<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1999
SECURITIES ACT FILE NO. 2-28097
INVESTMENT COMPANY ACT FILE NO. 811-01582
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. 55 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 41
(Check appropriate box or boxes)
THE ENTERPRISE GROUP OF FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
SUITE 450
3343 PEACHTREE ROAD
ATLANTA, GEORGIA 30326
(Address of Principal Executive Office)(Zip Code)
(404) 261-1116
Registrant's telephone number, including area code
CATHERINE R. MCCLELLAN
SUITE 450
3343 PEACHTREE ROAD, N.E.
ATLANTA, GEORGIA 30326-1022
(Name and Address for Agent for Service)
COPY TO:
MARGERY K. NEALE, ESQ
SWIDLER BERLIN SHEREFF FRIEDMAN, LLP
919 THIRD AVENUE
NEW YORK, NY 10022
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after this
Registration Statement becomes effective.
It is proposed that this filing will become effective (check appropriate box)
[X] immediately upon filing pursuant to paragraph (b)
[ ] on May 3, 1999, pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on May 3, 1999 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
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<PAGE> 2
THE ENTERPRISE GROUP OF FUNDS, INC.
PROSPECTUS
CLASS A, B AND C SHARES
JULY 1, 1999
EQUITY FUNDS
Growth Fund
Growth and Income Fund
Equity Fund
Equity Income Fund
Capital Appreciation Fund
Multi-Cap Growth Fund
Small Company Growth Fund
Small Company Value Fund
International Growth Fund
SECTOR FUNDS
Global Financial Services Fund
Internet Fund
INCOME FUNDS
Government Securities Fund
High-Yield Bond Fund
Tax-Exempt Income Fund
DOMESTIC HYBRID FUNDS
Balanced Fund
Managed Fund
MONEY MARKET FUND
Money Market Fund
This prospectus contains information you should know before investing,
including information about risks. Please read it before you invest and keep it
for future reference.
The Securities and Exchange Commission has not determined that the
information in this prospectus is accurate or complete, nor has it approved or
disapproved these securities. It is a criminal offense to state otherwise.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Introduction................................................ 1
Growth Fund................................................. 2
Growth and Income Fund...................................... 4
Equity Fund................................................. 6
Equity Income Fund.......................................... 8
Capital Appreciation Fund................................... 10
Multi Cap-Growth Fund....................................... 12
Small Company Growth Fund................................... 14
Small Company Value Fund.................................... 16
International Growth Fund................................... 18
Global Financial Services Fund.............................. 20
Internet Fund............................................... 22
Government Securities Fund.................................. 24
High-Yield Bond Fund........................................ 26
Tax-Exempt Income Fund...................................... 29
Balanced Fund............................................... 32
Managed Fund................................................ 34
Money Market Fund........................................... 36
Additional Information About the Funds' Investments and
Risks..................................................... 38
Higher-Risk Securities and Practices........................ 40
Risk Terminology............................................ 42
Shareholder Account Information............................. 43
Selecting a Share Class................................... 43
How to Purchase Shares.................................... 48
How to Redeem Shares...................................... 49
How to Exchange Shares.................................... 51
Transaction and Account Policies............................ 52
Dividends, Distributions and Taxes.......................... 54
Fund Management............................................. 56
The Investment Advisor.................................... 56
The Fund Managers......................................... 56
Financial Highlights........................................ 61
</TABLE>
<PAGE> 4
INTRODUCTION
The Enterprise Group of Funds, Inc. is a mutual fund family that offers
different classes of shares in separate investment portfolios or Funds. This
prospectus relates to Class A, B and C shares of the Funds. The Funds have
individual objectives and strategies to offer investors a broad range of
investment alternatives.
Enterprise Capital Management, Inc. (the "Advisor") is the investment
advisor to each Fund. The Advisor selects a Fund Manager for each Fund's
portfolio on the basis of a number of criteria, including the Fund Manager's
reputation, resources and performance results.
Before investing in any mutual fund, you should consider the general risks
involved. The value of your investment in a Fund is based on the market prices
of the securities the Fund holds. These prices change due to economic and other
events that affect securities markets generally, as well as those that affect
particular companies, industry sectors or governments. These price movements,
sometimes called volatility, will vary depending on the types of securities a
Fund owns and the markets in which these securities trade. In addition, the
investments made by a Fund may underperform the market generally or other mutual
funds with a similar investment objective of that Fund. As with other
investments, you could lose money on your investment in a Fund. Your investment
in a Fund is not a bank deposit. It is not insured or guaranteed by the FDIC or
any government agency. A Fund may not achieve its objective. A Fund's objective
may not be changed without shareholder approval.
1
<PAGE> 5
[Picture Description: Columns of various heights: located to the left of the
section titled: "Enterprise Growth Fund Portfolio Profile."]
ENTERPRISE GROWTH FUND
FUND PROFILE
Investment Objective Capital appreciation
Principal Investments U.S. common stocks of large
capitalization companies
Fund Manager Montag & Caldwell, Inc.
Who May Want To Invest Investors who want the value of
their investment to grow but do not need to receive income
on their investment.
Investment Strategies The Growth Fund invests primarily in
U.S. common stocks. The "Growth at a Reasonable Price"
strategy employed by the Fund combines growth and value
style investing. This means that the Fund invests in the
stocks of companies with long-term earnings potential but
which are currently selling at a discount to their
estimated long term value. The Fund's equity selection
process is generally lower risk than a typical growth stock
approach. Valuation is the key selection criterion which
makes the investment style risk averse. Also emphasized are growth
characteristics to identify companies whose shares are attractively priced and
may experience strong earnings growth relative to other companies.
Principal Risks As a result of investing primarily in U.S. common stocks, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1989-1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
26.81% -15.64%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1990)
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS RETURN SINCE INCEPTION(1)
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE PAST TEN -------------------------
DECEMBER 31, 1998) YEAR YEARS YEARS FUND S&P 500(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Enterprise Growth Fund(3).............. Class A 24.64% 24.72% 19.74% -- --
Class B 26.20% N/A N/A 32.04% 29.22%
Class C 29.22% N/A N/A 31.91% 31.33%
S&P 500(2)............................. 28.57% 24.06% 19.21%
</TABLE>
- ---------------
(1) Returns track inception dates for Class B shares and Class C shares of May
1, 1995 and May 1, 1997, respectively.
(2) This unmanaged broad-based index includes 500 companies which tend to be
leaders in important industries within the U.S. economy. It includes
reinvested dividends. An index does not have an investment advisor and does
not pay commissions or expenses. If an index had expenses, its performance
would be lower. One cannot invest directly in an index.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 0.28% 0.28% 0.29%
-----------------------------
Total Annual Fund Operating Expenses.......................... 1.48% 2.03% 2.04%
-----------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $618 $ 921 $1,245 $2,159
Class B..................................................... $706 $1,037 $1,293 $2,217
Class C..................................................... $307 $ 640 $1,098 $2,369
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $618 $ 921 $1,245 $2,159
Class B..................................................... $206 $ 637 $1,093 $2,217
Class C..................................................... $207 $ 640 $1,098 $2,369
</TABLE>
3
<PAGE> 7
[Picture Description: Columns of various heights: located to the left of the
section titled: "Enterprise Growth and Income Fund Portfolio Profile."]
ENTERPRISE GROWTH AND INCOME FUND
FUND PROFILE
Investment Objective Total return through capital
appreciation with income as a secondary consideration
Principal Investments Broadly diversified group of U.S.
common stocks of large capitalization companies
Fund Manager Retirement System Investors Inc.
Who May Want To Invest Investors who want the value of
their investment to grow with the potential of receiving
dividend income.
Investment Strategies The Growth and Income Fund invests
primarily in U.S. common stocks of large capitalization
companies. The Fund selects stocks that it believes will
appreciate in value, seeking to take advantage of temporary
stock price inefficiencies which may be caused by market
participants focusing heavily on short-term developments. In selecting stocks
for the Fund, the Fund Manager employs a "value-oriented" strategy. This means
that the Fund Manager attempts to identify stocks of companies that have greater
value than is recognized by the market generally. The Fund Manager considers a
number of factors, such as sales, growth and profitability prospects for the
economic sector and markets in which the company operates and sells its products
and services, the company's stock market price, earnings level and projected
earnings growth rate. The Fund Manager also considers current and projected
dividend yields. The Fund Manager compares this information to that of other
companies in determining relative value and dividend potential.
Principal Risks The Fund invests primarily in U.S. common stocks. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk by
comparing the Fund's performance with a broad measure of market performance. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows the performance of the Fund's Class A shares for the past
year. The bar chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance for 1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
19.50% -12.40%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1998)
</TABLE>
4
<PAGE> 8
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS RETURN SINCE INCEPTION(1)
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE -------------------------
DECEMBER 31, 1998) YEAR YEARS FUND S&P 500(2)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Enterprise Growth and Income Fund(3)........... Class A 10.95% N/A 7.57% 21.41%
Class B 11.95% N/A 8.09% 21.41%
Class C 14.95% N/A 10.83% 21.41%
S&P 500(2)..................................... 28.57% 24.06%
</TABLE>
- ---------------
(1) Inception date for Classes A, B and C is July 17, 1997. Performance reflects
annualized return from July 31, 1997 to December 31, 1998 for each Class and
S&P 500.
(2) This unmanaged broad-based index includes 500 companies which tend to be
leaders in important industries within the U.S. economy. It includes
reinvested dividends. An index does not have an investment advisor and does
not pay commissions or expenses. If an index had expenses, its performance
would be lower. One cannot invest directly in an index.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 0.73% 0.73% 0.74%
-----------------------------
Total Annual Fund Operating Expenses.......................... 1.93% 2.48% 2.49%
Less Expense Reimbursements................................... (0.43%) (0.43%) (0.44%)
-----------------------------
Net Annual Fund Operating Expenses............................ 1.50% 2.05% 2.05%
-----------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $620 $1,013 $1,429 $2,589
Class B..................................................... $708 $1,132 $1,482 $2,648
Class C..................................................... $308 $ 734 $1,286 $2,793
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $620 $1,013 $1,429 $2,589
Class B..................................................... $208 $ 732 $1,282 $2,648
Class C..................................................... $208 $ 734 $1,286 $2,793
</TABLE>
5
<PAGE> 9
[Picture Description: Columns of various heights: located to the left of the
section titled: "Enterprise Equity Fund Portfolio Profile."]
ENTERPRISE EQUITY FUND
FUND PROFILE
Investment Objective Long-term capital appreciation
Principal Investments U.S. common stocks
Fund Manager OpCap Advisors
Who May Want To Invest Investors who want the value of
their investment to grow but do not need to receive income
on their investment.
Investment Strategies The Equity Fund invests primarily in
U.S. common stocks of companies that meet the Fund
Manager's criteria of high return on investment capital,
strong positions within their industries, sound financial
fundamentals and management committed to shareholder
interests. The Fund Manager selects companies with one or
more of the following characteristics: substantial and
growing discretionary cash flow, strong shareholder value-oriented management,
valuable consumer or commercial franchises, high return on capital, favorable
price to intrinsic value, and undervalued assets. The Fund Manager also imposes
a strict sell discipline to sell the stock once it rises close to the target
price established by the Fund Manager.
Principal Risks The Fund invests primarily in U.S. common stocks. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk by
comparing the Fund's performance with a broad measure of market performance. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows the performance of the Fund's Class A shares for the past
year. The bar chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance for 1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
11.81% -11.80%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1998)
</TABLE>
6
<PAGE> 10
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS RETURN SINCE INCEPTION(1)
(AS OF THE CALENDAR YEAR ENDED PAST ONE --------------------------
DECEMBER 31, 1998) YEAR FUND S&P 500(2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Enterprise Equity Fund(3).............................. Class A 4.13% 15.05% 31.33%
Class B 4.82% 15.65% 31.33%
Class C 7.98% 17.97% 31.33%
S&P 500(2)............................................. 28.57% 31.33% 31.33%
</TABLE>
- ---------------
(1) Returns track inception date for Classes A, B and C of May 1, 1997.
(2) This unmanaged broad-based index includes 500 companies which tend to be
leaders in important industries within the U.S. economy. It includes
reinvested dividends. An index does not have an investment advisor and does
not pay commissions or expenses. If an index had expenses, its performance
would be lower. One cannot invest directly in an index.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 1.53% 1.54% 1.53%
---------------------------
Total Annual Fund Operating Expenses.......................... 2.73% 3.29% 3.28%
Less Expense Reimbursements................................... (1.13%) (1.14%) (1.13%)
---------------------------
Net Annual Fund Operating Expenses............................ 1.60% 2.15% 2.15%
---------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $630 $1,180 $1,755 $3,312
Class B..................................................... $718 $1,306 $1,819 $3,380
Class C..................................................... $318 $ 904 $1,615 $3,500
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $630 $1,180 $1,755 $3,312
Class B..................................................... $218 $ 906 $1,619 $3,380
Class C..................................................... $218 $ 904 $1,615 $3,500
</TABLE>
7
<PAGE> 11
[Picture Description: Growth, Growth & Income, Equity, Equity Income,
International Growth - Columns of various heights: located to the left
of the section titled: "Enterprise Equity Income Fund Portfolio Profile."]
ENTERPRISE EQUITY INCOME FUND
FUND PROFILE
Investment Objective A combination of growth and income to
achieve an above-average and consistent total return
Principal Investments Dividend-paying U.S. common stocks
Fund Manager 1740 Advisers, Inc.
Who May Want To Invest Investors who want the value of
their investment to grow, with the potential of receiving
dividend income.
Investment Strategies The Equity Income Fund invests
primarily in dividend-paying U.S. common stocks. The goal
is capital appreciation combined with a high level of
current income. Dividend yield relative to the S&P 500
average is used as a discipline and measure of value in
selecting stocks for the Fund. To qualify for a purchase, a
stock's yield must be greater than the S&P 500's average
dividend yield. The stock must be sold within two quarters after its dividend
yield falls below that of the S&P average. The effect of this discipline is that
a stock will be sold if increases in its annual dividends do not keep pace with
increases in its market price.
Principal Risks The Fund invests primarily in U.S. common stocks. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance for 1989-1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
14.94% -13.46%
(JUNE 30, 1997) (SEPTEMBER 30, 1990)
</TABLE>
8
<PAGE> 12
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
RETURN SINCE INCEPTION(1)
--------------------------
AVERAGE ANNUAL TOTAL RETURNS S&P 500/
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE PAST TEN BARRA VALUE
DECEMBER 31, 1998) YEAR YEARS YEARS FUND INDEX(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Enterprise Equity Income Fund(3)....... Class A 5.84% 16.22% 13.28% -- --
Class B 6.49% N/A N/A 20.10% 23.95%
Class C 9.47% N/A N/A 17.34% 22.96%
S&P 500/Barra Value Index(2)........... 14.68% 19.88% 16.67%
</TABLE>
- ---------------
(1) Inception dates for Class A, Class B and Class C shares are September 14,
1987, May 1, 1995 and May 1, 1997, respectively.
(2) This unmanaged broad-based index is comprised of S&P companies sorted with
low price to book ratios. It includes reinvested dividends.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 0.38% 0.38% 0.38%
---------------------------
Total Annual Operating Expenses............................... 1.58% 2.13% 2.13%
Less Expense Reimbursements................................... (0.08%) (0.08%) (0.08%)
---------------------------
Net Annual Fund Operating Expenses............................ 1.50% 2.05% 2.05%
---------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you sell Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $620 $ 943 $1,287 $2,258
Class B..................................................... $708 $1,059 $1,337 $2,316
Class C..................................................... $308 $ 659 $1,137 $2,456
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $620 $ 943 $1,287 $2,258
Class B..................................................... $208 $ 659 $1,137 $2,316
Class C..................................................... $208 $ 659 $1,137 $2,456
</TABLE>
9
<PAGE> 13
[Picture Description: Ticker: Old fashioned ticker tape: located to the left of
the section titled: "Enterprise Capital Appreciation Fund Portfolio Profile."]
ENTERPRISE CAPITAL APPRECIATION FUND
FUND PROFILE
Investment Objective Maximum capital appreciation
Principal Investments U.S. common stocks of companies that
demonstrate accelerating earnings momentum and consistently
strong financial characteristics
Fund Manager Provident Investment Counsel, Inc.
Who May Want To Invest Investors who want the value of
their investment to grow but do not need to receive income
on their investment and are willing to accept the increased
risk associated with more aggressive investment strategies.
Investment Strategies The Capital Appreciation Fund
invests in U.S. common stocks of companies that demonstrate
accelerating earnings momentum and consistently strong
financial characteristics. The Fund Manager's criteria for
stock selection include: (a) steadily increasing earnings;
and (b) a three-year performance record of sales, earnings,
dividend growth, pretax margins, return on equity and
reinvestment rate which, in the aggregate, average 1.5 times the average
performance of the S&P 500 for the same period. The Fund Manager selects stocks
of small, medium and large capitalization companies in an attempt to achieve an
average capitalization of portfolio companies that is less than the average
capitalization of the S&P 500. The potential for maximum capital appreciation is
the basis for investment decisions; any income is incidental.
Principal Risks The Fund's investment universe consists of large, medium and
small capitalization common stocks. As a result, the Fund is subject to the risk
that stock prices will fall over short or extended periods of time. Stock
markets tend to move in cycles, with periods of rising prices and periods of
falling prices. This price volatility is the principal risk of investing in the
Fund. In addition, small- to mid-sized companies may be more vulnerable to
adverse business or economic events than larger, more established companies. In
particular, these companies may have somewhat limited product lines, markets and
financial resources, and may depend upon a relatively small- to medium-sized
management group.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1989-1998]
10
<PAGE> 14
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
25.35% -17.81%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1990)
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
RETURN SINCE INCEPTION(1)
-------------------------
AVERAGE ANNUAL TOTAL RETURNS S&P 500/
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE PAST TEN BARRA GROWTH
DECEMBER 31, 1998) YEAR YEARS YEARS FUND INDEX(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Enterprise Capital Appreciation
Fund(3)............................ Class A 23.98% 16.09% 17.99% -- --
Class B 25.44% N/A N/A 22.47% 34.27%
Class C 28.60% N/A N/A 31.82% 39.04%
S&P 500/Barra Growth Index(2)........ 42.15% 27.94% 21.35%
</TABLE>
- ---------------
(1) Inception dates for Class A, Class B and Class C shares are September 14,
1987; May 1, 1995 and May 1, 1997, respectively.
(2) This unmanaged broad-based index is comprised of U.S. common stocks in the
S&P 500 with high price to book ratios. An index does not have an investment
advisor and does not pay commissions or expenses. If an index had expenses,
its performance would be lower. One cannot invest directly in an index.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN A FUND) CLASS A CLASS B CLASS C
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of offering price)(1)........................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)............................................... None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD CLASS A CLASS B CLASS C
FUND SHARES)
- ----------------------------------------------------------------------------------------------
Investment Advisory Fees..................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(4)..................... 0.45% 1.00% 1.00%
Other Expenses............................................... 0.32% 0.33% 0.36%
-----------------------------
Total Annual Fund Operating Expenses................ 1.52% 2.08% 2.11%
-----------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $622 $ 932 $1,265 $2,201
Class B..................................................... $711 $1,052 $1,319 $2,267
Class C..................................................... $314 $ 661 $1,134 $2,441
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $622 $ 932 $1,265 $2,201
Class B..................................................... $211 $ 652 $1,119 $2,267
Class C..................................................... $214 $ 661 $1,134 $2,441
</TABLE>
11
<PAGE> 15
[Picture Description: Ticker: Old fashioned ticker tape: located to the left of
the section titled: "Enterprise Multi-Cap Growth Fund Portfolio Profile."]
ENTERPRISE MULTI-CAP GROWTH FUND
FUND PROFILE
Investment Objective Long-term capital appreciation
Principal Investments Equity securities, such as common or
preferred stocks, which are listed on U.S. exchanges or
traded in the over-the-counter market
Fund Manager Fred Alger Management, Inc.
Who may want to invest Investors who want an increase in
the value of their investment without regard to income; are
willing to accept the increased risk of investing in small
and medium size company stocks for the possibility of
higher returns; and want to diversify their portfolio to
include small, medium and large company stocks.
Investment Strategies The Multi-Cap Growth Fund invests
primarily in growth stocks. The Fund Manager believes that
these companies tend to fall into one of two categories:
High Unit Volume Growth and Positive Life Cycle Change.
High Unit Volume Growth companies are those vital, creative
companies that offer goods or services to a rapidly expanding marketplace. They
include both established and emerging firms, offering new or improved products,
or firms simply fulfilling an increased demand for an existing line. Positive
Life Cycle Change companies are those companies experiencing a major change that
is expected to produce advantageous results. These changes may be as varied as
new management; new products or technologies; restructuring or reorganization;
or merger and acquisition. The Fund can leverage, that is, borrow money, to buy
additional securities for its portfolio. By borrowing money, the Fund has the
potential to increase its returns if the increase in the value of the securities
purchased, exceeds the cost of borrowing, including the interest paid on the
money borrowed.
Principal Risks As a result of investing primarily in U.S. common stocks, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. Moreover, because of large investments in
mid-capitalization, small-capitalization and/or emerging growth companies, the
Fund is riskier than large-capitalization funds since such companies typically
have greater earnings fluctuations and greater reliance on a few key customers
than larger companies.
In addition, the cost of borrowing money to leverage may exceed the returns for
the securities purchased or the securities purchased may actually go down in
value; thus, the Fund's net asset value could decrease more quickly than if it
had not borrowed money.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
The table on the following page describes the shareholder fees that you may pay
if you purchase or redeem Fund shares. Every mutual fund has operating expenses
to pay for professional advisory, shareholder, distribution, administration and
custody services. The Fund's expenses in the table are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Advisor
has contractually agreed to limit the Fund's expenses other than interest
expenses through May 1, 2000, to the expense ratios set forth in the table.
12
<PAGE> 16
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses(5)............................................. 1.74% 1.74% 1.74%
-----------------------------
Total Annual Fund Operating Expenses.......................... 3.19% 3.74% 3.74%
Less Expense Reimbursements................................... (1.28%) (1.28%) (1.28%)
-----------------------------
Net Annual Fund Operating Expenses............................ 1.91% 2.46% 2.46%
=============================
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
(5) Other expenses are based on estimated amounts for the current fiscal year.
Includes 0.06% interest expense.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $ 660 $1,298
Class B..................................................... $ 749 $1,426
Class C..................................................... $ 349 $1,026
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $ 660 $1,298
Class B..................................................... $ 249 $1,026
Class C..................................................... $ 249 $1,026
</TABLE>
13
<PAGE> 17
[Picture Description: Ticker: Old fashioned ticker tape: located to the left of
the section titled: "Small Company Growth Fund Portfolio Profile."
ENTERPRISE SMALL COMPANY GROWTH FUND
FUND PROFILE
Investment Objective Capital appreciation
Principal Investments U.S. common stocks of small
capitalization companies
Fund Manager William D. Witter, Inc.
Who May Want To Invest Investors who want an increase in
the value of their investment without regard to income; are
willing to accept the increased risk of investing in small
company stocks for the possibility of higher returns; and
want to diversify their portfolio to include small company
stocks.
Investment Strategies The Small Company Growth Fund
invests primarily in common stocks of small capitalization
companies with above-average growth characteristics that
are reasonably valued. The Fund Manager uses a disciplined
approach in evaluating growth companies. It relates the
expected growth rate in earnings to the price-earnings
ratio of the stock. Generally, the Fund Manager will not
buy a stock if its price-earnings ratio exceeds its growth rate. By using this
valuation parameter, the Fund Manager believes it moderates some of the inherent
volatility in the small capitalization sector of the market. Securities will be
sold when the Fund Manager believes the stock price exceeds the valuation
criteria, or when the stock appreciates to a point where it is substantially
overweighted in the portfolio, or when the company no longer meets expectations.
The Fund Manager's goal is to hold a stock for a minimum of one year but this
may not always be feasible and there may be times when short-term gains or
losses will be realized.
Principal Risks The Fund invests primarily in common stocks. As a result, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. In addition, the Fund invests primarily in
small-sized companies which may be more vulnerable to adverse business or
economic events than larger, more established companies. In particular,
small-sized companies may have limited product lines, markets and financial
resources, and may depend upon a relatively small management group.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk by
comparing the Fund's performance with a broad measure of market performance. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ slightly due to differences in expenses.
This bar chart shows the performance of the Fund's Class A shares for the past
year. The bar chart does not reflect sales charges. If sales charges had been
reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance for 1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
27.19% -24.36%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1998)
</TABLE>
14
<PAGE> 18
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
RETURN SINCE
AVERAGE ANNUAL TOTAL RETURNS INCEPTION(1)
(AS OF THE CALENDAR YEAR ENDED PAST ONE ------------
DECEMBER 31, 1998) YEAR FUND
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Enterprise Small Company Growth Fund(2)..................... Class A (8.63)% (8.54)%
Class B (8.93)% (9.15)%
Class C (5.71)% (6.00)%
Russell 2000(3)............................................. (2.56)% 2.37%
</TABLE>
- ---------------
(1) Inception date for Classes A, B and C is July 17, 1997. Performance reflects
annualized return from July 31, 1997 to December 31, 1998.
(2) Includes sales charge.
(3) This unmanaged broad-based index measures the performance of 2,000 small
capitalization companies. As of the latest reconstitution, the average
market capitalization was approximately $592.0 million and the largest
company in the index had an approximate market capitalization of $1,402.7
million. An index does not have an investment advisor and does not pay
commissions or expenses. If an index had expenses, its performance would be
lower. One cannot invest directly in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 1.21% 1.24% 1.24%
-----------------------------
Total Annual Fund Operating Expenses.......................... 2.66% 3.24% 3.24%
Less Expense Reimbursements................................... (0.81)% (0.84)% (0.84)%
-----------------------------
Net Annual Fund Operating Expenses............................ 1.85% 2.40% 2.40%
-----------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $654 $1,189 $1,749 $3,269
Class B..................................................... $743 $1,320 $1,820 $3,349
Class C..................................................... $343 $ 920 $1,620 $3,483
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $654 $1,189 $1,749 $3,269
Class B..................................................... $243 $ 920 $1,620 $3,349
Class C..................................................... $243 $ 920 $1,620 $3,483
</TABLE>
15
<PAGE> 19
[Picture Description: Ticker: Old fashioned ticker tape: located to the left of
the section titled: "Enterprise Small Company Value Fund Portfolio Profile."]
ENTERPRISE SMALL COMPANY VALUE FUND
FUND PROFILE
Investment Objective Maximum capital appreciation
Principal Investments U.S. common stocks of small
capitalization companies
Fund Manager Gabelli Asset Management Company (GAMCO
Investors, Inc.)
Who May Want To Invest Investors who want an increase in
the value of their investment without regard to income; are
willing to accept the increased risk of investing in small
company stocks for the possibility of higher returns; and
want to diversify their portfolio to include small company
stocks.
Investment Strategies The Small Company Value Fund invests
primarily in common stocks of small capitalization
companies that the Fund Manager believes are
undervalued -- that is, the stock's market price does not
fully reflect the company's value. The Fund Manager uses a
proprietary research technique to determine which stocks
have a market price that is less than the "private market
value" or what an investor would pay for the company. The
Fund Manager then determines whether there is an emerging
valuation catalyst that will focus investor attention on the underlying assets
of the company and increase the market price. Smaller companies may be subject
to a valuation catalyst such as increased investor attention, takeover efforts
or a change in management.
Principal Risks The Fund invests primarily in common stocks. As a result, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. In addition, the Fund invests primarily in
small-sized companies which may be more vulnerable to adverse business or
economic events than larger, more established companies. In particular,
small-sized companies may have limited product lines, markets and financial
resources, and may depend upon a relatively small management group.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1994-1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
18.94% -17.01%
(JUNE 30, 1997) (SEPTEMBER 30, 1998)
</TABLE>
16
<PAGE> 20
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
RETURN SINCE
AVERAGE ANNUAL TOTAL RETURNS INCEPTION(1)
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE ---------------------
DECEMBER 31, 1998) YEAR YEARS FUND RUSSELL 2000
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Enterprise Small Company Value Fund(2).......... Class A 0.11% 12.02% 12.62% --
Class B 0.44% N/A 16.34% 14.96%
Class C 4.03% N/A 23.10% 14.52%
Russell 2000(3)................................. (2.56)% 11.86% 11.81%
</TABLE>
- ---------------
(1) Inception date for Class A shares is October 1, 1993; inception date for
Class B shares is May 1, 1995; inception date for Class C shares is May 1,
1997.
(2) Includes sales charge.
(3) This unmanaged broad-based index measures the performance of 2,000 small
capitalization companies. As of the latest reconstitution, the average
market capitalization was approximately $592.0 million and the largest
company in the index had an approximate market capitalization of $1,402.7
million. An index does not have an investment advisor and does not pay
commissions or expenses. If an index had expenses, its performance would be
lower. One cannot invest directly in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 0.65% 0.66% 0.65%
-----------------------------
Total Annual Fund Operating Expenses.......................... 1.85% 2.41% 2.40%
Less Expense Reimbursements................................... (0.10)% (0.11)% (0.10)%
-----------------------------
Net Annual Fund Operating Expenses............................ 1.75% 2.30% 2.30%
-----------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $644 $1,020 $1,419 $2,533
Class B..................................................... $733 $1,141 $1,476 $2,599
Class C..................................................... $333 $ 739 $1,271 $2,729
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $644 $1,020 $1,419 $2,533
Class B..................................................... $233 $ 741 $1,276 $2,599
Class C..................................................... $233 $ 739 $1,271 $2,729
</TABLE>
17
<PAGE> 21
[Picture Description: Columns of various heights: located to the left of the
section titled: "Enterprise International Growth Fund Portfolio Profile."]
ENTERPRISE INTERNATIONAL GROWTH FUND
FUND PROFILE
Investment Objective Capital appreciation
Principal Investments Non-U.S. equity securities
Fund Manager Vontobel USA Inc.
Who May Want To Invest Investors who want an increase in
the value of their investment without regard to income and
are willing to accept the increased risk of international
investing for the possibility of higher returns.
Investment Strategies The International Growth Fund
invests primarily in non-U.S. equity securities that the
Fund Manager believes are undervalued. The Fund Manager
uses an approach that involves bottom-up stock selection.
The Fund Manager looks for companies that are good
predictable businesses selling at attractive prices
relative to an estimate of intrinsic value. The Fund
Manager diversifies investments among European, Australian
and Far East ("EAFE") markets.
Principal Risks The Fund invests primarily in common stocks of foreign
companies. As a result, the Fund is subject to the risk that stock prices will
fall over short or extended periods of time. Stock markets tend to move in
cycles, with periods of rising prices and periods of falling prices. This price
volatility is the principal risk of investing in the Fund. In addition,
investments in foreign markets may be more volatile than investments in U.S.
markets. Diplomatic, political or economic developments may cause foreign
investments to lose money. The value of the U.S. dollar may rise, causing
reduced returns for U.S. persons investing abroad. A foreign country may not
have the same accounting and financial reporting standards as the U.S. Foreign
stock markets, brokers and companies are generally subject to less supervision
and regulation than their U.S. counterparts. Emerging market securities may be
even more susceptible to these risks.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1989-1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
17.44% -18.21%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1990)
</TABLE>
18
<PAGE> 22
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
RETURNS SINCE INCEPTION(1)
AVERAGE ANNUAL TOTAL RETURNS --------------------------
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE PAST TEN MSCI EAFE
DECEMBER 31, 1998) YEAR YEARS YEARS FUND INDEX(2)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Enterprise International Growth
Fund(3).......................... Class A 8.87% 7.47% 8.06% -- --
Class B 9.57% N/A N/A 11.17% 8.0%
Class C 12.64% N/A N/A 9.30% 13.44%
MSCI EAFE Index.................... 20.00% 9.19% 5.54%
</TABLE>
- ---------------
(1) Inception dates for Class A, Class B and Class C shares is September 14,
1987, May 1, 1995, and May 1, 1997, respectively.
(2) The Morgan Stanley Capital International Europe, Australia and the Far East
(MSCI EAFE) Index is a market capitalization weighted, equity index
comprised of 1,032 companies that are representative of the market structure
of 20 countries, excluding the United States, Canada and other regions such
as Latin America. Constituent stocks are selected on the basis of industry
representation, liquidity and sufficient float. One cannot invest directly
in an index.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.85% 0.85% 0.85%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 0.81% 0.81% 0.82%
-----------------------------
Total Annual Fund Operating Expenses.......................... 2.11% 2.66% 2.67%
Less Expense Reimbursements................................... (0.11)% (0.11)% (0.12)%
-----------------------------
Net Annual Fund Operating Expenses............................ 2.00% 2.55% 2.55%
-----------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $668 $1,094 $1,545 $2,792
Class B..................................................... $758 $1,216 $1,600 $2,852
Class C..................................................... $358 $ 818 $1,404 $2,994
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $668 $1,094 $1,545 $2,792
Class B..................................................... $258 $ 816 $1,400 $2,852
Class C..................................................... $258 $ 818 $1,404 $2,994
</TABLE>
19
<PAGE> 23
[Picture Description: Ticker: Old fashioned ticker tape: located to the left of
the section titled: "Global Financial Services Fund Portfolio Profile."]
ENTERPRISE GLOBAL FINANCIAL SERVICES FUND
FUND PROFILE
Investment Objective Capital appreciation
Principal Investments Common stocks of domestic and
foreign financial services companies
Fund Manager Sanford C. Bernstein & Co., Inc.
Who May Want To Invest Investors who want an increase in
the value of their investment without regard to income;
want investment in the global financial services sector;
and are willing to accept the increased risk of
international investing for the possibility of higher
returns.
Investment Strategies The Global Financial Services Fund
invests primarily in the domestic and foreign financial
services industry by normally investing in companies
domiciled in the U.S. and in at least three other countries. The Fund considers
a financial services company to be a firm that in its most recent fiscal year
either (i) derived at least 50% of its revenues or earnings from financial
services activities, or (ii) devoted at least 50% of its assets to such
activities. Financial services companies provide financial services to consumers
and businesses and include the following types of U.S. and foreign firms:
commercial banks, thrift institutions and their holding companies; consumer and
industrial finance companies; diversified financial services companies;
investment banks; securities brokerage and investment advisory firms; financial
technology companies; real estate-related firms; leasing firms; credit card
companies; government sponsored financial enterprises; investment companies;
insurance brokerages; and various firms in all segments of the insurance
industry such as multi-line property and casualty, life insurance companies and
insurance holding companies. The Fund Manager selects securities by combining
fundamental and quantitative research to identify securities of financial
services companies that are attractively priced relative to their expected
returns. Its research analysts employ a long-term approach to forecasting the
earnings and growth potential of companies and attempt to construct global
portfolios that produce maximum returns at a given risk level.
Principal Risks The Fund invests in common stocks of foreign companies. As a
result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is a
principal risk of investing in the Fund. In addition, investments in foreign
markets may be more volatile than investments in U.S. markets. Diplomatic,
political or economic developments may cause foreign investments to lose money.
The value of the U.S. dollar may rise, causing reduced returns for U.S. persons
investing abroad. A foreign country may not have the same accounting and
financial reporting standards as the U.S. Foreign stock markets, brokers and
companies are generally subject to less supervision and regulation than their
U.S. counterparts. Emerging market securities may be even more susceptible to
these risks. Because the Fund concentrates in a single industry sector, its
performance is largely dependent on the sector's performance, which may differ
from that of the overall stock market. Generally, the financial services
industry is extremely sensitive to fluctuations in interest rates. Moreover,
while rising interest rates will cause a decline in the value of any debt
securities the Fund holds, falling interest rates or deteriorating economic
conditions can adversely affect the performance of financial services companies'
stock. Both foreign and domestic financial services companies are affected by
government regulation or market intervention, which may limit their activities
and affect their profitability. Some financial services companies, e.g.,
insurance companies, are subject to severe market share and price competition.
20
<PAGE> 24
PERFORMANCE INFORMATION
No bar chart and performance table are provided due to the fact the Fund does
not have performance information for a full calendar year. The Fund's inception
date was October 1, 1998.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.85% 0.85% 0.85%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses(5)............................................. 1.53% 1.53% 1.53%
-----------------------------
Total Annual Fund Operating Expenses.......................... 2.83% 3.38% 3.38%
Less Expense Reimbursements................................... (1.08)% (1.08)% (1.08)%
-----------------------------
Net Annual Fund Operating Expenses............................ 1.75% 2.30% 2.30%
=============================
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
(5) Other expenses are based on estimated amounts for the current fiscal year.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $644 $1,213
Class B..................................................... $733 $1,339
Class C..................................................... $333 $ 939
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $644 $1,213
Class B..................................................... $233 $ 939
Class C..................................................... $233 $ 939
</TABLE>
21
<PAGE> 25
[Picture Description: Ticker: Old fashioned ticker tape: located to the left of
the section titled: "Enterprise Internet Fund Portfolio Profile."]
ENTERPRISE INTERNET FUND
FUND PROFILE
Investment Objective Long-term capital appreciation
Principal Investments Equity securities, including common
stocks, preferred stocks, warrants and other securities
convertible into common stock of companies primarily
engaged in Internet, Intranet and other "high tech" related
activities.
Fund Manager Fred Alger Management, Inc.
Who may want to invest Investors who want an increase in
the value of their investment without regard to income and
want to diversify their overall portfolio with a
concentrated investment in companies engaged in Internet,
Intranet and other "high tech" related activities.
Investment Strategies Under normal conditions, the
Internet Fund will invest at least 65% of its assets in the
equity securities of companies in the Internet, Intranet
and "high tech" sectors. In choosing which companies' stock the Fund should
purchase, the Fund Manager invests in those companies listed on a U.S.
securities exchange or NASDAQ which are engaged in the research, design,
development or manufacturing, or engaged to a significant extent in the business
of distributing products, processes or services for use with Internet or
Intranet related businesses. The Fund may also invest in other "high tech"
companies. The Internet is a world-wide network of computers designed to permit
users to share information and transfer data quickly and easily. The World Wide
Web("WWW"), which is a means of graphically interfacing with the Internet, is a
hyper-text based publishing medium containing text, graphics, interactive
feedback mechanisms and links within WWW documents and to other WWW documents.
An Intranet is the application of WWW tools and concepts to a company's internal
documents and databases. Other "high tech" companies may include firms in the
computer, communication, video, electronic, office and factory automation and
robotic sectors.
Principal Risks As a result of investing primarily in U.S. common stocks, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. Moreover, because of large investments in
mid-capitalization, small-capitalization and/or emerging growth companies, the
Fund is riskier than large-capitalization funds since such companies typically
have greater earnings fluctuations and greater reliance on a few key customers
than larger companies. In addition, the value of companies engaged in Internet,
Intranet and other "high tech" related activities is particularly vulnerable to
rapidly changing technology, extensive government regulation and relatively high
risks of obsolescence caused by scientific and technological advances.
Therefore, the stocks of companies involved in these sectors tend to be more
volatile than stocks in other sectors. As a result, the value of the Fund's
shares may fluctuate more than shares of a fund investing in a broader range of
industries.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
The table on the next page describes the shareholder fees that you may pay if
you purchase or redeem Fund shares. Every mutual fund has operating expenses to
pay for professional advisory, shareholder,
22
<PAGE> 26
distribution, administration and custody services. The Fund's expenses in the
table are shown as a percentage of the Fund's net assets. These expenses are
deducted from Fund assets. The Advisor has contractually agreed to limit the
Fund's expenses through May 1, 2000, to the expense ratios set forth in the
table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- --------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses(5)............................................. 0.50% 0.50% 0.50%
=============================
Total Annual Fund Operating Expenses.......................... 1.95% 2.50% 2.50%
Less Expense Reimbursements................................... (0.05%) (0.05%) (0.05%)
-----------------------------
Net Annual Fund Operating Expenses............................ 1.90% 2.45% 2.45%
=============================
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
(5) Based on estimated amounts for the current fiscal year.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $659 $1,054
Class B..................................................... $748 $1,174
Class C..................................................... $348 $ 774
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $659 $1,054
Class B..................................................... $248 $ 774
Class C..................................................... $248 $ 774
</TABLE>
23
<PAGE> 27
[Picture Description: Antiqued piggy bank with various coins lying beside:
located to the left of the section titled: "Enterprise Government Securities
Fund Portfolio Profile."]
ENTERPRISE GOVERNMENT SECURITIES FUND
FUND PROFILE
Investment Objective Current income and safety of
principal
Principal Investments Securities that are obligations of
the U.S. Government, its agencies or instrumentalities
Fund Manager TCW Funds Management, Inc.
Who May Want To Invest Conservative investors who want to
receive income from their investment
Investment Strategies The Government Securities Fund
invests primarily in securities that are obligations of the
U.S. Government, its agencies or instrumentalities. The
Fund's investments may include securities issued by the
U.S. Treasury, such as treasury bills, treasury notes and
treasury bonds. In addition, the Fund may invest in
securities that are issued or guaranteed by agencies and
instrumentalities of the U.S. Government. Securities issued
by agencies or instrumentalities may or may not be backed
by the full faith and credit of the United States.
Securities issued by the Government National Mortgage
Association ("GNMA Certificates") are examples of full
faith and credit securities. Agencies or instrumentalities whose securities are
not backed by the full faith and credit of the United States include the Federal
National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corp.
(Freddie Mac). To a limited extent, the Fund may invest in mortgage-backed
securities, including collateralized mortgage obligations ("CMOs"). The Fund may
concentrate from time to time in different U.S. Government securities in order
to obtain the highest available level of current income and safety of principal.
Principal Risks The Government Securities Fund invests primarily in U.S.
Government debt securities. As a result, the Fund is subject to the risk that
the prices of debt securities will decline due to rising interest rates. This
risk is greater for long-term debt securities than for short-term debt
securities. To the extent that the Fund invests in mortgage-backed securities,
it is subject to additional risk. A mortgage-backed security pools all interest
and principal payments from the underlying mortgages and pays it to the
security's owner. The mortgages underlying mortgage-backed securities may mature
or be paid off before the stated maturity date. This has a number of drawbacks.
First, the Fund may lose money on its investment. Second, the monthly income
payments to the Fund may fluctuate. Third, the Fund cannot predict the maturity
of its investment with certainty. Fourth, the Fund would invest any resulting
proceeds elsewhere, generally at a lower interest rate.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1989-1998]
24
<PAGE> 28
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
6.08% -5.16%
(MARCH 31, 1995) (JUNE 30, 1994)
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
RETURN SINCE INCEPTION(1)
AVERAGE ANNUAL TOTAL RETURNS -----------------------------------
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE PAST TEN LEHMAN BROTHERS INTERMEDIATE
DECEMBER 31, 1998) YEAR YEARS YEARS FUND GOVERNMENT BOND INDEX(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Enterprise Government Securities
Fund(3).......................... Class A 1.75% 5.17% 7.67% -- --
Class B 2.24% N/A N/A 7.55% 7.87%
Class C 5.15% N/A N/A 8.23% 9.19%
Lehman Brothers Intermediate
Government Bond Index(2)......... 8.49% 6.45% 8.34%
</TABLE>
- ---------------
(1) Inception dates for Class A, Class B and Class C shares were September 14,
1987, May 1, 1995 and May 1, 1997, respectively.
(2) This is an unmanaged broad-based index that includes all issues with
maturities of one to 9.99 years contained in the Lehman Brothers Government
Bond Index (this index includes all publicly held U. S. Treasury debt or any
governmental agency thereof, quasi-federal corporation, or corporate debt
guaranteed by the U. S. government with a minimum maturity of one year and
minimum outstanding par amount of $1 million) and is constructed the same
way. Average weighted maturity is approximately four years. The index
excludes transaction and holding charges. One cannot invest directly in an
index.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
agreed to contractually limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.60% 0.60% 0.60%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 0.33% 0.33% 0.34%
-----------------------------
Total Annual Operating Expenses............................... 1.38% 1.93% 1.94%
Less Expense Reimbursements................................... (0.08)% (0.08)% (0.09)%
-----------------------------
Net Annual Fund Operating Expenses............................ 1.30% 1.85% 1.85%
-----------------------------
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $601 $ 884 $1,187 $2,047
Class B..................................................... $688 $ 998 $1,234 $2,105
Class C..................................................... $288 $ 600 $1,039 $2,257
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $601 $ 884 $1,187 $2,047
Class B..................................................... $188 $ 598 $1,034 $2,105
Class C..................................................... $188 $ 600 $1,039 $2,257
</TABLE>
25
<PAGE> 29
[Picture Description: Antiqued piggy bank with various coins lying beside:
located to the left of the section titled: "Enterprise High-Yield Bond Fund
Portfolio Profile."]
ENTERPRISE HIGH-YIELD BOND FUND
FUND PROFILE
Investment Objective Maximum current income
Principal Investments Debt securities rated below
investment grade, which are commonly known as "junk bonds"
Fund Manager Caywood-Scholl Capital Management
Who May Want To Invest Income-oriented investors who are
willing to accept increased risk for the possibility of
greater returns through high-yield bond investing.
Investment Strategies The High-Yield Bond Fund invests
primarily in high-yield, income-producing U.S. corporate
bonds rated B3 to Ba1 by Moody's Investors Service, Inc.
("Moody's") or B- to BB+ by Standard & Poor's Corporation
("S&P"), which are commonly known as "junk bonds." The
Fund's investments are selected by the Fund Manager after
examination of the economic outlook to determine those
industries that appear favorable for investment. Industries
going through a perceived decline generally are not
candidates for selection. After the industries are
selected, the Fund Manager identifies bonds of issuers within those industries
based on their creditworthiness, their yields in relation to their credit and
the relative value in relation to the high yield market. Companies near or in
bankruptcy are not considered for investment. The Fund does not purchase bonds
which are rated Ca or lower by Moody's or CC or lower by S&P or which, if
unrated, in the judgment of the Fund Manager have characteristics of such
lower-grade bonds. Should an investment be subsequently downgraded to Ca or
lower or CC or lower, the Fund Manager has discretion to hold or liquidate the
security. Subject to the restrictions described above, under normal
circumstances, up to 20% of the Fund's assets may include: (1) bonds rated Caa
by Moody's or CCC by S&P; (2) unrated debt securities which, in the judgment of
the Fund Manager, have characteristics similar to those described above; (3)
convertible debt securities; (4) puts, calls and futures as hedging devices; (5)
foreign issuer debt securities; and (6) short-term money market instruments,
including certificates of deposit, commercial paper, U.S. Government securities
and other income-producing cash equivalents.
Principal Risks The Fund invests primarily in below investment-grade debt
securities. As a result, the Fund is subject to the risk that the prices of the
debt securities will decline due to rising interest rates. This risk is greater
for long-term debt securities than for short-term debt securities. A high-yield
bond's market price may fluctuate more than higher-quality securities and may
decline significantly. High-yield bonds also carry a substantial risk of default
or changes in the issuer's creditworthiness. In addition, it may be more
difficult for the Fund to dispose of high-yield bonds or to determine their
value. High-yield bonds may contain redemption or call provisions that, if
exercised during a period of declining interest rates, may force the Fund to
replace the security with a lower-yielding security. If this occurs, it will
result in a decreased return for shareholders.
PERFORMANCE INFORMATION
The bar chart and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
26
<PAGE> 30
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1989-1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
11.52% -8.05%
(MARCH 31, 1991) (SEPTEMBER 30, 1990)
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
RETURNS SINCE INCEPTION(1)
---------------------------
AVERAGE ANNUAL TOTAL RETURNS LEHMAN BROTHERS
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE PAST TEN HIGH YIELD
DECEMBER 31, 1998) YEAR YEARS YEARS FUND BB INDEX(2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Enterprise High-Yield Bond Fund(1)..... Class A (2.62)% 7.62% 8.75% -- --
Class B (2.36)% N/A N/A 8.69% 9.92%
Class C 0.72% N/A N/A 7.48% 9.20%
Lehman Brothers High Yield BB
Index(2)............................. 5.13% 9.28% 10.61%
</TABLE>
- ---------------
(1) Includes sales charge.
(2) This is an unmanaged index that includes fixed rate, public nonconvertible
issues that are rated Ba1 or lower by Moody's. If a Moody's rating is not
available, the bonds must be rated BB+ or lower by S&P, or by Fitch if an
S&P rating is not available. The index excludes transaction or holding
charges. One cannot invest directly in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN A FUND) CLASS A CLASS B CLASS C
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of offering price)(1)........................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)............................................... None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD CLASS A CLASS B CLASS C
FUND SHARES)
- ----------------------------------------------------------------------------------------------
Investment Advisory Fees..................................... 0.60% 0.60% 0.60%
Distribution and Service (12b-1) Fees(4)..................... 0.45% 1.00% 1.00%
Other Expenses............................................... 0.39% 0.39% 0.39%
-----------------------------
Total Annual Operating Expenses.............................. 1.44% 1.99% 1.99%
Less Expense Reimbursements.................................. (0.14)% (0.14)% (0.14)%
-----------------------------
Net Annual Fund Operating Expenses........................... 1.30% 1.85% 1.85%
=============================
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
27
<PAGE> 31
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $601 $ 896 $1,212 $2,106
Class B..................................................... $688 $1,011 $1,260 $2,164
Class C..................................................... $288 $ 611 $1,060 $2,306
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $601 $ 896 $1,212 $2,106
Class B..................................................... $188 $ 611 $1,060 $2,164
Class C..................................................... $188 $ 611 $1,060 $2,306
</TABLE>
28
<PAGE> 32
[Picture Description: Piggy bank: Antiqued piggy bank with various coins lying
beside: located to the left of the section titled: "Enterprise Tax-Exempt Income
Fund Portfolio Profile."]
ENTERPRISE TAX-EXEMPT INCOME FUND
FUND PROFILE
Investment Objective A high level of current income exempt
from federal income tax, with consideration given to
preservation of principal
Principal Investments A diversified portfolio of long-term
investment grade municipal bonds
Fund Manager MBIA Capital Management Corp.
Who May Want To Invest Investors who want to receive
tax-free current income and maintain the value of their
investment.
Investment Strategies The Tax-Exempt Income Fund invests
primarily in investment grade, tax-exempt municipal
securities. The issuers of these securities may be located
in any state, territory or possession of the United States.
In selecting investments for the Fund, the Fund Manager
tries to limit risk as much as possible. The Fund Manager
analyzes municipalities, their credit risk, market trends
and investment cycles. The Fund Manager attempts to
identify and invest in municipal issuers with improving
credit and avoid those with deteriorating credit. The Fund
anticipates that its average weighted maturity will range
from 10 to 25 years. The Fund Manager will actively manage
the Fund, adjusting the average Fund maturity and utilizing futures contracts
and options on futures as a defensive measure according to its judgment of
anticipated interest rates. During periods of rising interest rates and falling
prices, the Fund Manager may adopt a shorter weighted average maturity to
cushion the effect of bond price declines on the Fund's net asset value. When
rates are falling and prices are rising, the Fund Manager may adopt a longer
weighted average maturity. The Fund may also invest up to 20% of its net assets
in cash, cash equivalents and debt securities, the interest from which may be
subject to federal income tax. Investments in taxable securities will be limited
to investment grade corporate debt securities and U.S. Government securities.
The Fund will not invest more than 20% of its net assets in municipal
securities, the interest on which is subject to the federal alternative minimum
tax.
Principal Risks The Fund invests primarily in long-term investment grade debt
securities. As a result, the Fund is subject to the risk that the prices of debt
securities will decline due to rising interest rates. This risk is greater for
long-term debt securities than for short-term debt securities. Debt securities
may decline in credit quality due to economic or governmental events. In
addition, an issuer may fail to make timely payments of principal or interest to
the Fund. Some investment grade bonds may have speculative characteristics.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1989-1998]
29
<PAGE> 33
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
6.78% -5.42%
(MARCH 31, 1995) (MARCH 31, 1994)
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
RETURNS SINCE INCEPTION(1)
---------------------------
AVERAGE ANNUAL TOTAL RETURNS LEHMAN BROTHERS
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE PAST TEN MUNICIPAL
DECEMBER 31, 1998) YEAR YEARS YEARS FUND BOND INDEX(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Enterprise Tax-Exempt Income
Fund(3)............................ Class A 0.86% 3.89% 6.32% -- --
Class B 1.33% N/A N/A 5.24% 8.09%
Class C 4.34% N/A N/A 6.92% 5.64%
Lehman Brothers Municipal Bond
Index.............................. 6.48% 6.23% 8.22%
</TABLE>
- ---------------
(1) Inception dates for Class A, Class B and Class C shares were September 14,
1987, May 1, 1995 and May 1, 1997, respectively.
(2) This is an unmanaged index that includes approximately 1,100 investment
grade tax-exempt bonds and is classified into four main sectors: general
obligation, revenue, insured and prerefunded. An index does not have an
investment advisor and does not pay commissions and expenses. If an index
had expenses, its performance would be lower. One cannot invest directly in
an index.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Fund's expenses through May 1, 2000, to the
expense ratios set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 0.45% 0.46% 0.43%
-----------------------------
Total Annual Operating Expenses............................... 1.40% 1.96% 1.93%
Less Expense Reimbursements................................... (0.30)% (0.31)% (0.28)%
-----------------------------
Net Annual Fund Operating Expenses............................ 1.10% 1.65% 1.65%
=============================
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
The example on the next page is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated. The example also assumes that each year your investment has a 5%
return and
30
<PAGE> 34
Fund expenses remain the same. Although your actual costs and returns may be
different, your approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $582 $ 869 $1,177 $2,050
Class B..................................................... $668 $ 985 $1,229 $2,115
Class C..................................................... $268 $ 579 $1,016 $2,231
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $582 $ 869 $1,177 $2,050
Class B..................................................... $168 $ 585 $1,029 $2,115
Class C..................................................... $168 $ 579 $1,016 $2,231
</TABLE>
31
<PAGE> 35
[Picture Description: Managed - Stones: "precious stones" lying in dishes of
varying sizes and shapes: located to the left of the section titled: "Enterprise
Balanced Fund Portfolio Profile."]
ENTERPRISE BALANCED FUND
FUND PROFILE
Investment Objective Long-term total return
Principal Investments A combination of equity, fixed
income and short-term securities
Fund Manager Montag & Caldwell, Inc.
Who may want to invest Investors who want the value of
their investment to grow and also want to receive income on
their investment
Investment Strategies Generally, between 55% and 75% of
the Balanced Fund's total assets will be invested in equity
securities, and at least 25% of the Balanced Fund's total
assets will be invested in fixed income securities. The
portfolio allocation will vary based upon the Fund
Manager's assessment of the return potential of each asset
class. For equity investments, the Fund Manager uses a
bottom-up approach to stock selection, focusing on high
quality, well-established companies that have a strong
history of earnings growth; attractive prices relative to
the company's potential for above average; long-term earnings and revenue
growth; strong balance sheets; a sustainable competitive advantage; the
potential to become (or currently are) industry leaders; and the potential to
outperform the market during downturns. When selecting fixed income securities,
the Fund Manager will seek to maintain the Fund's weighted average duration
within 20% of the duration of the Lehman Brothers Government Corporate Index.
Emphasis is also placed on diversification and credit analysis. The Fund will
only invest in fixed income securities with an "A" or better rating. Fixed
income investments will include: U.S. Government securities; corporate bonds;
mortgage/asset-backed securities; and money market securities and repurchase
agreements.
Principal Risks The Fund invests in both common stocks and debt securities. As
a result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is a
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that the prices of debt securities will decline due to rising interest
rates. The risk is greater for long-term debt securities than for short-term
debt securities. Debt securities may decline in credit quality due to events
related to the issuer as well as to general economic or governmental events.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
The table on the following page describes the shareholder fees that you may pay
if you purchase or redeem Fund shares. Every mutual fund has operating expenses
to pay for professional advisory, shareholder, distribution, administration and
custody services. The Fund's expenses in the table are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Advisor
has contractually agreed to limit the Fund's expenses through May 1, 2000, to
the expense ratios set forth in the table.
32
<PAGE> 36
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses(5)............................................. 1.74% 1.74% 1.74%
-----------------------------
Total Annual Fund Operating Expenses.......................... 2.94% 3.49% 3.49%
Less Expense Reimbursements................................... (1.54)% (1.54)% (1.54)%
-----------------------------
Net Annual Fund Operating Expenses............................ 1.40% 1.95% 1.95%
=============================
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
(5) Based on estimated amounts for the current fiscal year.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- -------------------------------------------------------------------------------
<S> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $611 $1,203
Class B..................................................... $698 $1,328
Class C..................................................... $298 $ 928
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $611 $1,203
Class B..................................................... $198 $ 928
Class C..................................................... $198 $ 928
</TABLE>
33
<PAGE> 37
[Picture Description: Managed - Stones: "precious stones" lying in dishes of
varying sizes and shapes: located to the left of the section titled: "Enterprise
Managed Fund Portfolio Profile."]
ENTERPRISE MANAGED FUND
FUND PROFILE
Investment Objective Growth of capital over time
Principal Investments Common stocks, bonds and cash
equivalents, the percentages of which will vary based on
the Fund Manager's assessment of relative investment values
Fund Manager OpCap Advisors
Who May Want To Invest Investors who want the value of
their investment to grow but do not need to receive income
on their investment.
Investment Strategies The Managed Fund invests in a
diversified portfolio of common stocks, bonds and cash
equivalents. The allocation of the Fund's assets among the
different types of permitted investments will vary from
time to time based upon the Fund Manager's evaluation of
economic and market trends and its perception of the
relative values available from such types of securities at
any given time. There is neither a minimum nor a maximum
percentage of the Fund's assets that may, at any given
time, be invested in any specific types of investments.
However, the Fund invests primarily in equity securities at times when the Fund
Manager believes that the best investment values are available in the equity
markets. The Fund may invest almost all of its assets in high-quality short-term
money market and cash equivalent securities when the Fund Manager deems it
advisable to preserve capital. Consequently, while the Fund will earn income to
the extent it is invested in bonds or cash equivalents, the Fund does not have
any specific income objective. The bonds in which the Fund may invest will
normally be investment grade intermediate to long-term U.S. Government and
corporate debt.
Principal Risks The Fund invests in both common stocks and debt securities. As
a result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is a
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that the prices of debt securities will decline due to rising interest
rates. The risk is greater for long-term debt securities than for short-term
debt securities. Debt securities may decline in credit quality due to factors
affecting the issuer and economic or political events.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year. The bar chart does not reflect sales charges. If sales
charges had been reflected, returns would be less than those shown below.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1995-1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
13.46% -14.60%
(JUNE 30, 1997) (SEPTEMBER 30, 1998)
</TABLE>
34
<PAGE> 38
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS RETURN SINCE INCEPTION(1)
(AS OF THE CALENDAR YEAR ENDED PAST ONE -------------------------
DECEMBER 31, 1998) YEAR FUND S&P 500(2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Enterprise Managed Fund(3)................................ Class A 1.97% 18.28% 28.44%
Class B 2.31% 17.57% 29.22%
Class C 4.36% 13.20% 31.33%
S&P 500................................................... 28.57% 28.44%
</TABLE>
- ---------------
(1) Inception dates for Class A, Class B and Class C shares were October 3,
1994; May 1, 1995 and May 1, 1997, respectively.
(2) This unmanaged broad-based index includes 500 companies which tend to be
leaders in important industries within the U.S. economy. It includes
reinvested dividends. An index does not have an investment advisor and does
not pay commissions or expenses. If an index had expenses, its performance
would be lower. One cannot invest directly in an index.
(3) Includes sales charge.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price)(1)....................................... 4.75% None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(2) 1.00%(3)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees(4)...................... 0.45% 1.00% 1.00%
Other Expenses................................................ 0.30% 0.30% 0.30%
-----------------------------
Total Annual Fund Operating Expenses.......................... 1.50% 2.05% 2.05%
=============================
</TABLE>
- ---------------
(1) This sales charge varies depending upon how much you invest. See
"Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(3) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
(4) Class B or Class C shareholders who own their shares for an extended period
of time may pay more in Rule 12b-1 distribution fees than the economic
equivalent of the maximum front-end sales charge permitted under the Conduct
Rules of the National Association of Securities Dealers.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $620 $ 927 $1,255 $2,180
Class B..................................................... $708 $1,043 $1,303 $2,238
Class C..................................................... $308 $ 643 $1,103 $2,379
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $620 $ 927 $1,255 $2,180
Class B..................................................... $208 $ 643 $1,103 $2,238
Class C..................................................... $208 $ 643 $1,103 $2,379
</TABLE>
35
<PAGE> 39
[Picture Description: Tool with coins: located to the left of the section
titled: "Enterprise Money Market Fund Portfolio Profile."]
ENTERPRISE MONEY MARKET FUND
FUND PROFILE
Investment Objective The highest possible level of current
income consistent with preservation of capital and
liquidity
Principal Investments High quality, short-term debt
securities, commonly known as money market instruments
Fund Manager Enterprise Capital Management, Inc.
Who May Want To Invest Investors who seek an income
producing investment with emphasis on preservation of
capital.
Investment Strategies The Money Market Fund invests in a
diversified portfolio of high quality dollar-denominated
money market instruments which present minimal credit risks
in the judgment of the Fund Manager. The Fund Manager
actively manages the Fund's average maturity based on current interest rates and
its outlook of the market.
Principal Risks Although the Money Market Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
the Fund. The Fund may not be able to maintain a stable share price at $1.00.
Investments in the Fund are neither insured nor guaranteed by the U.S.
government.
PERFORMANCE INFORMATION
The bar chart below and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future. The performance of different classes of shares will
differ due to differences in expenses.
This bar chart shows changes in the performance of the Fund's Class A shares
from year to year.
[Chart Description: Illustrates volatility of an investment and shows changes in
Class A shares performance from 1991-1998]
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
1.79% 0.53%
(SEPTEMBER 30, 1990) (JUNE 30, 1993)
</TABLE>
36
<PAGE> 40
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
RETURN SINCE INCEPTION(1)
AVERAGE ANNUAL TOTAL RETURNS --------------------------------
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE IBC TAXABLE MONEY
DECEMBER 31, 1998) YEAR YEARS FUND MARKET INDEX(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Enterprise Money Market Fund............. Class A 5.04% 4.52% 4.36% 4.74%
Class B 5.04% N/A 3.64% 5.09%
Class C 5.04% N/A 7.75% 5.07%
IBC Taxable Money Market Index........... 5.04% 4.85%
</TABLE>
- ---------------
(1) Inception date for Class A shares is May 1, 1990; inception date for Class B
shares is May 1, 1995; inception date for Class C shares is May 1, 1997.
