<PAGE>
A N N U A L R E P O R T
DECEMBER 31, 1997
[PICTURE]
THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
THE ENTERPRISE GROUP OF FUNDS, INC.
Enterprise Growth Portfolio
Enterprise Equity Portfolio
Enterprise Growth and Income Portfolio
Enterprise Equity Income Portfolio
Enterprise Capital Appreciation Portfolio
Enterprise Small Company Growth Portfolio
Enterprise Small Company Value Portfolio
Enterprise International Growth Portfolio
Enterprise Government Securities Portfolio
Enterprise High-Yield Bond Portfolio
Enterprise Tax-Exempt Income Portfolio
Enterprise Managed Portfolio
Enterprise Money Market Portfolio
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
The Enterprise Growth Portfolio
Manager's Comments................................................................................ 3
Portfolio of Investments.......................................................................... 6
The Enterprise Equity Portfolio
Manager's Comments................................................................................ 7
Portfolio of Investments.......................................................................... 10
The Enterprise Growth and Income Portfolio
Manager's Comments................................................................................ 12
Portfolio of Investments.......................................................................... 15
The Enterprise Equity Income Portfolio
Manager's Comments................................................................................ 17
Portfolio of Investments.......................................................................... 20
The Enterprise Capital Appreciation Portfolio
Manager's Comments................................................................................ 23
Portfolio of Investments.......................................................................... 26
The Enterprise Small Company Growth Portfolio
Manager's Comments................................................................................ 28
Portfolio of Investments.......................................................................... 31
The Enterprise Small Company Value Portfolio
Manager's Comments................................................................................ 33
Portfolio of Investments.......................................................................... 37
The Enterprise International Growth Portfolio
Manager's Comments................................................................................ 40
Portfolio of Investments.......................................................................... 44
The Enterprise Government Securities Portfolio
Manager's Comments................................................................................ 49
Portfolio of Investments.......................................................................... 52
The Enterprise High-Yield Bond Portfolio
Manager's Comments................................................................................ 54
Portfolio of Investments.......................................................................... 57
The Enterprise Tax-Exempt Income Portfolio
Manager's Comments................................................................................ 62
Portfolio of Investments.......................................................................... 65
The Enterprise Managed Portfolio
Manager's Comments................................................................................ 68
Portfolio of Investments.......................................................................... 72
The Enterprise Money Market Portfolio
Manager's Comments................................................................................ 74
Portfolio of Investments.......................................................................... 76
Statement of Assets and Liabilities................................................................. 78
Statement of Operations............................................................................. 80
Statement of Changes in Net Assets.................................................................. 82
Financial Highlights................................................................................ 86
Notes to Financial Statements....................................................................... 112
</TABLE>
Returns in this report are historical and do not guarantee future performance of
any fund. Investment return and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their cost.
<PAGE>
ENTERPRISE
GROUP OF FUNDS
- --------------------------------------------------------------------------------
MESSAGE FROM THE CHAIRMAN
Dear Fellow Shareholders:
Investors in U.S. stock mutual funds enjoyed another stellar year in 1997 as
the longest bull run in stock-market history continued. For the year, the
average diversified U.S. stock fund returned 24.36 percent, according to Lipper
Analytical Services, Inc. The good news extended to the bond market, as well,
which recorded an impressive rally during the second half of the year. Lipper
concluded that the average taxable-bond fund gained 8.67 percent in 1997, while
the average tax-free bond fund recorded 8.24 percent in total returns, which
include price changes and reinvested dividends.
1997 IN REVIEW
Stocks, as measured by the S&P 500 Composite Index, achieved an improbable
third consecutive rise of more than 20 percent in 1997. The S&P 500 gained 33.4
percent, inclusive of reinvested dividends and interest, which marked the 15th
calendar-year advance for the index in the past 16 years. Nearly ideal economic
conditions in the U.S. -- solid earnings gains and low unemployment combined
with almost non-existent inflationary pressure -- spurred the Dow Jones
Industrial Average to a 24.9 percent rise and the Nasdaq Composite Index to a
22.3 percent gain. Even small-cap stocks, as measured by the Russell 2000 Index,
showed marked improvement from 1996 by gaining 22.4 percent.
The headiness caused by all of this good news was tempered by a volatile
fourth quarter marked by the record one-day drop of 554 points by the Dow on
October 27. Although the fourth quarter barely detracted from the gains of the
first three quarters -- the average U.S. stock fund declined just 1.54 percent
according to Lipper -- it served as a reminder to investors of the value of
long-term investment planning and portfolio diversification. Much of the
volatility stemmed from the ongoing financial uncertainty in Southeast Asia,
where several economies suffered the effects of wild stock market swings caused
by weak currencies and bad loans by financial institutions.
During the second half of 1997, the "Asian flu" spread throughout Thailand,
Indonesia, the Philippines, Hong Kong, South Korea and Malaysia. As Japan,
traditionally the region's financial leader, struggled to turn around its own
economy, the leadership for an Asian bailout fell to the U.S. and the
International Monetary Fund.
In the fixed income arena, several factors cheered bond investors. Falling
inflation, little action by the Federal Reserve, a budget deficit shrinking
faster than predicted and a flattening yield curve raised prices on almost all
types of bonds. The yield on the 30-year Treasury bond, traditionally a
bellwether for the fixed income markets, hit a 1997 high of 7.2 percent in April
before closing the year below the psychologically important 6 percent barrier at
5.92 percent.
LOOKING TO 1998
We believe, as do our portfolio managers, that although the financial
problems in Southeast Asia will have an as-yet-undetermined effect on the
profits of some U.S. corporations, the overall strength of the American economy
may provide a scenario for further positive returns for U.S. stocks in 1998. We
must emphasize, however, that an expectation of the level of returns we have
experienced during the past three years is an unrealistic one in light of the
historical record. Past results do not guarantee future performance. Long-term
investors may potentially reduce their dependence upon short-term results by
exercising patience and examining the allocation of their investment portfolios
with professional financial advisors.
The Enterprise Group of Funds earned an outstanding vote of recognition
within the mutual fund industry in the DALBAR 1997 Broker/Dealer General Opinion
Survey, being ranked No. 1 overall among small mutual fund complexes. As a
result, we earned the prestigious DALBAR Crystal Pyramid Award for 1997. This
was the 11th
THE ENTERPRISE GROUP OF FUNDS, INC. 1
<PAGE>
annual survey conducted by DALBAR, Inc., which provides research and
publications to financial services institutions. The survey focused on the
investment performance, marketing support and operations support delivered by
mutual fund families. For the purposes of the survey, small mutual fund
complexes were defined as those whose assets under management were $8 billion or
less.
Effective July 17, Enterprise made available to its shareholders two new
portfolios, the Enterprise Growth and Income Portfolio and the Enterprise Small
Company Growth Portfolio. These portfolios emerged from Retirement System Fund
Inc. when Enterprise acquired the advisory services for that fund from
Retirement System Investors Inc., which had served as investment adviser to the
funds since their inception in May 1991. Retirement System Investors continues
to manage the Enterprise Growth and Income Portfolio, which offers a blend of
large-cap value and large-cap growth investment styles. Pilgrim Baxter &
Associates, Ltd., now manages the Enterprise Small Company Growth Portfolio.
During 1997, the Enterprise Growth, Growth and Income, Capital Appreciation,
Small Company Value and Government Securities Portfolios, in particular,
received favorable media recognition relative to their mutual fund peer groups
due to their performance. We will continue in 1998 and beyond to provide
investors with a wide selection of mutual funds to cover the spectrum of
investment needs.
1998 will also mark the 30th anniversary of the Enterprise Growth Portfolio,
subadvised by Montag & Caldwell, Inc. The Enterprise Growth Portfolio continues
to receive industry recognition for its long-term investment performance.
We are proud of our success to date and appreciate your confidence in The
Enterprise Group of Funds as we continue our primary mission of adding value to
your investment portfolio by providing you with access to some of the most
accomplished institutional investment firms in the industry.
Sincerely,
/s/ VICTOR UGOLYN
Victor Ugolyn
Chairman, President and Chief Executive Officer
2 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
THE ENTERPRISE GROWTH PORTFOLIO
MONTAG & CALDWELL, INC.
Atlanta, Georgia
INVESTMENT MANAGEMENT
Montag & Caldwell served as investment adviser to Alpha Fund, Inc., the
predecessor of the Growth Portfolio, since the Fund was organized in 1967.
Montag & Caldwell manages approximately $15.5 billion for institutional clients,
and its normal investment minimum is $40 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Growth Portfolio is to seek appreciation of
capital primarily through investments in common stocks.
INVESTMENT PHILOSOPHY
The equity selection process is a low-risk, growth stock approach. Valuation is
the key selection criterion that makes its investment style risk-averse. Montag
& Caldwell also emphasizes growth characteristics because it is seeking not only
companies with shares that are attractively priced but also those that may
experience strong earnings growth relative to other companies.
1997 PERFORMANCE REVIEW
As anticipated, 1997 proved to be a volatile year for the stock market but
equities still managed to produced positive returns for the third straight year.
After enduring a weak first quarter the stock market rebounded strongly during
the middle quarters, only to languish in the fourth quarter as Asia's economic
ills dominated investor concerns. During the year, the portfolio benefited
initially from its exposure to consumer, health care and technology holdings,
which responded to nearly perfect investment conditions: moderate economic
growth, lower-than-expected inflation, corporate profits growing at a healthy
rate, and interest rates remaining steady to lower. Late weakness in many of
these positions, reflecting their exposure to the Asian financial uncertainty,
caused a consolidation of portfolio gains, however.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GROWTH PORTFOLIO-A ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
Average Annual With Load 25.53% 20.59% 17.92%
Average Annual Without Load 31.76% 21.77% 18.50%
S&P 500* 33.36% 20.27% 18.06%
Lipper Growth Fund Index** 28.08% 17.08% 16.08%
Enterprise Growth
Portfolio-A S&P 500 Lipper Growth Fund Index
12/31/87 $9,525.32 $10,000.00 $10,000.00
1988 $10,696.93 $11,661.00 $11,413.00
1989 $13,162.58 $15,356.37 $14,548.15
1990 $12,863.79 $14,878.79 $13,761.10
1991 $18,239.56 $19,412.35 $18,760.50
1992 $19,417.84 $20,891.58 $20,191.93
1993 $21,474.19 $22,997.45 $22,610.92
1994 $21,261.59 $23,301.01 $22,255.93
1995 $29,761.98 $32,057.53 $29,522.49
1996 $39,464.39 $39,417.94 $34,683.02
1997 $51,998.27 $52,567.77 $44,422.02
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 3
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GROWTH PORTFOLIO-B ONE YEAR INCEPTION
<S> <C> <C> <C>
Annualized Return With CDSC 27.15% 32.34%
Annualized Return Without CDSC 31.15% 33.27%
S&P 500* 33.36% 29.47%
Lipper Growth Fund Index** 28.08% 24.88%
*From 5/1/95-12/31/97
Enterprise Growth Lipper Growth
Portfolio-B S&P 500 Fund Index
5/1/95 $10,000.00 $10,000.00 $10,000.00
1995 $12,465.80 $12,162.34 $12,030.00
1996 $16,421.20 $14,948.98 $14,132.84
1997 $21,136.40 $19,935.95 $18,101.35
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GROWTH PORTFOLIO-C INCEPTION
<S> <C> <C> <C>
Cumulative Return With CDSC 20.91%
Cumulative Return Without CDSC 21.91%
S&P 500* 22.56%
Lipper Growth Fund Index** 23.10%
*From 5/1/97-12/31/97
Enterprise Growth
Portfolio-C S&P 500 Lipper Growth Fund Index
5/1/97 $10,000.00 $10,000.00 $10,000.00
1997 $12,090.60 $12,256.00 $12,310.00
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ONE YEAR INCEPTION
<S> <C> <C> <C>
Enterprise Growth Portfolio-Y 32.40% 39.16%
S&P 500* 33.36% 37.24%
Lipper Growth Fund Index** 28.08% 30.81%
*From 8/31/96-12/31/97
Enterprise Growth
Portfolio-Y S&P 500 Lipper Growth Fund Index
8/31/96 $10,000.00 $10,000.00 $10,000.00
1996 $11,738.41 $11,439.00 $11,172.00
1997 $15,541.65 $15,255.05 $14,309.10
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original purchase.
* The S&P 500 index is an unmanaged index that includes 500 companies that tend
to be leaders in important industries within the U.S. economy and excludes any
transaction or holding charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
4 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
FUTURE INVESTMENT STRATEGY
Stock market returns may be respectable, but more subdued, in 1998. The
prospects for sustained growth in the economy and corporate profits, along with
low inflation and steady to lower bond yields, potentially suggest a continued
good fundamental setting for equities. Tempering this favorable outlook may be
lower corporate profit gains and stock market valuations that accurately reflect
these good economic fundamentals.
The outlook for the shares of high-quality growth companies remains bright. Most
of these companies operate globally and while there may be weakness in the
developing economies of the world, such as Southeast Asia, other economies may
be making good progress. The tendency for strength in some economic regions to
offset weakness in other areas, combined with dynamic global opportunities and
competitive advantages, have enabled these companies to produce consistently
solid earnings growth during the years. In the year ahead, the more predictable
and above-average earnings gains of these companies may be particularly
attractive as overall corporate profit growth slows.
Montag & Caldwell particularly favors the shares of multinational consumer and
health care companies with strong product offerings that are value-added and
proprietary in nature. Such products are generally used each day. Even in a U.S.
recession, demand remains relatively strong for products such as soft drinks,
detergents, blades and razors, as well as for pharmaceuticals. While the
portfolio's technology commitments have been reduced due to valuation, product
transition and macroeconomic issues, the outlook is still good for technology
spending as companies seek to position themselves better for the dynamic and
challenging global market environment.
Lastly, the outlook may be especially promising for these globally exposed
companies in the second half of 1998. By then, foreign economies in both
developed and developing parts of the world should be improving and, at the same
time, currency translations from a strong U.S. dollar may have a less negative
impact on reported sales and earnings. In the meantime, the shares of these
companies may hold their own as relative earnings and valuation positions
improve in a moderating corporate profit environment with steady to lower bond
yields.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
THE ENTERPRISE GROUP OF FUNDS, INC. 5
<PAGE>
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMON STOCKS -- 96.20% AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
BUSINESS SERVICES -- 4.23%
- -------------------------------------------------------------------------------
Interpublic Group of Companies Inc................ 280,000 $ 13,947,500
Manpower Inc...................................... 400,000 14,100,000
------------
28,047,500
CAPITAL GOODS & SERVICES -- 3.10%
- -------------------------------------------------------------------------------
General Electric Company.......................... 280,000 20,545,000
COMPUTER HARDWARE -- 10.76%
- -------------------------------------------------------------------------------
3Com Corporation (Rts) (a)........................ 220,000 7,686,250
Adaptec Inc. (a).................................. 290,000 10,766,250
Cisco Systems Inc. (a)............................ 510,000 28,432,500
Compaq Computer
Corporation (a)................................... 330,000 18,624,375
Seagate Technology (a)............................ 300,000 5,775,000
------------
71,284,375
COMPUTER SERVICES -- 2.51%
- -------------------------------------------------------------------------------
Solectron Corporation (a)......................... 400,000 16,625,000
COMPUTER SOFTWARE -- 7.94%
- -------------------------------------------------------------------------------
Electronic Arts (a)............................... 400,000 15,125,000
Microsoft Corporation (a)......................... 200,000 25,850,000
Oracle System Corporation (a)..................... 520,000 11,602,500
------------
52,577,500
CONGLOMERATES -- 3.63%
- -------------------------------------------------------------------------------
Cendant Corporation............................... 700,000 24,062,500
CONSUMER NON-DURABLES -- 9.99%
- -------------------------------------------------------------------------------
Gillette Company.................................. 280,000 28,122,500
Mattel Inc........................................ 335,200 12,486,200
Procter & Gamble Company.......................... 320,000 25,540,000
------------
66,148,700
ENTERTAINMENT & LEISURE -- 3.21%
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Walt Disney Company............................... 215,000 21,298,438
FINANCE -- 3.23%
- -------------------------------------------------------------------------------
American Express Company.......................... 240,000 21,420,000
FOOD & BEVERAGES & TOBACCO -- 6.69%
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Coca-Cola Company................................. 440,000 29,315,000
Pioneer Hi Bred International
Inc............................................... 140,000 15,015,000
------------
44,330,000
HEALTH CARE -- 3.24%
- -------------------------------------------------------------------------------
Medtronic Inc..................................... 410,000 21,448,125
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- -------------------------------------------------------------------------------
HOTELS & RESTAURANTS -- 5.60%
- -------------------------------------------------------------------------------
Cracker Barrel Old Country Store.................. 225,000 $ 7,509,375
Marriott International Inc........................ 220,000 15,235,000
McDonald's Corporation............................ 300,000 14,325,000
------------
37,069,375
INSURANCE -- 3.04%
- -------------------------------------------------------------------------------
American International Group Inc.................. 185,000 20,118,750
MEDICAL INSTRUMENTS -- 2.51%
- -------------------------------------------------------------------------------
Boston Scientific Corporation..................... 362,600 16,634,275
PHARMACEUTICALS -- 17.27%
- -------------------------------------------------------------------------------
Bristol Myers Squibb Company...................... 267,500 25,312,187
Johnson & Johnson................................. 400,000 26,350,000
Eli Lilly & Company............................... 300,000 20,887,500
Merck & Company Inc............................... 190,000 20,187,500
Pfizer Inc........................................ 290,300 21,645,494
------------
114,382,681
RETAIL -- 5.27%
- -------------------------------------------------------------------------------
Gap Inc........................................... 420,000 14,883,750
Home Depot Inc.................................... 340,000 20,017,500
------------
34,901,250
TECHNOLOGY -- 2.18%
- -------------------------------------------------------------------------------
Intel Corporation................................. 205,300 14,422,325
TELECOMMUNICATIONS -- 1.80%
- -------------------------------------------------------------------------------
Ericsson L M Tel Company (ADR).................... 320,000 11,940,000
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $470,569,547).................................. 637,255,794
- -------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.12%
- -------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
5.00% due 01/02/98
Collateral: U.S. Treasury Note $20,890,000, 5.625%
due 10/31/99 Value $21,045,568.................... $ 20,630,000 20,630,000
------------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $20,630,000)................................... 20,630,000
- -------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $491,199,547).................................. $657,885,794
OTHER ASSETS LESS LIABILITIES -- 0.68%.......................... 4,523,154
------------
NET ASSETS -- 100%.............................................. $662,408,948
- -------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
ADR American Depository Receipts
See notes to financial statements.
6 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
THE ENTERPRISE EQUITY PORTFOLIO
OPCAP ADVISORS
New York, New York
INVESTMENT MANAGEMENT
OpCap Advisors, a wholly owned subsidiary of Oppenheimer Capital, became
investment adviser to this Enterprise fund on May 1, 1997. Oppenheimer Capital
manages approximately $61 billion for institutional clients, and its normal
investment minimum is $10 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Equity Portfolio is long-term capital
appreciation primarily from investments in securities of companies that are
believed by the portfolio manager to be undervalued in the marketplace in
relation to factors such as the companies' assets or earnings.
INVESTMENT PHILOSOPHY
OpCap Advisors' investment process uses a fundamental, bottom-up process of
value investing. The security selection process focuses on well-positioned
companies that generate high returns on assets and free cash flow, have strong
barriers to competition, have managements oriented to shareholder interests and
sell at reasonable valuation levels. A complete qualitative review of the
business relative to its peers and its history is the key to the process. OpCap
seeks securities whose undervaluation is great enough to provide significant
upside reward with modest downside risk.
1997 PERFORMANCE REVIEW
As the stock market rose in 1997, OpCap maintained an above-average cash
position because it became somewhat difficult to find superior companies that
were underpriced. As of December 31, 1997, the portfolio's net assets were
allocated 87 percent to common stocks and 13 percent to cash and cash
equivalents. This cash position provides a resource to purchase quality stocks
opportunistically when they become available at favorable prices. The
portfolio's large cash position should serve shareholders well if the Asian
financial crisis continues to buffet the stock market.
The portfolio achieved satisfactory results in 1997. OpCap achieved these
results by being disciplined in its philosophy of investing in superior
companies that have strong competitive positions, generate high cash flow and
effectively deploy that cash to benefit shareholders. Some of its more recent
additions to the portfolio included the common stocks of ACE Ltd., AFLAC Inc.,
EXEL Ltd., Polaroid Corp., and UCAR International. OpCap liquidated portfolio
positions in Allegheny Teledyne Inc., Anheuser Busch Companies Inc., Boeing Co.,
Commscope Inc. and Computer Associates International.
THE ENTERPRISE GROUP OF FUNDS, INC. 7
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE EQUITY PORTFOLIO-A INCEPTION
<S> <C> <C> <C>
Average Annual With Load 15.52%
Average Annual Without Load 21.30%
S&P 500* 22.56%
Lipper Growth Fund Index** 23.10%
*From 5/1/97-12/31/97
Enterprise Lipper Growth
Equity Portfolio-A S&P 500 Fund Index
5/1/97 $9,523.81 $10,000.00 $10,000.00
1997 $11,552.00 $12,256.00 $12,310.00
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE EQUITY PORTFOLIO-B INCEPTION
<S> <C> <C> <C>
Annualized Return With CDSC 15.80%
Annualized Return Without CDSC 20.80%
S&P 500* 22.56%
Lipper Growth Fund Index** 23.10%
*From 5/1/97-12/31/97
Enterprise Equity Lipper Growth
Portfolio-B S&P 500 Fund Index
5/1/97 $10,000.00 $10,000.00 $10,000.00
1997 $11,580.30 $12,256.00 $12,310.00
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE EQUITY PORTFOLIO-C INCEPTION
<S> <C> <C> <C>
Cumulative Return With CDSC 19.89%
Cumulative Return Without CDSC 20.89%
S&P 500* 22.56%
Lipper Growth Fund Index** 23.10%
*From 5/1/97-12/31/97
Enterprise Equity
Portfolio-C S&P 500 Lipper Growth Fund Index
5/1/97 $10,000.00 $10,000.00 $10,000.00
1997 $11,989.20 $12,256.00 $12,310.00
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original purchase.
* The S&P 500 index is an unmanaged index that includes 500 companies that tend
to be leaders in important industries within the U.S. economy and excludes any
transaction or holding charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
8 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
FUTURE INVESTMENT STRATEGY
A tight U.S. job market and the Asian crisis may approximately offset each other
in their impact on the U.S. economy. Inflation probably may not pick up
markedly, nor does OpCap believe the U.S. will slide into a recession. Whether
the stock market indexes will rise or fall in 1998 is a matter of conjecture.
There could be a high level of market volatility until these issues sort
themselves out, but volatility creates opportunities to buy stocks at favorable
prices.
OpCap continues to invest for the long term in superior businesses that are
reasonably valued, especially those which generate a high level of cash
throughout the economic cycle. By being disciplined in this value approach,
OpCap seeks to control risk, and match or exceed its benchmarks regardless of
economic or market trends.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
THE ENTERPRISE GROUP OF FUNDS, INC. 9
<PAGE>
EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMON STOCKS -- 87.32% AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
ADVERTISING -- 3.20%
- ------------------------------------------------------------------------------
Omnicom Group Inc................................. 4,000 $ 169,500
AEROSPACE -- 4.09%
- ------------------------------------------------------------------------------
Lockheed Martin Corporation....................... 2,200 216,700
BANKING -- 9.54%
- ------------------------------------------------------------------------------
BankBoston Corporation............................ 1,600 150,300
Citicorp.......................................... 1,200 151,725
Wells Fargo & Company............................. 600 203,662
-----------
505,687
CAPITAL GOODS & SERVICES -- 3.86%
- ------------------------------------------------------------------------------
General Electric Company.......................... 400 29,350
Textron Inc....................................... 2,800 175,000
-----------
204,350
CHEMICALS -- 2.04%
- ------------------------------------------------------------------------------
Du Pont (E. I.) De Nemours & Company.............. 1,800 108,113
COMPUTER HARDWARE -- 1.21%
- ------------------------------------------------------------------------------
Wang Labs Inc. New................................ 2,900 64,163
CONSUMER NON-DURABLES -- 2.32%
- ------------------------------------------------------------------------------
Avon Products Inc................................. 2,000 122,750
CONSUMER PRODUCTS -- 2.39%
- ------------------------------------------------------------------------------
Polaroid Corporation.............................. 2,600 126,587
DRUGS & MEDICAL PRODUCTS -- 3.21%
- ------------------------------------------------------------------------------
Becton, Dickinson & Company....................... 3,400 170,000
ELECTRICAL EQUIPMENT -- 3.97%
- ------------------------------------------------------------------------------
Avnet Inc......................................... 2,100 138,600
UCAR International Inc............................ 1,800 71,887
-----------
210,487
ENTERTAINMENT & LEISURE -- 2.23%
- ------------------------------------------------------------------------------
Sabre Group Holdings Inc.......................... 4,100 118,388
FOOD & BEVERAGES & TOBACCO -- 1.72%
- ------------------------------------------------------------------------------
Sysco Corporation................................. 2,000 91,125
HEALTH CARE -- 2.63%
- ------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Tenet Healthcare Corporation (a).................. 4,200 139,125
HOTELS & RESTAURANTS -- 3.33%
- ------------------------------------------------------------------------------
McDonald's Corporation............................ 3,700 $ 176,675
INSURANCE -- 18.91%
- ------------------------------------------------------------------------------
ACE Ltd........................................... 1,600 154,400
AFLAC Inc......................................... 3,100 158,487
American International Group Inc.................. 650 70,688
Everest Reinsurance Holdings...................... 1,200 49,500
EXEL Ltd.......................................... 2,500 158,438
General Re Corporation............................ 700 148,400
Mid Ocean Ltd..................................... 1,500 81,375
Renaissance Holdings Ltd.......................... 4,100 180,912
-----------
1,002,200
MACHINERY -- 6.58%
- ------------------------------------------------------------------------------
Caterpillar Inc................................... 4,200 203,962
Dover Corporation................................. 4,000 144,500
-----------
348,462
MISC. FINANCIAL SERVICES -- 4.87%
- ------------------------------------------------------------------------------
Countrywide Credit Industries Inc................. 2,100 90,037
Federal Home Loan Mortgage Corporation............ 4,000 167,750
-----------
257,787
RETAIL -- 3.98%
- ------------------------------------------------------------------------------
May Department Stores Company..................... 4,000 210,750
RUBBER & PLASTICS -- 2.54%
- ------------------------------------------------------------------------------
Armstrong World Industries Inc.................... 1,800 134,550
TELECOMMUNICATIONS -- 2.10%
- ------------------------------------------------------------------------------
Sprint Corporation................................ 1,900 111,388
TRANSPORTATION -- 2.60%
- ------------------------------------------------------------------------------
AMR Corporation (a)............................... 500 64,250
Canadian Pacific Ltd.............................. 2,700 73,575
-----------
137,825
TOTAL COMMON STOCKS
(IDENTIFIED COST $4,251,976).................................... 4,626,612
- ------------------------------------------------------------------------------
</TABLE>
10 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EQUITY PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
COMMERCIAL PAPER -- 12.25%
- ------------------------------------------------------------------------------
Deere (John) Capital Corporation 5.73% due
01/28/98.......................................... $100,000 $ 99,570
Ford Motor Credit Company 5.71% due 01/05/98...... 200,000 199,873
IBM Credit Corporation 5.70% due 01/09/98......... 100,000 99,874
American Express Credit Corporation, 5.75% due
01/14/98.......................................... 250,000 249,481
-----------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $648,798)...................................... 648,798
- ------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
SHORT TERM GOVERNMENT SECURITIES -- 0.28%
- ------------------------------------------------------------------------------
Federal Home Loan Bank Consolidated Dsc Note,
5.43% due 01/20/98................................ $ 15,000 $ 14,957
-----------
TOTAL SHORT TERM GOVERNMENT SECURITIES
(IDENTIFIED COST $14,957)....................................... 14,957
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $4,915,731).................................... $ 5,290,367
OTHER ASSETS LESS LIABILITIES -- 0.15%.......................... 8,134
-----------
NET ASSETS 100%................................................. $ 5,298,501
- ------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 11
<PAGE>
THE ENTERPRISE GROWTH AND INCOME PORTFOLIO
RETIREMENT SYSTEM INVESTORS INC.
New York, New York
INVESTMENT MANAGEMENT
Retirement System Investors Inc. ("RSI") has served as investment adviser to the
Growth and Income Portfolio since 1991. RSI manages more than $511 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Growth and Income Portfolio is a total return in
excess of the total return of the Lipper Growth and Income Mutual Funds Index
measured over a new period of three to five years, by investing primarily in a
broadly diversified group of large-capitalization stocks.
INVESTMENT PHILOSOPHY
RSI uses a fundamental analysis approach, including both qualitative and
quantitative factors, applied to a universe of well-established companies. The
portfolio manager seeks to identify reasonable valuations among this group of
stocks. Forward earnings projections and relative valuation parameters are used
to determine price objectives and return potential.
ANNUAL PERFORMANCE REVIEW, OCTOBER 1, 1996 THROUGH SEPTEMBER 30, 1997
Large-cap stocks showed substantial strength as the period began, weakening as
investor sentiment became more bearish, and finally rising relentlessly until a
late summer swoon softened the advance. Overall, the stock market moved tangibly
higher during the year, setting numerous new highs in the popular averages along
the way.
The economic news was very favorable during the year, meaning the economy was
growing not too fast and not too slow, but just right for investors. Inflation
news was positive with growth in both the producer and consumer price indexes
bordering on a flat trend. Interest rates have drifted lower, flows into mutual
funds have continued and stock prices have responded positively.
RSI's stock selection in the latter part of the year emphasized value, focusing
on the lower price/earning multiple issuers -- indifferent to sector -- as the
large-cap growth issues became more sensitive to investor sentiment. RSI
continued to buy on weakness in individual securities, where fundamentals remain
in place, and on corrections in the general market.
THREE MONTHS ENDED DECEMBER 31, 1997 PERFORMANCE REVIEW
Even as the final quarter of calendar 1997 saw tumbling currencies and rising
interest rates in Southeast Asia spur concern among U.S. investors that U.S.
exports would taper off and corporate profits would slide, equity markets still
managed, after incurring a sharp sell-off in October, to rebound and close just
a bit below their highs for the calendar year. It was the third consecutive
calendar year of strong gains for equities. Interest rates were declining,
inflation remained under control, job growth and income growth continued strong,
corporate earnings were up and cash inflows into equity mutual funds remained at
high levels.
The Growth and Income Portfolio's 1997 returns were enhanced by its holdings in
technology, financial services and drugs, while basic material and capital goods
issues held back portfolio results.
12 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GROWTH & INCOME PORTFOLIO-A INCEPTION
<S> <C> <C> <C>
Average Annual With Load -4.79%
Average Annual Without Load -0.03%
S&P 500* 2.43%
Lipper Growth & Income Fund Index** 2.18%
*From 7/31/97-12/31/97 Enterprise Lipper Growth &
Growth & Income Portfolio-A S&P 500 Income Fund Index
7/31/97 $9,523.28 $10,000.00 $10,000.00
9/30/97 $9,501.00 $9,957.00 $10,111.00
1997 $9,520.52 $10,243.00 $10,218.00
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GROWTH & INCOME PORTFOLIO-B INCEPTION
<S> <C> <C> <C>
Annualized Return With CDSC -5.24%
Annualized Return Without CDSC -0.24%
S&P 500* 2.43%
Lipper Growth & Income Fund Index** 2.18%
*From 7/31/97-12/31/97
Enterprise Growth & Income Portfolio-B S&P 500 Lipper Growth & Income Fund Index
7/31/97 $10,000.00 $10,000.00 $10,000.00
9/30/97 $9,913.00 $9,957.00 $10,011.00
1997 $9,475.69 $10,243.00 $10,218.00
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GROWTH & INCOME PORTFOLIO-C INCEPTION
<S> <C> <C> <C>
Cumulative Return With CDSC -1.21%
Cumulative Return Without CDSC -0.21%
S&P 500* 2.43%
Lipper Growth & Income Fund Index** 2.18%
*From 7/31/97-12/31/97
Enterprise Growth & Income Portfolio-C S&P 500 Lipper Growth & Income Fund Index
7/31/97 $10,000.00 $10,000.00 $10,000.00
9/30/97 $9,959.00 $9,957.00 $10,111.00
1997 $9,878.78 $10,243.00 $10,218.00
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 13
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ONE YEAR 5 YEAR INCEPTION
<S> <C> <C> <C>
Enterprise Growth & Income Portfolio-Y 27.65% 21.56% 19.05%
S&P 500* 33.36% 20.27% 17.84%
Lipper Growth & Income Fund Index** 26.96% 18.06% 16.21%
*From 5/31/91-12/31/97
Enterprise Growth & Income Portfolio-Y S&P 500 Lipper Growth & Income Fund Index
5/31/91 $10,000.00 $10,000.00 $10,000.00
1991 $11,311.45 $10,895.00 $10,703.00
1992 $11,889.47 $11,725.20 $11,733.70
1993 $13,791.78 $12,907.10 $13,449.70
1994 $14,584.81 $13,077.47 $13,394.02
1995 $19,864.51 $17,991.99 $17,564.92
1996 $24,723.37 $22,122.95 $21,199.11
9/30/97 $31,459.00 $28,679.00 $26,633.00
1997 $31,559.38 $29,503.16 $26,914.38
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption that at original purchase.
* The S&P 500 index is an unmanaged index that includes 500 companies that tend
to be leaders in important industries within the U.S. economy and excludes any
transaction or holding charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
FUTURE INVESTMENT STRATEGY
The Asian currency and economic problems and their impact on domestic business
and consumer behavior constitute the chief unknown in the 1998 outlook. The
risks to earnings growth and profit margins are that pricing pressures may
intensify as U.S. companies feel pressure from Asian competitors to cut prices,
just as tight labor markets are pushing up U.S. wages, and that earnings will be
negatively affected by adverse foreign currency translations and weak exports.
On balance, there may be a choppy trading range stock market in 1998 with upside
potential more in line with a marginal earnings growth projection of five
percent or more. Earnings valuations at 19 to 20 times prospective earnings,
though high by historical standards, may move a bit higher if inflation and
interest rates decline further. Conversely, downside market risks may increase
if the impact of the Asian crisis is not contained and the impact spills over
into the U.S. economy.
RSI plans to maintain its strategy of being opportunistic in seeking out good
companies at attractive prices -- usually during periods of market uncertainty
or temporary setbacks. The Asian economic crisis needs to be better understood
or discounted, which might take a few quarters. Until then, RSI plans to be
deliberate in new investments, perhaps even letting cash reserves build.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
14 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMON STOCKS -- 81.70% AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
AEROSPACE -- 6.08%
- ------------------------------------------------------------------------------
Allied Signal Inc................................. 18,600 $ 724,237
Boeing Company.................................... 2,600 127,238
Lockheed Martin Corporation....................... 5,800 571,300
-----------
1,422,775
BANKING -- 6.20%
- ------------------------------------------------------------------------------
BankAmerica Corporation........................... 5,200 379,600
Chase Manhattan Corporation....................... 5,176 566,772
Citicorp.......................................... 3,000 379,312
Morgan J P & Company Inc.......................... 1,100 124,163
-----------
1,449,847
BASIC INDUSTRIES -- 3.95%
- ------------------------------------------------------------------------------
Aluminum Company America.......................... 4,000 281,500
Du Pont (E. I.) De Nemours & Company.............. 10,700 642,669
-----------
924,169
BUILDING & CONSTRUCTION -- 2.01%
- ------------------------------------------------------------------------------
Armstrong World Industries Inc.................... 4,600 343,850
Medusa Corporation................................ 1,900 79,444
Southdown Inc..................................... 800 47,200
-----------
470,494
COMPUTER HARDWARE -- 13.77%
- ------------------------------------------------------------------------------
Cisco Systems Inc. (a)............................ 3,600 200,700
E M C Corporation (Massachusetts) (a)............. 39,300 1,078,294
Hewlett Packard Company........................... 5,200 325,000
IBM............................................... 8,200 857,412
Intel Corporation................................. 6,200 435,550
Xerox Corporation................................. 4,400 324,775
-----------
3,221,731
COMPUTER SOFTWARE -- 7.55%
- ------------------------------------------------------------------------------
BMC Software Inc. (a)............................. 900 59,063
Cadence Design Systems Inc. (a)................... 14,400 352,800
Computer Associates International Inc............. 13,650 721,744
Oracle System Corporation (a)..................... 6,000 133,875
Sterling Commerce Inc. (a)........................ 13,000 499,687
-----------
1,767,169
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
CRUDE & PETROLEUM -- 5.28%
- ------------------------------------------------------------------------------
British Petroleum (ADR)........................... 2,300 $ 183,281
Exxon Corporation................................. 7,700 471,144
Royal Dutch Petroleum (ADR)....................... 3,100 167,981
Texaco Inc........................................ 7,600 413,250
-----------
1,235,656
ELECTRICAL EQUIPMENT -- 7.68%
- ------------------------------------------------------------------------------
Dresser Industries Inc............................ 9,100 381,631
Emerson Electric Company.......................... 15,700 886,069
General Electric Company.......................... 7,200 528,300
-----------
1,796,000
ENTERTAINMENT & LEISURE -- 0.98%
- ------------------------------------------------------------------------------
Callaway Golf Company............................. 8,000 228,500
FINANCE -- 1.04%
- ------------------------------------------------------------------------------
Travelers Inc..................................... 4,500 242,438
FOOD & BEVERAGES & TOBACCO -- 3.02%
- ------------------------------------------------------------------------------
Dole Food Inc..................................... 9,400 430,050
Philip Morris Companies Inc....................... 6,100 276,406
-----------
706,456
INSURANCE -- 3.78%
- ------------------------------------------------------------------------------
Allstate Corporation.............................. 5,600 508,900
SunAmerica Inc.................................... 8,750 374,062
-----------
882,962
MACHINERY -- 6.71%
- ------------------------------------------------------------------------------
Cincinnati Milacron Inc........................... 11,200 290,500
Deere & Company................................... 5,700 332,381
Ingersoll Rand Company............................ 3,000 121,500
Snap On Inc....................................... 18,300 798,337
U. S. Filter Corporation (a)...................... 900 26,944
-----------
1,569,662
METALS & MINING -- 1.81%
- ------------------------------------------------------------------------------
Potash Corp Saskatchewan Inc...................... 5,100 423,300
MISC. FINANCIAL SERVICES -- 1.93%
- ------------------------------------------------------------------------------
Federal National Mortgage Association............. 7,900 450,794
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 15
<PAGE>
GROWTH AND INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
PHARMACEUTICALS -- 4.04%
- ------------------------------------------------------------------------------
Johnson & Johnson................................. 5,800 $ 382,075
Lilly Eli & Company............................... 800 55,700
Pfizer Inc........................................ 6,800 507,025
-----------
944,800
RETAIL -- 2.15%
- ------------------------------------------------------------------------------
Federated Department Stores Inc. (Delaware) (a)... 8,100 348,806
Tiffany & Company New............................. 4,300 155,069
-----------
503,875
TELECOMMUNICATIONS -- 3.72%
- ------------------------------------------------------------------------------
GTE Corporation................................... 6,100 318,725
Lucent Technologies Inc........................... 2,004 160,070
Tellabs Inc. (a).................................. 7,400 391,275
-----------
870,070
TOTAL COMMON STOCKS
(IDENTIFIED COST $13,160,251)................................... 19,110,698
- ------------------------------------------------------------------------------
PREFERRED STOCK -- 1.27%
- ------------------------------------------------------------------------------
INSURANCE -- 1.27%
- ------------------------------------------------------------------------------
SunAmerica Inc.................................... 6,400 298,000
-----------
TOTAL PREFERRED STOCK
(IDENTIFIED COST $259,114)...................................... 298,000
- ------------------------------------------------------------------------------
COMMERCIAL PAPER -- 8.54%
- ------------------------------------------------------------------------------
Marsh & McLennan Cos Incorporated, 6.00% due
01/05/98.......................................... $1,000,000 999,333
Merrill Lynch & Company Inc. 6.00% due 01/02/98... 1,000,000 999,833
-----------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $1,999,166).................................... 1,999,166
- ------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
SHORT TERM GOVERNMENT SECURITIES -- 5.56%
- ------------------------------------------------------------------------------
Federal Home Loan Bank Consolidated Dsc Note,
4.75% due 01/02/98................................ $1,300,000 $ 1,299,829
-----------
TOTAL SHORT TERM GOVERNMENT SECURITIES
(IDENTIFIED COST $1,299,828).................................... 1,299,829
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.25%
- ------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
2.00% due 01/02/98
Collateral: U.S. Treasury Note $525,000, 6.25% due
03/31/99 Value $536,657........................... 525,000 525,000
-----------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $525,000)...................................... 525,000
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $17,243,360)................................... $23,232,693
OTHER ASSETS LESS LIABILITIES -- 0.68%.......................... 159,191
-----------
NET ASSETS -- 100%.............................................. $23,391,884
- ------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
See notes to financial statements.
16 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
THE ENTERPRISE EQUITY INCOME PORTFOLIO
1740 ADVISERS, INC.
New York, New York
INVESTMENT MANAGEMENT
1740 Advisers has been an investment adviser to the Enterprise Equity Income
Portfolio since its inception. 1740 Advisers manages more than $1 billion for
institutional clients, and its normal investment minimum is $20 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Equity Income Portfolio is to seek a combination
of growth and income to achieve an above-average and consistent total return,
primarily from investments in dividend-paying common stocks.
INVESTMENT PHILOSOPHY
Above-average returns can be achieved by buying undervalued, out-of-favor stocks
and selling them after the market has recognized and corrected their
undervaluation. Dividend yield relative to the S&P 500 is the measure of the
value used in this strategy. It provides a disciplined approach to buy and sell
decisions, enhances stability in the portfolio and lessens overall market risk.
1997 PERFORMANCE REVIEW
Economic news has been very favorable for the investment markets this year.
Inflation has been almost unnoticeable with both the producer and consumer price
indices showing flat trends. The economy and corporate profits enjoyed sustained
growth, and bond yields were steady to lower, suggesting a good fundamental
setting for equities. It was a bookend year for the Equity Income Portfolio with
the portfolio showing strength in the middle quarters but weakness at the
beginning and end, in line with overall market returns. As a whole, though, 1997
was a good year for the Equity Income Portfolio. Generally, portfolio returns
were helped at various times throughout the year by exposure to financial,
communication, health care, energy and cyclical stocks. The portfolio's lack of
exposure to technology issues was both good and bad in terms of performance as
this sector experienced extreme periods of volatility throughout the year.
