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SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
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[X] Preliminary Information Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
[ ] Definitive Information Statement
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The Enterprise Group of Funds, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] No Fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) 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:
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Letterhead
November 9, 1998
Dear Fellow Shareholder:
We are pleased to enclose an information statement relating to a change of
Fund Manager for The Enterprise Group of Funds, Inc. Small Company Growth Fund.
William D. Witter, Inc. ("Witter") was named Fund Manager effective September 2,
1998, by the Board of Directors of The Enterprise Group of Funds, Inc.
Witter brings its investment management expertise to the Small Company
Growth Fund of the Enterprise family of 14 Funds. In selecting Witter as Fund
Manager, consideration was given to, among other factors, the firm's investment
management acumen and style in conjunction with the investment objectives of the
Small Company Growth Fund. There will be no change in the Small Company Growth
Fund's investment objective. However, its investment policies have been slightly
revised to accommodate Witter's investment style.
Witter seeks out the stocks of small companies that are expected to have
above average growth in earnings and are reasonably valued. It uses a
disciplined approach in evaluating growth companies, relating the expected
growth rate in earnings to the price-earnings ratio of the stock. Generally,
Witter will not buy a stock if the price-earnings ratio exceeds the growth rate.
By using this valuation parameter, Witter believes it moderates some of the
inherent volatility in the small-capitalization sector of the market. Securities
will be sold when the Fund Manager believes the stock price exceeds the
valuation criteria, or when the stock appreciates to a point where it is
substantially overweighted in the portfolio, or when the company no longer meets
expectations. The Fund Manager's goal is to hold a stock for a minimum of one
year but this may not always be feasible and there may be times when short-term
gains or losses will be realized.
There will be no change in the fee paid by Enterprise Capital to the Fund
Manager, and the management fee paid by the Small Company Growth Fund to
Enterprise Capital will remain unchanged at 1.00% of its average daily net
assets.
We encourage you to read the attached information statement which more
fully describes Witter and the Fund Manager Agreement. Enterprise looks forward
to working with Witter to assist you in working toward your investment goals.
Thank you for your continued support.
Sincerely,
/s/ Victor Ugolyn
Victor Ugolyn
Chairman, President, Chief Executive Officer
Atlanta Financial Center - 3343 Peachtree Road NE, Suite 450 - Atlanta, Georgia
30326-1022
404-261-1116 - 1-800-432-4320 - 404-261-1118 (fax)
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PRELIMINARY COPY
THE ENTERPRISE GROUP OF FUNDS, INC.
SMALL COMPANY GROWTH FUND
ATLANTA FINANCIAL CENTER
3343 PEACHTREE ROAD, N.E., SUITE 450
ATLANTA, GA 30326-1022
---------------------
INFORMATION STATEMENT
---------------------
We are providing this information statement to the shareholders of The
Enterprise Group of Funds, Inc. Small Company Growth Fund (the "Small Company
Growth Fund") in lieu of a proxy statement, pursuant to the terms of an
exemptive order that The Enterprise Group of Funds, Inc. (the "Enterprise
Group") has received from the Securities & Exchange Commission. The order
permits the Fund's investment adviser, Enterprise Capital Management, Inc., to
hire new portfolio managers and to make changes to existing portfolio manager
contracts with the approval of the Enterprise Group Board of Directors (the
"Board"), but without obtaining shareholder approval. WE ARE NOT ASKING YOU FOR
A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
This information statement will be mailed on or about November, 1998. As of
October 26, 1998, there were shares outstanding as to the Small
Company Growth Fund. The cost of this information statement will be paid by the
Small Company Growth Fund.
THE FUND
The Small Company Growth Fund is an investment portfolio of the Fund, a
Maryland corporation. The Enterprise Group has entered into an investment
advisory agreement with Enterprise Capital Management, Inc. ("Enterprise
Capital"), dated May 1, 1995 (the "Adviser's Agreement"). Under the Adviser's
Agreement, it is the responsibility of Enterprise Capital to select, subject to
review and approval by the Board, one or more portfolio managers (the "Fund
Managers") to manage each investment portfolio of the Enterprise Group (each a
"Fund" and collectively, the "Funds"), to review and monitor the performance of
the Fund Managers on an ongoing basis, and to recommend changes in the roster of
Fund Managers to the Board as appropriate. Enterprise Capital is also
responsible for conducting all business operations of the Enterprise Group,
except those operations contracted to the custodian or transfer agent. As
compensation for its services, Enterprise Capital receives a fee from each Fund,
out of which Enterprise Capital renders all fees payable to the Fund Managers.