(2) This is a widely recognized composite of money market funds that invest in
taxable short-term money market instruments. An index does not have an
investment advisor and does not pay commissions or expenses. If an index had
expenses, its performance would be lower. One cannot invest directly in an
index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None None None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None 5.00%(1) 1.00%(2)
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND CLASS A CLASS B CLASS C
SHARES)
- ------------------------------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.35% 0.35% 0.35%
Distribution and Service (12b-1) Fees......................... None None None
Other Expenses................................................ 0.29% 0.29% 0.28%
-----------------------------
Total Annual Fund Operating Expenses.......................... 0.64% 0.64% 0.63%
=============================
</TABLE>
- ---------------
(1) This sales charge is imposed if you redeem Class B shares within one year of
your purchase. A graduated reduced sales charge is imposed if you redeem
your shares within six years of purchase. Class B shares automatically
convert to Class A shares about eight years after you purchase them and will
be subject to lower expenses. See "Shareholder Account Information."
(2) This sales charge is imposed if you redeem Class C shares within one year of
your purchase. See "Shareholder Account Information."
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class A..................................................... $ 65 $205 $357 $798
Class B..................................................... $565 $605 $557 $798
Class C..................................................... $164 $202 $351 $786
IF YOU DO NOT REDEEM YOUR SHARES:
Class A..................................................... $ 65 $205 $357 $798
Class B..................................................... $ 65 $205 $357 $798
Class C..................................................... $ 64 $202 $351 $786
</TABLE>
37
<PAGE> 41
ADDITIONAL INFORMATION ABOUT THE FUNDS'
INVESTMENTS AND RISKS
EQUITY, SECTOR AND DOMESTIC HYBRID FUNDS' INVESTMENTS
The table below shows the Equity, Sector and Domestic Hybrid Funds'
principal investments. In other words, the table describes the type or types of
investments that we believe will most likely help each Fund achieve its
investment goal.
y = Types of securities in which a Fund invests.
<TABLE>
<CAPTION>
EQUITY FUNDS
SMALL SMALL
GROWTH & EQUITY CAPITAL MULTI-CAP COMPANY COMPANY
GROWTH INCOME EQUITY INCOME APPRECIATION GROWTH GROWTH VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Stocks(1) y y y y y y y y
Foreign Stocks
Bonds
<CAPTION>
DOMESTIC HYBRID
EQUITY FUNDS SECTOR FUNDS FUNDS
GLOBAL
INTERNATIONAL FINANCIAL
GROWTH SERVICES INTERNET BALANCED MANAGED
<S> <C> <C> <C> <C> <C>
U.S. Stocks(1) y y y y
Foreign Stocks y y
Bonds y y
</TABLE>
- ---------------
(1) Each Fund that invests in U.S. stocks may invest in large capitalization
companies, medium capitalization companies and small capitalization
companies. Large capitalization companies generally have market
capitalizations of over $5 billion. Medium capitalization companies
generally have market capitalizations ranging from $1 billion to $5 billion.
Small capitalization companies generally have market capitalizations of $1
billion or less. However, there may be some overlap among capitalization
categories. The Growth, Growth & Income, Equity, Equity Income, Capital
Appreciation, Balanced and Managed Funds intend to invest primarily in
stocks of large capitalization companies. The Small Company Growth Fund and
the Small Company Value Fund intend to invest primarily in the stocks of
small capitalization issuers. The Multi-Cap Growth and Internet Funds intend
to invest in large, medium and small capitalization companies.
Each Fund also may invest in other securities, use other strategies and
engage in other investment practices, which are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that any
Fund will achieve its investment goal.
The investments listed above and the investments and strategies described
throughout this prospectus are those that a Fund may use under normal
conditions. During unusual economic or market conditions or for temporary
defensive or liquidity purposes, each Fund may invest up to 100% of its assets
in cash, money market instruments, repurchase agreements and short-term
obligations. When a Fund is investing for temporary defensive purposes, it is
not pursuing its investment goal.
INCOME FUNDS' INVESTMENTS
The table below shows the Income Funds' principal investments. In other
words, the table describes the type or types of investments that we believe will
most likely help each Fund achieve its investment goal.
<TABLE>
<CAPTION>
GOVERNMENT HIGH-YIELD TAX-EXEMPT
SECURITIES BOND INCOME
<S> <C> <C> <C>
U.S. Government Securities y
Corporate Debt Securities -- Junk Bonds(1) y
Mortgage-Backed Securities y
Municipal Securities y
</TABLE>
- ---------------
(1) "Junk Bond" refers to any security rated lower than "Baa" by Moody's
Investors Service. If a Moody's rating is not available, the bonds must be
rated lower than "BBB" by Standard & Poor's.
Each Fund also may invest in other securities, use other strategies and
engage in other investment practices, which are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that any
Fund will achieve its investment goal.
The investments listed above and the investments and strategies described
throughout this prospectus are those that a Fund may use under normal
conditions. During unusual economic or market conditions or for temporary
defensive or liquidity purposes, each Fund may invest up to 100% of its assets
in cash,
38
<PAGE> 42
money market instruments, repurchase agreements and short-term obligations. When
a Fund is investing for temporary defensive purposes, it is not pursuing its
investment goal.
MONEY MARKET FUND'S INVESTMENTS
The Money Market Fund's principal investments include: bank obligations,
commercial paper and corporate obligations. The Fund also may invest in other
securities, use other strategies and engage in other investment practices, which
are described in detail in our Statement of Additional Information. Of course,
we cannot guarantee that the Fund will achieve its investment goal or maintain a
stable share price of $1.00.
YEAR 2000
Many computer and computer-based systems cannot distinguish the year 2000
from the year 1900 because of the way they encode and calculate dates (commonly
known as the "Year 2000 Issue"). The Year 2000 Issue could potentially have an
adverse impact on the handling of security trades, the payment of interest and
dividends, pricing and account services. As part of its operational
responsibilities, the Advisor has reviewed each of its internal systems and has
obtained assessments from each service provider, including Fund Managers, of
Year 2000 issues which could potentially impact services to the Fund. The
Advisor is unaware of any Year 2000 issues which remain unresolved or have been
identified as unresolvable. In addition, the Advisor has established a timetable
to periodically re-evaluate systems to ensure new issues or those which may not
previously have been identified are addressed and resolved in an expeditious
manner. The Advisor does not anticipate any material expenditures for monitoring
Year 2000 issues. If the problem has not been fully addressed, however, the
Funds could be negatively affected. The Year 2000 Issue could also have a
negative impact on the companies in which the Funds invest, including foreign
issuers or associated foreign governments, which could hurt the Funds'
investment returns.
EURO CONVERSION
Effective January 1, 1999, several European countries irrevocably fixed
their existing national currencies to a new single European currency unit, the
"euro." Certain European investments may be subject to additional risks as a
result of this conversion. These risks include adverse tax and accounting
consequences, as well as difficulty in processing transactions. The Advisor is
aware of such potential problems and is coordinating efforts to prevent or
alleviate their adverse impact on the Funds. There can be no assurance that the
Funds will not suffer any adverse consequences as a result of the euro
conversion.
39
<PAGE> 43
HIGHER-RISK SECURITIES AND PRACTICES
<TABLE>
<CAPTION>
This table shows each Fund's investment limitations as a percentage of portfolio
assets. In each case the principal types of risk are listed in the Risk Terminology
section that follows.
5 Percent of total assets (italic type)
5 Percent of net assets (roman type)
Y* NO POLICY LIMITATION ON USAGE; FUND MAY BE USING CURRENTLY
Y PERMITTED, BUT NOT TYPICALLY USED. GROWTH & EQUITY
N NOT PERMITTED GROWTH INCOME EQUITY Income
<S> <C> <C> <C> <C>
CONVENTIONAL SECURITIES
NON-INVESTMENT-GRADE SECURITIES. Securities rated below Baa/BBB are considered
junk bonds. Credit, market, interest rate, liquidity, valuation, information risks. y y y y
FOREIGN EQUITIES.
- Stocks issued by foreign companies. Market, currency, information, natural
event, political risks. y y y y
- American or European depository receipts, which are dollar-denominated
securities typically issued by American or European banks and are based on
ownership of securities issued by foreign companies. Market, currency,
information, natural event, political risks. 20 20 20 20
RESTRICTED AND ILLIQUID SECURITIES. Securities not traded on the open market. May
include illiquid Rule 144A securities. Liquidity, valuation, information, market
risks. 10 10 10 10
INVESTMENT PRACTICES
REPURCHASE AGREEMENTS. The purchase of a security that must later be sold back to
the seller at the same price plus interest. Credit risk. 5 5 5 5
SECURITIES LENDING. The lending of securities to financial institutions, which
provide cash or government securities as collateral. Credit risk. n n n n
HEDGING. Means of offsetting or neutralizing the price movement of an investment
by making another investment, the price of which should tend to move in the
opposite direction from the original investment. y y y y
SHORT SALES/HEDGED OR SPECULATIVE. The selling of securities which have been
borrowed on the expectation that the market price will drop. Hedged leverage,
market, correlation, liquidity, opportunity risks. n n n n
SHORT-TERM TRADING. Selling a security soon after purchase. A Fund engaging in
short-term trading will have higher turnover, brokerage commissions and transaction
expenses. Short-term trading may also have tax consequences, involving a possible
increase in short-term capital gains or losses. Market risk. y y y y
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. The purchase or sale of securities
for delivery at a future date; market value may change before delivery. Market,
opportunity, leverage risks. 5 5 5 5
DERIVATIVE SECURITIES. The Funds will not invest in derivatives for speculative
purposes, but only as a hedge against changes in the values of the Funds'
securities resulting from market conditions. y y y y
FINANCIAL FUTURES AND OPTIONS; SECURITIES AND INDEX OPTIONS. Contracts involving
the right or obligation to deliver or receive assets or money depending on the
performance of one or more assets or an economic index.
- Futures and related options. Interest rate, currency, market, leverage,
correlation, liquidity, opportunity risks. y y y y
- Puts and calls on securities and indices. Interest rate, currency, market,
leverage, correlation, liquidity, credit, opportunity risks. 5 5 5 5
CURRENCY CONTRACTS. Contracts involving the right or obligation to buy or sell a
given amount of foreign currency at a specified price and future date.
- HEDGED. Currency, hedged leverage, correlation, liquidity, opportunity risks. y y y y
- SPECULATIVE. Currency, speculative leverage, liquidity risks. n n n n
OTHER DERIVATIVES, INCLUDING PUTS, CALLS AND INTEREST RATE SWAPS. Interest rate,
currency, market, hedged or speculative leverage, correlation, liquidity, credit,
opportunity risks. y y y y
</TABLE>
40
<PAGE> 44
<TABLE>
<CAPTION>
SMALL SMALL GLOBAL HIGH- TAX-
CAPITAL MULTI-CAP COMPANY COMPANY INTERNATIONAL FINANCIAL GOVERNMENT YIELD EXEMPT
APPRECIATION GROWTH GROWTH VALUE GROWTH SERVICES INTERNET BALANCED MANAGED SECURITIES BOND INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
y y y y y y y n y y y* y
y 20 y y y* y* y y y y y y
20 y 20 20 y* y* y y 20 n n n
10 10 10 10 10 10 10 10 10 10 10 10
5 15 5 5 5 5 y y 5 5 5 5
n 33 1/3 n n n n 25 25 n n n n
y y y y y y n n y y y y
n y n n n n n n n n n n
y y y y y y y y y y y y
5 5 5 5 20 5 y y 5 20 5 20
y y y y y y* y y y y* y y
y y y y y y y y y y y y
5 y 5 5 20 5 y y 5 20 20 5
y y y y y* y* y y y y y y
n y n n n n n n n n n n
y y y y y y y y y y y y
<CAPTION>
MONEY
Market
<S> <C>
y
n
n
n
5
n
y
n
y
5
n
y
5
n
n
n
</TABLE>
41
<PAGE> 45
RISK TERMINOLOGY
CORRELATION RISK: the risk that changes in the value of a hedging
instrument will not match that of the asset being hedged (hedging is the use of
one investment to offset the effects of another investment). Incomplete
correlation can result in unanticipated risks.
CREDIT RISK: the risk that the issuer of a security, or the counterparty
to a contract, will default or otherwise become unable to honor a financial
obligation.
CURRENCY RISK: the risk that fluctuations in the exchange rates between
the U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may increase any losses.
INFORMATION RISK: the risk that key information about a security or market
is inaccurate or unavailable.
INTEREST RATE RISK: the risk of market losses attributable to changes in
interest rates. With fixed-rate securities, a rise in interest rates typically
causes a fall in values, while a fall in rates typically causes a rise in
values.
LEVERAGE RISK: the risk associated with securities or practices (such as
borrowing) that multiply small index or market movements into large changes in
value.
Hedged. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
Fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains.
Speculative. To the extent that a derivative is not used as a hedge,
a Fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
LIQUIDITY RISK: the risk that certain securities may be difficult or
impossible to sell at the time and the price that the seller would like. The
seller may have to lower the price, sell other securities instead or forego an
investment opportunity, any of which could have a negative effect on Fund
management or performance.
MARKET RISK: the risk that the market value of a security may move up or
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than it
was worth at an earlier time. Market risk may affect a single issuer, industry,
sector of the economy or the market as a whole and is common to all stocks and
bonds and the mutual funds that invest in them.
NATURAL EVENT RISK: the risk of losses attributable to natural disasters,
crop failures and similar events.
OPPORTUNITY RISK: the risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in other less
advantageous investments.
POLITICAL RISK: the risk of losses attributable to government or political
actions. Political risks range from changes in tax or trade statutes to
governmental collapse and war.
VALUATION RISK: the risk that a Fund has valued certain of its securities
at a higher price than it can sell them for.
42
<PAGE> 46
SHAREHOLDER ACCOUNT INFORMATION
SELECTING A SHARE CLASS
Each Fund offers three Classes of shares through this Prospectus: Class A,
B and C shares. Each Class of shares has its own sales charge and expense
structure, which allows you to choose the Class of shares best suited to your
investment needs. When choosing your Class of shares, you should consider the
size of your investment and how long you plan to hold your shares. Your
financial advisor can help you determine which Class is right for you.
The table below summarizes the key features of Class A, B and C shares.
They are described in more detail below.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Availability? Generally available through Available only to investors Available only to investors
most investment dealers. purchasing less than purchasing less than
$250,000 in the aggregate. $1,000,000 in the
aggregate.
Initial Sales Charge? Yes (except for Money No. Entire purchase is No. Entire purchase is
Market Fund Class A shares, invested in shares of a invested in shares of a
which carry no sales Fund. Fund.
charge). Payable at time of
purchase. Lower sales
charges available for
larger investments.
Contingent Deferred Sales No. (However, we will Yes. Payable if you redeem Yes. Payable if you redeem
Charge ("CDSC")? charge a CDSC if you sell your shares within six your shares within one year
within two years of years of purchase. Amount of purchase.
purchase shares, on which of CDSC gradually decreases
no initial sales charge was over time.
imposed because the
original purchase price
exceeded $1 million.)
Distribution and Service 0.45% distribution and 0.75% distribution fee and 0.75% distribution fee and
Fees? service fee (except Money 0.25% service fee (except 0.25% service fee (except
Market Fund) Money Market Fund) Money Market Fund)
Conversion to Class A (Not applicable) Yes, automatically after No.
Shares? eight years.
</TABLE>
Enterprise Fund Distributors, Inc. (the "Distributor"), a subsidiary of
Enterprise Capital Management, Inc., the Advisor to the Funds, is the principal
underwriter for shares of the Funds. In addition to distribution and service
fees paid by the Funds under the Class A, Class B and Class C distribution
plans, the Distributor (or one of its affiliates) may make payments out of its
own resources to dealers (including MONY Securities Corp.) and other persons
that sell shares of the Funds. Such payments may be calculated by reference to
the net asset value of shares sold by such persons or otherwise.
43
<PAGE> 47
CLASS A SHARES -- INITIAL SALES CHARGE OPTION
If you select Class A shares of any Fund other than the Money Market Fund,
you will pay a sales charge at the time of purchase. No initial sales charge
applies to Class A shares that you receive through reinvestment of dividends or
distributions. However, if you have received shares of the Money Market Fund
through reinvestment of dividends, and you subsequently exchange those shares
for Class A shares of another Fund, an initial sales charge will apply to the
Class A purchase. The sales charges applicable to Class A shares are based on
the following schedule:
<TABLE>
<CAPTION>
DEALER DISCOUNT OR
SALES CHARGE AS A SALES CHARGE AS A AGENCY FEE AS A
PERCENTAGE OF OFFERING PERCENTAGE OF AMOUNT PERCENTAGE OF
YOUR INVESTMENT(1) PRICE INVESTED OFFERING PRICE(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Up to $99,999................ 4.75% 4.99% 4.00%
$100,000 up to $249,999...... 3.75% 3.90% 3.00%
$250,000 up to $499,999...... 2.50% 2.56% 2.00%
$500,000 up to $999,999...... 2.00% 2.04% 1.50%
$1,000,000 and up(3)......... None None 1% of the first $4.99
million, plus 0.75% of
amounts from $5-19.99
million, plus 0.50% of
amounts in excess of $20
million.
</TABLE>
- ---------------
(1) In determining the amount of your investment and the applicable sales
charge, we will include all shares you are currently purchasing in all of
the Funds, except for shares of the Money Market Fund.
(2) From time to time upon written notice to all of its dealers, the Distributor
may hold special promotions for specified periods during which the
Distributor may reallow dealers up to the full sales charges shown above.
During such periods, dealers may be deemed to have certain additional
responsibilities under the securities laws. In addition, the Distributor may
sponsor sales contests and provide to all qualifying dealers, from its own
profits and resources, additional compensation in the form of trips or
merchandise. The Distributor will provide additional compensation to dealers
in connection with sales of shares of the Funds and other mutual funds
distributed by the Distributor including promotional gifts (which may
include gift certificates, dinners and other items), financial assistance to
dealers in connection with conferences, sales or training programs for their
employees, seminars for the public and advertising campaigns. In some
instances, these incentives may be made available only to dealers whose
representatives have sold or are expected to sell significant amounts of
shares.
(3) If you invest $1,000,000 or more in Class A shares, you will not pay an
initial sales charge. However, if you redeem your shares within 24 months of
the end of the calendar month of their purchase, you will be charged a CDSC
of 1%. The Distributor will compensate dealers in connection with purchases
of Class A shares in excess of $1,000,000.
If you purchase Class A shares, you will also pay a distribution and
service fee at an annual rate of 0.45% of the average daily net assets
attributable to Class A shares of each Fund.
CLASS B AND C SHARES -- CDSC OPTIONS
If you select Class B or Class C shares, you will not pay an initial sales
charge at the time of purchase. However, if you redeem your Class B shares
within six years of purchase or Class C shares within one year, you will be
required to pay a CDSC, which will be deducted from your redemption proceeds. If
you own Class B or C shares of a Fund other than the Money Market Fund, you will
also pay distribution fees of 0.75% and service fees of 0.25% of the average
daily net assets each year pursuant to Rule 12b-1 under the Investment Company
Act of 1940. Because these fees are paid from the Funds' assets on an ongoing
basis, over time these fees increase the cost of your investment and may cost
you more than paying an initial sales charge. The Distributor uses the money
that it receives from the CDSC and the distribution fees to reimburse its
expenses of providing distribution related services to the Funds.
The Fund will not accept purchase orders for Class B shares in amounts of
$250,000 or more, and will not accept purchase orders for Class C shares in
amounts of $1,000,000 or more.
44
<PAGE> 48
The Class B CDSC gradually decreases as you hold your shares over time,
according to the following schedule:
<TABLE>
<CAPTION>
APPLICABLE CLASS B
YEARS SINCE PURCHASE CONTINGENT DEFERRED
ORDER WAS ACCEPTED SALES CHARGE
- ---------------------------------------------------------------------------------
<S> <C>
One year.................................................... 5.00%
Over one year up to two years............................... 4.00%
Over two years up to three years............................ 4.00%
Over three years up to four years........................... 3.00%
Over four years up to five years............................ 2.00%
Over five years up to six years............................. 1.00%
More than six years......................................... None
</TABLE>
If you redeem Class C shares within 12 months after purchase, you will be
charged a CDSC of 1.00%.
DETERMINATION OF THE CDSC
Each applicable CDSC will be determined using the original purchase cost or
current market value of the shares being redeemed, whichever is less. There is
no CDSC imposed upon the redemption of reinvested dividends or distributions.
Moreover, no CDSC will be charged upon the exchange of shares from one Fund into
another. In determining whether a CDSC is payable, we assume that shares that
are not subject to a CDSC are redeemed first and that other shares are then
redeemed in the order purchased. If shares of the Money Market Fund are acquired
upon an exchange from shares of another Fund, your Money Market Fund shares will
continue to be subject to any CDSC that is carried forward from the initial
purchase.
The following example illustrates the calculation of a CDSC. Assume that
you make a single purchase of $10,000 of the Fund's Class B shares at a price of
$10 per share. Sixteen months later the value of the shares has grown by $1,000
through reinvested dividends and by an additional $1,000 in appreciation to a
total of $12,000; the current price per share is $11. If you then redeem $5,500
in share values, (500 shares) the CDSC would apply only to $4,000. That figure
is arrived at by taking the entire redemption amount ($5,500) minus the
reinvested dividends ($1,000), minus the appreciation per share redeemed ($1 per
share X the number of shares redeemed--$500). The charge would be at a rate of
4% ($160) because it was in the second year after the purchase was made.
45
<PAGE> 49
CLASS A WAIVERS AND REDUCTIONS
The following individuals and institutions may purchase Class A shares
without an initial sales charge:
- Selling brokers, their employees and their registered representatives.
- Employees, clients or direct referrals of any Fund Manager or of
Evaluation Associates, Inc.
- Directors, former directors, employees or retirees of the Advisor or
of The MONY Group Inc. ("MONY") and its subsidiaries.
- Family including spouses, parents, siblings, children and
grandchildren and employee benefit plans of any of the first three
categories.
- Certain employee benefit plans qualified under Sections 401 and 403 of
the Internal Revenue Code ("IRC"), including salary reduction plans
qualified under Section 401(k) and certain payroll deduction plans,
subject to minimum requirements with respect to number of participants
or plan assets which may be established by the Distributor.
- MONY and its subsidiaries.
- Clients of fee-based financial planners.
- Financial institutions and financial institutions' trust departments
for funds over which they exercise exclusive discretionary investment
authority and which are held in fiduciary, agency, advisory, custodial
or similar capacity.
The Class A initial sales charge may be reduced in connection with
purchases by members of certain associations, fraternal groups, franchise
organizations and unions. There are also several special purchase plans that
allow you to combine multiple purchases of Class A shares to take advantage of
the breakpoints in the sales charge schedule. For information about initial
sales charge reductions, the "Right of Accumulation Discount" and "Letter of
Intent Investments," contact your financial advisor or broker, or consult the
Statement of Additional Information.
The CDSC will not apply to Class A shares for which the selling dealer is
not permitted to receive a sales load or redemption fee imposed on a shareholder
with whom such dealer has a fiduciary relationship in accordance with provisions
of the Employee Retirement Income Security Act and regulations thereunder,
provided that the dealer agrees to certain reimbursement arrangements with the
Distributor that are described in the Statement of Additional Information. If
the dealer agrees to these reimbursement arrangements, no CDSC will be imposed
with respect to shares purchased for $1,000,000 or more.
CDSC WAIVERS
Enterprise will waive your CDSC in connection with:
- Distributions to participants or beneficiaries of and redemptions
(other than redemption of the entire plan account) by plans qualified
under IRC Section 401(a) or from custodial accounts under IRC Section
403(b)(7), deferred compensation plans under the IRC Section 457 and
other employee benefit plans ("plans"), and returns of excess
contributions made to these plans.
- The liquidation of a shareholder's account if the aggregate net asset
value of shares held in the account is less than the required minimum.
46
<PAGE> 50
- Redemption of shares of a shareholder (including a registered joint
owner) who has died.
- Redemption of shares of a shareholder (including a registered joint
owner) who after purchase of the shares being sold becomes totally
disabled (as evidenced by a determination by the federal Social
Security Administration).
- Redemptions under a Fund's systematic withdrawal plan at a maximum of
10% per year of the net asset value of the account.
- Redemptions made pursuant to any Individual Retirement Account (IRA)
systematic withdrawal based on the shareholder's life expectancy in
accordance with the requirements of the IRC.
CONVERSION OF CLASS B SHARES
Your Class B shares will automatically convert to Class A shares of the
same Fund eight years after the end of the calendar month in which your purchase
order for Class B shares was accepted. A pro rata portion of any Class B shares
acquired through reinvestment of dividends or distributions will convert along
with Class B shares that were purchased. Class A shares are subject to lower
expenses than Class B shares. The conversion of Class B to Class A is not a
taxable event for federal income tax purposes.
REINSTATEMENT PRIVILEGE
If you redeem shares of a Fund on which you paid an initial sales charge or
are charged a CDSC upon redemption, you will be eligible for a reinstatement
privilege if you reinvest the proceeds in shares of the same Class of the same
within 180 days of redemption. Specifically, when you reinvest, the Fund will
waive any initial sales charge or credit your account with the amount of the
CDSC that you previously paid. The reinvested shares will keep their original
cost and purchase date for purposes of calculating any future CDSCs. The return
of a CDSC may affect determination of gain or loss relating to the original sale
transaction for federal income tax purposes. The Fund may modify or terminate
the reinstatement privilege at any time.
47
<PAGE> 51
PURCHASING, REDEEMING AND EXCHANGING SHARES
The charts below summarize how to purchase, redeem and exchange shares of
the Funds.
<TABLE>
<CAPTION>
HOW TO PURCHASE SHARES IMPORTANT INFORMATION ABOUT PURCHASING SHARES
<S> <C>
Select the Fund and the share Class Be sure to read this prospectus carefully.
appropriate for you
Determine how much you would like to invest The minimum initial investment for the Funds is $1,000 for
all accounts, except:
- $250 for retirement plans
- $100 for the Automatic Bank Draft Plan
The minimum investment for additional purchases is $50 for
all accounts except:
- $25 for retirement plans
- $25 for the Automatic Bank Draft Plan
Have your securities dealer submit your The price of your shares is based on the next calculation of
purchase order net asset value after your order is received by the
Enterprise Shareholder Services Division of the Transfer
Agent. All purchases made by check should be in U.S. dollars
and made payable to The Enterprise Group of Funds, Inc., or
your broker/dealer, or in the case of a retirement account,
the custodian or trustee. Third-party checks and money
orders will not be accepted.
Receive Letter of Intent Discount You are entitled to a reduced sales charge on $100,000 or
more of Class A shares purchased within 13 months. The
minimum investment is 5% of the amount indicated which will
be held in escrow in your name. This secures payment of the
higher sales charge of shares actually purchased if the full
amount indicated is not purchased within 13 months. Escrowed
shares will be redeemed to pay additional sales charges if
necessary. Escrowed shares will be released when you
purchase the full amount.
Receive Right of Accumulation Discount You are entitled to a reduced sales charge on additional
purchases of Class A shares if the value of their existing
aggregate holdings equals $100,000 or more. [See
"Shareholder Account Information -- Class A
Shares -- Initial Sales Charge Option" in the Prospectus for
more information.] To determine the discount, fund share
holdings of your immediate family, accounts you control as a
single investor, trustee of or participant in pooled and
similar accounts, will be totaled when you notify Enterprise
of the applicable accounts.
Acquire additional shares through the Dividends and capital gains distributions may be
Automatic Reinvestment Plan automatically reinvested in the same Class of shares without
a sales charge. This does not apply to Money Market Fund
dividends invested in another Fund.
Participate in the Automatic Bank Draft Plan Your bank account may be debited monthly for automatic
investment into one or more of the Funds for each Class.
Participate in the Automatic Dollar Cost You may have your shares automatically invested on a monthly
Averaging Plan basis into the same Class of one or more of the Funds. As
long as you maintain a balance of $1,000 in the account from
which you are transferring your shares, you may transfer $50
or more to an established account in another Enterprise Fund
or you may open a new account with $100 or more.
Participate in a Retirement Plan You may use shares of the Funds to establish a Profit
Sharing Plan, Money Purchase Plan, Conventional IRA, Roth
IRA, Educational IRA, other retirement plans funded by
shares of a Fund and other investment plans which have been
approved by the Internal Revenue Service.
The Distributor pays the cost of these plans, except for the
retirement plans, which charge an annual custodial fee of
$10. If you would like to find out more about these plans,
please contact the Retirement Plan Department.
</TABLE>
48
<PAGE> 52
<TABLE>
<CAPTION>
HOW TO REDEEM YOUR SHARES IMPORTANT INFORMATION ABOUT REDEEMING YOUR SHARES
<S> <C>
Have your investment dealer submit your The redemption price of your shares is based on the next
redemption order calculation of net asset value after your order is received.
Call the Transfer Agent at 1-800-368-3527 You may redeem your shares by telephone if you have
authorized this service. If you make a telephone redemption
request, you must furnish:
- the name and address of record of the registered owner,
- the account number and tax i.d. number,
- the amount to be redeemed, and
- the name of the person making the request.
Checks for telephone redemptions will be issued only to the
registered shareowner(s) and mailed to the last address of
record or exchanged into another Fund. All telephone
redemption instructions are recorded and are limited to
requests of $50,000 or less.
Write the Transfer Agent at: You may redeem your shares by sending in a written request.
Enterprise Shareholder Services If you own share certificates, they must accompany the
P.O. Box 219731 written request. You must obtain a signature guarantee if:
Kansas City, MO 64141-6731 - the redemption proceeds exceed $50,000,
- the proceeds are to be sent to an address other than the
address of record, or
- the proceeds are to be sent to a person other than the
registered holder.
You can generally obtain a signature guarantee from the
following sources:
- a member firm of a domestic securities exchange;
- a commercial bank;
- a savings and loan association;
- a credit union; or
- a trust company.
Corporations, executors, administrators, trustees or
guardians may need to include additional documentation with
a request to redeem shares and a signature guarantee.
Payment of Proceeds Generally The Funds normally will make payment of redemption proceeds
within seven days after your request has been properly made
and received. When purchases are made by check or periodic
account investment, redemption proceeds may not be available
until the investment being redeemed has been in the account
for seven calendar days. The Funds may suspend the
redemption privilege or delay sending redemption proceeds
for more than seven days during any period when the New York
Stock Exchange is closed or an emergency warranting such
action exists as determined by the Securities and Exchange
Commission.
Receipt of Proceeds By Wire For a separate $10 charge, you may request that your
redemption proceeds of $250,000 or less be wired. If you
submit a written request, your proceeds may be wired to the
bank currently on file. If written instructions are to send
wire to any other bank, a signature guarantee is required.
If you authorize the Transfer Agent to accept telephone wire
requests, any authorized person may make such requests at
1-800-368-3527. However, on a telephone request, your
proceeds may be wired only to a bank previously designated
by you in writing. If you have authorized expedited wire
redemption, shares can be sold and the proceeds sent by
federal wire transfer to previously designated bank
accounts. Otherwise, proceeds normally will be sent to the
designated bank account the following business day. To
change the name of the single designated bank account to
receive wire redemption proceeds, you must send a written
request with signature(s) guaranteed to the Transfer Agent.
</TABLE>
49
<PAGE> 53
<TABLE>
<CAPTION>
HOW TO REDEEM YOUR SHARES IMPORTANT INFORMATION ABOUT REDEEMING YOUR SHARES
<S> <C>
Use of Check Writing If you hold an account with a balance of more than $5,000 in
Class A shares of the Money Market Fund you may redeem your
shares of that Fund by redemption check. You may make
redemption checks payable in any amount from $500 to
$100,000. You may write up to five redemption checks per
month without charge. Each additional redemption check in
any given month will be subject to a $5 fee. You may obtain
redemption checks, without charge, by completing Optional
Features section of account application.
The Funds may charge a $25 fee for stopping payment of a
redemption check upon your request. It is not possible to
use a redemption check to close out an account since
additional shares accrue daily. Redemptions by check writing
may be subject to a CDSC if the Money Market Fund shares
being redeemed were purchased by exchanged shares of another
Fund on which a CDSC was applicable. The Funds will honor
the check only if there are sufficient funds available in
your Money Market Fund account to cover the fee amount of
the check plus applicable CDSC, if any.
Participate in the Bank Purchase and You may initiate an Automatic Clearing House (ACH) Purchase
Redemption Plan or Redemption directly to a bank account when you have
established proper instructions, including all applicable
bank information, on the account.
Participate in a Systematic Withdrawal Plan If you have at least $5,000 in your account you may
participate in a systematic withdrawal plan. Under a plan,
you may arrange monthly, quarterly, semi-annual or annual
automatic withdrawals of at least $100 from any Fund. The
proceeds of each withdrawal will be mailed to you or as you
otherwise direct in writing, including to a life insurance
company, such as an affiliate of MONY. The $5,000 minimum
account size is not applicable to Individual Retirement
Accounts. The maximum annual rate at which Class B shares
may be sold under a systematic withdrawal plan is 10% of the
net asset value of the account. The Funds process sales
through a systematic withdrawal plan on the 15th day of the
month or the following business day if the 15th is not a
business day. Any income or capital gain dividends will be
automatically reinvested at net asset value. A sufficient
number of full and fractional shares will be redeemed to
make the designated payment. Depending upon the size of the
payments requested and fluctuations in the net asset value
of the shares redeemed, sales for the purpose of making such
payments may reduce or even exhaust the account.
You should not purchase Class A shares while participating
in a systematic withdrawal plan because you may be redeeming
shares upon which a sales charge was already paid unless you
purchased shares at net asset value. The Funds will not
knowingly permit additional investments of less than $2,000
if you are making systematic withdrawals at the same time.
The Advisor will waive the CDSC on redemptions of shares
made pursuant to a systematic withdrawal plan.
The Funds may amend the terms of a systematic withdrawal
plan on 30 days' notice. You or the Funds may terminate the
plan at any time.
</TABLE>
50
<PAGE> 54
<TABLE>
<CAPTION>
HOW TO EXCHANGE YOUR SHARES IMPORTANT INFORMATION ABOUT EXCHANGING YOUR SHARES
<S> <C>
Select the Fund into which you want to You can exchange your shares of a Fund for the same Class of
exchange. Be sure to read the prospectus shares of any other Fund.
describing the Fund into which you want to
exchange.
No CDSC will be charged upon the exchange of shares.
However, if shares of the Money Market Fund are acquired
upon an exchange from shares of another Fund, your Money
Market Fund shares will continue to be subject to any CDSC
that is carried forward from the initial purchase. Shares of
a Fund subject to an exchange will be processed at net asset
value next determined after the Transfer Agent receives your
exchange request. In determining the CDSC applicable to
shares being redeemed subsequent to an exchange, we will
take into account the length of time you held shares prior
to the exchange.
If your exchange results in the opening of a new account in
a Fund, you are subject to the applicable minimum investment
requirements. Original investments in the Money Market Fund
which are transferred to other Funds are considered
purchases rather than exchanges.
Call the Transfer Agent at 1-800-368-3527 If you authorize the Transfer Agent to act upon telephone
exchange requests, you or anyone who can provide the
Transfer Agent with account registration information may
exchange by telephone.
If you exchange your shares by telephone, you must furnish:
- the name of the Fund you are exchanging from,
- the name and address of the registered owner,
- the account number and tax i.d. number,
- the dollar amount or number of shares to be exchanged,
- the Fund into which you are exchanging, and
- the name of the person making the request.
Write the Transfer Agent at: To exchange by letter, you must state:
Enterprise Shareholder Services - the name of the Fund you are exchanging from,
P.O. Box 219731 - the account name(s) and address,
Kansas City, MO 64141-6731 - the account number,
- the dollar amount or number of shares to be exchanged, and
- the Fund into which you are exchanging.
You must also sign your name(s) exactly as it appears on
your account statement.
</TABLE>
51
<PAGE> 55
TRANSACTION AND ACCOUNT POLICIES
VALUATION OF SHARES
When you purchase shares, you pay the offering price, which is net asset
value, plus any applicable sales charges. When you redeem your shares, you
receive the net asset value, minus any applicable CDSC. The Funds calculate a
share's net asset value by dividing net assets of each Class by the total number
of outstanding shares of such Class.
The Funds calculate net asset value at the close of regular trading on each
day the New York Stock Exchange is open.
Except with respect to the Money Market Fund, investment securities, other
than debt securities, listed on either a national or foreign securities exchange
or traded in the over-the-counter National Market System are valued each
business day at the last reported sale price on the exchange on which the
security is primarily traded. If there are no current day sales, the securities
are valued at their last quoted bid price. Other securities traded
over-the-counter and not part of the National Market System are valued at the
last quoted bid price. Debt securities (other than certain short-term
obligations) are valued each business day by an independent pricing service
approved by the Board of Directors. Short-term debt securities having a
remaining maturity of sixty days or less are valued at amortized cost, which
approximates market value. Any securities for which market quotations are not
readily available are valued at their fair value as determined in good faith by
the Board of Directors. Securities held by the Money Market Fund 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
percent.
The Money Market Fund seeks to maintain a constant net asset value per
share of $1.00, but there can be no assurance that the Money Market Fund will be
able to do so.
The different expenses borne by each Class of shares of a Fund will result
in different net asset values and dividends for each Class. The net asset values
of the three Classes of each Fund may, however, converge immediately after the
recording of dividends.
EXECUTION OF REQUESTS
The net asset value used in determining your purchase, redemption or
exchange price is the one next calculated after your order is received by the
Fund. Price calculations will be based on trades placed in good order by 4 PM
Eastern time. The Distributor or the Fund may reject any order. From time to
time, the Funds may suspend the sale of shares. In such event, existing
shareholders normally will be permitted to continue to purchase additional
shares of the same Class and to have dividends reinvested.
The Funds normally pay redemption proceeds in cash. However, if a Fund
determines that it would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment of redemption proceeds wholly or partly
in cash, the Fund may pay the redemption price in securities (redemption in
kind), in which case, you would probably have to pay brokerage costs to sell the
securities distributed to you, as well as taxes on any capital gains from the
sale as with any redemption. The Funds have made an election that requires them
to pay $250,000 of redemption proceeds in cash, subject to other restrictions as
described in the Statement of Additional Information.
TELEPHONE TRANSACTIONS
If you elect to exchange or redeem your shares by telephone, you are
subject to the risk that neither the Funds nor the Transfer Agent will be liable
for properly acting upon unauthorized telephone instructions believed to be
genuine. The Funds use reasonable procedures to confirm that telephone
instructions
52
<PAGE> 56
are genuine. However, if appropriate measures are not taken, the Funds may be
liable for any losses that may occur to an account due to an unauthorized
telephone call.
EXCHANGES AND REDEMPTIONS
The Funds may refuse to allow the exercise of the exchange privilege in
less than two-week intervals or may restrict an exchange from any Fund until
shares have been held in that Fund for at least seven days. The Funds may also
discontinue or modify the exchange privilege on a prospective basis at any time,
including a modification of the amount or terms of a service fee, upon notice to
shareholders in accordance with applicable rules adopted by the Securities and
Exchange Commission ("SEC"). Your exchange may be processed only if the shares
of the Fund to be acquired are eligible for sale in your state and if the
exchange privilege may be legally offered in your state.
In addition, if a Fund determines that an investor is using market timing
strategies or making excessive exchanges or redemptions and immediate loss of
redemption proceeds would harm the Fund, the Fund may delay investment of the
proceeds of such investor's exchange request for up to seven days. The Funds may
also may refuse any exchange order.
SHARE CERTIFICATES
The Funds do not ordinarily issue certificates representing shares of the
Funds. Instead, shares are held on deposit for shareholders by the Funds'
Transfer Agent, which will send you a statement of shares owned in each Fund
following each transaction in your account. If you wish to have certificates for
your shares, you may request them from the Transfer Agent by writing to
Enterprise Shareholder Services, P.O. Box 219731, Kansas City, MO 64141-6731.
The Funds do not issue certificates for fractional shares. You may redeem or
exchange certificated shares only by returning the certificates to the Fund,
along with a letter of instruction and a signature guarantee. Special
shareholder services such as telephone redemptions, exchanges, electronic funds
transfers and wire orders are not available if you hold certificates.
SMALL ACCOUNTS
For accounts with balances under $1,000, an annual service charge of $25
per account registration per Fund will apply, excluding Automatic Bank Draft
Plan Accounts, Automatic Investment Plan Accounts, Retirement Accounts and
Savings Plan Accounts.
If your account balance drops to $500 or less, a Fund may close out your
account and mail you the proceeds. You will always be given at least 45 days
written notice to give you time to add to your account and avoid redeeming your
shares.
53
<PAGE> 57
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund will distribute substantially all of its net investment income
and realized net capital gains, if any.
Each Fund makes distributions of capital gains, if any, at least annually.
Each Fund declares and pays dividends of investment income according to the
following schedule:
<TABLE>
<CAPTION>
DECLARED AND PAID AT LEAST ANNUALLY DECLARED AND PAID QUARTERLY DECLARED DAILY AND PAID MONTHLY
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth Fund Balanced Fund Government Securities Fund
Growth and Income Fund High-Yield Bond Fund
Equity Fund Tax-Exempt Income Fund
Equity Income Fund Money Market Fund
Capital Appreciation Fund
Multi-Cap Growth Fund
Small Company Growth Fund
Small Company Value Fund
International Growth Fund
Global Financial Services Fund
Internet Fund
Managed Fund
</TABLE>
Your dividends and capital gains distributions, if any, will be
automatically reinvested in shares of the same Fund and Class on which they were
paid at the net asset value. Such reinvestments automatically occur on the
payment date of such dividends and capital gains distributions. Alternatively,
if you contact the Transfer Agent, you may elect to receive dividends or capital
gains distributions, or both, in cash.
You will pay tax on dividends and distributions from the Funds whether you
receive them in cash or additional shares. The Funds intend to make
distributions that will either be taxed as ordinary income or capital gains. If,
for any taxable year, a Fund distributes income from dividends from domestic
corporations, and complies with certain requirements, corporate shareholders may
be entitled to take a dividends-received deduction for some or all of the
dividends they receive.
If you redeem shares of a Fund or exchange them for shares of another Fund,
unless you are a dealer, you generally will recognize capital gain or loss on
the transaction. Any such gain or loss will be a long-term capital gain or loss,
if you held such shares for more than 12 months. The maximum long-term capital
gain tax rate for individuals is 20%.
Income received by the Funds from investments in securities issued by
foreign issuers may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes.
If you are neither a lawful permanent resident nor a citizen of the U.S. or
if you are a foreign entity, the Funds' ordinary income dividends (which include
distributions of net short term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies.
The Funds are required to withhold 31% ("Back-Up Withholding") of the
distributions and the proceeds of redemptions payable to shareholders who fail
to provide a correct social security or taxpayer identification number or to
make required certifications, or who have been notified by the Internal Revenue
Service that they are subject to Back-Up Withholding. Corporate shareholders and
certain other shareholders specified in the IRC are exempt from Back-Up
Withholding.
Dividends derived from interest on municipal securities and designated by
the Tax-Exempt Income Fund as exempt interest dividends by written notice to the
shareholders, under existing law, are not subject to federal income tax.
Dividends derived from net capital gains realized by the Fund are taxable to
shareholders as a capital gain upon distribution. Any short-term capital gains
or any taxable interest income or accrued market discount realized by the Fund
will be distributed as a taxable ordinary income
54
<PAGE> 58
dividend distribution. These rules apply whether such distribution is made in
cash or in additional shares. Any capital loss realized from shares held for six
months or less is disallowed to the extent of tax-exempt dividend income
received.
Income from certain "private activity" bonds issued after August 7, 1986,
are items of tax preference for the corporate and individual alternative minimum
tax. If the Tax-Exempt Income Fund invests in private activity bonds, you may be
subject to the alternative minimum tax on that part of such Fund distributions
derived from interest income on those bonds. The receipt of exempt-interest
dividends also may have additional tax consequences. Certain of these are
described in the Statement of Additional Information.
The treatment for state and local tax purposes of distributions from the
Tax-Exempt Income Fund representing municipal securities interest will vary
according to the laws of state and local taxing authorities.
The foregoing summarizes some of the federal income tax considerations with
respect to the Funds and their shareholders. It is not a substitute for personal
tax advice. You should consult your tax advisor for more information regarding
the potential tax consequences of an investment in the Funds under all
applicable tax laws.
The Funds will mail statements indicating the tax status of your
distributions to you annually.
55
<PAGE> 59
FUND MANAGEMENT
THE INVESTMENT ADVISOR
Enterprise Capital Management, Inc. serves as the investment advisor to
each of the Funds. The Advisor selects Fund Managers for the Funds, subject to
the approval of the Board of Directors of the Funds, and reviews each Fund
Manager's continued performance. Evaluation Associates, Inc., which has had 26
years of experience in evaluating investment advisors for individuals and
institutional investors, assists the Advisor in selecting Fund Managers. The
Advisor also provides various administrative services and acts as Fund Manager
for the Money Market Fund.
The Securities and Exchange Commission has issued an exemptive order that
permits the Advisor to enter into or amend Agreements with Fund Managers without
obtaining shareholder approval each time. The exemptive order permits the
Advisor, with Board approval, to employ new Fund Managers for the Funds, change
the terms of the Agreements with Fund Managers or enter into a new Agreement
with a Fund Manager. Shareholders of a Fund have the right to terminate an
Agreement with a Fund Manager at any time by a vote of the majority of the
outstanding voting securities of such Fund. The Funds will notify shareholders
of any Fund Manager changes or other material amendments to the Agreements with
Fund Managers that occur under these arrangements.
The Advisor, which was incorporated in 1986, served as principal investment
advisor to Alpha Fund, Inc., the predecessor of the Enterprise Growth Fund. The
Advisor also serves as investment advisor to Enterprise Accumulation Trust which
had assets of $3.962 billion at March 31, 1999. The Advisor's address is Atlanta
Financial Center, 3343 Peachtree Road, N.E., Suite 450, Atlanta, GA 30326.
The following table sets forth the fee paid to the Advisor for the fiscal
year ended December 31, 1998 by each Fund. The Advisor in turn compensated each
Fund Manager at no additional cost to the Fund. However, because the Multi-Cap
Growth, Internet and Balanced Funds are new and were not in existence on
December 31, 1998, the fees in the table below reflect the fees that will be
paid to the Advisor for the fiscal year ending December 31, 1999.
<TABLE>
<CAPTION>
FEE (AS A PERCENTAGE OF
NAME OF FUND AVERAGE NET ASSETS)
- -------------------------------------------------------------------------------------
<S> <C>
Growth Fund................................................. 0.75%
Growth and Income Fund...................................... 0.75%
Equity Fund................................................. 0.75%
Equity Income Fund.......................................... 0.75%
Capital Appreciation Fund................................... 0.75%
Multi-Cap Growth Fund....................................... 1.00%
Small Company Growth Fund................................... 1.00%
Small Company Value Fund.................................... 0.75%
International Growth Fund................................... 0.85%
Global Financial Services Fund.............................. 0.85%
Internet Fund............................................... 1.00%
Government Securities Fund.................................. 0.60%
High-Yield Bond Fund........................................ 0.60%
Tax-Exempt Income Fund...................................... 0.50%
Balanced Fund............................................... 0.75%
Managed Fund................................................ 0.75%
Money Market Fund........................................... 0.35%
</TABLE>
THE FUND MANAGERS
The following chart sets forth certain information about each of the Fund
Managers other than the Advisor, which acts as the Fund Manager to the Money
Market Fund. The Fund Managers are responsible for the day-to-day management of
the Funds. The Fund Managers typically manage assets for institutional investors
and high net worth individuals. Collectively, the Fund Managers manage assets in
excess of $250 billion for all clients, including The Enterprise Group of Funds.
56
<PAGE> 60
<TABLE>
<CAPTION>
NAME OF FUND AND NAME AND THE FUND MANAGER'S
ADDRESS OF FUND MANAGER EXPERIENCE PORTFOLIO MANAGERS
<S> <C> <C>
Growth Fund Montag & Caldwell has served as Ronald E. Canakaris, President
the Fund Manager to Alpha Fund, and Chief Investment Officer of
Montag & Caldwell, Inc. Inc., the predecessor of the Montag & Caldwell, is
("Montag & Caldwell") Growth Fund, since the Fund was responsible for the day-to-day
1100 Atlanta Financial Center organized in 1968. Montag & investment management of the
3343 Peachtree Road, N.E. Caldwell and its predecessors Growth Fund and has more than
Atlanta, Georgia 30326 have been engaged in the 30 years' experience in the
business of providing investment industry. He has
investment counseling to been President of Montag &
individuals and institutions Caldwell for more than 15
since 1945. Total assets under years.
management for all clients
approximated $30.2 billion as
of March 31, 1999. Usual
investment minimum is $40
million.
Growth and Income Fund RSI has served as Fund Manager James P. Coughlin, President
for Retirement System Fund Inc. and Chief Investment Officer of
Retirement System Investors Core Equity Fund, the RSI, is responsible for the
Inc. predecessor of The Growth and day-to-day management of the
("RSI") Income Fund, since that Fund Fund and has more than 30
317 Madison Avenue was organized in 1991. RSI has years' experience in the
New York, New York 10017 been engaged in providing investment industry. He has
investment advisory services served as President and Chief
since 1989. Total assets under Investment Officer of RSI since
management for RSI were $648 1989.
million as of March 31, 1999.
Equity Fund OpCap has been providing Eileen Rominger, Managing
investment counseling since Director of Oppenheimer
OpCap Advisors ("OpCap") 1987. OpCap had approximately Capital, is responsible for the
One World Financial Center $60 billion under management as day-to-day management of the
New York, New York 10281 of March 31, 1999. Usual Fund. Ms. Rominger has more
investment minimum is $20 than 20 years' experience in
million. the investment industry and has
been Managing Director of
Oppenheimer Capital since 1994.
She previously served as Senior
Vice President from 1986 to
1994.
Equity Income Fund 1740 Advisers has been John V. Rock, President and
providing investment counseling Director of 1740 Advisers, is
1740 Advisers, Inc. since 1971. 1740 Advisers is an responsible for the day-to-day
("1740 Advisers") affiliate of the Advisor. Total investment management of the
1740 Broadway assets under management for Fund and has more than 35
New York, New York 10019 1740 Advisers as of March 31, years' experience in the
1999, were approximately $1.9 investment industry. He has
billion. Usual investment served as President of 1740
minimum is $20 million. Advisers since 1974.
Capital Appreciation Fund PIC has served as Fund Manager Jeffrey J. Miller is a Managing
since its inception in 1987. Director of PIC and is
Provident Investment Counsel, PIC traces its origins to an responsible for the day-to-day
Inc. investment partnership formed management of the Fund. He has
("PIC") in 1951. As of March 31, 1999, more than 26 years' experience
300 North Lake Avenue total assets under management in the investment industry. He
Pasadena, California 91101 for all clients were $17.6 has been Managing Director of
billion. Usual invest-ment PIC since 1972.
minimum is $5 million.
</TABLE>
57
<PAGE> 61
<TABLE>
<CAPTION>
NAME OF FUND AND NAME AND THE FUND MANAGER'S
ADDRESS OF FUND MANAGER EXPERIENCE PORTFOLIO MANAGERS
<S> <C> <C>
Multi-Cap Growth Fund Alger has been an investment David Alger is the individual
adviser since 1964. As of March responsible for the day-to-day
Fred Alger Management, Inc. 31, 1999, total assets under management of the Fund. Mr.
("Alger") management for all clients were Alger has been employed by
1 World Trade Center approximately $11 billion. Alger as Executive Vice
Suite 9333 Usual investment minimum is $2 President and Director of
New York, NY 10048 million. Research since 1971 and as
President since 1995. He has
more than 30 years experience
in the investment industry.
Small Company Growth Fund Witter has provided investment William D. Witter, President of
counseling since 1977. As of Witter, and Paul B. Phillips,
William D. Witter, Inc. March 31, 1999, total assets Managing Director of Witter,
("Witter") under management for all are responsible for the
One Citicorp Center clients were $975 million. day-to-day management of the
153 East 53rd Street Usual investment minimum is $1 Fund. They have more than 80
New York, New York 10022 million. years' combined experience in
the investment industry. Mr.
Witter and Mr. Phillips have
been employed in their present
positions by Witter since 1977
and 1996, respectively. Mr.
Phillips previously served as
Senior Portfolio Manager at
Bankers Trust Company from 1986
to 1995.
Small Company Value Fund GAMCO's predecessor, Gabelli & Mario J. Gabelli has served as
Company, Inc., was founded in Chief Investment Officer of
Gabelli Asset Management 1977. As of March 31, 1999, GAMCO since its inception in
Company total assets under management 1977 and is responsible for the
(GAMCO Investors, Inc.) for all clients were $7.57 day-to-day management of the
One Corporate Center billion. Usual investment Fund. He has more than 28
Rye, New York 10580 minimum is $500,000. years' experience in the
investment industry.
International Growth Fund Vontobel has provided Fabrizio Pierallini, Senior
investment counseling since Vice President and Managing
Vontobel USA Inc. 1984. Vontobel's assets under Director of International
("Vontobel") management for all clients were Investments is responsible for
450 Park Avenue $1.86 billion as of March 31, the day-to-day management of
New York, New York 10022 1999. Usual investment minimum the Fund. Mr. Pierallini has
is $10 million. been employed by Vontobel since
1994 as Senior Vice President
and Managing Director. He
previously served as associate
director/portfolio manager for
the Swiss Bank and has more
than 18 years experience in the
investment industry.
Global Financial Services Fund Sanford Bernstein was The day-to-day management of
established in 1967 and as of this Fund is performed by
Sanford C. Bernstein & Co., March 31, 1999, had $77.1 Sanford Bernstein's Policy
Inc. ("Sanford Bernstein") billion in assets under Group, chaired by Andrew S.
767 Fifth Avenue management. Usual investment Adelson, who has more than 20
New York, New York 10153-0185 minimum is $5 million. years' experience in the
investment industry. He joined
Sanford Bernstein in 1980 and
has served as Chief Investment
Officer of International
Investment Services since 1990.
</TABLE>
58
<PAGE> 62
<TABLE>
<CAPTION>
NAME OF FUND AND NAME AND THE FUND MANAGER'S
ADDRESS OF FUND MANAGER EXPERIENCE PORTFOLIO MANAGERS
<S> <C> <C>
Internet Fund Alger has been an investment David Alger is responsible for
adviser since 1964, and managed the day-to-day management of
Alger investments of approximately the Fund. Mr. Alger has been
1 World Trade Center $11 billion at March 31, 1999. employed as Executive Vice
Suite 9333 Usual investment minimum is $2 President and Director of
New York, NY 10048 million Research at Alger since 1971
and as President since 1995. He
has more than 30 years
experience in the investment
industry.
Government Securities Fund The firm was founded in 1971 Philip A. Barach, Managing
and as of December 31, 1998, Director of TCW, and Jeffrey E.
TCW Funds Management, Inc. TCW and its affiliated Gundlach, Managing Director are
("TCW") companies had approximately responsible for the day-to-day
865 South Figueroa Street $54.5 billion under management investment management of the
Suite 1800 or committed for management in Fund and have more than 37
Los Angeles, California 90017 various fiduciary advisory years' combined experience in
capacities. Usual investment the investment industry. They
minimum is $35 million. have served as Managing
Directors since they joined TCW
in 1987 and 1985, respectively.
High-Yield Bond Fund Caywood-Scholl has provided James Caywood, Managing
investment advice with respect Director and Chief Investment
Caywood-Scholl Capital to high-yield, low grade fixed Officer of Caywood-Scholl, is
Management income instruments since 1986. responsible for the day-to-day
("Caywood-Scholl") As of March 31, 1999, assets management of the Fund. He has
4350 Executive Drive, Suite 125 under management for all more than 30 years' investment
San Diego, California 92121 clients approximated $1.01 industry experience. He joined
billion. Usual investment Caywood-Scholl in 1986 as
minimum is $1 million. Managing Director and Chief
Investment Officer and has held
those positions since 1986.
Tax-Exempt Income Fund MBIA has provided investment Robert M. Ohanesian joined MBIA
counseling services since 1987. in 1994 as President and Chief
MBIA Capital Management Corp. As of March 31, 1999, assets Investment Officer. He has more
("MBIA") under management for all than 25 years' experience in
113 King Street clients approximated $16 the investment industry and
Armonk, New York 10504 billion. Usual investment serves as portfolio manager to
minimum is $10 million. the Fund. He previously served
as Director of Investments for
Shields Asset Management from
1988 through 1993.
Balanced Fund Montag & Caldwell has served as Ronald E. Canakaris, President
the Fund Manager to Alpha Fund, and Chief Investment Officer of
Montag & Caldwell Inc., the predecessor of the Montag & Caldwell and Helen M.
1100 Atlanta Financial Center Growth Fund, since the Fund was Donahue, Assistant Vice
3343 Peachtree Road, N.E. organized in 1968. Montag & President, are responsible for
Atlanta, Georgia 30326 Caldwell and its predecessors the day-to-day investment
have been engaged in the management of the Balanced
business of providing Fund. They have more than 36
investment counseling to years' combined experience in
individuals and institutions the investment industry. Mr.
since 1945. Total assets under Canakaris has been President of
management for all clients Montag & Caldwell for more than
approximated $30.2 billion as 15 years. Ms. Donahue has
of March 31, 1999. Usual served as Assistant Vice
investment minimum is $40 President since 1993.
million.
</TABLE>
59
<PAGE> 63
<TABLE>
<CAPTION>
NAME OF FUND AND NAME AND THE FUND MANAGER'S
ADDRESS OF FUND MANAGER EXPERIENCE PORTFOLIO MANAGERS
<S> <C> <C>
Managed Fund OpCap has provided investment Richard J. Glasebrook II,
counseling services since 1987. Managing Director of
OpCap Advisors As of March 31, 1999, Oppenheimer Capital is
One World Financial Center Oppenheimer Capital and its responsible for the day-to-day
New York, New York 10281 affiliates have over $60 management of the Fund. He has
billion under management. Its more than 25 years' investment
usual investment minimum is $20 industry experience. Mr.
million. Glasebrook has served as
Managing Director of
Oppenheimer Capital since 1994
and immediately prior to that
served as Senior Vice
President.
</TABLE>
60
<PAGE> 64
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS)
The following financial highlights have been audited by
PricewaterhouseCoopers LLP, independent auditors. The financial highlights are
derived from the Fund's financial statements. The Fund's financial statements
and the independent auditor's report thereon are incorporated by reference into
the Statement of Additional Information and may be obtained without charge by
calling the Fund at 800-368-3527.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
ENTERPRISE GROWTH FUND (CLASS A) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 16.91 $ 13.10 $ 10.44 $ 7.76 $ 8.26
Net Investment Income (Loss)................................ (0.11)(F) (0.07) (0.04) (0.03) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments...... 5.31 4.23 3.44 3.13 (0.06)
---------------------------------------------------------
Total from Investment Operations............................ 5.20 4.16 3.40 3.10 (0.08)
---------------------------------------------------------
Distributions from Capital Gains............................ (1.04) (0.35) (0.74) (0.42) (0.42)
---------------------------------------------------------
Total Distributions......................................... (1.04) (0.35) (0.74) (0.42) (0.42)
---------------------------------------------------------
Net Asset Value End of Period............................... $ 21.07 $ 16.91 $ 13.10 $ 10.44 $ 7.76
---------------------------------------------------------
Total Return(C)............................................. 30.94% 31.76% 32.60% 39.98% (0.99)%
Net Assets End of Period (In Thousands)..................... $827,567 $424,280 $196,752 $122,559 $88,375
Ratio of Expenses to Average Net Assets..................... 1.48% 1.43%(E) 1.53%(E) 1.60% 1.56%
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 1.48% 1.43%(E) 1.53%(E) 1.60% 1.56%
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (0.58)% (0.55)% (0.39)% (0.35)% (0.30)%
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (0.58)% (0.55)% (0.39)% (0.35)% (0.30)%
Portfolio Turnover Rate..................................... 28% 22% 30% 45% 65%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
--------------------------------- MAY 1 THROUGH
ENTERPRISE GROWTH FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period.......... $ 16.66 $ 12.97 $ 10.41 $ 8.69
Net Investment Income (Loss)................. (0.21)(F) (0.11) (0.06) (0.02)
Net Realized and Unrealized Gain (Loss) on
Investments................................. 5.21 4.15 3.36 2.16
-------------------------------------------------------
Total from Investment Operations............. 5.00 4.04 3.30 2.14
-------------------------------------------------------
Distributions from Capital Gains............. (1.04) (0.35) (0.74) (0.42)
-------------------------------------------------------
Total Distributions.......................... (1.04) (0.35) (0.74) (0.42)
-------------------------------------------------------
Net Asset Value End of Period................ $ 20.62 $ 16.66 $ 12.97 $10.41
-------------------------------------------------------
Total Return(D).............................. 30.20% 31.15% 31.73% 24.66%(B)
Net Assets End of Period (in thousands)...... $446,473 $166,932 $36,483 $4,572
Ratio of Expenses to Average Net Assets...... 2.03% 1.98%(E) 2.10%(E) 2.15%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers)......................... 2.03% 1.98%(E) 2.10%(E) 2.15%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets.......................... (1.13)% (1.10)% (0.96)% (0.82)%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers)...... (1.13)% (1.10)% (0.96)% (0.82)%(A)
Portfolio Turnover Rate...................... 28% 22% 30% 45%(A)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
DECEMBER 31, MAY 1 THROUGH
ENTERPRISE GROWTH FUND (CLASS C) 1998 DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 16.85 $ 14.11
Net Investment Income (Loss)................................ (0.21)(F) (0.06)
Net Realized and Unrealized Gain (Loss) on Investments...... 5.27 3.15
--------------------------------
Total from Investment Operations............................ 5.06 3.09
--------------------------------
Distributions from Capital Gains............................ (1.04) (0.35)
--------------------------------
Total Distributions......................................... (1.04) (0.35)
--------------------------------
Net Asset Value End of Period............................... $ 20.87 $ 16.85
--------------------------------
Total Return(D)............................................. 30.22% 21.91%(B)
Net Assets End of Period (In Thousands)..................... $133,194 $26,601
Ratio of Expenses to Average Net Assets..................... 2.04% 1.97%(AE)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.04% 1.97%(AE)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (1.13)% (1.10)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (1.13)% (1.10)%(A)
Portfolio Turnover Rate..................................... 28% 22%(A)
</TABLE>
A Annualized.