THE ENTERPRISE GROUP OF FUNDS, INC. 17
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE EQUITY INCOME
PORTFOLIO-A ONE YEAR FIVE YEAR
<S> <C> <C> <C> <C>
Average Annual With Load 21.99% 16.72%
Average Annual Without Load 28.08% 17.85%
S&P 500/Barra Value Index* 29.98% 20.68%
Lipper Equity Income Fund Index** 27.51% 17.30%
Enterprise Equity Income
Portfolio-A S&P 500/Barra Value Index
12/31/87 $ 9,522.32 $ 10,000.00
1988 $ 10,820.40 $ 12,167.00
1989 $ 12,719.71 $ 15,346.24
1990 $ 11,677.58 $ 14,295.02
1991 $ 14,428.35 $ 17,519.98
1992 $ 15,651.73 $ 19,364.83
1993 $ 17,756.58 $ 22,966.69
1994 $ 17,670.46 $ 22,822.00
1995 $ 23,571.86 $ 31,266.14
1996 $ 27,782.03 $ 38,141.56
1997 $ 35,583.78 $ 49,576.40
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE EQUITY INCOME
PORTFOLIO-A TEN YEAR
<S> <C>
Average Annual With Load 13.53%
Average Annual Without Load 14.09%
S&P 500/Barra Value Index* 17.36%
Lipper Equity Income Fund Index** 15.45%
Enterprise Equity Income
Portfolio-A Lipper Equity Income Fund Index
12/31/87 $ 10,000.00
1988 $ 11,706.00
1989 $ 14,356.24
1990 $ 13,622.63
1991 $ 17,257.15
1992 $ 18,938.00
1993 $ 21,748.40
1994 $ 21,548.31
1995 $ 27,976.18
1996 $ 32,981.11
1997 $ 42,054.22
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE EQUITY INCOME
PORTFOLIO-B ONE YEAR INCEPTION
<S> <C> <C> <C>
Annualized Return With CDSC 23.35% 23.57%
Annualized Return Without CDSC 27.35% 24.61%
S&P 500/Barra Value Index* 29.98% 27.61%
Lipper Equity Income Fund Index** 27.51% 23.89%
*From 5/1/95-12/31/97
Enterprise Equity Income
Portfolio-B S&P 500/Barra Value Index Lipper Equity Income Fund Index
5/1/95 $10,000.00 $10,000.00 $10,000.00
1995 $12,057.10 $12,097.02 $11,790.00
1996 $14,133.33 $14,757.16 $13,899.23
1997 $17,598.80 $19,181.35 $17,722.91
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE EQUITY INCOME
PORTFOLIO-C INCEPTION
<S> <C> <C> <C>
Cumulative Return With CDSC 17.21%
Cumulative Return Without CDSC 18.21%
S&P 500/Barra Value Index* 23.11%
Lipper Equity Income Fund Index** 21.27%
*From 5/1/97-12/31/97
Enterprise Equity Income
Portfolio-C S&P 500/Barra Value Index Lipper Equity Income Fund Index
5/1/97 $10,000.00 $10,000.00 $10,000.00
1997 $11,720.00 $12,311.00 $12,127.00
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original price.
* The S&P 500/Barra Value Index is an unmanaged index that excludes transaction
or holding charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
18 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
FUTURE INVESTMENT STRATEGY
The turmoil in Southeast Asia has clearly increased the risk level for the U.S.
stock market. Uncertainty has risen and the ultimate impact on U.S. companies'
business earnings is unknown as the situation changes day-by-day. Earnings
growth may be slower as a result of less demand from a large and fast-growing
part of the world. Pricing power, which was already weak, may likely weaken
further as a result of the deflationary forces at work in Southeast Asia. The
impact on the U.S. economy might be slightly positive as a result of slower
growth, lower inflation and interest rates, and a stronger dollar. The U.S. may
be viewed as a safe haven and this should help bonds, but the stock market will
continue to consolidate or correct until the impact on earnings becomes clearer.
The Equity Income Portfolio is defensive by nature as a result of its
above-average dividend yield requirement. The current strategy for the portfolio
is also defensive. The cyclical or economically sensitive sectors have been
reduced, especially those related to basic materials and capital spending.
Defensive and domestic sectors are being emphasized, particularly telephones,
electric and gas utilities and health care. Financial stocks continue as an
overweight but emphasis is being slowly switched toward domestic names in
regional banks and insurance.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
THE ENTERPRISE GROUP OF FUNDS, INC. 19
<PAGE>
EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR
PRINCIPAL
COMMON STOCKS -- 89.31% AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
AEROSPACE -- 2.69%
- ----------------------------------------------------------------------------
Northrop Grumman Corporation...................... 10,000 $ 1,150,000
Timken Company.................................... 30,000 1,031,250
United Technologies Corporation................... 14,000 1,019,375
------------
3,200,625
AUTOMOTIVE -- 2.71%
- ----------------------------------------------------------------------------
Eaton Corporation................................. 15,000 1,338,750
Ford Motor Company Delaware....................... 20,000 973,750
General Motors Corporation........................ 15,000 909,375
------------
3,221,875
BANKING -- 9.50%
- ----------------------------------------------------------------------------
BankBoston Corporation............................ 18,000 1,690,875
Bankers Trust New York Corporation................ 10,000 1,124,375
Chase Manhattan Corporation....................... 12,000 1,314,000
First Union Corporation........................... 25,000 1,281,250
Fleet Financial Group Inc......................... 10,000 749,375
Mellon Bank Corporation........................... 18,000 1,091,250
NationsBank Corporation........................... 15,000 912,188
Washington Mutual Inc............................. 22,500 1,435,781
Wells Fargo & Company............................. 5,000 1,697,187
------------
11,296,281
CAPITAL GOODS & SERVICES -- 8.18%
- ----------------------------------------------------------------------------
Cooper Industries Inc............................. 20,000 980,000
General Electric Company.......................... 50,000 3,668,750
General Signal Corporation........................ 30,000 1,265,625
Harsco Corporation................................ 25,000 1,078,125
Textron Inc....................................... 20,000 1,250,000
Xerox Corporation................................. 20,000 1,476,250
------------
9,718,750
CHEMICALS -- 2.91%
- ----------------------------------------------------------------------------
Du Pont (E. I.) De Nemours & Company.............. 24,000 1,441,500
Monsanto Company.................................. 20,000 840,000
Olin Corporation.................................. 25,000 1,171,875
------------
3,453,375
COMMUNICATIONS -- 0.71%
- ----------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
Frontier Corporation.............................. 35,000 842,188
CONSUMER DURABLES -- 2.39%
- ----------------------------------------------------------------------------
Dana Corporation.................................. 30,000 $ 1,425,000
Emerson Electric Company.......................... 25,000 1,410,937
------------
2,835,937
CONSUMER NON-DURABLES -- 1.54%
- ----------------------------------------------------------------------------
Avon Products Inc................................. 20,000 1,227,500
Eastman Kodak Company............................. 10,000 608,125
------------
1,835,625
CONSUMER PRODUCTS -- 1.24%
- ----------------------------------------------------------------------------
Colgate Palmolive Company......................... 20,000 1,470,000
CRUDE & PETROLEUM -- 0.85%
- ----------------------------------------------------------------------------
MCN Energy Group Inc.............................. 5,000 201,875
Royal Dutch Pete Co............................... 15,000 812,813
------------
1,014,688
ELECTRONICS -- 1.24%
- ----------------------------------------------------------------------------
Amp Inc........................................... 35,000 1,470,000
ENERGY -- 10.50%
- ----------------------------------------------------------------------------
Amoco Corporation................................. 7,000 595,875
Atlantic Richfield Company........................ 10,000 801,250
British Petroleum PLC (ADR)....................... 11,088 883,575
Chevron Corporation............................... 10,000 770,000
Consolidated Natural Gas Company.................. 20,000 1,210,000
Dresser Industries Inc............................ 35,000 1,467,812
El Paso Natural Gas Company....................... 20,000 1,330,000
Exxon Corporation................................. 17,000 1,040,188
Mobil Corporation................................. 12,000 866,250
Questar Corporation............................... 16,000 714,000
Texaco Inc........................................ 15,000 815,625
Williams Companies Inc............................ 70,000 1,986,250
------------
12,480,825
FINANCE -- 3.89%
- ----------------------------------------------------------------------------
Bank Of New York Company Inc...................... 20,000 1,156,250
BankAmerica Corporation........................... 20,000 1,460,000
H F Ahmanson & Company............................ 30,000 2,008,125
------------
4,624,375
</TABLE>
20 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EQUITY INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
FOOD & BEVERAGES & TOBACCO -- 2.77%
- ----------------------------------------------------------------------------
Fortune Brands Inc................................ 20,000 $ 741,250
Gallaher Group P L C.............................. 15,000 320,625
General Mills Inc................................. 8,000 573,000
Philip Morris Companies Inc....................... 25,000 1,132,812
Quaker Oats Company............................... 10,000 527,500
------------
3,295,187
FOREST PRODUCTS -- 0.10%
- ----------------------------------------------------------------------------
Timber Group...................................... 5,000 113,438
HOTELS & RESTAURANTS -- 0.45%
- ----------------------------------------------------------------------------
Felcor Suite Hotels Inc........................... 15,000 532,500
INSURANCE -- 3.19%
- ----------------------------------------------------------------------------
Cigna Corporation................................. 8,000 1,384,500
Lincoln National Corporation...................... 15,000 1,171,875
St Paul Companies Inc............................. 15,000 1,230,937
------------
3,787,312
MACHINERY -- 1.14%
- ----------------------------------------------------------------------------
Pitney Bowes Inc.................................. 15,000 1,349,063
MISC. FINANCIAL SERVICES -- 0.96%
- ----------------------------------------------------------------------------
Federal National Mortgage Association............. 20,000 1,141,250
PAPER & FOREST PRODUCTS -- 0.69%
- ----------------------------------------------------------------------------
Georgia Pacific Corporation....................... 5,000 303,750
International Paper Company....................... 12,000 517,500
------------
821,250
PHARMACEUTICALS -- 7.75%
- ----------------------------------------------------------------------------
American Home Products Corporation................ 18,000 1,377,000
Baxter International Inc.......................... 20,000 1,008,750
Bristol Myers Squibb Company...................... 12,000 1,135,500
Lilly Eli & Company............................... 20,000 1,392,500
Merck & Company Inc............................... 9,000 956,250
Schering Plough Corporation....................... 14,000 869,750
Smithkline Beecham P L C (ADR).................... 24,000 1,234,500
Warner-Lambert Company............................ 10,000 1,240,000
------------
9,214,250
PUBLISHING -- 1.37%
- ----------------------------------------------------------------------------
McGraw Hill Inc................................... 22,000 1,628,000
<CAPTION>
NUMBER
OF SHARES
OR
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
RAW MATERIALS -- 3.38%
- ----------------------------------------------------------------------------
Carpenter Technology Corporation.................. 15,000 $ 720,937
Freeport McMoRan Copper & Gold Inc................ 10,000 153,125
Kimberly Clark Corporation........................ 12,000 591,750
Minnesota Mining & Manufacturing Company.......... 10,000 820,625
Reynolds Metals Company........................... 10,000 600,000
Union Camp Corporation............................ 10,000 536,875
Weyerhaeuser Company.............................. 12,000 588,750
------------
4,012,062
REAL ESTATE -- 3.29%
- ----------------------------------------------------------------------------
Bay Apartment Communities......................... 10,000 390,000
Crescent Real Estate Equities..................... 15,000 590,625
Developers Diversified Realty..................... 10,000 382,500
Equity Office Properties Trust.................... 15,000 473,438
Equity Residential Properties Trust............... 10,000 505,625
Health Care Property Investors Inc................ 15,000 567,187
Irvine Apartment Communities Inc.................. 15,000 477,187
Public Storage Inc................................ 18,000 528,750
------------
3,915,312
RETAIL -- 0.88%
- ----------------------------------------------------------------------------
J C Penney Inc.................................... 6,000 361,875
Sears Roebuck & Company........................... 15,000 678,750
------------
1,040,625
TECHNOLOGY -- 1.95%
- ----------------------------------------------------------------------------
Harris Corporation Delaware....................... 30,000 1,376,250
Thomas & Betts Corporation........................ 20,000 945,000
------------
2,321,250
TELECOMMUNICATIONS -- 9.16%
- ----------------------------------------------------------------------------
Ameritech Corporation............................. 20,000 1,610,000
AT & T Corporation................................ 25,000 1,531,250
Bell Atlantic Corporation......................... 25,000 2,275,000
BellSouth Corporation............................. 20,000 1,126,250
GTE Corporation................................... 20,000 1,045,000
SBC Communications Inc............................ 25,000 1,831,250
Sprint Corporation................................ 25,000 1,465,625
------------
10,884,375
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 21
<PAGE>
EQUITY INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
TRANSPORTATION -- 1.17%
- ----------------------------------------------------------------------------
Norfolk Southern Corporation...................... 25,000 $ 770,313
Union Pacific Corporation......................... 10,000 624,375
------------
1,394,688
UTILITIES -- 2.71%
- ----------------------------------------------------------------------------
American Electric Power Inc....................... 17,000 877,625
Carolina Power & Light Company.................... 13,000 551,688
FPL Group Inc..................................... 15,000 887,812
U.S. West Communications Group.................... 20,000 902,500
------------
3,219,625
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $73,191,130)................................. 106,134,731
- ----------------------------------------------------------------------------
PREFERRED STOCK -- 0.24%
- ----------------------------------------------------------------------------
INSURANCE -- 0.24%
- ----------------------------------------------------------------------------
Aetna Inc......................................... 4,000 286,000
------------
TOTAL PREFERRED STOCK
(IDENTIFIED COST $305,489).................................... 286,000
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 8.89%
- ----------------------------------------------------------------------------
Associates Corporation of North America, 5.65% due
01/20/98.......................................... $2,000,000 1,994,036
Bell Atlantic Financial Services 6.00% due
01/21/98.......................................... 500,000 498,333
CIT Group Holdings Inc. 5.56% due 01/20/98........ 400,000 398,826
Merrill Lynch & Company Inc. 5.63% due 01/16/98... 1,300,000 1,296,950
National Rural Utilities Cooperative Finance,
5.57% due 02/12/98................................ 1,500,000 1,490,253
Sears Roebuck Acceptance Corporation, 5.81% due
01/09/98.......................................... 300,000 299,613
<CAPTION>
NUMBER
OF SHARES
OR
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------
Ford Motor Credit Company 5.65% due 02/02/98...... $1,500,000 $ 1,492,467
Ford Motor Credit Company 5.75% due 01/30/98...... 1,500,000 1,493,052
Prudential Funding Corporation 5.51% due
01/06/98.......................................... 1,300,000 1,299,005
Prudential Funding Corporation 5.59% due
01/07/98.......................................... 300,000 299,721
------------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $10,562,256)................................. 10,562,256
- ----------------------------------------------------------------------------
SHORT TERM GOVERNMENT SECURITIES -- 1.09%
- ----------------------------------------------------------------------------
Federal National Mortgage Association Discount
Notes, 5.45% due 01/16/98......................... 1,300,000 1,297,048
------------
TOTAL SHORT TERM GOVERNMENT SECURITIES
(IDENTIFIED COST $1,297,048).................................. 1,297,048
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.37%
- ----------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
2.00% due 01/02/98
Collateral: U.S. Treasury Bond $340,000, 8.5% due
2/15/20 Value $450,819............................ 440,000 440,000
------------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $440,000).................................... 440,000
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $85,795,923)................................. $118,720,035
OTHER ASSETS LESS LIABILITIES -- 0.10%........................ 123,685
------------
NET ASSETS 100%............................................... $118,843,720
- ----------------------------------------------------------------------------
</TABLE>
ADR American Depository Receipt
See notes to financial statements.
22 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
THE ENTERPRISE CAPITAL APPRECIATION PORTFOLIO
PROVIDENT INVESTMENT COUNSEL, INC.
Pasadena, California
INVESTMENT MANAGEMENT
Provident Investment Counsel has been investment adviser to the Enterprise
Capital Appreciation Portfolio since inception. Provident Investment Counsel
manages approximately $18 billion for institutional clients, and its usual
investment minimum is $5 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Capital Appreciation Portfolio is to seek
maximum capital appreciation, primarily through investment in common stock of
companies that demonstrate accelerating earnings momentum and consistently
strong financial characteristics.
INVESTMENT PHILOSOPHY
Provident's investment philosophy is based on the belief that, over time, the
reason the price of a company's stock increases is because its earnings are
increasing. The investment strategy seeks to create a portfolio of companies
that, in aggregate, is growing its earnings at a faster and more consistent rate
than is the overall market.
1997 PERFORMANCE REVIEW
U.S. equity investors enjoyed a third straight year of excellent returns in
1997. Notably, almost all of the year's gains was made in only three
months--May, June and July. The U.S. equity markets did manage to post a modest
advance in the fourth quarter, but only with the help of a year-end rally.
Fourth-quarter gains were small in comparison to the significant returns of the
preceding periods, but were achieved in an environment of high uncertainty and
increased volatility.
The longevity of the current economic expansion linked with continued strong
corporate earnings growth provided the fundamental underpinning for the year's
advance. Inflation remained surprisingly tame despite the lowest unemployment
levels in 24 years. Despite a generally favorable economic environment, it was
also a year of increasing volatility in the equity markets.
As in previous years, liquidity provided support for stocks. During the first
four months of 1997, cash flow found the path of least resistance, favoring
mega-capitalization shares. In May, the market began to broaden as investors
focused on the excellent earnings growth and valuation opportunities in other
large, midsize and small-capitalization stocks. The Capital Appreciation
Portfolio participated fully in this broad market move through the third
quarter.
Fears related to the direct earnings impact on U.S. companies roiled domestic
markets during the fourth quarter as the extent of Asia's economic and currency
crisis became apparent to U.S. investors. Additionally, a flight to liquidity
saw money flows returning to the same large-capitalization shares favored in the
first quarter.
THE ENTERPRISE GROUP OF FUNDS, INC. 23
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE CAPITAL APPRECIATION
PORTFOLIO-A ONE YEAR FIVE YEAR
<S> <C> <C> <C> <C>
Average Annual With Load 14.55% 11.36%
Average Annual Without Load 20.27% 12.45%
S&P 500/Barra Growth Index* 36.54% 19.65%
Lipper Cap. Appr. Fund Index** 19.86% 15.40%
Enterprise Capital Appreciation
Portfolio-A S&P 500/Barra Growth Index
12/31/87 $ 9,526.76 $ 10,000.00
1988 $ 10,092.65 $ 11,195.00
1989 $ 13,551.40 $ 15,269.98
1990 $ 14,071.77 $ 15,300.52
1991 $ 22,379.75 $ 21,171.33
1992 $ 23,684.49 $ 22,244.72
1993 $ 25,036.87 $ 22,618.43
1994 $ 24,170.60 $ 23,326.38
1995 $ 30,382.44 $ 32,218.40
1996 $ 35,401.62 $ 39,944.37
1997 $ 42,577.53 $ 54,540.05
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE CAPITAL APPRECIATION
PORTFOLIO-A TEN YEAR
<S> <C>
Average Annual With Load 15.59%
Average Annual Without Load 16.15%
S&P 500/Barra Growth Index* 18.49%
Lipper Cap. Appr. Fund Index** 15.00%
Enterprise Capital Appreciation
Portfolio-A Lipper Cap. Appr. Fund Index
12/31/87 $ 10,000.00
1988 $ 11,285.00
1989 $ 14,478.66
1990 $ 13,352.22
1991 $ 18,367.31
1992 $ 19,755.88
1993 $ 22,867.43
1994 $ 22,304.89
1995 $ 29,351.00
1996 $ 33,738.98
1997 $ 40,439.54
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE CAPITAL APPRECIATION
PORTFOLIO-B ONE YEAR INCEPTION
<S> <C> <C>
Annualized Return With CDSC 15.60% 19.49%
Annualized Return Without CDSC 19.60% 20.59%
S&P 500/Barra Growth Index* 36.54% 31.43%
Lipper Cap Appr. Fund Index** 19.86% 21.06%
*From 5/1/95-12/31/97
Enterprise Capital Appreciation
Portfolio-B S&P 500/Barra Growth Index
5/1/97 $10,000.00 $10,000.00
1995 $11,898.80 $12,258.67
1996 $13,787.14 $15,198.30
1997 $16,088.73 $20,751.75
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE CAPITAL APPRECIATION
PORTFOLIO-B
<S> <C>
Annualized Return With CDSC
Annualized Return Without CDSC
S&P 500/Barra Growth Index*
Lipper Cap Appr. Fund Index**
*From 5/1/95-12/31/97
Lipper Cap Appr. Fund Index
5/1/97 $10,000.00
1995 $12,093.00
1996 $13,900.90
1997 $16,661.62
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE CAPITAL APPRECIATION
PORTFOLIO-C INCEPTION
<S> <C> <C>
Cumulative Return With CDSC 21.35%
Cumulative Return Without CDSC 22.35%
S&P 500/Barra Growth Index* 21.99%
Lipper Cap. Appr. Fund Index** 23.11%
*From 5/1/97-12/31/97
Enterprise Capital Appreciation
Portfolio-C S&P 500/Barra Growth Index
5/1/97 $10,000.00 $10,000.00
1997 $12,134.60 $12,199.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE CAPITAL APPRECIATION
PORTFOLIO-C
<S> <C>
Cumulative Return With CDSC
Cumulative Return Without CDSC
S&P 500/Barra Growth Index*
Lipper Cap. Appr. Fund Index**
*From 5/1/97-12/31/97
Lipper Cap. Appr. Fund Index
5/1/97 $10,000.00
1997 $12,311.00
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than original purchase.
* The S&P 500/Barra Growth Index is an unmanaged index that excludes any
transaction or holding charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
24 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
FUTURE INVESTMENT STRATEGY
In 1998, visible and sustainable earnings and revenue growth may become a key
focal point for investors, particularly in light of slower domestic growth
resulting from the Asian economic crisis. True to its "bottom-up approach," the
Capital Appreciation Portfolio invests in established, profitable, well-managed
businesses with diversified customer bases. These companies share the superior
financial characteristics of high earnings and revenue growth, high return on
equity and reinvestment rates. Furthermore, these companies strive to maintain
high profit margins regardless of the economic environment, an especially
important factor given potentially increasing foreign price competition.
In the environment of global volatility and slowing earnings growth, portfolios
that exhibit consistent, strong revenue and earnings growth may prove attractive
to investors in 1998. The companies in this portfolio are growing earnings at
twice the rate of the 20 largest S&P 500 companies. The earnings growth in this
portfolio is complemented by excellent revenue growth, high profit margins, high
returns to equity and low debt levels. Thus, the quality of earnings growth may
be superior because it may be more visible and sustainable than that of the
average company. Despite the gains of the last three years, these companies
still offer reasonable price-to-earnings valuation levels and remain deserving
investment selections in 1998.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
THE ENTERPRISE GROUP OF FUNDS, INC. 25
<PAGE>
CAPITAL APPRECIATION PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMON STOCKS -- 98.56% AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMPUTER HARDWARE -- 1.04%
- ---------------------------------------------------------------------------------
Dell Computer Corporation (a)..................... 15,000 $ 1,260,000
COMPUTER SERVICES -- 3.67%
- ---------------------------------------------------------------------------------
HBO & Company..................................... 60,000 2,880,000
Sungard Data Systems Inc. (a)..................... 50,000 1,550,000
-------------
4,430,000
COMPUTER SOFTWARE -- 4.12%
- ---------------------------------------------------------------------------------
Compusa Inc. (a).................................. 35,000 1,085,000
Microsoft Corporation (a)......................... 21,200 2,740,100
Sterling Commerce Inc. (a)........................ 30,000 1,153,125
-------------
4,978,225
CONGLOMERATES -- 1.14%
- ---------------------------------------------------------------------------------
Cendant Corporation (a)........................... 40,000 1,375,000
CRUDE & PETROLEUM -- 2.14%
- ---------------------------------------------------------------------------------
Petroleum Geo Services (ADR) (a).................. 40,000 2,590,000
ENERGY -- 6.53%
- ---------------------------------------------------------------------------------
AES Corporation (a)............................... 80,000 3,730,000
Global Marine Inc. (a)............................ 100,000 2,450,000
Tosco Corporation................................. 45,000 1,701,563
-------------
7,881,563
FINANCE -- 11.43%
- ---------------------------------------------------------------------------------
Associates First Capital Corporation.............. 44,900 3,193,512
CIT Group Inc..................................... 45,000 1,451,250
MBNA Corporation.................................. 207,168 5,658,276
State Street Corporation.......................... 60,000 3,491,250
-------------
13,794,288
HEALTH CARE -- 9.55%
- ---------------------------------------------------------------------------------
Healthsouth Corporation (a)....................... 110,000 3,052,500
Medtronic Inc..................................... 70,600 3,693,263
Omnicare Inc...................................... 58,000 1,798,000
Pfizer Inc........................................ 40,000 2,982,500
-------------
11,526,263
INSURANCE -- 3.53%
- ---------------------------------------------------------------------------------
American International Group Inc.................. 14,775 1,606,781
MGIC Investment Corporation....................... 40,000 2,660,000
-------------
4,266,781
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
MACHINERY -- 7.40%
- ---------------------------------------------------------------------------------
Cooper Cameron Corporation (a).................... 22,000 $ 1,342,000
Tyco International Ltd. New....................... 135,200 6,092,450
United States Filter Corporation (a).............. 50,000 1,496,875
-------------
8,931,325
MEDICAL INSTRUMENTS -- 1.55%
- ---------------------------------------------------------------------------------
Guidant Corporation............................... 30,000 1,867,500
MEDICAL SERVICES -- 3.46%
- ---------------------------------------------------------------------------------
Health Management Associates Inc. (a)............. 44,095 1,113,399
Quintiles Transnational Corporation (a)........... 80,000 3,060,000
-------------
4,173,399
MISC. FINANCIAL SERVICES -- 2.63%
- ---------------------------------------------------------------------------------
Federal National Mortgage Association............. 55,600 3,172,675
OIL SERVICES -- 10.44%
- ---------------------------------------------------------------------------------
Nabors Industries Inc. (a)........................ 48,000 1,509,000
Parker Drilling Company (a)....................... 90,100 1,098,094
Reading & Bates Corporation (a)................... 65,000 2,721,875
Santa Fe International Corporation................ 60,000 2,441,250
Schlumberger Ltd.................................. 60,000 4,830,000
-------------
12,600,219
PAPER PRODUCTS -- 0.68%
- ---------------------------------------------------------------------------------
Staples Inc. (a).................................. 29,350 818,131
PHARMACEUTICALS -- 8.68%
- ---------------------------------------------------------------------------------
Dura Pharmaceuticals Inc. (a)..................... 30,000 1,376,250
Elan PLC (ADR) (a)................................ 54,000 2,764,125
Lilly Eli & Company............................... 60,000 4,177,500
McKesson Corporation.............................. 20,000 2,163,750
-------------
10,481,625
RETAIL -- 13.37%
- ---------------------------------------------------------------------------------
Costco Companies Inc. (a)......................... 65,000 2,900,625
CVS Corporation................................... 32,000 2,050,000
Dollar General Corporation........................ 70,000 2,537,500
Family Dollar Stores Inc.......................... 70,000 2,051,875
General Nutrition Companies Inc. (a).............. 11,000 374,000
Kohls Corporation (a)............................. 38,000 2,588,750
Proffitts Inc. (a)................................ 50,000 1,421,875
</TABLE>
26 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
CAPITAL APPRECIATION PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
Safeway Inc. (a).................................. 35,000 $ 2,213,750
-------------
16,138,375
TECHNOLOGY -- 1.98%
- ---------------------------------------------------------------------------------
Lucent Technologies Inc........................... 30,000 2,396,250
TELECOMMUNICATIONS -- 5.22%
- ---------------------------------------------------------------------------------
ADC Telecommunications Inc. (a)................... 40,000 1,670,000
Ericsson L M Tel Company (ADR).................... 40,000 1,492,500
Tellabs Inc. (a).................................. 28,000 1,480,500
Worldcom Inc. (a)................................. 55,000 1,663,750
-------------
6,306,750
TOTAL COMMON STOCKS
(IDENTIFIED COST $75,336,801 )................................... 118,988,369
- ---------------------------------------------------------------------------------
SHORT TERM INSTRUMENTS -- 1.66%
- ---------------------------------------------------------------------------------
Ford Motor Credit Company
Discount Cp Yrs 1+2, 5.84% due
01/22/98.......................................... $ 2,000,000 2,000,000
-------------
TOTAL SHORT TERM INSTRUMENTS
(IDENTIFIED COST $2,000,000)..................................... 2,000,000
- ---------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.96%
- ---------------------------------------------------------------------------------
State Street Bank & Trust
Repurchase Agreement, 4.00% due
01/02/98
Collateral: U.S. Treasury Bond,
$895,000, 8.5% due 2/15/20 Value
$1,186,715........................................ $ 1,160,000 $ 1,160,000
-------------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $1,160,000)..................................... 1,160,000
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $78,496,801).................................... $ 122,148,369
OTHER ASSETS LESS LIABILITIES -- (1.18)%......................... (1,422,824)
-------------
NET ASSETS 100%.................................................. $ 120,725,545
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
ADR American Depository Receipts
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 27
<PAGE>
THE ENTERPRISE SMALL COMPANY GROWTH PORTFOLIO
PILGRIM BAXTER & ASSOCIATES, LTD.
Wayne, Pennsylvania
INVESTMENT MANAGEMENT
Pilgrim Baxter & Associates, Ltd., which has approximately $14 billion in assets
under management, became manager of the portfolio on April 1, 1997. Pilgrim
Baxter's normal investment minimum for a separate account is $20 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Small Company Growth Portfolio is to seek
capital appreciation by investing primarily in common stocks of
small-capitalization companies believed by the portfolio manager to have an
outlook for strong earnings growth and potential for significant capital
appreciation.
INVESTMENT PHILOSOPHY
Pilgrim Baxter is a growth-stock investor, and believes the mission of any
portfolio of equity investments is to capture the growth exhibited by the
underlying assets in investment returns over time. Given that premise, superior
returns may be achieved by investing in those companies which exhibit
exceptional growth characteristics and internal reinvestment rates capable of
funding that growth into the future. Pilgrim Baxter focuses on bottom-up stock
selection using a combination of rigorous fundamental research and quantitative
techniques.
ANNUAL PERFORMANCE REVIEW, OCTOBER 1, 1996 THROUGH SEPTEMBER 30, 1997
The last 12 months have proven overall to be strong for companies in the
small-cap universe. While patience has been required to experience performance
commensurate with earnings, there appears to be no indication of any
deterioration in fundamentals.
Strong returns from the technology sector, as well as contributions from energy
and finance, have helped portfolio performance recover from earlier weakness.
Portfolio returns were further supported by stable-to-lower interest rates and
an improved investor attitude, as the year unfolded, toward small-cap growth
stocks in anticipation of stronger earnings.
Two groups that have been especially solid performers for most of this period
have been the financial and energy sectors. However, in both cases, stock
selection was key to participating in the returns enjoyed by these groups. While
Pilgrim Baxter increased exposure to these stocks, especially in the energy
sector, we have been determined to avoid being overwhelmed by the euphoria in a
group that has not historically had solid and sustainable fundamentals. Our
exposure to this or any sector is grounded in our bottom-up approach to stock
selection and could change dramatically as we evaluate each current or potential
position on its own merits.
THREE MONTHS ENDED DECEMBER 31, 1997 PERFORMANCE REVIEW
During the three months ended December 31, 1997, exogenous factors relating to
foreign economies and the general fear of a slowing economy hit small-cap stocks
especially hard as the year came to a close. With investors fearful of the
implications of a broad-based selling panic in the emerging Asian markets,
fourth-quarter returns were negatively impacted.
Financials, energy and technology sold off during October and November. The
continued drop in interest rates and expected solid earnings would normally put
a floor under stock valuations. Unfortunately, the far reaching impact of the
Asian crisis is as yet undetermined.
28 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY GROWTH PORTFOLIO-A INCEPTION
<S> <C> <C> <C>
Average Annual With Load -8.17%
Average Annual Without Load -3.59%
Russell 1000 Growth* 0.28%
Lipper Small Cap Fund Index** 2.58%
*From 7/31/97-12/31/97
Enterprise Small Lipper Small Cap
Company Growth Portfolio-A Russell 1000 Growth Fund Index
7/31/97 $9,524.36 $10,000.00 $10,000.00
9/30/97 $10,207.00 $10,978.00 $10,897.00
1997 $9,182.63 $10,028.00 $10,258.00
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
decreased $1,024 compared to a decrease of $368 and an increase of $150 in the
Russell 2000 Index and the Russell 1000 Growth Index, respectively.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY GROWTH PORTFOLIO-B INCEPTION
<S> <C> <C>
Annualized Return With CDSC -8.79%
Annualized Return Without CDSC -3.79%
Russell 1000 Growth* 0.28%
Lipper Small Cap Fund Index** 2.58%
*From 7/31/97-12/31/97
Enterprise Small Company Growth Portfolio-B Russell 1000 Growth
7/31/97 $10,000.00 $10,000.00
9/30/97 $10,699.00 $10,978.00
1997 $9,120.95 $10,028.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY GROWTH PORTFOLIO-B
<S> <C>
Annualized Return With CDSC
Annualized Return Without CDSC
Russell 1000 Growth*
Lipper Small Cap Fund Index**
*From 7/31/97-12/31/97
Lipper Small Cap Fund Index
7/31/97 $10,000.00
9/30/97 $10,897.00
1997 $10,258.00
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
decreased $1,578 compared to a decrease of $368 and an increase of $150 in the
Russell 2000 Index and the Russell 1000 Growth Index, respectively.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY GROWTH PORTFOLIO-C INCEPTION
<S> <C> <C>
Cumulative Return With CDSC -4.83%
Cumulative Return Without CDSC -3.83%
Russell 1000 Growth* 0.28%
Lipper Small Cap Fund Index** 2.58%
*From 7/31/97-12/31/97
Enterprise Small Company Growth Portfolio-C Russell 1000 Growth
7/31/97 $10,000.00 $10,000.00
9/30/97 $10,695.00 $10,976.00
1997 $9,516.92 $10,028.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY GROWTH PORTFOLIO-C
<S> <C>
Cumulative Return With CDSC
Cumulative Return Without CDSC
Russell 1000 Growth*
Lipper Small Cap Fund Index**
*From 7/31/97-12/31/97
Lipper Small Cap Fund Index
7/31/97 $10,000.00
9/30/97 $10,897.00
1997 $10,258.00
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
decreased $1,178 compared to a decrease of $442 and an increase of $150 in the
Russell 2000 Index and the Russell 1000 Growth Index, respectively.
THE ENTERPRISE GROUP OF FUNDS, INC. 29
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ONE YEAR 5 YEAR
<S> <C> <C>
Enterprise Small Company Growth Portfolio-Y 9.95% 22.16%
Russell 1000 Growth Index* 30.48% 18.41%
Lipper Small Cap Fund Index** 15.05% 15.05%
*From 5/31/91-12/31/97
Enterprise Small Company Growth Portfolio-Y Russell 1000 Growth Index
5/31/91 $10,000.00 $10,000.00
1991 $12,062.05 $11,511.60
1992 $14,075.21 $12,088.33
1993 $17,696.76 $12,438.89
1994 $19,531.91 $12,769.77
1995 $27,258.73 $17,518.84
1996 $34,828.48 $21,569.20
9/30/97 $42,531.00 $27,627.00
1997 $38,293.92 $28,143.49
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
INCEPTION
<S> <C>
Enterprise Small Company Growth Portfolio-Y 22.59%
Russell 1000 Growth Index* 17.00%
Lipper Small Cap Fund Index** 15.53%
*From 5/31/91-12/31/97
Lipper Small Cap Fund Index
5/31/91 $10,000.00
1991 $11,557.00
1992 $12,850.23
1993 $15,024.49
1994 $14,952.37
1995 $19,680.31
1996 $22,506.40
9/30/97 $28,213.00
1997 $25,893.61
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
decreased $4,237 compared to a decrease of $945 and an increase of $420 in the
Russell 2000 Index and the Russell 1000 Growth Index, respectively.
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than original purchase.
* The Russell 1000 Growth Index is an unmanaged index that excludes any
transaction or holding charges. The Russell 1000 Growth Index replaces the
Russell 2000 Index as the broad-based comparison to the Small Company Growth
Portfolio as it more appropriately reflects the securities market in which the
Portfolio invests.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
FUTURE INVESTMENT STRATEGY
For 1998, the Asian contagion has become the focal point of the investment
outlook. The recent developments in Asia have added a large dose of uncertainty
to the global economic expansion, the deflationary impact of the crisis on world
trade and how government policymakers respond to the challenges. While the Asian
situation will contribute to near-term financial market volatility, the focus
will clearly turn to the solid domestic fundamentals in the United States. The
resultant impact from Southeast Asia, Brazil and others may probably be modestly
negative on economic growth and earnings, with milder industrial commodity and
goods-related inflation, leading to a friendlier central bank policy. The
International Monetary Fund-led financial rescue package should help alleviate
the immediate financial pressures in these countries and with time provide the
needed catalyst to more sound economic expansion.
As always, the combination of change and confusion has produced a difficult
environment for smaller-cap growth stocks with a notable weakening in technology
stocks in November. Despite this and the style's relative underperformance
during the past 18 months, the prospects for a small-cap recovery and the
likelihood of superior relative returns going forward may be favorable.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
30 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
SMALL COMPANY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMON STOCKS -- 96.57% AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
ADVERTISING -- 1.35%
- ------------------------------------------------------------------------------
Lamar Advertising Company (a)..................... 7,500 $ 298,125
APPAREL & TEXTILES -- 3.90%
- ------------------------------------------------------------------------------
North Face Inc. (a)............................... 11,000 242,000
Stage Stores Inc. (a)............................. 6,100 227,987
Wolverine World Wide Inc.......................... 17,240 390,055
-----------
860,042
BUSINESS SERVICES -- 3.45%
- ------------------------------------------------------------------------------
Caribiner International Inc. (a).................. 4,600 204,700
Central Parking Corporation....................... 4,850 219,766
Pre Paid Legal Services Inc....................... 9,800 335,037
-----------
759,503
COMMUNICATIONS -- 2.24%
- ------------------------------------------------------------------------------
Pacific Gateway Exchange
Inc. (a).......................................... 7,300 392,831
Telephone Save Holdings Inc. (a).................. 5,100 101,363
-----------
494,194
COMPUTER HARDWARE -- 1.25%
- ------------------------------------------------------------------------------
Apex PC Solutions Inc. (a)........................ 7,300 161,513
Yurie Systems Inc................................. 5,600 113,050
-----------
274,563
COMPUTER SERVICES -- 9.73%
- ------------------------------------------------------------------------------
Computer Horizons Corporation (a)................. 12,398 564,109
Computer Task Group
Inc. (Rts)........................................ 16,800 597,450
Pegasystems Inc. (a).............................. 12,400 250,325
Remedy Corporation (a)............................ 3,800 79,800
Sapient Corporation (a)........................... 5,700 349,125
Technology Solutions Company (a).................. 11,550 304,631
-----------
2,145,440
COMPUTER SOFTWARE -- 9.35%
- ------------------------------------------------------------------------------
BEA Systems Inc. (a).............................. 16,700 289,119
HNC Software Inc. (a)............................. 6,300 270,900
JDA Software Group Inc. (a)....................... 7,700 269,500
Summit Design Inc................................. 11,100 115,163
Veritas Software Corporation (a).................. 7,400 377,400
Viasoft Inc. (a).................................. 6,200 261,950
Visio Corporation (a)............................. 6,000 230,250
Wind River Systems Inc. (a)....................... 6,200 246,062
-----------
2,060,344
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
CONSUMER DURABLES -- 0.32%
- ------------------------------------------------------------------------------
United Natural Foods Inc.......................... 2,700 $ 70,200
CONSUMER PRODUCTS -- 0.99%
- ------------------------------------------------------------------------------
Blyth Industries Inc. (a)......................... 7,325 219,292
CONSUMER SERVICES -- 3.28%
- ------------------------------------------------------------------------------
Corestaff Inc. (a)................................ 12,487 330,905
Transaction Systems Architects Inc. (a)........... 10,300 391,400
-----------
722,305
ENERGY -- 2.93%
- ------------------------------------------------------------------------------
Gulf Islands Fabrication Inc...................... 6,100 122,000
Gulfmark Offshore Inc. (a)........................ 4,800 158,400
Halter Marine Group Inc........................... 5,400 155,925
Patterson Energy Inc. (a)......................... 5,400 208,913
-----------
645,238
ENTERTAINMENT & LEISURE -- 1.68%
- ------------------------------------------------------------------------------
Regal Cinemas Inc. (a)............................ 13,300 370,738
FINANCE -- 0.85%
- ------------------------------------------------------------------------------
Healthcare Financial Partners
Inc............................................... 5,300 188,150
FOOD & BEVERAGES & TOBACCO -- 1.56%
- ------------------------------------------------------------------------------
Suiza Foods Corporation........................... 5,770 343,676
HEALTH CARE -- 7.64%
- ------------------------------------------------------------------------------
Alternative Living Services
Inc. (a).......................................... 10,400 307,450
Concentra Managed Care Inc........................ 8,000 270,000
FPA Medical Management Inc. (a)................... 14,200 264,475
Pediatrix Medical Group (a)....................... 9,400 401,850
Rural Metro Corporation (a)....................... 13,200 440,550
-----------
1,684,325
HOTELS & RESTAURANTS -- 3.64%
- ------------------------------------------------------------------------------
American Skiing Company........................... 12,200 181,475
Prime Hospitality Corporation..................... 5,700 116,137
Vistana Inc. (a).................................. 21,900 503,700
-----------
801,312
MANUFACTURING -- 1.54%
- ------------------------------------------------------------------------------
Vitesse Semiconductor Corporation (a)............. 9,000 339,750
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 31
<PAGE>
SMALL COMPANY GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
MEDICAL SERVICES -- 3.74%
- ------------------------------------------------------------------------------
National Surgery Centers Inc. (a)................. 17,925 $ 470,531
Renal Treatment Centers Inc. (a).................. 4,700 169,788
Total Renal Care Holdings Inc. (a)................ 6,733 185,157
-----------
825,476
MISC. FINANCIAL SERVICES -- 4.28%
- ------------------------------------------------------------------------------
Amresco Inc....................................... 17,500 529,375
Franchise Mortgage Acceptance Company............. 6,900 126,788
Sirrom Capital Corporation........................ 5,500 286,687
-----------
942,850
OIL SERVICES -- 2.01%
- ------------------------------------------------------------------------------
Cliffs Drilling Company........................... 3,600 179,550
Pool Energy Services Company (a).................. 5,700 126,825
UTI Energy Corporation............................ 5,300 137,138
-----------
443,513
PHARMACEUTICALS -- 5.09%
- ------------------------------------------------------------------------------
Dura Pharmaceuticals Inc. (a)..................... 5,550 254,606
Incyte Pharmaceuticals Inc. (a)................... 5,900 265,500
Jones Medical Industries Inc...................... 2,200 84,150
Medicis Pharmaceutical Corporation (a)............ 9,050 462,681
Pharmerica Inc.................................... 5,200 53,950
-----------
1,120,887
PRINTING & PUBLISHING -- 2.25%
- ------------------------------------------------------------------------------
Applied Graphics Technologies (a)................. 9,300 495,225
RETAIL -- 2.66%
- ------------------------------------------------------------------------------
Guitar Center Inc. (a)............................ 9,100 209,300
Insight Enterprises Inc. (a)...................... 10,250 376,688
-----------
585,988
TECHNOLOGY -- 12.81%
- ------------------------------------------------------------------------------
Comverse Technology Inc. (a)...................... 8,700 339,300
DSP Communications Inc. (a)....................... 8,100 97,200
Helix Technology Corporation...................... 8,400 163,800
Network Appliance Inc. (a)........................ 11,400 404,700
P-Com Inc. (a).................................... 16,400 282,900
Remec Inc. (a).................................... 5,600 126,000
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Sawtek Inc. (a)................................... 5,300 $ 139,788
Security Dynamics Technologies Inc. (a)........... 8,500 303,875
Semtech Corporation............................... 4,500 176,062
Uniphase Corporation (a).......................... 7,800 322,725
Waters Corporation (a)............................ 12,400 466,550
-----------
2,822,900
TELECOMMUNICATIONS -- 3.07%
- ------------------------------------------------------------------------------
Digital Lightwave Inc............................. 7,600 99,750
Intermediate Telephone Inc. (a)................... 10,100 195,687
Sykes Enterprises Inc. (a)........................ 8,150 158,925
Tekelec Inc. (a).................................. 7,300 222,650
-----------
677,012
TRANSPORTATION -- 0.55%
- ------------------------------------------------------------------------------
MotivePower Industries Inc........................ 5,200 120,900
WASTE MANAGEMENT -- 4.41%
- ------------------------------------------------------------------------------
American Disposal Services Inc. (a)............... 9,900 361,350
Eastern Environmental Services Inc. (a)........... 14,300 314,600
Tetra Tech Inc. (a)............................... 14,775 295,500
-----------
971,450
TOTAL COMMON STOCKS
(IDENTIFIED COST $19,012,036)................................... 21,283,398
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.70%
- ------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
2.00% due 01/02/98
Collateral: U.S. Treasury Note $790,000, 9.25% due
08/15/98 Value $833,450........................... $815,000 815,000
-----------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $815,000)...................................... 815,000
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $19,827,036)................................... $22,098,398
OTHER ASSETS LESS LIABILITIES -- (0.27)%........................ (60,315)
-----------
NET ASSETS -- 100%.............................................. $22,038,083
- ------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
See notes to financial statements.