The Funds, therefore, pay no fees directly to the Fund Managers.
Enterprise Capital recommends Fund Managers for the Funds to the Board, on
the basis of its continuing quantitative and qualitative evaluation of the Fund
Manager's skills in managing assets pursuant to specific investment styles and
strategies in accordance with the objectives of each Fund. Short-term investment
performance, by itself, is not a significant factor in selecting or terminating
a Fund Manager, and Enterprise Capital does not expect to recommend frequent
changes of Fund Managers.
The Fund Managers do not provide any services to the Funds except portfolio
investment management and related record-keeping services. However, in
accordance with the procedures adopted by the Board, the Fund Manager, or its
affiliated broker-dealer, may execute transactions for the Small Company Growth
Fund and receive brokerage commissions in connection therewith as permitted by
Section 17(e) of the Investment Company Act of 1940, as amended (the "1940 Act")
and the rules thereunder.
BOARD OF DIRECTORS' DECISION
At a meeting held on September 2, 1998, the Board, including a majority of
the non-interested directors, approved Enterprise Capital's recommendation to
replace Pilgrim Baxter with a new Fund Manager. Accordingly, the Board approved
a Fund Manager Agreement (the "New Agreement") with William D. Witter, Inc.
("Witter"). The Board's decision to replace Pilgrim Baxter was based on
performance and
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divergent investment strategies. In approving the New Agreement, the Board
considered a number of factors, including, but not limited to: (i) the
performance of the Small Company Growth Fund since it commenced operations; (ii)
the nature and quality of the services expected to be rendered to the Small
Company Growth Fund by the Fund Manager, (iii) that the terms of the Fund
Manager Agreement will be unchanged under the New Agreement; (iv) the history,
reputation, qualification and background of the Fund Manager, as well as the
qualifications of its personnel. The Board considered these factors to be of
equal weight and importance.
Enterprise Capital made the recommendation to hire Witter in the ordinary
course of its ongoing evaluation of Fund Manager performance and investment
strategy. Enterprise Capital conducted extensive research of numerous candidate
firms and qualitative and quantitative analysis of each candidate's
organizational structure, investment process and style, and long-term
performance record. Enterprise Capital believes that Witter's management style
is appropriately suited to the Small Company Growth Fund.
THE FUND MANAGER AGREEMENT
Pilgrim Baxter & Associates, Ltd. ("Pilgrim Baxter") served as Fund Manager
of the Small Company Growth Fund, pursuant to a Fund Manager Agreement dated May
1997 (the "Previous Agreement"). Under the Adviser's Agreement, the Small
Company Growth Fund paid to Enterprise Capital a management fee equal to 1.00%
of its average daily net assets. From this amount, under the Previous Agreement
Enterprise Capital paid to Pilgrim Baxter a fee equal to 0.65% of the Small
Company Growth Fund's average net daily assets. These fees will not change under
the New Agreement. For the fiscal year ended December 31, 1997, the Small
Company Growth Fund paid to Enterprise Capital management fees in the amount of
$84,918, of which Enterprise Capital paid $55,197 to Pilgrim Baxter. If the New
Agreement had been in effect for 1997, the total management fee paid by the
Small Company Growth Fund and the fee paid by Enterprise Capital to the Fund
Manager would have been unchanged.
The New Agreement is identical in form to the Previous Agreement. The form
of the New Agreement is attached to this Information Statement as Exhibit A.
INFORMATION ON WILLIAM D. WITTER, INC.
The following is a description of Witter, which is based on information
provided by Witter. Witter is not affiliated with Enterprise Capital or
Enterprise Group other than by reason of serving as Fund Manager to one or more
Funds.
William D. Witter, Inc. is located at One Citicorp Center, 153 East 53rd
Street, New York, New York 10022. Witter is a privately owned company and
William D. Witter is the majority shareholder. His address is the same as that
of Witter. William D. Witter, President, and Paul B. Phillips, Managing
Director, are responsible for the day-to-day management of the Small Company
Growth Fund. They have more than 80 years' combined experience in the investment
industry. Mr. Witter and Mr. Phillips have been employed in their present
positions by Witter since 1977 and 1996, respectively. Mr. Phillips previously
served as Senior Portfolio Manager at Bankers Trust Company from 1986 to 1995.