B Not Annualized.
C Total returns do not include one time sales charge.
D Total return does not include contingent deferred sales charge.
E Effective September 1, 1995, ratio includes expenses paid indirectly.
F Based on average monthly shares outstanding.
61
<PAGE> 65
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED OCTOBER 1 THROUGH JULY 17 THROUGH
ENTERPRISE GROWTH AND INCOME FUND (CLASS A) DECEMBER 31, 1998 DECEMBER 31, 1997 SEPTEMBER 30, 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period........... $ 25.19 $25.71 $25.05
Net Investment Income (Loss).................. 0.14 0.01 --
Net Realized and Unrealized Gain (Loss) on
Investments.................................. 4.00 0.04 0.66
----------------------------------------------------------
Total from Investment Operations.............. 4.14 0.05 0.66
----------------------------------------------------------
Dividends from Net Investment Income.......... (0.09) (0.11) --
Distributions from Capital Gains.............. (0.23) (0.46) --
----------------------------------------------------------
Total Distributions........................... (0.32) (0.57) --
----------------------------------------------------------
Net Asset Value End of Period................. $ 29.01 $25.19 $25.71
----------------------------------------------------------
Total Return(C)............................... 16.50% 0.20%(B) 2.63%(B)
Net Assets End of Period (In Thousands)....... $16,664 $4,032 $1,109
Ratio of Expenses to Average Net Assets....... 1.50% 1.50%(A) 1.50%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers).......................... 1.93% 2.11%(A) 4.47%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets........................... 0.41% 0.56%(A) 0.07%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers)....... (0.03)% (0.04)%(A) (2.90)%(A)
Portfolio Turnover Rate....................... 5% 1%(A) 16%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED OCTOBER 1 THROUGH JULY 17 THROUGH
ENTERPRISE GROWTH AND INCOME FUND (CLASS B) DECEMBER 31, 1998 DECEMBER 31, 1997 SEPTEMBER 30, 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period........... $ 25.15 $25.68 $25.05
Net Investment Income (Loss).................. 0.05 (0.01) (0.01)
Net Realized and Unrealized Gain (Loss) on
Investments.................................. 3.95 0.03 0.64
----------------------------------------------------------
Total from Investment Operations.............. 4.00 0.02 0.63
----------------------------------------------------------
Dividends from Net Investment Income.......... (0.02) (0.09) --
Distributions from Capital Gains.............. (0.23) (0.46) --
----------------------------------------------------------
Total Distributions........................... (0.25) (0.55) --
----------------------------------------------------------
Net Asset Value End of Period................. $ 28.90 $25.15 $25.68
----------------------------------------------------------
Total Return(D)............................... 15.95% 0.07%(B) 2.51%(B)
Net Assets End of Period (In Thousands)....... $21,891 $3,257 $ 992
Ratio of Expenses to Average Net Assets....... 2.05% 2.05%(A) 2.05%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers).......................... 2.48% 2.66%(A) 4.59%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets........................... (0.17)% (0.02)%(A) (0.34)%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers)....... (0.60)% (0.63)%(A) (2.87)%(A)
Portfolio Turnover Rate....................... 5% 2%(A) 16%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED OCTOBER 1 THROUGH JULY 17 THROUGH
ENTERPRISE GROWTH AND INCOME FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997 SEPTEMBER 30, 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period........... $ 25.15 $25.68 $25.05
Net Investment Income (Loss).................. 0.06 (0.02) (0.01)
Net Realized and Unrealized Gain (Loss) on
Investments.................................. 3.94 0.05 0.64
----------------------------------------------------------
Total from Investment Operations.............. 4.00 0.03 0.63
----------------------------------------------------------
Dividends from Net Investment Income.......... (0.01) (0.10) --
Distributions from Capital Gains.............. (0.23) (0.46) --
----------------------------------------------------------
Total Distributions........................... (0.24) (0.56) --
----------------------------------------------------------
Net Asset Value End of Period................. $ 28.91 $25.15 $25.68
----------------------------------------------------------
Total Return(D)............................... 15.95% 0.10%(B) 2.51%(B)
Net Assets End of Period (In Thousands)....... $ 4,654 $ 561 $ 99
Ratio of Expenses to Average Net Assets....... 2.05% 2.05%(A) 2.05%(A)
Ratio of Expenses to Average Net Assets
(Excluding Waivers).......................... 2.49% 2.64%(A) 4.60%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets........................... (0.16)% 0.03%(A) (0.39)%(A)
Ratio of Net Investment Income (Loss) to
Average Net Assets (Excluding Waivers)....... (0.60)% (0.56)%(A) (2.94)%(A)
Portfolio Turnover Rate....................... 5% 2%(A) 16%(A)
</TABLE>
62
<PAGE> 66
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
ENTERPRISE EQUITY FUND (CLASS A) DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 5.96 $ 5.00
Net Investment Income (Loss)................................ 0.03 0.01
Net Realized and Unrealized Gain (Loss) on Investments...... 0.53 1.05
-------------------------------------
Total from Investment Operations............................ 0.56 1.06
-------------------------------------
Dividends from Net Investment Income........................ (0.02) --
Distributions from Capital Gains............................ (0.03) (0.10)
-------------------------------------
Total Distributions......................................... (0.05) (0.10)
-------------------------------------
Net Asset Value End of Period............................... $ 6.47 $ 5.96
-------------------------------------
Total Return(C)............................................. 9.38% 21.30%(B)
Net Assets End of Period (In Thousands)..................... $6,741 $3,196
Ratio of Expenses to Average Net Assets..................... 1.60% 1.60%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.73% 6.52%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.59% 0.26%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (0.54)% (4.66)%(A)
Portfolio Turnover Rate..................................... 35% 69%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
ENTERPRISE EQUITY FUND (CLASS B) DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 5.94 $ 5.00
Net Investment Income (Loss)................................ -- --
Net Realized and Unrealized Gain (Loss) on Investments...... 0.53 1.04
-------------------------------------
Total from Investment Operations............................ 0.53 1.04
-------------------------------------
Dividends from Net Investment Income........................ (0.01) --
Distributions from Capital Gains............................ (0.03) (0.10)
-------------------------------------
Total Distributions......................................... (0.04) (0.10)
-------------------------------------
Net Asset Value End of Period............................... $ 6.43 $ 5.94
-------------------------------------
Total Return(D)............................................. 8.82% 20.80%(B)
Net Assets End of Period (In Thousands)..................... $8,731 $1,820
Ratio of Expenses to Average Net Assets..................... 2.15% 2.15%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 3.29% 6.21%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.07% (0.23)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (1.07)% (4.29)%(A)
Portfolio Turnover Rate..................................... 35% 69%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
EQUITY FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 5.94 $ 5.00
Net Investment Income (Loss)................................ 0.01 --
Net Realized and Unrealized Gain (Loss) on Investments...... 0.53 1.04
-------------------------------------
Total from Investment Operations............................ 0.54 1.04
-------------------------------------
Dividends from Net Investment Income........................ (0.01) --
Distributions from Capital Gains............................ (0.03) (0.10)
-------------------------------------
Total Distributions......................................... (0.04) (0.10)
-------------------------------------
Net Asset Value End of Period............................... $ 6.44 $ 5.94
-------------------------------------
Total Return(D)............................................. 8.98% 20.89%(B)
Net Assets End of Period (In Thousands)..................... $1,504 $ 283
Ratio of Expenses to Average Net Assets..................... 2.15% 2.15%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 3.28% 6.01%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.09% (0.21)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (1.03)% (4.07)%(A)
Portfolio Turnover Rate..................................... 35% 69%(A)
</TABLE>
63
<PAGE> 67
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
ENTERPRISE EQUITY INCOME FUND (CLASS A) 1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 26.42 $ 22.44 $ 20.73 $ 16.43 $ 17.75
Net Investment Income (Loss)................................ 0.36 0.17 0.41 0.45 0.44
Net Realized and Unrealized Gain (Loss) on Investments...... 2.52 5.95 3.27 5.00 (0.53)
----------------------------------------------------
Total from Investment Operations............................ 2.88 6.12 3.68 5.45 (0.09)
----------------------------------------------------
Dividends from Net Investment Income........................ (0.35) (0.15) (0.40) (0.45) (0.44)
Distributions from Capital Gains............................ (2.06) (1.99) (1.57) (0.70) (0.79)
----------------------------------------------------
Total Distributions......................................... (2.41) (2.14) (1.97) (1.15) (1.23)
----------------------------------------------------
Net Asset Value End of Period............................... $ 26.89 $ 26.42 $ 22.44 $ 20.73 $ 16.43
----------------------------------------------------
Total Return(C)............................................. 11.13% 28.08% 17.86% 33.40% (0.49)%
Net Assets End of Period (In Thousands)..................... $111,275 $97,932 $72,647 $61,906 $50,926
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)................................................... 1.58% 1.62% 1.68% 1.78% 1.73%
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 1.32% 1.35% 1.87% 2.33% 2.50%
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 1.25% 1.23% 1.69% 2.06% 2.30%
Portfolio Turnover Rate..................................... 31% 33% 33% 26% 41%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, FOR THE PERIOD
---------------------------- MAY 1 THROUGH
ENTERPRISE EQUITY INCOME FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 26.17 $ 22.30 $20.67 $18.12
Net Investment Income (Loss)................................ 0.20 0.12 0.24 0.29
Net Realized and Unrealized Gain (Loss) on Investments...... 2.49 5.83 3.30 3.40
------------------------------------------------
Total from Investment Operations............................ 2.69 5.95 3.54 3.69
------------------------------------------------
Dividends from Net Investment Income........................ (0.23) (0.09) (0.34) (0.44)
Distributions from Capital Gains............................ (2.06) (1.99) (1.57) (0.70)
------------------------------------------------
Total Distributions......................................... (2.29) (2.08) (1.91) (1.14)
------------------------------------------------
Net Asset Value End of Period............................... $ 26.57 $ 26.17 $22.30 $20.67
------------------------------------------------
Total Return(D)............................................. 10.49% 27.35% 17.22% 20.57%(B)
Net Assets End of Period (In Thousands)..................... $33,807 $19,055 $5,615 $1,086
Ratio of Expenses to Average Net Assets..................... 2.05% 2.05% 2.05% 2.05%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.13% 2.17% 2.23% 2.23%(A)
Ratio of Net Investment Income to Average Net Assets........ 0.78% 0.77% 1.32% 1.56%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 0.71% 0.65% 1.14% 1.33%(A)
Portfolio Turnover Rate..................................... 31% 33% 33% 26%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
ENTERPRISE EQUITY INCOME FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $26.31 $24.26
Net Investment Income (Loss)................................ 0.21 0.04
Net Realized and Unrealized Gains (Losses) on Investments... 2.49 4.14
--------------------------------------
Total from Investment Operations............................ 2.70 4.18
--------------------------------------
Dividends from Net Investment Income........................ (0.25) (0.14)
Distributions Capital Gains................................. (2.06) (1.99)
--------------------------------------
Total Distributions......................................... (2.31) (2.13)
--------------------------------------
Net Asset Value End of Period............................... $26.70 $26.31
--------------------------------------
Total Return(D)............................................. 10.47% 18.21%(B)
Net Assets End of Period (In Thousands)..................... $5,639 $1,857
Ratio of Expense in Average Net Assets...................... 2.05% 2.05%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.13% 2.20%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.81% 0.69%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 0.73% 0.54%(A)
Portfolio Turnover Rate..................................... 31% 33%(A)
</TABLE>
64
<PAGE> 68
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
ENTERPRISE CAPITAL APPRECIATION FUND (CLASS A) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 35.54 $ 34.21 $ 32.54 $ 28.54 $ 31.10
Net Investment Income (Loss)................................ (0.39)(F) (0.37) (0.31) (0.25) (0.13)
Net Realized and Unrealized Gain (Loss) on Investments...... 10.55 7.31 5.69 7.59 (0.95)
---------------------------------------------------------
Total from Investment Operations............................ 10.16 6.94 5.38 7.34 (1.08)
---------------------------------------------------------
Distributions from Capital Gains............................ (7.11) (5.61) (3.71) (3.34) (1.48)
---------------------------------------------------------
Total Distributions......................................... (7.11) (5.61) (3.71) (3.34) (1.48)
---------------------------------------------------------
Net Asset Value End of Period............................... $ 38.59 $ 35.54 $ 34.21 $ 32.54 $ 28.54
---------------------------------------------------------
Total Return(C)............................................. 30.15% 20.27% 16.52% 25.70% (3.46)%
Net Assets End of Period (In Thousands)..................... $131,605 $112,738 $115,253 $121,207 101,237
Ratio of Expenses to Average Net Assets..................... 1.52% 1.65% 1.60%(E) 1.65% 1.66%
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 1.52% 1.65% 1.60%(E) 1.65% 1.66%
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (1.01)% (1.06)% (0.87)% (0.82)% (0.50)%
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (1.01)% (1.06)% (0.87)% (0.82)% (0.50)%
Portfolio Turnover Rate..................................... 76% 61% 66% 65% 74%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
----------------------------- MAY 1 THROUGH
ENTERPRISE CAPITAL APPRECIATION FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 34.89 $33.86 $32.42 $30.04
Net Investment Income (Loss)................................ (0.58)(F) (0.45) (0.35) (0.12)
Net Realized and Unrealized Gain (Loss) on Investments...... 10.30 7.09 5.50 5.84
-------------------------------------------------
Total from Investment Operations............................ 9.72 6.64 5.15 5.72
-------------------------------------------------
Distributions from Capital Gains............................ (7.11) (5.61) (3.71) (3.34)
-------------------------------------------------
Total Distributions......................................... (7.11) (5.61) (3.71) (3.34)
-------------------------------------------------
Net Asset Value End of Period............................... $ 37.50 $34.89 $33.86 $32.42
-------------------------------------------------
Total Return(D)............................................. 29.44% 19.60% 15.87% 18.99%(B)
Net Assets End of Period (In Thousands)..................... $14,663 $7,862 $5,047 $1,953
Ratio of Expenses to Average Net Assets..................... 2.08% 2.21% 2.14%(E) 2.08%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.08% 2.21% 2.14%(E) 2.08%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (1.56)% (1.61)% (1.43)% (1.41)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (1.56)% (1.61)% (1.43)% (1.41)%(A)
Portfolio Turnover Rate..................................... 76% 61% 66% 65%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
ENTERPRISE CAPITAL APPRECIATION FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $35.43 $33.54
Net Investment Income (Loss) (0.57)(F) (0.19)
Net Realized and Unrealized Gain (Loss) on Investments...... 10.50 7.69
-------------------------------------
Total from Investment Operations............................ 9.93 7.50
-------------------------------------
Distributions from Capital Gains (7.11) (5.61)
-------------------------------------
Total Distributions......................................... (7.11) (5.61)
-------------------------------------
Net Asset Value End of Period............................... $38.25 $35.43
-------------------------------------
Total Return(D)............................................. 29.60% 22.35%(B)
Net Assets End of Period (In Thousands)..................... $1,040 $ 126
Ratio of Expenses to Average Net Assets..................... 2.11% 2.21%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.11% 2.21%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (1.53)% (1.88)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (1.53)% (1.88)%(A)
Portfolio Turnover Rate..................................... 76% 61%(A)
</TABLE>
65
<PAGE> 69
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED OCTOBER 1 THROUGH JULY 17 THROUGH
ENTERPRISE SMALL COMPANY GROWTH FUND (CLASS A) DECEMBER 31, 1998 DECEMBER 31, 1997 SEPTEMBER 30, 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period......................... $23.39 $26.61 $24.54
Net Investment Income (Loss)................................ (0.32)(F) (0.40) (0.05)
Net Realized and Unrealized Gain (Loss) on Investments...... (0.63) (2.27) 2.12
----------------------------------------------------------
Total from Investment Operations............................ (0.95) (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............................... $22.44 $23.39 $26.61
----------------------------------------------------------
Total Return(C)............................................. (4.06)% (10.04)%(B) 8.44%(B)
Net Assets End of Period (In Thousands)..................... $8,194 $4,861 $2,102
Ratio of Expenses to Average Net Assets..................... 1.85% 1.85%(A) 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.66% 2.38%(A) 4.48%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (1.43)% (1.56)%(A) (1.61)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (2.24)% (2.09)%(A) (4.25)%(A)
Portfolio Turnover Rate..................................... 151% 24%(A) 158%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED OCTOBER 1 THROUGH JULY 17 THROUGH
ENTERPRISE SMALL COMPANY GROWTH FUND (CLASS B) DECEMBER 31, 1998 DECEMBER 31, 1997 SEPTEMBER 30, 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period......................... $23.33 $ 26.58 $24.54
Net Investment Income (Loss)................................ (0.41)(F) (0.47) (0.05)
Net Realized and Unrealized Gain (Loss) on Investments...... (0.79) (2.23) 2.09
----------------------------------------------------------
Total from Investment Operations............................ (1.20) (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............................... $22.13 $ 23.33 $26.58
----------------------------------------------------------
Total Return(D)............................................. (5.14)% (10.16)%(B) 8.31%(B)
Net Assets End of Period (In Thousands)..................... $8,760 $ 2,842 $1,099
Ratio of Expenses to Average Net Assets..................... 2.40% 2.40%(A) 2.40%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 3.24% 2.93%(A) 5.52%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (1.94)% (2.11)%(A) (2.18)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (2.78)% (2.64)%(A) (5.29)%(A)
Portfolio Turnover Rate..................................... 151% 24%(A) 158%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD FOR THE PERIOD
YEAR ENDED OCTOBER 1 THROUGH JULY 17 THROUGH
ENTERPRISE SMALL COMPANY GROWTH FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997 SEPTEMBER 30, 1997
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net Asset Value Beginning of Period......................... $23.32 $ 26.57 $24.54
Net Investment Income (Loss)................................ (0.41)(F) (0.62) (0.07)
Net Realized and Unrealized Gain (Loss) on Investments...... (0.70) (2.08) 2.10
----------------------------------------------------------
Total from Investment Operations............................ (1.11) (2.70) 2.03
----------------------------------------------------------
Dividends from Net Investment Income........................ -- -- --
Distributions from Capital Gains............................ -- (0.55) --
----------------------------------------------------------
Total Distributions......................................... -- (0.55) --
----------------------------------------------------------
Net Asset Value End of Period............................... $22.21 $ 23.32 $26.57
----------------------------------------------------------
Total Return(D)............................................. (4.76)% (10.16)%(B) 8.27%(B)
Net Assets End of Period (In Thousands)..................... $2,481 $ 795 $ 201
Ratio of Expenses to Average Net Assets..................... 2.40% 2.40%(A) 2.40%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 3.24% 2.93%(A) 5.91%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (1.93)% (2.11)%(A) (2.15)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (2.77)% (2.64)%(A) (5.65)%(A)
Portfolio Turnover Rate..................................... 151% 24%(A) 158%(A)
</TABLE>
A Annualized.
B Not Annualized.
C Total returns do not include one time sales charge.
D Total return does not include contingent deferred sales charge.
E Effective September 1, 1995, ratio includes expenses paid indirectly.
F Based on average monthly shares outstanding.
66
<PAGE> 70
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
ENTERPRISE SMALL COMPANY VALUE FUND (CLASS A) 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period.................... $ 7.75 $ 5.74 $ 5.43 $ 5.17 $ 5.29
Net Investment Income (Loss)........................... (0.03)(F) 0.01 (0.01) 0.02 0.03
Net Realized and Unrealized Gain (Loss) on
Investments........................................... 0.42 2.53 0.62 0.46 (0.01)
---------------------------------------------------
Total from Investment Operations....................... 0.39 2.54 0.61 0.48 0.02
---------------------------------------------------
Dividends from Net Investment Income................... -- -- -- (0.02) (0.03)
Distributions from Capital Gains....................... (0.22) (0.53) (0.30) (0.20) (0.11)
---------------------------------------------------
Total Distributions.................................... (0.22) (0.53) (0.30) (0.22) (0.14)
---------------------------------------------------
Net Asset Value End of Period.......................... $ 7.92 $ 7.75 $ 5.74 $ 5.43 $ 5.17
---------------------------------------------------
Total Return(C)........................................ 5.15% 44.24% 11.28% 9.28% 0.34%
Net Assets End of Period (In Thousands)................ $79,867 $45,310 $17,308 $19,720 $22,120
Ratio of Expenses to Average Net Assets................ 1.75% 1.75% 1.75% 1.75% 1.75%
Ratio of Expenses to Average Net Assets (Excluding
Waivers).............................................. 1.85% 1.95% 2.38% 2.21% 2.15%
Ratio of Net Investment Income (Loss) to Average Net
Assets ............................................... (0.37)% 0.05% (0.13)% 0.32% 0.60%
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers)............................ (0.48)% (0.15)% (0.76)% (0.14)% 0.18%
Portfolio Turnover Rate................................ 33% 63% 144% 37% 17%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
-------------------------------- MAY 1 THROUGH
ENTERPRISE SMALL COMPANY VALUE FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period................. $ 7.63 $ 5.69 $ 5.41 $ 5.28
Net Investment Income (Loss)........................ (0.07)(F) -- (0.03) (0.01)
Net Realized and Unrealized Gain (Loss) on
Investments........................................ 0.40 2.47 0.61 0.36
-----------------------------------------------------
Total from Investment Operations.................... 0.33 2.47 0.58 0.35
-----------------------------------------------------
Dividends from Net Investment Income................ -- -- -- (0.02)
Distributions from Capital Gains.................... (0.22) (0.53) (0.30) (0.20)
-----------------------------------------------------
Total Distributions................................. (0.22) (0.53) (0.30) (0.22)
-----------------------------------------------------
Net Asset Value End of Period....................... $ 7.74 $ 7.63 $ 5.69 $ 5.41
-----------------------------------------------------
Total Return(D)..................................... 4.44% 43.40% 10.77% 6.87%(B)
Net Assets End of Period (In Thousands)............. $61,929 $22,013 $2,606 $ 862
Ratio of Expenses to Average Net Assets............. 2.30% 2.30% 2.30% 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)........................................... 2.41% 2.44% 2.92% 2.78%(A)
Ratio of Net Investment Income to Average Net
Assets............................................. (0.93)% (0.67)% (0.77)% (0.40)%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers)......................... (1.04)% (0.81)% (1.39)% (0.90)%(A)
Portfolio Turnover Rate............................. 33% 63% 144% 37%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
ENTERPRISE SMALL COMPANY VALUE FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 7.74 $ 6.14
Net Investment Income (Loss)................................ (0.07)(F) (0.02)
Net Realized and Unrealized Gain (Loss) on Investments...... 0.45 2.15
--------------------------------------
Total from Investment Operations............................ 0.38 2.13
--------------------------------------
Dividends from Net Investment Income........................ -- --
Distributions from Capital Gains............................ (0.22) (0.53)
--------------------------------------
Total Distributions......................................... (0.22) (0.53)
--------------------------------------
Net Asset Value End of Period............................... $ 7.90 $ 7.74
--------------------------------------
Total Return(D)............................................. 5.03% 34.68%(B)
Net Assets End of Period (In Thousands)..................... $14,239 $2,684
Ratio of Expenses to Average Net Assets..................... 2.30% 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.40% 2.38%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (0.94)% (0.88)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (1.04)% (0.95)%(A)
Portfolio Turnover Rate..................................... 33% 63%(A)
</TABLE>
67
<PAGE> 71
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
ENTERPRISE INTERNATIONAL GROWTH FUND ---------------------------------------------------
(CLASS A) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 16.71 $ 17.10 $ 16.08 $ 14.70 $ 17.44
Net Investment Income (Loss)................................ 0.06 0.08 0.10 0.11 (0.01)
Net Realized and Unrealized Gain (Loss) on Investments...... 2.32 0.73 1.88 2.12 (0.49)
---------------------------------------------------
Total from Investment Operations............................ 2.38 0.81 1.98 2.23 (0.50)
---------------------------------------------------
Dividends from Net Investment Income........................ (0.05) (0.07) (0.09) (0.09) --
Distributions from Capital Gains............................ (0.15) (1.13) (0.87) (0.76) (2.24)
---------------------------------------------------
Total Distributions......................................... (0.20) (1.20) (0.96) (0.85) (2.24)
---------------------------------------------------
Net Asset Value End of Period............................... $ 18.89 $ 16.71 $ 17.10 $ 16.08 $ 14.70
---------------------------------------------------
Total Return(C)............................................. 14.28% 4.75% 12.32% 15.17% (2.82)%
Net Assets End of Period (In Thousands)..................... $41,458 $38,020 $34,837 $28,628 $27,523
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% 2.11% 2.19% 2.40% 2.51%
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.30% 0.50% 0.61% 0.70% (0.20)%
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 0.19% 0.39% 0.42% 0.30% (0.70)%
Portfolio Turnover Rate..................................... 52% 27% 24% 31% 116%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
----------------------------- MAY 1 THROUGH
ENTERPRISE INTERNATIONAL GROWTH FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 16.53 $ 16.97 $ 16.02 $14.82
Net Investment Income (Loss)................................ (0.04) 0.01 0.01 (0.02)
Net Realized and Unrealized Gain (Loss) on Investments...... 2.28 0.69 1.87 2.08
--------------------------------------------------
Total from Investment Operations............................ 2.24 0.70 1.88 2.06
--------------------------------------------------
Dividends from Net Investment Income........................ -- (0.01) (0.06) (0.10)
Distributions from Capital Gains............................ (0.15) (1.13) (0.87) (0.76)
--------------------------------------------------
Total Distributions......................................... (0.15) (1.14) (0.93) (0.86)
--------------------------------------------------
Net Assets Value End of Period.............................. $ 18.62 $ 16.53 $ 16.97 $16.02
--------------------------------------------------
Total Return(D)............................................. 13.57% 4.17% 11.72% 13.88%(B)
Net Assets End of Period (In Thousands)..................... $16,008 $ 9,878 $ 4,276 $1,094
Ratio of Expenses to Average Net Assets..................... 2.55% 2.55% 2.55% 2.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.66% 2.67% 2.75% 2.75%(A)
Ratio of Net Investment Income to Average Net Assets........ (0.28)% (0.06)% 0.09% (0.65)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (0.39)% (0.18)% (0.11)% (0.85)%(A)
Portfolio Turnover Rate..................................... 52% 27% 24% 31%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
MAY 1
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
ENTERPRISE INTERNATIONAL GROWTH FUND (CLASS C) 1998 1997
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 16.66 $ 17.51
Net Investment Income (Loss)................................ 0.04 (0.03)
Net Realized and Unrealized Gain (Loss) on Investments...... 2.31 0.39
------------------------------
Total from Investment Operations............................ 2.27 0.36
------------------------------
Dividends from Net Investment Income........................ (0.01) (0.08)
Distributions from Capital Gains............................ (0.15) (1.13)
------------------------------
Total Distributions......................................... (0.16) (1.21)
------------------------------
Net Asset Value End of Period............................... $ 18.77 $ 16.66
------------------------------
Total Return(D)............................................. 13.64% 2.07%(B)
Net Assets End of Period (In Thousands)..................... $ 3,498 $ 1,113
Ratio of Expenses to Average Net Assets..................... 2.55% 2.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.67% 2.75%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (0.35)% (0.51)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (0.47)% (0.71)%(A)
Portfolio Turnover Rate..................................... 52% 27%(A)
</TABLE>
68
<PAGE> 72
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 1, 1998
THROUGH
ENTERPRISE GLOBAL FINANCIAL SERVICES FUND (CLASS A) DECEMBER 31, 1998
- ------------------------------------------------------------ -----------------------
<S> <C>
Net Asset Value Beginning of Period......................... $ 5.00
Net Investment Income (Loss)................................ 0.01
Net Realized and Unrealized Gain (Loss) on Investments...... 1.04
------
Total from Investment Operations............................ 1.05
------
Dividends from Net Investment Income........................ --
Distributions from Capital Gains............................ --
------
Total Distributions......................................... --
------
Net Asset Value End of Period............................... $ 6.05
------
Total Return(C)............................................. 21.00%(B)
Net Assets End of Period (In Thousands)..................... $1,426
Ratio of Expenses to Average Net Assets..................... 1.75%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 6.58%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.16%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (4.68)%(A)
Portfolio Turnover Rate..................................... 2%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 1, 1998
THROUGH
ENTERPRISE GLOBAL FINANCIAL SERVICES FUND (CLASS B) DECEMBER 31, 1998
- ------------------------------------------------------------ -----------------------
<S> <C>
Net Asset Value Beginning of Period......................... $ 5.00
Net Investment Income (Loss)................................ 0.01
Net Realized and Unrealized Gain (Loss) on Investments...... 1.02
------
Total from Investment Operations............................ 1.03
------
Dividends from Net Investment Income........................ --
Distributions from Capital Gains............................ --
------
Total Distributions......................................... --
------
Net Asset Value End of Period............................... $ 6.03
------
Total Return(D)............................................. 20.60%(B)
Net Assets End of Period (In Thousands)..................... $1,023
Ratio of Expenses to Average Net Assets..................... 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 7.50%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (0.49)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (5.69)%(A)
Portfolio Turnover Rate..................................... 2%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 1, 1998
THROUGH
ENTERPRISE GLOBAL FINANCIAL SERVICES FUND (CLASS C) DECEMBER 31, 1998
- ------------------------------------------------------------ -----------------------
<S> <C>
Net Asset Value Beginning of Period......................... $ 5.00
Net Investment Income (Loss)................................ 0.01
Net Realized and Unrealized Gain (Loss) on Investments...... 1.02
------
Total from Investment Operations............................ 1.03
------
Dividends from Net Investment Income........................ --
Distributions from Capital Gains............................ --
------
Total Distributions......................................... --
------
Net Asset Value End of Period............................... $ 6.03
------
Total Return(D)............................................. 20.60%(B)
Net Assets End of Period (In Thousands)..................... $ 218
Ratio of Expenses to Average Net Assets..................... 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 6.42%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... (0.33)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ (4.45)%(A)
Portfolio Turnover Rate..................................... 2%
</TABLE>
69
<PAGE> 73
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
ENTERPRISE GOVERNMENT SECURITIES FUND (CLASS A) 1998 1997 1996 1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period...................... $ 12.03 $ 11.80 $ 11.83 $ 10.62 $ 12.44
Net Investment Income (Loss)............................. 0.68 0.73 0.74 0.76 0.87
Net Realized and Unrealized Gain (Loss) on Investments... 0.12 0.23 (0.03) 1.21 (1.82)
--------------------------------------------------
Total from Investment Operations......................... 0.80 0.96 0.71 1.97 (0.95)
--------------------------------------------------
Dividends from Net Investment Income..................... (0.68) (0.73) (0.74) (0.76) (0.87)
--------------------------------------------------
Total Distributions...................................... (0.68) (0.73) (0.74) (0.76) (0.87)
--------------------------------------------------
Net Asset Value End of Period............................ $ 12.15 $ 12.03 $ 11.80 $ 11.83 $ 10.62
--------------------------------------------------
Total Return(C).......................................... 6.82% 8.39% 6.29% 19.00% 7.81%
Net Assets End of Period (In Thousands).................. $71,609 $68,639 $73,693 $86,224 $84,431
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)................................................ 1.38% 1.46% 1.42% 1.44% 1.35%
Ratio of Net Investment Income (Loss) to Average Net
Assets.................................................. 5.61% 6.16% 6.35% 6.66% 7.60%
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers).............................. 5.53% 6.00% 6.23% 6.52% 7.59%
Portfolio Turnover Rate.................................. 8% 10% 0% 0% 27%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
---------------------------- MAY 1 THROUGH
ENTERPRISE GOVERNMENT SECURITIES FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period....................... $ 12.02 $ 11.79 $11.83 $11.12
Net Investment Income (Loss).............................. 0.61 0.66 0.68 0.44
Net Realized and Unrealized Gain (Loss) on Investments.... 0.12 0.23 (0.04) 0.71
-------------------------------------------------
Total from Investment Operations.......................... 0.73 0.89 0.64 1.15
-------------------------------------------------
Dividends from Net Investment Income...................... (0.61) (0.66) (0.68) (0.44)
-------------------------------------------------
Total Distributions....................................... (0.61) (0.66) (0.68) (0.44)
-------------------------------------------------
Net Asset Value End of Period............................. $ 12.14 $ 12.02 $11.79 $11.83
-------------------------------------------------
Total Return(D)........................................... 6.24% 7.81% 5.61% 10.47%(B)
Net Assets End of Period (In Thousands)................... $27,134 $12,285 $5,683 $2,124
Ratio of Expenses to Average Net Assets................... 1.85% 1.85% 1.85% 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................. 1.93% 2.01% 1.96% 1.91%(A)
Ratio of Net Investment Income to Average Net Assets...... 5.00% 5.55% 5.79% 5.64%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers)............................... 4.91% 5.39% 5.68% 5.58%(A)
Portfolio Turnover Rate................................... 8% 10% 0% 0%(A)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
DECEMBER 31, MAY 1 THROUGH
ENTERPRISE GOVERNMENT SECURITIES FUND (CLASS C) 1998 DECEMBER 31, 1997
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $12.03 $11.63
Net Investment Income (Loss)................................ 0.62 0.46
Net Realized and Unrealized Gain (Loss) on Investments...... 0.11 0.40
---------------------------------
Total from Investment Operations............................ 0.73 0.86
---------------------------------
Dividends from Net Investment Income........................ (0.62) (0.46)
---------------------------------
Total Distributions......................................... (0.62) (0.46)
---------------------------------
Net Asset Value End of Period............................... $12.14 $12.03
---------------------------------
Total Return(D)............................................. 6.15% 7.49%(B)
Net Assets End of Period (In Thousands)..................... $3,089 $ 498
Ratio of Expenses to Average Net Assets..................... 1.85% 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 1.94% 2.03%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 4.97% 5.39%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 4.88% 5.21%(A)
Portfolio Turnover Rate..................................... 8% 10%(A)
</TABLE>
70
<PAGE> 74
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
ENTERPRISE HIGH-YIELD BOND FUND (CLASS A) 1998 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 12.35 $ 11.84 $ 11.39 $ 10.72 $ 11.70
Net Investment Income (Loss)................................ 0.94 0.99 0.94 0.99 0.97
Net Realized and Unrealized Gain (Loss) on Investments...... (0.66) 0.51 0.45 0.67 (0.97)
-------------------------------------------------
Total from Investment Operations............................ 0.28 1.50 1.39 1.66 --
-------------------------------------------------
Dividends from Net Investment Income........................ (0.94) (0.99) (0.94) (0.99) (0.98)
Distributions from Capital Gains............................ (0.16) -- -- -- --
-------------------------------------------------
Total Distributions......................................... (1.10) (0.99) (0.94) (0.99) (0.98)
-------------------------------------------------
Net Asset Value, End of Period.............................. $ 11.53 $ 12.35 $ 11.84 $ 11.39 $ 10.72
-------------------------------------------------
Total Return(C)............................................. 2.29% 13.18% 12.78% 16.00% 0.05%
Net Assets End of Period (In Thousands)..................... $72,637 $66,422 $54,129 $52,182 $44,822
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)................................................... 1.44% 1.47% 1.50% 1.52% 1.45%
Ratio of Net Investment Income to Average Net Assets........ 7.72% 8.20% 8.21% 8.80% 8.60%
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 7.58% 8.03% 8.01% 8.58% 8.52%
Portfolio Turnover Rate..................................... 114% 175% 180% 89% 113%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
-------------------------- MAY 1 THROUGH
ENTERPRISE HIGH-YIELD BOND FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 12.35 $ 11.84 $11.39 $11.11
Net Investment Income (Loss)................................ 0.87 0.77 0.88 0.61
Net Realized and Unrealized Gain (Loss) on Investments...... (0.67) 0.51 0.45 0.28
----------------------------------------------
Total from Investment Operations............................ 0.20 1.28 1.33 0.89
----------------------------------------------
Dividends from Net Investment Income........................ (0.87) (0.77) (0.88) (0.61)
Distributions from Capital Gains............................ (0.16) -- -- --
----------------------------------------------
Total Distributions......................................... (1.03) (0.77) (0.88) (0.61)
----------------------------------------------
Net Asset Value, End of Period.............................. $ 11.52 $ 12.35 $11.84 $11.39
----------------------------------------------
Total Return(D)............................................. 1.64% 12.59% 12.16% 8.12%(B)
Net Assets End of Period (In Thousands)..................... $35,495 $19,898 $7,892 $2,951
Ratio of Expenses to Average Net Assets..................... 1.85% 1.85% 1.85% 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 1.99% 2.02% 2.05% 2.09%(A)
Ratio of Net Investment Income to Average Net Assets........ 7.20% 7.51% 7.74% 7.84%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 7.06% 7.35% 7.55% 7.68%(A)
Portfolio Turnover Rate..................................... 114% 175% 180% 89%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
ENTERPRISE HIGH-YIELD BOND FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 12.35 $11.71
Net Investment Income (Loss)................................ 0.87 0.61
Net Realized and Unrealized Gains (Losses) on Investments... (0.66) 0.64
-------------------------------------
Total from Investment Operations............................ 0.21 1.25
-------------------------------------
Dividends from Net Investment Income........................ (0.87) (0.61)
Distributions from Capital Gains............................ (0.16) --
-------------------------------------
Total Distributions......................................... (1.03) (0.61)
-------------------------------------
Net Asset Value End of Period............................... $ 11.53 $12.35
-------------------------------------
Total Return(D)............................................. 1.72% 10.87%(B)
Net Assets End of Period (In Thousands)..................... $ 5,392 $1,463
Ratio of Expenses to Average Net Assets..................... 1.85% 1.85%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 1.99% 2.01%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 7.27% 6.84%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers) 7.13% 6.68%(A)
Portfolio Turnover Rate..................................... 114% 175%(A)
</TABLE>
71
<PAGE> 75
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
ENTERPRISE TAX-EXEMPT INCOME FUND (CLASS A) 1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period...................... $ 13.95 $ 13.83 $ 13.99 $ 12.80 $ 14.31
Net Investment Income (Loss)............................. 0.60 0.63 0.64 0.65 0.67
Net Realized and Unrealized Gain (Loss) on Investments... 0.20 0.31 (0.16) 1.21 (1.48)
--------------------------------------------------
Total from Investment Operations......................... 0.80 0.94 0.48 1.86 (0.81)
--------------------------------------------------
Dividends from Net Investment Income..................... (0.60) (0.63) (0.64) (0.65) (0.68)
Distributions from Capital Gains......................... (0.31) (0.19) -- (0.02) (0.02)
--------------------------------------------------
Total Distributions...................................... (0.91) (0.82) (0.64) (0.67) (0.70)
--------------------------------------------------
Net Asset Value End of Period............................ $ 13.84 $ 13.95 $ 13.83 $ 13.99 $ 12.80
--------------------------------------------------
Total Return(C).......................................... 5.92% 6.96% 3.53% 14.85% (5.69)%
Net Assets End of Period (In Thousands).................. $23,710 $23,695 $28,478 $33,626 $34,297
Ratio of Expenses to Average Net Assets.................. 1.10% 1.22% 1.25% 1.25% 1.25%
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................ 1.40% 1.60% 1.41% 1.42% 1.28%
Ratio of Net Investment Income (Loss) to Average Net
Assets.................................................. 4.30% 4.50% 4.64% 4.82% 5.00%
Ratio of Net Investment Income (Loss) to Average Net
Assets (Excluding Waivers).............................. 4.00% 4.12% 4.48% 4.65% 4.97%
Portfolio Turnover Rate.................................. 100% 1% 1% 1% 26%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
--------------------------- MAY 1 THROUGH
ENTERPRISE TAX-EXEMPT INCOME FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period........................ $ 13.95 $13.83 $13.99 $13.44
Net Investment Income (Loss)............................... 0.53 0.55 0.56 0.38
Net Realized and Unrealized Gain (Loss) on Investments..... 0.20 0.31 (0.16) 0.57
-----------------------------------------------
Total from Investment Operations........................... 0.73 0.86 0.40 0.95
-----------------------------------------------
Dividends from Net Investment Income....................... (0.53) (0.55) (0.56) (0.38)
Distributions from Capital Gains........................... (0.31) (0.19) -- (0.02)
-----------------------------------------------
Total Distributions........................................ (0.84) (0.74) (0.56) (0.40)
-----------------------------------------------
Net Asset Value End of Period.............................. $ 13.84 $13.95 $13.83 $13.99
-----------------------------------------------
Total Return(D)............................................ 5.33% 6.36% 2.96% 7.18%(B)
Net Assets End of Period (In Thousands).................... $ 4,451 $2,883 $2,037 $ 912
Ratio of Expenses to Average Net Assets.................... 1.65% 1.76% 1.80% 1.80%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers).................................................. 1.96% 2.16% 1.96% 1.98%(A)
Ratio of Net Investment Income to Average Net Assets....... 3.71% 3.94% 4.07% 4.08%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)....................................... 3.41% 3.54% 3.92% 3.94%(A)
Portfolio Turnover Rate.................................... 100% 1% 1% 1%(A)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
DECEMBER 31, MAY 1 THROUGH
ENTERPRISE TAX-EXEMPT INCOME FUND (CLASS C) 1998 DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 13.95 $13.68
Net Investment Income (Loss)................................ 0.53 0.36
Net Realized and Unrealized Gain (Loss) on Investments...... 0.20 0.46
--------------------------------
Total from Investment Operations............................ 0.73 0.82
--------------------------------
Dividends from Net Investment Income........................ (0.53) (0.36)
Distributions from Capital Gains............................ (0.31) (0.19)
--------------------------------
Total Distributions......................................... (0.84) (0.55)
--------------------------------
Net Asset Value End of Period............................... $ 13.84 $13.95
--------------------------------
Total Return(D)............................................. 5.34% 6.14%(B)
Net Assets End of Period (In Thousands)..................... $ 777 $ 184
Ratio of Expenses to Average Net Assets..................... 1.65% 1.67%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 1.93% 2.34%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 3.71% 3.99%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 3.43% 3.32%(A)
Portfolio Turnover Rate..................................... 100% 1%(A)
</TABLE>
72
<PAGE> 76
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
------------------------------------------ OCTOBER 1 THROUGH
ENTERPRISE MANAGED FUND (CLASS A) 1998 1997 1996 1995 DECEMBER 31, 1994
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 9.25 $ 7.97 $ 6.70 $ 4.91 $ 5.00
Net Investment Income (Loss)................................ 0.06 0.04 0.06 0.04 0.01
Net Realized and Unrealized Gain (Loss) on Investments...... 0.58 1.64 1.41 1.81 (0.09)
---------------------------------------------------------------
Total from Investment Operations............................ 0.64 1.68 1.47 1.85 (0.08)
---------------------------------------------------------------
Dividends from Net Investment Income........................ (0.05) (0.04) (0.06) (0.03) (0.01)
Distributions from Capital Gains............................ (0.58) (0.36) (0.14) (0.03) --
---------------------------------------------------------------
Total Distributions......................................... (0.63) (0.40) (0.20) (0.06) (0.01)
---------------------------------------------------------------
Net Asset Value End of Period............................... $ 9.26 $ 9.25 $ 7.97 $ 6.70 $ 4.91
---------------------------------------------------------------
Total Return(C)............................................. 7.05% 21.05% 22.08% 37.68% (1.58)%(B)
Net Assets End of Period (In Thousands)..................... $175,084 $156,608 $101,022 $47,839 $7,872
Ratio of Expenses to Average Net Assets..................... 1.50% 1.49% 1.57% 1.75% 1.75%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 1.50% 1.49% 1.57% 1.90% 3.71%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.57% 0.47% 1.12% 1.09% 1.30%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 0.57% 0.47% 1.12% 0.94% (0.32)%(A)
Portfolio Turnover Rate..................................... 43% 28% 33% 26% 27%(A)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
------------------------------- MAY 1 THROUGH
ENTERPRISE MANAGED FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 9.19 $ 7.93 $ 6.68 $ 5.68
Net Investment Income (Loss)................................ -- (0.01) 0.02 0.01
Net Realized and Unrealized Gain (Loss) on Investments...... 0.57 1.63 1.41 1.05
---------------------------------------------------
Total from Investment Operations............................ 0.57 1.62 1.43 1.06
---------------------------------------------------
Dividends from Net Investment Income........................ (0.01) -- (0.04) (0.03)
Distributions from Capital Gains............................ (0.58) (0.36) (0.14) (0.03)
---------------------------------------------------
Total Distributions......................................... (0.59) (0.36) (0.18) (0.06)
---------------------------------------------------
Net Asset Value End of Period............................... $ 9.17 $ 9.19 $ 7.93 $ 6.68
---------------------------------------------------
Total Return(D)............................................. 6.31% 20.45% 21.50% 18.38%(B)
Net Assets End of Period (In Thousands)..................... $161,552 $110,213 $57,037 $16,792
Ratio of Expenses to Average Net Assets..................... 2.05% 2.04% 2.13% 2.30%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.05% 2.04% 2.13% 2.45%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.02% (0.09)% 0.52% 0.31%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 0.02% (0.09)% 0.52% 0.14%(A)
Portfolio Turnover Rate..................................... 43% 28% 33% 26%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
ENTERPRISE MANAGED FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 9.21 $ 8.24
Net Investment Income (Loss)................................ (0.01) --
Net Realized and Unrealized Gain (Loss) on Investments...... 0.49 1.38
-------------------------------------
Total from Investment Operations............................ 0.48 1.38
-------------------------------------
Dividends from Net Investment Income........................ (0.02) (0.05)
Distributions from Capital Gains............................ (0.58) (0.36)
-------------------------------------
Total Distributions......................................... (0.60) (0.41)
-------------------------------------
Net Asset Value End of Period............................... $ 9.09 $ 9.21
-------------------------------------
Total Return(D)............................................. 5.36% 16.74%(B)
Net Assets End of Period (In Thousands)..................... $11,654 $ 3,614
Ratio of Expenses to Average Net Assets..................... 2.05% 2.06%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 2.05% 2.06%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 0.02% (0.18)%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 0.02% (0.18)%(A)
Portfolio Turnover Rate..................................... 43% 28%(A)
</TABLE>
73
<PAGE> 77
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
ENTERPRISE MONEY MARKET FUND (CLASS A) 1998 1997 1996 1995 1994
- -----------------------------------------------------------------------------------------------------------------
<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 0.05 0.04 0.05 0.03
----------------------------------------------------
Total from Investment Operations............................ 0.05 0.05 0.04 0.05 0.03
----------------------------------------------------
Dividends from Net Investment Income........................ (0.05) (0.05) (0.04) (0.05) (0.03)
----------------------------------------------------
Total Distributions......................................... (0.05) (0.05) (0.04) (0.05) (0.03)
----------------------------------------------------
Net Asset Value End of Period............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------------------------------------------------
Total Return................................................ 5.04% 4.69% 4.51% 5.05% 3.34%
Net Assets End of Period (In Thousands)..................... $140,490 $68,466 $59,074 $40,325 $32,334
Ratio of Expenses to Average Net Assets..................... 0.64% 1.00% 1.00% 1.00% 1.00%
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 0.64% 1.24% 1.18% 1.35% 1.33%
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 4.91% 4.59% 4.42% 4.92% 3.30%
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 4.91% 4.35% 4.24% 4.57% 3.08%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
----------------------------- MAY 1 THROUGH
ENTERPRISE MONEY MARKET FUND (CLASS B) 1998 1997 1996 DECEMBER 31, 1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value Beginning of Period......................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net Investment Income (Loss)................................ 0.05 0.04 0.04 0.03
---------------------------------------------------
Total from Investment Operations............................ 0.05 0.04 0.04 0.03
---------------------------------------------------
Dividends from Net Investment Income........................ (0.05) (0.04) (0.04) (0.03)
---------------------------------------------------
Total Distributions......................................... (0.05) (0.04) (0.04) (0.03)
---------------------------------------------------
Net Asset Value End of Period............................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------------------------------------------
Total Return(D)............................................. 5.04% 4.11% 3.94% 2.95%(B)
Net Assets End of Period (In Thousands)..................... $10,147 $5,980 $1,344 $ 394
Ratio of Expenses to Average Net Assets..................... 0.64% 1.55% 1.55% 1.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 0.64% 1.79% 1.73% 1.88%(A)
Ratio of Net Investment Income to Average (Loss) Net
Assets..................................................... 4.91% 4.09% 3.85% 4.23%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 4.91% 3.85% 3.68% 3.90%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
YEAR ENDED MAY 1 THROUGH
ENTERPRISE MONEY MARKET FUND (CLASS C) DECEMBER 31, 1998 DECEMBER 31, 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Asset Value Beginning of Period......................... $ 1.00 $ 1.00
Net Investment Income (Loss)................................ 0.05 0.02
-------------------------------------
Total from Investment Operations............................ 0.05 0.02
-------------------------------------
Dividends from Net Investment Income........................ (0.05) (0.02)
-------------------------------------
Total Distributions......................................... (0.05) (0.02)
-------------------------------------
Net Asset Value End of Period............................... $ 1.00 $ 1.00
-------------------------------------
Total Return(D)............................................. 5.04% 2.86%(B)
Net Assets End of Period (In Thousands)..................... $4,680 $1,021
Ratio of Expenses to Average Net Assets..................... 0.63% 1.55%(A)
Ratio of Expenses to Average Net Assets (Excluding
Waivers)................................................... 0.63% 1.85%(A)
Ratio of Net Investment Income (Loss) to Average Net
Assets..................................................... 4.90% 4.15%(A)
Ratio of Net Investment Income (Loss) to Average Net Assets
(Excluding Waivers)........................................ 4.90% 3.85%(A)
</TABLE>
74
<PAGE> 78
FOR MORE INFORMATION
The following documents contain more information about the Funds and are
available free of charge upon request:
Annual/Semi-annual Reports. Contain financial statements, performance
data and information on portfolio holdings. The annual report also contains
a written analysis of market conditions and investment strategies that
significantly affected a Fund's performance during the last fiscal year.
Statement of Additional Information (SAI). Contains additional
information about the Funds' policies, investment restrictions and business
structure. This prospectus incorporates the SAI by reference.
You may obtain copies of these documents or ask questions about the Funds
by contacting:
The Enterprise Group of Funds, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E., Suite 450
Atlanta, Georgia 30326
1-800-432-4320
or by calling your broker or financial advisor. A copy of the prospectus is also
available on the Funds' web site at www.enterprisefunds.com.
Information about the Funds (including the SAI) can be reviewed and copied
at the Public Reference Room of the Securities and Exchange Commission,
Washington, D.C. Call (800) SEC-0330 for information on the operation of the
Public Reference Room. Information about the Funds is also available on the
Securities and Exchange Commission's web-site at http://www.sec.gov and copies
may be obtained upon payment of a duplicating fee by writing the Public
Reference Section of the Securities and Exchange Commission, Washington, D.C.
20549-6009. You also may obtain additional information about the Funds by
visiting the Enterprise Group of Funds, Inc.'s website (www.enterprisefunds.com)
and 24-hour Shareholder information by calling 1-800-821-9540.
You should rely only on the information contained in this prospectus. No
one is authorized to provide you with any different information.
INVESTMENT COMPANY ACT
File No. 811-01582
<PAGE> 79
<TABLE>
<S> <C>
(ENTERPRISE LOGO)
Mail to: The Enterprise Group of Funds, Inc.
P.O. Box 219731
Kansas City, MO 64141-6731
Make check payable to: The Enterprise Group of Funds, Inc.
The Funds do not accept money orders.
For assistance call Enterprise Shareholder Services:
1-800-368-3527
</TABLE>
NEW ACCOUNT APPLICATION
<TABLE>
<S> <C> <C>
1 TYPE OF ACCOUNT (PLEASE PRINT OR TYPE)
[ ] JOINT
[ ] INDIVIDUAL
SSN# -----------------------------------------------------
Name ---------------------------------------------
Use only the social security number of the first listed
joint tenant.
Joint Registrant (if any)
Name ---------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
[ ] UNIFORM GIFT TO MINORS or [ ] UNIFORM TRANSFER TO MINORS
Name of Adult Custodian (only one permitted)
---------------------------------------------------------------------
Name of Minor (only one permitted)
------------------------------------------------------------------------------
Minor's Date of Birth Minor's Social Security Number
------------------ -----------------------------------------
under the ------------------------------ Uniform Gifts/Transfers to Minors Act
State of Residence of Minor
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
[ ] CORPORATION [ ] PARTNERSHIP Taxpayer ID#
-----------------------------------------------
or
[ ] TRUST [ ] OTHER Social Security #
---------------------------------------------
Name of Corporation, Partnership, Trust or Other -----------------------------------------------------------------
----------------------------------------------------------------
Name of Trustee(s) (if Trust)
---------------------------------------------------------------------------------------
Date of Trust Agreement (if Trust)
---------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
2 MAILING ADDRESS
Street or PO Box
--------------------------------------------------------------------------------------------------
State ------------------ Zip Code ----------------
City
------------------------------------------------------
E-mail Address --------------------------------------
Daytime Telephone
---------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C>
3 INVESTMENT INFORMATION (IF NO CLASS INDICATED, INVESTMENT WILL BE MADE IN CLASS A SHARES.)
TOTAL DOLLARS INVESTED $ __________ ($1000 MINIMUM PER CLASS PER FUND)
CLASS OF SHARES (CHECK ONE)
A B C
Growth [ ] [ ] [ ]
$ _____________________ or ____________ %
Growth and Income [ ] [ ] [ ]
$ _____________________ or ____________ %
Equity [ ] [ ] [ ]
$ _____________________ or ____________ %
Equity Income [ ] [ ] [ ]
$ _____________________ or ____________ %
Capital Appreciation [ ] [ ] [ ]
$ _____________________ or ____________ %
Multi-Cap Growth [ ] [ ] [ ]
$ _____________________ or ____________ %
Small Company Growth [ ] [ ] [ ]
$ _____________________ or ____________ %
Small Company Value [ ] [ ] [ ]
$ _____________________ or ____________ %
International Growth [ ] [ ] [ ]
$ _____________________ or ____________ %
Global Financial Services [ ] [ ] [ ]
$ _____________________ or ____________ %
Internet [ ] [ ] [ ]
$ _____________________ or ____________ %
Government Securities [ ] [ ] [ ]
$ _____________________ or ____________ %
High-Yield Bond [ ] [ ] [ ]
$ _____________________ or ____________ %
Tax-Exempt Income [ ] [ ] [ ]
$ _____________________ or ____________ %
Balanced [ ] [ ] [ ]
$ _____________________ or ____________ %
Managed [ ] [ ] [ ]
$ _____________________ or ____________ %
Money Market [ ] [ ] [ ]
$ _____________________ or ____________ %
<CAPTION>
<S> <C>
3
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 80
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
4 RIGHT OF ACCUMULATION DISCOUNT
The following previously established Class A Enterprise Fund
Accounts qualify for inclusion with the account established
hereby under the Cumulative Right of Accumulation Discount
provisions of the Prospectus for a reduced sales charge.
Account number(s) and registration:
1. -------------------------------------------------------
2. -------------------------------------------------------
3. -------------------------------------------------------
4. -------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
5 LETTER OF INTENT -- OPTIONAL (see terms and conditions in
prospectus) Class A Shares only
Although I am not obligated to do so, it is my intention to
invest over a 13 month period in shares of one or more of
the above Funds an aggregate amount of at least equal to
that which is checked below:
[ ] $100,000 [ ] $250,000 [ ] $500,000 [ ] $1,000,000
or more
Each purchase will be made at the then reduced offering
price applicable to the amount checked above, as described
in the Prospectus. By completing this Letter of Intent and
signing this application below, I agree to the terms and
conditions of the Letter of Intent and Escrow Account set
forth in the Prospectus.
In making purchases under this letter, the following are the
related accounts on which reduced offering prices are to
apply:
Account number(s) and registration:
1. -------------------------------------------------------
2. -------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
6 DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS
[ ] All distributions automatically reinvested
[ ] Income in cash, capital gains reinvested
[ ] Income reinvested, capital gains in cash
[ ] All distributions in cash by check
[ ] All distributions in cash, sent to bank account of record
(must complete Section 11)
Invest income/capital gains (circle one or both)
From the --------------------------- Fund(s) into the
--------------------------- Fund (account is subject to the $1,000 minimum)
<CAPTION>
<S> <C>
6
Income reinvested, capital gains in cash
All distributions in cash by check
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
7 TELEPHONE EXCHANGE PRIVILEGE AND/OR TELEPHONE REDEMPTION PRIVILEGE
Unless indicated below, I authorize the Transfer Agent to accept instructions from any person to exchange or
redeem shares in my account(s) by telephone, in accordance with the procedures and conditions set forth in
the Enterprise Funds current Prospectus. I understand that the exchange privilege is only available for
exchanges within the same class of shares.
[ ] I DO NOT WANT THE TELEPHONE EXCHANGE PRIVILEGE [ ] I DO NOT WANT THE TELEPHONE REDEMPTION PRIVILEGE
Redemptions by telephone must be for an amount less than $50,000 and will be sent by check via U.S. Mail to
the address of record, or sent to the bank of record, if Section 7 is completed with bank instructions.
Redemptions of Class B and C shares may be subject to a contingent deferred sales charge, as set forth in
the Enterprise Funds Prospectus.
Neither the Fund nor the Transfer Agent will be liable for properly acting upon telephone instructions
believed to be genuine. Should the Fund or its Transfer Agent fail to utilize reasonable procedures, it may
be liable for any losses due to unauthorized or fraudulent instructions.
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
8 SIGNATURES
The undersigned warrants that I (we) have full authority to
make this application, am (are) of legal age and have
received and read a current Prospectus and agree to its
terms. I (we) certify that the information provided on this
form is correct and complete.
Unless indicated by the box below, the account owner is not
subject to backup withholding.
[ ] The undersigned is subject to backup withholding.
NOTE: Do not check this box indicating that you are subject
to backup withholding unless you have received such notice
from the Internal Revenue Service.
------------------------------------------------------------
Signature of Individual, Custodian or Date
Trustee
------------------------------------------------------------
Signature of Joint Registrant, if any Date
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
9 TO BE COMPLETED BY BROKER OR DEALER
Registered Representative Name
--------------------------------
Broker/Dealer Name
------------------------------------------------------------
Branch Address
------------------------------------------------------------
---------------------------------------------------------
<CAPTION>
<S> <C>
9
Representative Number
----------------------------------------
Broker/Dealer Name
------------------------------------------------------------
Branch Address
------------------------------------------------------------
Branch Telephone Number ( )-----------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 81
- --------------------------------------------------------------------------------
OPTIONAL FEATURES
<TABLE>
<S> <C>
10 AUTOMATIC BANK DRAFT PLAN
With this plan, Enterprise will transfer money by ACH from
your bank account to your Enterprise Fund account(s) on a
monthly basis. The automatic bank draft plan is subject to a
$100 minimum initial investment and a $25 minimum subsequent
investment per Fund.
These investments should begin --------------- (month)
--------------- (day)
[ ] Invest $ ------------------ into the
------------------ Fund
[ ] Invest $ ------------------ into the
------------------ Fund
[ ] Invest $ ------------------ into the
------------------ Fund
[ ] Invest $ ------------------ into the
------------------ Fund
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
11 BANK ACCOUNT OF RECORD
[ ] I DO NOT want the bank of the purchase check established
as the bank of record. If bank of record is different,
Please attach VOIDED check.
Bank Name
------------------------------------------------------------
Bank Address
------------------------------------------------------------
City
--------------------------------------------- State
------------------ Zip Code ------------
Bank ABA # ------------------------------ Bank
Account # ---------------------------------------------
Account Name
------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
12 AUTOMATIC DOLLAR COST AVERAGING PLAN
With this plan, Enterprise will transfer money directly from
your Enterprise account into whichever Enterprise Funds you
choose. This plan is subject to a $1,000 balance in the Fund
that is to be debited. You may choose to have $50 or more
transferred within the same class of shares to either an
established Enterprise Fund, or you may open a new account
subject to an initial minimum of $100.
My --------------- Fund account should be debited beginning
------------ (month) --------------- (day)
[ ] Invest $ ------------------ into the
------------------ Fund
[ ] Invest $ ------------------ into the
------------------ Fund
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
CHECKWRITING (OPTIONAL -- ENTERPRISE CLASS A MONEY MARKET
13 FUND ONLY (Subject to a $5,000 minimum investment and $500
minimum per check.)
If you wish to have checkwriting privileges, complete and
sign below.
Account Name
------------------------------------------------------------
(must be the same as Shareholder Account
Registration)
Authorized Signature(s)
------------------------------------------------------------
------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
Check one:
--------------- All signatures required
--------------- One signature is required
--------------- Shareholder is a Trust, Corporation or other
organization
--------------- Total number of signatures required
In signing this signature card, the signator(s) signifies his/her
agreement to be subject to the rules and regulations of State Street
Bank and Trust Company pertaining thereto and as amended from time to
time and subject to the conditions printed in the prospectus.
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 82
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
14 SYSTEMATIC WITHDRAWAL PLAN
This plan makes it easy for you to receive regular income
from your investment, have checks deposited into your bank
account, or have this income sent to a third party. Minimum
account balance of $5,000 is required. For additional
information, please see the Prospectus.
I wish to open a systematic withdrawal account:
[ ] In a new account established with this application
[ ] In an existing account
-----------------------------------------------------------
Fund, account number and registration
Please redeem sufficient shares on the 15(th) day of the
month or the preceding business day ($100 minimum).
Quarterly and annual withdrawals will be processed on the
15th day or the preceding business day of the month
following the quarter or year end.
[ ] Monthly amount of $ ------------------
[ ] Quarterly amount of $ ------------------
[ ] Annual amount of $ --------------------
</TABLE>
<TABLE>
<S> <C> <C>
Check one:
[ ] Send checks to the address of registration.
[ ] Deposit checks into my bank account. (Section 11 of this
application must be completed.)
