that the
Transaction will not affect the ability of Oppenheimer Capital and OpCap to
fulfill their obligations under their investment advisory or Portfolio Manager
Agreements.
9
<PAGE> 13
INFORMATION CONCERNING PIMCO
PIMCO Advisors, with approximately $110 billion in assets under management
as of December 31, 1996, is one of the largest publicly traded money management
firms in the United States. PIMCO Advisors' address is 800 Newport Center Drive,
Suite 100, Newport Beach, California 92660.
PIMCO Partners, G.P. ("PIMCO GP") owns approximately 42.83% and 66.37%,
respectively (and will at the closing of the Transaction own a majority of the
voting stock of TAG which owns approximately 14.94% and 25.06%, respectively),
of the total outstanding Class A and Class B units of limited partner interest
("Units") of PIMCO Advisors and is PIMCO Advisors' sole general partner. PIMCO
GP is a California general partnership with two general partners. The first of
these is an indirect wholly-owned subsidiary of Pacific Mutual Life Insurance
Company ("Pacific Mutual").
PIMCO Partners L.L.C. ("PPLLC"), a California limited liability company, is
the second, and managing, general partner of PIMCO GP. PPLLC's members are the
Managing Directors (the "PIMCO Managers") of Pacific Investment Management
Company, a subsidiary of PIMCO Advisors (the "PIMCO Subpartnership"). The PIMCO
Managers are: William H. Gross, Dean S. Meiling, James F. Muzzy, William F.
Podlich, III, Frank B. Rabinovitch, Brent R. Harris, John L. Hague, William S.
Thompson Jr., William C. Powers, David H. Edington, Benjamin Trosky, William R.
Benz, II and Lee R. Thomas, III.
PIMCO Advisors is governed by an Operating Board and an Equity Board.
Governance matters are allocated generally to the Operating Board and the
Operating Board delegates to the Operating Committee the authority to manage
day-to-day operations of PIMCO Advisors. The Operating Board is composed of
twelve members, including the chief executive officer of the PIMCO
Subpartnership as Chairman and six PIMCO Managers designated by the PIMCO
Subpartnership.
The authority of PIMCO Advisors' Operating Board and Operating Committee to
take certain specified actions is subject to the approval of PIMCO Advisors'
Equity Board. Equity Board approval is required for certain major transactions
(e.g., issuance of additional PIMCO Advisors' Units and appointment of PIMCO
Advisors' chief executive officer). In addition, the Equity Board has
jurisdiction over matters such as actions which would have a material effect
upon PIMCO Advisors' business taken as a whole and (after an appeal from an
Operating Board decision) matters likely to have a material adverse economic
effect on any subpartnership of PIMCO Advisors. The Equity Board is composed of
twelve members, including the chief executive officer of PIMCO Advisors, three
members designated by a subsidiary of Pacific Mutual, the chairman of the
Operating Board and two members designated by PPLLC.
Because of its power to appoint (directly or indirectly) seven of the
twelve members of the Operating Board as described above, the PIMCO
Subpartnership may be deemed to control PIMCO Advisors. Because of the direct or
indirect power to appoint 25% of the members of the Equity Board, (i) Pacific
Mutual and (ii) the PIMCO Managers and/or the PIMCO Subpartnership may each be
deemed, under applicable provisions of the Investment Company Act, to control
PIMCO Advisors. Pacific Mutual, PIMCO Subpartnership and the PIMCO Managers
disclaim such control.
PIMCO Advisors, OpCap Advisors, OGI and Oppenheimer Capital have agreed to
comply and use all commercially reasonable efforts to cause compliance with the
provisions of Section 15(f) of the Investment Company Act. Section 15(f)
provides, in pertinent part, that an investment adviser and its affiliates may
receive any amount or benefit in connection with a sale of an interest in such
investment adviser which results in an assignment of an investment advisory
contract if (1) for a period of three years after the time of such event, 75% of
the members of the Board of Trustees or Directors of the investment company
which it advises
10
<PAGE> 14
are not "interested persons" (as defined in the Investment Company Act) of the
new or old investment adviser, and (2) during the two-year period after the date
on which the transactions occurs, there is no "unfair burden" imposed on the
investment company as a result of the transaction. For this purpose, "unfair
burden" is defined to include any arrangement during the two-year period after
the transaction whereby the investment adviser or predecessor or successor
investment advisers, or any interested person of any such adviser, receives or
is entitled to receive any compensation directly or indirectly (i) from any
person in connection with the purchase or sale of securities or other property
to, from, or on behalf of the investment company other than bona fide ordinary
compensation as principal underwriter for such company, or (ii) from the
investment company or its security holders for other than bona fide investment
advisory or other services. No compensation arrangements of the types described
above are contemplated in the Transaction. [The composition of the Board of
Trustees is presently in compliance with the 75% requirement and will continue
to be so if the Transaction is consummated.]