As of September 30, 1998, total assets under management for all clients were
$800 million. Witter's usual investment minimum is $1 million. Witter also
entered into a sub-adviser agreement with Enterprise Accumulation Trust Small
Company Growth Portfolio which has not commenced operations. The Portfolio will
pay Witter 0.65% of the Portfolio's average daily net assets.
INFORMATION ABOUT ENTERPRISE CAPITAL
Enterprise Capital, located at the Atlanta Financial Center, 3343 Peachtree
Road, N.E., Suite 450, Atlanta, GA 30326-1022, serves as Investment Adviser and
Administrator of the Fund.
Enterprise Capital is wholly-owned subsidiary of The Mutual Life Insurance
Company of New York (MONY). MONY is located at 1740 Broadway, New York, NY
10019. Enterprise Capital will also provide investment advisory services to
Enterprise Accumulation Trust Small Company Growth Portfolio (the "Portfolio"),
which will commence operations in November 1998. The Portfolio's investment
objective is
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capital appreciation through investment primarily in the common stocks of small
capitalization companies. The Portfolio pays Enterprise Capital a management fee
of 1.00% of its average daily net assets.
Enterprise Fund Distributors, Inc. is the Fund's principal underwriter, and
its address is 3343 Peachtree Road, N.E., Suite 450, Atlanta, Georgia
30326-1022.
ADDITIONAL INFORMATION
To the knowledge of the Fund, as of October 30, 1998, no person
beneficially owned no more than 5% the Small Company Growth Fund's outstanding
shares. As of October 31, 1998, the directors and officers of the Small Company
Growth Fund owned less than 1% of the Small Company Growth Fund's outstanding
shares. The Fund did not utilize services of any affiliated broker during the
most recent fiscal year. The Fund is not required to hold annual meetings of
shareholders, and therefore, it cannot be determined when the next meeting of
shareholders will be held. Shareholder proposals to be considered for inclusion
in the proxy statement for the next meeting of shareholders must be submitted a
reasonable time before the proxy statement is mailed. Whether a proposal
submitted will be included in the proxy statement will be determined in
accordance with the applicable state and federal laws.
Copies of the Fund's most recent annual and semi-annual reports are
available without charge. To obtain a copy, call or write Enterprise Capital at
the Atlanta Financial Center, 3343 Peachtree Road, N.E., Suite 450, Atlanta, GA
30326-1022 (800-432-4320).
By Order of the Board of Directors,
Catherine R. McClellan
Secretary
3
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EXHIBIT A
SMALL COMPANY GROWTH FUND
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
FUND MANAGER'S AGREEMENT
THIS AGREEMENT, made the 2nd day of September, 1998, 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 William D. Witter, Inc., a New York corporation (hereinafter
referred to as the "Fund Manager").
BACKGROUND INFORMATION
(A) The Adviser has entered into an Investment Adviser's Agreement dated as
of May 1, 1993, with the Fund ("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 series 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 Fund Managers to the series of the Fund.
(B) The parties hereto wish to enter into an agreement (the "Agreement")
whereby the Fund Manager will provide to the Small Company Growth Fund of the
Fund (the "Small Company Growth Fund") securities investment advisory services
for that Fund, subject to requisite approvals under the Investment Company Act
of 1940. The Fund, the Adviser, and the Fund Manager are registered under the
1940 Act.
WITNESSETH THAT:
In consideration of the mutual covenants herein contained, the Fund,
Adviser and the Fund Manager agree as follows:
(1) The Fund and Adviser hereby employ the Fund Manager to render
certain investment advisory services to the Fund, as set forth herein. The
Fund 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 Fund Manager shall furnish the Small Company Growth Fund
advice with respect to the investment and reinvestment of the assets of the
Small Company Growth Fund, or such portion of the assets of the Fund as the
Adviser shall specify from time to time, in accordance with the investment
objectives, restrictions and limitations of the series as set forth in the
Fund's most recent Registration Statement and the Fund's governing
documents.
(3) The Fund Manager shall perform a monthly reconciliation of the
Fund to the holdings report provided by the Fund's custodian and bring any
material or significant variances regarding holdings or valuations to the
attention of the Adviser.
(4) The Fund Manager shall for all purposes herein be deemed to be an
independent contractor. The Fund Manager has no authority to act for or
represent the Fund or the series in any way except to direct securities
transactions pursuant to its investment advice hereunder. The Fund Manager
is not an agent of the Fund or the series.
(5) It is understood that the Fund Manager does not, by this
Agreement, undertake to assume or pay any costs or expenses of the Fund or
the series.