[ ] Send checks to the following third party:
------------------------------------------------------------
First Name Middle Initial Last Name
------------------------------------------------------------
Street Address
------------------------------------------------------------
City State Zip Code
------------------------------------------------------------
Your Signature (as on account)
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
15 SIGNATURES
The undersigned warrants that I (we) have full authority to
elect the above options for my Enterprise Account. If this
is a new account, this page must accompany a new account
application. If this is an existing account, please list the
account number below:
------------------------------------------------------------
Enterprise Account number and registration
------------------------------------------------------------
Signature of Individual, Custodian or
Trustee Date
------------------------------------------------------------
Signature of Joint Registrant, if
any Date
</TABLE>
<TABLE>
<S> <C>
NOTE:
IF THIS CHECKWRITING CARD (SEE REVERSE) IS SIGNED BY MORE DEPOSITOR(S) HEREBY AUTHORIZE THE ACCOUNT OR ITS REDEMPTION
THAN ONE PERSON, ALL CHECKS WILL REQUIRE ONLY ONE OF THE AGENT TO HONOR REDEMPTION REQUESTS PRESENTED IN THE ABOVE
SIGNATURES APPEARING EXACTLY AS ABOVE UNLESS OTHERWISE MANNER BY THE AGENT. THE ACCOUNT AND ITS REDEMPTION AGENT
INDICATED. EACH PERSON GUARANTEES THE GENUINENESS OF THE WILL NOT BE LIABLE FOR ANY LOSS, EXPENSE, COST OR DAMAGE
OTHER'S SIGNATURE. CHECKS MAY NOT BE FOR LESS THAN $500. ARISING OUT OF CHECK REDEMPTION. SHARES OF THE ACCOUNT WHICH
CANCELLED CHECKS WILL BE RETURNED ONCE MONTHLY FOLLOWING THE WERE PURCHASED BY CHECK WITHIN FIFTEEN (15) CALENDAR DAYS
MONTH IN WHICH THEY ARE CLEARED BY THE AGENT. WILL NOT BE REDEEMED UNTIL THE END OF SUCH TIME PERIOD. THE
AGENT HAS THE RIGHT NOT TO HONOR CHECKS IN AMOUNTS EXCEEDING
STATE STREET BANK AND TRUST COMPANY IS HEREBY APPOINTED THE VALUE OF THE DEPOSITOR(S) SHAREHOLDER ACCOUNT AT THE
AGENT (AGENT) BY THE PERSON(S) SIGNING THIS CARD (THE TIME THE CHECK IS PRESENTED FOR PAYMENT. IF YOUR ACCOUNT IS
"DEPOSITOR(S)") AND, AS AGENT, IS AUTHORIZED AND DIRECTED TO SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE, PLEASE SEE
PRESENT CHECKS DRAWN ON THIS CHECKING ACCOUNT TO THE THE PROSPECTUS FOR ADDITIONAL TERMS AND CONDITIONS.
DESIGNATED FUND ("ACCOUNT") OR ITS REDEMPTION AGENT AND AS THE AGENT RESERVES THE RIGHT TO CHANGE, MODIFY OR TERMINATE
REQUESTS TO REDEEM SHARES OF THE ACCOUNT REGISTERED IN THE THIS CHECKING ACCOUNT AT ANY TIME UPON NOTIFICATION MAILED
NAME OF THE DEPOSITOR(S) IN THE AMOUNTS OF SUCH CHECKS AND TO THE ADDRESS OF RECORD OF THE DEPOSITOR(S).
TO DEPOSIT THE PROCEEDS OF SUCH REDEMPTIONS. THE AGENT SHALL
BE LIABLE ONLY FOR ITS OWN NEGLIGENCE.
</TABLE>
<PAGE> 83
The Enterprise Group of Funds
Investment Advisor
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: 800-432-4320
Custodian
State Street Bank and Trust Company
Boston, MA
Transfer Agent
National Financial Data Services, Inc.
330 W. 9th Street
Kansas City, MO 64105
Telephone: 800-368-3527
Independent Accountants
PricewaterhouseCoopers LLP
Atlanta, GA
Member - Investment Company Institute
<PAGE> 84
(OUTSIDE BACK COVER)
FOR MORE INFORMATION
The following documents contain more information about the Funds and
are available free of charge upon request:
ANNUAL/SEMI-ANNUAL REPORTS. Contain financial
statements, performance data and information on
portfolio holdings. The annual report also contains
a written analysis of market conditions and
investment strategies that significantly affected a
Fund's performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI). Contains
additional information about the Funds' policies,
investment restrictions and business structure. This
prospectus incorporates the SAI by reference.
You may obtain copies of these documents or ask questions about the
Funds by contacting:
Enterprise Group of Funds, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E., Suite 450
Atlanta, Georgia 30326
1-800-368-3527
or by calling your broker or financial advisor.
Information about the Funds (including the SAI) can be reviewed and
copied at the Public Reference Room of the Securities and Exchange Commission,
Washington, D.C. Call (800) SEC-0330 for information on the operation of the
Public Reference Room. Information about the Funds is also available on the
Securities and Exchange Commission's web-site at http://www.sec.gov and copies
may be obtained upon payment of a duplicating fee by writing the Public
Reference Section of the Securities and Exchange Commission, Washington, D.C.
20549-6009. You also may obtain additional information about the Funds by
visiting the Enterprise Group of Funds, Inc.'s website
(www.enterprisefunds.com) and 24-hour Shareholder Information by calling
1-800-821-9540.
You should rely only on the information contained in this prospectus.
No one is authorized to provide you with any different information.
<PAGE> 85
THE ENTERPRISE GROUP OF FUNDS, INC.
PROSPECTUS
CLASS Y SHARES
JULY 1, 1999
EQUITY FUNDS
Growth Fund
Growth and Income Fund
Equity Fund
Equity Income Fund
Capital Appreciation Fund
Multi-Cap Growth Fund
Small Company Growth Fund
Small Company Value Fund
International Growth Fund
SECTOR FUNDS
Global Financial Services Fund
Internet Fund
INCOME FUNDS
Government Securities Fund
High-Yield Bond Fund
Tax-Exempt Income Fund
DOMESTIC HYBRID FUNDS
Balanced Fund
Managed Fund
MONEY MARKET FUND
Money Market Fund
This prospectus contains information you should know before investing,
including information about risks. Please read it before you invest and keep it
for future reference.
The Securities and Exchange Commission has not determined that the
information in this prospectus is accurate or complete, nor has it approved or
disapproved these securities. It is a criminal offense to state otherwise.
<PAGE> 86
TABLE OF CONTENTS
<TABLE>
<S> <C>
Introduction................................................ 1
Growth Fund................................................. 2
Growth and Income Fund...................................... 4
Equity Fund................................................. 6
Equity Income Fund.......................................... 8
Capital Appreciation Fund................................... 10
Multi-Cap Growth Fund....................................... 12
Small Company Growth Fund................................... 14
Small Company Value Fund.................................... 16
International Growth Fund................................... 18
Global Financial Services Fund.............................. 20
Internet Fund............................................... 22
Government Securities Fund.................................. 24
High-Yield Bond Fund........................................ 26
Tax-Exempt Income Fund...................................... 28
Balanced Fund............................................... 30
Managed Fund................................................ 32
Money Market Fund........................................... 34
Additional Information About the Funds' Investments and
Risks..................................................... 36
Higher-Risk Securities and Practices........................ 38
Risk Terminology............................................ 40
Shareholder Account Information............................. 41
Class Y Shares............................................ 41
Dealer Compensation....................................... 41
Purchasing, Redeeming and Exchanging Shares............... 42
Transaction and Account Policies............................ 46
Valuation of Shares....................................... 46
Execution of Requests..................................... 46
Telephone Transactions.................................... 46
Exchanges and Redemptions................................. 47
Share Certificates........................................ 47
Small Accounts............................................ 47
Dividends, Distributions and Taxes.......................... 48
Fund Management............................................. 50
The Investment Advisor.................................... 50
The Fund Managers......................................... 51
Financial Highlights........................................ 55
</TABLE>
<PAGE> 87
INTRODUCTION
The Enterprise Group of Funds, Inc. is a mutual fund family that offers
different classes of shares in separate investment portfolios or Funds. This
prospectus relates to Class Y shares of the Funds. The Funds have individual
objectives and strategies to offer investors a broad range of investment
alternatives.
Enterprise Capital Management, Inc. (the "Advisor") is the investment
advisor to each Fund. The Advisor selects a Fund Manager for each Fund's
portfolio on the basis of a number of criteria, including the Fund Manager's
reputation, resources and performance results.
Before investing in any mutual fund, you should consider the general risks
involved. The value of your investment in a Fund is based on the market prices
of the securities the Fund holds. These prices change due to economic and other
events that affect securities markets generally, as well as those that affect
particular companies, industry sectors or governments. These price movements,
sometimes called volatility, will vary depending on the types of securities a
Fund owns and the markets in which these securities trade. In addition, the
investments made by a Fund may underperform the market generally or other mutual
funds with a similar investment objective of that Fund. As with other
investments, you could lose money on your investment in a Fund. Your investment
in a Fund is not a bank deposit. It is not insured or guaranteed by the FDIC or
any government agency. A Fund may not achieve its objective. A Fund's objective
may not be changed without shareholder approval.
1
<PAGE> 88
Columns of various heights: located to the left of the section titled:
"Enterprise Growth Fund Portfolio Profile."
ENTERPRISE GROWTH FUND
FUND PROFILE
Investment Objective Capital appreciation
Principal Investments U.S. common stocks of large
capitalization companies
Fund Manager Montag & Caldwell, Inc.
Who May Want to Invest Investors who want the value of
their investment to grow but do not need to receive income
on their investment.
Investment Strategies The Growth Fund invests primarily in
U.S. common stocks. The "Growth at a Reasonable Price"
strategy employed by the Fund combines growth and value
style investing. This means that the Fund invests in the
stocks of companies with long-term earnings potential but
which are currently selling at a discount to their
estimated long term value. The Fund's equity selection
process is generally lower risk than a typical growth stock
approach. Valuation is the key selection criterion which
makes the investment style risk averse. Also emphasized are growth
characteristics to identify companies whose shares are attractively priced and
may experience strong earnings growth relative to other companies.
Principal Risks As a result of investing primarily in U.S. common stocks, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund.
PERFORMANCE INFORMATION
The bar chart and the performance table illustrate the volatility of an
investment in the Fund and give some indication of the risk. Of course, the
Fund's past performance does not necessarily indicate how the Fund will perform
in the future.
This bar chart shows changes in the performance of the Fund's Class Y shares
from year to year.
Illustrates volatility of an investment and shows changes in Class Y shares
performance from 1997-1998
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
27.52% -13.92%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1998)
</TABLE>
2
<PAGE> 89
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(AS OF THE CALENDAR YEAR ENDED PAST ONE
DECEMBER 31, 1998) YEAR RETURN SINCE INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Enterprise Growth Fund.................................. Class Y 32.09% 36.09%
S&P 500(2).............................................. 28.57% 33.45%
</TABLE>
- ---------------
(1) Inception date for Class Y shares is August 31, 1996.
(2) This unmanaged broad-based index includes 500 companies which tend to be
leaders in important industries within the U.S. economy. It includes
reinvested dividends. An index does not have an investment advisor and does
not pay commissions or expenses. If an index had expenses, its performance
would be lower. One cannot invest directly in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND
SHARES)
- ----------------------------------------------------------------------------
Investment Advisory Fees...................................... 0.75%
Distribution and Service (12b-1) Fees......................... None
Other Expenses................................................ 0.28%
----
Total Annual Fund Operating Expenses.......................... 1.03%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $105 $328 $569 $1,259
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $105 $328 $569 $1,259
</TABLE>
3
<PAGE> 90
Columns of various heights: located to the left of the section titled:
"Enterprise Growth and Income Fund Portfolio Profile."
ENTERPRISE GROWTH AND INCOME FUND
FUND PROFILE
Investment Objective Total return through capital
appreciation with income as a secondary consideration
Principal Investments Broadly diversified group of U.S.
common stocks of large capitalization companies
Fund Manager Retirement System Investors Inc.
Who May Want to Invest Investors who want the value of
their investment to grow with the potential of receiving
dividend income.
Investment Strategies The Growth and Income Fund invests
primarily in U.S. common stocks of large capitalization
companies. The Fund selects stocks that it believes will
appreciate in value, seeking to take advantage of temporary
stock price inefficiencies, which may be caused by market
participants focusing heavily on short-term developments.
In selecting stocks for the Fund, the Fund Manager employs a "value-oriented"
strategy. This means that the Fund Manager attempts to identify stocks of
companies that have greater value than is recognized by the market generally.
The Fund Manager considers a number of factors, such as sales, growth and
profitability prospects for the economic sector and markets in which the company
operates and sells its products and services, the company's stock market price,
earnings level and projected earnings growth rate. The Fund Manager also
considers current and projected dividend yields. The Fund Manager compares this
information to that of other companies in determining relative value and
dividend potential.
Principal Risks The Fund invests primarily in U.S. common stocks. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund.
PERFORMANCE INFORMATION
The bar chart and the performance table illustrate the volatility of an
investment in the Fund and give some indication of the risk. Of course, the
Fund's past performance does not necessarily indicate how the Fund will perform
in the future.
This bar chart shows changes in the performance of the Fund's Class Y shares
from year to year.
Illustrates volatility of an investment and shows changes in Class Y shares
performance from 1992-1998
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
19.50% -12.40%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1998)
</TABLE>
4
<PAGE> 91
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE
DECEMBER 31, 1998) YEAR YEARS RETURN SINCE INCEPTION(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Enterprise Growth and Income Fund............ Class Y 17.08% 21.79% 18.79%
S&P 500(2)................................... 28.57% 24.06% 19.20%
</TABLE>
- ---------------
(1) Inception for Class Y shares is May 31, 1991.
(2) This unmanaged broad-based index includes 500 companies which tend to be
leaders in important industries within the U.S. economy. It includes
reinvested dividends. An index does not have an investment advisor and does
not pay commissions or expenses. If an index had expenses, its performance
would be lower. One cannot invest directly in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Adviser
has contractually agreed to limit the Fund's expenses through May 1, 2000, to
the expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.75%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.73%
-----
Total Annual Operating Expenses................................... 1.48%
Less Expense Reimbursements....................................... (0.43%)
-----
Net Annual Fund Operating Expenses................................ 1.05%
-----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $107 $426 $767 $1,732
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $107 $426 $767 $1,732
</TABLE>
5
<PAGE> 92
Columns of various heights: located to the left of the section titled:
"Enterprise Equity Fund Portfolio Profile."
ENTERPRISE EQUITY FUND
FUND PROFILE
Investment Objective Long-term capital appreciation
Principal Investments U.S. common stocks
Fund Manager OpCap Advisors
Who May Want To Invest Investors who want the value of
their investment to grow but do not need to receive income
on their investment.
Investment Strategies The Equity Fund invests primarily in
U.S. common stocks of companies that meet the Fund
Manager's criteria of high return on investment capital,
strong positions within their industries, sound financial
fundamentals and management committed to shareholder
interests. The Fund Manager selects companies with one or
more of the following characteristics: substantial and
growing discretionary cash flow, strong shareholder value-oriented management,
valuable consumer or commercial franchises, high return on capital, favorable
price to intrinsic value, and under-valued assets. The Fund Manager also imposes
a strict sell discipline to sell the stock once it rises close to the target
price established by the Fund Manager.
Principal Risks The Fund invests primarily in U.S. common stocks. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Advisor
has contractually agreed to limit the Fund's expenses through May 1, 2000, to
the expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.75%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 1.51%
-----
Total Annual Operating Expenses................................... 2.26%
Less Expense Reimbursements....................................... (1.13%)
-----
Net Annual Fund Operating Expenses................................ 1.13%
-----
</TABLE>
6
<PAGE> 93
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $115 $598 $1,107 $2,507
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $115 $598 $1,107 $2,507
</TABLE>
7
<PAGE> 94
Columns of various heights: located to the left of the section titled:
"Enterprise Equity Income Fund Portfolio Profile."
ENTERPRISE EQUITY INCOME FUND
FUND PROFILE
Investment Objective A combination of growth and income to
achieve an above-average and consistent total return
Principal Investments Dividend-paying U.S. common stocks
Fund Manager 1740 Advisers, Inc.
Who May Want To Invest Investors who want the value of
their investment to grow, with the potential of receiving
dividend income.
Investment Strategies The Equity Income Fund invests
primarily in dividend-paying U.S. common stocks. The goal
is capital appreciation combined with a high level of
current income. Dividend yield relative to the S&P 500
average is used as a discipline and measure of value in
selecting stocks for the Fund. To qualify for a purchase, a
stock's yield must be greater than the S&P 500's average
dividend yield. The stock must be sold within two quarters
after its dividend yield falls below that of the S&P average. The effect of this
discipline is that a stock will be sold if increases in its annual dividends do
not keep pace with increases in its market price.
Principal Risks The Fund invests primarily in U.S. common stocks. As a result,
the Fund is subject to the risk that stock prices will fall over short or
extended periods of time. Stock markets tend to move in cycles, with periods of
rising prices and periods of falling prices. This price volatility is the
principal risk of investing in the Fund.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Advisor
has contractually agreed to limit the Fund's expenses through May 1, 2000, to
the expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses (paid indirectly if you hold fund shares)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.75%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.38%
----
Total Annual Operating Expenses................................... 1.13%
Less Expense Reimbursements....................................... (0.08%)
----
Net Annual Fund Operating Expenses................................ 1.05%
----
</TABLE>
8
<PAGE> 95
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $107 $351 $615 $1,367
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $107 $351 $615 $1,367
</TABLE>
9
<PAGE> 96
Ticker: Old fashioned ticker tape: located to the left of the section titled:
"Enterprise Capital Appreciation Fund Portfolio Profile."
ENTERPRISE CAPITAL APPRECIATION FUND
FUND PROFILE
Investment Objective Maximum capital appreciation
Principal Investments U.S. common stocks of companies that
demonstrate accelerating earnings momentum and consistently
strong financial characteristics
Fund Manager Provident Investment Counsel, Inc.
Who May Want To Invest Investors who want the value of
their investment to grow but do not need to receive income
on their investment and are willing to accept the increased
risk associated with more aggressive investment strategies.
Investment Strategies The Capital Appreciation Fund
invests in U.S. common stocks of companies that demonstrate
accelerating earnings momentum and consistently strong
financial characteristics. The Fund Manager's criteria for
stock selection include: (a) steadily increasing earnings;
and (b) a three-year performance record of sales, earnings,
dividend growth, pretax margins, return on equity and
reinvestment rate which, in the aggregate, average 1.5 times the average
performance of the S&P 500 for the same period. The Fund Manager selects stocks
of small, medium and large capitalization companies in an attempt to achieve an
average capitalization of portfolio companies that is less than the average
capitalization of the S&P 500. The potential for maximum capital appreciation is
the basis for investment decisions; any income is incidental.
Principal Risks The Fund's investment universe consists of large, medium and
small capitalization common stocks. As a result, the Fund is subject to the risk
that stock prices will fall over short or extended periods of time. Stock
markets tend to move in cycles, with periods of rising prices and periods of
falling prices. This price volatility is the principal risk of investing in the
Fund. In addition, small- to mid-sized companies may be more vulnerable to
adverse business or economic events than larger, more established companies. In
particular, these companies may have somewhat limited product lines, markets and
financial resources, and may depend upon a relatively small- to medium-sized
management group.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN A FUND) CLASS Y
- --------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a
percentage of offering price).............................. None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)............................................... None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES) CLASS Y
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.75%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.30%
----
Total Annual Fund Operating Expenses.............................. 1.05%
----
</TABLE>
10
<PAGE> 97
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $107 $334 $579 $1,283
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $107 $334 $579 $1,283
</TABLE>
11
<PAGE> 98
Ticker: Old fashioned ticker tape: located to the left of the section titled:
"Enterprise Multi-Cap Growth Fund Portfolio Profile."
ENTERPRISE MULTI-CAP GROWTH FUND
FUND PROFILE
Investment Objective Long-term capital appreciation
Principal Investments Equity securities, such as common or
preferred stocks, which are listed on U.S. exchanges or
traded in the over-the-counter market
Fund Manager Fred Alger Management, Inc.
Who may want to Invest Investors who want an increase in
the value of their investment without regard to income; are
willing to accept the increased risk of investing in small
and medium company stocks for the possibility of higher
returns; and want to diversify their portfolio to include
small, medium and large company stocks.
Investment Strategies The Multi-Cap Growth Fund invests
primarily in growth stocks. The Fund Manager believes that
these companies tend to fall into one of two categories:
High Unit Volume Growth and Positive Life Cycle Change.
High Unit Volume Growth companies are those vital, creative
companies that offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms,
offering new or improved products, or firms simply fulfilling an increased
demand for an existing line. Positive Life Cycle Change companies are those
companies experiencing a major change that is expected to produce advantageous
results. These changes may be as varied as new management; products or
technologies; restructuring or reorganization; or merger and acquisition. The
Fund can leverage, that is, borrow money, to buy additional securities for its
portfolio. By borrowing money, the Fund has the potential to increase its
returns if the increase in the value of the securities purchase exceeds the cost
of borrowing, including the interest paid on the money borrowed.
Principal Risks As a result of investing primarily in U.S. common stocks, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. Moreover, because of large investments in
mid-capitalization, small-capitalization and/or emerging growth companies, the
Fund is riskier than large-capitalization funds since such companies typically
have greater earnings fluctuations and greater reliance on a few key customers
than larger companies.
In addition, the cost of borrowing money to leverage may exceed the returns for
the securities purchased or the securities purchased may actually go down in
value; thus, the Fund's net asset value could decrease more quickly than if it
had not borrowed.
PERFORMANCE INFORMATION
Information about Portfolio performance is not provided due to the fact that the
Fund does not have returns for a full calendar year.
12
<PAGE> 99
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. The Advisor has contractually agreed to limit the Fund's
expenses other than interest expenses through May 1, 2000, to the expense ratio
set forth in the table below.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND
SHARES)
- ----------------------------------------------------------------------------
Investment Advisory Fees...................................... 1.00%
Distribution and Service (12b-1) Fees......................... None
Other Expenses(1)............................................. 1.74%
------
Total Annual Fund Operating Expenses.......................... 2.74%
------
Less Expense Reimbursements................................... (1.28)%
Net Annual Fund Operating Expenses............................ 1.46%
------
</TABLE>
- ---------------
(1) Based on estimated amounts for the current fiscal year. Includes 0.06%
interest expense.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $149 $ 729
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $149 $ 729
</TABLE>
13
<PAGE> 100
Ticker: Old fashioned ticker tape: located to the left of the section titled:
"Small Company Growth Fund Portfolio Profile."
ENTERPRISE SMALL COMPANY GROWTH FUND
FUND PROFILE
Investment Objective Capital appreciation
Principal Investments U.S. common stocks of small
capitalization companies
Fund Manager William D. Witter, Inc.
Who May Want To Invest Investors who want an increase in
the value of their investment without regard to income; are
willing to accept the increased risk of investing in small
company stocks for the possibility of higher returns; and
want to diversify their portfolio to include small company
stocks.
Investment Strategies The Small Company Growth Fund
invests primarily in common stocks of small capitalization
companies with above-average growth characteristics that
are reasonably valued. The Fund Manager uses a disciplined
approach in evaluating growth companies. It relates the
expected growth rate in earnings to the price-earnings
ratio of the stock. Generally, the Fund Manager will not
buy a stock if its price-earnings ratio exceeds its growth
rate. By using this valuation parameter, the Fund Manager
believes it moderates some of the inherent volatility in the small
capitalization sector of the market. Securities will be sold when the Fund
Manager believes the stock price exceeds the valuation criteria, or when the
stock appreciates to a point where it is substantially overweighted in the
portfolio, or when the company no longer meets expectations. The Fund Manager's
goal is to hold a stock for a minimum of one year but this may not always be
feasible and there may be times when short-term gains or losses will be
realized.
Principal Risks The Fund invests primarily in common stocks. As a result, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. In addition, the Fund invests primarily in
small-sized companies which may be more vulnerable to adverse business or
economic events than larger, more established companies. In particular,
small-sized companies may have limited product lines, markets and financial
resources, and may depend upon a relatively small management group.
PERFORMANCE INFORMATION
The bar chart and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future.
This bar chart shows changes in the performance of the Fund's Class Y shares
from year to year.
Illustrates volatility of an investment and shows changes in Class Y shares
performance from 1992-1998
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
27.19% -24.36%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1998)
</TABLE>
14
<PAGE> 101
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(AS OF THE CALENDAR YEAR ENDED PAST ONE PAST FIVE
DECEMBER 31, 1998) YEAR YEARS RETURN SINCE INCEPTION(1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Enterprise Small Company Growth Fund......... Class Y -3.76% 15.80% 18.75%
Russell 2000(2).............................. -2.56% 11.86% 13.74%
</TABLE>
- ---------------
(1) Inception date for Class Y shares is May 31, 1991.
(2) This unmanaged broad-based index measures the performance of 2,000 small
capitalization companies. As of the latest reconstitution, the average
market capitalization was approximately $592.0 million and the largest
company in the index had an approximate market capitalization of $1,402.7
million. An index does not have an investment advisor and does not pay
commissions or expenses. If an index had expenses, its performance would be
lower. One cannot invest directly in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Advisor
has contractually agreed to limit the Fund's expenses through May 1, 2000, to
the expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses (paid indirectly if you hold fund shares)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 1.00%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 1.15%
----
Total Annual Fund Operating Expenses.............................. 2.15%
Less Expense Reimbursements....................................... (0.75%)
----
Net Annual Fund Operating Expenses................................ 1.40%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $143 $601 $1,086 $2,424
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $143 $601 $1,086 $2,424
</TABLE>
15
<PAGE> 102
Ticker: Old fashioned ticker tape: located to the left of the section titled:
"Enterprise Small Company Value Fund Portfolio Profile."
ENTERPRISE SMALL COMPANY VALUE FUND
FUND PROFILE
Investment Objective Maximum capital appreciation
Principal Investments U.S. common stocks of small
capitalization companies
Fund Manager Gabelli Asset Management Company (GAMCO
Investors, Inc.)
Who May Want To Invest Investors who want an increase in
the value of their investment without regard to income; are
willing to accept the increased risk of investing in small
company stocks for the possibility of higher returns; and
want to diversify their portfolio to include small company
stocks.
Investment Strategies The Small Company Value Fund invests
primarily in common stocks of small capitalization
companies that the Fund Manager believes are
undervalued -- that is, the stock's market price does not
fully reflect the company's value. The Fund Manager uses a
proprietary research technique to determine which stocks
have a market price that is less than the "private market
value" or what a private investor would pay for the company. The Fund Manager
then determines whether there is an emerging valuation catalyst that will focus
investor attention on the underlying assets of the company and increase the
market price. Smaller companies may be subject to a valuation catalyst such as
increased investor attention, takeover efforts or a change in management.
Principal Risks The Fund invests primarily in common stocks. As a result, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. In addition, the Fund invests primarily in
small-sized companies which may be more vulnerable to adverse business or
economic events than larger, more established companies. In particular,
small-sized companies may have limited product lines, markets and financial
resources, and may depend upon a relatively small management group.
PERFORMANCE INFORMATION
The bar chart and the performance table on the next page illustrate the
volatility of an investment in the Fund and give some indication of the risk. Of
course, the Fund's past performance does not necessarily indicate how the Fund
will perform in the future.
This bar chart shows changes in the performance of the Fund's Class Y shares
from year to year.
Illustrates volatility of an investment and shows changes in Class Y shares
performance from 1996-1998
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
19.21% -16.95%
(JUNE 30, 1997) (SEPTEMBER 30, 1998)
</TABLE>
16
<PAGE> 103
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(AS OF THE CALENDAR YEAR ENDED PAST ONE
DECEMBER 31, 1998) YEAR RETURN SINCE INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Enterprise Small Company Value Fund..................... Class Y 6.13% 17.93%
Russell 2000(2)......................................... -2.56% 14.78%
</TABLE>
- ---------------
(1) Inception date for Class Y shares is May 31, 1995.
(2) This unmanaged broad-based index measures the performance of 2,000 small
capitalization companies. As of the latest reconstitution, the average
market capitalization was approximately $592.0 million and the largest
company in the index had an approximate market capitalization of $1,402.7
million. An index does not have an investment advisor and does not pay
commissions or expenses. If an index had expenses, its performance would be
lower. One cannot invest directly in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Advisor
has contractually agreed to limit the Fund's expenses through May 1, 2000, to
the expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.75%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.64%
----
Total Annual Operating Expenses................................... 1.39%
Less Expense Reimbursements....................................... (0.09%)
----
Net Annual Fund Operating Expenses................................ 1.30%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $132 $431 $752 $1,661
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $132 $431 $752 $1,661
</TABLE>
17
<PAGE> 104
Columns of various heights: located to the left of the section titled:
"Enterprise International Growth Fund Portfolio Profile."
ENTERPRISE INTERNATIONAL GROWTH FUND
FUND PROFILE
Investment Objective Capital appreciation
Principal Investments Non-U.S. equity securities
Fund Manager Vontobel USA Inc.
Who May Want To Invest Investors who want an increase in
the value of their investment without regard to income; and
are willing to accept the increased risk of international
investing for the possibility of higher returns.
Investment Strategies The International Growth Fund
invests primarily in non-U.S. equity securities that the
Fund Manager believes are undervalued. The Fund Manager
uses an approach that involves bottom-up stock selection.
The Fund Manager looks for companies that are good
predictable businesses selling at attractive prices
relative to an estimate of intrinsic value. The Fund
Manager diversifies investments among European, Australian
and Far East ("EAFE") markets.
Principal Risks The Fund invests primarily in common stocks of foreign
companies. As a result, the Fund is subject to the risk that stock prices will
fall over short or extended periods of time. Stock markets tend to move in
cycles, with periods of rising prices and periods of falling prices. This price
volatility is the principal risk of investing in the Fund. In addition,
investments in foreign markets may be more volatile than investments in U.S.
markets. Diplomatic, political or economic developments may cause foreign
investments to lose money. The value of the U.S. dollar may rise, causing
reduced returns for U.S. persons investing abroad. A foreign country may not
have the same accounting and financial reporting standards as the U.S. Foreign
stock markets, brokers and companies are generally subject to less supervision
and regulation than their U.S. counterparts. Emerging market securities may be
even more susceptible to these risks.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund and give some indication of the risk. Of course, the
Fund's past performance does not necessarily indicate how the Fund will perform
in the future.
This bar chart shows changes in the performance of the Fund's Class Y shares
from year to year.
Illustrates volatility of an investment and shows changes in Class Y shares
performance from 1996-1998
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
17.54% -13.79%
(DECEMBER 31, 1998) (SEPTEMBER 30, 1998)
</TABLE>
18
<PAGE> 105
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(AS OF THE CALENDAR YEAR ENDED PAST ONE
DECEMBER 31, 1998) YEAR RETURN SINCE INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Enterprise International Growth Fund.................. Class Y 14.73% 12.22%
MSCI EAFE Index(2).................................... 20.00% 8.49%
</TABLE>
- ---------------
(1) Inception date for Class Y shares is July 31, 1995.
(2) The Morgan Stanley Capital International Europe, Australia and the Far East
(MSCI EAFE) Index is a market capitalization weighted, equity index
comprised of 1,032 companies that are representative of the market structure
of 20 countries, excluding the United States, Canada and other regions such
as Latin America. Constituent stocks are selected on the basis of industry
representation, liquidity and sufficient float. One cannot invest directly
in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Advisor
has contractually agreed to limit the Fund's expenses through May 1, 2000, to
the expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.85%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.81%
----
Total Annual Operating Expenses................................... 1.66%
Less Expense Reimbursements....................................... (0.11%)
----
Net Annual Fund Operating Expenses................................ 1.55%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $158 $513 $892 $1,956
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $158 $513 $892 $1,956
</TABLE>
19
<PAGE> 106
Ticker: Old fashioned ticker tape: located to the left of the section titled:
"Global Financial Services Fund Portfolio Profile."
ENTERPRISE GLOBAL FINANCIAL SERVICES FUND
FUND PROFILE
Investment Objective Capital appreciation
Principal Investments Common stocks of domestic and
foreign financial services companies
Fund Manager Sanford C. Bernstein & Co., Inc.
Who May Want To Invest Investors who want an increase in
the value of their investment without regard to income;
want investment in the global financial services sector;
and are willing to accept the increased risk of
international investing for the possibility of higher
returns.
Investment Strategies The Global Financial Services Fund
invests primarily in the domestic and foreign financial
services industry by normally investing in companies domiciled in the U.S. and
in at least three other countries. The Fund considers a financial services
company to be a firm that in its most recent fiscal year either (i) derived at
least 50% of its revenues or earnings from financial services activities, or
(ii) devoted at least 50% of its assets to such activities. Financial services
companies provide financial services to consumers and businesses and include the
following types of U.S. and foreign firms: commercial banks, thrift institutions
and their holding companies; consumer and industrial finance companies;
diversified financial services companies; investment banks; securities brokerage
and investment advisory firms; financial technology companies; real
estate-related firms; leasing firms; credit card companies; government sponsored
financial enterprises; investment companies; insurance brokerages; and various
firms in all segments of the insurance industry such as multi- line property and
casualty, life insurance companies and insurance holding companies. The Fund
Manager selects securities by combining fundamental and quantitative research to
identify securities of financial services companies that are attractively priced
relative to their expected returns. Its research analysts employ a long-term
approach to forecasting the earnings and growth potential of companies and
attempt to construct global portfolios that produce maximum returns at a given
risk level.
Principal Risks The Fund invests in common stocks of domestic and foreign
companies. As a result, the Fund is subject to the risk that stock prices will
fall over short or extended periods of time. Stock markets tend to move in
cycles, with periods of rising prices and periods of falling prices. This price
volatility is a principal risk of investing in the Fund. In addition,
investments in foreign markets may be more volatile than investments in U.S.
markets. Diplomatic, political or economic developments may cause foreign
investments to lose money. The value of the U.S. dollar may rise, causing
reduced returns for U.S. persons investing abroad. A foreign country may not
have the same accounting and financial reporting standards as the U.S. Foreign
stock markets, brokers and companies are generally subject to less supervision
and regulation than their U.S. counterparts. Emerging market securities may be
even more susceptible to these risks. Because the Fund concentrates in a single
industry sector, its performance is largely dependent on the sector's
performance, which may differ from that of the overall stock market. Generally,
the financial services industry is extremely sensitive to fluctuations in
interest rates. Moreover, while rising interest rates will cause a decline in
the value of any debt securities the Fund holds, falling interest rates or
deteriorating economic conditions can adversely affect the performance of
financial services companies' stock. Both foreign and domestic financial
services companies are affected by government regulation or market intervention,
which may limit their activities and affect their profitability. Some financial
services companies, e.g., insurance companies, are subject to severe market
share and price competition.
20
<PAGE> 107
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. These expenses are deducted from Fund assets. The Advisor has
contractually agreed to limit the Funds' expenses through May 1, 2000, to the
expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.85%
Distribution and Service (12b-1) Fees............................. None
Other Expenses(1)................................................. 1.53%
----
Total Annual Operating Expenses................................... 2.38%
Less Expense Reimbursements....................................... (1.08%)
----
Net Annual Fund Operating Expenses................................ 1.30%
----
</TABLE>
- ---------------
(1) Other expenses are based on estimated amounts for the current fiscal year.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $132 $639
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $132 $639
</TABLE>
21
<PAGE> 108
Ticker: Old fashioned ticker tape: located to the left of the section titled:
"Enterprise Internet Fund Portfolio Profile."
ENTERPRISE INTERNET FUND
FUND PROFILE
Investment Objective Long-term capital appreciation
Principal Investments Equity securities, including common
stocks, preferred stocks, warrants and other securities
convertible into common stock of companies primarily
engaged in Internet, Intranet and other "high tech" related
activities
Fund Manager Fred Alger Management, Inc.
Who may want to invest Investors who want an increase in
the value of their investment without regard to income and
want to diversify their overall portfolio with a
concentrated investment in companies engaged in Internet
and Intranet and other "high tech" related activities.
Investment Strategies Under normal conditions, the
Internet Fund will invest at least 65% of its assets in the
equity securities of companies in the Internet, Intranet
and "high tech" sectors. In choosing which companies' stock
the Fund should purchase, the Fund Manager invests in those
companies listed on a U.S. securities exchange or NASDAQ that are engaged in the
research, design, development or manufacturing, or, to a significant extent, in
the business of distributing products, processes or services for use with
Internet or Intranet related businesses. The Fund may also invest in other "high
tech" companies. The Internet is a world-wide network of computers designed to
permit users to share information and transfer data quickly and easily. The
World Wide Web ("WWW"), which is a means of graphically interfacing with the
Internet, is a hyper-text based publishing medium containing text, graphics,
interactive feedback mechanisms and links within WWW documents and to other WWW
documents. An Intranet is the application of WWW tools and concepts to a
company's internal documents and databases. Other "high tech" companies may
include firms in the computer, communications, video, electronic, office and
factory automation and robotics sector.
Principal Risks As a result of investing primarily in U.S. common stocks, the
Fund is subject to the risk that stock prices will fall over short or extended
periods of time. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices. This price volatility is the principal
risk of investing in the Fund. Moreover, because of large investments in
mid-capitalization, small-capitalization and/or emerging growth companies, the
Fund is riskier than large-capitalization funds since such companies typically
have greater earnings fluctuations and greater reliance on a few key customers
than larger companies. In addition, the value of companies engaged in Internet,
Intranet and other "high tech" related activities is particularly vulnerable to
rapidly changing technology, extensive government regulation and relatively high
risks of obsolescence caused by scientific and technological advances.
Therefore, the stocks of companies involved in these sectors tend to be more
volatile than stocks in other sectors. As a result, the value of the Fund's
shares may fluctuate more than shares of a fund investing in a broader range of
industries.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
The table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. The Advisor has contractually agreed to limit the Fund's
expenses through May 1, 2000, to the expense ratio noted in the table.
22
<PAGE> 109
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses (paid indirectly if you hold fund shares)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 1.00%
Distribution and Service (12b-1) Fees............................. None
Other Expenses(1)................................................. 0.50%
----
Total Annual Fund Operating Expenses.............................. 1.50%
Less Expense Reimbursements....................................... (0.05%)
----
Net Annual Fund Operating Expenses................................ 1.45%
----
</TABLE>
- ---------------
(1) Based on estimated amounts for the current fiscal year.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $148 $469
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $148 $469
</TABLE>
23
<PAGE> 110
Antiqued piggy bank with various coins lying beside: located to the left of the
section titled: "Enterprise Government Securities Fund Portfolio Profile."
ENTERPRISE GOVERNMENT SECURITIES FUND
FUND PROFILE
Investment Objective Current income and safety of
principal
Principal Investments Securities that are obligations of
the U.S. Government, its agencies or instrumentalities
Fund Manager TCW Funds Management, Inc.
Who May Want to Invest Conservative investors who want to
receive income from their investment
Investment Strategies The Government Securities Fund
invests primarily in securities that are obligations of the
U.S. Government, its agencies or instrumentalities. The
Fund's investments may include securities issued by the
U.S. Treasury, such as treasury bills, treasury notes and
treasury bonds. In addition, the Fund may invest in
securities that are issued or guaranteed by agencies and
instrumentalities of the U.S. Government. Securities issued
by agencies or instrumentalities may or may not be backed
by the full faith and credit of the United States.
Securities issued by the Government National Mortgage
Association ("GNMA Certificates") are examples of full faith and credit
securities. Agencies or instrumentalities whose securities are not backed by the
full faith and credit of the United States include Federal National Mortgage
Association (FANNIE MAE) and Federal Home Loan Mortgage Corp. (FREDDIE MAC). To
a limited extent, the Fund may invest in mortgage-backed securities, including
collateralized mortgage obligations ("CMOs"). The Fund may concentrate from time
to time in different U.S. Government securities in order to obtain the highest
available level of current income and safety of principal.
Principal Risks The Government Securities Fund invests primarily in U.S.
Government debt securities. As a result, the Fund is subject to the risk that
the prices of debt securities will decline due to rising interest rates. This
risk is greater for long-term debt securities than for short-term debt
securities. To the extent that the Fund invests in mortgage-backed securities,
it is subject to additional risk. A mortgage-backed security pools all interest
and principal payments from the underlying mortgages and pays it to the
security's owner. The mortgages underlying mortgage-backed securities may mature
or be paid off before the stated maturity date. This has a number of drawbacks.
First, the Fund may lose money on its investment. Second, the monthly income
payments to the Fund may fluctuate. Third, the Fund cannot predict the maturity
of its investment with certainty. Fourth, the Fund would invest any resulting
proceeds elsewhere, generally at a lower interest rate.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
The table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table above are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets. The Advisor
has contractually agreed to limit the Fund's expenses through May 1, 2000, to
the expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
24
<PAGE> 111
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.60%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.33%
----
Total Annual Operating Expenses................................... 0.93%
Less Expense Reimbursements....................................... (0.08%)
----
Net Annual Fund Operating Expenses................................ 0.85%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $87 $288 $507 $1,136
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $87 $288 $507 $1,136
</TABLE>
25
<PAGE> 112
Antiqued piggy bank with various coins lying beside: located to the left of the
section titled: "Enterprise High-Yield Bond Fund Portfolio Profile."
ENTERPRISE HIGH-YIELD BOND FUND
FUND PROFILE
Investment Objective Maximum current income
Principal Investments Debt securities rated below
investment grade, which are commonly known as "junk bonds"
Fund Manager Caywood-Scholl Capital Management
Who May Want to Invest Income-oriented investors who are
willing to accept increased risk for the possibility of
greater returns through high-yield bond investing.
Investment Strategies The High-Yield Bond Fund invests
primarily in high-yielding, income-producing U.S. corporate
bonds rated B3 to Ba1 by Moody's Investors Service, Inc.
("Moody's") or B- to BB+ by Standard & Poor's Corporation
("S&P"), which are commonly known as "junk bonds." The
Fund's investments are selected by the Fund Manager after
careful examination of the economic outlook to determine
those industries that appear favorable for investment.
Industries going through a perceived decline generally are not candidates for
selection. After the industries are selected, the Fund Manager identifies bonds
of issuers within those industries based on their creditworthiness, their yields
in relation to their credit and the relative value in relation to the high-yield
market. Companies near or in bankruptcy are not considered for investment. The
Fund does not purchase bonds which are rated Ca or lower by Moody's or CC or
lower by S&P or which, if unrated, in the judgment of the Fund Manager have
characteristics of such lower-grade bonds. Should an investment be subsequently
downgraded to Ca or lower or CC or lower, the Fund Manager has discretion to
hold or liquidate the security. Subject to the restrictions described above,
under normal circumstances, up to 20% of the Fund's assets may include: (1)
bonds rated Caa by Moody's or CCC by S&P; (2) unrated debt securities which, in
the judgment of the Fund Manager have characteristics similar to those described
above; (3) convertible debt securities; (4) puts, calls and futures as hedging
devices; (5) foreign issuer debt securities; and (6) short-term money market
instruments, including certificates of deposit, commercial paper, U.S.
Government securities and other income-producing cash equivalents.
Principal Risks The Fund invests primarily in below investment-grade debt
securities. As a result, the Fund is subject to the risk that the prices of the
debt securities will decline due to rising interest rates. This risk is greater
for long-term debt securities than for short-term debt securities. A high-yield
bond's market price may fluctuate more than higher-quality securities and may
decline significantly. High-yield bonds also carry a substantial risk of default
or changes in the issuer's creditworthiness. In addition, it may be more
difficult for the Fund to dispose of high-yield bonds or to determine their
value. High-yield bonds may contain redemption or call provisions that, if
exercised during a period of declining interest rates, may force the Fund to
replace the security with a lower-yielding security. If this occurs, it will
result in a decreased return for shareholders.
PERFORMANCE INFORMATION
The bar chart and the performance table illustrate the volatility of an
investment in the Fund and give some indication of the risk. Of course, the
Fund's past performance does not necessarily indicate how the Fund will perform
in the future.
This bar chart shows the performance of the Fund's Class Y shares for the past
year.
Chart Description:
Illustrates volatility of an investment and shows changes in Class Y shares
performance for 1998
26
<PAGE> 113
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
4.32% -5.72%
(MARCH 31, 1998) (SEPTEMBER 30, 1998)
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(AS OF THE CALENDAR YEAR ENDED PAST ONE
DECEMBER 31, 1998) YEAR RETURN SINCE INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Enterprise High-Yield Bond Fund......................... Class Y 2.49% 4.87%
Lehman Brothers High Yield BB Index(2).................. 5.13% 5.84%
</TABLE>
- ---------------
(1) Inception date for Class Y shares is July 31, 1997.
(2) This is an unmanaged broad-based index that includes fixed rate, public
nonconvertible issues that are rated Ba1 or lower by Moody's Investor
Service. If a Moody's rating is not available, the bonds must be rated BB+
or lower by S&P, or by Fitch if an S&P rating is not available. The index
excludes transaction or holding charges. One cannot invest directly in an
index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. The Advisor has contractually agreed to limit the Fund's
expenses through May 1, 2000, to the expense ratio set forth in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses (paid indirectly if you hold fund shares)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.60%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.40%
----
Total Annual Operating Expenses................................... 1.00%
Less Expense Reimbursements....................................... (0.15%)
----
Net Annual Fund Operating Expenses................................ 0.85%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $87 $303 $538 $1,211
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $87 $303 $538 $1,211
</TABLE>
27
<PAGE> 114
Piggy bank: Antiqued piggy bank with various coins lying beside: located to the
left of the section titled: "Enterprise Tax-Exempt Income Fund Portfolio
Profile."
ENTERPRISE TAX-EXEMPT INCOME FUND
FUND PROFILE
Investment Objective A high level of current income exempt
from federal income tax, with consideration given to
preservation of principal
Principal Investments A diversified portfolio of long-term
investment grade municipal bonds
Fund Manager MBIA Capital Management Corp.
Who May Want To Invest Investors who want to receive
tax-free current income and maintain the value of their
investment.
Investment Strategies The Tax-Exempt Income Fund invests
primarily in investment grade, tax-exempt municipal
securities. The issuers of these securities may be located
in any state, territory or possession of the United States.
In selecting investments for the Fund, the Fund Manager
tries to limit risk as much as possible. The Fund Manager
analyzes municipalities, their credit risk, market trends and investment cycles.
The Fund Manager attempts to identify and invest in municipal issuers with
improving credit and avoid those with deteriorating credit. The Fund anticipates
that its average weighted maturity will range from 10 to 25 years. The Fund
Manager will actively manage the Fund, adjusting the average Fund maturity and
utilizing futures contracts and options on futures as a defensive measure
according to its judgment of anticipated interest rates. During periods of
rising interest rates and falling prices, the Fund Manager may adopt a shorter
weighted average maturity to cushion the effect of bond price declines on the
Fund's net asset value. When rates are falling and prices are rising, the Fund
Manager may adopt a longer weighted average maturity. The Fund may also invest
up to 20% of its net assets in cash, cash equivalents and debt securities, the
interest from which may be subject to federal income tax. Investments in taxable
securities will be limited to investment grade corporate debt securities and
U.S. Government securities. The Fund will not invest more than 20% of its net
assets in municipal securities, the interest on which is subject to the federal
alternative minimum tax.
Principal Risks The Fund invests primarily in long-term investment grade debt
securities. As a result, the Fund is subject to the risk that the prices of debt
securities will decline due to rising interest rates. This risk is greater for
long-term debt securities than for short-term debt securities. Debt securities
may decline in credit quality due to economic or governmental events. In
addition, an issuer may fail to make timely payments of principal or interest to
the Fund. Some investment grade bonds may have speculative characteristics.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
The table on the next page describes the shareholder fees that you may pay if
you purchase or redeem Fund shares. Every mutual fund has operating expenses
which may pay for professional advisory, shareholder, distribution,
administration and custody services. The Fund's expenses in the table are shown
as a percentage of the Fund's net assets. These expenses are deducted from Fund
assets. The Advisor has contractually agreed to limit the Fund's expenses
through May 1, 2000, to the expense ratio set forth in the table.
28
<PAGE> 115
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES) CLASS Y
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.50%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.45%
----
Total Annual Operating Expenses................................... 0.95%
Less Expense Reimbursements....................................... (0.30%)
----
Net Annual Fund Operating Expenses................................ 0.65%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $66 $273 $496 $1,139
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $66 $273 $496 $1,139
</TABLE>
29
<PAGE> 116
Managed - Stones: "precious stones" lying in dishes of varying sizes and shapes:
located to the left of the section titled: "Enterprise Balanced Fund Portfolio
Profile."
ENTERPRISE BALANCED FUND
FUND PROFILE
Investment Objective Long-term total return
Principal Investments A combination of equity, fixed
income and short-term securities
Fund Manager Montag & Caldwell, Inc.
Who may want to Invest Investors who want the value of
their investment to grow and also want to receive income on
their investment
Investment Strategies Generally, between 55% and 75% of
the Balanced Fund's total assets will be invested in equity
securities, and at least 25% of the Balanced Fund's total
assets will be invested in fixed income securities. The
portfolio allocation will vary based upon the Fund
Manager's assessment of the return potential of each asset
class. For equity investments, the Fund Manager uses a
bottom-up approach to stock selection, focusing on high
quality, well-established companies that have a strong
history of earnings growth; attractive prices relative to the company's
potential for above average; long-term earnings and revenue growth; strong
balance sheets; a sustainable competitive advantage; the potential to become (or
currently are) industry leaders; and the potential to outperform the market
during downturns. When selecting fixed income securities, the Fund Manager will
seek to maintain the Fund's weighted average duration within 20% of the duration
of the Lehman Brothers Government Corporate Index. Emphasis is also placed on
diversification and credit analysis. The Fund will only invest in fixed income
securities with an "A" or better rating. Fixed income investments will include:
U.S. Government securities; corporate bonds; mortgage/asset-backed securities;
and money market securities and repurchase agreements.
Principal Risks The Fund invests in both common stocks and debt securities. As
a result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is a
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that the prices of debt securities will decline due to rising interest
rates. The risk is greater for long-term debt securities than for short-term
debt securities. Debt securities may decline in credit quality due to events
related to the issuer as well as to general economic or governmental events.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
The table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table are shown as a percentage of the
Fund's net assets. The Advisor has contractually agreed to limit the Fund's
expenses through May 1, 2000, to the expense ratio noted in the table.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
30
<PAGE> 117
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.75%
Distribution and Service (12b-1) Fees............................. None
Other Expenses(1)................................................. 1.74%
----
Total Annual Fund Operating Expenses.............................. 2.49%
Less Expense Reimbursements....................................... (1.54%)
----
Net Annual Fund Operating Expenses................................ 0.95%
----
</TABLE>
- ---------------
(1) Based on estimated amounts for the current fiscal year.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
- ------------------------------------------------------------------------------
<S> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $ 97 $628
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $ 97 $628
</TABLE>
31
<PAGE> 118
Managed - Stones: "precious stones" lying in dishes of varying sizes and shapes:
located to the left of the section titled: "Enterprise Managed Fund Portfolio
Profile."
ENTERPRISE MANAGED FUND
FUND PROFILE
Investment Objective Growth of capital over time
Principal Investments Common stocks, bonds and cash
equivalents, the percentages of which will vary based on
the Fund Manager's assessment of relative investment values
Fund Manager OpCap Advisors
Who May Want to Invest Investors who want the value of
their investment to grow but do not need to receive income
on their investment.
Investment Strategies The Managed Fund invests in a
diversified portfolio of common stocks, bonds and cash
equivalents. The allocation of the Fund's assets among the
different types of permitted investments will vary from
time to time based upon the Fund Manager's evaluation of
economic and market trends and its perception of the
relative values available from such types of securities at any given time. There
is neither a minimum nor a maximum percentage of the Fund's assets that may, at
any given time, be invested in any specific types of investments. However, the
Fund invests primarily in equity securities at times when the Fund Manager
believes that the best investment values are available in the equity markets.
The Fund may invest almost all of its assets in high-quality short-term money
market and cash equivalent securities when the Fund Manager deems it advisable
to preserve capital. Consequently, while the Fund will earn income to the extent
it is invested in bonds or cash equivalents, the Fund does not have any specific
income objective. The bonds in which the Fund may invest will normally be
investment grade intermediate to long-term U.S. Government and corporate debt.
Principal Risks The Fund invests in both common stocks and debt securities. As
a result, the Fund is subject to the risk that stock prices will fall over short
or extended periods of time. Stock markets tend to move in cycles, with periods
of rising prices and periods of falling prices. This price volatility is a
principal risk of investing in the Fund. In addition, the Fund is subject to the
risk that the prices of debt securities will decline due to rising interest
rates. The risk is greater for long-term debt securities than for short-term
debt securities. Debt securities may decline in credit quality due to factors
affecting the issuer and economic or political events.
PERFORMANCE INFORMATION
The bar chart and the performance table below illustrate the volatility of an
investment in the Fund and give some indication of the risk. Of course, the
Fund's past performance does not necessarily indicate how the Fund will perform
in the future.
This bar chart shows changes in the performance of the Fund's Class Y Shares
from year to year.
32
<PAGE> 119
Illustrates volatility of an investment and shows changes in Class Y shares
performance from 1996-1998
<TABLE>
<S> <C>
BEST QUARTER WORST QUARTER
13.55% -14.53%
(JUNE 30, 1997) (SEPTEMBER 30, 1998)
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(AS OF THE CALENDAR YEAR ENDED PAST ONE
DECEMBER 31, 1998) YEAR RETURN SINCE INCEPTION(1)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Enterprise Managed Fund................................. Class Y 7.20% 17.21%
S&P 500(2).............................................. 28.57% 28.08%
</TABLE>
- ---------------
(1) Inception date for Class Y shares is July 31, 1995.
(2) This unmanaged broad-based index includes 500 companies which tend to be
leaders in important industries within the U.S. economy. It includes
reinvested dividends. An index does not have an investment advisor and does
not pay commissions or expenses. If an index had expenses, its performance
would be lower. One cannot invest directly in an index.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
Annual Fund Operating Expenses (paid indirectly if you hold fund shares)
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.75%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.30%
----
Total Annual Fund Operating Expenses.............................. 1.05%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses remain
the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $107 $334 $579 $1,283
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $107 $334 $579 $1,283
</TABLE>
33
<PAGE> 120
Tool with coins: located to the left of the section titled: "Enterprise Money
Market Fund Portfolio Profile."
ENTERPRISE MONEY MARKET FUND
FUND PROFILE
Investment Objective The highest possible level of current
income consistent with preservation of capital and
liquidity
Principal Investments High quality, short-term debt
securities, commonly known as money market instruments
Fund Manager Enterprise Capital Management, Inc.
Who May Want To Invest Investors who seek an income
producing investment with emphasis on preservation of
capital.
Investment Strategies The Money Market Fund invests in a
diversified portfolio of high quality dollar-denominated
money market instruments which present minimal credit risks
in the judgment of the Fund Manager. The Fund Manager
actively manages the Fund's average maturity based on current interest rates and
its outlook on the market.
Principal Risks Although the Money Market Fund seeks to preserve the value of
your investment at $1.00 per share, it is possible to lose money by investing in
the Fund. The Fund may not be able to maintain a stable share price at $1.00.
Investments in the Fund are neither insured nor guaranteed by the U.S.
government.
PERFORMANCE INFORMATION
Information about Fund performance is not provided due to the fact that the Fund
does not have returns for a full calendar year.
FEES AND EXPENSES
This table describes the shareholder fees that you may pay if you purchase or
redeem Fund shares. Every mutual fund has operating expenses which may pay for
professional advisory, shareholder, distribution, administration and custody
services. The Fund's expenses in the table below are shown as a percentage of
the Fund's net assets. These expenses are deducted from Fund assets.
<TABLE>
<CAPTION>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT IN THE FUND) CLASS Y
- ----------------------------------------------------------------------------
<S> <C>
Maximum Sales Charge (Load) Imposed on Purchases (as a percentage
of offering price).......................................... None
Maximum Deferred Sales Charge (Load) (as a percentage of net
asset value)................................................ None
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES (PAID INDIRECTLY IF YOU HOLD FUND SHARES) CLASS Y
- -----------------------------------------------------------------------------------
<S> <C>
Investment Advisory Fees.......................................... 0.35%
Distribution and Service (12b-1) Fees............................. None
Other Expenses.................................................... 0.30%
----
Total Annual Fund Operating Expenses.............................. 0.65%
----
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated. The example also
assumes that each year your investment has a 5% return and Fund expenses
34
<PAGE> 121
remain the same. Although your actual costs and returns may be different, your
approximate costs of investing $10,000 in the Fund would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IF YOU REDEEM YOUR SHARES AT THE END OF THE PERIOD:
Class Y..................................................... $66 $208 $362 $810
IF YOU DO NOT REDEEM YOUR SHARES:
Class Y..................................................... $66 $208 $362 $810
</TABLE>
35
<PAGE> 122
ADDITIONAL INFORMATION ABOUT THE FUNDS'
INVESTMENTS AND RISKS
EQUITY, SECTOR AND DOMESTIC HYBRID FUNDS' INVESTMENTS
The table below shows the Equity, Sector and Domestic Hybrid Funds'
principal investments. In other words, the table describes the type or types of
investments that Enterprise believes will most likely help each Fund achieve its
investment goal.
y = Types of securities in which a Fund invests.
<TABLE>
<CAPTION>
EQUITY FUNDS
SMALL SMALL
GROWTH & EQUITY CAPITAL MULTI-CAP COMPANY COMPANY
GROWTH INCOME EQUITY INCOME APPRECIATION GROWTH GROWTH VALUE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Stocks(1) y y y y y y y y
Foreign Stocks
Bonds
<CAPTION>
DOMESTIC
EQUITY FUNDS SECTOR FUNDS HYBRID FUNDS
GLOBAL
INTERNATIONAL FINANCIAL
GROWTH SERVICES INTERNET BALANCED MANAGED
<S> <C> <C> <C> <C> <C>
U.S. Stocks(1) y y y y
Foreign Stocks y y
Bonds y y
</TABLE>
- ---------------
(1) Each Fund that invests in U.S. stocks may invest in large capitalization
companies, medium capitalization companies and small capitalization
companies. Large capitalization companies generally have market
capitalizations of over $5 billion. Medium capitalization companies
generally have market capitalizations ranging from $1 billion to $5 billion.
Small capitalization companies generally have market capitalizations of $1
billion or less. However, there may be some overlap among capitalization
categories. The Growth, Growth and Income, Equity, Equity Income, Capital
Appreciation, Balanced and Managed Funds intend to invest primarily in
stocks of large-capitalization companies. The Small Company Growth Fund and
the Small Company Value Fund intend to invest primarily in the stocks of
small-capitalization issuers. The Multi-Cap Growth and Internet Funds intend
to invest in large, medium and small capitalization companies.
Each Fund also may invest in other securities, use other strategies and
engage in other investment practices, which are described in detail in the
Statement of Additional Information. Of course, Enterprise cannot guarantee that
any Fund will achieve its investment goal.
The investments listed above and the investments and strategies described
throughout this Prospectus are those that a Fund may use under normal
conditions. During unusual economic or market conditions or for temporary
defensive or liquidity purposes, each Fund may invest up to 100% of its assets
in cash, money market instruments, repurchase agreements and short-term
obligations. When a Fund is investing for temporary defensive purposes, it is
not pursuing its investment goal.
INCOME FUNDS' INVESTMENTS
The table below shows the Income Funds' principal investments. In other
words, the table describes the type or types of investments that we believe will
most likely help each Fund achieve its investment goal.
<TABLE>
<CAPTION>
GOVERNMENT HIGH-YIELD TAX-EXEMPT
SECURITIES BOND INCOME
<S> <C> <C> <C>
U.S. Government Securities y
Corporate Debt Securities -- Junk Bonds(1) y
Mortgage-Backed Securities y
Municipal Securities y
</TABLE>
- ---------------
(1) "Junk Bond" refers to any security rated lower than "Baa" by Moody's
Investors Service. If a Moody's rating is not available, the bonds must be
rated lower than "BBB" by Standard & Poor's.
Each Fund also may invest in other securities, use other strategies and
engage in other investment practices, which are described in detail in our
Statement of Additional Information. Of course, we cannot guarantee that any
Fund will achieve its investment goal.
The investments listed above and the investments and strategies described
throughout this prospectus are those that a Fund may use under normal
conditions. During unusual economic or market conditions or for temporary
defensive or liquidity purposes, each Fund may invest up to 100% of its assets
in cash, money
36
<PAGE> 123
market instruments, repurchase agreements and short-term obligations. When a
Fund is investing for temporary defensive purposes, it is not pursuing its
investment goal.
MONEY MARKET FUND'S INVESTMENTS
The Money Market Fund's principal investments include: bank obligations,
commercial paper and corporate obligations. The Fund also may invest in other
securities, use other strategies and engage in other investment practices, which
are described in detail in our Statement of Additional Information. Of course,
we cannot guarantee that the Fund will achieve its investment goal or maintain a
stable share price of $1.00.
YEAR 2000
Many computer and computer-based systems cannot distinguish the year 2000
from the year 1900 because of the way they encode and calculate dates (commonly
known as the "Year 2000 Issue"). The Year 2000 Issue could potentially have an
adverse impact on the handling of security trades, the payment of interest and
dividends, pricing and account services. As part of its operational
responsibilities, the Advisor has reviewed each of its internal systems and has
obtained assessments from each service provider, including Fund Managers, of
Year 2000 issues which could potentially impact services to the Fund. The
Advisor is unaware of any Year 2000 issues which remain unresolved or have been
identified as unresolvable. In addition, the Advisor has established a timetable
to periodically re-evaluate systems to ensure new issues or those which may not
previously have been identified are addressed and resolved in an expeditious
manner. The Advisor does not anticipate any material expenditures for monitoring
Year 2000 issues. If the problem has not been fully addressed, however, the
Funds could be negatively affected. The Year 2000 Issue could also have a
negative impact on the companies in which the Funds invest, including foreign
issuers or associated foreign governments, which could hurt the Funds'
investment returns.
EURO CONVERSION
Effective January 1, 1999, several European countries irrevocably fixed
their existing national currencies to a new single European currency unit, the
"euro." Certain European investments may be subject to additional risks as a
result of this conversion. These risks include adverse tax and accounting
consequences, as well as difficulty in processing transactions. The Advisor is
aware of such potential problems and is coordinating efforts to prevent or
alleviate their adverse impact on the Funds. There can be no assurance that the
Funds will not suffer any adverse consequences as a result of the euro
conversion.
37
<PAGE> 124
HIGHER-RISK SECURITIES AND PRACTICES
<TABLE>
<CAPTION>
This table shows each Fund's investment limitations as a percentage of portfolio
assets. In each case the principal types of risk are listed in the Risk Terminology
section that follows.