32 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
THE ENTERPRISE SMALL COMPANY VALUE PORTFOLIO
GAMCO INVESTORS, INC.
Rye, New York
INVESTMENT MANAGEMENT
GAMCO Investors, Inc., which manages more than $6 billion for institutional
clients and whose normal investment minimum is $500,000, became manager of the
portfolio on July 1, 1996.
INVESTMENT OBJECTIVE
The objective of the Enterprise Small Company Value Portfolio is to seek maximum
capital appreciation, primarily through investment in the equity securities of
companies that have a market capitalization of no more than $1 billion.
INVESTMENT PHILOSOPHY
GAMCO's focus is on free cash flow, which it believes to be the best barometer
of a business' value. Rising free cash flow often foreshadows net earnings
improvement. GAMCO also looks at long-term earnings trends, and analyzes on and
off balance sheet assets and liabilities. GAMCO wants to know everything and
anything that will add or detract from its private market value estimates.
Finally GAMCO looks for a catalyst: something happening in the company's
industry or indigenous to the company itself that will reveal value.
1997 PERFORMANCE REVIEW
The strong portfolio performance in 1997 was the result of GAMCO's sector bets
on cable television and cable television networks, its positioning in niche
industrial companies, its focus on corporate restructurings and some good
old-fashioned stock picking.
Cable television stocks, particularly Cablevision Systems (up 210 percent in
1997) went from the doghouse to the penthouse for two reasons: Cash flows
exceeded analysts' consensus expectations and cable developed a technology
mantra, with Microsoft's Bill Gates committing $1 billion to the proposition
that coaxial cable would be the highway of choice for internet transmission to
American homes. The cable industry is in great shape except for the political
jawboning over cable rates that is likely to take place in an election year like
1998.
GAMCO's positioning in niche industrial companies also contributed to returns.
These companies reflect the new competitive strengths of American industry, the
prospect of improving earnings and the likelihood that smaller niche players
would be targeted by larger competitors. In 1997, stocks like Goulds Pumps and
Brad Ragan were strong performers on takeovers.
Corporate restructurings helped boost portfolio performance in 1997. The
splitting of Culbro (up 71 percent) into General Cigar and Griffin Land
Resources was a primary example of this activity.
The marketplace is in the early stages of the third great wave of mergers and
acquisitions, triggered by General Electric's hostile bid to acquire Kemper in
March 1994. The first wave was in the 1960s, with conglomerates buying companies
to build diversified empires. The second wave in the 1980s was led by the
financial engineers -- leveraged buyout specialists preying on undervalued
companies. The current wave is being propelled by strategic corporate
THE ENTERPRISE GROUP OF FUNDS, INC. 33
<PAGE>
buyers looking to extend product lines and distribution systems through the
acquisition of companies in related businesses and consolidators, savvy
individuals creating operational and financial leverage by consolidating
fragmented industries. GAMCO believes this wave will be the strongest of all.
For the last five years American companies have been able to boost earnings
through technology-oriented productivity gains and extensive cost cutting.
Progress will continue on these fronts but much of the work has already been
done. Limited pricing flexibility in an increasingly global economy will
restrain profit margins. Many companies will become increasingly dependent on
growth through the acquisition of complimentary businesses.
The portfolio has benefited from several deals throughout the year. In addition
to those mentioned above, the portfolio reaped profits on General Host, Black
Entertainment Television, International Family Entertainment, Lin Television and
Fieldcrest Cannon.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY VALUE
PORTFOLIO-A ONE YEAR THREE YEAR
AVERAGE ANNUAL WITH LOAD 37.31% 18.65%
<S> <C> <C> <C> <C>
Average Annual Without Load 44.24% 20.60%
Russell 1000 Value* 35.18% 31.52%
Lipper Small Cap Fund Index** 15.05% 20.09%
*From 10/1/93-12/31/97
Enterprise Small Company Value
Portfolio-A Russell 1000 Value Index
10/1/93 $ 9,523.81 $ 10,000.00
12/31/93 $ 10,087.60 $ 9,973.00
1994 $ 10,121.90 $ 9,774.54
1995 $ 11,061.61 $ 13,523.07
1996 $ 12,309.36 $ 16,449.47
1997 $ 17,755.03 $ 22,236.39
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY VALUE
PORTFOLIO-A INCEPTION*
AVERAGE ANNUAL WITH LOAD 14.46%
<S> <C>
Average Annual Without Load 15.78%
Russell 1000 Value* 20.68%
Lipper Small Cap Fund Index** 13.18%
*From 10/1/93-12/31/97
Enterprise Small Company Value
Portfolio-A Lipper Small Cap Fund Index
10/1/93 $ 10,000.00
12/31/93 $ 10,269.00
1994 $ 9,776.09
1995 $ 12,867.29
1996 $ 14,715.03
1997 $ 16,929.64
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
increased $5,446 compared to $4,462 and $5,787 in the Wilshire Small Cap Index
and the Russell 1000 Value Index, respectively.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY VALUE
PORTFOLIO-B ONE YEAR INCEPTION*
<S> <C> <C>
Annualized Return With CDSC 39.40% 20.83%
Annualized Return Without CDSC 43.40% 21.91%
Russell 1000 Value* 35.18% 29.96%
Lipper Small Cap Fund Index** 15.05% 19.71%
*From 5/1/95-12/31/97
Enterprise Small Company Value
Portfolio-B Russell 1000 Value
5/1/95 $10,000.00 $10,000.00
1995 $10,686.60 $12,247.16
1996 $11,837.55 $14,897.44
1997 $16,575.04 $20,138.36
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY VALUE
PORTFOLIO-B
<S> <C>
Annualized Return With CDSC
Annualized Return Without CDSC
Russell 1000 Value*
Lipper Small Cap Fund Index**
*From 5/1/95-12/31/97
Lipper Small Cap Fund Index
5/1/95 $10,000.00
1995 $12,291.00
1996 $14,055.99
1997 $16,171.41
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
increased $4,737 compared to $4,233 and $5,241 in the Wilshire Small Cap Index
and the Russell 1000 Value Index, respectively.
34 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY VALUE
PORTFOLIO-C INCEPTION*
<S> <C> <C>
Cumulative Return With CDSC 33.68%
Cumulative Return Without CDSC 34.68%
Russell 1000 Value* 26.49%
Lipper Small Cap Fund Index** 28.08%
*From 5/1/97-12/31/97
Enterprise Small Company Value
Portfolio-C Russell 1000 Value
5/1/97 $10,000.00 $10,000.00
1997 $13,368.40 $12,649.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE SMALL COMPANY VALUE
PORTFOLIO-C
<S> <C>
Cumulative Return With CDSC
Cumulative Return Without CDSC
Russell 1000 Value*
Lipper Small Cap Fund Index**
*From 5/1/97-12/31/97
Lipper Small Cap Fund Index
5/1/97 $10,000.00
1997 $12,808.00
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
increased $5,247 compared to $4,111 and $5,029 in the Wilshire Small Cap Index
and the Russell 1000 Value Index, respectively.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ONE YEAR INCEPTION*
<S> <C> <C>
Enterprise Small Company Value
Portfolio-Y 44.53% 22.83%
Russell 1000 Value Index* 35.18% 29.96%
Lipper Small Cap Fund Index** 15.05% 19.71%
*From 5/31/95-12/31/97
Enterprise Small Company Value
Portfolio-Y Russell 1000 Value Index
5/31/95 $10,000.00 $10,000.00
1995 $10,535.90 $11,752.42
1996 $11,782.30 $14,295.65
1997 $17,028.96 $19,324.86
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
<S> <C>
Enterprise Small Company Value
Portfolio-Y
Russell 1000 Value Index*
Lipper Small Cap Fund Index**
*From 5/31/95-12/31/97
Lipper Small Cap Fund Index
5/31/95 $10,000.00
1995 $12,102.00
1996 $13,839.85
1997 $15,922.74
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original price.
* The Russell 1000 Value Index is an unmanaged index that excludes any
transaction or holding charges. The Russell 1000 Value Index replaces the
Wilshire Small Cap Index as the broad-based comparison to the Small Company
Value Portfolio as it more appropriately reflects the securities market in which
the Portfolio invests.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
FUTURE INVESTMENT STRATEGY
Looking ahead to 1998, although sensitive to the impact of labor and
commodities, inflation may remain in check. Barring any synchronized worldwide
economic upswing, a relative low probability considering Asian economic
weakness, interest rates may be stable. In general, corporate earnings growth
may be respectable, in the seven to nine percent range. With expectations high,
there may be more earnings disappointments in the year ahead. Merger,
acquisition and restructuring activity may remain strong. If this scenario
unfolds, the market may be in line with corporate earnings.
GAMCO is concerned about several potential problems: The ripple effect on U.S.
profits from the currency debacle in Southeast Asia and a potential run on Latin
American currencies and economies; an upswing in wage inflation;
THE ENTERPRISE GROUP OF FUNDS, INC. 35
<PAGE>
upward pressure on interest rates; and the potential for a 1999 lame-duck
Clinton administration. Last, but certainly not least, the level of the market
is a concern. Valuations are high by most measures and the overall equity market
does not appear to have a margin of safety.
GAMCO believes deals may have a favorable impact on many of the portfolio's
holdings. With the lower longer term capital gain rate of 20 percent, the
owner/managers of many companies in the portfolio may be tempted to monetize
their investments. This will be an important source of profits for the
portfolio.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
36 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
SMALL COMPANY VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMON STOCKS -- 87.88% AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
ADVERTISING -- 1.43%
- ------------------------------------------------------------------------------
Ackerley Inc...................................... 59,000 $ 999,312
AEROSPACE -- 7.70%
- ------------------------------------------------------------------------------
Ametek Aerospace Products Inc..................... 14,500 391,500
Coltec Industries Inc. (a)........................ 20,000 463,750
Curtiss Wright Corporation........................ 20,000 726,250
Gencorp Inc....................................... 20,000 500,000
Moog Inc. (a)..................................... 6,000 209,625
Sequa Corporation (Class A) (a)................... 20,000 1,301,250
Sequa Corporation (Class B) (a)................... 5,000 370,000
SPS Technologies Inc.............................. 33,000 1,439,625
-----------
5,402,000
APPAREL & TEXTILES -- 0.09%
- ------------------------------------------------------------------------------
Carlyle Inds. Inc................................. 40,000 60,000
AUTOMOTIVE -- 7.43%
- ------------------------------------------------------------------------------
Clarcor Inc....................................... 12,000 355,500
Echlin Inc........................................ 25,000 904,687
Modine Manufacturing Company...................... 40,000 1,365,000
Navistar International Corporation Inc. (a)....... 10,000 248,125
Scheib Earl Inc................................... 80,000 640,000
Standard Motor Products Inc....................... 27,000 609,188
Superior Inds International Inc................... 1,000 26,813
Wynns International Inc........................... 33,351 1,063,063
-----------
5,212,376
BROADCASTING -- 8.67%
- ------------------------------------------------------------------------------
BET Holdings Inc. (a)............................. 35,000 1,911,875
Chris Craft Industries Inc........................ 15,000 784,687
Gray Communications Systems Inc. (Class B)........ 13,000 334,750
GST Telecommunications Inc........................ 60,000 712,500
Lin Television Corporation (a).................... 17,000 926,500
Paxson Communications Corporation................. 50,000 368,750
United Television Inc............................. 10,000 1,038,750
-----------
6,077,812
BUSINESS SERVICES -- 0.14%
- ------------------------------------------------------------------------------
Nashua Corporation................................ 8,500 99,875
CABLE -- 5.09%
- ------------------------------------------------------------------------------
Cablevision Systems Corporation (a)............... 33,000 3,159,750
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Century Communications Corporation................ 30,000 $ 292,500
Mercom Inc........................................ 12,000 114,000
-----------
3,566,250
CAPITAL GOODS & SERVICES -- 0.55%
- ------------------------------------------------------------------------------
AAR Corporation................................... 10,000 387,500
CHEMICALS -- 0.99%
- ------------------------------------------------------------------------------
Church & Dwight Inc............................... 12,000 336,750
Lawter International Inc.......................... 33,000 358,875
-----------
695,625
COMPUTER HARDWARE -- 0.12%
- ------------------------------------------------------------------------------
Cerion Technologies Inc. (a)...................... 42,000 82,688
COMPUTER SOFTWARE -- 0.17%
- ------------------------------------------------------------------------------
Software Artistry Inc. (a)........................ 5,000 121,563
CONSUMER DURABLES -- 0.60%
- ------------------------------------------------------------------------------
Envirosource Inc. (a)............................. 100,000 300,000
Oneida Ltd........................................ 4,500 120,094
-----------
420,094
CONSUMER SERVICES -- 1.12%
- ------------------------------------------------------------------------------
Berlitz International Inc. (a).................... 11,000 286,000
ITT Educational Services Inc...................... 10,000 223,125
Mikasa Inc........................................ 19,000 276,688
-----------
785,813
ELECTRICAL EQUIPMENT -- 2.33%
- ------------------------------------------------------------------------------
Ampco Pittsburgh Corporation...................... 30,000 586,875
Oak Technology.................................... 5,000 32,500
Portec Inc........................................ 25,000 362,500
Thomas Industries Inc............................. 33,000 651,750
-----------
1,633,625
ENERGY -- 2.05%
- ------------------------------------------------------------------------------
USX Delhi Group................................... 70,000 1,435,000
ENTERTAINMENT & LEISURE -- 7.05%
- ------------------------------------------------------------------------------
Ascent Entertainment Group Inc.................... 42,000 435,750
Bull Run Corporation Georgia...................... 40,000 153,750
Florida Panthers Holdings Inc..................... 15,000 258,750
Gaylord Entertainment Company New................. 40,000 1,277,500
GC Companies Inc.................................. 15,000 710,625
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 37
<PAGE>
SMALL COMPANY VALUE PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
HSN Inc........................................... 23,000 $ 1,184,500
Ticketmaster Group Inc............................ 40,000 920,000
-----------
4,940,875
FINANCE -- 1.47%
- ------------------------------------------------------------------------------
Advest Group Inc.................................. 7,500 185,156
Pioneer Group Inc................................. 30,000 843,750
-----------
1,028,906
FOOD & BEVERAGES & TOBACCO -- 3.22%
- ------------------------------------------------------------------------------
Brunos Inc. (a)................................... 29,000 59,813
Celestial Seasonings Inc. (a)..................... 30,000 945,000
Chock Full O Nuts Corporation..................... 25,000 175,000
Eskimo Pie Corporation............................ 33,000 379,500
General Cigar Holdings Inc.
(Class A) (a)..................................... 5,000 106,562
General Cigar Holdings Inc.
(Class B) (a)..................................... 8,000 170,500
Giant Foods Inc................................... 12,000 404,250
Vermont Pure Holdings Ltd......................... 5,000 20,000
-----------
2,260,625
HOTELS & RESTAURANTS -- 1.20%
- ------------------------------------------------------------------------------
Aztar Corporation (a)............................. 65,000 406,250
Trump Hotels & Casino Resorts Inc................. 65,000 434,688
-----------
840,938
INSURANCE -- 0.93%
- ------------------------------------------------------------------------------
Liberty Corporation............................... 14,000 654,500
MACHINERY -- 5.82%
- ------------------------------------------------------------------------------
Baldwin Technology Company Inc. (a)............... 20,000 100,000
Banner Aerospace Inc.............................. 25,000 276,563
Commercial Intertech Corporation.................. 3,000 62,250
Culligan Water Technologies Inc................... 2,260 113,565
Daniel Industries Inc............................. 15,000 288,750
Fairchild Corporation............................. 35,000 870,625
Hach Company...................................... 8,400 106,050
Hach Company (Class A)............................ 8,400 78,750
Idex Corporation.................................. 10,000 348,750
Katy Industries Inc............................... 40,000 815,000
Kollmorgen Corporation............................ 29,000 531,062
Nortek Inc........................................ 18,500 491,406
-----------
4,082,771
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
MANUFACTURING -- 1.74%
- ------------------------------------------------------------------------------
Fedders Corporation............................... 65,000 $ 398,125
Industrial Distribution Group Inc................. 1,500 23,531
Oil Dri Corporation of America.................... 10,000 165,000
Ralcorp Holdings Inc. New......................... 5,000 84,688
Strattec Security Corporation..................... 8,000 204,000
Trimas Corporation................................ 10,000 343,750
-----------
1,219,094
METALS & MINING -- 0.29%
- ------------------------------------------------------------------------------
TVX Gold Inc...................................... 60,000 202,500
MISC. FINANCIAL SERVICES -- 1.16%
- ------------------------------------------------------------------------------
Data Broadcasting Corporation..................... 50,000 281,250
Midland Company................................... 8,500 535,500
-----------
816,750
PAPER PRODUCTS -- 0.57%
- ------------------------------------------------------------------------------
Greif Brothers Corporation........................ 12,000 402,000
PHARMACEUTICALS -- 2.83%
- ------------------------------------------------------------------------------
Carter Wallace Inc................................ 50,000 843,750
Ivax Corporation.................................. 65,000 438,750
Natures Sunshine Products Inc..................... 6,000 156,000
Twinlab Corporation............................... 22,000 544,500
-----------
1,983,000
PRINTING & PUBLISHING -- 3.34%
- ------------------------------------------------------------------------------
Lee Enterprises Inc............................... 18,000 532,125
Media General Inc................................. 28,000 1,170,750
Meredith Corporation.............................. 8,000 285,500
Nelson Thomas Inc................................. 19,500 225,469
Price Communications Corporation.................. 15,000 128,437
-----------
2,342,281
PUBLISHING -- 0.68%
- ------------------------------------------------------------------------------
McClatchy Newspapers Inc.......................... 13,500 367,031
Topps Inc......................................... 50,000 110,938
-----------
477,969
REAL ESTATE -- 2.35%
- ------------------------------------------------------------------------------
Catellus Development Corporation (a).............. 60,000 1,200,000
Griffin Land & Nurseries Inc...................... 29,000 449,500
-----------
1,649,500
RETAIL -- 2.46%
- ------------------------------------------------------------------------------
</TABLE>
38 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
SMALL COMPANY VALUE PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Lillian Vernon Corporation........................ 25,000 $ 415,625
Neiman Marcus Group Inc........................... 33,000 998,250
Ragan Brad Inc.................................... 7,900 276,500
Valuevision International Inc..................... 10,000 38,125
-----------
1,728,500
SECURITY & INVESTIGATION SERVICES -- 2.50%
- ------------------------------------------------------------------------------
Pittway Corporation............................... 6,000 417,750
Rollins Inc....................................... 60,000 1,218,750
Wackenhut Corporation............................. 5,000 115,937
-----------
1,752,437
TELECOMMUNICATIONS -- 3.74%
- ------------------------------------------------------------------------------
Aerial Communications Inc......................... 50,000 356,250
Associated Group Inc. (a)......................... 1,500 44,438
Atlantic Tele Network Inc......................... 25,000 271,875
Centennial Cellular Corporation (a)............... 15,000 307,500
Comsat Corporation................................ 28,000 679,000
Shared Tech Fairchild Inc......................... 50,000 731,250
Telephone & Data Systems Inc...................... 5,000 232,812
-----------
2,623,125
TRANSPORTATION -- 2.78%
- ------------------------------------------------------------------------------
GATX Corporation.................................. 16,000 1,161,000
Hudson General Corporation........................ 14,500 696,000
Transpro Inc...................................... 10,000 90,000
-----------
1,947,000
UTILITIES -- 5.06%
- ------------------------------------------------------------------------------
Citizens Utilities Company Delaware............... 50,500 486,062
Tejas Gas Corporation Delaware.................... 50,000 3,062,500
-----------
3,548,562
WIRELESS COMMUNICATIONS -- 0.21%
- ------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Teligent Inc...................................... 6,000 $ 147,750
TOTAL COMMON STOCKS
(IDENTIFIED COST $52,737,253)................................... 61,628,616
- ------------------------------------------------------------------------------
U.S. TREASURY BILLS -- 13.27%
- ------------------------------------------------------------------------------
U.S. Treasury Bill
4.94% due 01/02/98................................ $ 760,000 759,896
U.S. Treasury Bill
4.95% due 01/08/98................................ 605,000 604,418
U.S. Treasury Bill
4.95% due 02/12/98................................ 169,000 168,024
U.S. Treasury Bill
5.06% due 01/29/98................................ 2,014,000 2,006,074
U.S. Treasury Bill
5.09% due 01/22/98................................ 3,500,000 3,489,608
U.S. Treasury Bill
5.10% due 01/22/98................................ 1,000,000 997,025
U.S. Treasury Bill
5.11% due 01/08/98................................ 88,000 87,912
U.S. Treasury Bill
5.12% due 01/22/98................................ 726,000 723,832
U.S. Treasury Bill
5.17% due 01/22/98................................ 466,000 464,594
-----------
TOTAL U.S. TREASURY BILLS
(IDENTIFIED COST $9,301,383).................................... 9,301,383
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $62,038,636)................................... $70,929,999
OTHER ASSETS LESS LIABILITIES -- (1.15)%........................ (803,940)
-----------
NET ASSETS -- 100%.............................................. $70,126,059
- ------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 39
<PAGE>
THE ENTERPRISE INTERNATIONAL GROWTH PORTFOLIO
BRINSON PARTNERS, INC.
Chicago, Illinois
INVESTMENT MANAGEMENT
Brinson Partners, Inc., is a global investment management firm with offices in
Chicago, London and Tokyo, and became manager of the Enterprise International
Growth Portfolio on October 1, 1994. Brinson Partners manages approximately $90
billion for institutional clients, and its normal investment minimum is $25
million.
INVESTMENT OBJECTIVE
The objective of the Enterprise International Growth Portfolio is to seek
capital appreciation, primarily through a diversified portfolio of non-U.S.
equity securities.
INVESTMENT PHILOSOPHY
Brinson Partners believes that discrepancies exist between prices and
fundamental values, both across and within the international equity markets. It
takes advantage of these discrepancies by using a disciplined approach to
measure fundamental value from the perspective of the long-term investor. This
international equity strategy reflects the manager's decisions about the
relative attractiveness of the asset class, the individual equity markets,
currencies, the industries across and within those markets, other common risk
factors within those markets and individual international companies.
1997 PERFORMANCE REVIEW
For the year ended December 31, 1997, the portfolio showed a slight gain.
Currency allocation and security selection added value, which was partially
offset by market selection. Within markets, the five percent allocation to cash
detracted from results as most markets outside of the Pacific region registered
strong double-digit returns. The underweight in Switzerland also detracted but
the portfolio's underweight to the turbulent Pacific region added value. The
overweight of the U.S. dollar and underweight in the Japanese yen and core
European currencies contributed to the positive results. Within Japan, the
underweight position in the poorly performing banks and financial sectors and
the emphasis on blue-chip exporters, pharmaceuticals, electricals, and insurance
companies added value.
Continental European markets were strong performers during the course of the
first 10 months, despite reacting negatively in October to the banking and
currency crisis in Asia, as investors began to incorporate the anticipated
negative consequences of a slowdown in this region's overall demand. Commodity
and basic industry companies, luxury goods and spirits manufacturers, as well as
companies engaged in infrastructure, construction and commodity goods projects
and multinational banks were particularly vulnerable. Despite this, during the
full year, European markets registered high double-digit returns, reflecting an
environment of benign inflation, low interest rates, improving growth and
ongoing company restructuring.
In January 1997, the portfolio held underweights in the four relevant Southeast
Asia countries: Japan, Hong Kong, Malaysia and Singapore. Brinson Partners
gradually increased exposure to Malaysia and Singapore to a modest overweight
using defensive issues as the market declines there offered attractive
opportunities to gain superior long-term returns. Conversely, in recognition of
a number of vulnerabilities in the Japanese economy, Brinson reduced
40 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
exposure there in July and again in early December to the current level of a six
percent underweight. Furthermore, the manager reinstated a partial hedge on the
yen in October that has proven beneficial. The portfolio has been substantially
underweight in Japanese banks for a sustained period as those institutions
sorted through their property loan problems of the early '90s and Brinson
further cut that position by selling Sumitomo Trust and Sanwa Bank in November.
The portfolio remains underweight in Hong Kong equities and has fully hedged the
currency exposure.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE INTERNATIONAL GROWTH
PORTFOLIO-A ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C> <C> <C>
Average Annual With Load -0.21% 11.28% 7.41%
Average Annual Without Load 4.75% 12.37% 7.93%
EAFE Index* 1.78% 11.39% 6.25%
Lipper International Fund Index** 7.27% 13.28% 9.64%
Enterprise International Growth Lipper International Fund
Portfolio-A EAFE Index Index
12/31/87 $ 9,523.81 $ 10,000.00 $ 10,000.00
1988 $ 10,247.62 $ 12,827.00 $ 11,590.00
1989 $ 12,046.31 $ 14,178.97 $ 14,176.89
1990 $ 10,191.18 $ 10,854.00 $ 12,423.21
1991 $ 11,505.84 $ 12,170.59 $ 14,059.34
1992 $ 11,402.29 $ 10,689.43 $ 13,457.60
1993 $ 15,518.51 $ 14,169.91 $ 18,730.29
1994 $ 15,081.67 $ 15,272.32 $ 18,591.69
1995 $ 17,369.56 $ 16,984.35 $ 20,454.58
1996 $ 19,509.49 $ 18,011.90 $ 23,406.17
1997 $ 20,436.19 $ 18,332.52 $ 25,107.80
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE INTERNATIONAL GROWTH
PORTFOLIO-B ONE YEAR INCEPTION*
<S> <C> <C> <C>
Annualized Return With CDSC 0.17% 9.85%
Annualized Return Without CDSC 4.17% 11.12%
EAFE Index* 1.78% 4.88%
Lipper International Fund Index** 7.27% 11.45%
*From 5/1/95-12/31/97
Enterprise International Growth Lipper International Fund
Portfolio-B EAFE Index Index
5/1/95 $10,000.00 $10,000.00 $10,000.00
1995 $11,387.70 $10,521.74 $10,883.00
1996 $12,722.34 $11,158.31 $12,453.42
1997 $12,852.86 $11,356.93 $13,358.78
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 41
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE INTERNATIONAL GROWTH
PORTFOLIO-C INCEPTION*
<S> <C> <C> <C>
Cumulative Return With CDSC 1.07%
Cumulative Return Without CDSC 2.07%
EAFE Index* 2.85%
Lipper International Fund Index** 4.18%
*From 5/1/97-12/31/97
Enterprise International Growth Lipper International Fund
Portfolio-C EAFE Index Index
5/1/97 $10,000.00 $10,000.00 $10,000.00
1997 $10,107.20 $10,285.00 $10,418.00
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ONE YEAR INCEPTION*
<S> <C> <C> <C>
Enterprise International Growth
Portfolio-Y 5.21% 11.20%
EAFE Index* 1.78% 4.06%
Lipper International Fund Index** 7.27% 9.62%
*From 7/31/95-12/31/97
Enterprise International Growth Lipper International Fund
Portfolio-Y EAFE Index Index
7/31/95 $10,000.00 $10,000.00 $10,000.00
1995 $10,890.74 $10,203.00 $10,176.00
1996 $12,291.29 $10,820.28 $11,644.40
1997 $12,931.67 $11,012.88 $12,490.94
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original purchase.
* The EAFE Index is an unmanaged index that excludes transaction or holding
charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
FUTURE INVESTMENT STRATEGY
The Japanese equity market represents the largest underweight in the portfolio.
In the other developed markets, Brinson continues to emphasize New Zealand and
Australia, Germany, Belgium and the United Kingdom. The portfolio is neutrally
positioned in Finland and Spain, and invested but quite underweight in Hong
Kong, Switzerland, the Netherlands, Canada and France. Brinson also recently
established a position in Sweden, which ranks reasonably in relative
attractiveness. The portfolio continues to maintain a five percent strategic
cash position reflecting Brinson's view that non-U.S. equity markets are
expensive.
42 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
In addition to the currency underweights in the Japanese yen and the Hong Kong
dollar, the portfolio maintains an underweight exposure to the overvalued U.K.
pound. These underweights are primarily hedged into the U.S. dollar. The New
Zealand dollar is modestly attractive and represents a small overweight
position. This overweight is the result of allowing the currency to mirror the
overweight market allocation.
The portfolio continues to undergo restructuring in order to reduce its overall
level of risk and, in particular, to minimize its exposure to economically
sensitive sectors such as steel. Brinson, however, is finding attractive
valuations in U.K. food manufacturers. They are undergoing extensive
restructuring in the form of cost cutting, personnel reductions and plant
modernizations. Within Japan, the portfolio continues to maintain its
underweight to Japanese banks and overweight to the Japanese electronic
industry. The thrust of Brinson's strategy in Asia (ex-Japan) is to underweight
interest rate and economically sensitive stocks, such as banking, property and
construction. In addition, highly leveraged stocks and stocks with foreign
currency debt have been underweighted. Brinson emphasizes securities with
defensive earnings, such as utilities, consumer non-durables and export
carriers, which are less exposed to weakening domestic economies.
As with all international growth funds, the Enterprise International Growth
Portfolio carries additional risks associated with possibly less stable foreign
securities and currencies, lack of uniform accounting standards and political
instability.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
THE ENTERPRISE GROUP OF FUNDS, INC. 43
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMON STOCKS -- 93.63% AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
AUSTRALIA -- 4.38%
- ---------------------------------------------------------------------------------
Amcor Ltd......................................... 11,800 $ 51,912
Boral Ltd......................................... 30,600 77,381
Brambles Industries Ltd........................... 6,000 119,075
Broken Hill Proprietary........................... 40,500 376,141
Coca Cola Amatil.................................. 7,000 52,311
CSR Ltd........................................... 26,000 88,116
David Jones Ltd................................... 76,500 86,256
Lend Lease Corporation............................ 5,665 110,765
Mayne Nickless Ltd................................ 10,000 52,857
MIM Holdings Ltd.................................. 51,177 31,353
National Australia Bank........................... 28,000 391,076
News Corporation.................................. 59,219 326,908
Pacific Dunlop Ltd................................ 41,500 87,905
Qantas Airways Ltd................................ 41,455 73,382
Rio Tinto Ltd..................................... 16,100 187,859
Santos Ltd........................................ 8,000 32,952
Telstra Corporation............................... 15,000 31,675
Westpac Bank Corporation.......................... 47,500 303,885
WMC Ltd........................................... 28,000 97,632
Woolworths Ltd.................................... 15,000 50,152
-------------
2,629,593
BELGIUM -- 3.56%
- ---------------------------------------------------------------------------------
Bruxelles Lambert Groupe.......................... 800 115,732
Delhaize Le Lion.................................. 4,100 208,038
Electrabel........................................ 1,690 390,902
Fortis AG......................................... 1,462 305,019
Fortis AG (Rts) (a)............................... 112 15
Generale De Banque................................ 400 174,084
Generale De Banque (Wts) (a)...................... 300 769
Kredietbank....................................... 380 159,483
Kredietbank (Vvrp)................................ 9 3,777
Petrofina SA...................................... 725 267,587
Society General De Belgique....................... 1,150 105,220
Solvay............................................ 2,410 151,556
Tractebel CAP..................................... 2,000 174,354
Union Miniere (a)................................. 1,104 76,578
-------------
2,133,114
CANADA -- 3.05%
- ---------------------------------------------------------------------------------
Agrium Inc........................................ 4,800 57,941
Alcan Aluminum Ltd................................ 3,000 82,712
Bank Montreal..................................... 2,800 124,124
Barrick Gold Corporation.......................... 1,700 31,703
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
Canadian National Railway Company................. 2,400 $ 113,026
Canadian Pacific Ltd.............................. 7,400 199,363
Hudsons Bay Company............................... 3,000 66,863
Imasco Ltd........................................ 1,400 49,963
Imperial Oil Ltd.................................. 2,700 173,822
Magna International Inc........................... 900 56,681
Moore Corporation Ltd............................. 2,500 38,400
Newbridge Networks Corporation (a)................ 1,100 38,526
Noranda Inc....................................... 2,900 49,921
Northern Telecom Ltd.............................. 700 62,283
Nova Corporation Alberta.......................... 10,200 97,071
Potash Corp Saskatchewan Inc...................... 1,100 91,599
Royal Bank Canada Montreal........................ 3,300 174,578
Seagram Ltd....................................... 2,100 67,965
Telus Corporation................................. 5,100 112,417
Transcanada Pipelines Ltd......................... 3,800 84,826
Westcoast Energy Inc.............................. 2,400 55,673
-------------
1,829,457
FINLAND -- 0.67%
- ---------------------------------------------------------------------------------
Cultor Oyj........................................ 400 21,721
Merita A Ltd...................................... 9,600 52,483
Metsa Serla Oy.................................... 2,500 19,492
Nokia Oy.......................................... 2,600 184,592
Outokumpu Oy...................................... 2,200 26,839
Rauma Oy.......................................... 94 1,466
Sampo Insurance A................................. 800 25,977
Upm Kymmene Oy.................................... 3,400 67,988
-------------
400,558
FRANCE -- 5.79%
- ---------------------------------------------------------------------------------
Accor............................................. 624 116,018
Alcatel Alsthom................................... 1,102 140,073
Axa Uap........................................... 2,360 182,612
Axa Uap CVG....................................... 1,860 1,823
Banque National Paris A........................... 2,380 126,504
Cie Bancaire SA................................... 45 7,290
Cie De St Gobain.................................. 1,333 189,369
Cie Fin Paribas................................... 1,300 112,968
CSF Thomson....................................... 3,600 113,470
Dexia France...................................... 1,112 128,780
Elf Aquitaine..................................... 1,836 213,542
France Telecom.................................... 4,700 170,476
Generale Des Eaux................................. 1,355 189,117
Generale Des Eaux (Wts) (a)....................... 1,905 1,295
</TABLE>
44 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
Groupe Danone..................................... 500 $ 89,308
Lafarge Coppee SA................................. 1,100 72,176
Lagardere......................................... 3,430 113,412
Michelin.......................................... 2,557 128,732
Pechiney.......................................... 2,830 111,723
Peugeot SA........................................ 1,460 184,122
Pinault Printemps Redo............................ 300 160,056
Rhone Poulenc Ord A............................... 3,996 179,002
Seita............................................. 4,000 143,557
Soc Generale...................................... 1,345 183,252
Suez Lyonnaise Des Eaux........................... 1,663 184,026
Total Company..................................... 1,735 188,822
Usinor............................................ 2,900 41,872
-------------
3,473,397
GERMANY -- 10.06%
- ---------------------------------------------------------------------------------
Allianz AG........................................ 2,510 650,190
BASF AG........................................... 3,700 131,118
Bayer AG.......................................... 9,100 339,932
Bayer Motoren Werken.............................. 305 228,036
Commerzbank AG.................................... 7,500 295,172
Continental AG.................................... 7,000 154,479
Daimler Benz AG................................... 3,500 245,532
Deutsche Bank AG.................................. 7,300 515,356
Deutsche Telekom.................................. 25,250 475,117
Hochtief AG....................................... 1,950 76,962
Hoechst AG........................................ 2,900 101,559
Man AG............................................ 440 127,430
Mannesmann AG..................................... 520 262,753
Metro AG.......................................... 5,128 183,861
Munchener Ruckvers................................ 1,270 478,646
Preuss AG......................................... 710 216,676
Rheim - West Elektr AG............................ 5,150 276,258
Schering AG....................................... 2,900 279,691
Siemens AG........................................ 5,600 331,527
Veba AG........................................... 6,030 410,615
Volkswagen AG..................................... 450 253,148
-------------
6,034,058
HONG KONG -- 1.02%
- ---------------------------------------------------------------------------------
Cheung Kong (Holdings)............................ 16,000 104,788
Citic Pacific Limited............................. 7,000 27,823
CLP Holdings...................................... 9,500 52,716
Hang Seng Bank.................................... 7,000 67,525
Hong Kong & China Gas............................. 38,000 73,558
Hong Kong Telecommunications...................... 41,000 84,391
Hutchison Whampoa................................. 19,000 119,164
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
Sun Hung Kai Properties........................... 8,000 $ 55,749
Swire Pacific..................................... 5,000 27,423
-------------
613,137
IRELAND -- 0.29%
- ---------------------------------------------------------------------------------
Smurfit (Jefferson) Group......................... 63,000 174,877
ITALY -- 4.39%
- ---------------------------------------------------------------------------------
Assic Generali.................................... 12,810 314,638
Banca Commerciale Italiana........................ 33,000 114,726
Credito Italiano.................................. 49,000 151,100
Danieli Di Risp................................... 15,000 53,929
Edison SPA........................................ 14,000 84,681
Eni (ADR)......................................... 3,400 194,013
Eni Ord........................................... 37,000 209,785
IMI............................................... 13,000 154,324
INA............................................... 53,000 107,408
Mediobanca SPA.................................... 7,000 54,963
Montedison SPA.................................... 166,820 149,846
Rinascente (LA)................................... 16,400 122,374
Rinascente (Wts) (a).............................. 400 484
Rinascente Savings (Risp)......................... 14,000 52,233
SAI Di Risp....................................... 15,000 66,139
Soc Italiano...................................... 18,000 74,279
Telecom Italia Mobile............................. 34,000 156,930
Telecom Italia Mobile Di Risp..................... 78,000 221,786
Telecom Italia Spa................................ 16,665 106,453
Telecom Italia Spa Risp........................... 55,450 244,494
-------------
2,634,585
JAPAN -- 19.16%
- ---------------------------------------------------------------------------------
Amada Company..................................... 25,000 92,862
Asahi Glass Company............................... 18,000 85,471
Bank of Tokyo/ Mitsubishi......................... 22,000 303,286
Canon Inc......................................... 20,000 465,651
Canon Sales Company Inc........................... 8,000 91,292
Citizen Watch Company............................. 23,000 154,132
Dai Nippon Printng................................ 22,000 412,805
Daiichi Pharmaceutical............................ 20,000 225,167
Daikin Kogyo...................................... 25,000 94,202
Daiwa House Industries Co......................... 12,000 63,414
Denso Corporation................................. 13,000 233,974
Fanuc Co.......................................... 9,300 351,857
Fujitsu........................................... 15,000 160,833
Hitachi........................................... 48,000 341,886
Honda Motor Company............................... 8,000 293,482
Hoya Corporation.................................. 3,000 94,202
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 45
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
INAX Corporation.................................. 18,000 $ 52,248
Ito Yokado Company................................ 9,000 458,375
Kaneka Corporation................................ 25,000 112,775
Keio Teito Electric Rail.......................... 28,000 107,008
Kinki Nippon Railway.............................. 28,000 149,468
Kirin Brewery Company............................. 27,000 196,446
Kokuyo Company.................................... 8,000 137,857
Kuraray Company Ltd............................... 29,000 239,871
Kyocera Corporation............................... 3,000 136,019
Marui Company..................................... 13,000 202,114
Matsushita Electric Ind........................... 36,000 526,614
Mitsubishi Paper.................................. 29,000 40,645
NGK Insulators.................................... 39,000 346,481
Nintendo.......................................... 2,400 235,276
Nippon Meat Packer................................ 16,000 218,121
Nippon Steel Corporation.......................... 19,000 28,085
Okumura........................................... 25,000 59,355
Osaka Gas Corporation............................. 46,000 104,986
Sankyo Pharmaceutical Company..................... 18,000 406,678
Secom Company..................................... 6,000 383,243
Seino Transport................................... 16,000 79,773
Sekisui House..................................... 37,000 237,750
Sony Corporation.................................. 5,400 479,743
Sumitomo Bank..................................... 26,000 296,699
Sumitomo Chemical Industries...................... 28,000 64,333
Sumitomo Electric Industries...................... 20,000 272,651
Takeda Chemical Industries........................ 15,000 427,357
TDK Corporation................................... 4,000 301,447
Tokio Marine & Fire............................... 22,000 249,368
Tokyo Electric Power.............................. 6,300 114,835
Tokyo Steel Manufacturing......................... 11,000 37,152
Tonen Corporation................................. 18,000 97,051
Toray Industries Inc.............................. 86,000 385,311
Toshiba Corporation............................... 57,000 237,045
Toyo Suisan Kaisha................................ 13,000 90,005
Toyota Motor Corporation.......................... 14,000 401,011
Yamazaki Baking Company........................... 12,000 116,719
-------------
11,494,431
MALAYSIA -- 1.41%
- ---------------------------------------------------------------------------------
Hume Industries Berhad............................ 17,000 17,833
Kuala Lumpur Kepong............................... 45,500 97,680
Land & General Holdings........................... 47,000 8,700
Malayan Banking Berhad............................ 20,000 58,105
Malaysia International Shipping................... 23,000 33,706
Nestle Malaysia Berhad............................ 10,000 46,279
New Straits Times Press........................... 20,000 24,785
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
Perusahaan Otomobl................................ 11,000 $ 10,747
Petronas Gas Berha................................ 20,000 45,507
Public Bank Berhad Foreign........................ 24,333 8,383
Public Bank Berhad Local.......................... 24,000 7,466
Public Bank FGN (Rts) (a)......................... 4,866 0
Resorts World Berhad.............................. 21,000 35,365
Rothmans of Pall Mall............................. 11,000 85,551
Sime Darby Berhad................................. 66,000 63,463
Telekom Malaysia.................................. 47,000 138,964
Tenaga Nasional................................... 55,000 117,367
UMW Holdings Berhad............................... 7,000 5,309
United Engineers (Malay).......................... 13,000 10,829
YTL Corporation Berhad............................ 19,500 26,321
YTL Power International........................... 500 384
-------------
842,744
NETHERLANDS -- 4.40%
- ---------------------------------------------------------------------------------
ABN Amro Holdings................................. 11,179 217,775
Akzo Nobel NV..................................... 350 60,346
Elsevier NV....................................... 13,100 211,910
Heineken NV....................................... 900 156,684
Hoogovens & Staalf................................ 1,241 50,861
ING NTFL.......................................... 6,465 272,291
KLM............................................... 1,725 63,805
KPN NV............................................ 6,524 272,202
Philips Electronics............................... 3,500 209,898
Royal Dutch Petroleum............................. 15,180 833,247
Unilever NV Cva................................... 4,760 293,443
-------------
2,642,462
NEW ZEALAND -- 3.02%
- ---------------------------------------------------------------------------------
Brierley Investment NPV........................... 361,000 257,826
Carter Holt Harvey NPV............................ 124,000 191,522
Fletcher Challenge Building....................... 46,000 94,019
Fletcher Challenge Energy......................... 50,000 175,066
Fletcher Challenge Forest Division NPV............ 106,433 88,374
Fletcher Challenge Paper.......................... 92,000 120,194
Lion Nathan Limited............................... 35,000 78,446
Telecom Corporation of New Zealand................ 154,000 746,658
Telecom Corporation of New Zealand (ADR).......... 1,600 62,000
-------------
1,814,105
SINGAPORE -- 1.64%
- ---------------------------------------------------------------------------------
City Developments................................. 14,000 64,788
</TABLE>
46 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
DBS Lands......................................... 27,000 $ 41,329
Elec & Eltek International........................ 3,300 15,114
Foreign Reg Bank Singapore........................ 12,000 102,521
Fraser & Neave.................................... 4,000 17,324
Hotel Properties.................................. 44,000 28,715
Keppel Corporation................................ 15,000 43,073
Keppel Land Ltd................................... 17,000 23,400
Natsteel Ltd...................................... 10,000 13,527
Overseas Chinese Bank............................. 16,200 94,192
Singapore Airlines................................ 22,000 143,578
Singapore Press Holdings.......................... 7,000 87,630
Singapore Telecom................................. 102,000 190,021
United Overseas Bank.............................. 19,000 105,399
Wing Tai Holdings................................. 11,000 12,857
-------------
983,468
SPAIN -- 2.34%
- ---------------------------------------------------------------------------------
Acerinox SA....................................... 200 29,629
Banco Bilbao Vizcaya.............................. 4,800 155,327
Banco Central Hispanoamericano.................... 4,100 99,842
Banco Popular Esp................................. 1,520 106,255
Banco Santander................................... 3,750 125,287
Corp Mapfre Sa.................................... 1,400 37,125
Empresa Nac Electricid............................ 9,400 166,899
Formento di Const Y Contra........................ 2,000 76,140
Gas Natural Sdg................................... 1,900 98,523
Iberdrola SA...................................... 10,600 139,501
Repsol SA (ADR)................................... 2,540 108,369
Tabacalera SA..................................... 200 16,213
Telefonica De Espana.............................. 5,800 165,606
Vallehermoso SA................................... 1,300 39,849
Viscofan Envoltura................................ 1,600 40,171
-------------
1,404,736
SWEDEN -- 1.66%
- ---------------------------------------------------------------------------------
ABB Ab............................................ 4,500 53,275
Astra Ab.......................................... 10,400 180,103
Electrolux Ab..................................... 700 48,577
Ericsson Lm Tel................................... 3,600 135,342
Hennes And Mauritz................................ 2,500 110,203
Nordbanken Holding................................ 23,900 135,154
Securitas Ab...................................... 1,500 45,340
Skanska Ab........................................ 1,300 53,294
Svenska Handelsbanken............................. 2,100 72,602
Swedish Match..................................... 18,200 60,744
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
Volvo Ab.......................................... 3,800 $ 101,941
-------------
996,575
SWITZERLAND -- 4.71%
- ---------------------------------------------------------------------------------
ABB Ag Series A................................... 55 69,070
Credit Suisse Group............................... 1,803 278,865
Holderbk Fn Glarus................................ 95 77,498
Nestle SA......................................... 217 325,084
Novartis AG....................................... 452 733,124
Roche Holdings AG................................. 51 506,265
Sairgroup (a)..................................... 57 78,018
Schw Ruckversicher................................ 128 239,321
SchweizBankgesellschaft........................... 132 190,791
Sulzer AG......................................... 98 62,105
Swiss Life........................................ 123 96,552
Zurich Versicherung............................... 354 168,618
-------------
2,825,311
UNITED KINGDOM -- 22.08%
- ---------------------------------------------------------------------------------
Abbey National.................................... 15,000 270,027
Barclays PLC...................................... 8,000 212,972
Bass.............................................. 10,200 158,662
BAT Industries.................................... 71,300 650,196
BG................................................ 71,911 323,632
Billiton PLC...................................... 58,000 148,613
Booker PLC........................................ 33,600 176,602
British Energy.................................... 35,000 243,172
British Petroleum................................. 41,577 550,003
British Sky Broadcasting.......................... 20,000 149,796
British Steel..................................... 55,000 118,342
British Telecom................................... 66,000 520,051
BTR PLC........................................... 29,000 87,644
Cable & Wireless.................................. 16,000 140,598
Cadbury Schweppes................................. 27,000 272,507
Centrica.......................................... 61,500 90,407
Charter........................................... 14,259 175,419
Coats Viyella PLC................................. 62,800 93,866
Diageo PLC........................................ 32,300 295,504
FKI............................................... 68,750 215,681
General Electric Company.......................... 64,600 418,586
Glaxo Wellcome.................................... 37,200 886,869
Great Universal Stores............................ 24,000 302,351
Greenalls Group................................... 20,000 143,883
Hanson PLC........................................ 29,437 131,331
Hillsdown Holdings................................ 75,000 182,317
House of Fraser PLC............................... 79,500 262,463
HSBC Holdings..................................... 16,000 415,224
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 47
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
Inchcape.......................................... 41,000 $ 109,768
Legal & General Group............................. 36,500 318,941
Lloyds TSB Group PLC.............................. 55,232 718,545
Marks & Spencer................................... 43,000 425,241
Mirror Group...................................... 78,800 252,387
National Westminster Bank......................... 16,000 265,954
Northern Foods.................................... 46,000 199,465
Peninsular and Oriental Steam Nav................. 26,500 301,419
Reckitt & Colman.................................. 8,650 135,683
Reuters Holdings.................................. 18,000 196,607
Rio Tinto Corporation............................. 17,100 210,791
RJB Mining........................................ 42,000 87,611
Royal Sun Alliance Ins............................ 20,538 206,787
Scottish Hydro.................................... 19,500 160,784
Sears............................................. 91,200 79,392
Sedgwick Group.................................... 60,400 140,874
Smithkline Beecham................................ 38,400 395,777
Tate & Lyle PLC................................... 19,000 156,350
TESCO............................................. 29,800 245,731
Thames Water...................................... 20,300 302,252
Unilever.......................................... 17,600 151,391
Vodafone Group.................................... 40,400 291,971
Williams Holdings................................. 46,000 255,376
-------------
13,245,815
TOTAL COMMON STOCKS
(IDENTIFIED COST $53,421,077).................................... 56,172,423
- ---------------------------------------------------------------------------------
PREFERRED STOCK -- 0.65%
- ---------------------------------------------------------------------------------
AUSTRALIA -- 0.13%
- ---------------------------------------------------------------------------------
News Corporation.................................. 15,116 74,815
GERMANY -- 0.27%
- ---------------------------------------------------------------------------------
Henkel Kgaa....................................... 2,600 164,040
ITALY -- 0.25%
- ---------------------------------------------------------------------------------
Fiat SPA.......................................... 98,100 149,729
-------------
TOTAL PREFERRED STOCK
(IDENTIFIED COST $369,264)....................................... $ 388,584
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER -- 2.98%
- ---------------------------------------------------------------------------------
Arco Coal Australia
5.90% due 01/23/98
Collateral:....................................... $ 1,000,000 $ 996,394
General Electric Capital Corporation Discount
5.78%, due 01/14/98............................... 800,000 798,330
-------------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $1,794,724)..................................... 1,794,724
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 2.88%
- ---------------------------------------------------------------------------------
State Street Bank & Trust
Repurchase Agreement, 4.00% due 01/02/98
Collateral: U.S. Treasury Note,
$1,750,000 5.625% due 10/31/99 Value $1,763,032... 1,725,000 1,725,000
-------------
TOTAL REPURCHASE AGREEMENTS
(IDENTIFIED COST $1,725,000)..................................... 1,725,000
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $57,310,065).................................... $ 60,080,731
OTHER ASSETS LESS LIABILITIES -- (0.14)%......................... (84,538)
-------------
NET ASSETS -- 100%............................................... $ 59,996,193
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
(Rts) Rights
(Wts) Warrants
ADR American Depository Receipts
See notes to financial statements.