Set forth below are the names, ages and principal occupations of the chief
executive officers of OpCap and Oppenheimer Capital.
Bernard H. Garil (56) President and Chief Operating Officer of OpCap;
Vice President of OCC Cash Reserves, Inc., and OCC Accumulation Fund,
open-end investment companies; formerly Senior Vice President of
Oppenheimer & Co., Inc., 1981-1990.
Joseph M. LaMotta (64) Chairman and Chief Executive Officer OpCap;
Chairman, Oppenheimer Capital; Chairman and President, OCC Cash Reserves
and OCC Value Accumulation Fund, open-end investment companies, and
Chairman of the Saratoga Advantage Fund, an open-end investment company.
OpCap and Oppenheimer Capital are located at Oppenheimer Tower, World
Financial Center, New York, New York, 10281, and all its executive officers have
business addresses at that location.
Exhibit B to this Proxy Statement sets forth a list of the investment
companies for which OpCap acts as investment adviser, the size of such
investment companies and the compensation OpCap Advisors receives for such
services.
AFFILIATED BROKERS
For the fiscal year ended December 31, 1996, Oppenheimer and Co., Inc., an
affiliate of OpCap Advisors, was paid a total of $75,954 in brokerage
commissions by the Managed Portfolio which amount was 44.21% of the Portfolio's
total brokerage commissions paid during the period.
If Proposal 3 is not approved, the existing Portfolio Manager's Agreement
will remain in effect and the Board will consider alternative actions.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 3.
RECEIPT OF SHAREHOLDER PROPOSALS
Notwithstanding the approval or disapproval of the proposal described
above, as in the past, the Directors do not intend to hold regular annual
meetings of Shareholders of the Fund. If a Shareholder wishes to present a
proposal to be included in the proxy statement for the next meeting of
Shareholders of a Portfolio, such
11
<PAGE> 15
proposal must be received by the Fund a reasonable time before the solicitation
is to be made. The Directors will call meetings of Shareholders of a Portfolio
as may be required under the Investment Company Act (such as to approve a new
Investment Advisory Agreement for a Portfolio or to remove Directors) or as they
may determine in their discretion.
MAILING OF ANNUAL REPORT
The Fund will furnish, without charge, a copy of its Annual Report for the
year ended December 31, 1996 to Shareholders upon request. Such requests should
be made to Catherine R. McClellan, Enterprise Capital, Atlanta Financial Center,
3343 Peachtree Road, Suite 450, Atlanta, GA, 30326 or by calling 800-432-4320.
The report will be sent by first class mail within three business days of the
request.
OTHER BUSINESS
The management knows of no business other than the matters specified above
which will be presented at the Meeting. Inasmuch as matters not known at the
time of the solicitation may come before the Meeting, the enclosed voting
instruction form confers discretionary authority with respect to such matters as
may properly come before the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
CATHERINE R. MC CLELLAN
Secretary
Dated: March 28, 1997
12
<PAGE> 16
EXHIBIT A
MANAGED PORTFOLIO
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
PORTFOLIO MANAGER'S AGREEMENT
THIS AGREEMENT, made the 1st day of May, 1997 is among The Enterprise Group
of Funds, Inc. (the "Fund"), a Maryland corporation. Enterprise Capital
Management, Inc., a Georgia corporation (hereinafter referred to as the
"Adviser"), and OpCap Advisors, a Delaware general partnership (hereinafter
referred to as the "Portfolio Manager").
BACKGROUND INFORMATION
(A) The Adviser has entered into an Investment Adviser's Agreement dated as
of May 1, 1995 with the Fund, a copy of which agreement is attached hereto as
Exhibit A (the "Investment Adviser's Agreement"). Pursuant to the Investment
Adviser's Agreement, the Adviser has agreed to render investment advisory and
certain other management services to all of the Portfolios of the Fund, and the
Fund has agreed to employ the Adviser to render such services and to pay to the
Adviser certain fees therefore. The Investment Adviser's Agreement recognizes
that the Adviser may enter into agreements with other investment advisers who
will serve as Portfolio Managers to the Portfolios of the Portfolio.