5 Percent of total assets (italic type)
5 Percent of net assets (roman type)
Y* NO POLICY LIMITATION ON USAGE; FUND MAY BE USING CURRENTLY
Y PERMITTED, BUT NOT TYPICALLY USED. GROWTH & EQUITY
N NOT PERMITTED GROWTH INCOME EQUITY Income
<S> <C> <C> <C> <C>
CONVENTIONAL SECURITIES
NON-INVESTMENT-GRADE SECURITIES. Securities rated below Baa/BBB are considered
junk bonds. Credit, market, interest rate, liquidity, valuation, information risks. y y y y
FOREIGN EQUITIES.
- Stocks issued by foreign companies. Market, currency, information, natural
event, political risks. y y y y
- American or European depository receipts, which are dollar-denominated
securities typically issued by American or European banks and are based on
ownership of securities issued by foreign companies. Market, currency,
information, natural event, political risks. 20 20 20 20
RESTRICTED AND ILLIQUID SECURITIES. Securities not traded on the open market. May
include illiquid Rule 144A securities. Liquidity, valuation, information, market
risks. 10 10 10 10
INVESTMENT PRACTICES
REPURCHASE AGREEMENTS. The purchase of a security that must later be sold back to
the seller at the same price plus interest. Credit risk. 5 5 5 5
SECURITIES LENDING. The lending of securities to financial institutions, which
provide cash or government securities as collateral. Credit risk. n n n n
HEDGING. Means of offsetting or neutralizing the price movement of an investment
by making another investment, the price of which should tend to move in the
opposite direction from the original investment. y y y y
SHORT SALES/HEDGED OR SPECULATIVE. The selling of securities which have been
borrowed on the expectation that the market price will drop. Hedged leverage,
market, correlation, liquidity, opportunity risks. n n n n
SHORT-TERM TRADING. Selling a security soon after purchase. A Fund engaging in
short-term trading will have higher turnover, brokerage commissions and transaction
expenses. Short-term trading may also have tax consequences, involving a possible
increase in short-term capital gains or losses. Market risk. y y y y
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. The purchase or sale of securities
for delivery at a future date; market value may change before delivery. Market,
opportunity, leverage risks. 5 5 5 5
DERIVATIVE SECURITIES. The Funds will not invest in derivatives for speculative
purposes, but only as a hedge against changes in the values of the Funds'
securities resulting from market conditions. y y y y
FINANCIAL FUTURES AND OPTIONS; SECURITIES AND INDEX OPTIONS. Contracts involving
the right or obligation to deliver or receive assets or money depending on the
performance of one or more assets or an economic index.
- Futures and related options. Interest rate, currency, market, leverage,
correlation, liquidity, opportunity risks. y y y y
- Puts and calls on securities and indices. Interest rate, currency, market,
leverage, correlation, liquidity, credit, opportunity risks. 5 5 5 5
CURRENCY CONTRACTS. Contracts involving the right or obligation to buy or sell a
given amount of foreign currency at a specified price and future date.
- HEDGED. Currency, hedged leverage, correlation, liquidity, opportunity risks. y y y y
- SPECULATIVE. Currency, speculative leverage, liquidity risks. n n n n
OTHER DERIVATIVES, INCLUDING PUTS, CALLS AND INTEREST RATE SWAPS. Interest rate,
currency, market, hedged or speculative leverage, correlation, liquidity, credit,
opportunity risks. y y y y
</TABLE>
38
<PAGE> 125
<TABLE>
<CAPTION>
SMALL SMALL GLOBAL HIGH- TAX-
CAPITAL MULTI-CAP COMPANY COMPANY INTERNATIONAL FINANCIAL GOVERNMENT YIELD EXEMPT
APPRECIATION GROWTH GROWTH VALUE GROWTH SERVICES INTERNET BALANCED MANAGED SECURITIES BOND INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
y y y y y y y n y y y* y
y 20 y y y* y* y y y y y y
20 y 20 20 y* y* y y 20 n n n
10 10 10 10 10 10 10 10 10 10 10 10
5 15 5 5 5 5 y y 5 5 5 5
n 33 1/3 n n n n 25 25 n n n n
y y y y y y n n y y y y
n y n n n n n n n n n n
y y y y y y y y y y y y
5 5 5 5 20 5 y y 5 20 5 20
y y y y y y* y y y y* y y
y y y y y y y y y y y y
5 y 5 5 20 5 y y 5 20 20 5
y y y y y* y* y y y y y y
n y n n n n n n n n n n
y y y y y y y y y y y y
<CAPTION>
MONEY
Market
<S> <C>
y
n
n
n
5
n
y
n
y
5
n
y
5
n
n
n
</TABLE>
39
<PAGE> 126
RISK TERMINOLOGY
CORRELATION RISK: the risk that changes in the value of a hedging
instrument will not match that of the asset being hedged (hedging is the use of
one investment to offset the effects of another investment). Incomplete
correlation can result in unanticipated risks.
CREDIT RISK: the risk that the issuer of a security, or the counterparty
to a contract, will default or otherwise become unable to honor a financial
obligation.
CURRENCY RISK: the risk that fluctuations in the exchange rates between
the U.S. dollar and foreign currencies may negatively affect an investment.
Adverse changes in exchange rates may erode or reverse any gains produced by
foreign currency denominated investments and may increase any losses.
INFORMATION RISK: the risk that key information about a security or market
is inaccurate or unavailable.
INTEREST RATE RISK: the risk of market losses attributable to changes in
interest rates. With fixed-rate securities, a rise in interest rates typically
causes a fall in values, while a fall in rates typically causes a rise in
values.
LEVERAGE RISK: the risk associated with securities or practices (such as
borrowing) that multiply small index or market movements into large changes in
value.
Hedged. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the
Fund also holds, any loss generated by the derivative should be
substantially offset by gains on the hedged investment, and vice versa.
While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains.
Speculative. To the extent that a derivative is not used as a hedge,
a Fund is directly exposed to the risks of that derivative. Gains or losses
from speculative positions in a derivative may be substantially greater
than the derivative's original cost.
LIQUIDITY RISK: the risk that certain securities may be difficult or
impossible to sell at the time and the price that the seller would like. The
seller may have to lower the price, sell other securities instead or forego an
investment opportunity, any of which could have a negative effect on Fund
management or performance.
MARKET RISK: the risk that the market value of a security may move up or
down, sometimes rapidly and unpredictably. These fluctuations may cause a
security to be worth less than the price originally paid for it, or less than it
was worth at an earlier time. Market risk may affect a single issuer, industry,
sector of the economy or the market as a whole and is common to all stocks and
bonds and the mutual funds that invest in them.
NATURAL EVENT RISK: the risk of losses attributable to natural disasters,
crop failures and similar events.
OPPORTUNITY RISK: the risk of missing out on an investment opportunity
because the assets necessary to take advantage of it are tied up in other less
advantageous investments.
POLITICAL RISK: the risk of losses attributable to government or political
actions. Political risks range from changes in tax or trade statutes to
governmental collapse and war.
VALUATION RISK: the risk that a Fund has valued certain of its securities
at a higher price than it can sell them for.
40
<PAGE> 127
SHAREHOLDER ACCOUNT INFORMATION
CLASS Y SHARES
Each Fund offers Class Y shares through this Prospectus for the minimum
initial purchase amount of $1,000,000. Class Y shares do not bear a sales
charge, distribution or service fee. Class Y shares are offered exclusively for
sale to institutional investors, including banks, savings institutions, trust
companies, insurance companies, investment companies registered under the
Investment Company Act of 1940, pension or profit sharing trusts, certain wrap
account clients of broker/dealers, former shareholders of Retirement System
Fund, Inc. ("RS Fund"), direct referrals of Fund Managers or Evaluation
Associates, Inc. ("EAI") or other financial institutional buyers. Wrap account
clients of broker/dealers, former RS Fund shareholders, and direct referrals of
Fund Managers or EAI are offered Class Y shares at a lower minimum purchase
amount.
DEALER COMPENSATION
Enterprise Fund Distributors, Inc. (the "Distributor"), a subsidiary of
Enterprise Capital Management, Inc., the Advisor to the Funds, is the principal
underwriter for shares of the Funds.
The Distributor will provide additional compensation to dealers in
connection with sales of shares of the Funds and other mutual funds distributed
by the Distributor including promotional gifts (which may include gift
certificates, dinners and other items), financial assistance to dealers in
connection with conferences, sales or training programs for their employees,
seminars for the public and advertising campaigns. In some instances, these
incentives may be made available only to dealers whose representatives have sold
or are expected to sell significant amounts of shares.
In addition to distribution and service fees paid the Funds under plans of
distribution for Class Y, the Distributor (or one of its affiliates) may make
payments to dealers (including MONY Securities Corp.) and other persons which
distribute shares of the Funds. Such payments may be calculated by reference to
the net asset value of shares sold by such persons or otherwise.
41
<PAGE> 128
PURCHASING, REDEEMING AND EXCHANGING SHARES
The charts below summarize how to purchase, redeem and exchange shares of
the Funds.
<TABLE>
<CAPTION>
HOW TO PURCHASE SHARES IMPORTANT INFORMATION ABOUT PURCHASING SHARES
<S> <C>
Select the Fund appropriate for you Be sure to read this prospectus carefully.
Have your securities dealer submit your The price of your shares is based on the next calculation of
purchase order net asset value after your order is received by the
Enterprise Shareholder Services Division of the Transfer
Agent. All purchases made by check should be in U.S. dollars
and made payable to The Enterprise Group of Funds, Inc., or
in the case of a retirement account, the custodian or
trustee. Third-party checks will not be accepted.
Acquire additional shares through the Dividends and capital gains distributions may be
Automatic Reinvestment Plan automatically reinvested in the same Class of shares without
a sales charge.
Participate in the Automatic Investment Plan You may have your shares automatically invested on a monthly
basis into the same Class of one or more of the Funds. As
long as you maintain a balance of $1,000 in the account from
which you are transferring your shares, you may transfer $50
or more to an established account in another Fund or you may
open a new account with $100 or more.
Participate in a Retirement Plan You may use shares of the Funds to establish a Profit
Sharing Plan, Money Purchase Plan, Conventional IRA, Roth
IRA, Educational IRA, other retirement plans funded by
shares of a Fund and other investment plans which have been
approved by the Internal Revenue Service.
The Distributor pays the cost of these plans, except for the
retirement plans, which charge an annual custodial fee of
$10. If you would like to find out more about these plans,
please contact the Transfer Agent.
</TABLE>
42
<PAGE> 129
<TABLE>
<CAPTION>
HOW TO REDEEM YOUR SHARES IMPORTANT INFORMATION ABOUT PURCHASING SHARES
<S> <C>
Have your investment dealer submit your The redemption price of your shares is based on the next
redemption order calculation of net asset value after your order is received.
Call the Transfer Agent at 1-800-368-3527 You may redeem your shares by telephone if you have
authorized this service. If you make a telephone redemption
request, you must furnish:
- the name and address of record of the registered owner,
- the account number and tax i.d. number,
- the amount to be withdrawn, and
- the name of the person making the request.
Checks for telephone redemptions will be issued only to the
registered shareowner(s) and mailed to the last address of
record or exchanged into another Fund. All telephone
redemption instructions are recorded and are limited to
requests of $50,000 or less.
Write the Transfer Agent at: You may redeem your shares by sending in a written request.
Enterprise Shareholder Services If you own share certificates, they must accompany the
P.O. Box 419731 written request. You must obtain a signature guarantee if:
Kansas City, MO 64141-6731 - the redemption proceeds exceed $50,000,
- the proceeds are to be sent to an address other than the
address of record, or
- the proceeds are to be sent to a person other than the
registered holder.
You can generally obtain a signature guarantee from the
following sources:
- a member firm of a domestic securities exchange;
- a commercial bank;
- a savings and loan association;
- a credit union; or
- a trust company.
Corporations, executors, administrators, trustees or
guardians may need to include additional documentation with
a request to redeem shares and a signature guarantee.
Payment of Proceeds Generally The Funds normally will make payment of redemption proceeds
within seven days after your request has been properly made
and received. When purchases are made by check or periodic
account investment, redemption proceeds may not be available
until the investment being redeemed has been in the account
for seven calendar days. The Funds may suspend the
redemption privilege or delay sending redemption proceeds
for more than seven days during any period when the New York
Stock Exchange is closed or an emergency warranting such
action exists as determined by the Securities and Exchange
Commission.
Receipt of Proceeds By Wire For a separate $10 charge, you may request that your
redemption proceeds of $250,000 or less be wired. If you
submit a written request, your proceeds may be wired to any
bank. If you authorize the Transfer Agent to accept
telephone wire requests, any authorized person may make such
requests at 1-800-368-3527. However, on a telephone request,
your proceeds may be wired only to a bank previously
designated by you in writing. If you have authorized
expedited wire redemption, shares can be sold and the
proceeds sent by federal wire transfer to a single,
previously designated bank account. Otherwise, proceeds
normally will be sent to the designated bank account the
following business day. To change the name of the single
designated bank account to receive wire redemption proceeds,
you must send a written request with signature(s) guaranteed
to the Transfer Agent.
Participate in the Bank Purchase and You may initiate an Automatic Clearing House (ACH) Purchase
Redemption Plan or Redemption directly to a bank account when you have
established proper instructions, including all applicable
bank information, on the account.
</TABLE>
43
<PAGE> 130
<TABLE>
<CAPTION>
HOW TO REDEEM YOUR SHARES IMPORTANT INFORMATION ABOUT PURCHASING SHARES
<S> <C>
Participate in a Systematic Withdrawal Plan If you have at least $5,000 in your account you may
participate in a systematic withdrawal plan. Under a plan,
you may arrange monthly, quarterly, semi-annual or annual
automatic withdrawals of at least $100 from any Fund. The
proceeds of each withdrawal will be mailed to you or as you
otherwise direct in writing, including to a life insurance
company, such as an affiliate of MONY. The $5,000 minimum
account size is not applicable to Individual Retirement
Accounts. The Funds process sales through a systematic
withdrawal plan on the 15th day of the month or the
following business day if the 15th is not a business day.
Any income or capital gain dividends will be automatically
reinvested at net asset value. A sufficient number of full
and fractional shares will be redeemed to make the
designated payment. Depending upon the size of the payments
requested and fluctuations in the net asset value of the
shares redeemed, sales for the purpose of making such
payments may reduce or even exhaust the account.
The Funds may amend the terms of a systematic withdrawal
plan on 30 days' notice. You or the Funds may terminate the
plan at any time.
</TABLE>
44
<PAGE> 131
<TABLE>
<CAPTION>
HOW TO EXCHANGE YOUR SHARES IMPORTANT INFORMATION ABOUT EXCHANGING YOUR SHARES
<S> <C>
Select the Fund into which you want to You can exchange your shares of a Fund for the same Class of
exchange. Be sure to read the prospectus shares of any other Fund.
describing the Fund into which you want to
exchange.
If you are not subject to the minimum investment requirement
of $1,000,000, and your exchange results in the opening of a
new account in a Fund, you are subject to the minimum
investment requirement of $1,000. Original investments in
the Money Market Fund which are transferred to other Funds
are considered purchases rather than exchanges.
Call the Transfer Agent at 1-800-368-3527 If you authorize the Transfer Agent to act upon telephone
exchange requests, you or anyone who can provide the
Transfer Agent with account registration information may
exchange by telephone.
If you exchange your shares by telephone, you must furnish:
- the name of the Fund you are exchanging from,
- the name and address of the registered owner,
- the account number and tax i.d. number,
- the dollar amount or number of shares to be exchanged,
- the Fund into which you are exchanging, and
- the name of the person making the request.
Write the Transfer Agent at: To exchange by letter, you must state:
Enterprise Shareholder Services - the name of the Fund you are exchanging from,
P.O. Box 419731 - the account name(s) and address,
Kansas City, MO 64141-6731 - the account number,
- the dollar amount or number of shares to be exchanged, and
- the Fund into which you are exchanging.
You must also sign your name(s) exactly as it appears on
your account statement.
</TABLE>
45
<PAGE> 132
TRANSACTION AND ACCOUNT POLICIES
VALUATION OF SHARES
When you purchase shares, you pay the net asset value. When you redeem your
shares, you receive the net asset value. The Funds calculate a share's net asset
value by dividing net assets of each Class by the total number of outstanding
shares of such Class.
The Funds calculate net asset value at the close of regular trading on each
day the New York Stock Exchange is open.
Except with respect to the Money Market Fund, investment securities, other
than debt securities, listed on either a national or foreign securities exchange
or traded in the over-the-counter National Market System are valued each
business day at the last reported sale price on the exchange on which the
security is primarily traded. If there are no current day sales, the securities
are valued at their last quoted bid price. Other securities traded
over-the-counter and not part of the National Market System are valued at the
last quoted bid price. Debt securities (other than certain short-term
obligations) are valued each business day by an independent pricing service
approved by the Board of Directors. Short-term debt securities having a
remaining maturity of sixty days or less are valued at amortized cost, which
approximates market value. Any securities for which market quotations are not
readily available are valued at their fair value as determined in good faith by
the Board of Directors. Securities held by the Money Market Fund 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
percent.
The Money Market Fund seeks to maintain a constant net asset value per
share of $1.00, but there can be no assurance that the Money Market Fund will be
able to do so.
Because Class Y shares are not subject to any distribution or service fees,
the net asset value per share of the Class Y shares will generally be higher
than the net asset value per share of Class A, Class B and Class C shares of
each Fund, except following payment of dividends and distributions.
EXECUTION OF REQUESTS
The net asset value used in determining your purchase, redemption or
exchange price is the one next calculated after your order is received by the
Fund. Price calculations will be based on trades placed in good order by 4 PM
Eastern time. The Distributor or the Fund may reject any order. From time to
time, the Funds may suspend the sale of shares. In such event, existing
shareholders normally will be permitted to continue to purchase additional
shares of the same Class and to have dividends reinvested.
The Funds normally pay redemption proceeds in cash. However, if a Fund
determines that it would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment of redemption proceeds wholly or partly
in cash, the Fund may pay the redemption price in securities (redemption in
kind), in which case, you would probably have to pay brokerage costs to sell the
securities distributed to you, as well as taxes on any capital gains from the
sale as with any redemption. The Funds have made an election that requires them
to pay $250,000 of redemption proceeds in cash, subject to other restrictions as
described in the Statement of Additional Information.
TELEPHONE TRANSACTIONS
If you elect to exchange or redeem your shares by telephone, you are
subject to the risk that neither the Funds nor the Transfer Agent will be liable
for properly acting upon unauthorized telephone instructions believed to be
genuine. The Funds use reasonable procedures to confirm that telephone
instructions are
46
<PAGE> 133
genuine. However, if appropriate measures are not taken, the Funds may be liable
for any losses that may occur to an account due to an unauthorized telephone
call.
EXCHANGES AND REDEMPTIONS
The Funds may refuse to allow the exercise of the exchange privilege in
less than two-week intervals or may restrict an exchange from any Fund until
shares have been held in that Fund for at least seven days. The Funds may also
discontinue or modify the exchange privilege on a prospective basis at any time,
including a modification of the amount or terms of a service fee, upon notice to
shareholders in accordance with applicable rules adopted by the Securities and
Exchange Commission ("SEC"). Your exchange may be processed only if the shares
of the Fund to be acquired are eligible for sale in your state and if the
exchange privilege may be legally offered in your state.
In addition, if a Fund determines that an investor is using market timing
strategies or making excessive exchanges or redemptions and immediate loss of
redemption proceeds would harm the Fund, the Fund may delay investment of the
proceeds of such investor's exchange request for up to seven days. Funds also
may refuse any exchange orders.
SHARE CERTIFICATES
The Funds do not ordinarily issue certificates representing shares of the
Funds. Instead, shares are held on deposit for shareholders by the Funds'
Transfer Agent, which will send you a statement of shares owned in each Fund
following each transaction in your account. If you wish to have certificates for
your shares, you may request them from the Transfer Agent by writing to
Enterprise Shareholder Services, P.O. Box 419731, Kansas City, MO 64141-6731.
The Funds do not issue certificates for fractional shares. You may redeem or
exchange certificated shares only by returning the certificates to the Fund,
along with a letter of instruction and a signature guarantee. Special
shareholder services such as telephone redemptions, exchanges, electronic funds
transfers and wire orders are not available if you hold certificates.
SMALL ACCOUNTS
For accounts with balances under $1,000, an annual service charge of $25
per account registration per Fund will apply, excluding Automatic Bank Draft
Plan Accounts, Automatic Investment Plan Accounts, Retirement Accounts and
Savings Plan Accounts.
If your account balance drops to $500 or less, a Fund may close out your
account and mail you the proceeds. You will always be given at least 45 days
written notice to give you time to add to your account and avoid redeeming your
shares.
47
<PAGE> 134
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Fund will distribute substantially all of its net investment income
and realized net capital gains, if any.
Each Fund makes distributions of capital gains, if any, annually. Each Fund
declares and pays dividends of investment income according to the following
schedule:
<TABLE>
<CAPTION>
DECLARED AND PAID ANNUALLY DECLARED AND PAID QUARTERLY DECLARED DAILY AND PAID MONTHLY
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth Fund Balanced Fund Government Securities Fund
Growth and Income Fund High-Yield Bond Fund
Equity Fund Tax-Exempt Income Fund
Equity Income Fund Money Market Fund
Capital Appreciation Fund
Multi-Cap Growth Fund
Small Company Growth Fund
Small Company Value Fund
International Growth Fund
Internet Fund
Global Financial Services Fund
Managed Fund
</TABLE>
Your dividends and capital gains distributions, if any, will be
automatically reinvested in shares of the same Fund and Class on which they were
paid at the net asset value. Such reinvestments automatically occur on the
payment date of such dividends and capital gains distributions. Alternatively,
if you contact the Transfer Agent, you may elect to receive dividends or capital
gains distributions, or both, in cash.
You will pay tax on dividends and distributions from the Funds whether you
receive them in cash or additional shares. The Funds intend to make
distributions that will either be taxed as ordinary income or capital gains. If,
for any taxable year, a Fund distributes income from dividends from domestic
corporations, and complies with certain requirements, corporate shareholders may
be entitled to take a dividends -- received deduction for some or all of the
dividends they receive.
If you redeem shares of a Fund or exchange them for shares of another Fund,
unless you are a dealer, you generally will recognize capital gain or loss on
the transaction. Any such gain or loss will be a long-term capital gain or loss,
if you held such shares for more than 12 months. The maximum long-term capital
gain tax rate for individuals is 20%.
Income received by the Funds from investments in securities issued by
foreign issuers may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes.
If you are neither a lawful permanent resident nor a citizen of the U.S. or
if you are a foreign entity, the Funds' ordinary income dividends (which include
distributions of net short term capital gains) will generally be subject to a
30% U.S. withholding tax, unless a lower treaty rate applies.
The Funds are required to withhold 31% ("Back-Up Withholding") of the
distributions and the proceeds of redemptions payable to shareholders who fail
to provide a correct social security or taxpayer identification number or to
make required certifications, or who have been notified by the Internal Revenue
Service that they are subject to Back-up Withholding. Corporate shareholders and
certain other shareholders specified in the IRC are exempt from Back-Up
Withholding.
Dividends derived from interest on municipal securities and designated by
the Tax-Exempt Income Fund as exempt interest dividends by written notice to the
shareholders, under existing law, are not subject to federal income tax.
Dividends derived from net capital gains realized by the Fund are taxable to
shareholders as a capital gain upon distribution. Any short-term capital gains
or any taxable interest income
48
<PAGE> 135
or accrued market discount realized by the Fund will be distributed as a taxable
ordinary income dividend distribution. These rules apply whether such
distribution is made in cash or in additional shares. Any capital loss realized
from shares held for six months or less is disallowed to the extent of
tax-exempt dividend income received.
Income from certain "private activity" bonds issued after August 7, 1986,
are items of tax preference for the corporate and individual alternative minimum
tax. If the Tax-Exempt Income Fund invests in private activity bonds, you may be
subject to the alternative minimum tax on that part of such Fund distributions
derived from interest income on those bonds. The receipt of exempt interest
dividends also may have additional tax consequences. Certain of these are
described in the Statement of Additional Information.
The treatment for state and local tax purposes of distributions from the
Tax-Exempt Income Fund representing municipal securities interest will vary
according to the laws of state and local taxing authorities.
The foregoing summarizes some of the federal income tax considerations with
respect to the Funds and their shareholders. It is not a substitute for personal
tax advice. You should consult your tax advisor for more information regarding
the potential tax consequences of an investment in the Funds under all
applicable tax laws.
The Funds will mail statements indicating the tax status of your
distributions to you annually.
49
<PAGE> 136
FUND MANAGEMENT
THE INVESTMENT ADVISOR
Enterprise Capital Management, Inc. serves as the investment advisor to
each of the Funds. The Advisor selects Fund Managers for the Funds, subject to
the approval of the Board of Directors of the Funds, and reviews each Fund
Manager's continued performance. Evaluation Associates, Inc., which has had 26
years of experience in evaluating investment advisors for individuals and
institutional investors, assists the Advisor in selecting Fund Managers. The
Advisor also provides various administrative services and acts as Fund Manager
for the Money Market Fund.
The Securities and Exchange Commission has issued an exemptive order that
permits the Advisor to enter into or amend Agreements with Fund Managers without
obtaining shareholder approval each time. The exemptive order permits the
Advisor, with Board approval, to employ new Fund Managers for the Funds, change
the terms of the Agreements with Fund Managers or enter into a new Agreement
with a Fund Manager. Shareholders of a Fund have the right to terminate an
Agreement with a Fund Manager at any time by a vote of the majority of the
outstanding voting securities of such Fund. The Funds will notify shareholders
of any Fund Manager changes or other material amendments to the Agreements with
Fund Managers that occur under these arrangements.
The Advisor, which was incorporated in 1986, served as principal investment
advisor to Alpha Fund, Inc., the predecessor of the Enterprise Growth Fund. The
Advisor also serves as investment advisor to Enterprise Accumulation Trust which
had assets of $3.962 billion at March 31, 1999. The Advisor's address is Atlanta
Financial Center, 3343 Peachtree Road, N.E., Suite 450, Atlanta, GA 30326.
The following table sets forth the fee paid to the Advisor for the fiscal
year ended December 31, 1998 by each Fund. The Advisor in turn compensated each
Fund Manager at no additional cost to the Fund. However, because the Multi-Cap
Growth, Internet and Balanced Funds are new and were not in existence on
December 31, 1998, the fees in the table below reflect the fees that will be
paid to the Advisor for the fiscal year ending December 31, 1999.
<TABLE>
<CAPTION>
FEE (AS A PERCENTAGE OF
NAME OF FUND AVERAGE NET ASSETS)
- -------------------------------------------------------------------------------------
<S> <C>
Growth Fund................................................. 0.75%
Growth and Income Fund...................................... 0.75%
Equity Fund................................................. 0.75%
Equity Income Fund.......................................... 0.75%
Capital Appreciation Fund................................... 0.75%
Multi-Cap Growth Fund....................................... 1.00%
Small Company Growth Fund................................... 1.00%
Small Company Value Fund.................................... 0.75%
International Growth Fund................................... 0.85%
Global Financial Services Fund.............................. 0.85%
Internet Fund............................................... 1.00%
Government Securities Fund.................................. 0.60%
High-Yield Bond Fund........................................ 0.60%
Tax-Exempt Income Fund...................................... 0.50%
Balanced Fund............................................... 0.75%
Managed Fund................................................ 0.75%
Money Market Fund........................................... 0.35%
</TABLE>
50
<PAGE> 137
THE FUND MANAGERS
The following chart sets forth certain information about each of the Fund
Managers other than the Advisor, which acts as the Fund Manager to the Money
Market Fund. The Fund Managers are responsible for the day-to-day management of
the Funds. The Fund Managers typically manage assets for institutional investors
and high net worth individuals. Collectively, the Fund Managers manage assets in
excess of $250 billion for all clients, including the Enterprise Group of Funds.
<TABLE>
<CAPTION>
NAME OF FUND AND NAME AND THE FUND MANAGER'S
ADDRESS OF FUND MANAGER EXPERIENCE PORTFOLIO MANAGERS
<S> <C> <C>
Growth Fund Montag & Caldwell has served as Ronald E. Canakaris, President
the Fund Manager to Alpha Fund, and Chief Investment Officer of
Montag & Caldwell, Inc. Inc., the predecessor of the Montag & Caldwell, is
("Montag & Caldwell") Growth Fund, since the Fund was responsible for the day-to-day
1100 Atlanta Financial Center organized in 1968. Montag & investment management of the
3343 Peachtree Road, N.E. Caldwell and its predecessors Growth Fund and has more than
Atlanta, Georgia 30326 have been engaged in the 30 years' experience in the
business of providing investment industry. He has
investment counseling to been President of Montag &
individuals and institutions Caldwell for more than 15
since 1945. Total assets under years.
management for all clients
approximated $30.2 billion as
of March 31, 1999. Usual
investment minimum is $40
million.
Growth and Income Fund RSI has served as Fund Manager James P. Coughlin, President
for Retirement System Fund Inc. and Chief Investment Officer of
Retirement System Investors Core Equity Fund, the RSI, is responsible for the
Inc. predecessor of The Growth and day-to-day management of the
("RSI") Income Fund, since that Fund Fund and has more than 30
317 Madison Avenue was organized in 1991. RSI has years' experience in the
New York, New York 10017 been engaged in providing investment industry. He has
investment advisory services served as President and Chief
since 1989. Total assets under Investment Officer of RSI since
management for RSI were $648 1989.
million as of March 31, 1999.
Equity Fund OpCap has been providing Eileen Rominger, Managing
investment counseling since Director of Oppenheimer
OpCap Advisors ("OpCap") 1987. OpCap had approximately Capital, is responsible for the
One World Financial Center $60 billion under management as day-to-day management of the
New York, New York 10281 of March 31, 1999. Usual Fund. Ms. Rominger has more
investment minimum is $20 than 20 years' experience in
million. the investment industry and has
been Managing Director of
Oppenheimer Capital since 1994.
She previously served as Senior
Vice President from 1986 to
1994.
Equity Income Fund 1740 Advisers has been John V. Rock, President and
providing investment counseling Director of 1740 Advisers, is
1740 Advisers, Inc. services since 1971. 1740 responsible for the day-to-day
("1740 Advisers") Advisers is an affiliate of the investment management of the
1740 Broadway Advisor. Total assets under Fund and has more than 35
New York, New York 10019 management for 1740 Advisers as years' experience in the
of December 31, 1998, were investment industry. He has
approximately $1.9 billion. served as President of 1740
Usual investment minimum is $20 Advisers since 1974.
million.
Capital Appreciation Fund PIC has served as Fund Manager Jeffrey J. Miller is a Managing
since its inception in 1987. Director of PIC and is
Provident Investment Counsel, PIC traces its origins to an responsible for the day-to-day
Inc. investment partnership formed management of the Fund. He has
("PIC") in 1951. As of March 31, 1999 more than 26 years' experience
300 North Lake Avenue total assets under management in the investment industry. He
Pasadena, California 91101 for all clients were $17.6 has been Managing Director of
billion. Usual investment PIC since 1972.
minimum is $5 million.
</TABLE>
51
<PAGE> 138
<TABLE>
<CAPTION>
NAME OF FUND AND NAME AND THE FUND MANAGER'S
ADDRESS OF FUND MANAGER EXPERIENCE PORTFOLIO MANAGERS
<S> <C> <C>
Multi-Cap Growth Fund Alger has been an investment David Alger is responsible for
adviser since 1964, and managed the day-to-day management of
Fred Alger Management, Inc. investments totaling $6.64 the Fund's portfolio. Mr. Alger
("Alger") billion in mutual fund assets has been employed by Alger as
1 World Trade Center as well as $3.95 billion in Executive Vice President and
Suite 9333 other assets at December 31, Director of Research since 1971
New York, NY 10048 1998. and as President since 1995. He
has more than 30 years
experience in the investment
industry.
Small Company Growth Fund Witter has provided investment William D. Witter, President of
counseling services since 1977. Witter, and Paul B. Phillips,
William D. Witter, Inc. As of March 31, 1999, total Managing Director of Witter,
("Witter") assets under management for all are responsible for the
One Citicorp Center clients were $975 million. day-to-day management of the
153 East 53rd Street Usual investment minimum is $1 Fund. They have more than 80
New York, New York 10022 million. years' combined experience in
the investment industry. Mr.
Witter and Mr. Phillips have
been employed in their present
positions by Witter since 1977
and 1996, respectively. Mr.
Phillips previously served as
Senior Portfolio Manager at
Bankers Trust Company from 1986
to 1995.
Small Company Value Fund GAMCO's predecessor, Gabelli & Mario J. Gabelli has served as
Company, Inc. was founded in Chief investment Officer of
Gabelli Asset Management 1977. As of March 31, 1999, GAMCO since its inception in
Company total assets under management 1977 and is responsible for the
(GAMCO Investors, Inc.) for all clients were $7.57 day-to-day management of the
One Corporate Center billion. Usual investment Fund. He has more than 28
Rye, New York 10580 minimum is $500,000. years' experience in the
investment industry.
International Growth Fund Vontobel has provided Fabrizio Pierallini, Senior
investment counseling since Vice President and Managing
Vontobel USA Inc. 1984. Vontobel's assets under Director of International
("Vontobel") management for all clients were Investments is responsible for
450 Park Avenue $1.86 billion as of March 31, the day-to-day management of
New York, New York 10022 1999. Usual investment minimum the Fund. Mr. Pierallini has
is $10 million. been employed by Vontobel since
1994 as Senior Vice President
and Managing Director. He
previously served as associate
director/portfolio manager for
the Swiss Bank and has more
than 18 years experience in the
investment industry.
Internet Fund Alger has been an investment David Alger is responsible for
adviser since 1964, and managed the day-to-day management of
Alger investments totaling $6.64 the Fund's portfolio. Mr. Alger
1 World Trade Center billion in mutual fund assets has been employed as Executive
Suite 9333 as well as $3.95 billion in Vice President and Director of
New York, NY 10048 other assets at December 31, Research since 1971 and as
1998. President since 1995. He has
more than 30 years experience
in the investment industry.
</TABLE>
52
<PAGE> 139
<TABLE>
<CAPTION>
NAME OF FUND AND NAME AND THE FUND MANAGER'S
ADDRESS OF FUND MANAGER EXPERIENCE PORTFOLIO MANAGERS
<S> <C> <C>
Global Financial Services Fund Sanford Bernstein was The day-to-day management of
established in 1967 and as of this Fund is performed by
Sanford C. Bernstein & Co., March 31, 1999, had $77.1 Sanford Bernstein's Policy
Inc. billion in assets under Group, which is chaired by
("Sanford Bernstein") management. Usual investment Andrew S. Adelson, who has more
767 Fifth Avenue minimum is $5 million. than 20 years' experience in
New York, New York 10153-0185 the investment industry. He
joined Sanford Bernstein in
1980 and has served as Chief
Investment Officer of
International Investment
Services since 1990.
Government Securities Fund The firm was founded in 1971 Philip A. Barach, Managing
and as of December 31, 1998, Director of TCW, and Jeffrey E.
TCW Funds Management, Inc. TCW and its affiliated Gundlach, Managing Director,
("TCW") companies had approximately are responsible for the
865 South Figueroa Street $54.5 billion under management day-to-day investment
Suite 1800 or committed for management in management of the Fund and have
Los Angeles, California 90017 various fiduciary advisory more than 37 years' combined
capacities. Usual investment experience in the investment
minimum is $35 million. industry. They have served as
Managing Directors since they
joined TCW in 1987 and 1985,
respectively.
High-Yield Bond Fund Caywood-Scholl has provided James Caywood, Managing
investment advice with respect Director and Chief Investment
Caywood-Scholl Capital to high-yield, low grade fixed Officer of Caywood-Scholl, is
Management income instruments since 1986. responsible for the day-to-day
("Caywood-Scholl") As of March 31, 1999, assets management of the Fund. He has
4350 Executive Drive, Suite 125 under management for all more than 30 years' investment
San Diego, California 92121 clients approximated $1.01 industry experience. He joined
billion. Usual investment Caywood-Scholl in 1986 as
minimum is $1 million. Managing Director and Chief
Investment Officer and has held
those positions since 1986.
Tax-Exempt Income Fund MBIA has provided investment Robert M. Ohanesian joined MBIA
counseling services since 1987. in 1994 as President and Chief
MBIA Capital Management Corp. As of March 31, 1999 assets Investment Officer. He has more
("MBIA") under management for all than 25 years' experience in
113 King Street clients approximated $16 the investment industry and
Armonk, New York 10504 billion. Usual investment serves as portfolio manager to
minimum is $10 million. the Fund. Mr. Ohanesian
previously served as Director
of Investments for Shields
Asset Management from 1988
through 1993.
Balanced Fund Montag & Caldwell and its Ronald E. Canakaris, President
predecessors have been engaged and Chief Investment Officer of
Montag & Caldwell in the business of providing Montag & Caldwell, and Helen M.
1100 Atlanta Financial Center investment counseling to Donahue, Assistant Vice
3343 Peachtree Road, N.E. individuals and institutions President, are responsible for
Atlanta, Georgia 30326 since 1945. Total assets under the day-to-day investment
management for all clients management of the Balanced
approximated $25.8 billion as Fund. They have more than 36
of December 31, 1998. Usual years' experience in the
investment minimum is $40 investment industry. He has
million. been President of Montag &
Caldwell for more than 15
years. Ms. Donahue has served
as Assistant Vice President
since 1993.
</TABLE>
53
<PAGE> 140
<TABLE>
<CAPTION>
NAME OF FUND AND NAME AND THE FUND MANAGER'S
ADDRESS OF FUND MANAGER EXPERIENCE PORTFOLIO MANAGERS
<S> <C> <C>
Managed Fund OpCap has provided investment Richard J. Glasebrook II,
counseling services since 1987. Managing Director of
OpCap Advisors As of March 31, 1999, Oppenheimer Capital is
One World Financial Center Oppenheimer day-to-day responsible for the day-to-day
New York, New York 10281 management of the Capital and management of the Fund. He has
its affiliates have over $60 more than 25 years' investment
billion under management. Its industry experience. Mr.
usual investment minimum is $20 Glasebrook has served as
million. Managing Director of
Oppenheimer Capital since 1994
and immediately prior to that
served as Senior Vice
President.
</TABLE>
54
<PAGE> 141
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS)
The Financial Highlights tables for each Fund is intended to help you
understand the Fund's financial performance for the past 5 years, or, if
shorter, the period of the Fund's operations. Certain information reflects
financial results for a single Fund share. The total returns in each table
represent the rate that an investor would have earned (or lost) on an investment
in a Fund (assuming reinvestment of all dividends and distributions).
A Annualized
B Not Annualized
E Effective September 1, 1995, ratio includes expenses paid indirectly.
F Based on average monthly shares outstanding.
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
DECEMBER 31, YEAR ENDED AUGUST 8 THROUGH
ENTERPRISE GROWTH FUND (CLASS Y) 1998 DECEMBER 31, 1997 DECEMBER 31, 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value beginning of period......................... $ 17.02 $ 13.12 $11.96
Net investment income (loss)................................ (0.02)(F) (0.02) --
Net realized and unrealized gain (loss) on investments...... 5.45 4.27 1.90
-------------------------------------------
Total from investment operations............................ 5.43 4.25 1.90
-------------------------------------------
Dividends from net investment Income........................ -- -- --
Distributions from capital gains............................ (1.04) (0.35) (0.74)
-------------------------------------------
Total distributions......................................... (1.04) (0.35) (0.74)
-------------------------------------------
Net asset value end of period............................... $ 21.41 $ 17.02 $13.12
-------------------------------------------
Total return................................................ 32.09% 32.40% 15.91%(B)
Net assets end of period (in thousands)..................... $60,640 $44,596 $2,339
Ratio of expenses to average net assets..................... 1.03% 0.97%(E) 1.10%(AE)
Ratio of expenses to average net assets (excluding
waivers)................................................... 1.03% 0.97%(E) 1.10%(AE)
Ratio of net investment income (loss) to average net
assets..................................................... (0.13)% (0.10)% 0.04%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ (0.13)% (0.10)% 0.04%(A)
Portfolio turnover rate..................................... 28% 22% 30%(A)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD YEAR ENDED SEPTEMBER 30,
DECEMBER 31, OCTOBER 1 THROUGH ------------------------------------
ENTERPRISE GROWTH AND INCOME FUND (CLASS Y) 1998 DECEMBER 31, 1997 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value beginning of period.................... $ 25.24 $ 25.73 $20.11 $16.69 $12.72 $12.08
Net investment income (loss)........................... 0.29 0.06 0.35 0.21 0.13 0.15
Net realized and unrealized gain (loss) on
investments........................................... 4.00 0.02 6.18 3.45 4.22 0.74
-------------------------------------------------------
Total from investment operations....................... 4.29 0.08 6.53 3.66 4.35 0.89
-------------------------------------------------------
Dividends from net investment income................... (0.17) (0.11) (0.20) (0.24) (0.16) (0.14)
Distributions from capital gains....................... (0.23) (0.46) (0.71) -- (0.22) (0.11)
-------------------------------------------------------
Total distributions.................................... (0.40) (0.57) (0.91) (0.24) (0.38) (0.25)
-------------------------------------------------------
Net asset value end of period.......................... $ 29.13 $ 25.24 $25.73 $20.11 $16.69 $12.72
-------------------------------------------------------
Total return........................................... 17.08% 0.31%(B) 33.55% 22.21% 35.24% 7.47%
Net assets end of period (in thousands)................ $18,310 $15,542 $15,428 $8,865 $5,657 $3,639
Ratio of expenses to average net assets................ 1.05% 1.05%(A) 0.99% 0.97% 0.90% 0.90%
Ratio of expenses to average net assets (excluding
waivers).............................................. 1.48% 1.68%(A) 2.20% 2.05% 2.20% 2.23%
Ratio of net investment income (loss) to average net
assets................................................ 0.89% 0.96%(A) 0.88% 1.23% 1.52% 1.17%
Ratio of net investment income (loss) to average net
assets (excluding waivers)............................ 0.45% 0.33%(A) (0.33)% 0.15% 0.22% (0.16)%
Portfolio turnover rate................................ 5% 1%(A) 16% 18% 25% 10%
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
ENTERPRISE EQUITY INCOME FUND (CLASS Y) 1/22/98 THROUGH 12/31/98
- --------------------------------------------------------------------------------------
<S> <C>
Net asset value beginning of period......................... $26.25
------
Net investment income (loss)................................ 0.47
Net realized and unrealized gain (loss) on investments...... 2.69
------
Total from investment operations............................ 3.16
------
Dividends from net investment income........................ (0.48)
Distributions from capital gains............................ (2.06)
------
Total distributions......................................... (2.54)
------
Net asset value end of period............................... $26.87
------
Total return................................................ 12.26%(B)
Net assets end of period (in thousands)..................... $ 112
Ratio of expenses to average net assets..................... 1.05%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 1.13%(A)
Ratio of net investment income (loss) to average net
assets..................................................... 1.79%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ 1.72%(A)
Portfolio turnover rate..................................... 31%(A)
</TABLE>
55
<PAGE> 142
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS)
<TABLE>
<CAPTION>
FOR THE PERIOD
ENTERPRISE CAPITAL APPRECIATION (CLASS Y) 5/14/98 THROUGH 12/31/98
- --------------------------------------------------------------------------------------
<S> <C>
Net asset value beginning of period......................... $40.71
------
Net investment income (loss)................................ (0.15)(F)
Net realized and unrealized gain (loss) on investments...... 5.34
------
Total from investment operations............................ 5.19
------
Dividends from net investment income........................ --
Distributions from capital gains............................ (7.11)
------
Total distributions......................................... (7.11)
------
Net asset value end of period............................... $38.79
------
Total return................................................ 14.08%(B)
Net assets end of period (in thousands)..................... $ 204
Ratio of expenses to average net assets..................... 1.05%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 1.05%(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)........................................ (0.51)%(A)
Portfolio turnover rate..................................... 76%(A)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD YEAR ENDED SEPTEMBER 30,
DECEMBER 31, OCTOBER 1 THROUGH -------------------------------------
ENTERPRISE SMALL COMPANY GROWTH FUND (CLASS Y) 1998 DECEMBER 31, 1997 1997 1996 1995 1994
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value beginning of period.................. $23.43 $ 26.62 $ 25.08 $19.05 $14.01 $14.74
Net investment income (loss)......................... (0.23)(F) (0.07) (0.13) (0.17) (0.12) (0.04)
Net realized and unrealized gain (loss) on
investments......................................... (0.65) (2.57) 3.73 7.62 5.49 1.58
----------------------------------------------------
Total from investment operations..................... (0.88) (2.64) 3.60 7.45 5.37 1.54
----------------------------------------------------
Dividends from net investment income................. -- -- -- -- -- --
Distributions from capital gains..................... -- (0.55) (2.06) (1.42) (0.33) (2.27)
----------------------------------------------------
Total distributions.................................. -- (0.55) (2.06) (1.42) (0.33) (2.27)
----------------------------------------------------
Net asset value end of period........................ $22.55 $ 23.43 $ 26.62 $25.08 $19.05 $14.01
----------------------------------------------------
Total return......................................... (3.76)% (9.92)%(B) 16.24% 42.07% 39.20% 11.89%
Net assets end of period (in thousands).............. $9,084 $13,540 $15,355 $6,609 $2,950 $1,825
Ratio of expenses to average net assets.............. 1.40% 1.40%(A) 1.84% 1.96% 1.85% 1.85%
Ratio of expenses to average net assets (excluding
waivers)............................................ 2.15% 1.96%(A) 3.08% 3.46% 5.15% 6.16%
Ratio of net investment income (loss) to average net
assets.............................................. (1.03)% (1.12)%(A) (1.30)% (1.43)% (1.33)% (1.37)%
Ratio of net investment income (loss) to average net
assets (excluding waivers).......................... (1.78)% (1.68)%(A) (2.54)% (2.93)% (4.63)% (5.68)%
Portfolio turnover rate.............................. 151% 24% 158% 78% 84% 73%
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
------------------------------ MAY 25 THROUGH
ENTERPRISE SMALL COMPANY VALUE FUND (CLASS Y) 1998 1997 1996 DECEMBER 31, 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value beginning of period......................... $ 7.81 $ 5.77 $ 5.43 $ 5.37
Net investment income (loss)................................ 0.01(F) 1.45 0.01 0.04
Net realized and unrealized gain (loss) on investments...... 0.46 1.12 0.63 0.26
--------------------------------------------------
Total from investment operations............................ 0.47 2.57 0.64 0.30
--------------------------------------------------
Dividends from net investment income........................ -- -- -- (0.04)
Distributions from capital gains............................ (0.22) (0.53) (0.30) (0.20)
--------------------------------------------------
Total distributions......................................... (0.22) (0.53) (0.30) (0.24)
--------------------------------------------------
Net asset value end of period............................... $ 8.06 $ 7.81 $ 5.77 $ 5.43
--------------------------------------------------
Total return................................................ 6.13% 44.53% 11.83% 5.55%(B)
Net assets end of period (in thousands)..................... $ 277 $ 119 $1,926 $2,832
Ratio of expenses to average net assets..................... 1.30% 1.30% 1.30% 1.30%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 1.39% 1.85% 1.92% 1.81%(A)
Ratio of net investment income (loss) to average net
assets..................................................... 0.06% 2.74% 0.35% 0.18%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ (0.02)% 2.19% (0.27)% (0.33)%(A)
Portfolio turnover rate..................................... 33%(A) 63% 144% 37%(A)
</TABLE>
56
<PAGE> 143
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
------------------------------ JULY 5 THROUGH
ENTERPRISE INTERNATIONAL GROWTH FUND (CLASS Y) 1998 1997 1996 DECEMBER 31, 1995
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value beginning of period......................... $ 16.71 $ 17.10 $16.07 $14.93
Net investment income (loss)................................ 0.14 0.17 0.14 0.02
Net realized and unrealized gain (loss) on investments...... 2.32 0.72 1.92 2.02
--------------------------------------------------
Total from investment operations............................ 2.46 0.89 2.06 2.04
--------------------------------------------------
Dividends from net investment income........................ (0.14) (0.15) (0.16) (0.14)
Distributions from capital gains............................ (0.15) (1.13) (0.87) (0.76)
--------------------------------------------------
Total distributions......................................... (0.29) (1.28) (1.03) (0.90)
--------------------------------------------------
Net asset value end of period............................... $ 18.88 $ 16.71 $17.10 $16.07
--------------------------------------------------
Total return................................................ 14.73% 5.21% 12.86% 13.65%(B)
Net assets end of period (in thousands)..................... $13,379 $10,986 $8,828 $3,109
Ratio of expenses to average net assets..................... 1.55% 1.55% 1.55% 1.55%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 1.66% 1.66% 1.75% 1.75%(A)
Ratio of net investment income (loss) to average net
assets..................................................... 0.75% 0.95% 1.03% 0.26%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ 0.64% 0.84% 0.84% 0.05%(A)
Portfolio turnover rate..................................... 52% 27% 24% 31%(A)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
DECEMBER 31, JULY 17 THROUGH
ENTERPRISE GOVERNMENT SECURITIES FUND (CLASS Y) 1998 DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value beginning of period......................... $12.02 $11.87
Net investment income (loss)................................ 0.74 0.35
Net realized and unrealized gain (loss) on investments...... 0.12 0.15
--------------------------------
Total from investment operations............................ 0.86 0.50
--------------------------------
Dividends from net investment income........................ (0.74) (0.35)
Distributions from capital gains............................ -- --
--------------------------------
Total distributions......................................... (0.74) (0.35)
--------------------------------
Net asset value end of period............................... $12.14 $12.02
--------------------------------
Total return................................................ 7.30% 4.02%(B)
Net assets end of period (in thousands)..................... $7,281 $7,569
Ratio of expenses to average net assets..................... 0.85% 0.85%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 0.93% 1.02%(A)
Ratio of net investment income (loss) to average net
assets..................................................... 6.06% 6.40%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ 5.98% 6.23%(A)
Portfolio turnover rate..................................... 8% 10%(A)
</TABLE>
<TABLE>
<CAPTION>
UNAUDITED
YEAR ENDED FOR THE PERIOD
DECEMBER 31, JULY 25 THROUGH
ENTERPRISE HIGH-YIELD BOND FUND (CLASS Y) 1998 DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value beginning of period......................... $12.35 $12.17
Net investment income (loss)................................ 0.99 0.67
Net realized and unrealized gain (loss) on investments...... (0.68) 0.18
--------------------------------
Total from investment operations............................ 0.31 0.85
--------------------------------
Dividends from net investment income........................ (0.99) (0.67)
Distributions from capital gains............................ (0.16) --
--------------------------------
Total distributions......................................... (1.15) (0.67)
--------------------------------
Net asset value end of period............................... $11.51 $12.35
--------------------------------
Total return................................................ 2.49% 5.24%(B)
Net assets end of period (in thousands)..................... $2,032 $ 809
Ratio of expenses to average net assets..................... 0.85% 0.85%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 1.00% 1.02%(A)
Ratio of net investment income (loss) to average net
assets..................................................... 8.30% 8.26%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ 8.16% 8.09%(A)
Portfolio turnover rate..................................... 114% 175%(A)
</TABLE>
57
<PAGE> 144
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THE PERIOD
--------------------------- 7/5/95 THROUGH
ENTERPRISE MANAGED FUND (CLASS Y) 1998 1997 1996 12/31/95
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value beginning of period......................... $ 9.27 $ 7.98 $ 6.70 $ 6.17
Net investment income (loss)................................ 0.10 0.08 0.09 0.03
Net realized and unrealized gain (loss) on investments...... 0.55 1.64 1.42 0.57
--------------------------------------------
Total from investment operations............................ 0.65 1.72 1.51 0.60
--------------------------------------------
Dividends from net investment income........................ (0.09) (0.07) (0.09) (0.04)
Distributions from capital gains............................ (0.58) (0.36) (0.14) (0.03)
--------------------------------------------
Total distributions......................................... (0.67) (0.43) (0.23) (0.07)
--------------------------------------------
Net asset value end of period............................... $ 9.25 $ 9.27 $ 7.98 $ 6.70
--------------------------------------------
Total return................................................ 7.20% 21.60% 22.63% 9.80%(B)
Net assets end of period (in thousands)..................... $89,084 $80,879 $57,794 $26,664
Ratio of expenses to average net assets..................... 1.05% 1.04% 1.12% 1.30%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 1.05% 1.04% 1.12% 1.41%(A)
Ratio of net investment income (loss) to average net
assets..................................................... 1.01% 0.92% 1.57% 1.39%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ 1.01% 0.92% 1.57% 1.28%(A)
Portfolio turnover rate..................................... 43% 28% 33% 26%(A)
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED FOR THE PERIOD
DECEMBER 31, JULY 17 THROUGH
ENTERPRISE MONEY MARKET FUND (CLASS Y) 1998 DECEMBER 31, 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value beginning of period......................... $ 1.00 $ 1.00
Net investment income (loss)................................ 0.05 0.02
--------------------------------
Total from investment operations............................ 0.05 0.02
--------------------------------
Dividends from net investment income........................ (0.05) (0.02)
--------------------------------
Total distributions......................................... (0.05) (0.02)
--------------------------------
Net asset value end of period............................... $ 1.00 $ 1.00
--------------------------------
Total return................................................ 5.04% 2.31%(B)
Net assets end of period (in thousands)..................... $3,413 $2,700
Ratio of expenses to average net assets..................... 0.65% 0.70%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 0.65% 0.95%(A)
Ratio of net investment income (loss) to average net
assets..................................................... 4.92% 4.96%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ 4.92% 4.71%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
OCTOBER 1, 1998
THROUGH
ENTERPRISE GLOBAL FINANCIAL SERVICES FUND (CLASS Y) DECEMBER 31, 1998
- -------------------------------------------------------------------------------------
<S> <C>
Net asset value beginning of period......................... $ 5.00
Net investment income (loss)................................ 0.01
Net realized and unrealized gains (losses) on investments... 1.04
------
Total from investment operations............................ 1.05
------
Dividends from net investment income........................ --
Distributions from net realized capital gains............... --
------
Total distributions......................................... --
------
Net asset value end of period............................... $ 6.05
------
Total return................................................ 21.00%(B)
Net assets end of period (in thousands)..................... $5,697
Ratio of expenses to average net assets..................... 1.30%(A)
Ratio of expenses to average net assets (excluding
waivers)................................................... 5.09%(A)
Ratio of net investment income (loss) to average net
assets..................................................... 0.61%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)........................................ (3.18)%(A)
Portfolio turnover rate..................................... 2%
</TABLE>
58
<PAGE> 145
FINANCIAL HIGHLIGHTS (CONTINUED)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS)
<TABLE>
<CAPTION>
FOR THE PERIOD
ENTERPRISE TAX-EXEMPT INCOME FUND (CLASS Y) 11/17/98 THROUGH 12/31/98
- --------------------------------------------------------------------------------------
<S> <C>
Net asset value beginning of period........................ $14.12
Net investment income (loss)............................... 0.07
Net realized and unrealized gains (losses) on
investments............................................... 0.03
------
Total from investment operations........................... 0.10
------
Dividends from net investment income....................... (0.07)
Distributions from net realized capital gains.............. (0.31)
------
Total distributions........................................ (0.38)
------
Net asset value end of period.............................. $13.84
------
Total return............................................... 0.75%(B)
Net assets end of period (in thousands).................... $ 65
Ratio of expenses to average net assets.................... 0.65%(A)
Ratio of expenses to average net assets (excluding
waivers).................................................. 0.95%(A)
Ratio of net investment income (loss) to average net
assets.................................................... 4.75%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)....................................... 4.45%(A)
Portfolio turnover rate.................................... 100%(A)
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
ENTERPRISE EQUITY FUND (CLASS Y) 10/14/98 THROUGH 12/31/98
- --------------------------------------------------------------------------------------
<S> <C>
Net asset value beginning of period........................ $ 5.86
Net investment income (loss)............................... 0.01
Net realized and unrealized gains (losses) on
investments............................................... 0.63
------
Total from investment operations........................... 0.64
------
Dividends from net investment income....................... (0.04)
Distributions from net realized capital gains.............. (0.03)
------
Total distributions........................................ (0.07)
------
Net asset value end of period.............................. $ 6.43
------
Total return............................................... 10.93%(B)
Net assets end of period (in thousands).................... $ 57
Ratio of expenses to average net assets.................... 1.13%(A)
Ratio of expenses to average net assets (excluding
waivers).................................................. 2.26%(A)
Ratio of net investment income (loss) to average net
assets.................................................... 1.04%(A)
Ratio of net investment income (loss) to average net assets
(excluding waivers)....................................... (0.11)%(A)
Portfolio turnover rate.................................... 35%(A)
</TABLE>
59
<PAGE> 146
Atlanta Financial Center
3343 Peachtree Road, Suite 450
Atlanta, Georgia 30326-1022
STATEMENT OF ADDITIONAL INFORMATION
EQUITY FUNDS:
Growth Fund
Growth and Income Fund
Equity Fund
Equity Income Fund
Capital Appreciation Fund
Multi-Cap Growth Fund
Small Company Growth Fund
Small Company Value Fund
International Growth Fund
SECTOR FUNDS:
Internet Fund
Global Financial Services Fund
INCOME FUNDS:
Government Securities Fund
High-Yield Bond Fund
Tax-Exempt Income Fund
DOMESTIC HYBRID FUNDS:
Balanced Fund
Managed Fund
MONEY MARKET FUND:
Money Market Fund
This Statement of Additional Information is not a prospectus and should
be read in conjunction with the Enterprise Group of Funds, Inc. (the
"Corporation") Prospectus dated July 1, 1999, which has been filed with the
Securities and Exchange Commission and can be obtained, without charge, by
writing to the Corporation at 3343 Peachtree Road, N.E., Suite 450, Atlanta,
Georgia 30326, or by calling the Corporation at the following numbers:
1-800-432-4320
1-800-368-3527 (SHAREHOLDER SERVICES)
The Prospectus is incorporated by reference into this Statement of
Additional Information, and this Statement of Additional Information is
incorporated by reference into the Prospectus.
The date of this Statement of Additional Information is July 1,
1999.
<PAGE> 147
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
General Information and History...................................................................................1
Investment Objectives and Policies................................................................................1
Certain Investment Securities, Techniques and Associated Risks...................................................12
Investment Restrictions..........................................................................................29
Portfolio Turnover...............................................................................................32
Management of the Corporation....................................................................................32
Fund Manager Arrangements........................................................................................43
Investment Advisory and Other Services ..........................................................................46
Investment Advisory Agreement...........................................................................46
Distributor's Agreements And Plans Of Distribution......................................................48
Miscellaneous...........................................................................................49
Purchase, Redemption and Pricing of Securities Being Offered.....................................................49
Initial Sales Charge Waivers and Reductions.............................................................50
Exemptions from Class A, B and C CDSC...................................................................51
CDSC Waivers and Reductions.............................................................................51
Services For Investors..................................................................................52
Conversion of Class B shares............................................................................54
Exchange Privilege......................................................................................55
Redemptions In Kind.....................................................................................55
Determination Of Net Asset Value........................................................................56
Fund Transactions and Brokerage..................................................................................61
Performance Comparisons..........................................................................................64
Taxes............................................................................................................67
Dividends and Distributions......................................................................................70
Additional Information...........................................................................................71
Custodian, Transfer and Dividend Disbursing Agent................................................................72
Independent Accountants..........................................................................................72
Financial Statements.............................................................................................73
Appendix A.......................................................................................................74
Appendix B.......................................................................................................76
</TABLE>
i
<PAGE> 148
GENERAL INFORMATION AND HISTORY
The Enterprise Group of Funds, Inc. (the "Corporation"), an open-end
management investment company, was incorporated in Maryland on January 2, 1968,
as Alpha Fund, Inc. On September 14, 1987, the Corporation's name was changed to
The Enterprise Group of Funds, Inc. and the Corporation's common stock was
divided into nine classes, each of which representing shares of a separate fund
of the Corporation (each a "Fund," and collectively the "Funds"). Effective May
1, 1990, the Corporation added its Money Market Fund. Effective October 1, 1993,
the Corporation added its Small Company Value Fund and effective October 3,
1994, the Corporation added its Managed Fund. Effective May 1, 1995, the
Corporation added Class B and Class Y Shares. Effective May 1, 1997, the
Corporation added Class C Shares and the Equity, Growth and Income and Small
Company Growth Funds. Effective October 1, 1998, the Corporation added its
Global Financial Services Fund. Effective July 1, 1999, the Corporation added
the Multi-Cap Growth Fund, the Internet Fund and the Balanced Fund. Each Fund is
diversified, as that term is defined in the Investment Company Act of 1940.
INVESTMENT OBJECTIVES AND POLICIES
The following information is provided for those investors wishing to
have more comprehensive information than that contained in the Prospectus. The
investment objectives of each Fund may not be changed without approval of a
majority of the outstanding voting securities of that Fund.
Equity Funds, Domestic Hybrid Funds and Sector Funds
Under normal market conditions, at least 65% of the net asset value of
the eleven Equity, Domestic Hybrid and Sector Funds will be invested in common
equity securities. The remainder of the Equity Funds' assets may be invested in
repurchase agreements, bankers acceptances, bank certificates of deposit,
commercial paper and similar money market instruments, convertible bonds,
convertible preferred stock, preferred stock, corporate bonds, U.S. Treasury,
notes and bonds, American Depository Receipts ("ADRs"), European Depository
Receipts ("EDRs"), rights and warrants.
The Growth, Growth and Income, Equity, Equity Income, Capital
Appreciation, Multi-Cap Growth, Small Company Growth, Small Company Value,
Global Financial Services, Balanced and Managed Funds invest in securities that
are traded on national securities exchanges and in the over-the-counter market.
Each of these Funds, except the Global Financial Services Fund, may invest up to
20% of its assets in foreign securities provided they are listed on a domestic
or foreign securities exchange or are represented by ADRs or EDRs. The Global
Financial Services Fund may invest over 50% of its assets in foreign securities.
As noted below, the International Growth Fund invests principally in the
securities of foreign issuers listed on recognized foreign exchanges, but may
also invest in securities traded on the over-the-counter market. No Fund except
the Multi-Cap Growth Fund, the Internet Fund and the Balanced Fund, may
invest more than 10% of its net assets in illiquid, including restricted,
securities. The Multi-Cap Growth Fund, the Internet Fund and the Balanced Fund
may invest up to 15% of their net assets in such securities.
Growth Fund. The objective of the Growth Fund is capital appreciation.
The Fund's common stock selection emphasizes those
<PAGE> 149
companies having growth characteristics, but the Fund's investment policy
recognizes that securities of other companies may be attractive for capital
appreciation purposes by virtue of special developments or depression in price
believed to be temporary. The potential for appreciation of capital is the basis
for investment decisions; any income is incidental.