48 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
THE ENTERPRISE GOVERNMENT SECURITIES PORTFOLIO
TCW FUNDS MANAGEMENT, INC.
Los Angeles, California
INVESTMENT MANAGEMENT
TCW Funds Management is a wholly owned subsidiary of TCW Management Company. TCW
manages more than $50 billion for institutional clients, and its normal
investment minimum is $25 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Government Securities Portfolio is to seek
current income and safety of principal, primarily from securities that are
obligations of the U.S. Government, its agencies or its instrumentalities.
INVESTMENT PHILOSOPHY
TCW's investment process is grounded in long-term value considerations. It does
not attempt to forecast short-term trends in interest rates and therefore, does
not frequently alter average portfolio maturities. The process focuses on
controlling the variables that are known and can be managed, such as the term
structure of interest rates, mortgage prepayment rates and security structure.
The portfolio remains substantially invested in mortgage-backed products under
the great majority of market conditions.
1997 PERFORMANCE REVIEW
The year was a strong one for fixed income investments, thanks to declining
inflationary pressures, a complacent Federal Reserve and strong investor demand
for all types of bonds. After beginning the year at 6.64 percent, the yield on
the 30-year benchmark U.S. Treasury bond rose to 7.10 percent by early April due
to market fears that the Fed would initiate another series of rate increases. A
steady stream of positive inflation reports, however, gave the Federal Reserve
no reason to raise interest rates and investors gained confidence and began
buying bonds. The bond market recovered fully from its weak first quarter and
gained some ground. During the second half of the year bond fund returns were
further bolstered by a "flight to quality" as investors moved money out of Asia
and into the traditional safe haven of the U.S. investment grade sector. By
December 31, the yield on the benchmark 30-year U.S. Treasury bond had fallen to
5.92 percent, its lowest level in more than four years.
During the first half of the year, stable prepayment rates and strong investor
demand brought mortgage spreads into their highest levels seen in a decade, yet
the sector retained much of its yield advantage over other fixed income
securities. In the second half of the year, the mortgage sector fared less well.
Declining interest rates intensified investors' fears about accelerating
prepayment rates and spreads widened.
THE ENTERPRISE GROUP OF FUNDS, INC. 49
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GOVERNMENT SECURITIES
PORTFOLIO-A ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
Average Annual With Load 3.25% 5.65% 7.43%
Average Annual Without Load 8.39% 6.67% 7.93%
Lehman Brothers Int. Gov't Bond* 7.72% 6.39% 8.13%
Lipper General US Gov't Bond Index** 8.81% 6.02% 7.75%
Enterprise Government Lehman Brothers Lipper General US
Securities Portfolio-A Int. Gov't Bond Gov't Bond Index
12/31/87 $ 9,522.29 $ 10,000.00 $ 10,000.00
1988 $ 9,950.79 $ 10,640.00 $ 10,666.00
1989 $ 10,945.87 $ 11,989.15 $ 11,989.65
1990 $ 11,974.78 $ 13,135.31 $ 12,951.22
1991 $ 13,483.61 $ 14,988.71 $ 14,845.98
1992 $ 14,818.48 $ 16,027.43 $ 15,751.59
1993 $ 16,196.60 $ 17,336.87 $ 17,062.12
1994 $ 14,932.62 $ 17,033.47 $ 16,253.38
1995 $ 17,769.82 $ 19,487.99 $ 19,006.70
1996 $ 18,887.54 $ 20,279.21 $ 19,388.43
1997 $ 20,472.20 $ 21,844.76 $ 21,096.55
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
increased $1,584 compared to $2,037 and $1,566 in the Lehman Brothers
Intermediate Government Corporate Bond Index and the Lehman Brothers
Intermediate Government Bond Index, respectively.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GOVERNMENT SECURITIES
PORTFOLIO-B ONE YEAR INCEPTION*
<S> <C> <C>
Annualized Return With CDSC 3.81% 7.66%
Annualized Return Without CDSC 7.81% 8.97%
Lehman Brothers Int. Gov't Bond Index* 7.72% 7.63%
Lipper General US Gov't Fund Index** 8.81% 7.95%
*From 5/1/95-12/31/97
Enterprise Government Securities
Portfolio-B Lehman Brothers Int. Gov't Bond Index
5/1/95 $10,000.00 $10,000.00
1995 $11,047.00 $10,858.63
1996 $11,666.74 $11,299.49
1997 $12,177.91 $12,171.81
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GOVERNMENT SECURITIES
PORTFOLIO-B
<S> <C>
Annualized Return With CDSC
Annualized Return Without CDSC
Lehman Brothers Int. Gov't Bond Index*
Lipper General US Gov't Fund Index**
*From 5/1/95-12/31/97
Lipper General US Gov't Fund Index
5/1/95 $10,000.00
1995 $11,052.45
1996 $11,274.43
1997 $12,267.70
</TABLE>
During 1997, an investment in the above hypothetical shareholder account
increased $511 compared to $1,109 and $873 in the Lehman Brothers Intermediate
Government Corporate Bond Index and the Lehman Brothers Intermediate Government
Bond Index, respectively.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GOVERNMENT SECURITIES
PORTFOLIO-C INCEPTION*
<S> <C> <C>
Cumulative Return With CDSC 6.49%
Cumulative Return Without CDSC 7.49%
Lehman Brothers Int. Gov't Bond Index* 6.74%
Lipper General US Gov't Fund Index** 8.14%
*From 5/1/97-12/31/97
Enterprise Government Securities
Portfolio-C Lehman Brothers Int. Gov't Bond Index
5/1/97 $10,000.00 $10,000.00
1997 $10,648.90 $10,674.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE GOVERNMENT SECURITIES
PORTFOLIO-C
<S> <C>
Cumulative Return With CDSC
Cumulative Return Without CDSC
Lehman Brothers Int. Gov't Bond Index*
Lipper General US Gov't Fund Index**
*From 5/1/97-12/31/97
Lipper General US Gov't Fund Index
5/1/97 $10,000.00
1997 $10,814.15
</TABLE>
50 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
INCEPTION*
<S> <C> <C>
Enterprise Government Securities
Portfolio-Y 3.23%
Lehman Brothers Int. Gov't Bond Index* 2.93%
Lipper General US Gov't Fund Index** 3.23%
*From 7/31/97-12/31/97
Enterprise Government Securities
Portfolio-Y Lehman Brothers Int. Gov't Bond Index
7/31/97 $10,000.00 $10,000.00
1997 $10,322.58 $10,293.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
<S> <C>
Enterprise Government Securities
Portfolio-Y
Lehman Brothers Int. Gov't Bond Index*
Lipper General US Gov't Fund Index**
*From 7/31/97-12/31/97
Lipper General US Gov't Fund Index
7/31/97 $10,000.00
1997 $10,323.03
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original purchase.
* The Lehman Brothers Intermediate Government Corporate Bond Index is an
unmanaged broad based index that excludes transaction and holding charges. The
Lehman Brothers Intermediate Government Bond Index replaces the Lehman Brothers
Intermediate Government Corporate Bond Index as the broad-based comparison to
the Government Securities Portfolio as it more appropriately reflects the
securities market in which the Portfolio invests.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
FUTURE INVESTMENT STRATEGY
The weakness in Asia may be likely to have a positive effect on the U.S. bond
market. If it takes a sizable bite out of U.S. exports and economic growth
slows, inflationary pressures are less likely to emerge and reduce bond returns.
The problems in Asia have also discouraged the Fed from raising interest rates,
which has been another positive for the U.S. market. High-grade U.S. bonds have
emerged from the turmoil of global equity markets as attractive investments.
TCW maintains a positive outlook on the mortgage sector for a number of reasons.
First and foremost is its emphasis on call protection and mitigating the
potentially negative affects of rapid prepayments on returns. This emphasis has
helped in previous periods of declining interest rates and TCW expects this
focus to continue to help its efforts. Furthermore, TCW anticipates an increase
in volatility that should create trading opportunities with the potential to
enhance performance. Finally, the strong technical factors that persisted for
much of last year remain in place today. There continues to be a constant demand
for mortgage product because of its attractive yield and the strong presence
maintained by the agencies.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
THE ENTERPRISE GROUP OF FUNDS, INC. 51
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
U.S. GOVERNMENT & AGENCY OR PRINCIPAL
OBLIGATIONS -- 88.78% AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
FEDERAL HOME LOAN BANKS -- .23%
- ------------------------------------------------------------------------------
Federal Home Loan Banks 5.20%, due 10/20/00....... $ 200,000 $ 200,054
FEDERAL HOME LOAN PARTICIPATION CERTIFICATES -- 12.15%
- ------------------------------------------------------------------------------
FHLPC 7.00%, due 09/01/17......................... 1,976,169 1,994,053
FHLPC 7.00%, due 10/01/17......................... 2,640,940 2,664,867
FHLPC 9.00%, due 10/01/22......................... 1,625,925 1,725,838
FHLPC 10.00%, due 10/01/18........................ 1,217,279 1,307,528
FHLPC 10.00%, due 07/01/20........................ 1,994,756 2,145,180
FHLPC 10.00%, due 10/01/20........................ 908,393 980,638
-----------
10,818,104
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 24.55%
- ------------------------------------------------------------------------------
GNMA 6.625%, due 11/15/28......................... 4,838,747 4,792,876
GNMA 7.00%, due 10/15/33.......................... 14,896,056 14,942,532
GNMA 7.50%, due 04/15/23.......................... 739,613 757,393
GNMA 7.50%, due 05/15/23.......................... 682,561 698,874
GNMA 7.50%, due 05/15/23.......................... 635,097 650,225
GNMA 9.00%, due 08/15/16.......................... 7,441 7,917
-----------
21,849,817
FEDERAL HOUSING ADMINISTRATION -- 35.48%
- ------------------------------------------------------------------------------
FHA 6.75%, due 11/01/28........................... 2,227,808 2,172,113
FHA 7.00%, due 10/01/28........................... 2,326,984 2,303,714
FHA 7.18%, due 02/20/29........................... 3,417,450 3,396,091
FHA 7.625%, due 06/01/28.......................... 3,716,441 3,767,542
FHA 7.75%, due 05/01/18........................... 6,349,982 6,524,607
FHA 7.75%, due 04/01/28........................... 3,882,094 3,988,852
FHA 7.80%, due 09/01/23........................... 2,774,323 2,850,617
FHA 8.65%, due 06/01/27........................... 3,667,077 3,850,431
FHA 8.70%, due 12/01/27........................... 2,580,409 2,715,881
-----------
31,569,848
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 15.73%
- ------------------------------------------------------------------------------
FNMA Medium Term Note 6.25%, due 01/14/04......... 250,000 248,318
FNMA Medium Term Note 6.28%, due 02/03/04......... 190,000 188,803
FNMA Principal Strip 7.70%, due 08/10/04.......... 125,000 113,398
FNMA 5.50%, due 01/01/09.......................... 2,058,235 1,998,546
FNMA 5.50%, due 02/01/09.......................... 3,542,342 3,440,075
FNMA 6.50%, due 02/01/09.......................... 163,632 163,780
FNMA 7.00%, due 03/01/14.......................... 1,824,749 1,837,504
FNMA 8.00%, due 11/01/16.......................... 2,814,055 2,926,617
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
FNMA 9.50%, due 08/01/20.......................... $1,035,118 $ 1,104,306
FNMA 9.50%, due 10/01/20.......................... 1,161,667 1,238,581
FNMA 10.00%, due 07/01/20......................... 235,710 254,604
FNMA 10.00%, due 07/01/20......................... 447,704 483,471
-----------
13,998,003
U.S. TREASURY NOTES -- 0.64%
- ------------------------------------------------------------------------------
U.S. Treasury Note 8.875%, due 05/15/00........... 380,000 407,124
U.S. Treasury Note Strip Zero Coupon, due
02/15/98.......................................... 65,000 64,561
U.S. Treasury Note Strip Zero Coupon, due
02/15/98.......................................... 100,000 99,330
-----------
571,015
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(IDENTIFIED COST $78,919,002)................................... 79,006,841
- ------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS (V) -- 4.25%
- ------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation 6.545%, due
08/15/23.......................................... 1,291,553 999,339
Federal Home Loan Mortgage Corporation 8.80%, due
12/15/23.......................................... 2,222,727 2,089,364
Federal National Mortgage Association 15.50%, due
03/25/23.......................................... 100,127 106,134
Federal National Mortgage Association Remic 6.50%,
due 06/25/23...................................... 500,000 489,800
Federal National Mortgage Association Remic 7.00%,
due 07/25/05...................................... 102,551 102,619
-----------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS (V)
(IDENTIFIED COST $4,003,787).................................... 3,787,256
- ------------------------------------------------------------------------------
COMMERCIAL PAPER -- 4.94%
- ------------------------------------------------------------------------------
International Lease Finance Corporation 6.05%, due
01/09/98.......................................... $4,400,000 4,394,084
-----------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $4,394,084).................................... 4,394,084
- ------------------------------------------------------------------------------
</TABLE>
52 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENTS -- 1.61%
- ------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement
4.00%, due 01/02/98...............................
Collateral: U.S. Treasury Note, $1,455,000 5.625%
due 11/30/99 Value $1,458,638..................... $1,430,000 $ 1,430,000
-----------
TOTAL REPURCHASE AGREEMENTS
(IDENTIFIED COST $1,430,000).................................... 1,430,000
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $88,746,873)................................... $88,618,181
OTHER ASSETS LESS LIABILITIES -- 0.42%.......................... 371,793
-----------
NET ASSETS -- 100%.............................................. $88,989,974
- ------------------------------------------------------------------------------
</TABLE>
(v) Variable interest rate security; interest rate is as of December 31, 1997.
The maturity date shown is the next interest reset date.
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 53
<PAGE>
THE ENTERPRISE HIGH-YIELD BOND PORTFOLIO
CAYWOOD-SCHOLL CAPITAL MANAGEMENT
San Diego, California
INVESTMENT MANAGEMENT
Caywood-Scholl has been investment adviser to the Enterprise High-Yield Bond
Portfolio since its inception in 1987. Caywood-Scholl manages more than $719
million for institutional clients, and its normal investment minimum is $1
million.
INVESTMENT OBJECTIVE
The objective of the Enterprise High-Yield Bond Portfolio is to seek maximum
current income, primarily from debt securities that are rated Ba or lower by
Moody's Investors Service, Inc., or BB or lower by Standard & Poor's.
INVESTMENT PHILOSOPHY
Caywood-Scholl's investment philosophy of seeking relative value and avoiding
risk is credit-research driven. The discipline of credit research facilitates
the informed use of a variety of lower-rated securities in aggressive fixed
income investing.
1997 PERFORMANCE REVIEW
The 1997 high-yield new issuance was a record $125.1 billion. For comparison,
1996 issuance was $73.4 billion. The estimated size of the high-yield market is
now $454 billion. Because spreads did not widen, 1997 was also a record year in
terms of new money committed to the high-yield market. Mutual fund inflows
reached a new high at $17.3 billion, coupon interest was estimated at $32
billion, and structured products contributed an estimated $5 billion to $8
billion. Accordingly, it appears that significant new funds were invested by
financial institutions, pension funds and foreign buyers. As a result, for the
majority of the year demand exceeded supply, causing spreads to tighten in
virtually all sectors.
Given the strong economic conditions that prevailed through 1997 and the
substantial amounts of liquidity in the U.S. financial system, it is not
surprising that defaults among high-yield issuers remained below their historic
averages.
However, 1997 also saw the decoupling of the U.S. Treasury and stock markets,
creating greater uncertainty in the high-yield market place. The decoupling is
the result of the economic crisis in Asia, with both markets forecasting slower
economic conditions. The magnitude of the impact and its duration are of great
importance to the high-yield market.
54 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE HIGH-YIELD BOND
PORTFOLIO-A ONE YEAR FIVE YEAR TEN YEAR
<S> <C> <C> <C>
Average Annual With Load 7.84% 10.66% 9.75%
Average Annual Without Load 13.18% 11.74% 10.28%
Lehman BB Index* 12.64% 11.52% 11.49%
Lipper High-Yield Bond Fund Index** 12.91% 11.50% 10.88%
Lipper High-Yield
Enterprise High-Yield Bond
Portfolio-A Lehman BB Index Bond Fund Index
12/31/87 $9,523.81 $10,000.00 $10,000.00
1988 $10,676.19 $11,377.00 $11,357.00
1989 $10,601.46 $12,265.54 $11,042.41
1990 $9,382.29 $12,274.13 $9,814.49
1991 $12,478.45 $15,346.34 $13,761.88
1992 $14,562.35 $17,198.65 $16,288.57
1993 $17,125.32 $19,928.07 $19,520.22
1994 $17,133.20 $19,850.35 $18,801.87
1995 $19,874.51 $24,185.67 $22,069.64
1996 $22,414.47 $26,343.03 $24,863.88
1997 $25,368.70 $29,672.79 $28,073.80
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE HIGH-YIELD BOND
PORTFOLIO-B ONE YEAR INCEPTION*
<S> <C> <C> <C>
Annualized Return With CDSC 8.59% 11.12%
Annualized Return Without CDSC 12.59% 12.36%
Lehman BB Index* 12.64% 11.77%
Lipper High-Yield Bond Fund Index** 12.91% 13.08%
*From 5/1/95-12/31/97
Enterprise High-Yield Bond
Portfolio-B Lehman BB Index Lipper High-Yield Bond Fund Index
5/1/95 $10,000.00 $10,000.00 $10,000.00
1995 $10,812.00 $10,971.00 $10,917.37
1996 $12,126.74 $11,949.61 $12,299.62
1997 $13,253.37 $13,460.04 $13,887.50
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE HIGH-YIELD BOND
PORTFOLIO-C INCEPTION*
<S> <C> <C> <C>
Cumulative Return With CDSC 9.87%
Cumulative Return Without CDSC 10.87%
Lehman BB Index* 10.16%
Lipper High-Yield Bond Fund Index** 11.52%
*From 5/1/97-12/31/97
Enterprise High-Yield Bond
Portfolio-C Lehman BB Index Lipper High-Yield Bond Fund Index
5/1/97 $10,000.00 $10,000.00 $10,000.00
1997 $10,987.40 $11,016.00 $11,151.68
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 55
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
INCEPTION*
<S> <C> <C> <C>
Enterprise High-Yield Bond
Portfolio-Y 4.38%
Lehman BB Index* 3.10%
Lipper High-Yield Bond Fund Index** 4.11%
*From 7/31/97-12/31/97
Enterprise High-Yield Bond
Portfolio-Y Lehman BB Index Lipper High-Yield Bond Fund Index
7/31/97 $10,000.00 $10,000.00 $10,000.00
1997 $10,438.40 $10,310.00 $10,411.07
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original purchase.
* The Lehman BB Index is an unmanaged index which excludes transaction and
holding charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
FUTURE INVESTMENT STRATEGY
The consensus is the Federal Reserve is on hold or may possibly consider an ease
in interest rates. Therefore the interest rate picture is at worst benign or
possibly constructive for the fixed income market. Key determinants for the
market in 1998 may be the extent the domestic economy slows in reaction to the
developments in Asia and the continuation of strong corporate cash flow. A
significant slowdown in economic activity may likely result in a decline in
equity prices. How sharp the decline is and its impact on the stock market will
be important. A relatively stable stock market, combined with 2.0 percent Gross
Domestic Product growth may lead to a stable high-yield market. As long as
default rates remain below or near their historic average the technical picture
should remain sound.
To date the impact of the Asia crisis upon the high-yield market has been
minimal. The technical balance of the market is favorable and may be expected to
remain so for the short term, so long as the stock market does not drop
substantially from its present levels. If the U.S. stock market begins to
discount significantly slower economic conditions, this may likely result in
wider spreads in the high-yield market. As always, Caywood-Scholl will emphasize
selectivity in the investment process, looking for those securities that offer
the most attractive risk-adjusted returns.
Like all investments in high-yield bond funds, an investment in the Enterprise
High-Yield Bond Portfolio carries an increased risk that issuers of securities
in which the High-Yield Bond Portfolio invests may default in the payment of
principal and interest as compared to the risk of such defaults in other income
portfolios. In addition, an investment in the High-Yield Bond Portfolio may be
subject to certain other risks relating to the market price, relative liquidity
in the secondary market and sensitivity to interest rate and economic changes on
the noninvestment grade securities in which the High-Yield Bond Portfolio
invests that are higher than may be associated with higher-rated, investment
grade securities.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
56 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
HIGH-YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
CORPORATE BONDS, CONVERTIBLE SECURITIES & COMMON & OR PRINCIPAL
PREFERRED STOCKS -- 82.16% AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
ADVERTISING -- 0.76%
- ------------------------------------------------------------------------------
Universal Outdoor Inc. 9.75%,
due 10/15/06...................................... $ 600,000 $ 674,125
APPAREL & TEXTILES -- 0.45%
- ------------------------------------------------------------------------------
Brazos Sportswear Inc. 10.50%,
due 07/01/07...................................... 400,000 399,000
AUTOMOTIVE -- 0.83%
- ------------------------------------------------------------------------------
United Auto Group Inc. 11.00%,
due 07/15/07...................................... 750,000 733,125
BANKING -- 2.46%
- ------------------------------------------------------------------------------
Bay View Capital Corporation Delaware 9.125%, due
08/15/07.......................................... 650,000 667,875
DVI Inc. 9.875%, due 02/01/04..................... 550,000 572,000
Imperial Credit Industries Inc.
9.875%, due 01/15/07.............................. 700,000 687,750
Southern Pacific Funding Corporation 11.50%, due
11/01/04.......................................... 250,000 248,750
-----------
2,176,375
BROADCASTING -- 7.02%
- ------------------------------------------------------------------------------
Chancellor Radio Broadcasting
8.125%, due 12/15/07.............................. 1,000,000 980,000
Echostar Communications Corporation Zero Coupon,
due 06/01/04...................................... 1,000,000 913,750
Fox Kids Worldwide Inc. Zero Coupon, due
11/01/07.......................................... 750,000 445,312
Fox Kids Worldwide Inc. 9.25%, due 11/01/07....... 600,000 580,500
Fox/Liberty Networks Llc/Fln 8.875%, due
08/15/07.......................................... 900,000 897,750
Fox/Liberty Networks Llc/Fln
Zero Coupon, due 08/15/07......................... 250,000 160,313
Rogers Communications Inc.
8.875%, due 07/15/07.............................. 500,000 500,000
Rogers Communications Inc.
9.125%, due 01/15/06.............................. 150,000 152,250
Sinclair Broadcast Group Inc.
8.75%, due 12/15/07............................... 750,000 755,625
TCI Satellite Entertainment Inc.
Zero Coupon, due 02/15/07......................... 1,250,000 835,937
-----------
6,221,437
BUILDING & CONSTRUCTION -- 1.20%
- ------------------------------------------------------------------------------
Building Materials Corporation America 8.00%, due
10/15/07.......................................... 450,000 451,125
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Nortek Inc. 9.125%,
due 09/01/07...................................... $ 600,000 $ 613,500
-----------
1,064,625
CABLE -- 4.13%
- ------------------------------------------------------------------------------
Adelphia Communications Corporation 9.25%, due
10/01/02.......................................... 250,000 255,000
Adelphia Communications Corporation 10.50%, due
07/15/04.......................................... 650,000 700,375
Cablevision Systems Corporation
7.875%, due 12/15/07.............................. 500,000 510,495
Century Communications Corporation 9.50%, due
03/01/05.......................................... 200,000 210,500
Century Communication
Corporation 9.75%, due 02/15/02................... 350,000 369,250
TCI Communications Inc. 6.875%, due 02/15/06...... 1,600,000 1,609,168
-----------
3,654,788
CHEMICALS -- 2.31%
- ------------------------------------------------------------------------------
General Chemical Corporation
9.25%, due 08/15/03............................... 550,000 570,625
Huntsman Polymers Corporation
11.75%, due 12/01/04.............................. 250,000 280,313
PCI Chemical Canada Inc. 9.25%, due 10/15/07...... 500,000 499,375
Pioneer Americas Acquisition Corporation 9.25%,
due 06/15/07...................................... 700,000 700,000
-----------
2,050,313
COMMUNICATIONS -- 4.73%
- ------------------------------------------------------------------------------
Globalstar L P 10.75%, due 11/01/04............... 500,000 488,750
Globalstar L P 11.375%,
due 02/15/04...................................... 700,000 705,250
Globalstar L P/Globalstar Capital
11.25%, due 06/15/04.............................. $ 100,000 100,750
Globalstar Telecommunications (Wts) (a) Wts
Expires 2/15/04................................... 700 79,800
Iridium Capital Corporation
13.00%, due 07/15/05.............................. $ 900,000 946,125
Iridium Capital Corporation
14.00%, due 07/15/05.............................. $ 800,000 876,000
Iridium World Communications (Wts) (a)............ 550 77,000
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 57
<PAGE>
HIGH-YIELD BOND PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Orion Network Systems Inc.
Zero Coupon, due 01/15/07......................... $ 850,000 $ 660,875
Orion Network Systems Inc.
Zero Coupon, due 01/15/07......................... 350,000 259,437
-----------
4,193,987
CONSUMER PRODUCTS -- 3.00%
- ------------------------------------------------------------------------------
CLN Holdings Inc. Zero
Coupon, due 05/15/01.............................. 550,000 365,750
E & S Holdings Corporation
10.375%, due 10/01/06............................. 400,000 370,000
French Fragrances Inc.
10.375%, due 05/15/07............................. 450,000 473,625
Mediq Inc. 7.50%, due 07/15/03.................... 940,000 962,325
Sealy Mattress Company
Zero Coupon, due 12/15/07......................... 800,000 485,000
-----------
2,656,700
CONTAINERS/PACKAGING -- 5.73%
- ------------------------------------------------------------------------------
Buckeye Cellulose Corporation
8.50%, due 12/15/05............................... 200,000 205,500
Huntsman Packaging Corporation
9.125%, due 10/01/07.............................. 200,000 206,000
Owens Illinois Inc. 8.10%,
due 05/15/07...................................... 1,850,000 1,980,536
Plastic Containers Inc. 10.00%,
due 12/15/06...................................... 300,000 315,750
Printpack Inc. 9.875%,
due 08/15/04...................................... 500,000 531,250
Printpack Inc.
10.625%, due 08/15/06............................. 400,000 425,000
Stone Container Corporation
10.75%, due 10/01/02.............................. 550,000 567,875
United States Can Corporation
10.125%, due 10/15/06............................. 800,000 844,000
-----------
5,075,911
CRUDE & PETROLEUM -- 0.28%
- ------------------------------------------------------------------------------
Clark Refining & Marketing Inc.
8.875%, due 11/15/07.............................. 250,000 251,875
ENERGY -- 1.93%
- ------------------------------------------------------------------------------
Canadian First Oil Ltd.
8.75%, due 09/15/07............................... 300,000 303,375
Chesapeake Energy Corporation
9.125%, due 04/15/06.............................. 200,000 206,000
Clark USA Inc. 10.875%,
due 12/01/05...................................... 1,100,000 1,197,625
-----------
1,707,000
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
ENTERTAINMENT & LEISURE -- 2.01%
- ------------------------------------------------------------------------------
AMF Group Inc. 10.875%,
due 03/15/06...................................... $1,000,000 $ 1,096,250
Cobblestone Golf Group Inc.
11.50%, due 06/01/03.............................. 400,000 435,000
Livent Inc. 9.375%, due 10/15/04.................. 250,000 250,000
-----------
1,781,250
FINANCE -- 0.93%
- ------------------------------------------------------------------------------
Western Financial Savings
Bank Orange California
8.875%, due 08/01/07.............................. 500,000 482,500
Western Financial Savings Bank Orange California
8.50%,
due 07/01/03...................................... 350,000 341,688
-----------
824,188
FOOD & BEVERAGES & TOBACCO -- 6.05%
- ------------------------------------------------------------------------------
Jitney Jungle Stores America Inc.
10.375%, due 09/15/07............................. 850,000 879,750
NBTY Inc. 8.625%, due 09/15/07.................... 1,000,000 1,000,000
North Atlantic Trading Inc.
11.00%, due 06/15/04.............................. 500,000 523,750
Ralphs Grocery Company
10.45%, due 06/15/04.............................. 300,000 337,500
Ralphs Grocery Company
11.00%, due 06/15/05.............................. 750,000 855,000
Randalls Food Markets Inc.
9.375%, due 07/01/07.............................. 1,000,000 1,030,000
Shoppers Food Warehouse Corporation 9.75%, due
06/15/04.......................................... 300,000 306,750
Twin Laboratories Inc. 10.25%,
due 05/15/06...................................... 400,000 430,000
-----------
5,362,750
GAMING -- 1.11%
- ------------------------------------------------------------------------------
Trump Atlantic City Associates
11.25%, due 05/01/06.............................. 1,000,000 980,000
HEALTH CARE -- 4.74%
- ------------------------------------------------------------------------------
Amerisource Distribution Corporation Class C...... 209 0
</TABLE>
58 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
HIGH-YIELD BOND PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Dade International Inc. 11.125%,
due 05/01/06...................................... $ 450,000 $ 500,625
Fresenius Med Care Capital Trust Preferred Secs... 250 262,500
Kinetic Concepts Inc. 9.625%,
due 11/01/07...................................... 350,000 355,250
Mariner Health Group Inc.
9.50%, due 04/01/06............................... 650,000 676,000
Maxxim Medical Inc. 10.50%,
due 08/01/06...................................... 1,000,000 1,082,500
Quest Diagnostics Inc. 10.75%,
due 12/15/06...................................... 750,000 821,250
Vencor Inc. 8.625%, due 07/15/07.................. 500,000 500,000
-----------
4,198,125
HOTELS & RESTAURANTS -- 3.17%
- ------------------------------------------------------------------------------
AFC Enterprises Inc. 10.25%,
due 05/15/07...................................... 550,000 580,250
Apple South Inc. 9.75%,
due 06/01/06...................................... 350,000 371,000
Foodmaker Corporation 9.75%,
due 11/01/03...................................... 350,000 353,500
Foodmaker Inc. (Wts) (a).......................... 250 4,750
Hammon John Q. Hotels
8.875%, due 02/15/04.............................. 300,000 306,375
HMH Properties Inc. 8.875%,
due 07/15/07...................................... 800,000 842,000
Perkins Family Restaurants L P
10.125%, due 12/15/07............................. 350,000 354,375
-----------
2,812,250
MACHINERY -- 1.55%
- ------------------------------------------------------------------------------
Axiohm Inc. 9.75%, due 10/01/07................... 500,000 507,500
Bucyrus International Inc. 9.75%,
due 09/15/07...................................... 350,000 353,500
Park Ohio Industries Inc.
9.25%, due 12/01/07............................... 500,000 511,875
-----------
1,372,875
MEDICAL INSTRUMENTS -- 0.29%
- ------------------------------------------------------------------------------
Physician Sales & Service Inc.
8.50%, due 10/01/07............................... 250,000 256,875
METALS & MINING -- 3.01%
- ------------------------------------------------------------------------------
Kaiser Aluminum & Chemical Corporation 10.875%,
due 10/15/06...................................... 500,000 543,750
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Oregon Steel Mills Inc. 11.00%,
due 06/15/03...................................... $ 650,000 $ 702,000
WCI Steel Inc. 10.00%, due 12/01/04............... 1,000,000 1,025,000
Wheeling Pittsburgh Corporation
9.25%, due 11/15/07............................... 400,000 392,000
-----------
2,662,750
OIL SERVICES -- 0.36%
- ------------------------------------------------------------------------------
Pride Petroleum Services Inc.
9.375%, due 05/01/07.............................. 300,000 322,500
PAPER & FOREST PRODUCTS -- 0.66%
- ------------------------------------------------------------------------------
Maxxam Group Inc. 11.25%,
due 08/01/03...................................... 550,000 583,000
PHARMACEUTICALS -- 0.91%
- ------------------------------------------------------------------------------
Pharmaceutical Fine Chemicals
9.75%, due 11/15/07............................... 800,000 810,000
PRINTING & PUBLISHING -- 1.60%
- ------------------------------------------------------------------------------
American Lawyer Media Inc.
9.75%, due 12/15/07............................... 250,000 253,750
Time Warner Inc. 7.75%,
due 06/15/05...................................... 750,000 795,000
Von Hoffmann Press Inc.
10.375%, due 05/15/07............................. 350,000 373,188
-----------
1,421,938
REAL ESTATE -- 0.57%
- ------------------------------------------------------------------------------
Crown Castle International Corporation Zero
Coupon, due 11/15/07.............................. 800,000 504,000
RETAIL -- 1.78%
- ------------------------------------------------------------------------------
Ann Taylor Inc. 8.75%, due 06/15/00............... 579,000 578,276
Cole National Group Inc.
8.625%, due 08/15/07.............................. 900,000 895,500
Michaels Stores Inc. 6.75%,
due 01/15/03...................................... 100,000 102,000
-----------
1,575,776
TELECOMMUNICATIONS -- 14.84%
- ------------------------------------------------------------------------------
American Communications Services Inc. (Wts) (a)... 800 75,200
American Communications Services Inc. Zero Coupon,
due 11/01/05...................................... 1,100,000 880,000
Call-Net Enterprises
Zero Coupon, due 08/15/07......................... 300,000 205,125
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 59
<PAGE>
HIGH-YIELD BOND PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
CCPR Services Inc. 10.00%,
due 02/01/07...................................... $1,000,000 $ 997,500
Comcast Cellular Holdings Inc.
9.50%, due 05/01/07............................... 1,300,000 1,358,500
ICG Holdings Inc. Zero Coupon, due 05/01/06....... 1,350,000 1,012,500
Intermedia Communications Inc.
Deposit Share 1/100 Junior Preferred Cnv E 144A... 7,500 197,813
Intermedia Communications Inc.
8.50%, due 01/15/08............................... 600,000 600,000
Intermedia Communications Inc.
8.875%, due 11/01/07.............................. 200,000 206,000
McLeod USA Inc. Zero Coupon, due 03/01/07......... 800,000 581,000
Metronet Communications Corp Zero Coupon, due
11/01/07.......................................... 500,000 305,625
Metronet Communications Corporation 12.00%, due
08/15/07.......................................... 150,000 173,250
Nextel Communications Inc.
Zero Coupon, due 09/15/07......................... 1,550,000 980,375
Nextel Communications Inc.
Zero Coupon, due 10/31/07......................... 500,000 304,375
Nextlink Communications Inc.