(B) The parties hereto wish to enter into an agreement whereby the
Portfolio Manager will provide to the Managed Portfolio of the Fund (the
"Portfolios") securities investment advisory services for that Portfolio.
WITNESSETH THAT:
In consideration of the mutual covenants herein contained, the Fund,
Adviser and the Portfolio Manager agree as follows:
(1) The Fund and Adviser hereby employs the Portfolio Manager to
render certain investment advisory services to the Portfolio, as set forth
herein. The Portfolio Manager hereby accepts such employment and agrees to
perform such services on the terms herein set forth, and for the
compensation herein provided.
(2) The Portfolio Manager shall furnish the Portfolios advice with
respect to the investment and reinvestment of the assets of the Portfolios,
or such portion of the assets of the Portfolio as the Adviser shall specify
from time to time, in accordance with the investment objectives,
restrictions and limitations of the Portfolio as set forth in the Fund's
most recent Registration Statement.
(3) The Portfolio Manager shall perform a monthly reconciliation of
the Portfolio to the holdings report provided by the Fund's custodian and
bring any material or significant variances regarding holding or valuation
to the attention of the Adviser.
(4) The Portfolio Manager shall for all purposes herein be deemed to
be an independent contractor. The Portfolio Manager has no authority to act
for or represent the Fund or the Portfolios in any way
A-1
<PAGE> 17
except to direct securities transactions pursuant to its investment advice
hereunder. The Portfolio Manager is not an agent of the Fund or the
Portfolio.
(5) It is understood that the Portfolio Manager does not, by this
Agreement, undertake to assume or pay any costs or expenses of the Fund or
the Portfolio.
(6) (a) The Adviser agrees to pay the Portfolio Manager for its
services to be furnished under this Agreement, with respect to each
calendar month after the effective date of this Agreement, on the twentieth
(20th) day after the close of each calendar month, a sum equal to 0.03333
of 1% of the average of the daily closing net asset value of the Portfolio
managed by the Portfolio Manager during such month (that is, .40 of 1% per
year) for assets up to $100,000,000 (one hundred million dollars); and a
sum equal to 0.025 of 1% of the average of the daily closing net asset
value of the Portfolio during such month (that is, .30 of 1% per year) for
assets under management in excess of $100,000,000 (one hundred million
dollars).
(6) (b) The payment of all fees provided for hereunder shall be
prorated and reduced for sums payable for a period less than a full month
in the event of termination of this Agreement on a day that is not the end
of a calendar month.
(6) (c) For the purposes of this Paragraph 6, the daily closing net
asset values of the Portfolios shall be computed in the manner specified in
the Registration Statement for the computation of the value of such net
assets in connection with the determination of the net asset value of the
Portfolio's shares.
(7) The services of the Portfolio Manager hereunder are not to be
deemed to be exclusive, and the Portfolio Manager is free to render
services to others and to engage in other activities so long as its
services hereunder are not impaired thereby. Without in any way relieving
the Portfolio Manager of its responsibilities hereunder, it is agreed that
the Portfolio Manager may employ others to furnish factual information,
economic advice and/or research, and investment recommendations, upon which
its investment advice and service is furnished hereunder.
(8) In the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or reckless
disregard of its obligations and duties hereunder, the Portfolio Manager
shall not be liable to the Fund, the Portfolio or the Adviser or to any
shareholder or shareholders of the Fund, the Portfolio or the Adviser for
any mistake of judgment, act or omission in the course of, or connected
with, the services to be rendered by the Portfolio Manager hereunder.
(9) The Portfolio Manager will take necessary steps to prevent the
investment professionals of the Portfolio Manager who are responsible for
investing assets of the Portfolio from taking, at any time, a short
position in any shares of any holdings of any Portfolios of the Fund for
any accounts in which such individuals have a beneficial interest,
excluding short positions, including without limitation, short
against-the-box positions, effected for tax reasons. The Portfolio Manager
also will cooperate with the Fund in adopting a written policy prohibiting
insider trading with respect to Fund Portfolio transactions insofar as such
transactions may relate to the Portfolio Manager.