Growth and Income Fund. The objective of the Growth and Income Fund is
total return through capital appreciation with income as a secondary
consideration. The Fund will invest in securities of companies which the Fund
Manager believes to be financially sound and will consider such factors as the
sales, growth and profitability prospects for the economic sector and markets in
which the company operates and for the services or products it provides; the
financial condition of the company; its ability to meet its liabilities and to
provide income in the form of dividends; the prevailing price of the security;
how that price compares to historical price levels of the security to current
price levels in the general market, and to the prices of competing companies;
projected earnings estimates and projected earnings growth rate of the company,
and the relation of those figures to the current price. The securities held in
the Growth and Income Fund will generally reflect the price volatility of the
broad equity market.
Equity Fund. The investment objective of the Equity Fund is long-term
capital appreciation. The Fund invests in securities (primarily equity
securities) of companies that are believed by the Fund Manager to be undervalued
in the marketplace in relation to factors such as the companies' assets or
earnings. It is the Fund Manager's intention to invest in securities of
companies which in the Fund Manager's opinion possess one or more of the
following characteristics: undervalued assets, valuable consumer or commercial
franchises, securities valuation below peer companies, substantial and growing
cash flow and/or a favorable price to book value relationship. Investment
policies aimed at achieving the Fund's objective are set in a flexible framework
of securities selection which primarily includes equity securities, such as
common stocks, preferred stocks, convertible securities, rights and warrants in
proportions which vary from time to time. Under normal circumstances at least
65% of the Fund's assets will be invested in equity securities. The Fund will
invest primarily in stocks listed on the New York Stock Exchange. In addition,
it may also purchase securities listed on other domestic securities exchanges,
securities traded in the domestic over-the-counter market and foreign securities
provided that they are listed on a domestic or foreign securities exchange or
represented by ADRs or EDRs listed on a domestic securities exchange or traded
in the United States over-the-counter market.
Equity Income Fund. The objective of the Equity Income Fund is a
combination of growth and income to achieve an above-average and consistent
total return. The Fund invests primarily in
2
<PAGE> 150
dividend-paying common stocks. Under normal circumstances, at least 65% of the
Fund's total assets will be invested in income-producing equity securities.
The Fund's principal criterion in stock selection is above-average
yield, and it uses this criterion as a discipline to enhance stability and
reduce market risk. Subject to this primary criterion, the Fund invests in
stocks that have relatively low price to earnings ratios or relatively low price
to book value ratios.
Capital Appreciation Fund. The objective of the Capital Appreciation
Fund is maximum capital appreciation. The Fund invests primarily in common
stocks of companies that demonstrate accelerating earnings momentum and
consistently strong financial characteristics.
The Fund invests primarily in common stocks of companies which meet the
Fund Manager's criteria of: (a) steadily increasing earnings; and (b) a
three-year average performance record of sales, earnings, dividend growth,
pretax margins, return on equity and reinvestment rate at an aggregate average
of 1.5 times the average performance of the Standard & Poor's 500 common stocks
("S&P 500") for the same period. The Fund attempts to invest in a range of
small, medium and large companies designed to achieve an average capitalization
of the companies in which it invests that is less than the average
capitalization of the S&P 500. The potential for maximum capital appreciation is
the basis for investment decisions; any income is incidental.
Multi-Cap Growth Fund. The Multi-Cap Growth Fund invests primarily in
growth stocks. The Fund Manager believes that these companies tend to fall into
one of two categories: High Unit Volume Growth and Positive Life Cycle Change.
High Unit Volume Growth companies are those vital, creative companies that
offer goods or services to a rapidly expanding marketplace. They include both
established and emerging firms, offering new or improved products, or firms
simply fulfilling an increased demand for an existing line. Positive Life Cycle
Change companies are those companies experiencing a major change that is
expected to produce advantageous results. These changes may be as varied as new
management; products or technologies; restructuring or reorganization; or
merger and acquisition. The Fund can leverage, that is, borrow money, to buy
additional securities for its portfolio. By borrowing money, the Fund has the
potential to increase its returns if the increase in the value of the
securities purchase exceeds the cost of borrowing, including the interest paid
on the money borrowed.
Small Company Growth Fund. The Small Company Growth Fund seeks to
achieve its objective of capital appreciation by investing primarily in common
stocks of small companies with strong earnings growth and potential for
significant capital appreciation. Under normal market conditions, the Fund will
have at least 65% of its total assets in small capitalization stocks (market
capitalization of up to $1 billion) and generally that percentage will be
considerably higher. The Fund reserves the right to have some of its assets in
the equities of companies with over $1 billion in market capitalization. These
holdings may be equities that have appreciated since original purchase or
equities of companies with a market capitalization in excess of $1 billion at
the time of purchase. The Fund will normally be as fully invested as practicable
in common stocks, but also may invest up to 5% of its assets in warrants and
rights to purchase common stocks.
In pursuing its objective, the Fund Manager will seek out the stocks of
small companies that are expected to have above average growth in earnings and
are reasonably valued. The Fund Manager uses a disciplined approach in
evaluating growth companies. It relates the expected growth rate in earnings to
its price-earnings ratio of the stock. Generally, the Fund Manager will not buy
a stock if its price-earnings ratio exceeds its growth rate. By using this
valuation parameter, the Fund Manager believes it moderates some of the inherent
volatility in the small-capitalization sector of the market. Securities will be
sold when the Fund Manager believes the stock price exceeds the valuation
criteria, or when the stock appreciates to a point where it is substantially
overweighted in the portfolio, or when the company no longer meets The Fund
Manager's expectations. The Fund Manager's goal is to
3
<PAGE> 151
hold a stock for a minimum of one year but this may not always be feasible and
there may be times when short-term gains or losses will be realized.
Small Company Value Fund. The objective of the Small Company Value Fund
is maximum capital appreciation. The Fund invests at least 65% of its total
assets in the common equity securities of companies (based on the total
outstanding common shares at the time of investment) which have a market
capitalization of up to $1 billion.
The Fund intends to invest the remaining 35% of its total assets in the
same manner but reserves the right to use some or all of the 35% to invest in
equity securities of companies (based on the total outstanding common shares at
the time of investment) which have a market capitalization of more than $1
billion.
In pursuing its objective, the Fund's strategy will be to invest in
stocks of companies with value that may not be fully reflected by the current
stock price. Since small companies tend to be less actively followed by stock
analysts, the market may overlook favorable trends and then adjust its valuation
more quickly once investor interest has surfaced. The Fund Manager uses a number
of proprietary research techniques in various sectors to seek out companies in
the public market that are selling at a discount to what the Fund Manager terms
the private market value (PMV) of the companies. The Fund Manager then
determines whether there is an emerging valuation catalyst that will increase
market price. Smaller companies may be subject to a valuation catalyst such as
increased investor attention, takeover efforts or a change in management.
International Growth Fund. The objective of the International Growth
Fund is capital appreciation. The Fund primarily invests in a diversified
portfolio of non-U.S. equity securities.
It is an operating policy of the Fund that it will invest at least 80%
of its total assets (except when maintaining a temporary defensive position) in
equity securities of companies domiciled outside the United States. That portion
of the Fund not invested in equity securities is, in normal circumstances,
invested in U.S. and foreign government securities, high-grade commercial paper,
certificates of deposit, foreign currency, bankers acceptances, cash and cash
equivalents, time deposits, repurchase agreements and similar money market
instruments, both foreign and domestic. The Fund may invest in convertible debt
securities of foreign issuers which are convertible into equity securities at
such time as a market for equity securities is established in the country
involved.
4
<PAGE> 152
The International Growth Fund will invest primarily in equity
securities, which may achieve capital appreciation by selecting companies with
superior potential based on a series of macro and micro analyses. The
International Growth Fund may select its investments from companies which are
listed on a domestic or foreign securities exchange or from companies whose
securities have an established over-the-counter market, and may make limited
investments in "thinly traded" securities.
The International Growth Fund will normally have at least 65% of its
total assets invested in European and Pacific Basin equity securities. The
International Growth Fund intends to broadly diversify investments among
countries and normally to have represented in the portfolio issuers located in
not less than three different countries. The selection of the securities in
which the International Growth Fund will invest will not be limited to companies
of any particular size.
Using a bottom-up investment approach, Vontobel USA invests in large-
and medium-capitalization companies that have a long record of successful
operations in their core business. Typically such companies occupy a leading
position in their industry, have consistently generated free cash flow, and have
achieved earnings growth through increasing market share and unit sales volumes.
Vontobel USA's goal is to construct a portfolio of the best companies in the
developed markets of Europe and the Pacific Basin without making any country
bets. With approximately 80-100 stocks, the International Growth Fund also seeks
to be well diversified in terms of industry exposure. Vontobel USA analyzes
approximately 35 international equity markets, including those comprised in
Morgan Stanley Capital International's EAFE (Europe, Australia and Far East).
The Adviser also gives consideration to such factors as market liquidity,
accessibility to foreign investors, regulatory protection of shareholders,
accounting and disclosure standards, transferability of funds and foreign
exchange controls, if any.
5
<PAGE> 153
Global Financial Services Fund
The objective of the Global Financial Services Fund is capital
appreciation. The Global Financial Services Fund invests almost exclusively in
financial services stocks with average holdings of between 55 and 75 stocks. At
least 65% of total assets of the Fund will normally be invested in financial
services stocks. In addition, the Fund primarily invests in U.S. financial
services companies. Other countries eligible for inclusion into this service
will be limited to the developed market as represented by the MSCI EAFE Index
with Canada. The Fund Manager will not make investments in emerging markets. The
Fund is broadly diversified geographically, typically with holdings in ten or
more foreign countries. The vast majority of the investments are made in common
stocks with a fully invested
6
<PAGE> 154
posture being the norm. Individual security positions are controlled so that no
single holding will dominate the portfolio.
The Fund Manager employs a centralized investment approach in all
portfolios. The Global Investment Policy Group uses its many years of experience
and market memory to review analysts' latest research findings and forecasts.
The group integrates the work of analysts, economists and the quantitative
group, systematically applying valuation and portfolio construction processes to
select securities. The portfolio managers then apply the Investment Policy
Group's decisions, deviating only to conform to Fund objectives.
The Fund Manager employs 129 analysts who take an intensive, long-term
approach to forecasting earnings power and growth. Organized in global industry
teams so that they can discern companies' strategies, cost pressures and
competition in a global context, the Fund Manager's analysts are centrally
located so that the senior professionals can control the quality of their
findings.
Internet Fund. Under normal conditions, the Internet Fund will invest
at least 65% of its assets in equity securities. In choosing which companies'
stock the Fund should purchase, the Fund Manager invests in those companies
listed on a U.S. securities exchange or NASDAQ which are engaged in the
research, design, development or manufacturing, or engaged to a significant
extent in the business of distributing products, processes or services for use
with Internet or Intranet related businesses. The Fund may also invest in other
"high tech" companies. The Internet is a world-wide network of computers
designed to permit users to share information and transfer data quickly and
easily. The World Wide Web ("WWW"), which is a means of graphically interfacing
with the Internet, is a hyper-text based publishing medium containing text,
graphics, interactive feedback mechanisms and links within WWW documents and to
other WWW documents. An Intranet is the application of WWW tools and concepts to
a company's internal documents and databases. Other "high tech" companies may
include firms in the computer, communications, video, electronic, office and
factory automation and robotics sectors.
Income Funds
Investors should refer to Appendix A to this Statement of Additional
Information for a description of the Moody's Investors Service, Inc. ("Moody's")
and Standard & Poor's ("S&P") ratings mentioned below.
Government Securities Fund. The objective of the Government Securities
Fund is current income and safety of principal. The Fund invests primarily in
from securities that are obligations of the U.S. Government, its agencies and
instrumentalities ("U.S. Government Securities").
It is a fundamental policy of the Fund that under normal conditions at
least 80% of its net assets will be invested in U.S. Government Securities.
Securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities are generally considered to be of the same or higher credit
quality as privately issued securities rated Aaa by Moody's Investor Services or
AAA by Standard & Poor's.
U.S. Government Securities consist of direct obligations of the U.S.
Treasury (such as treasury bills, treasury notes and treasury bonds) and
securities issued or guaranteed by agencies and instrumentalities of the United
States Government. Those securities issued by agencies or instrumentalities may
or may not be backed by the full faith and credit of the United States. Examples
of full faith and credit securities are securities issued by the Government
National Mortgage Association ("GNMA Certificates"). Examples of agencies or
instrumentalities whose securities are not backed by the full faith and credit
of the United States are the Federal Farm Credit System, the Federal Home Loan
Banks, the Tennessee Valley Authority, the United States Postal Service and the
Export-Import Bank. The Fund will choose among these categories in order to
achieve the highest level of current income and safety of principal.
7
<PAGE> 155
The remainder of the Fund's assets may be invested in repurchase
agreements, bankers acceptances, bank certificates of deposit, commercial paper
and similar money market instruments, corporate bonds and other mortgage-related
securities (including collateralized mortgage obligations or "CMOs") rated Aaa
by Moody's or AAA by S&P at the time of the investment or determined by the Fund
Manager to be of comparable credit quality at the time of investment to such
rated securities. In making such investments, the Fund Manager seeks income but
gives careful attention to security of principal and considers such factors as
marketability and diversification. For a discussion of CMOs and related risks,
see "Certain Investment Techniques and Associated Risks in this Statement of
Additional Information."
As described in "Certain Investment Techniques and Associated Risks,"
the Fund may write and sell covered call option contracts on securities that it
owns (in an effort to enhance income through hedging and other investment
techniques) to the extent of 20% of its net assets at the time such option
contracts are written.
High-Yield Bond Fund. The objective of the High-Yield Bond Fund is
maximum current income. The Fund invests primarily in debt securities that are
rated Ba or lower by Moody's or BB or lower by S&P.
It is a fundamental policy of the Fund that under normal circumstances
it will invest at least 80% of its net assets (at least 65% of gross assets) in
high-yielding, income-producing domestic corporate bonds that are rated below
investment grade and rated B3 or better by Moody's or B- or better by S&P. The
corporate bonds in which the Fund invests are high-yielding but normally carry a
greater credit risk than bonds with higher ratings. In addition, such bonds,
commonly referred to as "junk bonds," may involve greater volatility of price
than higher-rated bonds. For a discussion of high-yield securities and related
risks, see "Certain Investment Techniques and Associated Risks."
The Fund's investments are selected by the Fund Manager after careful
examination of the economic outlook to determine those industries that appear
favorable for investments. Industries going through a perceived decline
generally are not candidates for selection. After the industries are selected,
bonds of issuers within those industries are selected based on their
creditworthiness, their yields in relation to their credit and the relative
strength of their common stock prices. Companies near or in bankruptcy are not
considered for investment. The Fund does not purchase bonds which are rated Ca
or lower by Moody's or CC or lower by S&P or which, if unrated, in the judgment
of the Fund Manager have characteristics of such lower-grade bonds. Should an
investment purchased with the above-described credit quality requisites be
downgraded to Ca or lower or CC or lower, the Fund Manager shall have discretion
to hold or liquidate the security.
Subject to the restrictions described above, under normal
circumstances, up to 20% of the Fund's total assets may include: (1) bonds rated
Caa by Moody's or CCC by S&P; (2) unrated debt securities which, in the judgment
of the Fund Manager have characteristics similar to below investment grade
bonds; (3) convertible debt securities; (4) puts, calls and futures as hedging
devices;
8
<PAGE> 156
(5) foreign issuer debt securities; and (6) short-term money market
instruments, including certificates of deposit, commercial paper, U.S.
Government Securities and other income-producing cash equivalents. For a
discussion of puts, calls, and futures and their related risks, see "Certain
Investment Techniques and Associated Risks."
Tax-Exempt Income Fund. The objective of the Tax-Exempt Income Fund is
a high level of current income not includable in gross income for federal income
tax purposes, with consideration given to preservation of principal. The Fund
invests primarily in a diversified portfolio of long-term investment grade
municipal bonds.
It is a fundamental policy of the Fund that under normal circumstances
it will invest at least 80% of its net assets in investment grade "Municipal
Securities" (or futures contracts or options on futures with respect thereto)
which, at the time of investment, are investment grade or in Municipal
Securities which are not rated if, based upon credit analysis by the Fund
Manager, it is believed that such securities are of comparable quality to such
rated bonds. Municipal Securities are notes and bonds issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities. These
securities are traded primarily in the over-the-counter market. Such securities
may have fixed, variable or floating rates of interest. The interest on
investment grade Municipal Securities, in the opinion of counsel for issuers and
the Fund, is generally not includable in gross income for federal income tax
purposes, and is generally not subject to the alternative minimum tax. See the
Appendix B for a further description of Municipal Securities.
Investment grade securities in which the Fund may invest are those
bonds rated within the three highest ratings by Moody's (Aaa, Aa, A) or S&P
(AAA, AA, A); notes given one of the three highest ratings by Moody's (MIG1,
MIG2, MIG3) commercial paper rated P-1 by Moody's or A-1 by S&P; and
variable rate securities rated VMIG1 or VMIG2 by Moody's.
While there are no maturity restrictions on the Municipal Securities in
which the Fund invests, the average maturity is expected to range between 10 and
25 years. The Fund Manager will actively manage the Fund, adjusting the average
Fund maturity and in some cases utilizing futures contracts and options on
futures as a defensive measure according to its judgment of anticipated interest
rates. During periods of rising interest rates and falling prices, a shorter
weighted average maturity may be adopted to cushion the effect of bond price
declines on the Fund's net asset value. When rates are falling and prices are
rising, a longer weighted average maturity rate may be adopted. For a discussion
on futures and their related risks, see "Certain Investment Techniques and
Associated Risks."
The Fund may also invest up to 20% of its net assets in cash, cash
equivalents and debt securities, the interest from which may be subject to
federal income tax. Investments in taxable
9
<PAGE> 157
securities will be limited to investment grade corporate debt securities and
U.S. Government Securities.
The Fund will invest at least 80% of its total assets in tax-exempt
securities, the interest on which is not subject to federal alternative minimum
tax.
Domestic Hybrid Funds
The Balanced Fund. Generally, between 60% and 75% of the Balanced
Fund's total assets will be invested in equity securities. The portfolio
allocation will vary based upon the Fund Manager's assessment of the return
potential of each asset class. For equity investments, the Fund Manager uses a
bottom-up approach to stock selection, focusing on high quality,
well-established companies that have a strong history of earnings growth;
attractive prices relative to the company's potential for above average;
long-term earnings and revenue growth; strong balance sheets; a sustainable
competitive advantage; the potential to become (or currently are) industry
leaders; and the potential to outperform the market during downturns. When
selecting fixed income securities, the Fund Manager will seek to maintain the
Fund's weighted average duration within 20% of the duration of the Lehman
Brothers Government Corporate Index. Emphasis is also placed on diversification
and credit analysis. The Fund will only invest in fixed income securities with
an "A" or better rating. Fixed income investments will include: U.S. Government
securities; corporate bonds; mortgage/asset-backed securities; and money market
securities and repurchase agreements.
Managed Fund. The objective of the Managed Fund is growth of capital
over time. The Fund invests in a diversified portfolio consisting of common
stocks, bonds and cash equivalents, the percentages of which will vary based on
the Fund Manager's assessments of the relative outlook for such investments. In
seeking to achieve its investment objective, the types of equity securities in
which the Fund may invest will be the same as those in which the Equity Funds
invest. Debt securities are expected to be predominantly investment grade
intermediate to long-term U.S. Government and corporate debt, although the Fund
will also invest in high quality short-term money market and cash equivalent
securities and may invest all of its assets in such securities when the Fund
Manager deems it advisable in order to preserve capital. In addition, the Fund
may also invest up to 20% of its total assets in foreign securities provided
that they are listed on a domestic or foreign securities exchange or are
represented by ADRs or EDRs listed on a domestic securities exchange or traded
in the United States over-the-counter market.
The allocation of the Fund's assets among the different types of
permitted investments will vary from time to time based upon the Fund Manager's
evaluation of economic and market trends and its perception of the relative
values available from such types of securities at any given time. There is
neither a minimum nor a maximum percentage of the Fund's assets that may, at any
given time, be invested in any of the types of investments identified above.
Consequently, while the Fund will earn income to the extent it is invested in
bonds or cash equivalents, the Fund does not have any specific income objective.
However, it is a policy of the Fund that it will not invest more than 5% of the
value of its total assets in high-yield securities.
Money Market Fund
Money Market Fund. The investment objective of the Money Market Fund is
to provide the highest possible level of current income, consistent with
preservation of capital and liquidity. Securities in which the Fund will invest
may not yield as high a level of current income as securities of lower quality
and longer maturity which generally have less liquidity and greater market risk.
The Money Market Fund seeks to achieve its objective by investing in a
diversified portfolio of high-quality money market instruments, comprised of
U.S. dollar-denominated instruments which present minimal credit risks and are
of eligible quality which consist of the following:
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1. obligations issued or guaranteed as to principal and interest by the
United States Government or any agency or authority controlled or
supervised by and acting as an instrumentality of the U.S. Government
pursuant to authority granted by Congress;
2. U.S. dollar denominated commercial paper, negotiable certificates of
deposit, letters of credit, time deposits and bankers acceptances, of
U.S. or foreign banks, and U.S. or foreign savings and loans
associations, which at the date of investment have capital, surplus and
undistributed profits as of the date of their most recent published
financial statements of $500,000,000 or greater;
3. short-term corporate debt instruments (commercial paper or variable
amount master demand notes) rated "A-1" or "A-2" by S&P or "Prime 1" or
"Prime 2" by Moody's or Tier 1 by any two Nationally Recognized
Statistical Rating Organizations ("NRSRO"), or, if not rated, issued by
a company rated at least "A" by any two NRSROs; however, investments in
securities of all issuers having the second highest rating (A-2/P-2)
assigned shall be limited to no more than five percent of the Fund's
assets at the time of purchase, with the investment of any one such
issuer being limited to not more than one percent of Fund assets at the
time of purchase;
4. corporate obligations limited to non-convertible corporate debt
securities having one year or less remaining to maturity and which are
rated "AA" or better by S&P or "Aa" or better by Moody's; and
5. repurchase agreements with respect to any of the foregoing
obligations.
The Money Market Fund will limit its investment in the securities of
any one issuer to no more than five percent of Fund assets, measured at the time
of purchase.
In addition, the Money Market Fund will not purchase any security,
including any repurchase agreement maturing in more than seven days, which is
subject to legal or contractual delays on resale or which is not readily
marketable if more than 10% of the net assets of the Money Market Fund, taken at
market value would be invested in such securities.
After purchase by the Money Market Fund, a security may cease to be
rated or its rating may be reduced below the minimum required for purchase by
the Money Market Fund. Neither event will require a sale of such security by the
Money Market Fund. The Fund Manager will consider such event in its
determination of whether the Money Market Fund should continue to hold the
security provided that the security presents minimal credit risks and that
holding the security is in the best interests of the Fund. To the extent Moody's
or S&P may change their rating systems generally (as described in Appendix A)
the Money Market Fund will attempt to use comparable ratings as standards for
investments in accordance with investment policies contained herein and in the
Fund's Prospectus.
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The dollar-weighted average maturity of the Money Market Fund will be
90 days or less.
All investments of the Money Market Fund will be limited to instruments
which are determined to be of eligible quality, which, if instruments of foreign
issuers, are United States dollar-denominated instruments presenting minimal
credit risk, and all of which are either:
1. of those rated in the two highest rating categories by any NRSRO, or
2. if the instrument is not rated, of comparable quality as determined
by or under the direction of the Board of Directors.
Generally, instruments with NRSRO ratings in the two highest grades are
considered "high quality." All of the money market investments will mature in
397 days or less. The Money Market Fund will use the amortized cost method of
securities valuation, as described more fully below in "Determination of Net
Asset Value."
CERTAIN INVESTMENT SECURITIES, TECHNIQUES
AND ASSOCIATED RISKS
Following is a description of certain investment techniques employed by
the Funds, and certain types of securities invested in by the Funds and
associated risks. Unless otherwise indicated, all of the Funds may use the
indicated techniques and invest in the indicated securities.
Mortgage-Related Securities and Asset-Backed Securities
Up to 20% of the net assets of the Government Securities Fund may be
invested in assets other than U.S. Government Securities, including
collateralized mortgage-related securities ("CMOs") and asset-backed securities.
The Balanced Fund may also invest in such securities as well as Real Estate
Mortgage Investment Conduits ("REMICs") and Multi-Pass-Throughs. These
securities are considered to be volatile and may be thinly traded. CMOs are
obligations fully collateralized by a portfolio of mortgages or mortgage-related
securities. Payments of principal and interest on the mortgages are passed
through to the holders of the CMOs on the same schedule as they are received,
although certain classes of CMOs have priority over others with respect to the
receipt of prepayments on the mortgages. Therefore, depending on the type of
CMOs in which the Government Securities Fund and Balanced Fund invests, the
investment may be subject to a greater or lesser risk of prepayment than other
types of mortgage-related securities. REMIC's are private entities formed for
the purpose of holding a fixed pool of mortgages secured by an interest in real
property. REMICs are similar to CMOs in that they issue multiple classes of
securities. As with CMOs, the mortgages which collateralize the REMICs in which
the Funds may invest include mortgages backed by GNMA certificates or other
mortgage pass-throughs issued or guaranteed by the U.S. Government, its agencies
or instrumentalities or issued by private entities, which are not guaranteed by
any government agency.
While there are many versions of CMOs and asset-backed securities, some
include "Interest Only" or "IO" -- where all interest payments go to one class
of holders, "Principal Only" or "PO" -- where all of the principal goes to a
second class of holders, "Floaters" -- where the coupon rate floats in the same
direction as interest rates and "Inverse Floaters" --where the coupon rate
floats in the opposite direction as interest rates. All of these securities are
volatile; they also have particular risks in differing interest rate
environments as described below.
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The yield to maturity on an IO class is extremely sensitive to the rate
of principal payments (including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a material adverse
effect on yield to maturity and, therefore, the market value of the IO. As
interest rates rise and fall, the value of IOs tends to move in the same
direction as interest rates. Accordingly, investment in IOs can theoretically be
expected to contribute to stabilizing the Fund's net asset value. However, if
the underlying mortgage assets experience greater than anticipated prepayments
of principal, the Fund may fail to fully recoup its initial investment in these
securities even if the securities are rated AAA or the equivalent. Conversely,
while the yield to maturity on a PO class is also extremely sensitive to rate of
principal payments (including prepayments) on the related underlying mortgage
assets, a slow rate of principal payments may have a material adverse effect on
yield to maturity and therefore the market value of the PO. As interest rates
rise and fall, the value of POs tends to move in the opposite direction from
interest rates. This is typical of most debt instruments.
Floaters and Inverse Floaters ("Floaters") are extremely sensitive to
the rise and fall in interest rates. The coupon rate on these securities is
based on various benchmarks, such as LIBOR ("London Inter-Bank Offered Rate")
and the 11th District cost of funds (the base rate). The coupon rate on Floaters
can be affected by a variety of terms. Floaters can be reset at fixed intervals
over the life of the Floater, float with a spread to the base rate or be a
certain percentage rate minus a certain base rate. Some Floaters have floors
below which the interest rate cannot be reset and/or ceilings above which the
interest rate cannot be reset. The coupon rate and/or market value of Floaters
tend to move in the same direction as the base rate while the coupon rate and/or
market value of Inverse Floaters tend to move in the opposite direction from the
base rate.
The market value of all CMOs and other asset-backed securities are
determined by supply and demand in the bid/ask market, interest rate movements,
the yield curve, forward rates, prepayment assumptions and credit of the
underlying issuer. Further, the price actually received on a sale may be
different from bids when the security is being priced. CMOs and asset-backed
securities trade over a bid and ask market through several large market makers.
Due to the complexity and concentration of derivative securities, the liquidity
and, consequently, the volatility of these securities can be sharply influenced
by market demand.
Asset-backed and mortgage-related securities may not be readily
marketable. To the extent any of these securities are not readily marketable in
the judgment of the Fund Managers (subject to the oversight of the Board of
Directors), the investment restriction limiting the Fund's investment in
illiquid instruments will apply. However, IOs and POs issued by the U.S.
Government, its agencies and instrumentalities, and backed by fixed-rate
mortgages may be excluded from this limit, if, in the judgment of the respective
Fund Managers (subject to the oversight of the Board of Directors) such IOs and
POs are readily marketable. The Government Securities Fund does not intend to
invest in residual interests, privately issued securities or subordinated
classes of underlying mortgages.
Other Mortgage-Backed Securities. The Balanced Fund may invest in other
mortgage-backed securities. The Fund Manager expects that governmental,
government-related or private entities may create mortgage loan pools and other
mortgage-related securities offering mortgage pass-through and
mortgage-collateralized investments in addition to those described above. The
mortgages underlying these securities may include alternative mortgage
instruments, that is, mortgage instruments whose principal or interest payments
may vary or whose terms to maturity may differ from customary long-term
fixed-rate mortgages. As new types of mortgage-related securities are developed
and offered to investors, the Fund Manager will, consistent with the Fund's
investment objective, policies and quality standards, consider making
investments in such new types of mortgage-related securities.
Short Term Investments
Each Fund typically invests a part of its assets in various types of
U.S. Government Securities and high-quality short-term debt securities with
remaining maturities of one year or less ("money market investments"). This type
of short-term investment is made to provide liquidity for the purchase of new
investments and to effect redemptions of shares. The money market instruments in
which each Fund may invest include government obligations, certificates of
deposit, bankers' acceptances, commercial paper, short-term corporate securities
and repurchase agreements. The International Growth Fund and Global Financial
Services Fund may invest in all of the above, both foreign and domestic,
including foreign currency, foreign time deposits and foreign bank acceptances.
Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities
Some obligations issued or guaranteed by U.S. government agencies or
instrumentalities, such as securities issued by the Federal Home Loan Bank, are
backed by the right of the agency or instrumentality to borrow from the
Treasury. Others, such as securities issued by the Federal National Mortgage
Association ("Fannie Mae"), are supported only by the credit of the
instrumentality and not by the Treasury. If the securities are not backed by the
full faith and credit of the United States, the owner of the securities must
look principally to the agency issuing the obligation for repayment and may not
be able to assert a claim against the United States in the event that the agency
or instrumentality does not meet its commitment.
Information on Time Deposits and Variable Rate Notes
The Fund may invest in fixed time deposits, whether or not subject to
withdrawal penalties; however, investment in such deposits which are subject to
withdrawal penalties, other than overnight deposits, are subject to 10% limit on
illiquid investments set forth in the Certain Other Securities Section,
hereafter.
The commercial paper obligations which the Funds may buy are
unsecured and may include variable rate notes. The nature and terms of a
variable rate note (i.e., the "Master Note") permit a Fund to invest
fluctuating amounts at varying rates of interest pursuant to a direct
arrangement between a Fund as lender and the issuer as borrower. It permits
daily changes in the amounts borrowed. The Funds have the right at any time
to increase, up to the full amount stated in the note agreement, or to decrease
the amount outstanding under the note. The issuer may prepay at any time and
without penalty any part of or the full amount of the note. The note may or may
not be backed by one or more bank letters of credit. Because these notes are
direct lending arrangements between the Funds and the issuer, it is not
generally contemplated that they will be traded; moreover, there is currently no
secondary market for them. The Funds have no limitations on the type of
issuer from whom these notes will be purchased; however, in connection with such
purchase and on an ongoing basis, the Fund Managers will consider the
earning power, cash flow and other liquidity ratios of the issuer, and its
ability to pay principal and interest on demand, including a situation in which
all holders of such notes made demand simultaneously. The Funds will not
invest more than 5% of their total assets in variable rate notes.
Insured Bank Obligations
The Federal Deposit Insurance Corporation ("FDIC") insures the deposits
of federally insured banks and savings and loan associations (collectively
referred to as "banks") up to $100,000. The Funds may, within the limits set
forth in this Statement of Additional Information, purchase bank obligations
which are fully insured as to principal by the FDIC. Currently, to remain fully
insured as to principal, these investments must be limited to $100,000 per bank;
if the principal amount and accrued interest together exceed $100,000, the
excess accrued interest will not be insured. Insured bank obligations may have
limited marketability. Unless the Board of Directors determines that a readily
available market exists for such obligations, a Fund will treat such obligations
as subject to the 10% limit for illiquid investments for each Fund unless such
obligations are payable at principal amount plus accrued interest on demand or
within seven days after demand.
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High-Yield Securities
The Funds, other than the Balanced Fund, may invest in high-yield
securities. Notwithstanding the investment policies and restrictions applicable
to the Funds which were designed to reduce risks associated with such
investments, high-yield securities may carry higher levels of risk than many
other types of income producing securities. These risks are of three basic
types: the risk that the issuer of the high-yield bond will default in the
payment of principal and interest; the risk that the value of the bond will
decline due to rising interest rates, economic conditions, or public perception;
and the risk that the investor in such bonds may not be able to readily sell
such bonds. Each of the major categories of risk are affected by various
factors, as discussed below:
High-Yield Bond Market. The high-yield bond market has grown in the
context of a long economic expansion. Any downturn in the economy may have a
negative impact on the perceived ability of the issuer to make principal and
interest payments which may adversely affect the value of outstanding high-yield
securities and reduce market liquidity.
Sensitivity To Interest Rate and Economic Changes. In general, the
market prices of bonds bear an inverse relationship to interest rates; as
interest rates increase, the prices of bonds decrease. The same relationship may
hold for high-yield bonds, but in the past high-yield bonds have been somewhat
less sensitive to interest rate changes than treasury and investment grade
bonds. While the price of high-yield bonds may not decline as much, relatively,
as the prices of treasury or investment grade bonds decline in an environment of
rising interest rates, the market price, or value, of a high-yield bond will be
expected to decrease in periods of increasing interest rates, the net asset
value of the Funds. High-yield bond prices may not increase as much, relatively,
as the prices of treasury or investment grade bonds in periods of decreasing
interest rates. Payments of principal and interest on bonds are dependent upon
the issuer's ability to pay. Because of the generally lower creditworthiness of
issuers of high-yield bonds, changes in the economic environment generally, or
in an issuer's particular industry or business, may severely impair the ability
of the issuer to make principal and interest payments and may depress the price
of high-yield securities more significantly than such changes would affect
higher-rated, investment-grade securities.
Payment Expectations. Many high-yield bonds contain redemption or
call provisions which might be expected to be exercised in periods of
decreasing interest rates. Should bonds in which the Funds have invested be
redeemed or called during such an interest rate environment, the Funds would
have to sell such securities without reference to their investment merit and
reinvest the proceeds received in lower yielding securities, resulting in a
decreased return for investors in the Funds. In addition, such redemptions or
calls may reduce the Funds' asset base over which the Funds' investment
expenses may be spread.
Liquidity and Valuation. Because of periods of relative illiquidity,
many high-yield bonds may be thinly traded. As a result, the ability to
accurately value high-yield bonds and
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determine the net asset value of the High-Yield Bond Fund, as well as the Fund's
ability to sell such securities, may be limited. Public perception of and
adverse publicity concerning high-yield securities may have a significant
negative impact on the value and liquidity of high-yield securities, even though
not based on fundamental investment analysis.
Tax Considerations. To the extent that a Fund invests in securities
structured as zero coupon bonds, or other securities issued with original issue
discount, the Fund will be required to report interest income even though no
cash interest payment is received. Because such income is not represented by
cash, the Fund may be required to sell other securities in order to satisfy the
distribution requirements applicable to regulated investment companies under the
Internal Revenue Code of 1986 ("IRC").
Fund Composition. As of March 31, 1999, the High-Yield Bond Fund
consisted of securities classified as follows:
<TABLE>
<CAPTION>
PERCENTAGE OF
CATEGORY TOTAL INVESTMENTS
---------- -------------------
<S> <C>
AAA 1%
BBB 3.5%
BB 26.6%
B 65.3%
CCC 1.7%
Non-rated* 2.3%
</TABLE>
- ----------
* Equivalent ratings for these securities would have been B.
REITS
Each Fund other than the Money Market may invest up to 10% of its total
assets in the securities of real estate investment trusts ("REITs"). The
Multi-Cap Growth, the Internet and the Balanced Funds are not subject to this
limitation. REITs are pooled investment vehicles which invest in real estate
and real estate-related loans. The value of a REIT's shares generally is
affected by changes in the value of the underlying investments of the trust.
Hedging Transactions
Except as otherwise indicated, the Fund Managers, other than for the
Money Market Fund, may invest in derivatives, which are discussed in detail
below, to seek to hedge all or a portion of a Fund's assets against market value
changes resulting from changes in equity or bond values, interest rates and
currency fluctuations. Hedging is a means of offsetting, or neutralizing, the
price movement of an investment by making another investment, the price of which
should tend to move in the opposite direction from the original investment.
Other than the Multi-Cap Growth Fund, the Funds will not engage in
hedging transactions for speculative purposes but only as a hedge against
changes resulting from market conditions in the values of securities owned or
expected to be owned by the Funds. Unless otherwise indicated, a Fund, other
than the Multi-Cap Growth Fund, will not enter into a futures transaction
(except for closing transactions) if, immediately thereafter, the sum of the
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amount of the initial deposits and premiums on open futures contracts and
options on futures would exceed 5% of the Fund's total assets.
Certain Securities
The Funds may invest in the following described securities, except as
otherwise indicated. These securities are commonly referred to as derivatives. A
Fund's investment in such securities, in the aggregate, may not exceed 5% of net
assets at the time of investment; provided, however, that the International
Growth Fund, the High-Yield Bond Fund, and the Government Securities Fund may
invest up to 20% of their net assets in such securities. The Multi-Cap Growth
Fund will not purchase options if, as a result, the aggregate cost of all
outstanding options exceeds 10% of the Fund's total assets, although no more
than 5% will be committed to transactions entered into for non-hedging
(speculative) purposes.
Call Options. The Multi-Cap Growth Fund, the Internet Fund, and the
Balanced Fund may purchase call options, but the Balanced Fund may only do so to
the extent premiums paid on all outstanding call options do not exceed 20% of
the Fund's total assets. The Internet and Balanced Funds may purchase options
that may or may not be listed on a national securities exchange and issued by
the Options Clearing Corporation. The Funds, other than the Money Market Fund,
may write (sell) call options ("calls") that are listed on national securities
exchanges or are available in the over-the-counter market through primary
broker-dealers. The Internet Fund and the Balanced Fund may purchase or write
options that may or may not be listed on a national securities exchange and
issued by the Options Clearing Corporation. Call options are short-term
contracts with a duration of nine months or less. Such Funds may only write call
options which are "covered," meaning that the Fund either owns the underlying
security or has an absolute and immediate right to acquire that security,
without additional cash consideration, upon conversion or exchange of other
securities currently held in the Fund. In addition, no Fund will, prior to the
expiration of a call option, permit the call to become uncovered. If a Fund
writes a call option, the purchaser of the option has the right to buy (and the
Fund has the obligation to sell) the underlying security at the exercise price
throughout the term of the option. The amount paid to the Fund by the purchaser
of the option is the "premium." The Fund's obligation to deliver the underlying
security against payment of the exercise price would terminate either upon
expiration of the option or earlier if the Fund were to effect a "closing
purchase transaction" through the purchase of an equivalent option on an
exchange. The Fund would not be able to effect a closing purchase transaction
after it had received notice of exercise. The International Growth Fund and
Global Financial Services Fund may purchase and write covered call options on
foreign and U.S. securities and indices and enter into related closing
transactions.
The Internet Fund may write options in connection with buy-and-write
transactions; that is, the Fund may purchase a security and then write a call
option against that security. The exercise price of the call the Fund determine
to write will depend upon the expected price movement of the underlying
security. The exercise price of a call option may be below ("in-the-money"),
equal to ("at-the-money") or above ("out-of-the-money") the current value of the
underlying security at the time the option is written. Buy-and-write
transactions using in-the-money call options may be used when it is expected
that the price of the underlying security will remain flat or decline moderately
during the option period. Buy-and-write transactions using out-of-the-money call
options may be used when it is expected that the premiums received from writing
the call option plus the appreciation in the market price of the underlying
security up to the exercise price will be greater than the appreciation in the
price of the underlying security alone. If the call options are exercised in
such transactions, the maximum gain to the Fund will be the premium received by
it for writing the option, adjusted upwards or downwards by the difference
between the Fund's purchase price of the security and the exercise price. If the
options are not exercised and the price of the underlying security declines, the
amount of such decline will be offset in part, or entirely, by the premium
received.
Generally, a Fund intends to write listed covered calls when it
anticipates that the rate of return from so doing is attractive, taking into
consideration the premium income to be received, the risks of a decline in
securities prices during the term of the option, the probability that closing
purchase transactions will be available if a sale of the securities is desired
prior to the exercise or expiration of the options, and the cost of entering
into such transactions. A principal reason for writing calls on a securities
portfolio is to attempt to realize, through the receipt of premium income, a
greater return than would be earned on the securities alone. A covered call
writer such as a Fund, which owns the underlying security, has, in return for
the premium, given up the opportunity for profit from a price increase in the
underlying security above the exercise price, but it has retained the risk of
loss should the price of the security decline.
The writing of covered call options involves certain risks. A principal
risk arises because exchange and over-the-counter markets for options may be
limited; it is impossible to predict the amount of trading interest which may
exist in such options, and there can be no assurance that
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viable exchange and over-the-counter markets will develop or continue. The Funds
will write covered call options only if there appears to be a liquid secondary
market for such options. If, however, an option is written and a liquid
secondary market does not exist, it may be impossible to effect a closing
purchase transaction in the option. In that event, the Fund may not be able to
sell the underlying security until the option expires or the option is
exercised, even though it may be advantageous to the Fund to sell the underlying
security before that time.
Moreover, there is no assurance that the Internet Fund or the Balanced
Fund will be able to close an unlisted option position. Furthermore, unlisted
options are not subject to the protection afforded purchasers of listed options
by the Options Clearing Corporation, which performs the obligations of its
members which fail to do so in connection with the purchase or sale of options.
The Funds may use options traded on U.S. exchanges, and to the extent
permitted by law, options traded over-the-counter. It is the position of the SEC
that over-the-counter options are illiquid. Accordingly, the Funds will invest
in such options only to the extent consistent with their limit on investments in
illiquid securities.
Put Options. The Funds, except the Government Securities Fund and the
Money Market Fund, may purchase put options ("Puts") which relate to (i)
securities (whether or not they hold such securities); (ii) Index Options
(described below whether or not they hold such Options); or (iii) broadly-based
stock indices. The Internet Fund and the Balanced Fund may purchase or write put
options that may or may not be listed on a national securities exchange and
issued by the Options Clearing Corporation. The Balanced Fund will only purchase
put options to the extent that the premiums on all outstanding put options do
not exceed 20% of the Fund's total assets. The Balanced Fund will, at all times
during which it holds a put option, own the security covered by such option.
With regard to the writing of put options, the Balanced Fund will limit the
aggregate value of the obligations underlying such put options to 50% of its
total assets. The Funds, except the Government Securities Fund and Money Market
Fund, may write covered Puts. The Funds will receive premium income from writing
covered Puts, although a Fund may be required, when the put is exercised, to
purchase securities at higher prices than the current market price. The
High-Yield Bond Fund may invest up to 10% of its total assets in Puts.
Futures Contracts. All Funds, other than the Money Market Fund, may
enter into contracts for the future acquisition or delivery of securities
("Futures Contracts") including index contracts and foreign currencies, and may
also purchase and sell call options on Futures Contracts. These Funds may use
this investment technique to hedge against anticipated future adverse price
changes which otherwise might either adversely affect the value of the
securities or currencies held in the Fund, or to hedge anticipated future price
changes which adversely affect the prices of stocks, long-term bonds or
currencies which the Fund intends to purchase at a later date.
These Funds may use this investment technique to hedge against
anticipated future adverse price changes which otherwise might either adversely
affect the value of the securities or currencies held in a Fund, or to hedge
anticipated future price changes which adversely affect the prices of stocks,
long-term bonds or currencies which the Fund intends to purchase at a later
date. Alternatively, a Fund may enter into Futures Contracts in order to hedge
against a change in interest rates which will result in the premature call at
par value of certain securities which the Fund has purchased at a premium. If
stock, bond or currency prices or interest rates move in an unexpected manner,
the Fund would not achieve the anticipated benefits of Futures Contracts. The
Balanced Fund may not purchase or sell a Futures Contract unless immediately
after any such transaction the sum of the aggregate amount of margin deposits on
its existing futures positions and the amount of premiums paid for related
options is 5% or less of its total assets, after taking into account unrealized
profits and unrealized losses on any such contracts. The Balanced Fund may
purchase and sell call and put options on Futures Contracts traded on an
exchange or board of trade.
In connection with transactions on options on stock index futures, the
Multi-Cap Growth Fund and the Internet Fund will be required to deposit as
"initial margin" an amount of cash or other specified assets equal to, with
respect to the Multi-Cap Growth Fund 1% to 10% of the face amount of the
contract, and between 5% to 8% of the contract amount with respect to the
Internet Fund. Thereafter, subsequent payments (referred to as "variation
margin") are made to and from the broker to reflect changes in the value of the
option or Futures Contract. The Multi-Cap Growth Fund and the Internet Fund may
not at any time commit more than 5% of their total assets to initial margin
deposits on Futures Contracts, index options and options on Futures Contracts.
However, with respect to the Multi-Cap Growth Fund, in the case of an option
that is in-the-money at the time of purchase, the in-the-money amount may be
excluded in calculating the 5% limitation.
In an effort to compensate for the imperfect correlation of movements
in the price of the securities being hedged and movements in the price of the
stock index futures, the Multi-Cap Growth Fund may, if it uses a hedging
strategy, buy or sell stock index futures contracts in a greater or lesser
dollar amount than the dollar amount of the securities being hedged if the
historical volatility of the stock index futures has been less or greater than
that of the securities. Such "over hedging" or "under hedging" may adversely
affect the Fund's net investment results if market movements are not as
anticipated when the hedge is established.
Alternatively, the Funds may enter into Futures Contracts in order to
hedge against a change in interest rates which will result in the premature call
at par value of certain securities which the Fund has purchased at a premium. If
stock, bond or currency prices or interest rates move in an unexpected manner,
the Fund would not achieve the anticipated benefits of Futures Contracts.
The use of Futures Contracts involves special considerations or risks
not associated with the primary activities engaged in by any Funds. 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 if the Fund attempts to enter into a closing position; (3)
the risk that the Fund will lose an amount in excess of the initial margin
deposit; and (4) risk that the Fund Manager may be incorrect in its prediction
of movements in stock, bond, currency prices and interest rates.
Index Options. All of the Equity Domestic Hybrid and Sector Funds may
invest in options on stock indices. These options are based on indices of stock
prices that change in value according to the market value of the stocks they
include. Some stock index options are based on a broad market index, such as the
New York Stock Exchange Composite Index or the S&P 500. Other index options are
based on a market segment or on stocks in a single industry. Stock index options
are traded primarily on securities exchanges.
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For a call option on an index, the option is covered if a Fund
maintains with its sub-custodian cash or liquid securities equal to the contract
value. With respect to the Balanced Fund, the option is also covered if the fund
maintains with its custodian a diversified stock portfolio equal to the contract
value.
The use of options on securities indexes entails the risk that trading
in the options may be interrupted if trading in certain securities included in
the index is interrupted. Because the value of an index option depends primarily
on movements in the value of the index rather than in the price of a single
security, whether a Fund will realize a gain or loss from purchasing or writing
an option on a stock index depends on movements in the level of stock prices in
the stock market generally or, in the case of certain indexes, in an industry or
market segment rather than changes in the price of a particular security.
Consequently, successful use of stock index options by a Fund will depend on
that Fund Manager's ability to predict movements in the direction of the stock
market generally or in a particular industry. This requires different skills and
techniques than predicting changes in the value of individual securities.
Interest Rate Swaps. In order to attempt to protect the Fund's
investments from interest rate fluctuations, the Funds may engage in interest
rate swaps. Generally, the Funds intend to use interest rate swaps as a hedge
and not as a speculative investment. Interest rate swaps involve the exchange
between the Fund and another party of their respective rights to receive
interest (e.g., an exchange of fixed rate payments for floating rate payments).
For example, if the Fund holds an interest-paying security whose interest rate
is reset once a year, it may swap the right to receive interest at a rate that
is reset daily. Such a swap position would offset changes in the value of the
underlying security because of subsequent changes in interest rates. This would
protect the Fund from a decline in the value of the underlying security due to
rising rates, but would also limit its ability to benefit from falling interest
rates.
The Fund will enter into interest rate swaps only on a net basis (i.e.,
the two payments streams will be netted out, with the Fund receiving or paying
as the case may be, only the net amount of the two payments). The net amount of
the excess, if any, of the Fund's obligations over its entitlements with respect
to each interest rate swap will be accrued on a daily basis, and an amount of
cash or liquid debt securities having an aggregate net asset value at least
equal to the accrued excess, will be segregated by the Fund.
The use of interest rate swaps involves investment techniques and risks
different from those associated with ordinary portfolio security transactions.
If a Fund Manager is incorrect in its forecasts of market values, interest rates
and other applicable factors, the investment performance of the Fund will be
less favorable than it would have been if this investment technique were never
used. Interest rate swaps do not involve the delivery of securities or other
underlying assets or principal. Thus, if the other party to an interest rate
swap defaults, the Fund's risk of loss consists of the net amount of interest
payments that the Fund is contractually entitled to receive.
Foreign Currency Values and Transactions
Investments in foreign securities will usually involve currencies of
foreign countries, and the value of the assets of the International Growth Fund
and the Global Financial Services Fund (and of the other Funds that may invest
in foreign securities to a much lesser extent) as measured in United States
dollars may be affected favorably or unfavorably by changes in foreign currency
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exchange rates and exchange control regulations, and the International Growth
Fund and the Global Financial Services Fund may incur costs in connection with
conversions between various currencies.
To manage exposure to currency fluctuations, the Funds may alter equity
or money market exposures (in its normal asset allocation mix as previously
identified where applicable), enter into forward currency exchange contracts,
buy or sell options, futures or options on futures relating to foreign
currencies and may purchase securities indexed to currency baskets. The Funds
may purchase securities indexed to currency baskets. The Funds will also use
these currency exchange techniques in the normal course of business to hedge
against adverse changes in exchange rates in connection with purchases and sales
of securities. Some of these strategies may require the Funds to set aside
liquid assets in a segregated account to cover its obligations. These techniques
are further described below.
The Funds may conduct their foreign currency exchange transactions on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through entering into contracts to purchase or sell foreign
currencies at a future date (i.e., "forward foreign currency" contract or
"forward" contract). A forward contract involves an obligation to purchase or
sell a specific currency amount at a future date, which may be any fixed number
of days from the date of the contract, agreed upon by the parties, at a price
set at the time of the contract. The Fund will convert currency on a spot basis
from time to time and investors should be aware of the potential costs of
currency conversion.
When a Fund Manager believes that the currency of a particular country
may suffer a significant decline against the U.S. dollar or against another
currency, the Fund may enter into a currency contract to sell, for a fixed
amount of U.S. dollars or other appropriate currency, the amount of foreign
currency approximating the value of some or all of the Funds, securities
denominated in such foreign currency.
At the maturity of a forward contract, the Funds may either sell a
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by repurchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Funds may realize a gain or loss from currency
transactions.
The Funds also may purchase and write put and call options on foreign
currencies (traded on U.S. and foreign exchanges or over-the-counter markets) to
manage the Funds' exposure to
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changes in currency exchange rates. Call options on foreign currency written by
the Fund will be "covered", which means that the Fund will own an equal amount
of the underlying foreign currency. With respect to put options on foreign
currency written by the Fund, the Fund will establish a segregated account
consisting of cash or liquid securities in an amount equal to the amount the
Fund would be required to pay upon exercise of the put.
The Internet Fund may also engage in currency swaps, which are
agreements to exchange cash flows based on the national difference among two or
more currencies.
Certain Other Securities
Except as otherwise indicated, the Funds may purchase the following
securities, the purchase of which involves certain risks described below. Unless
otherwise indicated, a Fund will not purchase a category of such securities if
the value of such category, taken at current value, would exceed 5% of the
Fund's total assets.
Money Market Instruments. The Equity Funds and the Flexible Funds may
invest from time to time in "money market instruments," a term that includes,
among other things, bank obligations, commercial paper, time deposits, loan
participations ("LPs"), and, except with respect to the Multi-Cap Growth Fund,
variable amount master demand notes. The Multi-Cap Growth Fund may invest in
corporate bonds with remaining maturities of one year and the Internet Fund may
invest in corporate bonds with remaining maturities of 397 days or less. The
Balanced Fund may also invest in short-term corporate obligations, foreign
commercial paper, and variable and floating-rate instruments.
Bank obligations include bankers' acceptances, including Yankee
Bankers' Acceptances and foreign bankers' acceptances. Eurodollar Time Deposits
("ETDs") and Canadian Time Deposits ("CTDs"), and with respect to the Internet
Fund, Schedule B's. In addition, bank obligations include U.S.
dollar-denominated instruments issued or supported by the credit of U.S. or
foreign banks or savings institutions and U.S. dollar-denominated obligations of
foreign branches of U.S. banks or of U.S. branches of foreign banks, all of the
same type as domestic bank obligations. The Internet Fund will invest in
obligations of foreign banks or foreign branches of U.S. banks only where the
Fund Manager deems the instrument to present minimal credit risks. Such
investments may nevertheless entail risks that are different from those of
investments in domestic obligations of U.S. banks due to differences in
political, regulatory and economic systems and conditions. All investments in
bank obligations by the Internet Fund and the Balanced Fund are limited to the
obligations of financial institutions having more than $1 billion in total
assets at the time of purchase.
A Euro CD is a receipt from a bank for funds deposited at that bank for
a specific period of time at some specific rate of return and denominated in
U.S. dollars. It is the liability of a U.S. bank branch or foreign bank located
outside the U.S. Almost all Euro CDs are issued in London. Yankee CDs are
certificates of deposit that are issued domestically by foreign banks. It is a
means by which foreign banks may gain access to U.S. markets through their
branches which are located in the United States, typically in New York. These
CDs are treated as domestic securities. ETDs are U.S. dollar-denominated
deposits on a foreign branch of a U.S. bank or a foreign bank and CTDs are
essentially the same as ETDs except they are issued by Canadian offices of major
Canadian banks. Schedule Bs are obligations issued by Canadian branches of
foreign or domestic banks and Yankee BAs are U.S. dollar denominated bankers'
acceptances issued by a U.S. branch of a foreign bank and held in United States.
Domestic and foreign banks are subject to extensive but different
government regulations which may limit the amount and types of their loans and
the interest rates that may be charged. In addition, the profitability of the
banking industry is largely dependent upon the availability and cost of funds to
finance lending operations and the quality of underlying bank assets.
Investments in obligations of foreign branches of U.S. banks and of U.S.
branches of foreign banks may subject a Fund to additional investment risks,
including future political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure
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or nationalization of foreign deposits, the possible establishment of exchange
controls, or the adoption of other foreign governmental restrictions which
might adversely affect the payment of principal and interest on such
obligations. In addition, foreign branches of U.S. banks and U.S. branches of
foreign banks may be subject to less stringent reserve requirements and to
different accounting, auditing, reporting, and record keeping standards than
those applicable to domestic branches of U.S. banks.
Euro CDs, Yankee CDs and foreign bankers' acceptances involve risks
that are different from investments in securities of U.S. banks. The major risk,
which is sometimes referred to as "sovereign risk," pertains to possible
future unfavorable political and economic developments, possible withholding
taxes, seizures of foreign deposits, currency controls, interest limitations, or
other governmental restrictions which might affect payment of principal or
interest. Investment in foreign commercial paper also involves risks that are
different from investments in securities of commercial paper issued by U.S.
companies. Non-U.S. securities markets generally are not as developed or
efficient as those in the United States. Such securities may be less liquid and
more volatile than securities of comparable U.S. corporations. Non-U.S. issuers
are not generally subject to uniform accounting and financial reporting
standards, practices and requirements comparable to those applicable to U.S.
issuers. In addition, there may be less public information available about
foreign banks, their branches and other issuers.
Time deposits usually trade at a premium over Treasuries of the same
maturity. Investors regard such deposits as carrying some credit risk, which
Treasuries do not; also, investors regard time deposits as being sufficiently
less liquid than Treasuries; hence, investors demand some extra yield for buying
time deposits rather than Treasuries. The investor in a loan participation has a
dual credit risk to both the borrower and also the selling bank. The second risk
arises because it is the selling bank that collects interest and principal and
sends it to the investor.
Commercial paper may include variable and floating-rate instruments,
which are unsecured instruments that permit the interest on indebtedness
thereunder to vary. Variable-rate instruments provide for periodic adjustments
in the interest rate. Floating-rate instruments provide for automatic adjustment
of the interest rate whenever some other specified interest rate changes. Some
variable and floating-rate obligations are direct lending arrangements between
the purchaser and the issuer and there may be no active secondary market.
However, in the case of variable and floating-rate obligations with the demand
feature, a Fund may demand payment of principal and accrued interest at a time
specified in the instrument or may resell the instrument to a third party. In
the event an issuer of a variable or floating-rate obligation defaulted on its
payment obligation, a Fund might be unable to dispose of the note because of the
absence of a secondary market and could, for this or other reasons, suffer a
loss to the extent of the default. Substantial holdings of variable and
floating-rate instruments could reduce portfolio liquidity.
Variable- and Floating-Rate Instruments and Related Risks. The Balanced
Fund may acquire variable- and floating-rate instruments. The Fund Manager will
consider the earning power, cash flows and other liquidity ratios of the
issuers and guarantors of such instruments and, if the instruments are subject
to demand features, will monitor their financial status with respect to the
ability of the issuer to meet its obligation to make payment on demand. Where
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necessary to ensure that a variable- or floating-rate instrument meets the
Fund's quality requirements, the issuer's obligation to pay the principal of the
instrument will be backed by an unconditional bank letter or line of credit,
guarantee, or commitment to lend.
Because variable and floating-rate instruments are direct lending
arrangements between the lender and the borrower, it is not contemplated that
such instruments will generally be traded, and there is generally no established
secondary market for these obligations, although they are redeemable at face
value. Accordingly, where these obligations are not secured by letters of credit
or other credit support arrangements, the Fund's right to redeem is dependent on
the ability of the borrower to pay principal and interest on demand.
The same credit research must be done for master demand notes as in
accepted names for potential commercial paper issuers to reduce the chances of
a borrower getting into serious financial difficulties.
Loan Participations. The Balanced Fund may also engage in Loan
Participations ("LPs"). LPs are loans sold by the lending bank to an investor.
The loan participant borrower may be a company with highly-rated commercial
paper that finds it can obtain cheaper funding through an LP than with
commercial paper and can also increase the company's name recognition in the
capital markets. LPs often generate greater yield than commercial paper.
The borrower of the underlying loan will be deemed to be the issuer except
to the extent the Fund derives its rights from the intermediary bank which sold
the LPs. Because LPs are undivided interests in a loan made by the issuing
bank, the Fund may not have the right to proceed against the LP borrower
without the consent of other holders of the LPs. In addition, LPs will be rated
as illiquid if, in the judgment of the Fund Manager, they cannot be sold within
seven days.
Foreign Bankers' Acceptances. The Balanced Fund may purchase foreign
bankers' acceptances. Foreign bankers' acceptances are short-term (270 days or
less), non-interest-bearing notes sold at a discount and redeemed by the
accepting foreign bank at maturity for full face value and denominated in U.S.
dollars. Foreign bankers' acceptances are the obligations of the foreign bank
involved, to pay a draft drawn on it by a customer. These instruments reflect
the obligation both of the bank and the drawer to pay the face amount of the
instrument upon maturity.
Foreign Commercial Paper. The Balanced Fund may purchase foreign
commercial paper. Foreign commercial paper consists of short-term unsecured
promissory notes denominated in U.S. dollars, either issued directly by a
foreign firm in the U.S., or issued by a "domestic shell" subsidiary of a
foreign firm established to raise dollars for the firm's operations abroad or
for its U.S. subsidiary. Like commercial paper issued by U.S. companies,
foreign commercial paper is rated by the rating agencies (Moody's, S&P) as to
the issuer's creditworthiness. Foreign commercial paper can potentially provide
the investor with a greater yield than domestic commercial paper.
Supranational Bank Obligations. The Internet Fund may invest in
supranational bank obligations. Supranational banks are international banking
institutions designed or supported by national governments to promote economic
reconstruction, development or trade between nations (e.g., The World Bank).
Obligations of supranational banks may be supported by appropriated but unpaid
commitments of their member countries and there is no assurance these
commitments will be undertaken or met in the future.
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Master Demand Notes. All Funds except the Multi-Cap Growth, may
purchase variable amount master demand notes. However, the Funds, except the
Multi-Cap Growth Fund, the Internet Fund and the Balanced Fund, will not
purchase such securities if the value of such securities, taken at the current
value, would exceed 5% of the Fund's total assets. Variable amount master demand
notes are demand obligations that permit the investment of fluctuating amounts
at varying market rates of interest pursuant to arrangements between the issuer
and a commercial bank acting as agent for the payees of such notes whereby both
parties have the right to vary the amount of the outstanding indebtedness on the
notes. Since there is no secondary market for these notes, the appropriate Fund
Managers, subject to the overall review of the Fund's Directors and the Advisor,
monitor the financial condition of the issuers to evaluate their ability to
repay the notes.
U.S. Government Obligations. The Funds may purchase obligations issued
or guaranteed by the U.S. Government and U.S. Government agencies and
instrumentalities. Obligations of certain agencies and instrumentalities of the
U.S. Government, such as those of the Government National Mortgage Association
("GNMA"), are supported by the full faith and credit of the U.S. Treasury.
Others, such as those of the Export-Import Bank of the United States, are
supported by the right of the issuer to borrow from the U.S. Treasury; and still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the agency or instrumentality issuing the obligation. No
assurance can be given that the U.S. Government would provide financial support
to U.S. government-sponsored instrumentalities if it is not obligated to do so
by law. Examples of the types of U.S. Government obligations that may be
acquired by the Funds include U.S. Treasury Bills, U.S. Treasury Notes and U.S.