9.625%, due 10/01/07.............................. 250,000 256,875
Pagemart (Wts) (a)................................ 3,450 24,150
Pagemart Nationwide Inc........................... 1,750 17,500
RCN Corporation Zero Coupon, due 10/15/07......... 850,000 534,437
RCN Corporation 10.00%,
due 10/15/07...................................... 250,000 257,500
Rogers Cantel Inc. 8.80%, due 10/01/07............ 1,050,000 1,047,375
Sprint Spectrum L P Zero Coupon, due 08/15/06..... 1,250,000 978,125
Sprint Spectrum L P 11.00%,
due 08/15/06...................................... 650,000 729,625
Teleport Communications Group
Zero Coupon, due 07/01/07......................... 1,200,000 984,000
Winstar Equipment Corporation
12.50%, due 03/15/04.............................. 400,000 445,000
-----------
13,151,850
TEXTILES -- 1.63%
- ------------------------------------------------------------------------------
Polymer Group Inc. 9.00%,
due 07/01/07...................................... 550,000 548,625
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Carter William Company Acquired 10.375%, due
12/01/06.......................................... $ 850,000 $ 896,750
-----------
1,445,375
TRANSPORTATION -- 0.32%
- ------------------------------------------------------------------------------
Atlas Air Inc. 12.25%,
due 12/01/02...................................... 250,000 279,688
UTILITIES -- 1.42%
- ------------------------------------------------------------------------------
Calenergy Inc. 7.63%,
due 10/15/07...................................... 250,000 251,227
Ferrellgas Partners L P 9.375%,
due 06/15/06...................................... 550,000 581,625
Midland Cogeneration Venture L P
10.33%, due 07/23/02.............................. 188,369 202,496
Midland Funding Corporation
10.33%, due 07/23/02.............................. 202,832 218,045
-----------
1,253,393
WASTE MANAGEMENT -- 0.37%
- ------------------------------------------------------------------------------
Allied Waste N A Inc. 10.25%,
due 12/01/06...................................... 300,000 328,125
TOTAL CORPORATE BONDS, CONVERTIBLE SECURITIES & COMMON STOCKS
(IDENTIFIED COST $70,425,062)................................... 72,785,969
- ------------------------------------------------------------------------------
FOREIGN BONDS -- 10.29%
- ------------------------------------------------------------------------------
APPAREL & TEXTILES -- 0.29%
- ------------------------------------------------------------------------------
Reliance Industries Ltd. 8.25%,
due 01/15/27...................................... 250,000 260,505
BASIC INDUSTRIES -- 1.22%
- ------------------------------------------------------------------------------
Cemex S A 12.75%, due 07/15/06.................... 900,000 1,080,000
BROADCASTING -- 1.40%
- ------------------------------------------------------------------------------
Grupo Televisa S A De C V 11.375%, due 05/15/03... 700,000 764,750
Grupo Televisa S A De C V
11.875%, due 05/15/06............................. 150,000 170,062
TV Azteca S A De C V 10.125%,
due 02/15/04...................................... 300,000 309,750
-----------
1,244,562
CABLE -- 0.70%
- ------------------------------------------------------------------------------
Kabelmedia Holding Zero Coupon, due 08/01/06...... 850,000 623,688
CONTAINERS/PACKAGING -- 0.74%
- ------------------------------------------------------------------------------
</TABLE>
60 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
HIGH-YIELD BOND PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Viacap Sa De C V 11.375%, due 05/15/07............ $ 600,000 $ 652,500
ENERGY -- 0.73%
- ------------------------------------------------------------------------------
Petroleos Mexicanos 8.85%, due 09/15/07........... 250,000 247,670
Petroleos Mexicanos 9.00%, due 06/01/07........... 400,000 399,740
-----------
647,410
GOVERNMENT BOND -- 3.05%
- ------------------------------------------------------------------------------
Argentina Global 11.00%, due 10/09/06............. 350,000 374,500
Argentina Rep 11.00%, due 10/09/06................ 550,000 591,250
Mexico United Mexico States 9.875%, due
01/15/07.......................................... 950,000 990,750
Russian Federation 10.00%, due 06/26/07........... 300,000 274,500
St. Petersburg Russia 9.50%, due 06/18/02......... 300,000 267,750
Turkiye Cumhuriyeti 10.00%, due 09/19/07.......... 200,000 203,740
-----------
2,702,490
PAPER & FOREST PRODUCTS -- 0.86%
- ------------------------------------------------------------------------------
Indah Kiat Finance Mautitius Limited 10.00%, due
07/01/07.......................................... 450,000 373,500
Pindo Deli Finance Mauritius Ltd. 10.75%, due
10/01/07.......................................... 450,000 385,875
-----------
759,375
TELECOMMUNICATIONS -- 0.44%
- ------------------------------------------------------------------------------
Hermes Europe Railtel B V 11.50%, due 08/15/07.... 350,000 387,625
TRANSPORTATION -- 0.86%
- ------------------------------------------------------------------------------
TFM S A Ce C V 10.25%,
due 06/15/07...................................... 250,000 256,875
Transportacion Maritima Mexica 10.00%, due
11/15/06.......................................... 500,000 502,500
-----------
759,375
TOTAL FOREIGN BONDS
(IDENTIFIED COST $8,839,163).................................... 9,117,530
- ------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
U.S. TREASURY BONDS -- 2.38%
- ------------------------------------------------------------------------------
U.S.Treasury Bonds 6.375%,
due 08/15/27...................................... $2,000,000 $ 2,110,480
TOTAL U.S. TREASURY BONDS
(IDENTIFIED COST $2,056,314).................................... 2,110,480
- ------------------------------------------------------------------------------
U.S. TREASURY NOTES -- 1.16%
- ------------------------------------------------------------------------------
U.S. Treasury Note 6.125%, due 08/15/07........... 1,000,000 1,027,440
TOTAL U.S. TREASURY NOTES
(IDENTIFIED COST $1,014,147).................................... 1,027,440
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.85%
- ------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement
4.00%, due 01/02/98 Collateral: U.S. Treasury Note
$2,570,000 5.625% due 11/30/99 Value $2,576,425... 2,525,000 2,525,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $2,525,000).................................... 2,525,000
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $84,924,620)................................... $87,566,419
OTHER ASSETS LESS LIABILITIES -- 1.16%.......................... 1,025,510
-----------
NET ASSETS 100%................................................. $88,591,929
- ------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 61
<PAGE>
THE ENTERPRISE TAX-EXEMPT INCOME PORTFOLIO
MBIA CAPITAL MANAGEMENT CORP.
Armonk, New York
INVESTMENT MANAGEMENT
Morgan Stanley Asset Management, Inc., was the investment adviser to the
Enterprise Tax Exempt Income Portfolio from January 1, 1992, through December
31, 1997. MBIA Capital Management Corp. became manager of the Enterprise
Tax-Exempt Income Portfolio on January 1, 1998. MBIA Capital Management Corp.
manages approximately $11 billion for institutional clients, and its normal
investment minimum is $10 million.
INVESTMENT OBJECTIVE
The investment objective of the Enterprise Tax-Exempt Income Portfolio is to
seek a high level of current income exempt from federal income tax, with
consideration given to preservation of principal, primarily from investment in a
diversified portfolio of long-term investment-grade municipal bonds.
INVESTMENT PHILOSOPHY
MBIA Capital Management uses a value-driven, bottom-up investment selection
process. Recognition that interest rate movement is uncertain and that yield is
a dominant source of return drives its decisions. The key to performance is to
buy yield at the right price, in the right sector and in the right part of the
yield curve.
1997 PERFORMANCE REVIEW (MORGAN STANLEY ASSET MANAGEMENT, INC.)
The municipal bond market produced solid returns for the year. Benefiting from
the turmoil in the broader global marketplace, municipals, while lagging
treasuries, finished the year with three straight quarters in which yields
declined. While the major inflationary measures had already been remarkably
well-behaved, the Asian crisis further reduced inflation expectations, causing
long rates to fall. In addition, the rapid decline in the U.S. budget deficit
has reduced the outlook for the future issuance of treasury securities, further
supporting the treasury rally that spilled over into the municipal bond market.
The low interest rate levels in 1997 led to an increase in both new money and
refunding issuance in the municipal bond market. The growing demand for public
works along with lower absolute interest rates and improving state and local
finances together combined to fuel the increase. Bonds issued for educational
purposes led the stampede of issuance, followed by health care and
transportation sectors. The demand side of the equation was led by the healthy
appetite of insurance companies spurred on by attractive municipal/treasury
ratios and individual investors who became enamored with bonds as they were not
so subtly reminded that equity markets can decline.
62 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE TAX-EXEMPT INCOME
PORTFOLIO-A ONE YEAR FIVE YEAR
<S> <C> <C>
Average Annual With Load 1.88% 4.82%
Average Annual Without Load 6.96% 5.85%
Lehman Municipal Bond Index* 9.20% 7.37%
Lipper General Municipal Debt Index** 9.03% 6.90%
Enterprise Tax-Exempt Income
Portfolio-A Lehman Municipal Bond Index
12/31/87 $9,527.19 $10,000.00
1988 $10,565.65 $11,015.00
1989 $11,482.75 $12,202.42
1990 $12,138.42 $13,091.97
1991 $13,489.42 $14,682.65
1992 $14,552.39 $15,977.66
1993 $16,118.23 $17,939.71
1994 $15,200.46 $17,017.61
1995 $17,457.72 $19,988.89
1996 $18,075.73 $20,876.39
1997 $19,333.80 $22,797.02
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE TAX-EXEMPT INCOME
PORTFOLIO-A TEN YEAR
<S> <C>
Average Annual With Load 6.81%
Average Annual Without Load 7.33%
Lehman Municipal Bond Index* 8.59%
Lipper General Municipal Debt Index** 8.29%
Lipper General Municipal Debt Index
12/31/87 $10,000.00
1988 $11,166.00
1989 $12,278.13
1990 $13,014.82
1991 $14,581.81
1992 $15,879.59
1993 $17,853.42
1994 $16,775.07
1995 $19,678.84
1996 $20,327.65
1997 $22,163.24
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE TAX-EXEMPT INCOME
PORTFOLIO-B ONE YEAR INCEPTION*
<S> <C> <C>
Annualized Return With CDSC 2.36% 4.81%
Annualized Return Without CDSC 6.36% 6.18%
Lehman Municipal Bond Index* 9.20% 8.70%
Lipper General Municipal Debt Index** 9.03% 8.18%
*From 5/1/95-12/31/97
Enterprise Tax-Exempt Income
Portfolio-B Lehman Municipal Bond Index
5/1/95 $10,000.00 $10,000.00
1995 $10,718.20 $10,957.45
1996 $11,035.46 $11,443.96
1997 $11,337.31 $12,496.80
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE TAX-EXEMPT INCOME
PORTFOLIO-B
<S> <C>
Annualized Return With CDSC
Annualized Return Without CDSC
Lehman Municipal Bond Index*
Lipper General Municipal Debt Index**
*From 5/1/95-12/31/97
Lipper General Municipal Debt Index
5/1/95 $10,000.00
1995 $10,954.14
1996 $11,315.31
1997 $12,337.08
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE TAX-EXEMPT INCOME
PORTFOLIO-C INCEPTION*
<S> <C> <C>
Cumulative Return With CDSC 5.14%
Cumulative Return Without CDSC 6.14%
Lehman Municipal Bond Index* 8.55%
Lipper General Municipal Debt Index** 8.60%
*From 5/1/97-12/31/97
Enterprise Tax-Exempt Income
Portfolio-C Lehman Municipal Bond Index
5/1/97 $10,000.00 $10,000.00
1997 $10,513.60 $10,855.00
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE TAX-EXEMPT INCOME
PORTFOLIO-C
<S> <C>
Cumulative Return With CDSC
Cumulative Return Without CDSC
Lehman Municipal Bond Index*
Lipper General Municipal Debt Index**
*From 5/1/97-12/31/97
Lipper General Municipal Debt Index
5/1/97 $10,000.00
1997 $10,860.40
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original purchase.
* The Lehman Municipal Bond Index is an unmanaged index which excludes
transaction and holding charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
THE ENTERPRISE GROUP OF FUNDS, INC. 63
<PAGE>
FUTURE INVESTMENT STRATEGY (MBIA)
The Asian financial crisis continues to be the focus of domestic equity and
fixed income markets and is likely to remain so until economic reform measures
are instituted. The U.S. bond market has rallied as investors wary of equity and
emerging market debt look to bonds as a safe haven. The flight to quality may
especially benefit treasuries and municipal bonds. MBIA, therefore, expects
investors to increase their exposure to both treasuries and municipal bonds at
the expense of equities.
Municipal bonds are extremely attractive relative to treasuries on a historical
basis. Yield ratios are approaching 90 percent, levels the market has not
experienced since the flat tax scare of 1996 and which cannot be sustained,
given current tax rates. Credit spreads on municipals remain tight and have been
relatively unaffected by Asia. MBIA sees this as an opportunity to upgrade
portfolios at little sacrifice in potential yield. MBIA continues to emphasize
better-structured bonds as a way to reduce reinvestment risk and to realize the
greatest return from the bond market rally.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
64 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
TAX-EXEMPT INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
MUNICIPAL BONDS -- 96.42% AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------
ALABAMA -- 1.01%
- ----------------------------------------------------------------------------------
Alabama Housing Finance Authority Single
Family Mortgage Revenue Home Mortgage Series
A-1 6.55% due 10/01/14........................ $ 250,000 $ 270,758
ARIZONA -- 3.60%
- ----------------------------------------------------------------------------------
Salt River Project, Arizona Agriculture Import
and Power District Electric System Revenue
5.00% due 01/01/30............................ 1,000,000 964,700
CALIFORNIA -- 1.03%
- ----------------------------------------------------------------------------------
California State General Obligation Bonds
6.10% due 09/01/04............................ 150,000 165,645
Los Angeles County, California Sales Tax
Series A Revenue 6.75% due 07/01/18
Prerefunded 07/01/01 at 102................... 100,000 110,434
-------------
276,079
DELAWARE -- 0.41%
- ----------------------------------------------------------------------------------
Delaware Transportation Authority Systems
Revenue 6.50% due 07/01/11 Prerefunded
07/01/01 at 102............................... 100,000 109,458
FLORIDA -- 8.82%
- ----------------------------------------------------------------------------------
Broward County, Broward Recovery Revenue 7.95%
due 12/01/08.................................. 310,000 337,460
Florida State Board Education Capital Outlay
Series C 5.50% due 06/01/23................... 1,500,000 1,529,640
Florida State Board Education Capital Outlay
Series A 7.25% due 06/01/23................... 170,000 184,759
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------
Orlando Florida Utilities Commission Water and
Electric Revenue Refunding Sub Series D 6.75%
due 10/01/17.................................. $ 250,000 $ 307,380
-------------
2,359,239
GEORGIA -- 2.01%
- ----------------------------------------------------------------------------------
Atlanta Downtown Development Authority
Underground Atlanta Project 6.25% due
10/01/12...................................... 500,000 538,145
IDAHO -- 1.35%
- ----------------------------------------------------------------------------------
Idaho Housing Agency Single Family Mortgage
Revenue Series F-2 (AMT) 7.80% due 01/01/23... 340,000 360,777
LOUISIANA -- 1.23%
- ----------------------------------------------------------------------------------
Louisiana State Offshore Term Authority
Deepwater Port Revenue Series E 7.60% due
09/01/10...................................... 300,000 328,317
MARYLAND -- 3.98%
- ----------------------------------------------------------------------------------
Maryland State General Obligation Bonds 5.50%
due 02/01/07.................................. 1,000,000 1,064,470
MASSACHUSETTS -- 2.96%
- ----------------------------------------------------------------------------------
Massachusetts State Housing Finance Agency
Revenue Residential FNMA Collateral-A 6.90%
due 11/15/24.................................. 750,000 792,300
MICHIGAN -- 4.07%
- ----------------------------------------------------------------------------------
Michigan State Building Authority Revenue
Series I 6.40% due 10/01/04................... 1,000,000 1,089,110
MISSOURI -- 0.46%
- ----------------------------------------------------------------------------------
Missouri State Housing Development Community
Mortgage Single Family GNMA Revenue Series B
(AMT) 8.25% due 05/01/19...................... 120,000 123,986
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 65
<PAGE>
TAX-EXEMPT INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------
NEBRASKA -- 3.88%
- ----------------------------------------------------------------------------------
Omaha Public Power District Nebraska Electric
Revenue 5.60% due 02/01/12.................... $ 1,000,000 $ 1,038,290
NEVADA -- 7.50%
- ----------------------------------------------------------------------------------
Clark County School District Series A MBIA
7.00% due 06/01/11............................ 750,000 919,957
Nevada State General Obligation Bonds 6.25%
due 07/01/12 Prefunded 07/01/02 at 101........ 1,000,000 1,087,040
-------------
2,006,997
NEW MEXICO -- 1.54%
- ----------------------------------------------------------------------------------
New Mexico Mortgage Finance Authority Single
Family Mortgage 7.80% due 09/01/17............ 395,000 413,253
NEW YORK -- 11.61%
- ----------------------------------------------------------------------------------
New York State Local Government Assistance
7.00% due 04/01/21 Prerefunded 04/01/01 at
102........................................... 200,000 221,222
New York State Mortgage Agency Revenue 7.95%
due 10/01/14.................................. 200,000 205,090
New York State Power Authority Revenue &
General Purpose Series CC 5.00% due
01/01/09...................................... 1,200,000 1,217,568
Triborough Bridge & Tunnel Authority, New York
General Purpose Series A 6.00% due 01/01/10... 1,300,000 1,462,058
-------------
3,105,938
OHIO -- 0.23%
- ----------------------------------------------------------------------------------
Ohio Housing Finance Agency Single Family
Mortgage Revenue GNMA (AMT) 8.25% due
12/15/19...................................... 60,000 62,573
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------
OKLAHOMA -- 6.01%
- ----------------------------------------------------------------------------------
Tulsa, Oklahoma General Obligation Bonds 6.30%
due 06/01/17.................................. $ 1,500,000 $ 1,607,520
OREGON -- 1.57%
- ----------------------------------------------------------------------------------
Oregon State General Obligation Bonds 7.00%
due 12/01/11.................................. 400,000 419,588
PENNSYLVANIA -- 3.08%
- ----------------------------------------------------------------------------------
Philadelphia Pennsylvania Hospitals & Higher
Education Facilities Hospital Revenue 6.50%
due 02/15/09 Prerefunded 02/15/02 at 102...... 750,000 825,578
SOUTH CAROLINA -- 0.19%
- ----------------------------------------------------------------------------------
Charleston County South Carolina Resource
Recovery Revenue (AMT) 9.25% due 01/01/10..... 50,000 51,500
TEXAS -- 8.34%
- ----------------------------------------------------------------------------------
Brazos River Authority Texas Revenue 8.25% due
05/01/15...................................... 150,000 154,940
Houston Texas General Obligation Bonds 6.00%
due 03/01/05.................................. 500,000 532,135
San Antonio, Revenue Refunding General
Obligation Bonds 5.75% due 08/01/13........... 975,000 1,007,721
Texas Housing Agency Residential Development
Revenue Series A GNMA Collateral 7.60% due
07/01/16...................................... 95,000 98,787
Texas State Department Housing Community
Affairs Home Mortgage Revenue GNMA Collateral
Series A 6.95% due 07/01/23................... 410,000 438,228
-------------
2,231,811
</TABLE>
66 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
TAX-EXEMPT INCOME PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------
UTAH -- 0.25%
- ----------------------------------------------------------------------------------
Utah State Housing Finance Agency Single
Family Mortgage Series E (AMT) 9.00% due
01/01/19...................................... $ 60,000 $ 65,772
VIRGINIA -- 11.65%
- ----------------------------------------------------------------------------------
Fairfax County, Virginia General Obligation
Bonds 5.40% due 05/01/11...................... 1,000,000 1,039,110
Fairfax County, Virginia Water Authority
Revenue 5.75% due 04/01/29.................... 1,000,000 1,020,090
Virginia State Transportation Board Revenue
6.00% due 04/01/10............................ 1,000,000 1,058,150
-------------
3,117,350
WASHINGTON -- 7.95%
- ----------------------------------------------------------------------------------
Tacoma, Washington Electric Systems Revenue
AMBAC 6.15% due 01/01/08...................... 1,000,000 1,072,160
Washington State General Obligation Series 93A
5.75% due 10/01/17............................ 1,000,000 1,055,740
-------------
2,127,900
WISCONSIN -- 1.69%
- ----------------------------------------------------------------------------------
Wisconsin Housing & Economic Development
Authority Home Ownership Revenue Series A
7.75% due 09/01/17............................ 430,000 452,579
TOTAL MUNICIPAL BONDS
(IDENTIFIED COST $24,044,194)..................................... 25,803,988
- ----------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ----------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT INVESTMENTS -- 2.62%
- ----------------------------------------------------------------------------------
CALIFORNIA -- 0.38%
- ----------------------------------------------------------------------------------
California Pollution Control Financing (v)
Adjustment Adjusted Tend Southern California
Edison D 3.45% due 02/28/08................... $ 100,000 $ 100,000
NEW YORK -- 2.24%
- ----------------------------------------------------------------------------------
New York City Municipal Water Finance
Authority (v) Systems Revenue Series C 3.75%
due 06/15/22.................................. 400,000 400,000
New York New York (v) Series A9 3.75% due
08/01/17...................................... 200,000 200,000
-------------
600,000
TOTAL SHORT-TERM TAX-EXEMPT INVESTMENTS
(IDENTIFIED COST $700,000)........................................ 700,000
- ----------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $24,744,194)..................................... $ 26,503,988
OTHER ASSETS LESS LIABILITIES -- 0.96%............................ 258,220
-------------
NET ASSETS -- 100%................................................ $ 26,762,208
- ----------------------------------------------------------------------------------
</TABLE>
AMT Securities subject to Alternative Minimum Tax
(v) Variable interest rate security; Interest rate is as of December 31, 1997,
and is adjusted daily. Maturity date shown is the next interest reset date.
See notes to financial statements
THE ENTERPRISE GROUP OF FUNDS, INC. 67
<PAGE>
THE ENTERPRISE MANAGED PORTFOLIO
OPCAP ADVISORS
New York, New York
INVESTMENT MANAGEMENT
OpCap Advisors, a wholly owned subsidiary of Oppenheimer Capital, became
investment adviser to this new Enterprise fund on October 1, 1994. Oppenheimer
Capital manages approximately $61 billion for institutional clients, and its
normal investment minimum is $10 million.
INVESTMENT OBJECTIVE
The objective of the Enterprise Managed Portfolio is to seek growth of capital
over time through investment in a portfolio consisting of common stocks, bonds
and cash equivalents, the percentages of which will vary based on the manager's
assessment of relative investment values.
INVESTMENT PHILOSOPHY
OpCap's investment process seeks to take advantage of opportunities in all
market sectors by shifting the investment mix among stock, bonds and money
market instruments. The focus of the investment process is to identify quality
companies that are undervalued in the market. The average annual return on
equity of these companies is in excess of the average return on equity of the
companies in the S&P 500 Index, while the average price-to-earnings ratio of
these companies is significantly below the price-to-earnings ratio for those
companies. This combination of high returns on equity and low security
valuations helps preserve capital in down markets and provides opportunity for
investment profit over time.
1997 PERFORMANCE REVIEW
The recent volatility of the U.S. dollar and other currencies, coupled with the
Asian financial crisis, has caused some investors to be concerned about the
outlook for large U.S. multinational companies. As a result, some of these
companies' stocks fared worse in 1997 than those of more purely domestic
companies. Such companies owned by the portfolio include McDonald's Corp. and
Citicorp.
At the end of 1997, the portfolio's net assets were allocated 82 percent to
common stocks and 18 percent to cash and cash equivalents.
Some of the stocks owned by the portfolio delivered exceptional returns in 1997.
Many were in the financial services sector, which in general performed well.
They included, among others, Federal Home Loan Mortgage Corp. (Freddie Mac), a
home mortgage company, and ACE Ltd., a Bermuda based provider of excess
directors and officers liability insurance. Freddie Mac's stock was up 52
percent for the year, while ACE stock rose more than 60 percent.
A few other holdings were disappointing. The market price of McDonald's Corp.,
the fast-food chain, increased only about five percent in 1997 and the market
price of Boeing Co., the aircraft manufacturer, declined. Boeing's stock
suffered when it became apparent the company was experiencing production
problems. OpCap expects these problems to last through mid-1998, after which
cash flow should accelerate.
68 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
OpCap recently established a new position in the common stock of Time Warner,
Inc., and eliminated the portfolio's holdings in Freeport McMoRan Copper & Gold,
Hercules, Inc., Tele-Communications Inc., Union Pacific Corp. and Waste
Management, Inc.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE MANAGED PORTFOLIO-A ONE YEAR THREE YEAR INCEPTION*
<S> <C> <C> <C> <C> <C>
Average Annual With Load 15.26% 24.72% 21.96%
Average Annual Without Load 21.05% 26.72% 23.81%
S&P 500* 33.36% 31.13% 28.40%
Lipper Flexible Portfolio Fund
Index** 18.77% 18.74% 16.51%
*From 10/1/94-12/31/97
Lipper Flexible Portfolio Fund
Enterprise Managed Portfolio-A S&P 500 Index
10/1/94 $ 9,523.81 $ 10,000.00 $ 10,000.00
1995 $ 12,905.21 $ 13,753.25 $ 12,135.30
1996 $ 15,754.68 $ 16,904.12 $ 13,840.31
1997 $ 19,071.03 $ 22,543.33 $ 16,438.14
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE MANAGED PORTFOLIO-B ONE YEAR INCEPTION*
<S> <C> <C> <C>
Annualized Return With CDSC 16.45% 21.77%
Annualized Return Without CDSC 20.45% 22.84%
S&P 500* 33.36% 29.47%
Lipper Flexible Portfolio Fund
Index** 10.77% 17.88%
*From 5/1/95-12/31/97
Enterprise Managed Lipper Flexible Portfolio Fund
Portfolio-B S&P 500 Index
5/1/95 $10,000.00 $10,000.00 $10,000.00
1995 $11,383.20 $12,162.54 $11,455.00
1996 $14,382.90 $14,948.98 $13,064.43
1997 $16,924.21 $19,935.95 $15,516.62
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 69
<PAGE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ENTERPRISE MANAGED PORTFOLIO-C INCEPTION*
<S> <C> <C> <C>
Cumulative Return With CDSC 15.74%
Cumulative Return Without CDSC 16.74%
S&P 500* 22.56%
Lipper Flexible Portfolio Fund
Index** 23.10%
*From 5/1/97-12/31/97
Lipper Flexible Portfolio Fund
Enterprise Managed Portfolio-C S&P 500 Index
5/1/97 $10,000.00 $10,000.00 $10,000.00
1997 $13,573.70 $12,256.00 $12,310.00
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDING DECEMBER 31, 1997
ONE YEAR INCEPTION*
<S> <C> <C> <C>
Enterprise Managed Portfolio-Y 21.60% 21.61%
S&P 500* 33.36% 27.88%
Lipper Flexible Portfolio Fund
Index** 18.77% 16.12%
*From 7/31/95-12/31/97
Lipper Flexible Portfolio Fund
Enterprise Managed Portfolio-Y S&P 500 Index
7/31/95 $10,000.00 $10,000.00
1995 $10,770.77 $11,067.84
1996 $13,208.20 $13,603.48
1997 $16,061.17 $18,141.60
</TABLE>
Enterprise performance numbers include the maximum sales charge and all fees.
Remember that historic performance does not predict future performance. Shares
may be worth more or less at redemption than at original purchase.
* The S&P 500 index is an unmanaged index which includes 500 companies which
tend to be leaders in important industries within the U.S. economy and excludes
any transaction or holding charges.
** Lipper Analytical Services is an independent reporting service that measures
the performance of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales charges and
redemption fees.
70 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
FUTURE INVESTMENT STRATEGY
OpCap is a long-term investor in superior businesses that may increase the value
of shareholders' capital through all market conditions. The objectives of this
strategy are to preserve capital and generate excellent returns for the
portfolio's shareholders. While one cannot take lightly the impact of the
current economic difficulties in Asia, we believe each of the multinational
businesses owned by the portfolio may benefit substantially longer term even if
experiencing some short-term weakness. For instance, one of McDonald's biggest
challenges in Asia had been the very high cost of store locations in cities.
These locations are now "on sale" for roughly half the price in many locations.
OpCap believes a tight U.S. job market and the Asian crisis may approximately
offset each other in their impact on the U.S. economy. It is probable,
therefore, that inflation will not pick up markedly, nor will the U.S. slide
into a recession. Whether the stock market indexes will rise or fall in 1998 is
a matter of conjecture, however, there may be a high level of market volatility
until these issues sort themselves out. Volatility creates opportunities to buy
stocks at favorable prices.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
THE ENTERPRISE GROUP OF FUNDS, INC. 71
<PAGE>
MANAGED PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMON STOCKS -- 81.66% AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
AEROSPACE -- 6.84%
- ---------------------------------------------------------------------------------
Boeing Company.................................... 270,000 $ 13,213,125
Lockheed Martin Corporation....................... 100,000 9,850,000
Loral Space & Communications (a).................. 45,000 964,688
-------------
24,027,813
AUTOMOTIVE -- 1.59%
- ---------------------------------------------------------------------------------
LucasVarity PLC (ADR)............................. 160,000 5,580,000
BANKING -- 13.94%
- ---------------------------------------------------------------------------------
BankBoston Corporation............................ 105,000 9,863,437
Citicorp.......................................... 120,000 15,172,500
First Empire State Corporation.................... 15,000 6,975,000
Wells Fargo & Company............................. 50,000 16,971,875
-------------
48,982,812
CHEMICALS -- 8.24%
- ---------------------------------------------------------------------------------
Du Pont (E. I.) de Nemours & Company.............. 260,000 15,616,250
Monsanto Company.................................. 190,000 7,980,000
Solutia Inc....................................... 200,000 5,337,500
-------------
28,933,750
COMPUTER SOFTWARE -- 1.13%
- ---------------------------------------------------------------------------------
Computer Associates International Inc............. 75,000 3,965,625
CONSUMER NON-DURABLES -- 3.82%
- ---------------------------------------------------------------------------------
Mattel Inc........................................ 360,000 13,410,000
CONSUMER PRODUCTS -- 0.95%
- ---------------------------------------------------------------------------------
Nike Inc.......................................... 85,000 3,336,250
DRUGS & MEDICAL PRODUCTS -- 1.99%
- ---------------------------------------------------------------------------------
Becton, Dickinson & Company....................... 140,000 7,000,000
ELECTRICAL EQUIPMENT -- 1.44%
- ---------------------------------------------------------------------------------
Varian Associates Inc............................. 100,000 5,056,250
ELECTRONICS -- 0.61%
- ---------------------------------------------------------------------------------
Unitrode Corporation (a).......................... 100,000 2,150,000
ENERGY -- 0.91%
- ---------------------------------------------------------------------------------
Triton Energy Ltd. (a)............................ 110,000 3,210,625
FINANCE -- 2.03%
- ---------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
American Express Company.......................... 80,000 7,140,000
HOTELS & RESTAURANTS -- 3.81%
- ---------------------------------------------------------------------------------
McDonald's Corporation............................ 280,000 $ 13,370,000
INSURANCE -- 6.10%
- ---------------------------------------------------------------------------------
ACE Ltd........................................... 50,000 4,825,000
EXEL Ltd.......................................... 210,000 13,308,750
Travelers Property Casualty Corporation........... 75,000 3,300,000
-------------
21,433,750
MACHINERY -- 5.39%
- ---------------------------------------------------------------------------------
Caterpillar Inc................................... 260,000 12,626,250
Tenneco Inc....................................... 160,000 6,320,000
-------------
18,946,250
MISC. FINANCIAL SERVICES -- 9.60%
- ---------------------------------------------------------------------------------
Countrywide Credit Industries Inc................. 130,000 5,573,750
Federal Home Loan Mortgage Corporation............ 420,000 17,613,750
Federal National Mortgage Association............. 184,700 10,539,444
-------------
33,726,944
PAPER & FOREST PRODUCTS -- 2.32%
- ---------------------------------------------------------------------------------
Champion International Corporation................ 180,000 8,156,250
PRINTING & PUBLISHING -- 3.53%
- ---------------------------------------------------------------------------------
Time Warner Inc................................... 200,000 12,400,000
PUBLISHING -- 0.37%
- ---------------------------------------------------------------------------------
Donnelley R R & Sons Company...................... 35,100 1,307,475
TECHNOLOGY -- 4.07%
- ---------------------------------------------------------------------------------
Intel Corporation................................. 74,200 5,212,550
National Semiconductor Corporation (a)............ 350,000 9,078,125
-------------
14,290,675
TELECOMMUNICATIONS -- 2.98%
- ---------------------------------------------------------------------------------
Tele-Communications Inc. New...................... 370,000 10,475,625
TOTAL COMMON STOCKS
(IDENTIFIED COST $214,110,107)................................... 286,900,094
- ---------------------------------------------------------------------------------
</TABLE>
72 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
MANAGED PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
COMMERCIAL PAPER -- 14.76%
- ---------------------------------------------------------------------------------
Deere (John) Capital Corporation 5.73% due
01/28/98.......................................... $ 10,000,000 $ 9,957,025
General Electric Capital Corporation, 5.75% due
02/02/98.......................................... 7,000,000 6,964,222
General Motors Acceptance Corporation, 5.86% due
01/14/98.......................................... 15,000,000 14,968,259
IBM Credit Corporation 5.74% due 01/21/98......... 10,000,000 9,968,111
Ford Motor Credit Company 5.80% due 01/07/98...... 10,000,000 9,990,333
-------------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $51,847,950).................................... 51,847,950
- ---------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ---------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.58%
- ---------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
5.00% due 01/02/98
Collateral: U.S. Treasury Bond $9,665,000, 8.5%
due 02/15/20 Value $12,815,191.................... $ 12,560,000 $ 12,560,000
-------------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $12,560,000).................................... 12,560,000
- ---------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $278,518,057)................................... $ 351,308,044
OTHER ASSETS LESS LIABILITIES -- 0.00%........................... 7,599
-------------
NET ASSETS 100%.................................................. $ 351,315,643
- ---------------------------------------------------------------------------------
</TABLE>
(a) Non-income Producing
ADR American Depository Receipts
Ltd Limited
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 73
<PAGE>
THE ENTERPRISE MONEY MARKET PORTFOLIO
ENTERPRISE CAPITAL MANAGEMENT, INC.
Atlanta, Georgia
INVESTMENT MANAGEMENT
Enterprise Capital Management is a wholly owned subsidiary of the Mutual Life
Insurance Company of New York, and has managed the Enterprise Money Market
Portfolio since May 1, 1992.
INVESTMENT OBJECTIVE
The objective of the Enterprise Money Market Portfolio is the highest possible
level of current income consistent with the preservation of capital and
liquidity in obligations maturing in one year or less from the time of purchase.
An investment in the portfolio is neither insured nor guaranteed by the U.S.
Government and there can be no assurance that the portfolio will be able to
maintain a stable net asset value of $1.00. Past performance is no guarantee of
future results and the yield will fluctuate.
INVESTMENT PHILOSOPHY
Enterprise invests primarily in high-quality (A-1/P-1) short-term money market
instruments, principally commercial paper. While interest rate projection is not
a key component of the management style, Enterprise does emphasize purchases
primarily in a maturity range of 60 to 120 days to provide flexibility in
responding to significant changes in the market.
1997 PERFORMANCE REVIEW
While the U.S. economy remained buoyant throughout the year, inflation was
conspicuously absent in both the consumer and producer sectors. The Consumer
Price Index increased 1.7 percent for all of 1997, compared to a 3.3 percent
gain in 1996. Wholesale prices reflected in the Producer Price Index, fell 1.2
percent for the year versus a 2.8 percent increase for 1996. Wage inflation was
modest and not yet passed through in the form of higher prices to consumers. In
sum, while economic indicators point to a strong economy on an above-trend
growth track, the near absence of inflation, recent drop in commodity prices and
potential drag stemming from Asia's difficulties left the Fed on hold as far as
a change in interest rates. In fact market sentiment shifted to the view that
the next Fed move will be an easing, a conclusion Enterprise has not yet
adopted.
The yield curve during the year grew increasingly flat. Investors responded to
the problems in Asia, rebounding economic conditions and the Fed's restraint
against additional tightening of monetary policy by continuing a rally on the
long end begun after the March 1997 Fed move. Interest rates on the long
treasury declined by 72 basis points during the year from a yield of 6.64
percent at the end of 1996 to 5.92 percent at year-end. However, yields on the
short end have been somewhat reluctant to move lower, with the yield on the
three-month Treasury Bill backing up from 5.09 percent at the end of the third
quarter to 5.34 percent at year-end.
The 30-day and seven-day effective yields of the Enterprise Money Market
Portfolio were 4.85 percent and 4.91 percent, respectively, as of December 31,
1997, after charges imposed by the portfolio with an average maturity of 35
days. The 30-day and seven-day current yields of the Enterprise Money Market
Portfolio were 4.75 percent and 4.81 percent, respectively, as of December 31,
1997.
74 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
FUTURE INVESTMENT STRATEGY
The prevailing market sentiment is that the Federal Open Market Committee may be
on hold near-term with the expectation that an eventual easing may be undertaken
perhaps in the second quarter. The portfolio is being managed to react quickly
to the change of investor expectations. Short maturity investments allow
flexibility, while some longer maturity investments lock in yields.
THE VIEWS EXPRESSED IN THIS REPORT REFLECT THOSE OF THE PORTFOLIO MANAGER ONLY
THROUGH THE END OF THE PERIOD OF THE REPORT AS STATED ON THE COVER. THE
MANAGER'S VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET AND OTHER
CONDITIONS.