(10) In connection with the management of the investment and
reinvestment of the assets of the Portfolio, the Portfolio Manager is
authorized to select the brokers or dealers including Oppenheimer & Co.,
Inc., ("Opco") that will execute purchase and sale transactions for the
Portfolios, and is directed to use its best efforts to obtain the best
available price and most favorable execution with respect to such purchases
and sales of portfolio securities for the Fund. Subject to this primary
requirement, and maintaining as its first consideration the benefits for
the Portfolios and its shareholders, the Portfolio
A-2
<PAGE> 18
Manager shall have the right, subject to the approval of the Board of
Trustees of the Fund and of the Adviser, to follow a policy of selecting
brokers and dealers who furnish statistical research and other services to
the Portfolios, the Adviser, or the Portfolio Manager and, subject to the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc., to select brokers and dealers who sell shares of Portfolios of the
Fund.
The Adviser and the Fund's Portfolios recognize and intend that
subject to the foregoing provisions of this Section, Opco will act as its
regular broker so long as it is lawful for it so to act and that Opco may
be a major recipient of brokerage commissions paid by the Fund's
Portfolios. Opco may effect securities transactions for the Fund's
Portfolios only if (1) the commissions, fees or other remuneration received
or to be received by it are reasonable and fair compared to the
commissions, fees or other remuneration received by other brokers in
connection with comparable transactions involving similar securities being
purchased or sold on a securities exchange during a comparable period of
time and (2) the Trustees, including a majority of those Trustees who are
not interested persons, have adopted procedures pursuant to Rule 17e-1
under the Investment Company Act of 1940 for determining the permissible
level of such commissions. The Fund's Portfolios will not purchase any
securities from or sell any securities to Opco acting as principal for
their own account.
(11) The Fund may terminate this Agreement by sixty days written
notice to the Adviser and the Portfolio Manager at any time, without the
payment of any penalty, by vote of the Fund's Board of Trustees, or by vote
of a majority of its outstanding voting securities. The Adviser may
terminate this Agreement by sixty days written notice to the Portfolio
Manager and the Portfolio Manager may terminate this Agreement by sixty
days written notice to the Adviser, without the payment of any penalty.
This Agreement shall immediately terminate in the event of its assignment,
unless an order is issued by the Securities and Exchange Commission
conditionally or unconditionally exempting such assignment from the
provision of Section 15(a) of the Investment Company Act of 1940, in which
event this Agreement shall remain in full force and effect.
(12) Subject to prior termination as provided above, this Agreement
shall continue in force from the date of execution until November 1, 1995
and from year to year thereafter if its continuance after said date: (1) is
specifically approved on or before said date and at least annually
thereafter by vote of the Board of Trustees of the Fund, including a
majority of those trustees who are not parties to this Agreement of
interested persons of any such party, or by vote of a majority of the
outstanding voting securities of the Fund, and (2) is specifically approved
at least annually by the vote of a majority of trustees of the Fund who are
not parties to this Agreement or interested persons of any such party cast
in person at a meeting called for the purpose of voting on such approval.
(13) The Adviser shall indemnify and hold harmless the Portfolio
Manager, its officers and directors and each person, if any, who controls
the Portfolio Manager within the meaning of Section 15 of the Securities
Act of 1933 (any and all such persons shall be referred to as "Indemnified
Party"), against any loss, liability, claim, damage or expense (including
the reasonable cost of investigating or defending any alleged loss,
liability, claim, damages or expense and reasonable counsel fees incurred
in connection therewith), arising by reason of any matter to which this
Portfolio Manager's Agreement relates. However, in no case (i) is this
indemnity to be deemed to protect any particular Indemnified Party against
any liability to which such Indemnified Party would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its
obligations and duties under this Portfolio Manager's Agreement or (ii) is
the Adviser to be liable under this indemnity with respect to any claim
made against any particular Indemnified Party
A-3
<PAGE> 19
unless such Indemnified Party shall have notified the Adviser in writing
within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon
the Portfolio Manager or such controlling persons.
The Portfolio Manager shall indemnify and hold harmless the Adviser
and each of its directors and officers and each person if any who controls
the Adviser within the meaning of Section 15 of the Securities Act of 1933,
against any loss, liability, claim, damage or expense described in the
foregoing indemnity, but only with respect to the Portfolio Manager's
willful misfeasance, bad faith or gross negligence in the performance of
its duties under this Portfolio Manager's Agreement. In case any action
shall be brought against the Adviser or any person so indemnified, in
respect of which indemnity may be sought against the Portfolio Manager, the
Portfolio Manager shall have the rights and duties given to the Adviser,
and the Adviser and each person so indemnified shall have the rights and
duties given to the Portfolio Manager by the provisions of subsection (i)
and (ii) of this section.