Treasury Bonds and the obligations of Federal Home Loan Banks, Federal Farm
Credit Banks, Federal Land Banks, the Federal Housing Administration, Farmers
Home Administration, Export-Import Bank of the United States, Small Business
Administration, Federal National Mortgage Association ("FNMA"), GNMA, General
Services Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Mortgage Corporation ("FHLMC"), Federal
Intermediate Credit Banks Maritime Administration, some of which are discussed
below.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related
securities and among the securities that they issue. Mortgage-related
securities guaranteed by the GNMA include GNMA Mortgage Pass-Through
Certificates (also known as "Ginnie Maes") which are guaranteed as to the
timely payment of principal and interest by GNMA and such guarantee is backed
by the full faith and credit of the United States. GNMA is a wholly-owned U.S.
Government corporation within the
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Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related securities issued by the
FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as
"Fannie Maes") which are solely the obligations of the FNMA and are not backed
by or entitled to the full faith and credit of the United States, but are
supported by the right of the issuer to borrow from the U.S. Treasury. FNMA is a
government-sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed at to timely payment of the principal and interest by FNMA.
Mortgage-related securities issued by the FHLMC include FHLMC Mortgage
Participation Certificates (also known as "Freddie Macs" or "PCs"). FHLMC is a
corporate instrumentality of the United States, created pursuant to an Act of
Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs are
not guaranteed by the United States or by any Federal Home Loan Banks and do not
constitute a debt or obligation of the United States or of any Federal Home Loan
Bank. Freddie Macs entitle the holder to timely payment of interest, which is
guaranteed by the FHLMC. FHLMC guarantees either ultimate collection or timely
payment of all principal payments on the underlying mortgage loans. When FHLMC
does not guarantee timely payment of principal, FHLMC may remit the amount due
on account of its guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after it
becomes payable. Under normal market conditions, the Internet Fund will not
invest to a significant extent, or on a routine basis, in U.S. Government
securities.
The Balanced Fund may also invest in other mortgage-backed securities are
issued by private issuers, generally originators of and investors in mortgage
loans, including savings associations, mortgage bankers, commercial banks,
investment bankers, and special purpose entities. These private mortgage-backed
securities may be supported by U.S. Government mortgage-backed securities or
some form of non-government credit enhancement. Mortgage-backed securities have
either fixed or adjustable interest rates. The rate of return on
mortgage-backed securities may be affected by prepayments of principal on the
underlying loans, which generally increase as interest rates decline; as a
result, when interest rates decline, holders of these securities normally do
not benefit from appreciation in market value to the same extent as holders of
other non-callable debt securities. In addition, like other debt securities,
the values of mortgage-related securities, including government and
government-related mortgage pools, generally will fluctuate in response to
market interest rates.
Mortgage-backed securities have greater market volatility then other types
of securities. In addition, because prepayments often occur at times when
interest rates are low or are declining, the Funds may be unable to reinvest
such funds in securities which offer comparable yields. The yields provided by
these mortgage securities have historically exceeded the yields on other types
of U.S. Government securities with comparable maturities in large measure due
to the risks associated with prepayment features.
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The Balanced Fund may also invest in pass-through certificates issued by
non-governmental issuers. Pools of conventional residential mortgage loans
created by such issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government guarantees of payment. Timely payment of interest and principal of
these pools is, however, generally supported by various forms of insurance or
guarantees, including individual loan, title, pool and hazard insurance. The
insurance and guarantees are issued by government entities, private insurance
and the mortgage poolers. Such insurance and guarantees and the creditworthiness
of the issuers thereof will be considered in determining whether a
mortgage-related security meets the Fund's quality standards. The Fund may buy
mortgage-related securities without insurance or guarantees if through an
examination of the loan experience and practices of the poolers, the investment
manager determines that the securities meet the Fund's quality standards.
Repurchase Agreements. All Funds may enter into repurchase agreements
usually having maturities of one business day and not more than one week. The
Funds, except for the Multi-Cap Growth Fund, the Internet Fund, and the Balanced
Fund, will not purchase such securities if the value of such securities, taken
at current value, would exceed 5% of the Fund's total assets. When a Fund
acquires securities from a bank or broker-dealer, it may simultaneously enter
into a repurchase agreement with the same seller pursuant to which the seller
agrees at the time of sale to repurchase the security at a mutually agreed upon
time and price. In such instances, the Corporation's Custodian has possession
of the security or collateral for the seller's obligation. The repurchase price
generally equals the price paid by a Fund plus interest negotiated on the basis
of current short-term rates (which may be more or less than the rate on the
securities underlying the repurchase agreement). Repurchase agreements may be
considered loans by a Fund collateralized by the underlying instrument. If the
seller should default on its obligation to repurchase the securities, the Fund
may experience delays, difficulties or other costs when selling the securities
held as collateral and may incur a loss if the value of the collateral declines.
The appropriate Fund Managers, subject to the overall review by the
Corporation's Directors and the Advisor, monitor the value of the collateral as
to repurchase agreements, and they monitor the creditworthiness of the seller
and must find it satisfactory before engaging in repurchase agreements. The
Funds enter into repurchase agreements only with Federal Reserve member banks
that have net worth of at least $100,000,000 and outstanding commercial paper of
the two highest rating categories assigned by Moody's or S&P or with
broker-dealers that are registered with the Securities and Exchange Commission,
are members of the National Association of Securities Dealers, Inc. ("NASD") and
have similarly rated commercial paper outstanding. Any repurchase agreements
entered into by the Funds will be fully collateralized and marked to market
daily, other than those entered into by the Money Market Fund, which are valued
on a market to market basis.
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Reverse Repurchase Agreements. Reverse repurchase agreements involve the
sale of securities held by a Fund pursuant to a Fund's agreement to repurchase
the securities at an agreed upon price, date and rate of interest. During the
reverse repurchase agreement period, a Fund continues to receive principal and
interest payments on these securities. Because reverse repurchase agreements are
considered borrowings, the Internet Fund and the Balanced Fund may only enter
into such agreements for temporary or emergency purposes. The Internet Fund may
only sell portfolio securities to financial institutions such as banks and
broker/dealers and requiring to repurchase them at a mutually specified date and
price ("reverse purchase agreements"). Reverse repurchase agreements involve
the risk that the market value of the securities sold by a Fund may decline
below the repurchase price. A Fund will pay interest on amounts obtained
pursuant to a reverse repurchase agreement. While reverse repurchase agreements
are outstanding, a Fund will maintain cash, U.S. Government securities or other
liquid securities in a segregated account in an amount at least equal to the
market value of the securities, plus accrued interest, subject to the agreement.
With respect to the Balance Fund, liquid securities include equity securities
and debt securities that are unencumbered and marked to market daily.
Restricted or Illiquid Securities. Each Fund, except the Multi-Cap Growth
Fund, the Internet Fund, and the Balanced Fund, may invest up to 10% of its net
assets in restricted securities (privately placed equity or debt securities) or
other securities which are not readily marketable. The Multi-Cap Growth Fund and
the Internet Fund may invest up to 15% of their respective net assets and the
Balanced Fund may invest up to 5% of its total assets in illiquid or restricted
securities. With respect to the Multi-Cap Growth Fund, restricted securities
that are determined by the Board or Directors to be liquid are not subject to
this limitation.
Each Fund may invest in commercial obligations issued in reliance on the
"private placement" exemption from registration afforded by Section 4(2) of the
Act ("Section 4(2) paper"). Section 4(2) paper is restricted as to disposition
under the Federal Securities laws, and generally is sold to institutional
investors who agree that they are purchasing the paper for investment and not
with a view to public distribution. Any resale by the purchaser must be in an
exempt transaction. Section 4(2) paper normally is resold to other institutional
investors through or with the assistance of the issuer or investment dealers
which make a market on the Section 4(2) paper, thus providing liquidity.
The Funds may invest in restricted securities governed by Rule 144A under
the Securities Act of 1933. In adopting Rule 144A, the Securities Exchange
Commission specifically stated that restricted securities traded under Rule 144A
may be treated as liquid for purposes of investment limitations if the board of
directors (or the Fund Manager acting subject to the board's supervision)
determines that the securities are in fact liquid. Examples of factors that will
be taken into account in evaluating the liquidity of a Rule 144A security by a
Fund, both with respect to the initial purchase and on an ongoing basis, will
include, among others: (1) the frequency of trades and quotes for the security;
(2) the number of dealers willing to purchase or sell the security and the
number of other potential purchasers; (3) dealer undertakings to make a market
in the security; and (4) the nature of the security and the nature of the
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers, and the mechanics of transfer). If institutional trading
in restricted securities were to decline to limited levels, the liquidity of a
Fund's portfolio could be adversely affected. This investment practice could
have the effect of increasing the level of illiquidity in a Fund during any
period that qualified institutional buyers become uninterested in purchasing
these restricted securities.
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Foreign Securities. As noted above, the International Growth Fund will
invest primarily in foreign securities and the Global Financial Services Fund
may invest 50% or more of its total assets in such securities. All other Funds,
except the Internet Fund, Government Securities Fund, the Tax-Exempt Income Fund
and the Money Market Fund, may, other than the Multi-Cap Growth Fund, subject to
the 20% limitation, invest in foreign securities as well as both sponsored and
unsponsored ADRs, and EDRs which are securities of U.S. issuers backed by
securities of foreign issuers. The Multi-Cap Growth Fund may invest in ADRs,
American Depository Shares or U.S. dollar denominated securities of foreign
issuers without limitation. The Internet Fund typically will only purchase
foreign securities which are represented by sponsored or unsponsored ADRs listed
on a domestic securities exchange or included in the NASDAQ National Market
System, or foreign securities listed directly on a domestic securities exchange
or included on the NASDAQ National Market System. The Balanced Fund may invest
up to 20% of total assets in foreign securities as well as sponsored and
unsponsored ADRs and EDRs. There may be less information available about
unsponsored ADRs and EDRs, and therefore, they may carry higher credit risks.
The Funds may also invest in securities of foreign branches of domestic banks
and domestic branches of foreign banks.
Investments in foreign equity and debt securities involve risks
different from those encountered when investing in securities of domestic
issuers. The appropriate Fund Managers and the Advisor, subject to the overall
review of the Funds' Directors, evaluate the risks and opportunities when
investing in foreign securities. Such risks include trade balances and
imbalances and related economic policies; currency exchange rate fluctuations;
foreign exchange control policies; expropriation or confiscatory taxation;
limitations on the removal of funds or other assets; political or social
instability; the diverse structure and liquidity of securities markets in
various countries and regions; policies of governments with respect to possible
nationalization of their own industries; and other specific local, political and
economic considerations.
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Forward Commitments
Securities may be purchased on a "when issued" or on a "forward
delivery" basis, which means it may take as long as 120 days before such
obligations are delivered to a Fund. The purpose of such investments is to
attempt to obtain higher rates of return or lower purchase costs than would be
available for securities purchased for immediate delivery. Securities purchased
on a when issued or forward delivery basis involve a risk that the value of the
security to be purchased may decline prior to the settlement date. In addition,
if the dealer through which the trade is made fails to consummate the
transaction, the Fund may lose an advantageous yield or price. The Fund does not
accrue income prior to delivery of the securities in the case of forward
commitment purchases. The 5% limitation does not apply to the International
Growth, Global Financial Services, Government Securities and Tax-Exempt Income
Funds which have a 20% limitation. Because the Internet Fund's liquidity and
ability to manage its portfolio might be affected when it earmarks cash or
portfolio securities to cover such purchase commitments, the Fund Manager
expects that its commitments to purchase when-issued securities and forward
commitments will not exceed 25% of the value of the Fund's total assets absent
unusual market conditions.
Portfolio Depositary Receipts. To the extent otherwise consistent with
its investment policies and applicable law, the Multi-Cap Growth Fund may
invest up to 5% of its total assets in Portfolio Depositary Receipts,
exchange-traded shares issued by investment companies, typically unit
investment trusts, holding portfolios of common stocks designed to replicated
and, therefore, track the performance of various broad securities indices or
sectors of such indices. For example, the Fund may invest in Standard & Poor's
Depositary Receipts R (SPDRs), issued by a unit investment trust whose
portfolio tracks the S&P 500 Composite Stock Price Index, or Standard & Poor's
MidCap 400 Depositary Receipts R (MidCap SPDRs), similarly linked to the S&P
MidCap 400 Index.
Short sales. The Multi-Cap Growth Fund may sell securities "short
against the box." While a short sale is the sale of a security the Multi-Cap
Growth Fund does not own, it is "against the box" if at all times when the
short position is open the Multi-Cap Growth Fund owns an equal amount of the
securities or securities convertible into, or exchangeable without further
consideration for, securities of the same issue as the securities sold short.
Convertible Securities. Common stock occupies the most junior position
in a company's capital structure. Convertible securities entitle the holder to
exchange the securities for a specified number of shares of common stock,
usually of the same company, at specified prices within a certain period of
time and to receive interest or dividends until the holder elects to convert.
The provisions of any convertible security determine its ranking in a company's
capital structure. In the case of subordinated convertible debentures, the
holder's claims on assets and earnings are subordinated to the claims of other
creditors, and are senior to the claims of preferred and common shareowners. In
the case of preferred stock and convertible preferred stock, the holder's
claims on assets and earnings are subordinated to the claims of all creditors
but are senior to the claims of common shareowners.
Temporary Defensive Techniques
Any or all of the Funds may at times for defensive purposes, at the
determination of the Fund Manager, temporarily place all or a portion of their
assets in cash, short-term commercial paper (i.e., short-term unsecured
promissory notes issued by corporations to finance short-term credit needs),
United States Government securities, high-quality debt securities (including
"Eurodollar" and "Yankee Dollar" obligations, i.e., U.S. issuer borrowings
payable overseas in
28
<PAGE> 176
U.S. funds and obligations of foreign issuers payable in U.S. funds), and
obligations of banks when in the judgment of the Fund Manager such investments
are appropriate in light of economic or market conditions. The Money Market Fund
may at times for defensive purposes temporarily place all or a portion of its
assets in cash, when in the judgment of the Fund Manager such an investment is
appropriate in light of economic or market conditions. For temporary defensive
purposes, the International Growth Fund and the Global Financial Services Fund
may invest in all of the above, both foreign and domestic, including foreign
currency, foreign time deposits, and foreign bank acceptances. When a Fund takes
a defensive position, it may not be following the fundamental investment policy
of the Fund.
Other Investments. Each Fund may, in the future, be authorized to
invest in securities other than those listed here and in the Prospectus,
provided that such investment would be consistent with that Fund's investment
objective and that it would not violate any fundamental investment policies or
restrictions applicable to the Fund.
Year 2000. Many computer and computer-based systems cannot distinguish
the year 2000 from the year 1900 because of the way they encode and calculate
dates (commonly known as the "Year 2000 Issue"). The Year 2000 Issue could
potentially have an adverse impact on the handling of security trades, the
payment of interest and dividends, pricing and account services. As part of its
operational responsibilities, the Advisor has reviewed each of its internal
systems and has obtained assessments from each service provider, including Fund
Managers, of Year 2000 issues which could potentially impact services to the
Fund. The Advisor is unaware of any Year 2000 issues which remain unresolved or
have been identified as unresolvable. In addition, the Advisor has established a
timetable to periodically re-evaluate systems to ensure new issues or those
which may not previously have been identified are addressed and resolved in an
expeditious manner. The Advisor does not anticipate any material expenditures
for monitoring Year 2000 issues. If the problem has not been fully addressed,
however, the Funds could be negatively affected. The Year 2000 Issue could also
have a negative impact on the companies in which the Funds invest, including
foreign issuers or associated foreign government, which could hurt the Funds'
investment returns.
INVESTMENT RESTRICTIONS
Each of the Funds has adopted the following investment restrictions and
limitations which cannot be changed as to any individual Fund without approval
by the holders of a majority of the outstanding shares of the relevant Fund. (As
used in this Statement of Additional Information, "a majority of the outstanding
shares of the relevant Fund" means the lesser of (i) 67% of the shares of the
relevant Fund represented at a meeting at which more than 50% of the outstanding
shares of that Fund are represented in person or by proxy or (ii) more than 50%
of the outstanding shares of the relevant Fund.) Except as otherwise set forth,
no Fund may:
1. As to 75% of its total assets purchase the securities of any issuer
if such purchase would cause more than 5% of its total assets to be invested in
the securities of such issuer (except U.S. Government securities or those of its
agencies or instrumentalities as defined in the Investment Company Act of 1940),
or purchase more than 10% of the outstanding securities, or more than 10% of the
outstanding voting securities, of any issuer. For purposes of this restriction,
each Fund will regard the entity which has ultimate responsibility for the
payment of interest and principal as the issuer.
2. Purchase securities of any company that has a continuous operating
history of less than three years (including that of predecessors) if such
securities would cause the Fund's investment in such companies taken at cost to
exceed 5% of the value of the Fund's total assets. (The Multi-Cap Growth Fund,
Global Financial Services Fund, the Internet Fund, High-Yield Bond and
Tax-Exempt Income Funds are not subject to this restriction.)
3. Purchase securities on margin, but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities and may make initial and maintenance margin deposits in connection
with options and futures contracts options on futures as permitted by its
investment program.
4. With respect to all Funds, other than the Multi-Cap Growth Fund make
short sales of securities, unless at the time of such sale, it owns, or has the
right to acquire at no additional cost to the Fund as the result of the
ownership of convertible or exchange securities, an equal amount of such
securities, and it will retain such securities so long as it is in a short
portion as to them. In no event will a Fund make short sales of securities in
29
<PAGE> 177
such a manner that the value used to cover such sales would exceed 15% of its
net assets at any time. The short sales of the type described above, which
are called "short sales against the box," may be used by a Fund when management
believes that they will protect profits or limit losses in investments.
5. Borrow money, except that a Fund may borrow from banks as a
temporary measure for emergency purposes and not for investment, in which case
such borrowings may not be in excess of the lesser of: (a) 10% of its total
assets taken at cost; or (b) 5% of the value of its assets at the time that the
loan is made. A Fund will not purchase securities while borrowings are
outstanding. A Fund will not pledge, mortgage or hypothecate its assets taken at
market value to an extent greater than the lesser of 10% of the value of its
net assets or 5% of the value of its total assets taken at cost.
6. Purchase or retain the securities of any issuer if those officers
and directors of a Fund or of its investment adviser holding individually more
than 1/2 of 1% of the securities of such issuer together own more than 5% of the
securities of such issuer. (The Global Financial Services Fund, the Multi-Cap
Growth, the Internet Fund and the Balanced Fund are not subject to this
restriction).
7. Purchase the securities of any other investment company except in
the open market in a transaction involving no commission or profit to a sponsor
or dealer (other than the customary sales load or broker's commission) or as a
part of a merger, consolidation, acquisition or reorganization. (The Internet
Fund, the Multi-Cap Growth, and the Balanced Fund are not subject to this
restriction.
8. Invest in real estate; this restriction does not prohibit a Fund
from investing in the securities of real estate investment trusts.
9. Invest for the purpose of exercising control of management of any
company.
10. Underwrite securities issued by others except to the extent that
the disposal of an investment position may qualify any Fund or the Corporation
as an underwriter as that term is defined under the Securities Act of 1933, as
amended,
11. Except for the Money Market Fund, the Government Securities Fund,
the Internet Fund and the Global Financial Services Fund, make any investment
which would cause more than 25% of the total assets of the Fund to be invested
in securities issued by companies principally engaged in any one industry;
provided, however, that: (i) this limitation does not apply to investments in
U.S. Government Securities as well as its agencies and instrumentalities,
general obligation bonds, municipal securities other than industrial development
bonds issued by non-governmental users, and (ii) utility companies will be
divided according to their services (for example, gas, gas transmission,
electric, electric and gas, and telephone will each be considered a separate
industry). The Money Market Fund may invest more than 25% of its total assets in
U.S. Government Securities as well as its agencies and instrumentalities and
certain bank instruments issued by domestic banks. The instruments in which the
Money Market Fund
30
<PAGE> 178
may invest in excess of 25%, in the aggregate, of its total assets are letters
of credit and guarantees, negotiable certificates of deposit, time deposits,
commercial paper and bankers acceptances meeting the investment criteria for the
Money Market Fund. The Global Financial Services Fund will invest 25% or more of
its total assets in companies in the financial services industry. The Internet
Fund will invest more than 25% of its assets in securities of companies engaged
in the research, design, development, manufacturing or distribution of
products, processes or services for use with the Internet or Intranet related
businesses.
12. Participate with others in any trading account. This restriction
does not prohibit the Corporation or any Fund from combining portfolio orders
with those of other Funds or other clients of the investment adviser or Fund
Managers when to do so would permit the Corporation and one or more Funds to
obtain a large-volume discount from ordinary brokerage commissions when
negotiated rates are available. (The Global Financial Services Fund, the
Multi-Cap Growth Fund, the Internet Fund and the Balanced Fund are not subject
to this restriction).
13. Invest more than 10% of its total assets in securities which are
subject to legal or contractual restrictions on resale or are otherwise not
readily salable.
14. Issue senior securities, except as permitted by the Investment
Company Act of 1940 and rules thereunder.
15. Invest in commodities or commodities contracts, except the Funds
may purchase and sell options, futures contracts and options on futures
contracts in accordance with their investment policies as set forth in this
registration statement.
16. Make loans, except by purchasing debt securities or entering into
repurchase agreements, in each case in accordance with its investment policies
as set forth in this Statement of Additional Information.
In addition, management of the Corporation has adopted the following
restrictions which apply to all of the Funds and may be changed only by the
Board of Directors of the Corporation. No Fund will: (i) lend its assets to any
person or individual, except by the purchase of bonds or other debt obligations
customarily sold to institutional investors, (ii) invest more than 5% of the
value of its net assets, in warrants (iii) invest in oil, gas, or other mineral
leases or engage in arbitrage transactions, or (iv) invest more than 15% of its
total assets in the securities of real estate investment trusts ("REITs").
31
<PAGE> 179
If a percentage restriction is adhered to at the time of an investment,
a later increase or decrease in the investment's percentage of the value of a
Fund's total assets resulting from a change in portfolio value or assets will
not constitute a violation of the percentage restrictions.
PORTFOLIO TURNOVER
A portfolio turnover rate is, in summary, the percentage computed by
dividing the lesser of a Fund's purchases or sales of securities (excluding
short-term securities) by the average market value of that Fund. The Fund
Managers intend to manage each Fund's assets by buying and selling securities to
help attain its investment objective. This may result in increases or decreases
in a Fund's current income available for distribution to its shareholders. While
none of the Funds is managed with the intent of generating short-term capital
gains, each of the Funds may dispose of investments (including money market
instruments) regardless of the holding period if, in the opinion of the Fund
Manager, an issuer's creditworthiness or perceived changes in a company's growth
prospects or asset value make selling them advisable. Such an investment
decision may result in capital gains or losses and could result in a high
portfolio turnover rate during a given period, resulting in increased
transaction costs related to equity securities. Disposing of debt securities in
these circumstances should not increase direct transaction costs since debt
securities are normally traded on a principal basis without brokerage
commissions. However, such transactions do involve a mark-up or mark-down of the
price.
The portfolio turnover rates of the Funds cannot be accurately
predicted. Nevertheless, the annual portfolio turnover rates of the Funds (other
than the Money Market Fund for which, due to the short-term nature of its
investment, a portfolio turnover rate is not applicable and the High-Yield Bond
Fund) are not expected to exceed 100%. A 100% portfolio turnover rate would
occur, for example, if all the securities in a Fund's investment portfolio were
replaced once in a period of one year.
The portfolio turnover rate for the Enterprise High-Yield Bond Fund was
180% in 1996, 175% in 1997 and 114% in 1998. These rates exceeded 100% due to
several factors, including a declining level of interest rates, a reduction in
risk premiums, and healthy stock and bank loan markets. As a result of these
conditions, the Fund experienced an abnormally high amount of redemptions and
tenders for existing positions. The Fund Manager has taken measures to
potentially improve the overall call protection of the Fund in order to capture
the total return potentially made available by declining medium and long-term
interest rates.
During 1998, the portfolio turnover rate for the Tax-Exempt Income Fund
was 100% due to a change in management style which resulted from the appointment
of a new Fund Manager.
During 1998, the portfolio turnover rate for the Small Company Growth
Fund exceeded 100% due to a change in management style which resulted from the
appointment of a new Fund Manager.
During 1996, the portfolio turnover rate for the Small Company Value
Fund was 144%. It exceeded 100% principally due to a change in management
style which resulted from the appointment of a new Fund Manager. In 1997, the
portfolio turnover rate for the Fund was 63%.
MANAGEMENT OF THE CORPORATION
The Board of Directors of the Corporation is responsible for the
management of the business of the Corporation under the laws of Maryland, and it
is primarily responsible for reviewing the activities of Enterprise Capital
Management, Inc. (the "Adviser"), the various Fund Managers and Enterprise Fund
Distributors, Inc. (the "Distributor" or "EFD") under the Investment Advisor's
Agreement, the Fund Manager's Agreements, the Distributor's Agreement and the
Plans which relate to the operations of the Corporation and its Funds.
The Directors and officers of the Corporation, and their principal
occupations during the past five years, are set forth below. Directors who are
"interested persons", as defined in the Investment Company
32
<PAGE> 180
1940 Act, are denoted by an asterisk. As to their duties relative to the
Corporation, the address of each is Atlanta Financial Center, 3343 Peachtree
Road, N.E., Suite 450, Atlanta, GA 30326.
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH PRINCIPAL OCCUPATION
THE CORPORATION PAST FIVE YEARS
- ---------------------------- --------------------
<S> <C>
Arthur T. Dietz (75) President, ATD Advisory Corp. since 1996; President and
Director Chief Executive Officer, Strategic Fund Management, Inc.,
Member of the Audit Committee 1987-1995; Mills B. Lane Professor of Finance and
Banking, Emory University, 1954-1988; Chairman, First
Atlanta Investments, 1998-present; Trustee, Enterprise
Accumulation Trust.
*Samuel J. Foti (47) President and Chief Operating Officer, MONY Life
Director Insurance Company of New York ("MONY") since 1994;
Executive Vice President, MONY (1991-1994); Trustee,
MONY since 1993; Senior Vice President, MONY (1989 -
1991); Director, MONY Life Insurance Co. of America
since 1989; Director, MONY Brokerage, Inc. since 1990;
Director, MONY International Holdings, Inc. since 1994;
Director, MONY Life Insurance Company of the Americas,
Ltd. since 1994, MONY Bank & Trust Co. of the Americas,
Ltd. since 1994; Director, Life Insurance Marketing and
Research Associates; Chairman, Life Insurance Marketing
and Research Associates 1996 - 1997; Trustee, Enterprise
Accumulation Trust.
Arthur Howell (80) Of Counsel, law firm of Alston & Bird, Atlanta, Georgia
Director since 1987; President, Summit Industries, Inc.
Chairman of Audit Committee (manufacturer) since 1954; Chairman Crescent Banking
Co., Inc. since 1985; President, Jonesheirs, Inc.
(licensing entity) since 1975; Trustee, Enterprise
Accumulation Trust.
William A. Mitchell, Jr.(59) President/CEO, Carter & Associates (real estate
Director development), Atlanta, Georgia since 1994; Director, John
Wieland Homes (commercial residential builders) since 1992;
Trustee, Enterprise Accumulation Trust.
Lonnie H. Pope (65) Chief Executive Officer, Longleaf Industries, Inc.
Director (chemical manufacturing) (1996-present); formerly President and
Member of the Audit Committee Chief Executive Officer of AFF, Inc. (aromatics manufacturing)
from 1987 to 1998; Trustee, Enterprise Accumulation Trust
</TABLE>
33
<PAGE> 181
<TABLE>
<S> <C>
*Michael I. Roth (53) Chairman and Chief Executive Officer, MONY since 1993;
Director President and Chief Executive Officer, MONY (1991-
1993); Director, MONY Life Insurance Company of America since
1991; Director, ARES Holdings Inc. since 1995; 1740 Advisers, Inc.
since 1992; MONY CS, Inc. since 1989; Executive Vice President
and Chief Financial Officer, MONY (1989-1991); Executive Vice
President and Chief Financial Officer, Primerica Corporation
(1987); Executive Vice President, Primerica Corporation
(1982-1987); Trustee, Enterprise Accumulation Trust; Director,
American Council of Life Insurance (ACLI);Director, the Life
Insurance Counsel of New York; Director, Pitney Bowes, Inc.;
Director, Promus Hotel Corporation.
*Victor Ugolyn (51) Chairman, President and Chief Executive Officer, The
Director Enterprise Group of Funds, Inc. since 1991; Chairman,
President and Chief Executive Officer, Enterprise Capital
and Enterprise Fund Distributors, Inc. since 1991;
Chairman, President and Chief Executive Officer;
Enterprise Accumulation Trust; Vice Chairman and Chief
Marketing Officer, Value Line Securities, Inc. (1986-1991).
Catherine R. McClellan (43)
Secretary Secretary, Enterprise Accumulation Trust since 1994;
Senior Vice President, Secretary and Chief Counsel,
Enterprise Capital Management, Inc. since 1989;
Senior Vice President, Secretary and Chief Counsel,
Enterprise Fund Distributors, Inc. since 1989.
Herbert M. Williamson (48) Assistant Secretary and Treasurer, Enterprise Accumulation
Treasurer Trust, Enterprise Capital Management, Inc. and Enterprise
Fund Distributors, Inc. since 1989.
Phillip G. Goff (35) Vice President and Chief Financial Officer, Enterprise
Vice President Accumulation Trust, Enterprise Capital Management, Inc.
and Enterprise Fund Distributors, Inc. 1995 - present; Audit
Manager, Coopers & Lybrand LLP, 1991 - 1995.
</TABLE>
* Messrs. Foti, Roth and Ugolyn are "interested persons" of the
Corporation, of the Advisor, and of the Distributor, as that term is
defined in the Investment Company Act of 1940.
Arthur T. Dietz, Arthur Howell and Lonnie H. Pope also serve on the
Audit Committee of the Board of Directors. The Audit Committee is charged with
recommending to the full
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<PAGE> 182
Board the engagement or discharge of the Corporation's independent accountants;
directing investigations into matters within the scope of the independent
accountants' duties; reviewing with the independent accountants the audit plan
and results of the audit; approving professional services provided by the
independent accountants and other accounting firms prior to the performance of
such services; reviewing the independence of the independent accountants;
considering the range of audit and non-audit fees; and preparing and submitting
Committee minutes to the full Board. Arthur T. Dietz and Victor Ugolyn also
serve on the Valuation Committee of the Board of Directors.
The Corporation pays fees to those directors who are not "interested
persons" of the Corporation at the rate of $12,500 per director per year plus
$625 for each regular, special or committee meeting attended. The Corporation
pays no salaries, fees or compensation to any of its officers, since these
expenses are borne by the Advisor. No fees were paid to the "interested"
Directors of the Corporation.
The following sets forth compensation paid to each of the Directors
during 1998:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name Aggregate Pension or Estimated Total
Compensa- Retirement Annual Compensation
tion from Benefits Benefits from the
the Corporation Accrued as upon Corporation
part of Retirement and Fund
Fund Complex
Expenses paid to
Directors*
<S> <C> <C> <C> <C>
Arthur T. Dietz $14,275 None None $25,875
Arthur Howell $14,800 None None $26,875
William A.
Mitchell, Jr. $13,350 None None $24,625
Lonnie H. Pope $14,275 None None $26,875
</TABLE>
* Each Director received fees for services as a Trustee of Enterprise
Accumulation Trust.
Directors, former directors, employees or retirees of the Corporation,
or of MONY and its subsidiaries and members of their families, or MONY and its
subsidiaries and any employee benefit plans of the foregoing may purchase Class
A shares at net asset value.
At June 21, 1999 the officers and Directors of the Fund as a group
owned less than one percent of the shares of each Fund.
35
<PAGE> 183
The following shareholders owned of record or beneficially 5% or more
of the indicated Fund Class' shares outstanding as of June 21, 1999:
<TABLE>
<CAPTION>
Shares Percent
------ -------
<S> <C> <C>
Growth Fund Class Y
- -------------------
Rayweb 595,084.20 19.80%
Capinco 418,717.33 13.93%
Growth & Income Class Y
- -----------------------
IBJ Whitehall Bank & Trust TTE 72,705.83 12.34%
First Fidelity Bancorp Retirement
Plan PWSB Board of Directors
IBJ Whitehall Bank & Trust TTE 55,998.61 9.51%
Peoples Westchester Savings SERP
Marine Midland Bank TTEE 29,790.32 5.06%
FBO Benefit Maintenance Plan of
Dime Community Bancorp
Equity Class A
- --------------
Enterprise Capital Management, Inc. 203,110.08 18.57%
Equity Class C
- --------------
Donaldson Lufkin Jenrette Securities Corp, Inc. 47,694.75 15.98%
Advanced Clearing FBO 3740226891 32,822.02 11.00%
State Street Bank & Trust Co. 19,729.55 6.61%
IRA R/O Carolyn B. Freeman
State Street Bank & Trust Co. 15,724.28 5.27%
IRA A/C Donald R. Sterner
Equity Class Y
- --------------
Enterprise Capital Management Inc. 7,849.29 63.93%
IBJ Whitehall Bank & Trust TTEE 3,865.75 31.49%
FBO Wesley D. Ratcliff
</TABLE>
36
<PAGE> 184
<TABLE>
<S> <C> <C>
Equity Income Class Y
- ---------------------
Enterprise Capital Management, Inc. 3,769.32 92.03%
General Sullivan GRP Inc BOARD OF DIR 219.96 5.37%
COMP PLAN FBO THOMAS J. TRAINER
Capital Appreciation Class C
- ---------------------------
Pacific Century Trust FBO 8,038.70 11.58%
Daniel Failoni IRA
Pacific Century Trust FBO
Roger Harding IRA 5,195.40 7.48%
Everen Securities FBO 4,933.83 7.10%
WH McVay IRA
Capital Appreciation Class Y
- ----------------------------
Enterprise Capital Management, Inc. 2,543.88 43.29%
Enterprise Capital Management, Inc. 710.71 12.09%
401(k) Phillip G. Goff
General Sullivan Group Board
of Directors General Compensation Plan 588.19 10.01%
IBJ Whitehall Bank & Trust TTEE 538.98 9.17%
Premier National Bancorp Inc.
Enterprise Capital Management, Inc. 365.66 6.22%
401(k) Lucretia L. Gaston
Small Company Growth Class Y
- ----------------------------
Marine Midland Bank TTEE 25,001.02 7.71%
Flushing Savings Bank Outside Dir.
Marine Midland Bank TTEE 17,521.62 5.40%
Roosevelt Savings Bank Serp DB Plan
Small Company Value Class Y
- ---------------------------
IBJ Whitehall Bank & Trust TTEE 5,714.29 9.54%
Independence Savings Bank DDCP
FBO Janine Luke
Madison Academy Inc. 5,672.53 9.47%
Enterprise Capital Management, Inc. 5,461.89 9.12%
401(k) Robert Ippolito
Fred L. Moyse Trust PFD 3,544.30 5.92%
Morgan Keegan & Co., Inc. Cust. 3,417.72 5.70%
FBO David H. Mulholland
</TABLE>
37
<PAGE> 185
<TABLE>
<S> <C> <C>
International Growth Class A
- ----------------------------
MONY Financial Services 130,384.27 6.22%
International Growth Class Y
- ----------------------------
MONY Employees' Supplemental Investment Plan 464,317.84 64.82%
MONY Field Underwriters Retirement Plan 241,168.48 33.67%
Global Financial Services Class C
- ---------------------------------
NFSC FEBO Nancy J. Walter 6,880.73 10.54%
NFSC FEBO JH Ramon Real Est Ltd. 4,173.62 6.32%
Global Financial Services Class Y
- ----------------------------------
MONY Financial Services 940,000.00 99.47%
Government Securities Class C
- -----------------------------
Everen Securities FBO
Robert McKay & Assoc. LLP 401(k) 39,909.59 10.72%
Schoolhouse Road Ped Asso. 401(k) 18,982.35 5.10%
</TABLE>
38
<PAGE> 186
<TABLE>
<S> <C> <C>
Government Securities Class Y
- -----------------------------
Institutional Securities Corp. 110,683.93 17.96%
Marine Midland Bank TTEE 53,526.86 8.69%
Flushing Savings Bank Dir. Plan
Manchester Trust Bank
FBO Wendell T. Breithaupt SERP 50,126.61 8.14%
IBJ Whitehall Bank & Trust TTEE 46,534.02 7.55%
Roslyn Savings Bank
Marine Midland Bank 43,310.42 7.03%
Roosevelt Savings Bank SERP
Marine Midland Bank TTEE 42,399.84 6.88%
FBO Benefit Maintenance Plan of
Dime Community Bank
Tax-Exempt Income Class C
- -------------------------
NFSC FEBO John H. Muller 10,891.36 11.50%
Larry Frederick/Sophie Frederick 5,886.82 6.22%
Clarence Glass TTEE 5,839.88 6.17%
NFSC FEBO Danny F. Sutter 5,391.98 5.69%
Porter Y & Ora L. Fisher JTWROS 5,005.87 5.29%
</TABLE>
39
<PAGE> 187
<TABLE>
<S> <C> <C>
Money Market Class C
- --------------------
Alice A. Tuseth 874,012.28 15.12%
Wales Industrial Services Inc. 513,174.71 8.88%
Glenn E. Cooper IRA 293,680.32 5.08%
Money Market Class Y
- --------------------
IBJ Whitehall Bank and Trust TTEE 674,857.33 21.99%
Northfield Savings Bank
Midland Marine Bank TTEE 444,457.80 14.48%
Flushing Savings Bank FSB
IBJ Whitehall Bank & Trust TTEE 298,683.75 9.73%
Charter One Bank
General Sullivan Group Board 291,281.98 9.49%
Charter Trust Bank TTEE 226,040.90 7.37%
Mid-Maine Savings Bank
Marine Midland Bank 218,460.26 7.12%
Flushing Savings Bank FSB SRP
Marine Midland Bank 205,311.13 6.69%
Flushing Savings Bank FSB DCP
</TABLE>
40
<PAGE> 188
<TABLE>
<S> <C> <C>
Tax-Exempt Income Class Y
- -------------------------
Enterprise Capital Management, Inc. 3,541.08 74.49%
Mario V. Prevosti & Helene Prevosti 1,207.34 25.40%
High-Yield Bond Class C
- -----------------------
Peoples Two Ten Co. 34,914.52 6.28%
Health Plus Shared Services 31,222.41 5.62%
High-Yield Bond Class Y
- -----------------------
Salsar Partnership #2 70,614.28 39.08%
Eric K. Scholl/Diane Scholl 38,538.33 21.33%
James R. Caywood 36,478.43 20.19%
Caywood Christian Capital Management 23,426.05 12.97%
Managed Class Y
- ---------------
Mony Employee Supplemental Investment
Plan 5,019,405.24 54.27%
Mony Field Underwriters Retirement Plan 3,078,457.47 33.28%
</TABLE>
41
<PAGE> 189
The Advisor has contractually agreed with the Corporation that it will
reimburse such portion of the fees due to it under the Advisor's Agreement as is
necessary to assure, for the period commencing January 1, 1999, and ending no
earlier than May 1, 2000, that expenses incurred by the Funds will not exceed
the following percentages of average daily net assets: Growth (A) 1.60%; (B)
2.15%; (C) 2.15%; (Y) 1.15%; Growth and Income (A) 1.50%; (B) 2.05%; (C) 2.05%;
(Y) 1.05%; Equity (A) 1.60%; (B) 2.15%; (C) 2.15%; (Y) 1.15%; Equity Income (A)
1.50%; (B) 2.05%; (C) 2.05%; (Y) 1.05%; Capital Appreciation (A) 1.75%; (B)
2.30%; (C) 2.30%; (Y) 1.30%; Multi-Cap Growth (A) 1.85%; (B) 2.40%; (C) 2.40%;
(Y) 1.40%; Small Company Growth (A) 1.85%; (B) 2.40%; (C) 2.40%; (Y) 1.40%;
Small Company Value (A) 1.75%; (B) 2.30%; (C) 2.30%; (Y) 1.30%; International
Growth (A) 2.00%; (B) 2.55%; (C) 2.55%; (Y) 1.55%; Internet (A) 1.90%; (B)
2.45%; (C) 2.45%; (Y) 1.45%; Global Financial Services (A) 1.75%; (B) 2.30%;
(C) 2.30%; (Y) 1.30%; Government Securities (A) 1.30%; (B) 1.85%; (C) 1.85%;
(Y) 0.85%; High-Yield Bond (A) 1.30%; (B) 1.85%; (C) 1.85%; (Y) 0.85%;
Tax-Exempt Income (A) 1.10%; (B) 1.65%; (C) 1.65%; (Y) 0.65%; Balanced (A)
1.40%; (B) 1.95%; (C) 1.95%; (Y) 0.95%; Managed (A) 1.75%; (B) 2.30%; (C)
2.30%; (Y) 1.30% and Money Market (A) 0.70%; (B) 0.70%; (C) 0.70%; (Y) 0.70%.
This commitment was also in effect from January 1, 1989 through December 31,
1998. The Fund Managers have advised the Corporation that they may assist in a
portion of the above-referenced reimbursement from time to time.
The Advisory Agreement provides that in the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard for its
obligations thereunder,the Advisor, as the case may be, is not liable for any
act or omission in the course of, or in connection with, the rendition of
services thereunder. The Agreement permits the Advisor to act as investment
advisor for any other person or firm.
The Advisor and the Corporation entered into agreements pursuant to
which the Advisor advanced on behalf of the Corporation $33,748 to cover the
costs of expanding the series to include a Small Company Value Fund; $34,116 to
cover the costs of expanding the series to include a Managed Fund; and $40,378
for expanding the series to include an Equity Fund and completing the
appropriate registrations under the Investment Company Act of 1940, the
Securities Act of 1933, and certain state securities laws. The agreements
provide that these amounts will be repaid by each Fund, in five equal annual
increments without interest, commencing at the end of the first fiscal year at
which each such Fund have total net assets of $5 million or more. Each Fund has
commenced such payments.
The Advisor's Agreement authorizes the Advisor to enter into
subadvisory agreements with various investment advisers as Fund Managers for the
Funds. The Fund Manager's Agreements are substantially the same in all material
respects except for the names of the Fund Managers and the rates of
compensation, which consist of a portion of the management fee that is paid by
the Corporation to the Advisor and which the Advisor pays to the Fund Managers.
The Advisor and the Corporation have received an exemptive order from
the Securities and Exchange Commission which permits the Corporation, subject
to, among other things, initial shareholder authority, to thereafter enter into
or amend Fund Manager Agreements without obtaining shareholder approval each
time. Shareholders voted affirmatively to give the Corporation this ongoing
authority. With Board approval, the Advisor is permitted to employ new Fund
Managers for the Funds, change the terms of the Fund Manager Agreements or enter
into a new Agreement with that Fund Manager. Shareholders of a Fund continue to
have the right to terminate the Fund Manager's Agreement for the Fund at any
time by a vote of the majority of the outstanding voting securities of the Fund.
Shareholders will be notified of any Fund Manager changes or other material
amendments to Fund Manager Agreements that occur under these arrangements.
42
<PAGE> 190
FUND MANAGER ARRANGEMENTS
The following table sets forth certain information about the Fund
Managers for each Fund.
<TABLE>
<CAPTION>
Fund Name and Control Persons Fee Paid by the Advisor to the
of the Fund Manager Fund Manager as a Percentage of
Average Daily Net Assets
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Growth Fund Montag & Caldwell, Inc. 0.30% for assets under management
("Montag & Caldwell"). up to $100,000,000; 0.25% for
Montag & Caldwell is assets from $100,000,000 to
controlled by Alleghany $200,000,000; and 0.20% for assets
Corporation. greater than $200,000,000.
Growth and Income Fund Retirement System 0.30% for assets under management
Investors Inc. ("RSI") up to $100,000,000; 0.25% on the
which is a subsidiary of next $100,000,000; and 0.20% for
Retirement System Group assets greater than $200,000,000.
Inc.
Equity Fund OpCap Advisors, which is 0.40% for assets under management
a subsidiary of up to $100,000,000 and 0.30%
Oppenheimer Capital, a thereafter.
general partnership.
Equity Income Fund 1740 Advisers, Inc. 0.30% for assets under management
("1740 Advisers"). It is a up to $100,000,000; 0.25% on the
subsidiary of MONY. next $100,000,000; and 0.20%
thereafter.
Capital Appreciation Fund Provident Investment 0.50% for assets under management
Counsel, Inc. ("PIC"). up to $100,000,000; 0.45% for
PIC is a wholly owned assets under management for the
subsidiary of United Asset next $100,000,000; 0.35% for assets
Management, Inc. greater than $200,000,000 up to
$300,000,000; and 0.30% thereafter.
Multi-Cap Growth Fund Fred Alger Management, Inc. 0.40% for assets under management.
("Alger"). Alger is owned
by its employees.
</TABLE>
43
<PAGE> 191
<TABLE>
<S> <C> <C>
Small Company Growth Fund William D. Witter, Inc. 0.65% for assets under management
("Witter"). Witter is up to $50 million; 0.55% for assets
owned by its employees. under management for the next
$50 million; and 0.45% for assets
thereafter.
Small Company Value Fund GAMCO Investors, Inc. 0.40% for assets under management
is a wholly owned up to $1 billion and 0.30% for
subsidiary of Gabelli assets in excess of $1 billion.
Asset Management Inc.
International Growth Fund Vontobel USA Inc. 0.40% for assets under management
"Vontobel". Vontobel is a up to $100,000,000; 0.35% for
wholly-owned subsidiary assets under management from
of Bank J. Vontobel of $100,000,000 to $200,000,000;
Zurich, Switzerland. 0.325% for assets from
$200,000,000 to $500,000,000;
and 0.25% for assets greater than
$500,000,000.
Global Financial Services Fund Sanford C. Bernstein & 0.50% for assets up to $100 million;
Co., Inc. ("Sanford 0.40% for assets from $100 million
Bernstein") is owned to $300 million; 0.30% for assets
by its employees. over $300 million.
Internet Fund Alger, which is owned 0.40% for assets under management.
by its employees.
Government Securities Fund TCW Funds Management, 0.30% for assets under management
Inc. The firm is a wholly up to $50,000,000 and 0.25% for
owned subsidiary of TCW assets under management greater
Management Company, a than $50,000,000.
Nevada corporation,
whose direct and indirect
subsidiaries, including
Trust Company of the
West and TCW Asset
Management Company,
provide a variety of trust,
investment management
and investment advisory
services.
</TABLE>
44
<PAGE> 192
<TABLE>
<S> <C> <C>
High-Yield Bond Fund Caywood-Scholl Capital 0.30% for assets under management
Management ("Caywood- up to $100,000,000 and 0.25% for
Scholl"). It is a wholly assets above $100,000,000.
owned subsidiary of
RCM Global Investors
LLC, an affiliate of
Dresdner Bank AG.
Tax-Exempt Income Fund MBIA Capital 0.15% for assets under
Management Corp. management.
("MBIA"). It is a wholly
owned subsidiary of
MBIA, Inc.
Balanced Fund Montag & Caldwell, Inc. 0.30% for assets under management
("Montag & Caldwell"). up to $100,000,000; 0.25% for
Montag and Caldwell is assets from $100,000,000 to
controlled by Alleghany $200,000,000; and 0.20% for assets
Corporation greater than $200,000,000.
Managed Fund OpCap Advisors, a 0.40% for assets under management
majority-owned subsidiary up to $100,000,000 and 0.30% for
of Oppenheimer Capital, a assets in excess of $100,000,000.
general partnership.
Money Market Fund Enterprise Capital, a 0.35% for assets under
wholly owned second tier management.
subsidiary of The Mony
Group Inc.
</TABLE>
The Advisor is the Fund Manager of the Money Market Fund. It utilizes
the services of MONY employees for certain services relating to management of
the Fund. These services include but are not limited to the initial credit
review of approved issuers and trading. All such services are provided on a cost
reimbursement basis.
The tables below sets forth the 1998, 1997 and 1996 breakdown by Fund
of (1) the investment advisory fee paid to the Advisor, (2) the percentage of
the investment advisory fee to be paid by the Advisor to the Fund Manager, (3)
the fund management fee paid by the Advisor to the Fund Manager, (4) the net
investment advisory fee left to the Advisor after payment of the fund management
fee, and (5) the amount of the expense reimbursement paid by the Advisor to the
Fund.
45
<PAGE> 193
A shareholder who owns beneficially, directly or indirectly, 25% or
more of a Fund's outstanding voting securities may be deemed to "control" (as
defined in the 1940 Act) that Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
Investment Advisory Agreement
The Corporation, on behalf of each Fund, has entered into an Investment
Advisory Agreement (the "Advisor's Agreement") with the Advisor which, in turn,
has entered into Fund Manager's Agreements with each of the Fund Managers. The
Advisor is a subsidiary of MONY Life Insurance Company ("MONY"), one of the
nation's largest insurance companies, and is a second-tier subsidiary of The
MONY Group Inc. The Advisor was incorporated in 1986. The Advisor's address is
3343 Peachtree Road, Suite 450, Atlanta, Georgia 30326. Victor Ugolyn, who is
President of the Fund, is also Chairman of the Board and President of the
Advisor.
The Advisor's Agreement obligates the Advisor to provide investment
advisory services to the Funds, to furnish the Corporation with certain
administrative, clerical, bookkeeping and statistical services, office space and
facilities, and to pay the compensation of the officers of the Corporation. Each
Fund pays all other expenses incurred in its operation, including redemption
expenses, expenses of portfolio transactions, shareholder servicing costs,
mailing costs, expenses of registering the shares under federal and state
securities laws, accounting and pricing costs (including the daily calculation
of net asset value and daily dividends), interest, certain taxes, legal
services, auditing services, charges of the custodian and transfer agent, and
other expenses attributable to an individual account. Each Fund also pays a
portion of the Corporation's general administrative expenses. These expenses are
allocated to the Funds either on the basis of their asset size, on the basis of
special needs of any Fund, or equally as is deemed appropriate. These expenses
include expenses such as: directors' fees; custodial, transfer agent, brokerage,
auditing and legal services; the printing of prospectuses, proxies, registration
statements and shareholder reports sent to existing shareholders; printing and
issuance of stock certificates; expenses relating to bookkeeping, recording and
determining the net asset value of shares; the expenses of qualification of a
Fund's shares under the federal and state securities laws; and any other
expenses properly payable by the Corporation that are allocable to the
respective Funds. Litigation costs, if any, may be directly allocable to the
Funds or allocated on the basis of the size of the respective Funds. The Board
of Directors annually reviews allocation of expenses among the Funds and has
been determined that this is an appropriate method of allocation of expenses.
46
<PAGE> 194
<TABLE>
<CAPTION>
1998
FUND (1) (2) (3) (4) (5)
- ---- ------------ --- ------------ ------------ --------
<S> <C> <C> <C> <C> <C>
Growth $7,776,795 31% $2,223,812 $5,552,983 --
Equity 77,640 53% 33,324 44,316 $117,115
Growth and Income 309,113 40% 123,645 185,468 178,665
Equity Income 1,030,099 40% 393,367 636,732 102,250
Capital Appreciation 944,606 66% 616,764 327,843 --
Small Company Growth 247,812 65% 172,622 75,250 196,438
Small Company Value 893,406 53% 476,304 417,102 126,994
International Growth 574,799 53% 304,305 270,493 73,295
Global Financial Services 14,156 47% 8,327 5,829 66,710
Government Securities 585,666 50% 269,028 316,639 80,305
High-Yield Bond 623,478 50% 309,058 314,420 146,963
Tax-Exempt Income 138,737 45% 41,621 97,116 82,991
Managed 3,103,061 --% 1,341,224 1,761,836 --
Money Market 685,510 --% -- 385,510 --
</TABLE>
<TABLE>
<CAPTION>
1997
FUND (1) (2) (3) (4) (5)
- ---- ------------ --- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Growth $ 3,331,589 31% $ 1,038,424 $ 2,293,165 $ --
Equity 15,970 53% 8,516 7,453 99,274
Growth and Income 63,099 40% 25,240 37,859 102,630
Equity Income 739,501 40% 293,217 446,285 115,504
Capital Appreciation 903,281 66% 591,969 311,312 --
Small Company Growth 84,918 65% 55,197 29,791 104,369
Small Company Value 275,321 53% 146,838 128,483 69,743
International Growth 478,833 53% 253,500 225,333 62,527
Government Securities 483,366 47% 226,402 256,963 130,007
High-Yield Bond 436,989 50% 218,495 218,494 123,123
Tax-Exempt Income 141,160 50% 70,580 70,580 108,255
Managed 2,180,923 45% 972,369 1,208,554 --
Money Market 231,118 -- -- 231,118 158,757
</TABLE>
<TABLE>
<CAPTION>
1996
FUND (1) (2) (3) (4) (5)
- ---- ------------ --- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Growth $ 1,282,393 37% $ 474,978 $ 807,415 $ --
Equity Income 523,261 40% 209,391 313,870 126,447
Capital Appreciation 935,780 65% 611,348 324,432 --
Small Company Value 153,784 47% 72,105 81,679 128,396
International Growth 353,427 53% 187,181 166,246 80,932
Government Securities 490,882 47% 229,645 261,237 94,868
High-Yield Bond 339,960 50% 170,056 169,904 114,041
Tax-Exempt Income 162,828 50% 81,452 81,376 51,959
Managed 1,164,633 49% 568,181 596,452 --
Money Market 160,844 -- -- 160,844 82,594
</TABLE>
47
<PAGE> 195
Distributor's Agreements and Plans of Distribution
The Distributor is a subsidiary of Enterprise Capital Management, Inc.
The Distributor's principal business address is Atlanta Financial Center, 3343
Peachtree Road, N.E., Suite 450, Atlanta, Georgia 30326.
Class A, Class B and Class C shares of each Fund have adopted a
separate Distribution Plan (the "Plans") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Under the Plans, Class A, Class B and Class C
shares of each of the Funds are authorized to pay the Distributor a distribution
fee for expenses incurred in connection with the continuous distribution of
shares of the Fund and an account maintenance fee for shareholder servicing.
There is no Distribution Plan in effect for Class Y shares.
Class A Shares. Class A shares of each Fund (except Money Market Fund)
pay the Distributor an account maintenance and distribution fee at the annual
rate of 0.45% of each Fund's average daily net assets attributable to Class A
shares.
Class B Shares. Class B shares of each Fund (except Money Market Fund)
pay the Distributor a distribution fee at the annual rate of 0.75% of each
Fund's average daily net assets attributable to Class B shares. Class B shares
of each Fund (except Money Market Fund) also pay an account maintenance fee at
the annual rate of 0.25% of each Fund's average daily net assets.
Class C Shares. Class C shares of each Fund (except Money Market Fund)
pay the Distributor a distribution fee at the annual rate of 0.75% of each
Fund's average daily net assets attributable to Class C shares. Class C shares
of each Fund (except Money Market Fund) also pay an account maintenance fee at
the annual rate of 0.25% of each Fund's average daily net assets attributable to
Class C shares.
Use of Distribution and Account Maintenance Fees. All or a portion of
the distribution fees paid by Class A, B or C shares may be used by the
Distributor to pay costs of printing reports and prospectuses for potential
investors and the costs of other distribution expenses. All or a portion of the
account maintenance fees paid by the Class A, Class B or Class C shares may be
paid to broker-dealers or others for the provision of personal continuing
services to shareholders, including such matters as responding to shareholder
inquiries concerning the status of their accounts and assistance in account
maintenance matters such as changes in address. Payments under the Plans are not
limited to amounts actually paid or expenses actually incurred by the
Distributor but cannot exceed the maximum rate set by the Plans or by the Board.
It is, therefore, possible that the Distributor may realize a profit in a
particular year as a result of these payments. The Plans have the effect of
increasing the Corporation's expenses from what they would otherwise be. The
Board reviews the Corporation's distribution and account maintenance fee
payments and may reduce or eliminate the fee at any time without further
obligation of the Corporation.
In addition to distribution and account maintenance fees paid by the
Corporation under Class A, Class B and Class C Plans, the Advisor (or one of its
affiliates) may make payments to
48
<PAGE> 196
dealers (including MONY Securities Corp.) and other persons which distribute
shares of the Funds (including Class Y shares). Such payments may be calculated
by reference to the net asset value of shares sold by such persons or otherwise.
Distribution Fees and Commissions
<TABLE>
<CAPTION>
TRAVEL,
TELEPHONE &
DISTRIBUTION COMMISSION CDSC COMMISSIONS MARKETING & OTHER
FEES PAID TO & SALES FEES COLLECTED & AND FEES PAID ADVERTISING AUTHORIZED
THE PAID TO THE PAID TO THE TO DEALERS FEES PAID FEES PAID
DISTRIBUTOR DISTRIBUTOR DISTRIBUT0R
------------ ------------- ------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
1998 $12,899,177 $1,943,513 $ 69,676 $ 8,641,680 $ 3,653,072 $ 5,150,111
1997 $6,667,912 $1,244,343* $ 13,318 $ 4,320,682 $ 2,143,274 $ 3,103,754
1996 $3,696,663 $ 692,305 $ 131,372 $ 2,043,128 $ 1,108,160 $ 1,512,246
</TABLE>
- -----------------
* During the period from November 3, 1997 through December 31, 1997
the Distributor reallowed the full applicable sales charge to
certain broker/dealers with respect to the sale of shares of the
Growth and Income Fund, Equity Fund, and Small Company Growth Fund.
MISCELLANEOUS
The terms of each of the Advisor's Agreement, the Distributor's
Agreements and 12b-1 Plans, the Transfer Agent Agreement, the Accounting
Agreement and the Fund Manager's Agreements (each an "Agreement," and
collectively, the "Agreements") provide that each such Agreement: (i) will
automatically terminate upon "assignment," as such term is defined in the
Investment Company Act of 1940; (ii) must be approved annually by the
Corporation's Board of Directors or by vote of a majority of the outstanding
voting securities; and (iii) must be approved annually in person by vote of a
majority of the Directors of the Corporation who are not parties to such
contract or "interested persons" (as such term is defined in the Investment
Company Act of 1940) of such party. Each Agreement further provides that it can
be terminated without penalty by either party thereto upon 60 days written
notice to the other party.
Purchase, Redemption and Pricing of Securities being Offered
Information concerning purchase and redemption of shares of the Funds,
as well as information concerning computation of net asset value per share is
set forth in the Prospectus.
Each Fund offers four separate classes of shares: Class A, B, C and Y
shares. Each Class of shares of a Fund represents an identical interest in the
investment portfolio of that Fund and has the same rights, except that (i) each
class may bear differing amounts of certain class-specific expenses, (ii) Class
A shares are subject to an initial sales charge, a distribution fee and service
fee, (iii) Class B and Class C shares are subject to a contingent deferred sales
charge ("CDSC"), a distribution fee and an
49
<PAGE> 197
ongoing service fee, (iv) only Class B shares have a conversion feature; (v) the
Class A, B and C shares have exclusive voting rights with respect to matters
related to distribution and servicing expenditures; (vi) Class Y shares are not
subject to any sales charge or any distribution, account maintenance or service
fee, and (vii) the Classes have separate exchange privileges. In addition, the
income attributable to each Class and the dividends payable on the shares of
each Class will be reduced by the amount of the distribution fee or service fee,
if any, payable by that Class. The distribution-related fees paid with respect
to any Class will not be used to finance the distribution expenditures of
another Class. Sales personnel may receive different compensation for selling
different Classes of shares.
Fund shares are purchased at the net asset value (plus, with the
exception of the Money Market Fund Class A shares and Class Y shares of each
fund, the applicable sales charge) next determined after the application for
purchase of shares is received by the Enterprise Shareholder Services Division
of the Fund's Transfer Agent, National Financial Data Services, Inc. (the
"Transfer Agent"). The sales charge may be imposed, at the election of the
investor, at the time of purchase (Class A shares) or may be deferred (Class B
and C shares and Class A shares in excess of $1,000,000). Purchases can be made
through most investment dealers who, as part of the service they provide, must
transmit orders promptly.
Initial Sales Charge Waivers and Reductions
No sales charge applies to purchases of Class A shares by any of the
following: (a) selling brokers, their employees and their registered
representatives; (b) employees, clients or direct referrals of any Fund Manager
or of Evaluation Associates, Inc. ("EAI"); (c) directors, former directors,
employees or retirees of the Fund or of The MONY Group Inc. and its
subsidiaries; (d) family including spouses, parents, siblings, children,
grandchildren and employee benefit plans of any of (a), (b) and (c) above; (e)
certain employee benefit plans qualified under Sections 401 and 403 of the IRC,
including salary reduction plans qualified under Section 401(k) of IRC and
certain payroll deduction plans, subject to minimum requirements with respect to
number of participants or plan assets which may be established by the
Distributor; (f) MONY and its subsidiaries; (g) clients of fee-based financial
planners; and (h) financial institutions and financial institutions' trust
departments for funds over which they exercise exclusive discretionary
investment authority and which are held in fiduciary, agency, advisory,
custodial or similar capacity.
In addition, members of certain associations, fraternal groups,
franchise organizations and unions may enter into an agreement with the
Distributor which allows members to purchase Class A shares at a sales load
equal to 75% of the applicable sales charge, subject to minimum requirements,
with respect to number of participants or plan assets which may be established
by the Distributor. The Dealer Discount will also be adjusted in like manner.
An investor seeking a reduction in sales charge with respect to a
waiver of sales charge by reason of being a member of the above-described
groups, must describe the basis for the requested reduction or waiver in
documents accompanying any new investment. The
50
<PAGE> 198
Corporation may terminate, or amend the terms of, offering shares of a Fund at
net asset value or at a reduced sales charge at any time.
Exemptions from Class A, B and C CDSC
No CDSC will be imposed when a shareholder redeems Class A, B or C
shares in the following instances: (a) shares or amounts representing increases
in the value of an account above the net cost of the investment due to increases
in the net asset value per share; (b) shares acquired through reinvestment of
income dividends or capital gains distributions; (c) shares acquired by exchange
from any Fund, other than the Class A Money Market fund where the exchanged
shares would not have been subject to a CDSC upon redemption; and (d) Class A
shares purchased in the amount of $1 million or more if held for more than
twenty-four (24) months, Class B shares held for more than six years and Class C
shares held for more than one year.
In determining whether the Class A, B or C CDSC is payable, it will be
assumed that shares that are not subject to a CDSC are redeemed first and that
other shares are then redeemed in the order purchased. No CDSC will be imposed
on exchanges to purchase shares of another Fund although a CDSC will be imposed
on shares (when redeemed) of the acquired Fund purchased by exchange of shares
subject to a CDSC. The holding period of shares subject to a CDSC that are
exchanged will be deemed to commence as of the date of the initial investment.