THE ENTERPRISE GROUP OF FUNDS, INC. 75
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
COMMERCIAL PAPER -- 86.87% AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
American Express Credit Corporation, 5.60% due
02/02/98.......................................... $3,000,000 $ 2,985,066
Asset Backed Securities Investment Trust Series
1997-C, 5.69% due 06/15/98........................ 2,500,000 2,500,000
Asset Backed Securities Investment Trust Series
1997-E, 5.63% due 08/15/98........................ 1,000,000 1,000,000
Asset Backed Securities Investment Trust Series
1997-I, 5.69% due 10/15/98........................ 2,000,000 2,000,000
Associates Corporation Of North America, 5.60% due
01/13/98.......................................... 1,500,000 1,497,200
Avco Financial Services Inc. 5.55% due 01/09/98... 1,500,000 1,498,150
Avco Financial Services Inc. 5.60% due 02/17/98... 1,000,000 992,689
Bell Atlantic Financial Services 5.82% due
01/12/98.......................................... 3,500,000 3,493,776
Bellsouth Telecommunications Inc., 6.10% due
01/13/98.......................................... 2,000,000 1,995,933
British Province of Columbia 5.68% due 02/12/98... 2,500,000 2,483,433
Capital One Funding Corporation 6.00% due
03/01/17.......................................... 2,400,000 2,400,000
CIT Group Holdings Inc. 5.56% due 01/20/98........ 1,400,000 1,395,892
Conagra Inc. 6.15% due 01/02/98................... 600,000 599,898
CSX Corporation 6.15% due 01/16/98................ 600,000 598,463
Export Development Corp 5.53% due 01/16/98........ 2,750,000 2,743,664
Ford Motor Canada 5.75% due 03/25/98.............. 1,000,000 986,743
Ford Motor Canada 5.84% due 01/27/98.............. 1,600,000 1,593,252
General Electric Capital Corporation, 5.50% due
01/07/98.......................................... 2,000,000 1,998,167
General Motors Acceptance Corporation, 5.54% due
01/20/98.......................................... 500,000 498,538
General Motors Acceptance Corporation, 5.55% due
01/20/98.......................................... 1,500,000 1,495,606
Goldman Sachs Group L P Discount 5.95% due
01/05/98.......................................... 1,000,000 999,339
Heller Financial Inc. 6.05% due 01/20/98.......... 2,600,000 2,591,698
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
Household International Incorporated, 5.87% due
01/14/98.......................................... $1,700,000 $ 1,696,396
Lehman Brothers Incorporated 5.90% due 01/08/98... 700,000 699,197
Lehman Brothers Incorporated 6.20% due 01/30/98... 2,600,000 2,587,014
Mellon Bank N A 5.65% due 02/20/98................ 2,500,000 2,480,382
Merrill Lynch & Company Inc. 5.63% due 01/30/98... 2,000,000 1,990,929
National Rural Utilities Cooperative Finance,
5.57% due 02/12/98................................ 2,500,000 2,483,754
Province De Quebec 5.70% due 01/27/98............. 3,500,000 3,485,592
Prudential Funding Corporation 5.51% due
01/06/98.......................................... 2,500,000 2,498,087
Sanwa Business Credit Corporation, 6.60% due
01/02/98.......................................... 1,000,000 999,817
Sanwa Business Credit Corporation, 6.70% due
01/06/98.......................................... 1,000,000 999,069
Sanwa Business Credit Corporation, 6.75% due
01/13/98.......................................... 500,000 498,875
Sears Roebuck Acceptance Corporation, 5.56% due
01/12/98.......................................... 2,500,000 2,495,753
Sears Roebuck Acceptance Corporation, 6.07% due
01/09/98.......................................... 750,000 748,988
Sony Capital Corporation 5.73% due 01/07/98....... 1,200,000 1,198,854
Textron Inc. 6.10% due 01/02/98................... 700,000 699,881
Toronto Dominion Holdings 5.53% due 01/02/98...... 2,000,000 1,999,693
Union Bancal Commercial Funding 5.54% due
01/23/98.......................................... 2,000,000 1,993,229
-----------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $67,903,017)................................... 67,903,017
- ------------------------------------------------------------------------------
CERTIFICATE OF DEPOSITS -- 7.03%
- ------------------------------------------------------------------------------
Bank Of Nova Scotia 5.74% due 02/20/98............ 3,500,000 3,500,000
National Westminster Bank Plc 5.86% due
08/10/98.......................................... 2,000,000 1,998,920
-----------
TOTAL CERTIFICATES OF DEPOSIT
(IDENTIFIED COST $5,498,920).................................... 5,498,920
- ------------------------------------------------------------------------------
</TABLE>
76 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
MONEY MARKET PORTFOLIO -- (Continued)
- --------------------------------------------------------------------------------
Portfolio of Investments
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
SHORT TERM GOVERNMENT SECURITIES -- 3.20%
- ------------------------------------------------------------------------------
Federal Home Loan Bank 5.69% due 10/02/98......... $1,500,000 $ 1,500,036
Federal Home Loan Bank 5.81% due 08/20/98......... 1,000,000 1,000,000
-----------
TOTAL SHORT TERM GOVERNMENT SECURITIES
(IDENTIFIED COST $2,500,036).................................... 2,500,036
- ------------------------------------------------------------------------------
<CAPTION>
NUMBER
OF SHARES
OR PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
- ------------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.58%
- ------------------------------------------------------------------------------
State Street Bank & Trust Repurchase Agreement,
2.00% due 01/02/98
Collateral: U.S. Treasury Bond $350,000 8.5% due
2/15/20 Value $464,078............................ $ 450,000 $ 450,000
-----------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $450,000)...................................... 450,000
- ------------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $76,351,973)................................... $76,351,973
OTHER ASSETS LESS LIABILITIES -- 2.32%.......................... 1,815,191
-----------
NET ASSETS -- 100%.............................................. $78,167,164
- ------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 77
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH
GROWTH EQUITY AND INCOME EQUITY INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------
Investments at value $ 657,885,794 $ 5,290,367 $ 23,232,693 $ 118,720,035
- -------------------------------------------------------------------------------------------
Foreign currency at value
(identified cost-$760,389) -- -- -- --
- -------------------------------------------------------------------------------------------
Receivable for fund shares
sold 8,488,748 7,452 272,193 405,024
- -------------------------------------------------------------------------------------------
Receivable for investments
sold -- -- -- 48,781
- -------------------------------------------------------------------------------------------
Dividends and interest
receivable 412,379 2,881 14,018 169,732
- -------------------------------------------------------------------------------------------
Due from investment adviser -- 12,198 9,344 21,957
- -------------------------------------------------------------------------------------------
Forward currency contracts
(net) receivable -- -- -- --
- -------------------------------------------------------------------------------------------
Cash and other assets -- 87,486 7,197 --
- -------------------------------------------------------------------------------------------
Total assets $ 666,786,921 $ 5,400,384 $ 23,535,445 $ 119,365,529
- -------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------
Payable for fund shares
redeemed 2,612,461 -- -- 43,557
- -------------------------------------------------------------------------------------------
Payable for investments
purchased -- -- 102,609 --
- -------------------------------------------------------------------------------------------
Dividends and distributions
payable 1,018,368 2,842 7,310 277,829
- -------------------------------------------------------------------------------------------
Investment advisory fee
payable 407,702 3,227 14,143 74,428
- -------------------------------------------------------------------------------------------
Distribution fee payable 313,809 2,847 4,060 53,972
- -------------------------------------------------------------------------------------------
Other accrued expenses 25,633 92,967 15,439 72,023
- -------------------------------------------------------------------------------------------
Total liabilities $ 4,377,973 $ 101,883 $ 143,561 $ 521,809
- -------------------------------------------------------------------------------------------
NET ASSETS $ 662,408,948 $ 5,298,501 $ 23,391,884 $ 118,843,720
- -------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------
Accumulated paid-in capital 490,855,608 4,950,779 17,395,398 84,049,286
- -------------------------------------------------------------------------------------------
Undistributed net investment
income (loss) -- -- 2,090 61,487
- -------------------------------------------------------------------------------------------
Accumulated net realized gain
(loss) on investments 4,867,093 (26,914) 5,063 1,808,835
- -------------------------------------------------------------------------------------------
Accumulated net realized gain
(loss) on futures -- -- -- --
- -------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of investments
and foreign currencies
denominated amounts 166,686,247 374,636 5,989,333 32,924,112
- -------------------------------------------------------------------------------------------
Net assets $ 662,408,948 $ 5,298,501 $ 23,391,884 $ 118,843,720
- -------------------------------------------------------------------------------------------
CLASS A: NET ASSETS $ 424,279,667 $ 3,195,511 $ 4,031,673 $ 97,932,144
- -------------------------------------------------------------------------------------------
Shares outstanding 25,089,213 536,398 160,033 3,706,922
- -------------------------------------------------------------------------------------------
Net asset value and redemption
price per share $16.91 $5.96 $25.19 $26.42
- -------------------------------------------------------------------------------------------
Sales charge per share $0.84 $0.30 $1.26 $1.32
- -------------------------------------------------------------------------------------------
Maximum offering price per
share, including sales charge
of 4.75% $17.75 $6.26 $26.45 $27.74
- -------------------------------------------------------------------------------------------
CLASS B: NET ASSETS $ 166,931,724 $ 1,820,101 $ 3,256,881 $ 19,054,734
- -------------------------------------------------------------------------------------------
Shares outstanding 10,021,998 306,328 129,481 727,993
- -------------------------------------------------------------------------------------------
Net asset value and offering
price per share $16.66 $5.94 $25.15 $26.17
- -------------------------------------------------------------------------------------------
CLASS C: NET ASSETS $ 26,601,337 $ 282,889 $ 561,260 $ 1,856,842
- -------------------------------------------------------------------------------------------
Shares outstanding 1,578,485 47,595 22,316 70,580
- -------------------------------------------------------------------------------------------
Net asset value and offering
price per share $16.85 $5.94 $25.15 $26.31
- -------------------------------------------------------------------------------------------
CLASS Y: NET ASSETS $ 44,596,220 $ -- $ 15,542,070 $ --
- -------------------------------------------------------------------------------------------
Shares outstanding 2,620,250 -- 615,725 --
- -------------------------------------------------------------------------------------------
Net asset value, offering and
redemption price per share $17.02 $-- $25.24 $--
- -------------------------------------------------------------------------------------------
INVESTMENTS AT COST $ 491,199,547 $ 4,915,731 $ 17,243,360 $ 85,795,923
- -------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
78 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
<TABLE>
<CAPTION>
SMALL
CAPITAL COMPANY SMALL INTERNATIONAL GOVERNMENT HIGH-YIELD
APPRECIATION GROWTH COMPANY VALUE GROWTH SECURITIES BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------------------------------
Investments at value $ 122,148,369 $ 22,098,398 $ 70,929,999 $ 60,080,731 $ 88,618,181 $ 87,566,419
- -------------------------------------------------------------------------------------------------------------------------
Foreign currency at value
(identified cost-$760,389) -- -- -- 747,977 -- --
- -------------------------------------------------------------------------------------------------------------------------
Receivable for fund shares
sold 105,979 189,108 667,139 98,428 113,493 359,075
- -------------------------------------------------------------------------------------------------------------------------
Receivable for investments
sold -- 89,820 62,114 67,032 -- --
- -------------------------------------------------------------------------------------------------------------------------
Dividends and interest
receivable 59,550 2,515 26,023 152,630 606,360 1,714,748
- -------------------------------------------------------------------------------------------------------------------------
Due from investment adviser -- 7,909 5,354 40,429 15,466 21,944
- -------------------------------------------------------------------------------------------------------------------------
Forward currency contracts
(net) receivable -- -- -- 234,297 -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash and other assets 47,803 -- 12,664 22,692 -- 1,984
- -------------------------------------------------------------------------------------------------------------------------
Total assets $ 122,361,701 $ 22,387,750 $ 71,703,293 $ 61,444,216 $ 89,353,500 $ 89,664,170
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------------------------------
Payable for fund shares
redeemed 77,966 8,767 134,916 118,768 133,158 33,033
- -------------------------------------------------------------------------------------------------------------------------
Payable for investments
purchased 777,097 277,350 1,157,110 1,065,970 -- 795,747
- -------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
payable 524,056 14,624 195,645 113,562 81,707 111,329
- -------------------------------------------------------------------------------------------------------------------------
Investment advisory fee
payable 75,060 17,737 42,420 43,593 44,725 44,116
- -------------------------------------------------------------------------------------------------------------------------
Distribution fee payable 48,613 4,437 36,030 24,084 36,492 42,330
- -------------------------------------------------------------------------------------------------------------------------
Other accrued expenses 133,364 26,752 11,113 82,046 67,444 45,686
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 1,636,156 $ 349,667 $ 1,577,234 $ 1,448,023 $ 363,526 $ 1,072,241
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 120,725,545 $ 22,038,083 $ 70,126,059 $ 59,996,193 $ 88,989,974 $ 88,591,929
- -------------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
Accumulated paid-in capital 76,502,164 19,990,041 60,739,034 57,523,493 93,184,298 85,789,329
- -------------------------------------------------------------------------------------------------------------------------
Undistributed net investment
income (loss) -- -- -- 45,473 -- --
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain
(loss) on investments 571,813 (223,320) 495,662 (578,999) (4,065,632) 223,106
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain
(loss) on futures -- -- -- -- -- (62,305)
- -------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of investments
and foreign currencies
denominated amounts 43,651,568 2,271,362 8,891,363 3,006,226 (128,692) 2,641,799
- -------------------------------------------------------------------------------------------------------------------------
Net assets $ 120,725,545 $ 22,038,083 $ 70,126,059 $ 59,996,193 $ 88,989,974 $ 88,591,929
- -------------------------------------------------------------------------------------------------------------------------
CLASS A: NET ASSETS $ 112,737,548 $ 4,861,339 $ 45,309,826 $ 38,019,525 $ 68,638,637 $ 66,421,709
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 3,172,535 207,861 5,844,506 2,274,882 5,707,542 5,379,222
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption
price per share $35.54 $23.39 $7.75 $16.71 $12.03 $12.35
- -------------------------------------------------------------------------------------------------------------------------
Sales charge per share $1.77 $1.17 $0.39 $0.85 $0.60 $0.62
- -------------------------------------------------------------------------------------------------------------------------
Maximum offering price per
share, including sales charge
of 4.75% $37.31 $24.56 $8.14 $17.56 $12.63 $12.97
- -------------------------------------------------------------------------------------------------------------------------
CLASS B: NET ASSETS $ 7,861,977 $ 2,841,856 $ 22,012,800 $ 9,877,638 $ 12,284,637 $ 19,898,363
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 225,323 121,823 2,885,408 597,427 1,021,654 1,611,496
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and offering
price per share $34.89 $23.33 $7.63 $16.53 $12.02 $12.35
- -------------------------------------------------------------------------------------------------------------------------
CLASS C: NET ASSETS $ 126,020 $ 795,036 $ 2,684,053 $ 1,113,310 $ 497,845 $ 1,462,767
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 3,557 34,086 346,982 66,820 41,397 118,461
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and offering
price per share $35.43 $23.32 $7.74 $16.66 $12.03 $12.35
- -------------------------------------------------------------------------------------------------------------------------
CLASS Y: NET ASSETS $ -- $ 13,539,852 $ 119,380 $ 10,985,720 $ 7,568,855 $ 809,090
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding -- 577,931 15,277 657,357 629,566 65,526
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, offering and
redemption price per share $-- $23.43 $7.81 $16.71 $12.02 $12.35
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AT COST $ 78,496,801 $ 19,827,036 $ 62,038,636 $ 57,310,065 $ 88,746,873 $ 84,924,620
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
TAX-EXEMPT
INCOME MANAGED MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
------------- -------------- -------------
<S> <C> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------
Investments at value $ 26,503,988 $ 351,308,044 $ 76,351,973
- ---------------------------------------------------------------------------------------------------------
Foreign currency at value
(identified cost-$760,389) -- -- --
- ------------------------------------------------------------------------------------------------------------------------
Receivable for fund shares
sold 680 755,354 4,145,011
- -------------------------------------------------------------------------------------------------------------------------
Receivable for investments
sold -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Dividends and interest
receivable 456,868 169,250 144,460
- -------------------------------------------------------------------------------------------------------------------------
Due from investment adviser 20,411 -- 21,272
- -------------------------------------------------------------------------------------------------------------------------
Forward currency contracts
(net) receivable -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Cash and other assets 20,041 229,224 141,760
- -------------------------------------------------------------------------------------------------------------------------
Total assets $ 27,001,988 $ 352,461,872 $ 80,804,476
- -------------------------------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------------------------------
Payable for fund shares
redeemed 105,287 218,679 2,467,599
- -------------------------------------------------------------------------------------------------------------------------
Payable for investments
purchased -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Dividends and distributions
payable 67,979 410,430 15,984
- -------------------------------------------------------------------------------------------------------------------------
Investment advisory fee
payable 11,263 220,721 21,769
- -------------------------------------------------------------------------------------------------------------------------
Distribution fee payable 11,413 153,550 21,049
- -------------------------------------------------------------------------------------------------------------------------
Other accrued expenses 43,838 142,849 110,911
- -------------------------------------------------------------------------------------------------------------------------
Total liabilities $ 239,780 $ 1,146,229 $ 2,637,312
- -------------------------------------------------------------------------------------------------------------------------
NET ASSETS $ 26,762,208 $ 351,315,643 $ 78,167,164
- -------------------------------------------------------------------------------------------------------------------------
ANALYSIS OF NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------
Accumulated paid-in capital 25,002,395 278,149,429 78,167,164
- -------------------------------------------------------------------------------------------------------------------------
Undistributed net investment
income (loss) -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain
(loss) on investments 19 376,227 --
- -------------------------------------------------------------------------------------------------------------------------
Accumulated net realized gain
(loss) on futures -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of investments
and foreign currencies
denominated amounts 1,759,794 72,789,987 --
- -------------------------------------------------------------------------------------------------------------------------
Net assets $ 26,762,208 $ 351,315,643 $ 78,167,164
- -------------------------------------------------------------------------------------------------------------------------
CLASS A: NET ASSETS $ 23,694,668 $ 156,608,488 $ 68,465,856
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 1,698,887 16,925,856 68,465,856
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption
price per share $13.95 $9.25 $1.00
- -------------------------------------------------------------------------------------------------------------------------
Sales charge per share $0.70 $0.46 --
- -------------------------------------------------------------------------------------------------------------------------
Maximum offering price per
share, including sales charge
of 4.75% $14.65 $9.71 $1.00
- -------------------------------------------------------------------------------------------------------------------------
CLASS B: NET ASSETS $ 2,883,323 $ 110,213,485 $ 5,980,247
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 206,727 11,999,101 5,980,247
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and offering
price per share $13.95 $9.19 $1.00
- -------------------------------------------------------------------------------------------------------------------------
CLASS C: NET ASSETS $ 184,217 $ 3,614,264 $ 1,020,966
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding 13,208 392,464 1,020,966
- -------------------------------------------------------------------------------------------------------------------------
Net asset value and offering
price per share $13.95 $9.21 $1.00
- -------------------------------------------------------------------------------------------------------------------------
CLASS Y: NET ASSETS $ -- $ 80,879,406 $ 2,700,095
- -------------------------------------------------------------------------------------------------------------------------
Shares outstanding -- 8,721,945 2,700,095
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, offering and
redemption price per share $-- $9.27 $1.00
- -------------------------------------------------------------------------------------------------------------------------
INVESTMENTS AT COST $ 24,744,194 $ 278,518,057 $ 76,351,973
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 79
<PAGE>
STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
For the Year Ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH
AND GROWTH EQUITY CAPITAL
GROWTH EQUITY INCOME AND INCOME INCOME APPRECIATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
10/1/97- 10/1/96-
INVESTMENT INCOME: 12/31/97 9/30/97
- ---------------------------------------------------------------------------------------------------------------------------
Dividends $ 2,884,404(2) $ 25,170(2) $ 67,631(2) $ 176,910 $ 2,264,555(2) $ 510,236(2)
- ---------------------------------------------------------------------------------------------------------------------------
Interest 918,321 14,805 35,456 51,917 535,273 200,262
- ---------------------------------------------------------------------------------------------------------------------------
Total 3,802,725 39,975 103,087 228,827 2,799,828 710,498
- ---------------------------------------------------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------------------------------------------------
Management fees 3,331,589 15,970 38,283 78,818 739,501 903,281
- ---------------------------------------------------------------------------------------------------------------------------
Distribution fees, Class A 1,402,951 6,778 2,806 427 389,808 512,845
- ---------------------------------------------------------------------------------------------------------------------------
Distribution fees, Class B 974,967 5,598 4,960 1,103 115,503 64,302
- ---------------------------------------------------------------------------------------------------------------------------
Distribution fees, Class C 88,865 634 777 95 4,258 417
- ---------------------------------------------------------------------------------------------------------------------------
Distribution fees, Class Y 22,502
- ---------------------------------------------------------------------------------------------------------------------------
Transfer agent fees 596,611 40,436 19,846 81,581 224,935 321,112
- ---------------------------------------------------------------------------------------------------------------------------
Custodian and accounting
fees 90,953(1) 24,195 10,165 12,109 52,123 47,765
- ---------------------------------------------------------------------------------------------------------------------------
Audit and legal fees 60,661 13,421 5,073 18,179 29,328 31,441
- ---------------------------------------------------------------------------------------------------------------------------
Reports to shareholders 128,632 13,200 5,798 25,489 46,177 74,698
- ---------------------------------------------------------------------------------------------------------------------------
Registration fees 43,489 5,481 4,449 25,737 42,534 40,828
- ---------------------------------------------------------------------------------------------------------------------------
Directors' fees 4,571 3,176 1,015 7,889 4,572 4,572
- ---------------------------------------------------------------------------------------------------------------------------
Other expenses 50,513 7,881 979 758 11,649 17,544
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses 6,773,802 136,770 94,151 274,687 1,660,388 2,018,805
- ---------------------------------------------------------------------------------------------------------------------------
Less: Expense
reimbursement (58,412)(1) (99,274) (31,988) (151,471) (115,504) --
- ---------------------------------------------------------------------------------------------------------------------------
Total expenses, net of
reimbursement 6,715,390 37,496 62,163 123,216 1,544,884 2,018,805
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (2,912,665) 2,479 40,924 105,611 1,254,944 (1,308,307)
- ---------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
security transactions 18,241,515 60,709 69,380 348,420 9,306,031 15,731,336
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain on foreign
currency transactions -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized loss from
futures transactions -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments
and foreign currency
related transactions 89,190,233 374,636 (22,006) 3,204,139 12,427,285 7,731,763
- ---------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 107,431,748 435,345 47,374 3,552,559 21,733,316 23,463,099
- ---------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 104,519,083 $ 437,824 $ 88,298 $ 3,658,170 $ 22,988,260 $ 22,154,792
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Reflects total expense before reduction for brokerage commission credits
which are reflected as expense reimbursement.
(2) Net of foreign taxes withheld of $8,262 for Growth, $74 for Equity, $24 for
Growth and Income, $8,754 for Equity Income, $5,768 for Capital
Appreciation, $173,266 for International Growth, $366 for High-Yield Bond
and $17,741 for Managed.
See notes to financial statements.
80 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
<TABLE>
<CAPTION>
SMALL SMALL SMALL
COMPANY COMPANY COMPANY INTERNATIONAL GOVERNMENT HIGH-YIELD
GROWTH GROWTH VALUE GROWTH SECURITIES BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
10/1/97- 10/1/96-
INVESTMENT INCOME: 12/31/97 9/30/97
- -----------------------------------------------------------------------------------------------------------------------
Dividends $ 6,256 $ 9,782 $ 413,752 $ 1,215,471(2) $ -- $ 28,625(2)
- -----------------------------------------------------------------------------------------------------------------------
Interest 8,416 51,580 241,068 191,520 5,995,972 6,865,976
- -----------------------------------------------------------------------------------------------------------------------
Total 14,672 61,362 654,820 1,406,991 5,995,972 6,894,601
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------------------------------------
Management fees 51,613 118,526 275,321 478,833 483,366 436,989
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees, Class A 4,364 1,174 120,773 170,870 309,926 266,469
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees, Class B 5,248 974 87,187 75,658 83,531 129,485
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees, Class C 1,035 318 6,279 4,452 1,099 3,653
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees, Class Y 20,407
- -----------------------------------------------------------------------------------------------------------------------
Transfer agent fees 20,498 82,617 115,333 172,007 168,431 133,755
- -----------------------------------------------------------------------------------------------------------------------
Custodian and accounting
fees 11,097 58,789 49,795 172,738 49,866 64,619
- -----------------------------------------------------------------------------------------------------------------------
Audit and legal fees 5,056 18,179 22,339 25,186 27,064 26,398
- -----------------------------------------------------------------------------------------------------------------------
Reports to shareholders 5,823 25,489 20,550 29,271 31,204 24,579
- -----------------------------------------------------------------------------------------------------------------------
Registration fees 4,450 25,737 46,150 43,260 41,799 42,748
- -----------------------------------------------------------------------------------------------------------------------
Directors' fees 1,015 7,889 4,571 4,572 4,572 4,572
- -----------------------------------------------------------------------------------------------------------------------
Other expenses 1,002 600 12,911 9,827 8,478 8,530
- -----------------------------------------------------------------------------------------------------------------------
Total expenses 111,201 360,699 761,209 1,186,674 1,209,336 1,141,797
- -----------------------------------------------------------------------------------------------------------------------
Less: Expense
reimbursement (28,296) (148,473) (69,743) (62,527) (130,007) (123,123)
- -----------------------------------------------------------------------------------------------------------------------
Total expenses, net of
reimbursement 82,905 212,226 691,466 1,124,147 1,079,329 1,018,674
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) (68,233) (150,864) (36,646) 282,844 4,916,643 5,875,927
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
security transactions (158,828) 523,987 4,633,929 2,832,942 (70,610) 2,743,109
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain on foreign
currency transactions -- -- -- 118,763 -- --
- -----------------------------------------------------------------------------------------------------------------------
Net realized loss from
futures transactions -- -- -- -- -- (62,305)
- -----------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments
and foreign currency
related transactions (1,916,083) 2,373,082 7,400,618 (1,379,627) 1,607,251 349,675
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (2,074,911) 2,897,069 12,034,547 1,572,078 1,536,641 3,030,479
- -----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ (2,143,144) $ 2,746,205 $ 11,997,901 $ 1,854,922 $ 6,453,284 $ 8,906,406
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
TAX-
EXEMPT MONEY
INCOME MANAGED MARKET
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------
Dividends $ -- $ 3,283,501(2) $ --
- ---------------------------------------------------------------------------------------------------
Interest 1,614,084 2,388,229 3,696,185
- ----------------------------------------------------------------------------------------------------------------
Total 1,614,084 5,671,730 3,696,185
- -----------------------------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------------------------------------
Management fees 141,160 2,180,923 231,118
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees, Class A 117,327 600,976 180,719
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees, Class B 21,263 849,143 37,787
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees, Class C 331 9,806 1,326
- -----------------------------------------------------------------------------------------------------------------------
Distribution fees, Class Y
- -----------------------------------------------------------------------------------------------------------------------
Transfer agent fees 55,953 492,357 229,207
- -----------------------------------------------------------------------------------------------------------------------
Custodian and accounting
fees 35,360 75,136 42,996
- -----------------------------------------------------------------------------------------------------------------------
Audit and legal fees 20,795 49,279 21,750
- -----------------------------------------------------------------------------------------------------------------------
Reports to shareholders 20,807 104,828 24,575
- -----------------------------------------------------------------------------------------------------------------------
Registration fees 40,800 58,546 51,820
- -----------------------------------------------------------------------------------------------------------------------
Directors' fees 4,572 4,572 4,572
- -----------------------------------------------------------------------------------------------------------------------
Other expenses 4,664 48,387 14,934
- -----------------------------------------------------------------------------------------------------------------------
Total expenses 463,032 4,473,953 840,804
- -----------------------------------------------------------------------------------------------------------------------
Less: Expense
reimbursement (108,255) -- (158,757)
- -----------------------------------------------------------------------------------------------------------------------
Total expenses, net of
reimbursement 354,777 4,473,953 682,047
- -----------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1,259,307 1,197,777 3,014,138
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
security transactions 372,519 12,784,062 --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain on foreign
currency transactions -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net realized loss from
futures transactions -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments
and foreign currency
related transactions 229,121 38,518,875 --
- -----------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 601,640 51,302,937 --
- -----------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS $ 1,860,947 $ 52,500,714 $ 3,014,138
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 81
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EQUITY GROWTH AND
PORTFOLIO INCOME PORTFOLIO
------------- ---------------------------------------------
GROWTH FOR THE FOR THE
PORTFOLIO PERIOD PERIOD
----------------------------- MAY 1, 1997 OCTOBER 1, FOR YEAR
YEAR ENDED YEAR ENDED THROUGH 1997 THROUGH YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1997 1997 1996
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ (2,912,665) $ (762,775) $ 2,479 $ 40,924 $ 105,611 $ 85,853
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 18,241,515 11,317,236 60,709 69,380 348,420 364,855
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments 89,190,233 36,890,580 374,636 (22,006) 3,204,139 980,258
- -----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 104,519,083 47,445,041 437,824 88,298 3,658,170 1,430,966
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
A -- -- (2,460) (18,371) --
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
B -- -- -- (11,694) --
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
C -- -- (208) (2,192) --
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
Y -- -- -- (69,364) (93,534) (86,059)
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class A (8,614,445) (10,559,038) (52,758) (71,049) --
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class B (3,431,799) (1,957,665) (30,175) (57,595) --
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class C (493,612) -- (4,690) (9,938) --
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y (906,323) (124,046) -- (273,727) (338,162) --
- -----------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (13,446,179) (12,640,749) (90,291) (513,930) (431,696) (86,059)
- -----------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------------
Shares sold 260,192,148 106,776,181 2,924,258 3,059,535 1,088,636 --
- -----------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 8,246,727 10,017,857 55,088 86,011 --
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed (108,981,528) (74,805,079) (59,944) (160,185) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class A 159,457,347 41,988,959 2,919,402 2,985,361 1,088,636 --
- -----------------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------------
Shares sold 117,131,669 28,798,411 1,782,097 2,266,006 977,832 --
- -----------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 3,282,897 1,812,775 27,982 66,791 --
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed (7,865,656) (1,074,883) (56,145) (8,694) (30) --
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class B 112,548,910 29,536,303 1,753,934 2,324,103 977,802 --
- -----------------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------------
Shares sold 28,408,390 -- 306,566 459,347 97,483 --
- -----------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 478,133 -- 4,380 11,908 --
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed (2,696,749) -- (33,314) (2,071) (75) --
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class C 26,189,774 -- 277,632 469,184 97,408 --
- -----------------------------------------------------------------------------------------------------------------------------
CLASS Y
- -----------------------------------------------------------------------------------------------------------------------------
Shares sold 44,900,757 5,950,078 -- 382,747 4,708,756 2,533,992
- -----------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 480,824 124,046 -- 341,911 431,185 86,059
- -----------------------------------------------------------------------------------------------------------------------------
Shares redeemed (7,816,150) (3,959,203) -- (313,478) (1,767,589) (757,380)
- -----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class Y 37,565,431 2,114,921 -- 411,180 3,372,352 1,862,671
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 335,761,462 73,640,183 4,950,968 6,189,828 5,536,198 1,862,671
- -----------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 426,834,366 108,444,475 5,298,501 5,764,196 8,762,672 3,207,578
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period $ 235,574,582 $ 127,130,107 $ -- $ 17,627,688 $ 8,865,016 $ 5,657,438
- -----------------------------------------------------------------------------------------------------------------------------
End of period $ 662,408,948 $ 235,574,582 $ 5,298,501 $ 23,391,884 $ 17,627,688 $ 8,865,016
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
82 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
<TABLE>
<CAPTION>
SMALL
COMPANY GROWTH
PORTFOLIO
EQUITY CAPITAL ---------------------------
INCOME APPRECIATION FOR THE
PORTFOLIO PORTFOLIO PERIOD
--------------------------- --------------------------- OCTOBER 1, FOR YEAR
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1997 THROUGH ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER
1997 1996 1997 1996 1997 30, 1997
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ 1,254,944 $ 1,289,804 $ (1,308,307) $ (1,109,093) $ (68,233) $ (150,864)
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 9,306,031 5,664,492 15,731,336 10,763,909 (158,828) 523,987
- -----------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments 12,427,285 4,614,269 7,731,763 9,326,093 (1,916,083) 2,373,082
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 22,988,260 11,568,565 22,154,792 18,980,909 (2,143,144) 2,746,205
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- -----------------------------------------------------------------------------------------------------------------------
Net investment income, Class
A (1,072,290) (1,197,980) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net investment income, Class
B (119,901) (63,375) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net investment income, Class
C (10,306) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net investment income, Class
Y -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class A (6,834,121) (4,726,758) (15,427,334) (11,466,091) (111,554) --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class B (1,334,999) (369,926) (1,092,295) (501,250) (64,497) --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class C (130,982) -- (17,309) -- (18,302) --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y -- -- -- -- (310,189) (665,013)
- -----------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (9,502,599) (6,358,039) (16,536,938) (11,967,341) (504,542) (665,013)
- -----------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- -----------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------
Shares sold 17,272,166 9,911,599 8,448,481 19,727,741 3,329,056 1,977,903
- -----------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 7,703,613 5,727,817 14,967,124 10,709,311 109,857 --
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (12,389,236) (10,005,618) (31,521,891) (43,391,759) (177,096) (23,177)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class A 12,586,543 5,633,798 (8,106,286) (12,954,707) 3,261,817 1,954,726
- -----------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------
Shares sold 12,399,165 4,189,055 2,827,251 2,946,771 2,166,644 1,059,895
- -----------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 1,368,111 392,623 1,059,795 466,933 61,101 --
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (1,216,943) (155,615) (1,112,978) (331,951) (230,849) (23,506)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class B 12,550,333 4,426,063 2,774,068 3,081,753 1,996,896 1,036,389
- -----------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------
Shares sold 1,846,156 -- 124,776 -- 645,548 189,019
- -----------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 124,710 -- 16,626 -- 17,752 --
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (11,463) -- (1,512) -- (26,689) (170)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class C 1,959,403 -- 139,890 -- 636,611 188,849
- -----------------------------------------------------------------------------------------------------------------------
CLASS Y
- -----------------------------------------------------------------------------------------------------------------------
Shares sold -- -- -- -- 384,008 10,548,168
- -----------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions -- -- -- -- 301,209 656,535
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed -- -- -- -- (651,790) (4,317,735)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class Y -- -- -- -- 33,427 6,886,968
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 27,096,279 10,059,861 (5,192,328) (9,872,954) 5,928,751 10,066,932
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 40,581,940 15,270,387 425,526 (2,859,386) 3,281,065 12,148,124
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------------------------------------------
Beginning of period $ 78,261,780 $62,991,393 $120,300,019 $123,159,405 $18,757,018 $ 6,608,894
- -----------------------------------------------------------------------------------------------------------------------
End of period $118,843,720 $78,261,780 $120,725,545 $120,300,019 $22,038,083 $18,757,018
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
SMALL
COMPANY VALUE
PORTFOLIO
FOR YEAR ---------------------------
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER DECEMBER 31, DECEMBER 31,
30, 1996 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ (61,578) $ (36,646) $ (24,765)
- ----------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 697,630 4,633,929 1,473,113
- ------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- --
- --------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments 926,887 7,400,618 795,406
- -----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 1,562,939 11,997,901 2,243,755
- -----------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- -----------------------------------------------------------------------------------------------------------------------
Net investment income, Class
A -- --
- -----------------------------------------------------------------------------------------------------------------------
Net investment income, Class
B -- --
- -----------------------------------------------------------------------------------------------------------------------
Net investment income, Class
C -- --
- -----------------------------------------------------------------------------------------------------------------------
Net investment income, Class
Y -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class A (2,902,903) (868,453)
- -----------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class B (1,418,458) (131,977)
- -----------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class C (172,913) --
- -----------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y (252,458) (7,578) (100,931)
- -----------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (252,458) (4,501,852) (1,101,361)
- -----------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- -----------------------------------------------------------------------------------------------------------------------
CLASS A
- -----------------------------------------------------------------------------------------------------------------------
Shares sold -- 24,183,248 4,307,659
- -----------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 2,817,488 831,465
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed -- (5,179,631) (8,474,210)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class A -- 21,821,105 (3,335,086)
- -----------------------------------------------------------------------------------------------------------------------
CLASS B
- -----------------------------------------------------------------------------------------------------------------------
Shares sold -- 17,761,763 1,845,129
- -----------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 1,337,536 122,778
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed -- (912,538) (260,393)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class B -- 18,186,761 1,707,514
- -----------------------------------------------------------------------------------------------------------------------
CLASS C
- -----------------------------------------------------------------------------------------------------------------------
Shares sold -- 2,602,460 --
- -----------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 158,448 --
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed -- (49,665) --
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class C -- 2,711,243 --
- -----------------------------------------------------------------------------------------------------------------------
CLASS Y
- -----------------------------------------------------------------------------------------------------------------------
Shares sold 2,748,861 133,172 847,748
- -----------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 250,995 7,533 1,728
- -----------------------------------------------------------------------------------------------------------------------
Shares redeemed (651,909) (2,069,409) (1,938,659)
- -----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class Y 2,347,947 (1,928,704) (1,089,183)
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 2,347,947 40,790,405 (2,716,755)
- -----------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 3,658,428 48,286,454 (1,574,361)
- -----------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------------------------------------------------
Beginning of period $ 2,950,466 $21,839,605 $23,413,966
- -----------------------------------------------------------------------------------------------------------------------
End of period $ 6,608,894 $70,126,059 $21,839,605
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 83
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GOVERNMENT
GROWTH SECURITIES
PORTFOLIO PORTFOLIO
----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ 282,844 $ 269,629 $ 4,916,643 $ 5,172,678
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 2,951,705 2,656,487 (70,610) 342,253
- ---------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- -- -- --
- ---------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments (1,379,627) 2,020,264 1,607,250 (754,744)
- ---------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 1,854,922 4,946,380 6,453,283 4,760,187
- ---------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- ---------------------------------------------------------------------------------------------
Net investment income, Class
A (143,750) (173,156) (4,240,611) (4,942,104)
- ---------------------------------------------------------------------------------------------
Net investment income, Class
B (7,274) (13,172) (463,583) (230,737)
- ---------------------------------------------------------------------------------------------
Net investment income, Class
C (4,922) -- (5,921) --
- ---------------------------------------------------------------------------------------------
Net investment income, Class
Y (89,451) (79,688) (206,528) --
- ---------------------------------------------------------------------------------------------
Net realized gains on
investments Class A (2,418,648) (1,684,658) -- --
- ---------------------------------------------------------------------------------------------
Net realized gains on
investments Class B (631,985) (208,721) -- --
- ---------------------------------------------------------------------------------------------
Net realized gains on
investments Class C (71,424) -- -- --
- ---------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y (692,785) (424,530) -- --
- ---------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (4,060,239) (2,583,925) (4,916,643) (5,172,841)
- ---------------------------------------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- ---------------------------------------------------------------------------------------------
CLASS A
- ---------------------------------------------------------------------------------------------
Shares sold 9,664,091 9,214,469 9,968,742 8,082,041
- ---------------------------------------------------------------------------------------------
Reinvestment of
distributions 2,483,065 1,776,922 3,239,373 3,653,159
- ---------------------------------------------------------------------------------------------
Shares redeemed (7,918,925) (6,715,142) (19,528,142) (23,815,232)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) -
Class A 4,228,231 4,276,249 (6,320,027) (12,080,032)
- ---------------------------------------------------------------------------------------------
CLASS B
- ---------------------------------------------------------------------------------------------
Shares sold 8,132,892 3,267,075 7,500,863 4,496,001
- ---------------------------------------------------------------------------------------------
Reinvestment of
distributions 618,379 213,154 366,928 177,788
- ---------------------------------------------------------------------------------------------
Shares redeemed (2,560,054) (393,878) (1,468,710) (1,153,825)
- ---------------------------------------------------------------------------------------------
Net increase (decrease) -
Class B 6,191,217 3,086,351 6,399,081 3,519,964
- ---------------------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------
Shares sold 1,623,970 -- 491,753 --
- ---------------------------------------------------------------------------------------------
Reinvestment of
distributions 64,561 -- 5,436 --
- ---------------------------------------------------------------------------------------------
Shares redeemed (411,829) -- (1,730) --
- ---------------------------------------------------------------------------------------------
Net increase (decrease) -
Class C 1,276,702 -- 495,459 --
- ---------------------------------------------------------------------------------------------
CLASS Y
- ---------------------------------------------------------------------------------------------
Shares sold 5,152,548 6,700,676 7,776,475 --
- ---------------------------------------------------------------------------------------------
Reinvestment of
distributions 782,252 504,218 203,007 --
- ---------------------------------------------------------------------------------------------
Shares redeemed (3,371,537) (1,819,421) (476,237) --
- ---------------------------------------------------------------------------------------------
Net increase (decrease) -
Class Y 2,563,263 5,385,473 7,503,245 --
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 14,259,413 12,748,073 8,077,758 (8,560,068)
- ---------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 12,054,096 15,110,528 9,614,398 (8,972,722)
- ---------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------
Beginning of period $ 47,942,097 $ 32,831,569 $ 79,375,576 $ 88,348,298
- ---------------------------------------------------------------------------------------------
End of period $ 59,996,193 $ 47,942,097 $ 88,989,974 $ 79,375,576
- ---------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
84 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
<TABLE>
<CAPTION>
HIGH-YIELD TAX-EXEMPT MANAGED
BOND PORTFOLIO INCOME PORTFOLIO PORTFOLIO
----------------------------- --------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997 1996
------------- ------------- ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ 5,875,927 $ 4,626,639 $ 1,259,307 $ 1,503,075 $ 1,197,777 $ 1,722,342
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
investments 2,743,109 746,203 372,519 54,614 12,784,062 4,191,029
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options (62,305) (16,406) -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments 349,675 1,549,219 229,121 (497,297) 38,518,875 25,922,892
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 8,906,406 6,905,655 1,860,947 1,060,392 52,500,714 31,836,263
- ---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
A (4,853,097) (4,227,766) (1,174,218) (1,437,694) (591,297) (799,735)
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
B (972,857) (398,943) (83,769) (65,432) (7,511) (286,048)
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
C (24,986) -- (1,321) -- (18,130) --
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
Y (24,987) -- -- -- (607,068) (643,498)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class A -- -- (322,461) -- (5,861,184) (1,790,459)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class B -- -- (39,833) -- (4,171,627) (1,012,095)
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class C -- -- (2,497) -- (136,070) --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y -- -- -- -- (3,007,927) (1,018,912)
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (5,875,927) (4,626,709) (1,624,099) (1,503,126) (14,400,814) (5,550,747)
- ---------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold 20,360,902 12,189,056 2,691,749 2,501,597 52,752,538 48,360,893
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 3,697,275 3,065,474 1,171,184 1,077,601 6,249,605 2,491,364
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed (14,219,658) (15,310,792) (8,876,454) (8,294,044) (21,520,190) (10,298,814)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class A 9,838,519 (56,262) (5,013,521) (4,714,845) 37,481,953 40,553,443
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold 14,068,528 5,149,262 1,466,262 1,482,068 45,496,427 35,850,528
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 701,407 269,854 100,177 57,257 3,984,094 1,222,567
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed (3,320,942) (754,001) (728,264) (403,587) (6,915,745) (2,767,399)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class B 11,448,993 4,665,115 838,175 1,135,738 42,564,776 34,305,696
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold 1,690,084 -- 181,367 -- 3,630,893 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 18,460 -- 3,787 -- 143,683 --
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed (255,370) -- -- -- (69,464) --
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class C 1,453,174 -- 185,154 -- 3,705,112 --
- ---------------------------------------------------------------------------------------------------------------------------
CLASS Y
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold 775,896 -- -- -- 29,017,460 30,665,682
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 24,887 -- -- -- 3,614,889 1,662,410
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed (897) -- -- -- (19,022,024) (8,914,287)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class Y 799,886 -- -- -- 13,610,325 23,413,805
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 23,540,572 4,608,853 (3,990,192) (3,579,107) 97,362,166 98,272,944
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 26,571,051 6,887,799 (3,753,344) (4,021,841) 135,462,066 124,558,460
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of period $ 62,020,878 $ 55,133,079 $ 30,515,552 $ 34,537,393 $ 215,853,577 $ 91,295,117
- ---------------------------------------------------------------------------------------------------------------------------
End of period $ 88,591,929 $ 62,020,878 $ 26,762,208 $ 30,515,552 $ 351,315,643 $ 215,853,577
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
MONEY MARKET
PORTFOLIO
-------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income (loss) $ 3,014,138 $ 2,023,539
- -------------------------------------------------------------------------------
Net realized gain (loss) on
investments -- --
- -----------------------------------------------------------------------------------------------
Net realized gain (loss) on
futures and options -- --
- ---------------------------------------------------------------------------------------------------------------
Net change in unrealized
gain (loss) of investments -- --
- ---------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net
assets resulting from
operations 3,014,138 2,023,539
- ---------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM:
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
A (2,766,936) (1,984,743)
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
B (181,537) (38,796)
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
C (6,468) --
- ---------------------------------------------------------------------------------------------------------------------------
Net investment income, Class
Y (59,197) --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class A -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class B -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class C -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net realized gains on
investments Class Y -- --
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to shareholders (3,014,138) (2,023,539)
- ---------------------------------------------------------------------------------------------------------------------------
FROM CAPITAL SHARE
TRANSACTIONS:
- ---------------------------------------------------------------------------------------------------------------------------
CLASS A
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold 186,445,537 155,780,333
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 2,799,348 1,843,341
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed (179,852,529) (138,874,791)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class A 9,392,356 18,748,883
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold 16,428,666 4,456,552
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 165,715 35,289
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed (11,957,685) (3,542,604)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class B 4,636,696 949,237
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold 3,804,829 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 5,853 --
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed (2,789,716) --
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class C 1,020,966 --
- ---------------------------------------------------------------------------------------------------------------------------
CLASS Y
- ---------------------------------------------------------------------------------------------------------------------------
Shares sold 3,225,033 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
distributions 55,490 --
- ---------------------------------------------------------------------------------------------------------------------------
Shares redeemed (580,428) --
- ---------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) -
Class Y 2,700,095 --
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets resulting from
capital share transactions 17,750,113 19,698,120
- ---------------------------------------------------------------------------------------------------------------------------
Total increase (decrease) in
net assets 17,750,113 19,698,120
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
- ---------------------------------------------------------------------------------------------------------------------------
Beginning of period $ 60,417,051 $ 40,718,931
- ---------------------------------------------------------------------------------------------------------------------------
End of period $ 78,167,164 $ 60,417,051
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 85
<PAGE>
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
(A) Annualized.
(B) Not annualized.
(C) Total return does not include one time sales charge.
(D) Total return does not include contingent deferred sales charge.
(E) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
(F) Effective September 1, 1995, ratio includes expenses paid indirectly.
(G) Based on average monthly shares outstanding.
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
GROWTH PORTFOLIO (CLASS A) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 13.10 $ 10.44 $ 7.76 $ 8.26 $ 7.96
Net Investment Income (Loss) (0.07) (0.04) (0.03) (0.02) 0.01
Net Realized and Unrealized Gain (Loss) on
Investments 4.23 3.44 3.13 (0.06) 0.84
--------- --------- --------- -------- --------
Total from Investment Operations 4.16 3.40 3.10 (0.08) 0.85
--------- --------- --------- -------- --------
Dividends from Net Investment Income -- -- -- -- 0.01
Distributions from Capital Gains 0.35 0.74 0.42 0.42 0.54
--------- --------- --------- -------- --------
Total Distributions 0.35 0.74 0.42 0.42 0.55
--------- --------- --------- -------- --------
Net Asset Value End of Period $ 16.91 $ 13.10 $ 10.44 $ 7.76 $ 8.26
--------- --------- --------- -------- --------
Total Return(C) 31.76% 32.60% 39.99% (0.99)% 10.59%
Net Assets End of Period (in thousands) $ 424,280 $ 196,752 $ 122,559 $ 88,375 $ 90,902
Ratio of Expenses to Average Net Assets 1.43%(F) 1.53%(F) 1.60% 1.56% 1.60%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.43%(F) 1.53%(F) 1.60% 1.56% 1.61%
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.55)% (0.39)% (0.35)% (0.30)% 0.10%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.55)% (0.39)% (0.35)% (0.30)% 0.06%
Portfolio Turnover Rate 22.28% 29.90% 45.30% 64.50% 107.90%
Average commission per share(E) $ 0.0509 $ 0.0636
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, FOR THE PERIOD
----------------------- -------------------------
GROWTH PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 12.97 $ 10.41 $ 8.69
Net Investment Income (Loss) (0.11) (0.06) (0.02)
Net Realized and Unrealized Gain (Loss) on
Investments 4.15 3.36 2.16
--------- -------- ------
Total from Investment Operations 4.04 3.30 2.14
--------- -------- ------
Dividends from Net Investment Income -- -- --
Distributions from Capital Gains 0.35 0.74 0.42
--------- -------- ------
Total Distributions 0.35 0.74 0.42
--------- -------- ------
Net Asset Value End of Period $ 16.66 $ 12.97 $10.41
--------- -------- ------
Total Return(D) 31.15% 31.73% 24.66%(B)
Net Assets End of Period (in thousands) $ 166,932 $ 36,483 $4,572
Ratio of Expenses to Average Net Assets 1.98%(F) 2.10%(F) 2.15%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.98%(F) 2.10%(F) 2.15%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (1.10)% (0.96)% (0.82)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (1.10)% (0.96)% (0.82)%(A)
Portfolio Turnover Rate 22.28% 29.90% 45.30%(A)
Average commission per share(E) $ 0.0509 $ 0.0636
</TABLE>
See notes to financial statements.