(14) Except as otherwise provided in paragraph 13 hereof and as may be
required under applicable federal law, this Portfolio Manager's Agreement
shall be governed by the laws of the State of Georgia.
(15) The Portfolio Manager agrees to notify the parties within a
reasonable period of time regarding a material change in the membership of
the Portfolio Manager.
(16) The terms "vote of a majority of the outstanding voting
securities," "assignment" and "interested persons," when used herein, shall
have the respective meanings specified in the Investment Company Act of
1940 as now in effect or as hereafter amended.
A-4
<PAGE> 20
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their duly authorized officers and their corporate seals hereunder duly affixed
and attested, as of the date first above written.
<TABLE>
<C> <C>
(SEAL) THE ENTERPRISE GROUP OF
FUNDS, INC.
By:
----------------------------------------------
Victor Ugolyn
Chairman, President and
Chief Executive Officer
ATTEST:
---------------------------------------
Secretary
(SEAL) ENTERPRISE CAPITAL MANAGEMENT, INC.
By:
----------------------------------------------
Victor Ugolyn
Chairman, President and
Chief Executive Officer
ATTEST:
---------------------------------------
Secretary
(SEAL) OPCAP ADVISORS
By:
----------------------------------------------
ATTEST:
---------------------------------------
Secretary
</TABLE>
A-5
<PAGE> 21
EXHIBIT B
The registered investment companies listed below are managed by OpCap
Advisors and have similar investment objectives to at least one of the
Portfolios:
<TABLE>
<CAPTION>
APPROXIMATE NET
ASSETS (AS OF
FUND 3/5/97) ADVISORY FEE RATE
---- --------------- ------------------------------------------
<S> <C> <C>
Oppenheimer Quest Value $ 727,037,375 1.0% on the first $400 million;
Fund, Inc.(1) .90% on the next $400 million;
.85% of net assets in excess of
$800 million
Oppenheimer Quest $2,588,190,004 1.0% on the first $400 million;
Opportunity Value Fund(1) .90% on the next $400 million;
.85% of net assets in excess of
$800 million
Oppenheimer Quest Officers $ 9,629,594 1.0% of its daily net assets
Value Fund(1,2)
Oppenheimer Quest Capital $ 517,386,883 (3)
Value Fund, Inc.
Enterprise Accumulation Trust:
Equity Portfolio $ 351,881,504 .40% on the first $1 billion;(4)
.30% on assets over $1 billion;
Managed Portfolio $2,119,223,394 .40% on the first $1 billion;(4)
.30% on assets over $1 billion
Enterprise Group of Funds
Managed Portfolio $ 249,381,713 .40% on the first $100 million;(5)
.30% on assets in excess of
$100 million
Penn the Fund's, Inc.:
Value Equity Fund......................... $ 202,900,000 .50%(6)
Endeavor Series Trust:
Value Equity Portfolio.................... $ 128,700,000 .40%(7)
Opportunity Value Portfolio............... $ 3,824,007 .40%(6)
OCC Accumulation Trust:
Equity Portfolio.......................... $ 21,579,021 .80% on the first $400 million;
.75% on the next $400 million;
.70% of net assets in excess
of $800 million
Managed Portfolio $ 210,594,170 .80% on the first $400 million;
.75% on the next $400 million;
.70% of net assets in excess
of $800 million
</TABLE>
B-1
<PAGE> 22
<TABLE>
<CAPTION>
APPROXIMATE NET
ASSETS (AS OF
FUND 3/5/97) ADVISORY FEE RATE
---- --------------- ------------------------------------------
<S> <C> <C>
WNL Series Trust:
Elite Value Asset
Allocation Portfolio $ 2,776,727 .40%(8)
The Saratoga Advantage Trust:
Large Capitalization Value
Portfolio $ 25,297,008 .30%(8)
</TABLE>
- ---------------
(1) With respect to each of these funds, Oppenheimer Funds, Inc. ("OFI") is the
investment adviser and OpCap Advisors is the sub-adviser. OFI pays OpCap
Advisors monthly an annual fee based on the average daily net assets of the
fund equal to 40% of the advisory fee collected by OFI based on the total
net assets of the fund as of November 22, 1995 (the "base amount") plus 30%
of the investment advisory fee collected by OFI based on the total net
assets of the fund that exceed the base amount.