(6) (a) The Adviser agrees to pay as compensation to the Fund 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 0.054 of
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1% of the average of the daily closing net asset value of the Fund managed
by the Fund Manager during such month (that is, 0.65 of 1% per year) for
the first $50,000,000 of assets under management; a sum equal to 0.046 of
1% of the average of the daily closing net asset value of the Fund during
such month (that is, 0.55 of 1% per year) for assets in excess $50,000,000
to $100,000,000 under management; and a sum equal to 0.0375 of 1% of the
average of the daily closing net asset value of the Fund during such month
(that is, 0.45 of 1% per year) for assets in excess of $100,000,000.
(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 Fund 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 Fund's
shares.
(7) The services of the Fund Manager hereunder are not to be deemed to
be exclusive, and the Fund 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 Fund Manager of its
responsibilities hereunder, it is agreed that the Fund 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. The Fund Manager may, from time to time hereafter, act
as investment adviser to one or more other investment companies and
fiduciary or other managed accounts, provided that when the purchase or
sale of securities of the same issuer is suitable for the investment
objectives of two or more companies or accounts managed by the Fund Manager
which have available funds for investment, the available securities will be
allocated in a manner believed by the Fund Manager to be equitable to each
company or account.
(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 Fund Manager shall
not be liable to the Fund, the series or the Adviser or to any shareholder
or shareholders of the Fund, the series 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 Fund Manager hereunder.
(9) The Fund Manager will take necessary steps to prevent the
investment professionals of the Fund Manager who are responsible for
investing assets of the Fund from taking, at any time, a short position in
any shares of any holdings of any series 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 Fund Manager also will cooperate with the
Fund in adopting a written policy prohibiting insider trading with respect
to Fund series transactions insofar as such transactions may relate to the
Fund Manager.
(10) In connection with the management of the investment and
reinvestment of the assets of the Fund, the Fund Manager is authorized to
select the brokers or dealers that will execute purchase and sale
transactions for the Fund, 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 Fund securities for the Fund. Subject to
this primary requirement, and maintaining as its first consideration the
benefits for the Funds and its shareholders, the Fund Manager shall have
the right, subject to the approval of the Board of Directors 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 Fund, the Adviser,
or the Fund Manager and, subject to the Conduct Rules of the National
Association of Securities Dealers, Inc., to select brokers and dealers who
sell shares of series of the Fund.
(11) The Fund may terminate this Agreement by thirty (30) days written
notice to the Adviser and the Fund Manager at any time, without the payment
of any penalty, by vote of the Fund's Board of Directors, or by vote of a
majority of its outstanding voting securities. The Adviser may terminate
this Agreement by thirty (30) days written notice to the Fund Manager and
the Fund Manager may
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terminate this Agreement by thirty (30) 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 January 1, 1999
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 Directors of the Fund, including a
majority of those Directors 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 Directors 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 Fund Manager,
its officers and directors and each person, if any, who controls the Fund
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 from the Indemnified Party's performance or
non-performance of any duties under this Agreement. 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 Fund 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 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 Fund Manager or such
controlling persons.
The Fund 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 Fund Manager's willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Fund 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 Fund Manager, the Fund 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 Fund
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 Fund Manager's Agreement shall
be governed by the laws of the State of Georgia.
(15) The Fund Manager agrees to notify the parties within a reasonable
period of time regarding a material change in the membership of the Fund
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.
(17) This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the 1940 Act.
(18) If any provision of this Agreement shall be held or made invalid
by a count decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
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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.
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(SEAL) THE ENTERPRISE GROUP OF
FUNDS, INC.
By: /s/ VICTOR UGOLYN
-------------------------------------------------
Victor Ugolyn
Chairman, President and
Chief Executive Officer
ATTEST: /s/ CATHERINE R. MCCLELLAN
-----------------------------------------
Secretary
(SEAL) ENTERPRISE CAPITAL
MANAGEMENT, INC.
By: /s/ VICTOR UGOLYN
------------------------------------------------
Victor Ugolyn
Chairman, President and
Chief Executive Officer
ATTEST: /s/ CATHERINE R. MCCLELLAN
-----------------------------------------
Secretary
(SEAL) WILLIAM D. WITTER, INC.
By: /s/ WILLIAM D. WITTER
------------------------------------------------
William D. Witter
President
ATTEST: /s/ MARY R. DONNELLY
-----------------------------------------
Secretary
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