86 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
5/1/97 THROUGH
GROWTH PORTFOLIO (CLASS C) 12/31/97
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 14.11
Net Investment Income (Loss) (0.06)
Net Realized and Unrealized Gain (Loss) on
Investments 3.15
-------
Total from Investment Operations 3.09
-------
Dividends from Net Investment Income --
Distributions from Capital Gains 0.35
-------
Total Distributions 0.35
-------
Net Asset Value End of Period $ 16.85
-------
Total Return(D) 21.91%
Net Assets End of Period (in thousands) $ 26,601
Ratio of Expenses to Average Net Assets 1.97%(F)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.97%(F)
Ratio of Net Investment Income (Loss) to Average
Net Assets (1.10)%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (1.10)%
Portfolio Turnover Rate 22.28%
Average commission per share(E) $ 0.0509
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED -------------------------
GROWTH PORTFOLIO (CLASS Y) DECEMBER 31, 1997 8/8/96 THROUGH 12/31/96
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 13.12 $ 11.96
Net Investment Income (Loss) (0.02) --
Net Realized and Unrealized Gain (Loss) on
Investments 4.27 1.90
------- -------
Total from Investment Operations 4.25 1.90
------- -------
Dividends from Net Investment Income -- --
Distributions from Capital Gains 0.35 0.74
------- -------
Total Distributions 0.35 0.74
------- -------
Net Asset Value End of Period $ 17.02 $ 13.12
------- -------
Total Return 32.40% 15.91%(B)
Net Assets End of Period (in thousands) $44,596 $ 2,339
Ratio of Expenses to Average Net Assets 0.97%(F) 1.10%(A)(F)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 0.97%(F) 1.10%(A)(F)
Ratio of Net Investment Income (loss) to Average
Net Assets (0.10)% 0.04%(A)
Ratio of Net Investment Income (loss) to Average
Net Assets (Excluding Waivers) (0.10)% 0.04%(A)
Portfolio Turnover Rate 22.28% 29.90%(A)
Average commission per share(E) $0.0509 $0.0636
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 87
<PAGE>
EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
EQUITY PORTFOLIO (CLASS A) 05/01/97 THROUGH 12/31/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 5.00
Net Investment Income (Loss) 0.01
Net Realized and Unrealized Gain (Loss) on
Investments 1.05
-------
Total from Investment Operations 1.06
-------
Dividends from Net Investment Income --
Distributions from Capital Gains 0.10
-------
Total Distributions 0.10
-------
Net Asset Value End of Period $ 5.96
-------
Total Return(C) 21.30%(B)
Net Assets End of Period (in thousands) $ 3,196
Ratio of Expenses to Average Net Assets 1.60%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 6.52%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.26%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (4.66)%(A)
Portfolio Turnover Rate 68.73%(A)
Average commission per share(E) $ 0.0564
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
EQUITY PORTFOLIO (CLASS B) 05/01/97 THROUGH 12/31/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 5.00
Net Investment Income (Loss) (0.00)
Net Realized and Unrealized Gain (Loss) on
Investments 1.04
-------
Total from Investment Operations 1.04
-------
Dividends from Net Investment Income --
Distributions from Capital Gains 0.10
-------
Total Distributions 0.10
-------
Net Asset Value End of Period $ 5.94
-------
Total Return(D) 20.80%(B)
Net Assets End of Period (in thousands) $ 1,820
Ratio of Expenses to Average Net Assets 2.15%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 6.21%(A)
Ratio of Net Investment Income (loss) to Average
Net Assets (0.23)%(A)
Ratio of Net Investment Income (loss) to Average
Net Assets (Excluding Waivers) (4.29)%(A)
Portfolio Turnover Rate 68.73%(A)
Average commission per share(E) $ 0.0564
</TABLE>
See notes to financial statements.
88 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
EQUITY PORTFOLIO (CLASS C) 05/01/97 THROUGH 12/31/97
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 5.00
Net Investment Income (Loss) 0.00
Net Realized and Unrealized Gain (Loss) on
Investments 1.04
-------
Total from Investment Operations 1.04
-------
Dividends from Net Investment Income --
Distributions from Capital Gains 0.10
-------
Total Distributions 0.10
-------
Net Asset Value End of Period $ 5.94
-------
Total Return(D) 20.89%(B)
Net Assets End of Period (in thousands) $ 283
Ratio of Expenses to Average Net Assets 2.15%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 6.01%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.21)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (4.07)%(A)
Portfolio Turnover Rate 68.73%(A)
Average commission per share(E) $ 0.0564
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 89
<PAGE>
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
10/1/97 7/17/97
GROWTH AND INCOME PORTFOLIO (CLASS A) THROUGH 12/31/97 THROUGH 9/30/97
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 25.71 $ 25.05
Net Investment Income (Loss) 0.01 --
Net Realized and Unrealized Gain (Loss) on
Investments 0.04 0.66
------- -------
Total from Investment Operations 0.05 0.66
------- -------
Dividends from Net Investment Income 0.11 --
Distributions from Capital Gains 0.46 --
------- -------
Total Distributions 0.57 --
------- -------
Net Asset Value End of Period $ 25.19 $ 25.71
------- -------
Total Return(C) 0.20%(B) 2.63%
Net Assets End of Period (in thousands) $ 4,032 $ 1,109
Ratio of Expenses to Average Net Assets 1.50%(A) 1.50%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.11%(A) 4.47%
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.56%(A) 0.07%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.04)%(A) (2.90)%
Portfolio Turnover Rate 1.46%(A) 15.69%
Average commission per share(E) $0.0600 $0.0560
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
10/1/97 7/17/97
GROWTH AND INCOME PORTFOLIO (CLASS B) THROUGH 12/31/97 THROUGH 9/30/97
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 25.68 $ 25.05
Net Investment Income (Loss) (0.01) (0.01)
Net Realized and Unrealized Gain (Loss) on
Investments 0.03 0.64
------- -------
Total from Investment Operations 0.02 0.63
------- -------
Dividends from Net Investment Income 0.09 --
Distributions from Capital Gains 0.46 --
------- -------
Total Distributions 0.55 --
------- -------
Net Asset Value End of Period $ 25.15 $ 25.68
------- -------
Total Return(D) 0.07%(B) 2.51%
Net Assets End of Period (in thousands) $ 3,257 $ 992
Ratio of Expenses to Average Net Assets 2.05%(A) 2.05%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.66%(A) 4.59%
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.02)%(A) (0.34)%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.63)%(A) (2.87)%
Portfolio Turnover Rate 1.46%(A) 15.69%
Average commission per share(E) $0.0600 $0.0560
</TABLE>
See notes to financial statements.
90 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
GROWTH AND INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
10/1/97 7/17/97
GROWTH AND INCOME PORTFOLIO (CLASS C) THROUGH 12/31/97 THROUGH 9/30/97
- --------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 25.68 $ 25.05
Net Investment Income (Loss) (0.02) (0.01)
Net Realized and Unrealized Gain (Loss) on
Investments 0.05 0.64
------- -------
Total from Investment Operations 0.03 0.63
------- -------
Dividends from Net Investment Income 0.10 --
Distributions from Capital Gains 0.46 --
Other 0.00 --
------- -------
Total Distributions 0.56 --
------- -------
Net Asset Value End of Period $ 25.15 $ 25.68
------- -------
Total Return(D) 0.10%(B) 2.51%
Net Assets End of Period (in thousands) $ 561 $ 99
Ratio of Expenses to Average Net Assets 2.05%(A) 2.05%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.64%(A) 4.60%
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.03%(A) (0.39)%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.56)%(A) (2.94)%
Portfolio Turnover Rate 1.46%(A) 15.69%
Average commission per share(E) $0.0600 $0.0560
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
10/1/97 YEAR YEAR YEAR YEAR YEAR
THROUGH ENDED ENDED ENDED ENDED ENDED
GROWTH AND INCOME PORTFOLIO (CLASS Y) 12/31/97 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 25.73 $ 20.11 $ 16.69 $ 12.72 $ 12.08 $ 10.98
Net Investment Income (Loss) 0.06 .35 0.21 0.13 0.15 0.18
Net Realized and Unrealized Gain (Loss) on
Investments 0.02 6.18 3.45 4.22 0.74 1.84
------- -------- -------- -------- -------- --------
Total from Investment Operations 0.08 6.53 3.66 4.35 0.89 2.02
------- -------- -------- -------- -------- --------
Dividends from Net Investment Income 0.11 .20 0.24 0.16 0.14 0.28
Distributions from Capital Gains 0.46 0.71 -- 0.22 0.11 0.64
Other 0.00 -- -- -- -- --
------- -------- -------- -------- -------- --------
Total Distributions 0.57 .91 0.24 0.38 0.25 0.92
------- -------- -------- -------- -------- --------
Net Asset Value End of Period 25.24 $ 25.73 $ 20.11 $ 16.69 $ 12.72 $ 12.08
------- -------- -------- -------- -------- --------
Total Return 0.31%(B) 33.55% 22.21% 35.24% 7.47% 19.39%
Net Assets End of Period (in thousands) $15,542 $ 15,428 $ 8,865 $ 5,657 $ 3,639 $ 3,094
Ratio of Expenses to Average Net Assets 1.05%(A) .99% 0.97% 0.90% 0.90% 0.90%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.68%(A) 2.20% 2.05% 2.20% 2.23% 3.33%
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.96%(A) 0.88% 1.23% 1.52% 1.17% 1.31%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) 0.33%(A) (0.33)% 0.15% 0.22% (0.16)% (1.12)%
Portfolio Turnover Rate 1.46%(A) 15.69% 18.08% 25.49% 9.64% 21.79%
Average commission per share(E) $0.0600 $ 0.0560 $ 0.0600 -- -- --
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 91
<PAGE>
EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
EQUITY INCOME PORTFOLIO (CLASS A) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 22.44 $ 20.73 $ 16.43 $ 17.75 $ 16.93
Net Investment Income (Loss) 0.17 0.41 0.45 0.44 0.52
Net Realized and Unrealized Gain (Loss) on
Investments 5.95 3.27 5.00 (0.53) 1.74
-------- -------- -------- -------- --------
Total from Investment Operations 6.12 3.68 5.45 (0.09) 2.26
-------- -------- -------- -------- --------
Dividends from Net Investment Income 0.15 0.40 0.45 0.44 0.50
Distributions from Capital Gains 1.99 1.57 0.70 0.79 0.94
-------- -------- -------- -------- --------
Total Distributions 2.14 1.97 1.15 1.23 1.44
-------- -------- -------- -------- --------
Net Asset Value End of Period $ 26.42 $ 22.44 $ 20.73 $ 16.43 $ 17.75
-------- -------- -------- -------- --------
Total Return(C) 28.08% 17.86% 33.38% (0.49)% 13.45%
Net Assets End of Period (in thousands) $ 97,932 $ 72,647 $ 61,906 $ 50,926 $ 49,920
Ratio of Expenses to Average Net Assets 1.50% 1.50% 1.50% 1.50% 1.50%
Ratio of Expenses to Average Net Assets
(Excluding Waivers) 1.62% 1.68% 1.78% 1.73% 1.91%
Ratio of Net Investment Income to Average Net
Assets 1.35% 1.87% 2.33% 2.50% 2.90%
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 1.23% 1.69% 2.06% 2.30% 2.51%
Portfolio Turnover Rate 32.89% 33.22% 25.60% 41.40% 39.90%
Average commission per share(E) $ 0.0600 $ 0.0615
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, FOR THE PERIOD
------------------- -------------------------
EQUITY INCOME PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 22.30 $ 20.67 $18.12
Net Investment Income (Loss) $ 0.12 0.24 0.29
Net Realized and Unrealized Gain (Loss) on
Investments 5.83 3.30 3.40
-------- -------- ------
Total from Investment Operations 5.95 3.54 3.69
-------- -------- ------
Dividends from Net Investment Income 0.09 0.34 0.44
Distributions from Capital Gains 1.99 1.57 0.70
-------- -------- ------
Total Distributions 2.08 1.91 1.14
-------- -------- ------
Net Asset Value End of Period $ 26.17 $ 22.30 $20.67
-------- -------- ------
Total Return(D) 27.35% 17.22% 20.57%(B)
Net Assets End of Period (in thousands) $ 19,055 $ 5,615 $1,086
Ratio of Expenses to Average Net Assets 2.05% 2.05% 2.05%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers) 2.17% 2.23% 2.23%(A)
Ratio of Net Investment Income to Average Net
Assets 0.77% 1.32% 1.56%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 0.65% 1.14% 1.33%(A)
Portfolio Turnover Rate 32.89% 33.22% 25.60%(A)
Average commission per share(E) $ 0.0600 $ 0.0615
</TABLE>
See notes to financial statements.
92 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
EQUITY INCOME PORTFOLIO (CLASS C) 5/1/97 THROUGH 12/31/97
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 24.26
Net Investment Income (Loss) 0.04
Net Realized and Unrealized Gain (Loss) on
Investments 4.14
-------
Total from Investment Operations 4.18
-------
Dividends from Net Investment Income 0.14
Distributions from Capital Gains 1.99
-------
Total Distributions 2.13
-------
Net Asset Value End of Period 26.31
-------
Total Return(D) 18.21%(B)
Net Assets End of Period (in thousands) $ 1,857
Ratio of Expenses to Average Net Assets 2.05%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.20%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.69%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) 0.54%(A)
Portfolio Turnover Rate 32.89%(A)
Average commission per share(E) $0.0600
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 93
<PAGE>
CAPITAL APPRECIATION PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
CAPITAL APPRECIATION PORTFOLIO (CLASS A) 1997 1996 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 34.21 $ 32.54 $ 28.54 $ 31.10 $ 29.42
Net Investment Income (Loss) (0.37) (0.31) (0.25) (0.13) (0.15)
Net Realized and Unrealized Gain (Loss) on
Investments 7.31 5.69 7.59 (0.95) 1.83
--------- --------- --------- --------- ---------
Total from Investment Operations 6.94 5.38 7.34 (1.08) 1.68
--------- --------- --------- --------- ---------
Dividends from Net Investment Income -- -- -- -- --
Distributions from Capital Gains 5.61 3.71 3.34 1.48 --
--------- --------- --------- --------- ---------
Total Distributions 5.61 3.71 3.34 1.48 --
--------- --------- --------- --------- ---------
Net Asset Value End of Period $ 35.54 $ 34.21 $ 32.54 $ 28.54 $ 31.10
--------- --------- --------- --------- ---------
Total Return(C) 20.27% 16.52% 25.72% (3.46)% 5.71%
Net Assets End of Period (in thousands) $ 112,738 $ 115,253 $ 121,207 $ 101,237 $ 103,187
Ratio of Expenses to Average Net Assets 1.65% 1.60%(F) 1.65% 1.66% 1.64%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.65% 1.60%(F) 1.65% 1.66% 1.64%
Ratio of Net Investment Income (Loss) to Average
Net Assets (1.06)% (0.87)% (0.82)% (0.50)% (0.60)%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (1.06)% (0.87)% (0.82)% (0.50)% (0.60)%
Portfolio Turnover Rate 60.73% 66.42% 65.20% 74.40% 61.90%
Average commission per share(E) $ 0.0463 $ 0.0486
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, FOR THE PERIOD
------------------- -------------------------
CAPITAL APPRECIATION PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 33.86 $ 32.42 $30.04
Net Investment Income (Loss) (0.45) (0.35) (0.12)
Net Realized and Unrealized Gain (Loss) on
Investments 7.09 5.50 5.84
-------- -------- ------
Total from Investment Operations 6.64 5.15 5.72
-------- -------- ------
Dividends from Net Investment Income -- -- --
Distributions from Capital Gains 5.61 3.71 3.34
-------- -------- ------
Total Distributions 5.61 3.71 3.34
-------- -------- ------
Net Asset Value End of Period $ 34.89 $ 33.86 $32.42
-------- -------- ------
Total Return(D) 19.60% 15.87% 18.99%(B)
Net Assets End of Period (in thousands) $ 7,862 $ 5,047 $1,953
Ratio of Expenses to Average Net Assets 2.21% 2.14%(F) 2.08%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.21% 2.14%(F) 2.08%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (1.61)% (1.43)% (1.41)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (1.61)% (1.43)% (1.41)%(A)
Portfolio Turnover Rate 60.73% 66.42% 65.20%(A)
Average commission per share(E) $ 0.0463 $ 0.0486
</TABLE>
See notes to financial statements.
94 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
CAPITAL APPRECIATION PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
FROM
CAPITAL APPRECIATION PORTFOLIO (CLASS C) 5/1/97 THROUGH 12/31/97
-------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 33.54
Net Investment Income (Loss) (0.19)
Net Realized and Unrealized Gain (Loss) on
Investments 7.69
-------
Total from Investment Operations 7.50
-------
Dividends from Net Investment Income 0.00
Distributions from Capital Gains 5.61
-------
Total Distributions 5.61
-------
Net Asset Value End of Period $ 35.43
-------
Total Return(D) 22.35%(B)
Net Assets End of Period (in thousands) $ 126
Ratio of Expenses to Average Net Assets 2.21%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.21%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (1.88)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (1.88)%(A)
Portfolio Turnover Rate 60.73%(A)
Average commission per share(E) $0.0463
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 95
<PAGE>
SMALL COMPANY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM FOR THE PERIOD
SMALL COMPANY GROWTH PORTFOLIO (CLASS A) 10/1/97 THROUGH 12/31/97 7/17/97 THROUGH 9/30/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 26.61 $ 24.54
Net Investment Income (Loss) 0.18 (0.05)
Net Realized and Unrealized Gain (Loss) on
Investments (2.85) 2.12
------- -------
Total from Investment Operations (2.67) 2.07
------- -------
Dividends from Net Investment Income -- --
Distributions from Capital Gains 0.55 --
------- -------
Total Distributions 0.55 --
------- -------
Net Asset Value End of Period $ 23.39 $ 26.61
------- -------
Total Return(C) (10.04)%(B) 8.44%
Net Assets End of Period (in thousands) $ 4,861 $ 2,102
Ratio of Expenses to Average Net Assets 1.85%(A) 1.85%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.38%(A) 4.48%
Ratio of Net Investment Income to Average Net
Assets (1.56)%(A) (1.61)%
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) (2.09)%(A) (4.25)%
Portfolio Turnover Rate 23.68%(A) 157.51%
Average commission per share(E) $0.0518 $0.0503
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FROM FOR THE PERIOD
SMALL COMPANY GROWTH PORTFOLIO (CLASS B) 10/1/97 THROUGH 12/31/97 7/17/97 THROUGH 9/30/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 26.58 $ 24.54
Net Investment Income (Loss) 0.15 (0.05)
Net Realized and Unrealized Gain (Loss) on
Investments (2.86) 2.09
------- -------
Total from Investment Operations (2.70) 2.04
------- -------
Dividends from Net Investment Income -- --
Distributions from Capital Gains 0.55 --
------- -------
Total Distributions 0.55 --
------- -------
Net Asset Value End of Period $ 23.33 $ 26.58
------- -------
Total Return(D) (10.16)%(B) 8.31%
Net Assets End of Period (in thousands) $ 2,842 $ 1,099
Ratio of Expenses to Average Net Assets 2.40%(A) 2.40%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.93%(A) 5.52%
Ratio of Net Investment Income (Loss) to Average
Net Assets (2.11)%(A) (2.18)%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (2.64)%(A) (5.29)%
Portfolio Turnover Rate 23.68%(A) 157.51%
Average commission per share(E) $0.0518 $0.0503
</TABLE>
See notes to financial statements.
96 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
SMALL COMPANY GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD FROM FOR THE PERIOD
SMALL COMPANY GROWTH PORTFOLIO (CLASS C) 10/1/97 THROUGH 12/31/97 7/17/97 THROUGH 9/30/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 26.57 $ 24.54
Net Investment Income (Loss) 0.16 (0.07)
Net Realized and Unrealized Gain (Loss) on
Investments (2.86) 2.10
------- -------
Total from Investment Operations (2.70) 2.03
------- -------
Dividends from Net Investment Income -- --
Distributions from Capital Gains 0.55 --
Other -- --
------- -------
Total Distributions 0.55 --
------- -------
Net Asset Value End of Period $ 23.32 $ 26.57
------- -------
Total Return(D) (10.16)%(B) 8.27%
Net Assets End of Period (in thousands) $ 795 $ 201
Ratio of Expenses to Average Net Assets 2.40%(A) 2.40%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.93%(A) 5.91%
Ratio of Net Investment Income (Loss) to Average
Net Assets (2.11)%(A) (2.15)%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (2.64)%(A) (5.65)%
Portfolio Turnover Rate 23.68%(A) 157.51%
Average commission per share(E) $0.0518 $0.0503
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FROM YEAR YEAR YEAR YEAR YEAR
10/1/97 THROUGH ENDED ENDED ENDED ENDED ENDED
SMALL COMPANY GROWTH PORTFOLIO (CLASS Y) 12/31/97 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 26.62 $ 25.08 $ 19.05 $ 14.01 $ 14.74 $ 11.83
Net Investment Income (Loss) 0.16 (0.13) (0.17) (0.12) (0.04) (0.13)
Net Realized and Unrealized Gain (Loss) on
Investments (2.81) 3.73 7.62 5.49 1.58 4.36
------- -------- -------- -------- -------- --------
Total from Investment Operations (2.64) 3.60 7.45 5.37 1.54 4.23
------- -------- -------- -------- -------- --------
Dividends from Net Investment Income -- -- -- -- -- 0.11
Distributions from Capital Gains 0.55 2.06 1.42 0.33 2.27 1.21
Other -- --
------- -------- -------- -------- -------- --------
Total Distributions 0.55 2.06 1.42 0.33 2.27 1.32
------- -------- -------- -------- -------- --------
Net Asset Value End of Period $ 23.43 $ 26.62 $ 25.08 $ 19.05 $ 14.01 $ 14.74
------- -------- -------- -------- -------- --------
Total Return (9.92)%(B) 16.24% 42.07% 39.20% 11.89% 38.05%
Net Assets End of Period (in thousands) $13,540 $ 15,355 $ 6,609 $ 2,950 $ 1,825 $ 1,352
Ratio of Expenses to Average Net Assets 1.40%(A) 1.84% 1.96% 1.85% 1.85% 1.85%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.96%(A) 3.08% 3.46% 5.15% 6.16% 8.06%
Ratio of Net Investment Income (Loss) to Average
Net Assets (1.12)%(A) (1.30)% (1.43)% (1.33)% (1.37)% (1.34)%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (1.68)%(A) (2.54)% (2.93)% (4.63)% (5.68)% (7.55)%
Portfolio Turnover Rate 23.68%(A) 157.51% 77.94% 84.05% 72.59% 144.49%
Average commission per share(E) $0.0518 $ 0.0503 $ 0.0486 -- -- --
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 97
<PAGE>
SMALL COMPANY VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
----------------------------------------- -------------------------
SMALL COMPANY VALUE PORTFOLIO (CLASS A) 1997 1996 1995 1994 10/1/93 THROUGH 12/31/93
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 5.74 $ 5.43 $ 5.17 $ 5.29 $ 5.00
Net Investment Income (Loss) 0.01 (0.01) 0.02 0.03 0.01
Net Realized and Unrealized Gain (Loss) on
Investments 2.53 0.62 0.46 (0.01) 0.29
-------- -------- -------- -------- ------
Total from Investment Operations 2.54 0.61 0.48 0.02 0.30
-------- -------- -------- -------- ------
Dividends from Net Investment Income -- -- 0.02 0.03 0.01
Distributions from Capital Gains 0.53 0.30 0.20 0.11 --
-------- -------- -------- -------- ------
Total Distributions 0.53 0.30 0.22 0.14 0.01
-------- -------- -------- -------- ------
Net Asset Value End of Period $ 7.75 $ 5.74 $ 5.43 $ 5.17 $ 5.29
-------- -------- -------- -------- ------
Total Return(C) 44.24% 11.28% 9.28% 0.34% 5.92%(B)
Net Assets End of Period (in thousands) $ 45,310 $ 17,308 $ 19,720 $ 22,120 $8,118
Ratio of Expenses to Average Net Assets 1.75% 1.75% 1.75% 1.75% 1.75%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.95% 2.38% 2.21% 2.15% 4.00%(A)
Ratio of Net Investment Income to Average Net
Assets 0.05% (0.13)% 0.32% 0.60% 0.10%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) (0.15)% (0.76)% (0.14)% 0.18% (1.54)%(A)
Portfolio Turnover Rate 62.51% 143.58% 36.50% 16.70% --%
Average commission per share(E) $ 0.0470 $ 0.0483
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, FOR THE PERIOD
------------------- -------------------------
SMALL COMPANY VALUE PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 5.69 $ 5.41 $ 5.28
Net Investment Income (Loss) -- (0.03) (0.01)
Net Realized and Unrealized Gain (Loss) on
Investments 2.47 0.61 0.36
-------- -------- ------
Total from Investment Operations 2.47 0.58 0.35
-------- -------- ------
Dividends from Net Investment Income -- -- 0.02
Distributions from Capital Gains 0.53 0.30 0.20
-------- -------- ------
Total Distributions 0.53 0.30 0.22
-------- -------- ------
Net Asset Value End of Period $ 7.63 $ 5.69 $ 5.41
-------- -------- ------
Total Return(D) 43.40% 10.77% 6.87%(B)
Net Assets End of Period (in thousands) $ 22,013 $ 2,606 $ 862
Ratio of Expenses to Average Net Assets 2.30% 2.30% 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.44% 2.92% 2.78%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.67)% (0.77)% (0.40)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.81)% (1.39)% (0.90)%(A)
Portfolio Turnover Rate 62.51% 143.58% 36.50%(A)
Average commission per share(E) $ 0.0470 $ 0.0483
</TABLE>
See notes to financial statements.
98 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
SMALL COMPANY VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
SMALL COMPANY VALUE PORTFOLIO (CLASS C) 5/1/97 THROUGH 12/31/97
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 6.14
Net Investment Income (Loss) (0.02)
Net Realized and Unrealized Gain (Loss) on
Investments 2.15
-------
Total from Investment Operations 2.13
-------
Dividends from Net Investment Income --
Distributions from Capital Gains 0.53
-------
Total Distributions 0.53
-------
Net Asset Value End of Period $ 7.74
-------
Total Return(D) 34.68%(B)
Net Assets End of Period (in thousands) $ 2,684
Ratio of Expenses to Average Net Assets 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.38%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.88)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.95)%(A)
Portfolio Turnover Rate 62.51%(A)
Average commission per share(E) $0.0470
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, FOR THE PERIOD
------------------- --------------------------
SMALL COMPANY VALUE PORTFOLIO (CLASS Y) 1997 1996 5/25/95 THROUGH 12/31/95
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 5.77 $ 5.43 $ 5.37
Net Investment Income (Loss) 1.45 0.01 0.04
Net Realized and Unrealized Gain (Loss) on
Investments 1.12 0.63 0.26
-------- -------- ------
Total from Investment Operations 2.57 0.64 0.30
-------- -------- ------
Dividends from Net Investment Income -- -- 0.04
Distributions from Capital Gains 0.53 0.30 0.20
-------- -------- ------
Total Distributions 0.53 0.30 0.24
-------- -------- ------
Net Asset Value End of Period $ 7.81 $ 5.77 $ 5.43
-------- -------- ------
Total Return 44.53% 11.83% 5.55%(B)
Net Assets End of Period (in thousands) $ 119 $ 1,926 $ 2,832
Ratio of Expenses to Average Net Assets 1.30% 1.30% 1.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.85% 1.92% 1.81%(A)
Ratio of Net Investment Income to Average Net
Assets 2.74% 0.35% 0.18%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 2.19% (0.27)% (0.33)%(A)
Portfolio Turnover Rate 62.51% 143.58% 36.50%(A)
Average commission per share(E) $ 0.0470 $ 0.0483
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 99
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
INTERNATIONAL GROWTH PORTFOLIO (CLASS A) 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 17.10 $ 16.08 $ 14.70 $ 17.44 $ 13.23
Net Investment Income (Loss) 0.08 0.10 0.11 (0.01) (0.02)
Net Realized and Unrealized Gain (Loss) on
Investments 0.73 1.88 2.12 (0.49) 4.79
-------- -------- -------- -------- --------
Total from Investment Operations 0.81 1.98 2.23 (0.50) 4.77
-------- -------- -------- -------- --------
Dividends from Net Investment Income 0.07 0.09 0.09 -- --
Distributions from Capital Gains 1.13 0.87 0.76 2.24 0.17
Other -- -- -- -- 0.39
-------- -------- -------- -------- --------
Total Distributions 1.20 0.96 0.85 2.24 0.56
-------- -------- -------- -------- --------
Net Asset Value End of Period $ 16.71 $ 17.10 $ 16.08 $ 14.70 $ 17.44
-------- -------- -------- -------- --------
Total Return(C) 4.75% 12.32% 15.17% (2.82)% 36.05%
Net Assets End of Period (in thousands) $ 38,020 $ 34,837 $ 28,628 $ 27,523 $ 22,900
Ratio of Expenses to Average Net Assets 2.00% 2.00% 2.00% 2.00% 2.00%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.11% 2.19% 2.40% 2.51% 3.06%
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.50% 0.61% 0.70% (0.20)% (0.10)%
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) 0.39% 0.42% 0.30% (0.70)% (1.15)%
Portfolio Turnover Rate 27.08% 23.79% 31.10% 116.10% 70.10%
Average commission per share(E) $ 0.0275 $ 0.0221
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, FOR THE PERIOD
------------------- -------------------------
INTERNATIONAL GROWTH PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 16.97 $ 16.02 $14.82
Net Investment Income (Loss) 0.01 0.01 (0.02)
Net Realized and Unrealized Gain (Loss) on
Investments 0.69 1.87 2.08
-------- -------- ------
Total from Investment Operations 0.70 1.88 2.06
-------- -------- ------
Dividends from Net Investment Income 0.01 0.06 0.10
Distributions from Capital Gains 1.13 0.87 0.76
Other -- -- --
-------- -------- ------
Total Distributions 1.14 0.93 0.86
-------- -------- ------
Net Asset Value End of Period $ 16.53 $ 16.97 $16.02
-------- -------- ------
Total Return(D) 4.17% 11.72% 13.88%(B)
Net Assets End of Period (in thousands) $ 9,878 $ 4,276 $1,094
Ratio of Expenses to Average Net Assets 2.55% 2.55% 2.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.67% 2.75% 2.75%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.06)% 0.09% (0.65)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.18)% (0.11)% (0.85)%(A)
Portfolio Turnover Rate 27.08% 23.79% 31.10%(A)
Average commission per share(E) $ 0.0275 $ 0.0221
</TABLE>
See notes to financial statements.
100 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
INTERNATIONAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
INTERNATIONAL GROWTH PORTFOLIO (CLASS C) 5/1/97 THROUGH 12/31/97
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 17.51
Net Investment Income (Loss) (0.03)
Net Realized and Unrealized Gain (Loss) on
Investments 0.39
-------
Total from Investment Operations 0.36
-------
Dividends from Net Investment Income 0.08
Distributions from Capital Gains 1.13
-------
Total Distributions 1.21
-------
Net Asset Value End of Period $ 16.66
-------
Total Return(D) 2.07%(B)
Net Assets End of Period (in thousands) $ 1,113
Ratio of Expenses to Average Net Assets 2.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.75%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.51)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.71)%(A)
Portfolio Turnover Rate 27.08%(A)
Average commission per share(E) $0.0275
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, FOR THE PERIOD
------------------- -------------------------
INTERNATIONAL GROWTH PORTFOLIO (CLASS Y) 1997 1996 7/5/95 THROUGH 12/31/95
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 17.10 $ 16.07 $14.93
Net Investment Income (Loss) 0.17 0.14 0.02
Net Realized and Unrealized Gain (Loss) on
Investments 0.72 1.92 2.02
-------- -------- ------
Total from Investment Operations 0.89 2.06 2.04
-------- -------- ------
Dividends from Net Investment Income 0.15 0.16 0.14
Distributions from Capital Gains 1.13 0.87 0.76
-------- -------- ------
Total Distributions $ 1.28 1.03 0.90
-------- -------- ------
Net Asset Value End of Period $ 16.71 $ 17.10 $16.07
-------- -------- ------
-------- -------- ------
Total Return 5.21% 12.86% 13.65%(B)
Net Assets End of Period (in thousands) $ 10,986 $ 8,828 $3,109
Ratio of Expenses to Average Net Assets 1.55% 1.55% 1.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.66% 1.75% 1.75%(A)
Ratio of Net Investment Income to Average Net
Assets 0.95% 1.03% 0.26%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 0.84% 0.84% 0.05%(A)
Portfolio Turnover Rate 27.08% 23.79% 31.10%(A)
Average commission per share(E) $ 0.0275 $ 0.0221
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 101
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
GOVERNMENT SECURITIES PORTFOLIO (CLASS A) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 11.80 $ 11.83 $ 10.62 $ 12.44 $ 12.47
Net Investment Income (Loss) 0.73 0.74 0.76 0.87 0.92
Net Realized and Unrealized Gain (Loss) on
Investments 0.23 (0.03) 1.21 (1.82) 0.21
-------- -------- -------- -------- ---------
Total from Investment Operations 0.96 0.71 1.97 (0.95) 1.13
-------- -------- -------- -------- ---------
Dividends from Net Investment Income 0.73 0.74 0.76 0.87 0.92
Distributions from Capital Gains -- -- -- -- 0.24
-------- -------- -------- -------- ---------
Total Distributions 0.73 0.74 0.76 0.87 1.16
-------- -------- -------- -------- ---------
Net Asset Value End of Period $ 12.03 $ 11.80 $ 11.83 $ 10.62 $ 12.44
-------- -------- -------- -------- ---------
Total Return(C) 8.39% 6.29% 19.00% (7.81)% 9.26%
Net Assets End of Period (in thousands) $ 68,639 $ 73,693 $ 86,224 $ 84,431 $ 106,541
Ratio of Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30% 1.30%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.46% 1.42% 1.44% 1.35% 1.44%
Ratio of Net Investment Income to Average Net
Assets 6.16% 6.35% 6.66% 7.60% 7.20%
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 6.00% 6.23% 6.52% 7.59% 7.03%
Portfolio Turnover Rate 9.61% 0.17% --% 27.20% 90.10%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, FOR THE PERIOD
------------------ -------------------------
GOVERNMENT SECURITIES PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 11.79 $ 11.83 $11.12
Net Investment Income (Loss) 0.66 0.68 0.44
Net Realized and Unrealized Gain (Loss) on
Investments 0.23 (0.04) 0.71
-------- ------- ------
Total from Investment Operations 0.89 0.64 1.15
-------- ------- ------
Dividends from Net Investment Income 0.66 0.68 0.44
Distributions from Capital Gains -- -- --
-------- ------- ------
Total Distributions(D) 0.66 0.68 0.44
-------- ------- ------
Net Asset Value End of Period $ 12.02 $ 11.79 $11.83
-------- ------- ------
Total Return 7.81% 5.61% 10.47%(B)
Net Assets End of Period (in thousands) $ 12,285 $ 5,683 $2,124
Ratio of Expenses to Average Net Assets 1.85% 1.85% 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.01% 1.96% 1.91%(A)
Ratio of Net Investment Income to Average Net
Assets 5.55% 5.79% 5.64%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 5.39% 5.68% 5.58%(A)
Portfolio Turnover Rate 9.61% 0.17% --%(A)
</TABLE>
See notes to financial statements.
102 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
GOVERNMENT SECURITIES PORTFOLIO (CLASS C) 5/1/97 THROUGH 12/31/97
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $11.63
Net Investment Income (Loss) 0.46
Net Realized and Unrealized Gain (Loss) on
Investments 0.40
------
Total from Investment Operations 0.86
------
Dividends from Net Investment Income 0.46
Distributions from Capital Gains --
------
Total Distributions 0.46
------
Net Asset Value End of Period $12.03
------
Total Return(D) 7.49%(B)
Net Assets End of Period (in thousands) $ 498
Ratio of Expenses to Average Net Assets 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.03%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets 5.39%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) 5.21%(A)
Portfolio Turnover Rate 9.61%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
7/17/97 THROUGH
GOVERNMENT SECURITIES PORTFOLIO (CLASS Y) 12/31/97
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $11.87
Net Investment Income (Loss) 0.35
Net Realized and Unrealized Gain (Loss) on
Investments 0.15
------
Total from Investment Operations 0.50
------
Dividends from Net Investment Income 0.35
Distributions from Capital Gains --
------
Total Distributions 0.35
------
Net Asset Value End of Period $12.02
------
Total Return 4.02%(B)
Net Assets End of Period (in thousands) $7,569
Ratio of Expenses to Average Net Assets 0.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.02%(A)
Ratio of Net Investment Income to Average Net
Assets 6.40%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 6.23%(A)
Portfolio Turnover Rate 9.61%(A)
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 103
<PAGE>
HIGH-YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------
HIGH-YIELD BOND PORTFOLIO (CLASS A) 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 11.84 $ 11.39 $ 10.72 $ 11.70 $ 10.83
Net Investment Income (Loss) 0.99 0.94 0.99 0.97 0.95
Net Realized and Unrealized Gain (Loss) on
Investments 0.51 0.45 0.67 (0.97) 0.89
-------- -------- -------- -------- --------
Total from Investment Operations 1.50 1.39 1.66 -- 1.84
-------- -------- -------- -------- --------
Dividends from Net Investment Income 0.99 0.94 0.99 0.98 0.97
Distributions from Capital Gains -- -- -- -- --
-------- -------- -------- -------- --------
Total Distributions 0.99 0.94 0.99 0.98 0.97
-------- -------- -------- -------- --------
Net Asset Value End of Period $ 12.35 $ 11.84 $ 11.39 $ 10.72 $ 11.70
-------- -------- -------- -------- --------
Total Return(C) 13.18% 12.78% 16.00% 0.05% 17.58%
Net Assets End of Period (in thousands) $ 66,422 $ 54,129 $ 52,182 $ 44,822 $ 44,361
Ratio of Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30% 1.30%(G)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.47% 1.50% 1.52% 1.45% 1.59%
Ratio of Net Investment Income to Average Net
Assets 8.20% 8.21% 8.80% 8.60% 8.20%
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 8.03% 8.01% 8.58% 8.52% 7.95%
Portfolio Turnover Rate 175.38% 180.13% 88.50% 113.00% 121.20%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, FOR THE PERIOD
------------------- -------------------------
HIGH-YIELD BOND PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 11.84 $ 11.39 $11.11
Net Investment Income (Loss) 0.77 0.88 0.61
Net Realized and Unrealized Gain (Loss) on
Investments 0.51 0.45 0.28
-------- -------- ------
Total from Investment Operations 1.28 1.33 0.89
-------- -------- ------
Dividends from Net Investment Income 0.77 0.88 0.61
Distributions from Capital Gains -- -- --
-------- -------- ------
Total Distributions 0.77 0.88 0.61
-------- -------- ------
Net Asset Value End of Period $ 12.35 $ 11.84 $11.39
-------- -------- ------
Total Return(D) 12.59% 12.16% 8.12%(B)
Net Assets End of Period (in thousands) $ 19,898 $ 7,892 $2,951
Ratio of Expenses to Average Net Assets 1.85% 1.85% 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.02% 2.05% 2.09%(A)
Ratio of Net Investment Income to Average Net
Assets 7.51% 7.74% 7.84%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 7.35% 7.55% 7.68%(A)
Portfolio Turnover Rate 175.38% 180.13% 88.50%(A)
</TABLE>
See notes to financial statements.
104 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
HIGH-YIELD BOND PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
5/1/97 THROUGH
HIGH-YIELD BOND PORTFOLIO (CLASS C) 12/31/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 11.71
Net Investment Income (Loss) 0.61
Net Realized and Unrealized Gain (Loss) on
Investments 0.64
-------
Total from Investment Operations 1.25
-------
Dividends from Net Investment Income 0.61
Distributions from Capital Gains --
-------
Total Distributions 0.61
-------
Net Asset Value End of Period $ 12.35
-------
Total Return(D) 10.87%(B)
Net Assets End of Period (in thousands) $ 1,463
Ratio of Expenses to Average Net Assets 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.01%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets 6.84%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) 6.68%(A)
Portfolio Turnover Rate 175.38%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
7/25/97
THROUGH
HIGH-YIELD BOND PORTFOLIO (CLASS Y) 12/31/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 12.17
Net Investment Income (Loss) 0.67
Net Realized and Unrealized Gain (Loss) on
Investments 0.18
-------
Total from Investment Operations 0.85
-------
Dividends from Net Investment Income 0.67
Distributions from Capital Gains --
-------
Total Distributions 0.67
-------
Net Asset Value End of Period $ 12.35
-------
Total Return 5.24%(B)
Net Assets End of Period (in thousands) $ 809
Ratio of Expenses to Average Net Assets 0.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.02%(A)
Ratio of Net Investment Income to Average Net
Assets 8.26%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 8.09%(A)
Portfolio Turnover Rate 175.38%(A)
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 105
<PAGE>
TAX-EXEMPT INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
TAX-EXEMPT INCOME PORTFOLIO (CLASS A) 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 13.83 $ 13.99 $ 12.80 $ 14.31 $ 13.60
Net Investment Income (Loss) 0.63 0.64 0.65 0.67 0.70
Net Realized and Unrealized Gain (Loss) on
Investments 0.31 (0.16) 1.21 (1.48) 0.73
-------- -------- -------- -------- --------
Total from Investment Operations 0.94 0.48 1.86 (0.81) 1.43
-------- -------- -------- -------- --------
Dividends from Net Investment Income 0.63 0.64 0.65 0.68 0.70
Distributions from Capital Gains 0.19 -- 0.02 0.02 0.02
-------- -------- -------- -------- --------
Total Distributions 0.82 0.64 0.67 0.70 0.72
-------- -------- -------- -------- --------
Net Asset Value End of Period $ 13.95 $ 13.83 $ 13.99 $ 12.80 $ 14.31
-------- -------- -------- -------- --------
Total Return(C) 6.96% 3.54% 14.85% (5.69)% 10.76%
Net Assets End of Period (in thousands) $ 23,695 $ 28,478 $ 33,626 $ 34,297 $ 41,702
Ratio of Expenses to Average Net Assets 1.22% 1.25% 1.25% 1.25% 1.25%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.60% 1.41% 1.42% 1.28% 1.39%
Ratio of Net Investment Income to Average Net
Assets 4.50% 4.64% 4.82% 5.00% 4.90%
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 4.12% 4.48% 4.65% 4.97% 4.79%
Portfolio Turnover Rate 0.94% 0.91% 0.75% 25.70% 8.30%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, FOR THE PERIOD
----------------- -------------------------
TAX-EXEMPT INCOME PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 13.83 $ 13.99 $13.44
Net Investment Income (Loss) 0.55 0.56 0.38
Net Realized and Unrealized Gain (Loss) on
Investments 0.31 (0.16) 0.57
------- ------- ------
Total from Investment Operations 0.86 0.40 0.95
------- ------- ------
Dividends from Net Investment Income 0.55 0.56 0.38
Distributions from Capital Gains 0.19 -- 0.02
------- ------- ------
Total Distributions 0.74 0.56 0.40
------- ------- ------
Net Asset Value End of Period $ 13.95 $ 13.83 $13.99
------- ------- ------
Total Return(D) 6.36% 2.96% 7.18%(B)
Net Assets End of Period (in thousands) $ 2,883 $ 2,037 $ 912
Ratio of Expenses to Average Net Assets 1.76% 1.80% 1.80%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.16% 1.96% 1.98%(A)
Ratio of Net Investment Income to Average Net
Assets 3.94% 4.07% 4.08%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 3.54% 3.92% 3.94%(A)
Portfolio Turnover Rate 0.94% 0.91% 0.75%(A)
</TABLE>
See notes to financial statements.