(2) OFI's advisory fee for the Oppenheimer Quest Officers Value Fund is 1.00%.
However, effective August 1, 1996, OFI is waiving the portion of its
management fee equal to what OFI would have been required to pay OpCap as
the sub-advisory fee and OpCap has agreed to waive its sub-advisory fee.
(3) Effective February 28, 1997, OFI became the manager of the fund and will be
paid a fee at the rate of 1.00% of the first $400 million of assets, .90% of
the next $400 million of net assets and .85% of assets over $800 million.
OFI will pay OpCap a sub-advisory fee equal to 40% of the net advisory fee
calculated by OFI for the fund based on the total net assets of the fund as
of February 28, 1997 and remaining 120 days later (the "base amount") plus
30% of the investment advisory fee collected by OFI based on the total net
assets that exceed the base amount.
(4) These fees are for investment advisory services only. Management services
are provided to the portfolios by a third party, not OpCap Advisors. The
Manager, who pays the investment advisory fee to OpCap Advisors, receives a
management fee, on an annual basis, of 0.80% of the first $400 million of
average daily net assets; .75% on the next $400 million and .70% on assets
above $800 million of each of the portfolios.
(5) This fee is for investment advisory services only. Management services are
provided to the Portfolio by a party other than OpCap Advisors. The Manager,
who pays the investment advisory fee to OpCap Advisors, receives a
Management Fee of 0.75% of the average daily net assets of the Portfolio.
(6) These fees are for investment advisory services only. Administrative
services are provided to these funds by a third party, not OpCap Advisors.
The funds are each charged on an annual basis a fee for administrative
services of 0.15% of their respective average daily net assets.
(7) This fee is for investment advisory services only. Management services are
provided to the Portfolio by a party other than OpCap Advisors. The Manager,
who pays the investment advisory fee to OpCap Advisors, receives a
Management Fee of .80% of the average daily net assets of the Portfolio.
(8) This fee is for investment advisory services only. Management services are
provided to the portfolio by a party other than OpCap Advisors. The Manager,
who pays the investment advisory fee to OpCap Advisors, receives a
Management Fee of 0.65% of the average daily net assets of the portfolio.
B-2
<PAGE> 23
APPENDIX
THE ENTERPRISE GROUP OF FUNDS, INC.
PROXY FOR SHAREHOLDER MEETING APRIL 28, 1997
The undersigned does hereby appoints Victor Ugolyn, Catherine R. McClellan
or Herbert M. Williamson, and each of them as proxies of the undersigned, each
will power to appoint his substitute, for the Special Meeting of Shareholders of
The Enterprise Group of Funds, Inc. (the "Fund") to be held on April 28, 1997,
at the offices of Enterprise Capital Management, Atlanta Financial Center, 3343
Peachtree Road, NE, Suite 450, Atlanta, Georgia 30326 at 1:00 p.m., and at any
ajournment thereof (the "Meeting") to vote, as designated below, all shares of
the Fund, held by the undersigned at the close of business on March 12, 1997.
Capitalized terms used without definition have the meanings given to them in the
accompanying Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE PROPOSALS LISTED
BELOW AND ON THE REVERSE SIDE HEREOF. THE SHARES REPRESENTED HEREBY WILL BE
VOTED A INDICATED OR FOR IF NO CHOICE IS INDICATED. THE PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS.
1. APPROVAL OF CHANGE IN EACH PORTFOLIO'S FUNDAMENTAL INVESTMENT RESTRICTION
WHERBY NO, PORTFOLIO WILL, 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).
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. APPROVAL OF PROPOSAL TO PERMIT ENTERPRISE CAPITAL MANAGEMENT, INC. TO
ENTER INTO NEW OR AMENDED CONTRACTS WITH PORTFOLIO MANAGERS WITHOUT
OBTAINING SHAREHOLDER APPROVAL.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. AS FOR MANAGED PORTFOLIO SHAREHOLDER'S, APPROVAL OF PORTFOLIO MANAGER'S
AGREEMENT BETWEEN THE ADVISER, FUND AND OPCAP ADVISORS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
DATED:
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1997
(MONTH, DAY)
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SIGNATURE(S)
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SIGNATURE(S)
NOTE: PLEASE SIGN EXACTLY AS YOUR NAME(S) APPEAR HEREON. When signing as
custodian, attorney, executor, administrator, trustee, guardian, etc.,
please give your full title as such. Joint owners should each sign this
Voting Instruction Form.