106 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
TAX-EXEMPT INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
5/1/97 THROUGH
TAX-EXEMPT INCOME PORTFOLIO (CLASS C) 12/31/97
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $13.68
Net Investment Income (Loss) 0.36
Net Realized and Unrealized Gain (Loss) on
Investments 0.46
------
Total from Investment Operations 0.82
------
Dividends from Net Investment Income 0.36
Distributions from Capital Gains 0.19
------
Total Distributions 0.55
------
Net Asset Value End of Period $13.95
------
Total Return(D) 6.14%(B)
Net Assets End of Period (in thousands) $ 184
Ratio of Expenses to Average Net Assets 1.67%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.34%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets 3.99%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) 3.32%(A)
Portfolio Turnover Rate 0.94%(A)
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 107
<PAGE>
MANAGED PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
------------------------------- -------------------------
MANAGED PORTFOLIO (CLASS A) 1997 1996 1995 10/1/94 THROUGH 12/31/94
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 7.97 $ 6.70 $ 4.91 $ 5.00
Net Investment Income (Loss) 0.04 0.06 0.04 0.01
Net Realized and Unrealized Gain (Loss) on Investments 1.64 1.41 1.81 (0.09)
--------- --------- --------- ------
Total from Investment Operations 1.68 1.47 1.85 (0.08)
--------- --------- --------- ------
Dividends from Net Investment Income 0.04 0.06 0.03 0.01
Distributions from Capital Gains 0.36 0.14 0.03 --
--------- --------- --------- ------
Total Distributions 0.40 0.20 0.06 0.01
--------- --------- --------- ------
Net Asset Value End of Period $ 9.25 $ 7.97 $ 6.70 $ 4.91
--------- --------- --------- ------
Total Return(C) 21.05% 22.08% 37.68% (1.58)%(B)
Net Assets End of Period (in thousands) $ 156,608 $ 101,022 $ 47,839 $ 7,872
Ratio of Expenses to Average Net Assets 1.49% 1.57% 1.75% 1.75%(A)
Ratio of Expenses to Average Net Assets (Excluding Waivers) 1.49% 1.57% 1.90% 3.71%(A)
Ratio of Net Investment Income to Average Net Assets 0.47% 1.12% 1.09% 1.30%(A)
Ratio of Net Investment Income to Average Net Assets
(Excluding Waivers) 0.47% 1.12% 0.94% (0.32)%(A)
Portfolio Turnover Rate 28.17% 33.21% 26.40% 27.10%(A)
Average commission per share(E) $ 0.0552 $ 0.0551
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, FOR THE PERIOD
-------------------- -----------------------
MANAGED PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 7.93 $ 6.68 $ 5.68
Net Investment Income (Loss) (0.01) 0.02 0.01
Net Realized and Unrealized Gain (Loss) on Investments 1.63 1.41 1.05
--------- --------- -------
Total from Investment Operations 1.62 1.43 1.06
--------- --------- -------
Dividends from Net Investment Income -- 0.04 0.03
Distributions from Capital Gains 0.36 0.14 0.03
--------- --------- -------
Total Distributions 0.36 0.18 0.06
--------- --------- -------
Net Asset Value End of Period $ 9.19 $ 7.93 $ 6.68
--------- --------- -------
Total Return(D) 20.45% 21.50% 18.38%(B)
Net Assets End of Period (in thousands) $ 110,213 $ 57,037 $ 16,792
Ratio of Expenses to Average Net Assets 2.04% 2.13% 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding Waivers) 2.04% 2.13% 2.45%(A)
Ratio of Net Investment Income to Average Net Assets (0.09)% 0.52% 0.31%(A)
Ratio of Net Investment Income to Average Net Assets
(Excluding Waivers) (0.09)% 0.52% 0.14%(A)
Portfolio Turnover Rate 28.17% 33.21% 26.40%(A)
Average commission per share(E) $ 0.0552 $ 0.0551
</TABLE>
See notes to financial statements.
108 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
MANAGED PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
MANAGED PORTFOLIO (CLASS C) 5/1/97 THROUGH 12/31/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 8.24
Net Investment Income (Loss) (0.00)
Net Realized and Unrealized Gain (Loss) on
Investments 1.38
-------
Total from Investment Operations 1.38
-------
Dividends from Net Investment Income 0.05
Distributions from Capital Gains 0.36
-------
Total Distributions 0.41
-------
Net Asset Value End of Period $ 9.21
-------
Total Return(D) 16.74%(B)
Net Assets End of Period (in thousands) $ 3,614
Ratio of Expenses to Average Net Assets 2.06%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 2.06%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (0.18)%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) (0.18)%(A)
Portfolio Turnover Rate 28.17%(A)
Average commission per share $ 0.0552
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31, FOR THE PERIOD
------------------- -----------------------
MANAGED PORTFOLIO (CLASS Y) 1997 1996 7/5/95 THROUGH 12/31/95
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 7.98 $ 6.70 $ 6.17
Net Investment Income (Loss) 0.08 0.09 0.03
Net Realized and Unrealized Gain (Loss) on
Investments 1.64 1.42 0.57
-------- -------- -------
Total from Investment Operations 1.72 1.51 0.60
-------- -------- -------
Dividends from Net Investment Income 0.07 0.09 0.04
Distributions from Capital Gains 0.36 0.14 0.03
-------- -------- -------
Total Distributions 0.43 0.23 0.07
-------- -------- -------
Net Asset Value End of Period $ 9.27 $ 7.98 $ 6.70
-------- -------- -------
Total Return 21.60% 22.63% 9.80%(B)
Net Assets End of Period (in thousands) $ 80,879 $ 57,794 $26,664
Ratio of Expenses to Average Net Assets 1.04% 1.12% 1.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.04% 1.12% 1.41%(A)
Ratio of Net Investment Income to Average Net
Assets 0.92% 1.57% 1.39%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 0.92% 1.57% 1.28%(A)
Portfolio Turnover Rate 28.17% 33.21% 26.40%(A)
Average commission per share(E) $ 0.0552 $ 0.0551
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 109
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------------------------
MONEY MARKET PORTFOLIO (CLASS A) 1997 1996 1995 1994 1993
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income (Loss) 0.05 0.04 0.05 0.03 0.02
-------- -------- -------- -------- --------
Total from Investment Operations 0.05 0.04 0.05 0.03 0.02
-------- -------- -------- -------- --------
Dividends from Net Investment Income 0.05 0.04 0.05 0.03 0.02
-------- -------- -------- -------- --------
Total Distributions 0.05 0.04 0.05 0.03 0.02
-------- -------- -------- -------- --------
Net Asset Value End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Total Return(C) 4.69% 4.51% 5.05% 3.34% 2.24%
Net Assets End of Period (in thousands) $ 68,466 $ 59,074 $ 40,325 $ 32,334 $ 18,302
Ratio of Expenses to Average Net Assets 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.24% 1.18% 1.35% 1.33% 1.72%
Ratio of Net Investment Income to Average Net
Assets 4.59% 4.42% 4.92% 3.30% 2.20%
Ratio of Net Investment to Average Net Assets
(Excluding Waivers) 4.35% 4.24% 4.57% 3.08% 1.47%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, FOR THE PERIOD
----------------- -------------------------
MONEY MARKET PORTFOLIO (CLASS B) 1997 1996 5/1/95 THROUGH 12/31/95
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period $ 1.00 $ 1.00 $1.00
Net Investment Income (Loss) 0.04 0.04 0.03
------- ------- -----
Total from Investment Operations 0.04 0.04 0.03
------- ------- -----
Dividends from Net Investment Income 0.04 0.04 0.03
------- ------- -----
Total Distributions 0.04 0.04 0.03
------- ------- -----
Net Asset Value End of Period $ 1.00 $ 1.00 $1.00
------- ------- -----
Total Return(D) 4.11% 3.94% 2.95%(B)
Net Assets End of Period (in thousands) $ 5,980 $ 1,344 $ 394
Ratio of Expenses to Average Net Assets 1.55% 1.55% 1.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.79% 1.73% 1.88%(A)
Ratio of Net Investment Income to Average Net
Assets 4.09% 3.85% 4.23%(A)
Ratio of Net Investment Income to Average Net
Assets (Excluding Waivers) 3.85% 3.68% 3.90%(A)
</TABLE>
See notes to financial statements.
110 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
-----------------------
MONEY MARKET PORTFOLIO (CLASS C) 5/1/97 THROUGH 12/31/97
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 1.00
Net Investment Income (Loss) 0.02
------
Total from Investment Operations 0.02
------
Dividends from Net Investment Income 0.02
------
Total Distributions 0.02
------
Net Asset Value End of Period $ 1.00
------
Total Return(D) 2.86%(B)
Net Assets End of Period (in thousands) $1,021
Ratio of Expenses to Average Net Assets 1.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 1.85%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets 4.15%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) 3.85%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
------------------------
MONEY MARKET PORTFOLIO (CLASS Y) 7/17/97 THROUGH 12/31/97
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period $ 1.00
Net Investment Income (Loss) 0.02
------
Total from Investment Operations 0.02
------
Dividends from Net Investment Income 0.02
------
Total Distributions 0.02
------
Net Asset Value End of Period $ 1.00
------
Total Return 2.31%(B)
Net Assets End of Period (in thousands) $2,700
Ratio of Expenses to Average Net Assets 0.70%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers) 0.95%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets 4.96%(A)
Ratio of Net Investment Income (Loss) to Average
Net Assets (Excluding Waivers) 4.71%(A)
</TABLE>
See notes to financial statements.
THE ENTERPRISE GROUP OF FUNDS, INC. 111
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
1. ORGANIZATION OF THE FUND
The Enterprise Group of Funds, Inc. (the "Fund") is registered under The
Investment Company Act of 1940 as an open-end management investment company and
consists of the Growth, Equity, Growth and Income, Equity Income, Capital
Appreciation, Small Company Growth, Small Company Value, International Growth,
Government Securities, High-Yield Bond, Tax-Exempt Income, Managed and Money
Market Portfolios.
Prior to July 17, 1997, the Growth and Income and Small Company Growth
Portfolios were part of Retirement System Fund, Inc. ("RSF"). On July 17, 1997,
the Fund acquired all of the assets and liabilities of these RSF portfolios. The
acquisition, which was approved by the shareholders of Retirement System Fund,
Inc. was accomplished by an even exchange of shares of the Fund for the shares
then outstanding of RSF as follows:
<TABLE>
<CAPTION>
PORTFOLIO SHARES RSF NAV
- -------------------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Growth and Income 600,588 $ 25.21
Small Company Growth 578,969 24.76
</TABLE>
In addition, on July 17, 1997, the Fund acquired the net assets of the
Intermediate-Term Fixed-Income Fund and Money Market Fund which were combined
with the net assets of the Fund's Government Securities and Money Market
Portfolios, respectively.
Based on the opinion of Fund counsel, the reorganization qualified as a tax-free
reorganization for federal income tax purposes with no gain or loss recognized
to the funds or their shareholders. The net assets of the corresponding RSF
Growth and Income Portfolio, Small Company Growth Portfolio, Government
Securities Portfolio and Money Market Portfolio were $15,141,711, $14,335,622,
$6,865,850 and $2,061,980, respectively. The tax and book year-end of the Growth
and Income and Small Company Growth Portfolios has been changed to December 31
after the close of the previous year end September 30, 1997.
The Fund offers Class A, B, C and Y shares. Shares of each Class represent an
identical interest in the investments of their respective portfolios and
generally have the same rights, but are offered with different sales charge and
distribution fee arrangements. Class A shares are subject to a maximum sales
charge of 4.75%. Upon redemption, Class B shares are subject to a maximum
contingent sales charge of 5%, which declines to zero after six years and which
is based on the lesser of net asset value at the time of purchase or redemption.
Class B shares will automatically convert to Class A shares of the same fund
eight years after purchase. On May 1, 1997, the Fund began offering Class C
shares which are subject to a maximum contingent sales charge of 1%, which
declines to zero after one year and which is based on the lesser of net asset
value at the time of purchase or redemption. Class Y shares are not subject to
sales charges.
112 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
2. SIGNIFICANT ACCOUNTING POLICIES
SECURITY VALUATION -- Domestic equity securities are valued at the last sale
price or, in the absence of any sale on that date, the closing bid price.
Domestic equity securities without last trade information are valued at the last
bid price. Debt securities and foreign securities are valued on the basis of
independent pricing services approved by the Board of Directors, and such
pricing services generally follow the same procedures in valuing foreign equity
securities as are described above as to domestic equity securities. Securities
held by the Money Market Portfolio are valued on an amortized cost basis. Under
the amortized cost method, a security is valued at its cost and any discount or
premium is amortized over the period until maturity, without taking into account
the impact of fluctuating interest rates on the market value of the security
unless the aggregate deviation from net asset value as calculated by using
available market quotations exceeds 1/2 of 1%.
SPECIAL VALUATION RISKS -- As part of its investment program, the Government
Securities Portfolio invests in collateralized mortgage obligations ("CMOs").
Payments of principal and interest on the mortgages are passed through to the
holders of the CMOs on the same schedule as they are received, although certain
classes of CMOs have priority over others with respect to the receipt of
prepayments on the mortgages. Therefore, depending on the type of CMOs in which
the Government Securities Portfolio invests, the investment may be subject to a
greater valuation risk due to prepayment than other types of mortgage-related
securities.
The high-yield securities in which the High-Yield Bond Portfolio may invest may
be considered speculative in regard to the issuer's continuing ability to meet
principal and interest payments. The value of the lower-rated securities in
which the High-Yield Bond Portfolio may invest will be affected by the
creditworthiness of individual issuers, general economic and specific industry
conditions, and will fluctuate inversely with changes in interest rates. In
addition, the secondary trading market for lower-quality bonds may be less
active and less liquid than the trading market for higher-quality bonds.
REPURCHASE AGREEMENTS -- Each portfolio may acquire securities subject to
repurchase agreements. Under a typical repurchase agreement, a Portfolio would
acquire a debt security for a relatively short period (usually for one day and
not more than one week) subject to an obligation of the seller to repurchase and
of the Portfolio to resell the debt security at an agreed-upon higher price,
thereby establishing a fixed investment return during the Portfolio's holding
period. Under each repurchase agreement, the Portfolio receives, as collateral,
securities whose market value is at least equal to the repurchase price.
FUTURES CONTRACTS -- A futures contract is an agreement between two parties to
buy and sell a financial instrument at a set price on a future date. Upon
entering into such a contract a Portfolio is required to pledge to the broker an
amount of cash or securities equal to the minimum "initial margin" requirements
of the exchange. Pursuant to the contract, the Portfolio agrees to receive from
or pay to the broker an amount of cash equal to the daily fluctuation in value
of the contract. Such receipts or payments are known as "variation margin" and
are recorded by the Portfolio as unrealized appreciation or depreciation. When
the contract is closed the Portfolio records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed and reverses any unrealized appreciation or
depreciation previously recorded.
FOREIGN CURRENCY TRANSLATION -- Securities, other assets and liabilities of the
International Growth Portfolio whose values are initially expressed in foreign
currencies are translated to U.S. dollars at the bid price of such currency
THE ENTERPRISE GROUP OF FUNDS, INC. 113
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
against U.S. dollars last quoted by a major bank. Dividend and interest income
and certain expenses denominated in foreign currencies are marked-to-market
daily based on daily exchange rates and exchange gains and losses are realized
upon ultimate receipt or disbursement. The fund does not isolate that portion of
its realized and unrealized gains on investments from changes in foreign
exchange rates from fluctuations arising from changes in the market prices of
the investments.
SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security transactions are
accounted for on the trade date. Realized gains and losses from investment
transactions are determined on the basis of identified cost and realized gains
and losses from currency transactions are determined on the basis of average
cost. Dividend income received and distributions to shareholders are recognized
on the ex-dividend date, and interest income is recognized on the accrual basis.
Premium and discounts on securities are amortized for both financial and tax
purposes.
EXPENSES -- Each portfolio and class bears expenses incurred specifically on its
behalf as well as a portion of the common expenses of the Fund. No class has
preferential dividend rights; differences in per share dividend rates are
generally due to differences in separate class expenses.
FEDERAL INCOME TAXES -- No provision for federal income or excise taxes is
required, because the Fund intends to continue to qualify as a regulated
investment company and distribute all of its taxable income to shareholders.
USE OF ESTIMATES IN PREPARATION OF FINANCIAL STATEMENTS -- Preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that may affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
3. TRANSACTIONS WITH AFFILIATES
The Portfolios are charged management fees by Enterprise Capital Management,
Inc. ("Enterprise Capital") for furnishing management and administrative
services. Enterprise Capital has also agreed to reimburse the Portfolios for
expenses incurred in excess of a percentage of average net assets. Enterprise
Fund Distributors, Inc. (the "Distributor"), a wholly owned subsidiary of
Enterprise Capital, serves as principal underwriter for shares of the Fund. The
Directors of the Fund have adopted a Distributor's Agreement and Plan of
Distribution (the "Plan") pursuant to rule 12b-1 under the Investment Company
Act of 1940. The Plan provides that each Portfolio will pay
114 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
the Distributor a distribution fee, accrued daily and payable monthly. The
management fee, distribution fee, and maximum expense amounts are equal to the
following annual percentage of average net assets for each class of shares:
<TABLE>
<CAPTION>
MAXIMUM
DISTRIBUTION FEE EXPENSE AMOUNT
--------------------------- -----------------------------
PORTFOLIO MANAGEMENT FEE A B C Y A B C Y
- ----------------------------------- -------------- ---- ----- ----- ---- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth .75% .45% 1.00% 1.00% none 1.60% 2.15% 2.15% 1.15%
Equity .75% .45% 1.00% 1.00% none 1.60% 2.15% 2.15% 1.15%
Growth and Income .75% .45% 1.00% 1.00% none 1.50% 2.05% 2.05% 1.05%
Equity Income .75% .45% 1.00% 1.00% none 1.50% 2.05% 2.05% 1.05%
Capital Appreciation .75% .45% 1.00% 1.00% none 1.75% 2.30% 2.30% 1.30%
Small Company Growth 1.00% .45% 1.00% 1.00% none 1.85% 2.40% 2.40% 1.40%
Small Company Value .75% .45% 1.00% 1.00% none 1.75% 2.30% 2.30% 1.30%
International Growth .85% .45% 1.00% 1.00% none 2.00% 2.55% 2.55% 1.55%
Government Securities .60% .45% 1.00% 1.00% none 1.30% 1.85% 1.85% .85%
High-Yield Bond .60% .45% 1.00% 1.00% none 1.30% 1.85% 1.85% .85%
Tax-Exempt Income .50% .45% 1.00% 1.00% none 1.10% 1.65% 1.65% .65%
Managed .75% .45% 1.00% 1.00% none 1.75% 2.30% 2.30% 1.30%
Money Market .35% .30% .85% .85% none 1.00% 1.55% 1.55% .70%
</TABLE>
Prior to October 1, 1997, the maximum expense amount for the Tax-Exempt Income
Portfolio was 1.25%, 1.80%, 1.80%, and .80% for Classes A, B, C, and Y,
respectively.
Prior to July 17, 1997, Retirement System Investors Inc. ("RSI") served as
adviser, Retirement Systems Distributors Inc. ("RSD") served as distributor, and
Retirement Systems Consultants Inc. ("RSC") served as transfer agent and
registrar to RSF. The fees paid to RSI, RSD, and RSC as a percentage of net
assets and in dollars are as follows:
<TABLE>
<CAPTION>
PORTFOLIO RSI MANAGEMENT FEE RSD DISTRIBUTION FEE RSC SERVICE FEE
- ------------------------------------------------ ---------------------- ----------------------- -------------------
<S> <C> <C> <C>
Growth and Income .60% .25% .60%
Small Company Growth (10/1/96-3/31/97) 1.20% .25% .60%
Small Company Growth (4/1/97-7/16/97) .85% .25% .60%
</TABLE>
<TABLE>
<CAPTION>
RSD DISTRIBUTION
PORTFOLIO RSI MANAGEMENT FEE FEE RSC SERVICE FEE
- ----------------------------------------------- ------------------- ------------------- ---------------
<S> <C> <C> <C>
Growth and Income $ 54,002 $ 22,502 $ 54,002
Small Company Growth 85,221 20,407 48,979
</TABLE>
MAXIMUM EXPENSE AMOUNTS -- For the period October 1, 1996, through July 16,
1997, RSF waived .20% of its management fee on Small Company Growth. In
addition, RSD limited its distribution fee for Growth and Income and Small
Company Growth to .20% for the period October 1, 1996, through July 16, 1997.
For the period October 1, 1996, through July 16, 1997, RSF and its affiliates
reimbursed fees for the Growth and Income and Small Company Growth Portfolios
amounting to $80,829 and $72,400, respectively.
THE ENTERPRISE GROUP OF FUNDS, INC. 115
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
Enterprise Capital is a wholly owned subsidiary of The Mutual Life Insurance
Company of New York, Inc. ("MONY") MONY and its subsidiaries and affiliates had
the following investments in the portfolios as of December 31, 1997:
<TABLE>
<CAPTION>
PORTFOLIO A B C Y
- ------------------------------------------------------------ ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Growth $ 197,832 -- $ 1,225 --
Equity 1,210,536 $ 1,208 1,209 --
Growth and Income 1,028 1,026 1,026 --
Equity Income 1,094,659 -- 1,179 --
Capital Appreciation -- -- 1,223 --
Small Company Growth 976 973 973 --
Small Company Value 319,382 -- 1,351 --
International Growth 2,387,191 -- 1,028 $10,919,839
Government Securities 1,132,110 -- 1,076 --
High-Yield Bond 102,098 -- 1,112 --
Tax-Exempt Income -- -- 1,062 --
Managed 2,814,593 -- 1,167 77,606,554
Money Market -- -- 1,029 --
</TABLE>
Enterprise Capital has subadvisory agreements with various investment advisors
as Portfolio Managers for the Portfolios of the Fund. The management fee, as a
percentage of average net assets of a Portfolio, is paid to Enterprise Capital
which pays a portion of the fee to the Portfolio Manager. 1740 Advisers, Inc., a
wholly owned subsidiary of MONY, is the Portfolio Manager for the Equity Income
Portfolio. For the year ended December 31, 1997, Enterprise Capital incurred
subadvisory fees payable to 1740 Advisers, Inc., related to the Equity Income
Portfolio of $29,056.
The portion of sales charges paid to MONY Securities Corporation, a wholly owned
subsidiary of MONY, from the proceeds of the sale of fund shares was $6,308,464
for the year ended December 31, 1997. The portion of sales charges paid to the
Distributor was $1,231,024 for the year ended December 31, 1997.
The Distributor uses its distribution fee from the Fund to pay expenses on
behalf of the Fund related to the distribution and servicing of its shares.
These expenses include a service fee to securities dealers that enter into a
sales agreement with the Distributor. During 1997, the Distributor incurred
$1,083,135 of services fees payable to MONY Securities Corporation.
4. FINANCIAL INSTRUMENTS
As part of its investment program, the International Growth Portfolio utilizes
forward currency exchange contracts to manage exposure to currency fluctuations
and hedge against adverse changes in connection with purchases and sales of
securities. The Portfolio will enter into forward contracts only for hedging
purposes. The Portfolio may be required to set aside liquid assets in a
segregated custodial account to cover its obligations. At December 31, 1997, the
International Growth Portfolio had entered into various forward currency
exchange contracts under which it is
116 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
obligated to exchange currencies at specified future dates. Risks arise from the
possible inability of counterparties to meet the terms of their contracts and
from movements in currency values. Outstanding contracts at December 31, 1997,
are as follows:
<TABLE>
<CAPTION>
CONTRACT TO NET UNREALIZED
SETTLEMENT ------------------------------------ APPRECIATION/
DATE RECEIVE DELIVER (DEPRECIATION)
- ---------- ----------------- ----------------- ---------------
<C> <S> <C> <C>
1/20/98 USD 1,257,269 AUD 1,700,000 $ 148,801
1/20/98 USD 1,204,489 BEL 44,000,000 15,555
1/20/98 CAD 1,400,000 USD 1,033,973 (53,595)
1/20/98 CHF 3,300,000 USD 2,288,171 (24,234)
1/20/98 USD 760,982 CHF 1,100,000 6,337
1/20/98 DEM 822,000 USD 458,577 (1,510)
1/20/98 USD 310,980 DEM 550,000 4,886
1/20/98 DKK 3,500,000 USD 518,488 (7,151)
1/20/98 FRF 7,000,000 USD 1,145,827 18,602
1/20/98 USD 3,677,200 GBP 2,200,000 67,210
1/20/98 USD 900,131 HKD 7,000,000 (2,460)
1/20/98 HKD 2,400,000 USD 307,207 2,253
1/20/98 USD 308,462 ITL 525,000,000 11,739
1/20/98 JPY 441,000,000 USD 3,748,482 (361,192)
1/20/98 USD 2,350,874 JPY 281,000,000 192,533
1/20/98 USD 525,328 MYR 1,400,000 165,086
1/20/98 USD 477,147 NLG 950,000 8,035
1/20/98 NLG 2,000,000 USD 998,029 (10,424)
1/20/98 NOK 2,400,000 USD 341,710 (16,373)
1/20/98 SEK 11,000,000 USD 1,420,546 (34,356)
1/20/98 USD 981,646 SEK 7,600,000 23,914
1/20/98 USD 613,079 SGD 900,000 80,641
---------------
$ 234,297
---------------
---------------
</TABLE>
As part of its investment program, the High-Yield Bond Portfolio enters into
futures contracts to hedge against anticipated future price and interest rate
changes. Risks of entering into futures contracts include: (1) the risk that the
price of the futures contracts may not move in the same direction as the price
of the securities in the various markets; (2) the risk that there will be no
liquid secondary market when the Portfolio attempts to enter into a closing
position, (3) the risk that the Portfolio will lose an amount in excess of the
initial margin deposit; and (4) the fact that the success or failure of these
transactions for the Portfolio depends on the ability of the Portfolio Manager
to predict movements in stock, bond, and currency prices and interest rates.
There were no open futures contracts at December 31, 1997, in the High-Yield
Bond Portfolio.
THE ENTERPRISE GROUP OF FUNDS, INC. 117
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
For the year ended December 31, 1997, purchases and sales proceeds of
investments, other than short-term investments, were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT OTHER INVESTMENT
OBLIGATIONS SECURITIES
------------------------ -------------------------
PORTFOLIO PURCHASES SALES PURCHASES SALES
- ------------------------------------------------------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Growth -- -- $400,262,393 $94,233,790
Equity -- -- 5,435,366 1,244,128
Growth and Income -- -- 3,801,558 262,855
Equity Income -- -- 43,593,059 29,148,264
Capital Appreciation -- -- 70,559,804 95,909,382
Small Company Growth -- -- 10,114,510 4,748,258
Small Company Value -- -- 49,067,852 20,573,402
International Growth -- -- 25,212,967 14,219,663
Government Securities $15,304,375 $10,114,437 -- --
High-Yield Bond 4,817,738 1,764,961 138,147,090 119,892,429
Tax-Exempt Income -- -- 260,505 4,978,989
Managed -- -- 113,942,080 69,217,684
</TABLE>
118 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
5. FUND SHARE TRANSACTIONS
At December 31, 1997, the Fund, excluding the Money Market Portfolio, has
300,000,000 authorized shares at $.10 par value. The Money Market Portfolio has
500,000,000 authorized shares at $.10 par value. The following tables summarize
the fund share activity for the years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
GROWTH AND INCOME
GROWTH PORTFOLIO EQUITY PORTFOLIO PORTFOLIO
------------------------ ---------------------- -------------------------------------
YEAR YEAR YEAR YEAR THREE MONTHS YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, SEPT. 30, SEPT. 30,
1997 1996 1997 1996 1997 1997 1996
----------- ----------- ----------- --------- ------------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold 16,798,417 8,738,168 537,283 -- 119,722 43,148 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 488,201 764,679 9,243 -- 3,414 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (7,220,904) (6,216,899) (10,128) -- (6,251) -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 10,065,714 3,285,948 536,398 -- 116,885 43,148 --
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold 7,535,787 2,318,350 311,371 -- 88,542 38,624 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 196,989 139,776 4,711 -- 2,656 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (523,041) (85,206) (9,754) (340) (1) --
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 7,209,735 2,372,920 306,328 -- 90,858 38,623 --
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold 1,710,077 -- 52,431 -- 18,085 3,842 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 28,376 -- 737 -- 473 -- --
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (159,968) -- (5,573) -- (81) (3) --
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 1,578,485 -- 47,595 -- 18,477 3,839 --
- ---------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold 2,914,866 467,776 -- -- 14,920 216,623 138,929
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 28,250 9,455 -- -- 13,546 20,982 5,104
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (501,167) (298,930) -- -- (12,369) (78,821) (42,161)
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 2,441,949 178,301 -- -- 16,097 158,784 101,872
- ---------------------------------------------------------------------------------------------------------------------------
Total Net Increase (Decrease) 21,295,883 5,837,169 890,321 -- 242,317 244,394 101,872
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 119
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CAPITAL APPRECIATION SMALL COMPANY
EQUITY INCOME PORTFOLIO PORTFOLIO GROWTH PORTFOLIO
------------------------ ------------------------ ---------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THREE MONTHS YEAR ENDED YEAR ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, ENDED SEPT. 30, SEPT. 30,
1997 1996 1997 1996 DEC. 31, 1997 1997 1996
----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold 658,272 445,852 226,042 575,596 131,634 79,965 --
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 291,471 255,843 421,161 312,878 4,697 -- --
- --------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (480,133) (451,181) (843,612) (1,243,989) (7,480) (955) --
- --------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 469,610 250,514 (196,409) (355,515) 128,851 79,010 --
- --------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold 471,024 188,604 76,065 84,267 87,205 42,270 --
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 52,259 17,631 30,380 13,789 2,619 -- --
- --------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (47,084) (6,975) (30,197) (9,219) (9,338) (933) --
- --------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 476,199 199,260 76,248 88,837 80,486 41,337 --
- --------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold 66,249 -- 3,123 -- 26,874 7,580 --
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 4,740 -- 469 -- 761 -- --
- --------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (409) -- (35) -- (1,122) (7) --
- --------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 70,580 -- 3,557 -- 26,513 7,573 --
- --------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold -- -- -- -- 15,422 481,796 125,953
- --------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions -- -- -- -- 12,856 30,325 13,991
- --------------------------------------------------------------------------------------------------------------------------
Shares Redeemed -- -- -- -- (27,103) (198,869) (31,299)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) -- -- -- -- 1,175 313,252 108,645
- --------------------------------------------------------------------------------------------------------------------------
Total Net Increase (Decrease) 1,016,389 449,774 (116,604) (266,678) 237,025 441,172 108,645
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
120 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL COMPANY VALUE INTERNATIONAL GROWTH GOVERNMENT SECURITIES
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------ ------------------------ ------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1997 1996 1997 1996 1997 1996
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold 3,235,542 747,903 528,097 547,159 840,014 693,755
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 364,015 144,852 148,597 103,914 274,184 314,104
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (768,577) (1,511,602) (438,610) (394,928) (1,654,266) (2,050,440)
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 2,830,980 (618,847) 238,084 256,145 (540,068) (1,042,581)
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold 2,379,023 323,495 448,885 194,193 633,414 385,535
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 175,399 21,578 37,407 12,561 30,968 15,300
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (127,118) (46,439) (140,802) (23,124) (124,591) (98,589)
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 2,427,304 298,634 345,490 183,630 539,791 302,246
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold 332,692 -- 85,857 -- 41,088 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 20,471 -- 3,875 -- 453 --
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (6,181) -- (22,912) -- (144) --
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) 346,982 -- 66,820 -- 41,397 --
- ---------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold 21,005 150,961 276,478 399,982 652,423 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of Distributions 963 293 46,815 29,486 16,945 --
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (340,603) (339,207) (182,169) (106,743) (39,802) --
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) (318,635) (187,953) 141,124 322,725 629,566 --
- ---------------------------------------------------------------------------------------------------------------------------
Total Net Increase (Decrease) 5,286,631 (508,166) 791,518 762,500 670,686 (740,335)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 121
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH-YIELD BOND TAX-EXEMPT INCOME
PORTFOLIO PORTFOLIO MANAGED PORTFOLIO
------------------------ ---------------------- ------------------------ MONEY MARKET PORTFOLIO
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED ----------------------------
DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31, YEAR ENDED YEAR ENDED
1997 1996 1997 1996 1997 1996 DEC. 31, 1997 DEC. 31, 1996
----------- ----------- ---------- ---------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A
Shares sold 1,682,960 1,061,881 193,960 182,258 5,986,736 6,602,960 186,445,536 155,780,333
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 306,270 266,718 84,287 78,413 675,645 312,623 2,799,349 1,843,341
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (1,180,212) (1,340,318) (638,188) (604,753) (2,408,149) (1,385,991) (179,852,529) (138,874,791)
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) 809,018 (11,719) (359,941) (344,082) 4,254,232 5,529,592 9,392,356 18,748,883
- ---------------------------------------------------------------------------------------------------------------------------
CLASS B
Shares sold 1,161,593 449,539 104,859 107,623 5,149,999 4,899,330 16,428,666 4,456,552
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 57,929 23,405 7,203 4,171 433,505 154,174 165,715 35,289
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (274,381) (65,696) (52,601) (29,665) (776,922) (374,396) (11,957,685) (3,542,604)
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) 945,141 407,248 59,461 82,129 4,806,582 4,679,108 4,636,696 949,237
- ---------------------------------------------------------------------------------------------------------------------------
CLASS C
Shares sold 137,745 -- 12,937 -- 384,001 -- 3,804,829 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 1,503 -- 271 -- 15,601 -- 5,853 --
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (20,787) -- 0 -- (7,138) -- (2,789,719) --
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) 118,461 -- 13,208 -- 392,464 -- 1,020,963 --
- ---------------------------------------------------------------------------------------------------------------------------
CLASS Y
Shares sold 63,572 -- -- -- 3,318,402 4,254,875 3,225,033 --
- ---------------------------------------------------------------------------------------------------------------------------
Reinvestment of
Distributions 2,027 -- -- -- 389,953 208,342 55,490 --
- ---------------------------------------------------------------------------------------------------------------------------
Shares Redeemed (73) -- -- -- (2,225,883) (1,204,112) (580,428) --
- ---------------------------------------------------------------------------------------------------------------------------
Net Increase
(Decrease) 65,526 -- -- -- 1,482,472 3,259,105 2,700,095 --
- ---------------------------------------------------------------------------------------------------------------------------
Total Net Increase
(Decrease) 1,938,146 395,529 (287,272) (261,953) 10,935,750 13,467,805 17,750,110 19,698,120
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
In the Growth and Income Portfolio, two shareholders owned 14.42% of the fund as
of December 31, 1997.
122 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
6. TAX BASIS UNREALIZED GAIN (LOSS) OF INVESTMENTS AND DISTRIBUTIONS
At December 31, 1997, the cost of securities for federal income tax purposes,
the aggregate gross unrealized gain for all securities for which there was an
excess of value over tax cost and the aggregate gross unrealized loss for all
securities for which there was an excess of tax cost over value were as follows:
<TABLE>
<CAPTION>
NET
UNREALIZED UNREALIZED UNREALIZED
PORTFOLIO TAX COST GAIN LOSS GAIN (LOSS)
- ---------------------------------------------------------------------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Growth $491,684,576 $176,118,738 $(9,917,520) $166,201,218
- -----------------------------------------------------------------------------------------------------------------------------
Equity 4,915,731 402,325 (27,689) 374,636
- -----------------------------------------------------------------------------------------------------------------------------
Growth and Income 17,245,348 6,061,161 (73,816) 5,987,345
- -----------------------------------------------------------------------------------------------------------------------------
Equity Income 85,840,471 33,483,933 (604,369) 32,879,564
- -----------------------------------------------------------------------------------------------------------------------------
Capital Appreciation 78,496,801 44,292,716 (641,148) 43,651,568
- -----------------------------------------------------------------------------------------------------------------------------
Small Company Growth 19,853,958 3,296,594 (1,052,154) 2,244,440
- -----------------------------------------------------------------------------------------------------------------------------
Small Company Value 62,051,868 9,946,273 (1,068,142) 8,878,131
- -----------------------------------------------------------------------------------------------------------------------------
International Growth 58,336,382 8,798,970 (7,054,621) 1,744,349
- -----------------------------------------------------------------------------------------------------------------------------
Government Securities 88,746,873 608,153 (736,845) (128,692)
- -----------------------------------------------------------------------------------------------------------------------------
High-Yield Bond 84,876,880 3,120,105 (430,566) 2,689,539
- -----------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Income 24,744,194 1,766,951 (7,157) 1,759,794
- -----------------------------------------------------------------------------------------------------------------------------
Managed 278,520,855 77,525,752 (4,738,563) 72,787,189
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for futures and
options transactions, foreign currency transactions, pay downs, market
discounts, losses deferred due to wash sales, investments in passive foreign
investment companies, and excise tax regulations.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital. Any taxable gain remaining
at fiscal year end is distributed in the following year.
At December 31, 1997, the following Portfolios had capital loss carryforwards
for federal tax purposes of:
<TABLE>
<CAPTION>
EXPIRING
BALANCE THROUGH
----------- --------
<S> <C> <C>
Government Securities Portfolio $ 4,065,514 2004
- ---------------------------------------------------------------------------------------------
Money Market Portfolio 4,140 2005
- ---------------------------------------------------------------------------------------------
</TABLE>
THE ENTERPRISE GROUP OF FUNDS, INC. 123
<PAGE>
NOTES TO FINANCIAL STATEMENTS -- (Continued)
- --------------------------------------------------------------------------------
December 31, 1997
- --------------------------------------------------------------------------------
The capital gains distribution paid to shareholders for 1997, whether taken in
additional shares or cash, is as follows:
<TABLE>
<CAPTION>
20% CAPITAL 28% CAPITAL
GAINS GAINS
------------ ------------
<S> <C> <C>
Growth Portfolio $ 11,502,466 $ 1,933,365
- --------------------------------------------------------------------------------------------------
Growth and Income 337,504 66,433
- --------------------------------------------------------------------------------------------------
Equity Income Portfolio 3,942,594 3,910,954
- --------------------------------------------------------------------------------------------------
Capital Appreciation Portfolio 13,135,869 3,401,068
- --------------------------------------------------------------------------------------------------
Small Company Growth 209,625 294,917
- --------------------------------------------------------------------------------------------------
Small Company Value Portfolio 614,465 843,454
- --------------------------------------------------------------------------------------------------
International Growth Portfolio 843,959 1,024,026
- --------------------------------------------------------------------------------------------------
Tax-Exempt Income Portfolio 295,151 69,640
- --------------------------------------------------------------------------------------------------
Managed Portfolio 3,315,174 3,849,340
- --------------------------------------------------------------------------------------------------
</TABLE>
The Tax-Exempt Income Portfolio has designated all income dividends paid as
exempt interest dividends. Thus 100% of the net investment income distributions
are exempt from federal income tax.
7. SUBSEQUENT EVENTS
Effective January 1, 1998, the 12b-1 Distribution Fee has been eliminated on the
Money Market Portfolio.
Effective January 1, 1998, the Portfolio Manager for the Tax-Exempt Income
Portfolio has been changed to MBIA Capital Management Corp.
124 THE ENTERPRISE GROUP OF FUNDS, INC.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of The Enterprise Group of Funds,
Inc.:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the Growth, Equity, Growth and Income, Equity
Income, Capital Appreciation, Small Company Growth, Small Company Value
(formerly Small Company), International Growth, Government Securities,
High-Yield Bond, Tax-Exempt Income, Managed and Money Market Portfolios of The
Enterprise Group of Funds, Inc. as of December 31, 1997, the statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended and the financial highlights for
each of the five years (or periods) in the period then ended of Growth, Equity
Income, Capital Appreciation, Small Company Value (formerly Small Company),
International Growth, Government Securities, High-Yield Bond, Tax-Exempt Income,
Managed, and Money Market Portfolios; the statement of operations, statement of
changes in net assets and financial highlights of the Equity Portfolio for the
period May 1, 1997 through December 31, 1997; and the statements of operations,
statements of changes in net assets and financial highlights of Growth and
Income and Small Company Growth Portfolios for the periods October 1, 1997
through December 31, 1997 and for the year (or period) ended September 30, 1997.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on the
financial statements and financial highlights based on our audits. The statement
of changes in net assets for the year ended September 30, 1996 and the financial
highlights for each of the four years in the period ended September 30, 1996 for
Growth and Income and Small Company Growth Portfolios of The Enterprise Group of
Funds, Inc. were audited by other auditors whose report dated November 15, 1996,
expressed an unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1997 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Growth, Equity, Growth and Income, Equity Income, Capital Appreciation, Small
Company Growth, Small Company Value (formerly Small Company), International
Growth, Government Securities, High-Yield Bond, Tax-Exempt Income, Managed and
Money Market Portfolios of The Enterprise Group of Funds, Inc. as of December
31, 1997, the results of their operations, and the changes in their net assets,
and their financial highlights for each of the respective periods stated in the
first paragraph, in conformity with generally accepted accounting principles.
Atlanta, Georgia
February 19, 1998
THE ENTERPRISE GROUP OF FUNDS, INC. 125
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
DIRECTORS AND OFFICERS
DIRECTORS
Victor Ugolyn
CHAIRMAN AND DIRECTOR
Arthur T. Dietz Arthur Howell
DIRECTOR DIRECTOR
William A. Mitchell, Jr. Lonnie H. Pope
DIRECTOR DIRECTOR
Samuel J. Foti Michael I. Roth
DIRECTOR DIRECTOR
OFFICERS
Victor Ugolyn
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Phillip G. Goff
VICE PRESIDENT
Herbert M. Williamson Catherine R. McClellan
TREASURER AND SECRETARY
ASSISTANT SECRETARY
<PAGE>
INVESTMENT ADVISER
Enterprise Capital Management, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E.
Suite 450
Atlanta, GA 30326-1022
DISTRIBUTOR
Enterprise Fund Distributors, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E.
Suite 450
Atlanta, GA 30326-1022
Telephone: 1-800-432-4320
CUSTODIAN
State Street Bank and Trust Company
Boston, MA
TRANSFER AGENT
National Financial Data Services, Inc.
1004 Baltimore Ave., 2nd Floor
Kansas City, MO 64105-2112
Telephone: 1-800-368-3527
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Atlanta, GA
MEMBER - INVESTMENT COMPANY INSTITUTE
[LOGO] ENTERPRISE
GROUP OF FUNDS
INVEST WITH THE PROS THE PROFESSIONALS USE
1-800-432-4320
www.enterprisegroup.com
THIS REPORT IS NOT TO BE USED IN CONNECTION WITH
THE OFFERING OF SHARES OF THE FUND UNLESS ACCOMPANIED OR
PRECEDED BY AN EFFECTIVE PROSPECTUS.