Special Fiduciary Relationships. The CDSC will not apply with respect
to purchase of Class A shares for which the seller dealer is not permitted to
receive a sales load or redemption fee imposed on a shareholder with whom such
dealer has a fiduciary relationship in accordance with the provisions of the
such dealer agrees to the reimbursement provision described below, no sales
charge will be imposed on sales of $1,000,000 or more and the Distributor will
pay to the selling dealer a commission described in the Prospectus.
For the period of 13 months from the date of the sales referred to in
the above paragraph, the distribution fee payable by a Fund to the Distributor
pursuant to the Fund's Distribution Plan in connection with such shares will be
retained by the Distributor. In the event of a redemption of any such shares
within 24 months of purchase, the selling dealer will reimburse the Distributor
for the amount of commission paid less the amount of the distribution fee with
respect to such shares.
CDSC Waivers and Reductions
The CDSC will be waived in the event of: (a) distributions to
participants or beneficiaries and redemptions (other than redemption of the
entire plan) by certain plans, including participant-directed qualified
retirement qualified under Section 401(a) of the IRC or from custodial accounts
under the IRC Section 403(b)(7), individual retirement accounts under the IRC
Section 408(a), participant-directed non-qualified deferred compensation plans
under the IRC section 457 and other employee benefit plans ("plans"), and
returns of excess contributions made to these
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<PAGE> 199
plans; (b) redemption of shares of a shareholder (including a registered joint
owner) who has died; (c) redemption of shares of a shareholder (including a
registered joint owner) who after purchase of the shares being redeemed becomes
totally disabled (as evidenced by a determination by the federal Social Security
Administration); (d) withdrawals under a systematic withdrawal plan where the
annual withdrawal does not exceed 10% of the net asset value of the account
(only for Class B shares); and (e) liquidation of a shareholder's account if the
aggregate net asset value of shares held in the account is less than the
required minimum. The CDSC will also be waived for redemptions made pursuant to
any IRA systematic withdrawal based on the shareholder's life expectancy
including, but not limited to, substantially equal periodic payments described
in IRC Section 72(t)(2)(A)(iv) prior to age 59 1/2 and required minimum
distributions after age 70 1/2. A shareholder will be credited with any CDSC
paid in connection with the redemption of any Class A, B, or C shares if within
180 days after such redemption, the proceeds are invested in the same class of
shares in the same and/or another Fund.
SERVICES FOR INVESTORS
For the convenience of investors, the following plans are available.
Investors should realize that none of these plans can guarantee profit or insure
against loss. The costs of these shareholder plans (exclusive of the employee
benefit plans) are paid by the Distributor, except for the normal cost of
issuing shares, which is paid by the Corporation.
AUTOMATIC REINVESTMENT PLAN. All shareholders, unless they request
otherwise, are enrolled in the Automatic Reinvestment Plan under which dividends
and capital gains distributions on their shares are automatically reinvested in
shares of the same Class of Fund(s) at the net asset value per share computed on
the record date of such dividends and capital gains distributions. The Automatic
Reinvestment Plan may be terminated by participants or by the Corporation at any
time. No sales charge is applied upon reinvestment of dividends or capital
gains.
AUTOMATIC BANK DRAFT PLAN. An Automatic Bank Draft Plan is available
for investors who wish to purchase shares of one or more of the Funds in amounts
of $25 or more on a regular basis by having the amount of the investment
automatically deducted from the investor's checking account. The minimum initial
investment for this Plan is $100. Forms authorizing this service are available
from the Corporation.
AUTOMATIC INVESTMENT PLAN. An investor may debit any Class of a Fund
Account on a monthly basis for automatic investments into one or more of the
other Funds of the same Class. The Fund from which the investment will be made
is subject to the $1,000 minimum. The
52
<PAGE> 200
investor may then choose to have $50 or more transferred to either an
established Fund, or they may open a new account subject to an initial minimum
investment of $100.
Letter of Intent Investments. Any investor may execute a Letter of
Intent covering purchases of Class A shares of $100,000 or more, at the public
offering price, of Fund shares to be made within a period of 13 months. A
reduced sales charge will be applicable to the total dollar amount of Class A
shares purchased in the 13-month period provided at least $100,000 is purchased.
The minimum initial investment under a Letter of Intent is 5% of the amount
indicated in the Letter of Intent. Class A shares purchased with the first 5% of
such amount will be held in escrow (while remaining registered in the name of
the investor) to secure payment of the higher sales charge applicable to the
shares actually purchased if the full amount indicated is not purchased, and
such escrowed shares will be involuntarily redeemed to pay the additional sales
charge, if necessary. When the full amount indicated has been purchased, the
escrow will be released.
Investors wishing to enter into a Letter of Intent in conjunction with
their investment in Class A shares of the Funds should complete the appropriate
portion of the new account application.
Right of Accumulation Discount. Investors who make an additional
purchase of Class A shares of a Fund which, when combined with the value of
their existing aggregate holdings of shares of a Fund, each calculated at the
then applicable net asset value per share, at the time of the additional
purchase, equals $100,000 or more, will be entitled to the reduced sales charge
shown under "Shareholder Account Information-Class A Shares-Initial Sales Charge
Option" in the Prospectus on the full amount of each additional purchase. For
purposes of determining the discount, holdings of Fund shares of the investor's
spouse, immediate family or accounts controlled by the investor, whether as a
single investor or trustee of, or participant in, pooled and similar accounts,
will be aggregated upon notification of applicable accounts from the investor.
Checkwriting. A check redemption feature is available on the Money
Market Fund Class A shares with opening balances of $5,000 or more. Redemption
checks may be made payable to the order of any person in any amount from $500 to
$100,000. Up to five redemption checks per month may be written without charge.
Each additional redemption check over five in a given month will be subject to a
$5 fee. Redemption checks are free and may be obtained from the Transfer Agent
or by contacting the Advisor. A $25 fee will be imposed on any account for
stopping payment of a redemption check upon request of the shareholder. It is
not possible to use a redemption check to close out an account since additional
shares accrue daily.
Systematic Withdrawal Plan. Investors may elect a Systematic Withdrawal
Plan under which a fixed sum will be paid monthly, quarterly, or annually. There
is no minimum withdrawal payment required. Shares in the Plan are held on
deposit in noncertificate form and any capital gain distributions and dividends
from investment income are invested in additional shares of the Fund(s)at net
asset value. Shares in the Plan account are then redeemed at net asset
53
<PAGE> 201
value to make each withdrawal payment. Redemptions for the purpose of
withdrawals are made on or about the 15th day of the month of payment at that
day's closing net asset value, and checks are mailed within five days of the
redemption date. Such distributions are subject to applicable taxation.
Because withdrawal payments may include a return of principal,
redemptions for the purpose of making such payments may reduce or even use up
the investment, depending upon the size of the payments and the fluctuations of
the market price of the underlying Fund securities. For this reason, the
payments cannot be considered as a yield of income on the investment.
Retirement Plans. The Corporation offers various Retirement Plans: IRA
(generally for all individuals with employment income); 403(b)(7) (for employees
of certain tax-exempt organizations and schools); and corporate pension and
profit sharing (including a 401(k) option) plans. For full details as to these
plans, you should request a copy of the plan document from the Transfer Agent.
After reading the plan, you may wish to consult a competent financial or tax
adviser if you are uncertain that the plan is appropriate for your needs.
Conversion of Class B Shares
Class B shares will automatically convert to Class A shares of the same
Fund eight years after the end of the calendar month in which the purchase order
for Class B shares was accepted, on the basis of the relative net asset values
of the two classes and subject to the following terms: Class B shares acquired
through the reinvestment of dividends and distributions ("reinvested Class B
shares") will be converted to Class A shares on a pro rata basis only when Class
B shares not acquired through reinvestment of dividends or distributions
("purchased Class B shares") are converted. The portion of reinvested Class B
shares to be converted will be determined by the ratio that the purchased Class
B shares eligible for conversion bear to the total amount of purchased Class B
shares eligible in the shareholder's account. For the purposes of calculating
the holding period, Class B shares will be deemed to have been issued on the
sooner of: (a) the date on which the issuance of Class B shares occurred, or (b)
for Class B shares obtained by an exchange or series of exchanges, the date on
which the issuance of the original Class B shares occurred. This conversion to
Class A shares will relieve Class B shares that have been outstanding for at
least eight years (a period of time sufficient for the Distributor to have been
compensated for distribution expenses related to such Class B shares) from the
higher ongoing distribution fee paid by Class B shares. Only Class B shares have
this conversion feature. Conversion of Class B shares to Class A shares is
contingent on the continuing availability of a private letter revenue ruling
from the Internal Revenue Service affirming that such conversion does not
constitute a taxable event for the shareholder under the IRC. If such revenue
ruling or an opinion of counsel is no longer available, conversion of Class B
shares to Class A shares would have to be suspended, and Class B shares would
continue to be subject to the Class B distribution fee until redeemed.
54
<PAGE> 202
Exchange Privilege
An exchange represents the sale of shares of one Fund and the purchase
of shares of another, which may produce a gain or loss for tax purposes.
Shares of a Fund which are not subject to a CDSC exchange will be
processed at the net asset value next determined after the Transfer Agent
receives your exchange request. Shares of a Fund which are subject to a CDSC
will be exchangeable on the basis of the relative net asset value per share
without payment of any CDSC which might otherwise be due upon redemption of the
shares of the Fund. For purposes of computing the CDSC that may be payable upon
a disposition of the shares acquired in the exchange, the holding period for the
previously owned shares of the Fund is "tacked" onto the holding period for the
newly acquired shares of the other Enterprise Fund. The exchange feature may be
modified or discontinued at any time, upon notice to shareholders in accordance
with applicable rules adopted by the Securities and Exchange Commission ("SEC").
Your exchange may be processed only if the shares of the Fund to be acquired are
eligible for sale in your state and if the exchange privilege may be legally
offered in your state.
Exchange of Class A Shares. You may exchange your Class A shares for
Class A shares of any other Fund. Class A shares of any Fund cannot be exchanged
for Class B, C or Y shares of any other Fund.
Exchange of Class B Shares. Class B shares of all Fund are exchangeable
for Class B shares of any other Enterprise Fund. Class B shares of any Fund
cannot be exchanged for Class A, C or Y shares of any other Fund.
Exchange of Class C Shares. Class C shares of all Funds are
exchangeable for Class C shares of any other Fund. Class C shares of any Fund
cannot be exchanged for Class A, B or Y shares of any other Fund.
Exchange of Class Y Shares. Class Y shares of all Funds are
exchangeable for Class Y shares of any other Fund. Class Y shares of any Fund
cannot be exchanged for Class A, B or C shares of any other Fund.
The minimum initial investment rules applicable to a Fund apply to any
exchange where the exchange results in a new account being opened in such Fund.
Exchanged into existing accounts are not subject to minimum amount. Original
investment in the Money Market Fund which are transferred to other Funds are not
considered Fund exchanges but purchases.
Redemptions -- General
Payment for redeemed shares is ordinarily made within seven days after
receipt by the corporation's transfer agent of redemption instructions in
proper form. The redemption privilege may be suspended or payment may be
postponed for more than seven days during any period when: (1) the NYSE is
closed other than for customary weekend or holiday closings or trading thereon
is restricted as determined by the securities and exchange commission; (2) an
emergency, as defined by the Securities and Exchange Commission, exists making
trading of fund securities or valuation of net assets not reasonably
practicable; (3) the Securities and Exchange Commission has by order permitted
such suspension or delay.
The Corporation reserves the right to redeem an account at its option
upon not less than 45 days' written notice if an account's net asset value is
$500 or less and remains so during the notice period.
Redemptions in Kind
The Corporation's Articles of Incorporation provide that it may redeem
its shares in cash or with a pro rata portion of the assets of the Corporation.
To date, all redemptions have been made in cash, and the Corporation anticipates
that all redemptions will be made in cash in the future. In order to meet the
requirements of certain state laws, the Corporation has elected, pursuant to
Rule 18f-1 under the Investment Company Act of 1940, to commit itself to pay in
cash all requests for redemption by any shareholder of record, limited in amount
with respect to each shareholder during any 90-day period to the lesser of: (i)
$250,000; or (ii) 1% of the net asset value of the Corporation at the beginning
of such period. If shares are redeemed through a distribution of
55
<PAGE> 203
the recipient would incur brokerage commissions upon the sale of such
securities.
Determination of Net Asset Value
The net asset value of each Fund's shares is determined once daily as
of the close of regular trading on the NYSE on each day on which the NYSE is
open for trading. The Funds may own securities that are primarily listed on
foreign exchanges which trade on Saturday or other customary United States
national business holidays. If the Funds do not price their securities on these
days, their net asset values may be significantly affected on days when
investors have no access to the Funds. The net asset value per share is
effective as of the time of computation.
Money Market Fund. The net asset value of the Money Market Fund is
computed by dividing the total value of the Fund's assets, less liabilities
(including dividends payable), by the number of shares outstanding. The assets
are determined by valuing the Fund securities at amortized cost, pursuant to
Rule 2a-7. The amortized cost method of valuation involves valuing a security at
cost at the time of purchase and thereafter assuming a constant amortization to
maturity of any discount or premium, regardless of the impact of fluctuating
interest rates on the market value of the instrument.
The purpose of the amortized cost method of valuation is to attempt to
maintain a constant net asset value per share of $1.00. While this method
provides certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is slightly higher or lower than the price the
Fund would receive if it sold its securities. Under the direction of the Board
of Directors, certain procedures have been adopted to monitor and stabilize the
price per share. Calculations are made to compare the value of the Fund's
securities, valued at amortized cost, with market values. Market valuations are
obtained by using actual quotations provided by market makers, estimates of
market value, or values obtained from yield data relating to classes of money
market instruments published by reputable sources at the bid prices for those
instruments. If a deviation of 1/2 of 1% or more between the $1.00 per share net
asset value and the net asset value calculated by reference to market valuations
has occurred, or if there are any other deviations which the Board of Directors
believes will result in dilution or other unfair results material to
shareholders, the Board of Directors will consider what action, if any, should
be initiated. The Money Market Fund seeks to maintain a constant net asset value
of $1.00 but there can be no assurance that the Money Market Fund will be able
to maintain a stable net asset value.
56
<PAGE> 204
The market value of debt securities usually reflects yields generally
available on securities of similar quality. When yields decline, the market
value of the Fund holding higher yielding securities can be expected to
increase; when yields increase, the market value of the Fund invested at lower
yields can be expected to decline. In addition, if the Fund has net redemptions
at a time when interest rates have increased, the Fund may be forced to sell
Fund securities prior to maturity at a price below the Fund's carrying value.
Also, rather than market value, any yield quoted may be different from the yield
that would result if the entire Fund were valued at market value, since the
amortized cost method does not take market fluctuations into consideration.
Other Funds. The Funds, other than the Money Market Fund, calculate a
share's net asset value by dividing the net assets of the Fund by the
number of shares then outstanding of such Fund.
Computation of Offering Price Per Share. The following is the offering
price calculation for each Class of shares of each Fund. The Class A, Class B
and Class C calculations are based on the value of each Fund's net assets and
number of shares outstanding on December 31, 1998.
57
<PAGE> 205
<TABLE>
<CAPTION>
Growth Fund Growth and Income Fund
----------------------------------------------- -----------------------------------------------
Class A Class B Class C Class Y Class A Class B Class C Class Y
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets......... $827,567,226 $446,472,930 $133,194,151 $60,639,461 $16,664,261 $21,890,475 $4,654,429 $18,309,675
------------ ------------ ------------ ----------- ----------- ----------- ---------- -----------
Number of
Shares
Outstanding........ 39,279,626 21,650,929 6,381,815 2,832,109 574,389 757,479 161,018 628,524
----------- ----------- ----------- ---------- ---------- ---------- --------- ----------
Net Asset
Value Per
Share (net
assets divided
by number of
shares) ........... $21.07 $20.62 $20.87 $21.41 $29.01 $28.90 $28.91 $29.13
------ ------ ------ ------ ------ ------ ------ ------
Sales charge
for Class A
Shares: 4.75%
of offering
price (4.99% of
net asset value
per share)*........ $ 1.05 ** ** ** 1.45 ** ** **
------ ------- ------- ------- ------- ------- ------- -------
Offering Price..... $22.12 $20.62 $20.87 $21.41 $30.46 $28.90 $28.91 $29.13
------ ------ ------ ------ ------ ------ ------ ------
</TABLE>
- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.
** Class B, Class C, and Class Y shares are not subject to an initial
charge. However, Class B and Class C shares may be subject to a CDSC on
redemption of shares.
<TABLE>
<CAPTION>
Equity Fund Equity Income Fund
----------------------------------------------- -----------------------------------------------
Class A Class B Class C Class Y Class A Class B Class C Class Y
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets......... $6,740,895 $8,731,197 $1,503,982 $ 56,592 $111,274,606 $33,806,809 $5,639,379 $112,498
---------- ---------- ---------- ---------- ------------ ----------- ---------- --------
Number of
Shares
Outstanding........ 1,041,720 1,357,791 233,706 8,797 4,138,708 1,272,483 211,193 4,187
--------- --------- ------- --------- --------- --------- ------- -------
Net Asset
Value Per
Share (net
assets divided
by number of
shares) ........... $ 6.47 $ 6.43 $ 6.44 $ 6.43 $26.89 $26.57 $26.70 $26.87
------ ------ ------ ------ ------ ------ ------ ------
Sales charge
for Class A
Shares: 4.75%
of offering
price (4.99% of
net asset value
per share)*........ 0.32 ** ** ** 1.34 ** ** **
------ ------ ------ ------ ------ ------ ------ ------
Offering Price..... $ 6.79 $ 6.43 $ 6.44 $ 6.43 $28.23 $26.57 $26.70 $26.87
------ ------ ------ ------ ------ ------ ------ ------
</TABLE>
- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.
** Class B, Class C, and Class Y shares are not subject to an initial
charge. However, Class B and Class C shares may be subject to a CDSC on
redemption of shares.
58
<PAGE> 206
<TABLE>
<CAPTION>
Capital Appreciation Fund Small Company Growth Fund
------------------------------------------------ --------------------------------------------------
Class A Class B Class C Class Y Class A Class B Class C Class Y
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets......... $131,604,967 $14,663,236 $1,039,961 $203,561 $8,194,498 $8,759,560 $2,481,164 $9,084,105
------------ ----------- ---------- -------- ---------- ---------- ---------- ----------
Number of
Shares
Outstanding........ 3,410,132 390,970 27,190 5,248 365,227 395,771 111,708 402,788
------------ ----------- ---------- -------- ---------- ---------- ---------- ----------
Net Asset
Value Per
Share (net
assets divided
by number of
shares) ........... $ 38.59 $ 37.50 $ 38.25 $ 38.79 $ 22.44 $ 22.13 $ 22.21 $ 22.55
------------ ----------- ---------- -------- ---------- ---------- ---------- ----------
Sales charge
for Class A
Shares: 4.75%
of offering
price (4.99% of
net asset value
per share)*........ 1.92 ** ** ** 1.12 ** ** **
------------ ----------- ---------- -------- ---------- ---------- ---------- ----------
Offering Price..... $ 40.51 $ 37.50 $ 38.25 $ 38.79 $ 23.56 $ 22.13 $ 22.21 $ 22.55
------------ ----------- ---------- -------- ---------- ---------- ---------- ----------
</TABLE>
- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.
** Class B, Class C and Class Y shares are not subject to an initial
charge. However, Class B and Class C shares may be subject to a CDSC on
redemption of shares.
<TABLE>
<CAPTION>
Small Company Value Fund International Growth Fund
------------------------------------------------- -----------------------------------------------------
Class A Class B Class C Class Y Class A Class B Class C Class Y
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets......... $ 79,867,579 $61,929,341 $14,238,508 $276,539 $41,458,039 $16,007,394 $3,498,291 $13,378,928
------------ ----------- ----------- -------- ----------- ----------- ---------- -----------
Number of
Shares
Outstanding........ 10,081,778 7,997,909 1,802,611 34,308 2,194,602 859,679 186,364 708,491
------------ ----------- ----------- -------- ----------- ----------- ---------- -----------
Net Asset
Value Per
Share (net
assets divided
by number of
shares) ........... $ 7.92 $ 7.74 $ 7.90 $ 8.06 $ 18.89 $ 18.62 $ 18.77 $ 18.88
------------ ----------- ----------- -------- ----------- ----------- ---------- -----------
Sales charge
for Class A
Shares: 4.75%
of offering
price (4.99% of
net asset value
per share)*........ 0.39 ** ** ** 0.94 ** ** **
------------ ----------- ----------- -------- ----------- ----------- ---------- -----------
Offering Price..... $ 8.31 $ 7.74 $ 7.90 $ 8.06 $ 19.83 $ 18.62 $ 18.77 $ 18.88
------------ ----------- ----------- -------- ----------- ----------- ---------- -----------
</TABLE>
- ------------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.
** Class B, Class C and Class Y are not subject to an initial charge.
However, Class B and Class C shares may be subject to a CDSC on
redemption of shares.
59
<PAGE> 207
<TABLE>
<CAPTION>
Global Financial Services Fund Government Securities Fund
----------------------------------------------- -----------------------------------------------
Class A Class B Class C Class Y Class A Class B Class C Class Y
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets......... $1,426,281 $1,022,356 $217,936 $5,697,430 $71,609,403 $27,133,777 $3,088,857 $7,280,521
---------- ---------- -------- ---------- ----------- ----------- ---------- ----------
Number of
Shares
Outstanding........ 235,885 169,647 36,167 942,373 5,896,061 2,235,436 254,390 599,717
---------- ---------- -------- ---------- ----------- ----------- ---------- ----------
Net Asset
Value Per
Share (net
assets divided
by number of
shares) ........... $ 6.05 $ 6.03 $ 6.03 $ 6.05 $ 12.15 $ 12.14 $ 12.14 $ 12.14
---------- ---------- -------- ---------- ----------- ----------- ---------- ----------
Sales charge
for Class A
Shares: 4.75%
of offering
price (4.99% of
net asset value
per share)*........ 0.30 ** ** ** 0.61 ** ** **
---------- ---------- -------- ---------- ----------- ----------- ---------- ----------
Offering Price..... $ 6.35 $ 6.03 $ 6.03 $ 6.05 $ 12.76 $ 12.14 $ 12.14 $ 12.14
---------- ---------- -------- ---------- ----------- ----------- ---------- ----------
</TABLE>
- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge is
applicable.
** Class B, Class C and Class Y shares are not subject to an initial charge.
However, Class B and Class C shares may be subject to a CDSC on redemption
of shares.
<TABLE>
<CAPTION>
High-Yield Bond Fund Tax-Exempt Income Fund
----------------------------------------------- -----------------------------------------------
Class A Class B Class C Class Y Class A Class B Class C Class Y
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets......... $72,636,908 $35,495,217 $5,391,870 $2,031,873 $23,709,484 $4,450,523 $777,408 $65,412
----------- ----------- ---------- ---------- ----------- ---------- -------- -------
Number of
Shares
Outstanding........ 6,302,320 3,080,313 467,798 176,496 1,712,806 321,631 56,161 4,727
----------- ----------- ---------- ---------- ----------- ---------- -------- -------
Net Asset
Value Per
Share (net
assets divided
by number of
shares) ........... $ 11.53 $ 11.52 $ 11.53 $ 11.51 $ 13.84 $ 13.84 $ 13.84 $ 13.84
----------- ----------- ---------- ---------- ----------- ---------- -------- -------
Sales charge
for Class A
Shares: 4.75%
of offering
price (4.99% of
net asset value
per share)*........ 0.57 ** ** ** 0.69 ** ** **
----------- ----------- ---------- ---------- ----------- ---------- -------- -------
Offering Price..... $ 10.10 $ 11.52 $ 11.53 $ 11.51 $ 14.53 $ 13.84 $ 13.84 $ 13.84
----------- ----------- ---------- ---------- ----------- ---------- -------- -------
</TABLE>
- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.
** Class B, Class C and Class Y shares are not subject to an initial
charge. However, Class B and Class C shares may be subject to a CDSC on
redemption of shares.
60
<PAGE> 208
<TABLE>
<CAPTION>
Managed Fund Money Market Fund
-------------------------------------------------- --------------------------------------------------
Class A Class B Class C Class Y Class A Class B Class C Class Y
------- ------- ---------- ---------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Assets......... $175,083,644 $161,552,271 $11,653,660 $89,084,043 $140,490,150 $10,147,261 $4,680,248 $3,412,307
------------ ------------ ----------- ----------- ------------ ----------- ---------- ----------
Number of
Shares
Outstanding........ 18,914,704 17,626,832 1,281,367 9,633,554 140,490,150 10,147,261 4,680,248 3,412,307
------------ ----------- ----------- ----------- ------------ ----------- ---------- ----------
Net Asset
Value Per
Share (net
assets divided
by number of
shares) ........... $ 9.26 $ 9.17 $ 9.09 $ 9.25 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ----------- ----------- ----------- ----------- ----------- ----------- ----------
Sales charge
for Class A
Shares: 4.75%
of offering
price (4.99% of
net asset value
per share)*........ 0.46 ** ** ** ** ** ** **
------------ ------------ ----------- ----------- ------------ ----------- ---------- ----------
Offering Price..... $ 9.72 $ 9.17 $ 9.09 $ 9.25 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------------ ------------ ----------- ----------- ------------ ----------- ---------- ----------
</TABLE>
- -----------------------
* Rounded to nearest one-hundredth percent; assumes maximum sales charge
is applicable.
** Class B, Class C and Class Y shares are not subject to an initial
charge. However, Class B and Class C shares may be subject to a CDSC on
redemption of shares.
Fund Transactions and Brokerage
Each Fund Manager selects the brokerage firms which complete portfolio
transactions for that Fund, subject to the overall direction and review of the
Advisor and the Board of Directors of the Corporation.
The initial criterion which must be met by any Fund Manager in
selecting brokers and dealers to effect securities transactions for a Fund is
whether such brokers and dealers can obtain
61
<PAGE> 209
the most favorable combination of price and execution for the transaction. This
does not mean that the execution decision must be based solely on whether the
lowest possible commission costs may be obtained. In seeking to achieve the best
combination of price and execution, the Fund Managers evaluate the overall
quality and reliability of broker-dealers and the service they provide,
including their general execution capability, reliability and integrity,
willingness to take positions in securities, general operational capabilities
and financial condition.
Subject to this primary objective, the Fund Managers may select for
brokerage transactions those firms which furnish brokerage and research
services, including analyses and reports concerning issuers, industries,
securities, economic factors and trends, to the Corporation, the Advisor, and
the respective Fund Managers, or those firms who agree to pay certain of the
Corporation's expenses, including certain custodial and transfer agent services,
and, consistent with the National Association of Securities Dealers, Inc.
Conduct Rules, those firms which have been active in selling shares of the
Corporation. If in the judgment of the Fund Manager the Fund will be benefitted
by supplemental research services, a broker furnishing such services may be paid
brokerage commissions which are in excess of commissions which another broker
may have charged for effecting the same transaction. Fund Managers may execute
brokerage transactions through affiliated broker/dealers, subject to compliance
with applicable requirements of the federal securities laws.
The following table sets forth the amounts of the brokerage commissions
paid to broker-dealers by each Fund for the fiscal year ended December 31, 1998.
<TABLE>
<CAPTION>
Fund Aggregate Brokerage Commissions Brokerage Commissions Paid
Brokerage Brokerage Paid to Affiliated Broker- to Affiliated Broker-Dealers
Commission Paid Commissions Paid To Dealers as a Percentage of as a Percentage of the Fund's
on Transactions in Affiliated Broker- the Fund's Aggregate Aggregate Dollar Amount of
the Fund's Dealers Commissions Paid Transactions Involving
Securities Brokerage Commissions
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Growth $941,748 $ 0 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
Growth and Income 37,396 0 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
Equity 17,644 390 2.21% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
Equity Income 107,429 7,769 7.23% 0.01%
- ---------------------------------------------------------------------------------------------------------------------------
Capital Appreciation 196,418 12,510 6.37% 0.01%
- ---------------------------------------------------------------------------------------------------------------------------
Small Company 72,430 36 0.05% 0.00%
Growth
- ---------------------------------------------------------------------------------------------------------------------------
Small Company Value 255,204 0 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
International Growth 194,686 0 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
Global Financial
Services 8,670 4,915 56.69% 0.08%
- ---------------------------------------------------------------------------------------------------------------------------
Government Securities 0 0 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
62
<PAGE> 210
<TABLE>
<CAPTION>
Fund Aggregate Brokerage Commissions Brokerage Commissions Paid
Brokerage Brokerage Paid to Affiliated Broker- to Affiliated Broker-Dealers
Commission Paid Commissions Paid To Dealers as a Percentage of as a Percentage of the Fund's
on Transactions in Affiliated Broker- the Fund's Aggregate Aggregate Dollar Amount of
the Fund's Dealers Commissions Paid Transactions Involving
Securities Brokerage Commissions
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
High-Yield Bond $ 421 $ 0 0.00% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
Tax-Exempt Income 0 0 0% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
Managed 390,898 $9,003 2.30% 0.00%
- ---------------------------------------------------------------------------------------------------------------------------
Money Market 4 0 0.00% 0.00%
</TABLE>
The aggregate brokerage commissions paid by the Funds on transactions
for the fiscal year ended December 31, 1997 and December 31, 1996 were $629,024
and $534,229, respectively.
63
<PAGE> 211
PERFORMANCE COMPARISONS
From time to time the Corporation may advertise a Fund's average annual
total return, other total return data, or yield. Total return and yield are
calculated separately for Class A, Class B, Class C and Class Y shares. Total
return figures are based on the Fund's historical performance and are not
intended to indicate future performance.
Average annual total return is calculated by finding the average annual
compounded rates of return over the specified periods that would equate the
initial amount invested to the ending redemption value according to the
following formula: Average annual total return is computed assuming all
dividends and distributions are reinvested when received and taking into account
all applicable recurring and nonrecurring expenses.
64
<PAGE> 212
P(1+T)N=ERV
Where: P = a hypothetical initial payment of $1,000
T = average annual total return
N = number of years
ERV = ending redeemable value of hypothetical $1,000 payment made at
the beginning of the specified periods at the end of the
specified periods.
Each Fund also may quote annual, average annual and annualized total
return and aggregate total return performance data, both as a percentage and as
a dollar amount based on a hypothetical $10,000 investment. Such data will be
computed as described above, except that as required by the periods of the
quotations, actual annual, annualized or aggregate data, rather than average
annual data may be quoted. Actual annual or annualized total return data
generally will be lower than average total return data since the average rates
of return reflect compounding of return; aggregate total return data generally
will be higher than average annual total return data since the aggregate rates
of return reflect compounding over a longer period of time.
Yield quotations for the Funds, other than the Money Market Fund, is
calculated by dividing net investment income of a Fund per share earned during a
30 day period by the maximum offering price per share on the last day of the
period according to the following formula:
Yield=2[(a-b/cd+1)6-1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period,
that were entitled to receive dividends.
d = the maximum offer price per share on the last day of the period.
Yield quotations for the Money Market Fund will be computed based on a
seven day period by determining the net change, exclusive of capital changes and
income other than investment income, in the value of a hypothetical pre-existing
account having a balance of one share at the beginning of the period,
subtracting a hypothetical change reflecting deductions from shareholder
accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return, and then
multiplying the base period return by (365/7) with the resulting yield figure
carried to at least the nearest hundredth of one percent. The effective yield of
the Money Market Fund for a seven-day period is computed by expressing the
unannualized return for that period on a compounded, annualized basis by adding
1, raising the sum to a power equal to 365 divided by 7, and subtracting 1 from
the result according to the following formula:
Effective Yield=[(Base Period Return + 1)365/7]-1.
The Money Market Fund's actual yields will fluctuate, and are not
necessarily indicative of future actual yields. Actual yields are dependent on
such variables as portfolio quality, average portfolio maturity, the type of
instruments in which investments are made, changes in interest rates on money
market instruments, fund expenses and other factors.
A Fund may also advertise in items of sales literature an "actual
distribution rate" which is computed in the same manner as yield except that
actual income dividends declared per share during the period in question are
substituted for net investment income per share.
Any distribution rate, yield or total rate of return figure should not
be considered as representative of the performance of a Fund in the future. In
addition, the Income Funds' performance figures are not directly comparable to
those of bank deposits and other similar investments, which maintain a fixed
principal value and pay a fixed yield on the principal amount. These Funds' net
asset values are not fixed. They vary based not only upon the type, quality and
maturities of the securities held in the Funds, but also on the changes in the
current value of such securities and on changes in the Funds' expenses. For
narrative discussions of the Fund's performance including graphs comparing Funds
to various securities indices, please request a copy of an Annual Report to
Shareholders from the Corporation.
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From time to time, a Fund's performance and performance of comparable
investments may be compared to that of the Consumer Price Index or various
unmanaged indices such as the Dow Jones Industrial Average, the S&P 500, the
Lehman Brothers Government/Corporate Bond Index, the Lehman Brothers Government
Bond Index, Lehman Brothers Mortgage Backed Index, Lehman Brothers Municipal
Bond Index, Morgan Stanley Goldmine Index, the Salomon Smith Barney Low Grade
Index, the Salomon Smith Barney Analytical Record of Yield and Yield Spreads,
the Salomon Smith Barney Corporate Bond Rate-of-Return Index, and the Salomon
Smith Barney World Money Market Index, Bond-20 Bond Index; and it may also be
compared to the performance of other appropriate fixed income or equity mutual
funds or mutual fund indices as reported by Lipper Inc. ("Lipper") or CDA
Investment Technologies, Inc. ("CDA"). Lipper and CDA are widely recognized
independent mutual fund reporting services. Lipper and CDA performance
calculations are based upon changes in net asset value with all dividends
reinvested and do not include the effect of any sales charges. Investors may
also look to mutual fund reporting services such as Computer Directions Advisor
Services, Inc., Moody's Bond Survey Index, Nelson's Investment Manager Data
Base, Morningstar, Inc. and mortgage trade and other publications to compare the
performance of each Fund with other mutual funds in that Fund's category. Also,
a Fund's performance may be compared to the historical returns of various
investments, performance indices of those investments or economic indicators,
included but not limited to stocks, bonds, certificates of deposit, money market
deposit accounts, money market funds and US Treasury Bills. Certain of these
alternative investments may offer fixed rates of return and guaranteed principal
and may be insured. Betas utilized will be calculated by CDA Investment
Technologies, Inc.
The Corporation's performance may be compared in advertising to the
performance of other mutual funds in general or the performance of particular
types of mutual funds, especially those with similar objectives. Lipper, an
independent mutual fund performance rating service headquartered in Summit, New
Jersey, provides rankings which may be used from time to time.
From time to time, articles about the Corporation regarding its
performance or ranking may appear in national publications such as Kiplinger's
Personal Finance Magazine, Money Magazine, Financial World, Morningstar, Dalbar,
Value Line Mutual Fund Survey, Forbes, Fortune, Business Week, Wall Street
Journal, Donaghue Mutual Funds and Barron's. Some of these publications may
publish their own rankings or performance reviews of mutual funds, including the
Corporation. Reference to or reprints of such articles may be used in the
Corporation's promotional literature.
The Money Market Fund may compare its performance in advertising to the
yield on Certificates of Deposit ("CDs") or other investments issued by banks.
The Money Market Fund differs from bank investments in that bank products offer
fixed or variable rates; principal is fixed and may be insured. Money market
funds seek to maintain a stable net asset value and yield fluctuates. Further,
the Fund may offer greater liquidity or higher potential returns than CDs.
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The Corporation may advertise examples of the effects of periodic
investment plans, including the principal of dollar cost averaging. Dollar cost
averaging programs provide an opportunity to invest a fixed dollar amount in a
fund at periodic intervals, thereby purchasing fewer shares when the price is
high and more shares when the price is low. While such a strategy does not
assure a profit guard against loss in a declining market, the investor's cost
per share can be lower if fixed numbers of shares had been purchased at periodic
intervals. In evaluating such a plan, consideration should be given to the
shareholder's ability to continue purchasing shares through periods of low price
levels.
TAXES
In order to qualify for federal income tax treatment as a regulated
investment company under Subchapter M of the IRC for a taxable year, each Fund
must, among other things, (a) derive at least 90% of its gross income during
such taxable year from qualifying income (i.e., dividends, interest, payments
with respect to loans of stock and securities, gains from the sale or other
disposition of stock or securities or options thereon, and certain other related
income); (b) diversify its holdings so that, at the end of each fiscal quarter
of such taxable year, (i) at least 50% of the market value of its total assets
is represented by cash, cash items, U.S. Government Securities, securities of
other regulated investment companies, and other securities limited, in the case
of other securities for purposes of this calculation, in respect of any one
issuer, to an amount not greater than 5% of the value of its total assets or 10%
of the voting securities of the issuer, and (ii) not more than 25% of the value
of its assets is invested in the securities of any one issuer (other than U.S.
Government Securities).
Each Fund has qualified and intends to continue to qualify as a
"regulated investment company" under the provisions of the IRC as amended. For
purposes of the IRC, each Fund is regarded as a separate regulated investment
company. If any Fund qualifies as a "regulated investment company" and complies
with distribution requirements applicable to regulated investment companies, the
Fund will be relieved of federal income tax on the income and capital gains
distributed to shareholders.
Dividends declared from a Fund's net investment income, including its
net realized short-term capital gains in excess of its net realized long-term
capital losses, are taxable to its shareholders as ordinary income, whether such
dividends are received in cash or additional shares. If, for any taxable year, a
Fund complies with certain requirements, some or all of the dividends paid out
of the Fund's income from dividends paid by domestic corporations received by
the Fund's corporate shareholders may qualify for the 70% dividends received
deduction available to corporations. Dividends paid by the Income Funds, the
Global Financial Services Fund and the International Growth Fund are not
expected to be eligible for dividends received deductions.
Distributions declared from a Fund's realized net capital gain
(realized net capital gains from the sale of assets held for more than 12 months
in excess of realized net short-term capital losses) and designated by the Fund
as a capital gain dividend in a written notice to the shareholders are taxable
to such shareholders as capital gain without regard to the length of time
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a shareholder has held stock of the Fund and regardless of whether paid in cash
or additional shares. Capital gain dividends received by individuals are taxed
at the minimum rate of 20%.
The Funds may be required to withhold for federal income taxes 31%
("Back-Up Withholding") of the distributions and the proceeds of redemptions
payable to shareholders who fail to comply with regulations requiring that they
provide a correct social security or taxpayer identification number or to make
required certifications, or who have been notified by the Internal Revenue
Service that they are subject to Back-up Withholding. Corporate shareholders and
certain other shareholders specified in the IRC are exempt from Back-Up
Withholding.
Upon a sale or exchange of its shares, a shareholder will realize a
taxable gain or loss depending on its basis in the shares. Such gain or loss
will be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands. In the case of an individual, any such capital gain will be
treated as short-term capital gain if the shares were held for not more than 12
months and long-term gain taxable at the maximum rate of 20% if such shares were
held for more than 18 months. In the case of a corporation, any such capital
gain will be treated as long-term capital gain, taxable at the same rates as
ordinary income, if such shares were held for more than 12 months. Any such
capital loss will be long-term capital loss if the shares were held for more
than 12 months. A sale or exchange of shares held for six months or less,
however, will be treated as long-term capital loss to the extent of any
long-term capital gains distributions with respect to such shares.
Generally, any loss realized on a sale or exchange of shares of a Fund
will be disallowed if other Fund shares are acquired (whether through the
automatic reinvestment of dividends or otherwise) within a 61-day period
beginning 30 days before and ending 30 days after the date on which the shares
are disposed. In such a case, the basis of the shares acquired will be adjusted
to reflect the disallowed loss.
In certain circumstances (e.g., an exchange), a shareholder who has
held shares in a Fund for not more than 90 days may not be allowed to include
certain sales charges incurred in acquiring such shares for purposes of
calculating gain or loss realized upon the sale or exchange of shares of the
Fund.
No gain or loss will be recognized by Class B shareholders upon the
conversion of Class B shares into Class A shares.
Tax-Exempt Income Fund
Dividends derived from interest on Municipal Securities and designated
by the Tax-Exempt Income Fund as exempt interest dividends by written notice to
the shareholders, under existing law, are not subject to federal income tax.
Dividends derived from net capital gains realized by the Fund are taxable to
shareholders as a capital gain upon distribution. Any short-term capital gains
or any taxable interest income or accrued market discount (whether on taxable or
tax-exempt securities)
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realized by the Fund will be distributed as a taxable ordinary income dividend
distribution. These rules apply whether such distribution is made in cash or in
additional shares. The percentage of income that is tax-exempt is applied
uniformly to all income distributions made by the Fund during each year. As with
shares in all Funds, a sale, exchange or redemption of shares in the Tax-Exempt
Income Fund is a taxable event and may result in capital gain or loss. Any
capital loss realized from shares held for six months or less is disallowed to
the extent of tax-exempt dividend income received.
The Tax-Exempt Income Fund declares daily and pays dividends monthly on
the last business day of the month. When a shareholder redeems shares of the
Fund on other than a dividend payment date, a portion of the shareholder's
redemption proceeds will represent accrued tax-exempt income which will be
treated as part of the amount realized for purposes of capital gains
computations for federal and state or local income tax purposes and will not be
tax-exempt.
Income from certain "private activity" bonds issued after August 7,
1986, are items of tax preference for the alternative minimum tax at a maximum
rate of 28% for individuals and 20% for corporations. If the Fund invests in
private activity bonds, shareholders may be subject to the alternative minimum
tax on that part of such Fund distributions derived from interest income on
those bonds. The Tax-Exempt Income Fund does not intend to invest more than 20%
of its assets in private activity bonds. In addition, a portion of a
distribution derived from any tax-exempt interest incurred, whether or not from
private activity bonds, will be taken into account in determining the corporate
alternative minimum tax. In higher income brackets, up to 85% of an individual's
Social Security benefits may be subject to federal income tax. Along with other
factors, total tax-exempt income, including any tax-exempt dividend income from
the Fund, is taken into account in determining that portion of Social Security
benefits which is taxed.
All or a portion of the interest incurred by a shareholder to purchase
or carry an investment in the Tax-Exempt Income Fund will not be deductible.
The treatment for state and local tax purposes of distribution from the
Tax-Exempt Income Fund representing Municipal Securities interests will vary
according to the laws of state and local taxing authorities.
FOREIGN INCOME TAXES
Investment income received by a Fund from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Corporation to a reduced rate of tax or exemption from tax on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Funds' assets to be invested within various
countries is not known. The Corporation intends to operate so as to obtain
treaty-reduced rates of tax where applicable.
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To the extent that a Fund is liable for foreign income taxes withheld
at the source, the Fund may elect to "pass through" to the Fund's shareholders
credits for foreign income taxes paid, but there can be no assurance that the
Fund will be able to do so.
EXCISE TAX
The federal tax laws impose a 4% nondeductible excise tax on each
regulated investment company with respect to the amount, if any, by which such
company does not meet certain specified distribution requirements. Each Fund
intends to comply with such distribution requirements and thus does not expect
to incur the 4% nondeductible excise tax.
GENERAL
The foregoing is a general and abbreviated summary of the applicable
provisions of the IRC and Treasury Regulations in effect, as currently
interpreted by the Courts and by the Internal Revenue Service in published
revenue rulings and in private letter rulings and is only applicable to U.S.
persons. These interpretations can be changed at any time. For the complete
provisions, reference should be made to the pertinent IRC sections and the
Treasury Regulations promulgated thereunder. The above discussion covers only
federal income tax considerations with respect to the Funds and their
shareholders. State and local tax laws vary greatly, especially with regard to
the treatment of exempt-interest dividends. Shareholders should consult their
own tax advisers for more information regarding the federal, state, and local
tax treatment of each account.
Statements indicating the tax status of distributions to each
shareholder will be mailed to each shareholder annually.
DIVIDENDS AND DISTRIBUTIONS
It is the Corporation's intention to distribute substantially all of
the net investment income and realized net capital gains, if any, of each Fund.
The per share dividends and distribution on each class of shares of a Fund will
be reduced as a result of any service fees applicable to that class. For
dividend purposes, net investment income of each Fund will consist of
substantially all dividends received, interest accrued, net short-term capital
gains realized by such Fund less the applicable expenses of such Fund.
Unless shareholders request otherwise, by notifying the Fund's Transfer
Agent, dividends and capital gains distributions will be automatically
reinvested in shares of the respective Fund at net asset value; such
reinvestments automatically occur on the payment date of such dividends
and capital gains distributions. At the election of any shareholder, dividends
or capital gains distributions, or both, will be distributed in cash to such
shareholders. However, if it is determined that the U.S. Postal Service cannot
properly deliver Fund mailings to the shareholder, the respective Funds will
terminate the shareholder's election to receive dividends and other
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distributions in cash. Thereafter, the shareholder's subsequent dividends and
other distributions will be automatically reinvested in additional shares of the
respective Funds until the shareholder notifies the Transfer Agent or the
Corporation in writing of his or her correct address and requests in writing
that the election to receive dividends and other distributions in each be
reinstated.
Distributions of capital gains from each of the Funds, other than the
Money Market Fund, are made at least annually. Dividends from investment income
of the Equity Funds (except the Equity Income Fund) and Managed Fund are
declared and paid annually. Dividends from investment income on the Equity
Income Fund are paid semiannually. Dividends from investment income for the
Balanced Fund are paid quarterly. Dividends from investment income for the
Income Funds are declared daily and paid monthly. Dividends from investment
income and any net realized capital gains for the Money Market Fund are declared
daily and reinvested monthly in additional shares of the Money Market Fund at
net asset value.
Although the legal rights of each Class of shares are substantially
identical, the different expenses borne by each Class will result in different
net asset values and dividends for each Class.
ADDITIONAL INFORMATION
CAPITAL STOCK
The authorized capital stock of the Corporation consists of Common
Stock, par value $0.10 per share. The shares of Common Stock are divided into 17
series with each series representing a separate Fund. The Board of Directors may
determine the number of authorized shares for each series and to create new
series of Common Stock. It is anticipated that new Classes will be authorized by
the Board from time to time as new Funds with separate investment objectives and
policies are established.
Each Class of shares is entitled to participate in dividends and
distributions declared by the respective Funds and in net assets of such Funds
upon liquidation or dissolution remaining after satisfaction of outstanding
liabilities, except that each Class will bear its own distribution and
shareholder servicing charges. The shares of each Fund, when issued, will be
fully paid and nonassessable, have no preference, preemptive, conversion
(except as described above), exchange or similar rights, and will be freely
transferable. Holders of shares of any Fund are entitled to redeem their shares
as set forth in the Prospectus. The rights of redemption and conversion rights
are described elsewhere herein and in the Prospectus.
VOTING RIGHTS
Shares of each Fund are entitled to one vote per share and fractional
votes for fractional shares. The Corporation's shareholders have the right to
vote on the election of Directors of the
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Corporation and on any and all other matters on which, by law or the provisions
of the Corporation's bylaws, they may be entitled to vote. Voting rights are not
cumulative, so that holders of more than 50% of the shares voting in the
election of Directors can, if they choose to do so, elect all of the Directors
of the Corporation, in which event the holders of the remaining shares are
unable to elect any person as a Director.
On matters relating to all Funds or Classes of shares and affecting all
Funds or Class of shares in the same manner, shareholders of all Funds or
Classes of shares are entitled to vote. On any matters affecting only one Fund,
only the shareholders of that Fund are entitled to vote. On matters relating to
all the Funds but affecting the Funds differently, separate votes by Fund are
required. Each Class has exclusive voting rights with respect to matters related
to distribution and servicing expenditures, as applicable.
The Corporation and its Funds are not required by Maryland law to hold
annual meetings of shareholders under normal circumstances. The Board of
Directors or the shareholders may call special meetings of the shareholders for
action by shareholder vote, including the removal of any or all of the
Directors, as may be required by either the Articles of Incorporation or bylaws
of the Corporation, or the Investment Company Act of 1940. Shareholders possess
certain rights related to shareholder communications which, if exercised, could
facilitate the calling by shareholders of a special meeting.
REPORTS TO SHAREHOLDERS
The Corporation sends to all its shareholders annual and semiannual
reports.
CUSTODIAN, TRANSFER AND DIVIDEND DISBURSING AGENT
State Street Bank and Trust Company whose address is One Heritage
Drive, The Joseph Palmer Building, North Quincy, Massachusetts, 02171, has been
retained to act as custodian of the assets of the Corporation. The custodian is
responsible for safeguarding and controlling the cash and securities of the
Funds, handling the receipt and delivery of securities and collecting interest
and dividends on the Funds' investments.
National Financial Data Services, Inc. acts as the Corporation's
Transfer Agent and Dividend Disbursing Agent. National Financial Data Services,
Inc. is a joint venture of State Street Bank & Trust Company of Boston,
Massachusetts, and DST Systems, Inc. of Kansas City, Missouri.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, whose address is 2400 Eleven Penn Center,
Philadelphia, Pennsylvania 19103, has been retained to serve as the
Corporation's independent accountants. The
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independent accountants are responsible for auditing the annual financial
statements of the Funds.
FINANCIAL STATEMENTS
The Fund's Semi-Annual Report dated June 30, 1998, which was filed with the
Securities & Exchange Commission on August 27, 1998 (accession number
0001047469-98-032945), and the Fund's Annual Report dated December 31, 1998,
which was filed with the Securities & Exchange Commission on March 2, 1999
(accession number 0001047469-99-008061), are hereby incorporated by reference
into this Statement of Additional Information.
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APPENDIX A
RATINGS OF CORPORATE DEBT SECURITIES
MOODY'S INVESTORS SERVICE, INC. (1)
Aaa Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt edge."
Aa Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high grade bonds.
A Bonds rated A possess many favorable investment attributes and are to
be considered as upper medium grade obligations.
Baa Bonds rated Baa are considered as medium grade obligations, i.e., they
are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics
as well.
Ba Bonds rated Ba are judged to have speculative elements: their future
cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterize bonds in this case.
B Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments of or
maintenance of other terms of the contract over any long period of time
may be small.
Caa Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or
interest.
Ca Bonds rated Ca represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked
short-comings.
---------------------
(1) Moody's applies numerical modifiers, 1, 2 and 3 in generic rating
classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the security ranks in the
higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that
the issue ranks in the lower end of its generic rating category.
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STANDARD & POOR'S CORPORATION (2)
AAA Bonds rated AAA have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest-rated issues only in a small
degree.
A Bonds rated A have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds
in higher-rated categories.
BBB Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for bonds in this category than for bonds
in higher-rated categories.
BB, Bonds rated BB, B, CCC, and CC are regarded, on balance, as
predominately B, speculative with respect to the issuer's capacity to
pay interest and repay principal in
CCC, accordance with the terms of the obligation. BB indicates the lowest
degree of
CC speculation and CC the highest degree of speculation. While such bonds
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse
conditions.
----------------------
(2) Plus (+) or Minus (-): The ratings from AA to BB may be modified by the
addition of a plus or minus sign to show relative standing within the
major rating categories.
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APPENDIX B
DESCRIPTION OF MUNICIPAL SECURITIES
Municipal Securities are notes and bonds issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia and their political subdivisions, agencies and instrumentalities,
the interest on which is exempt from federal income taxes and, in certain
instances, applicable state or local income taxes. These securities are
traded primarily in the over-the-counter market.
Municipal Securities are issued to obtain funds for various public
purposes, including the construction of a wide range of public facilities
such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets, water and sewer works and gas and electric
utilities. Municipal Securities may also be issued in connection with the
refunding of outstanding Municipal Securities obligations, obtaining funds
to lend to other public institutions and for general operating expenses.
Industrial Development Bonds ("IDBs") are issued by or on behalf of public
authorities to obtain funds to provide privately operated facilities for
business and manufacturing, housing, sports, pollution control, and for
airport, mass transit, port and parking facilities and are considered
tax-exempt bonds if the interest thereon is exempt from federal income
taxes.
The two principal classifications of tax-exempt bonds are "general
obligation" and "revenue." General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the
payment of principal and interest. Revenue bonds are payable only from the
revenues derived from a particular facility or class of facilities or, in
some cases, from the proceeds of a special excise tax or other specific
revenue source. Although IDBs are issued by municipal authorities, they are
generally secured only by the revenues derived from payment of the
industrial user. The payment of principal and interest on IDBs is dependent
solely upon the ability of the user of the facilities financed by the bonds
to meet its financial obligations and the pledge, if any, of real and
personal property so financed as security for such payment.
Tax-exempt notes are of short maturity, generally less than three
years. They include such securities as Project Notes, Tax Anticipation
Notes, Revenue Anticipation Notes, Bond Anticipation Notes and Construction
Loan Notes. Tax-exempt commercial paper consists of short-term obligations
generally having a maturity of less than nine months.
New issues of Municipal Securities are normally offered on a
when-issued basis, which means that delivery and payment for these
securities normally takes place 15 to 45 days after the date of commitment
to purchase.
Yields of Municipal Securities depend upon a number of factors,
including economic, money and capital market conditions, the volume of
Municipal Securities available, conditions within the Municipal Securities
market, and the maturity, rating and size of individual offerings.
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Changes in market values of Municipal Securities may vary inversely in
relation to changes in interest rates. The magnitude of changes in market
values in response to changes in market rates of interest typically varies
in proportion to the quality and maturity of obligations. In general, among
Municipal Securities of comparable quality, the longer the maturity, the
higher the yield, and the greater potential for price fluctuations.
FLOATING RATE AND VARIABLE RATE SECURITIES
The Tax-Exempt Income Fund may invest in floating rate and variable
rate tax-exempt securities. These securities are normally IDBs or revenue
bonds that provide that the rate of interest is set as a specific percentage
of a designated base rate, such as rates of treasury bills or bonds or the
prime rate at a major commercial bank and provide that the holders of the
securities can demand payment of the obligation on short notice at par plus
accrued interest, which amount may be more or less than the amount initially
paid for the bonds. Floating rate securities have an interest rate which
changes whenever there is a change in the designated base interest rate,
while variable rate securities provide for a specific periodic adjustment in
the interest rate. Frequently such securities are secured by letters of
credit or other credit support arrangements provided by banks. The quality
of the underlying credit or of the bank, as the case may be, must be
equivalent to the long-term bond or commercial paper rating stated above.
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PART C
OTHER INFORMATION
Item 23. Exhibits.
(a) (i) Registrant's Charter [Articles of Incorporation], filed
as Exhibit (a)(i) to Post-Effective Amendment No. 55 dated
June 30, 1999, to Registration Statement on Form N-1A (File
No. 2-28097), is incorporated.
(ii) Amendments to Charter [Articles of Incorporation],
filed as Exhibit (a)(ii) to Post-Effective Amendment No. 55
dated June 30, 1999, to Registration Statement on Form N-1A
(File No. 2-28097), is incorporated.
(b) (i) By-Laws, filed as Exhibit (b)(i) to Post-Effective
Amendment No. 55 dated June 30, 1999, to Registration
Statement on Form N-1A (File No. 2-28097), is incorporated.
(ii) Amendment to By-Laws, filed as Exhibit (b)(ii) to
Post-Effective Amendment No. 55 dated June 30, 1999, to
Registration Statement on Form N-1A (File No. 2-28097), is
incorporated.
(c) Specimen share certificate. Incorporated by reference to
Article V of the Articles of Incorporation filed as Exhibit
(a)(i) to Post-Effective Amendment No. 55 dated June 30, 1999,
to Registration Statement on Form N-1A (File No. 2-28097).
(d) (i) Investment Adviser's Agreement between Registrant and
Enterprise Capital Management, Inc. ("Enterprise
Capital"). Incorporated herein by reference to
Post-Effective Amendment No. 53 to Registrant's
Registration Statement on Form N-1A (Reg. No. 2-28097)
filed on May 3, 1999.
(ii) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Montag &
Caldwell, Inc., as sub-adviser. Incorporated herein by
reference to Post-Effective Amendment No. 53, to
Registrant's Registration Statement on Form N-1A (Reg.
No. 2-28097), filed on May 3, 1999.
(iii) Fund Manager's Agreement Between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Retirement
System Investors Inc., as sub-adviser. Incorporated
herein by reference to Post-Effective Amendment No. 53
to Registrant's Registration Statement on Form N-1A
(Reg. No. 2-28097) filed on May 3, 1999.
(iv) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and OpCap
Advisors, as sub-adviser. Incorporated herein by
reference to Post-Effective Amendment No. 53 to
Registrant's Registration Statement on Form N-1A (Reg.
No. 2-28097) filed on May 3, 1999.
(v) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and 1740 Advisers,
Inc., as sub-adviser. Incorporated herein by reference
to Post-Effective Amendment No. 53 to Registrant's
Registration Statement on Form N-1A (Reg. No. 2-28097)
filed on May 3, 1999.
(vi) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Provident
Investment Counsel, Inc., as sub-adviser. Incorporated
herein by reference to Post-Effective Amendment No. 53
to Registrant's Registration Statement on Form N-1A
(Reg. No. 2-28097) filed on May 3, 1999.
(vii) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and William D.
Witter, Inc., as sub-adviser. Incorporated herein by
reference to Post-Effective Amendment No. 53 to
Registrant's Registration Statement on Form N-1A (Reg.
No. 2-28097) filed on May 3, 1999.
(viii) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and GAMCO
Investors, Inc., as sub-adviser. Incorporated herein
by reference to Post-Effective Amendment No. 53 to
Registrant's Registration Statement on Form N-1A (Reg.
No. 2-28097) filed on May 3, 1999.
(ix) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Vontobel USA
Inc., as sub-adviser. Incorporated herein by reference
to Post-Effective Amendment No. 53 to Registrant's
Registration Statement on Form N-1A (Reg. No. 2-28097)
filed on May 3, 1999.
(x) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Sanford C.
Bernstein & Co., Inc., as sub-adviser. Incorporated
herein by reference to Post-Effective Amendment No. 53
to Registrant's Registration Statement on Form N-1A
(Reg. No. 2-28097) filed on May 3, 1999.
(xi) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and TCW Funds
Management, Inc., as sub-adviser. Incorporated
herein by reference to Post-Effective Amendment No. 53
to Registrant's Registration Statement on Form N-1A
(Reg. No. 2-28097) filed on May 3, 1999.
(xii) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Caywood-Scholl
Capital Management, as sub-adviser. Incorporated
herein by reference to Post-Effective Amendment No. 53
to Registrant's Registration Statement on Form N-1A
(Reg. No. 2-28097) filed on May 3, 1999.
(xiii) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and MBIA Capital
Management Corp., as sub-adviser. Incorporated herein
by reference to Post-Effective Amendment No. 53 to
Registrant's Registration Statement on Form N-1A (Reg.
No. 2-28097) filed on May 3, 1999.
(xiv) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Fred Alger
Management, Inc., as Sub-adviser, filed as Exhibit
(d)(xiv) to Post-Effective Amendment No. 55 dated
June 30, 1999, to Registration Statement on Form N-1A
(File No. 2-28097), is incorporated.
(xv) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Fred Alger
Management, Inc., as sub-adviser, filed as Exhibit
(d)(xv) to Post-Effective Amendment No. 55 dated
June 30, 1999 (File No. 2-28097), is incorporated.
(xvi) Fund Manager's Agreement between The Enterprise Group
of Funds, Inc., Enterprise Capital, and Montag &
Caldwell, Inc., as sub-adviser, filed as Exhibit
(d)(xvi) to Post-Effective Amendment No. 55 dated
June 30, 1999 (File No. 2-28097), is incorporated.
(e) (i) General Distributor's Agreement, filed as Exhibit
(e)(i) to Post-Effective Amendment No. 55 dated
June 30, 1999, to Registration Statement on Form N-1A
(File No. 2-28097), is incorporated.
(ii) Prototype Soliciting Broker/Dealer Agreement.
Incorporated herein by reference to Post-Effective
Amendment No. 53 to Registrant's Registration
Statement on Form N-1A (Reg. No. 2-28097) filed on
May 3, 1999.
(f) Not applicable.
<PAGE> 226
(g) Form of Custodian Contract, filed as Exhibit (g) to
Post-Effective Amendment No. 55 dated June 30, 1999,
to Registration Statement on Form N-1A (File No. 2-28097),
is incorporated.
(h) Not applicable.
(i) Opinion and Consent of Counsel, filed as Exhibit (i) to Post-
Effective Amendment No. 55, dated June 30, 1999, to
Registration Statement on Form N-1A (Reg. No. 2-28097), is
incorporated.
(j) Consent of PricewaterhouseCoopers LLP filed as Exhibit (j) to
Post-Effective Amendment No. 55, dated June 30, 1999, to
Registration Statement on Form N-1A (Reg. No. 2-28097), is
incorporated.
(k) Not applicable.
(l) Not applicable.
(m) Amended and Restated Plan of Distribution Pursuant to Rule
12b-1 for Class A, B and C shares. Incorporated herein by
reference to Exhibit 6(i) to Post-Effective Amendment No. 48
to Registrant's Registration Statement on Form N-1A (File No.
2-28097) filed on March 2, 1998.
(n) Not applicable.
(o) (i) 18f-3 Plan. Incorporated herein by reference to
Post-Effective Amendment No. 53 to Registrant's
Registration Statement on Form N-1A (Reg. No. 2-28097)
filed on May 3, 1999.
(ii) Powers of Attorney. Incorporated
herein by reference to Post-Effective Amendment No. 53
to Registrant's Registration Statement on Form N-1A
(Reg. No. 2-28097) filed on May 3, 1999.
Item 24. Persons Controlled By or Under Common Control with Registrant.
There are no persons controlled by or under common control with
Registrant.
Item 25. Indemnification.
Reference is made to the provisions of Article Six of Registrant's
Articles of Incorporation which is incorporated herein by reference to
Post-Effective Amendment No. 39 to the Registration Statement on Form
N-1A (File No. 2-28097) filed on April 26, 1995.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of Registrant pursuant to the foregoing provision or otherwise,
Registrant has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment of Registrant of expenses
incurred or paid by a director, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person, Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such
<PAGE> 227
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication
of such issue.
Item 26. Business and Other Connections of the Investment Adviser.
See "Management of The Fund" in the Prospectus and "Investment Advisory
and Other Services" in the Statement of Additional Information for
information regarding the business and other connections of the
Investment Adviser
For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and directors of
Enterprise Capital Management, Inc. reference is made to Part B of
Post-Effective Amendment to the Registrant's Registration Statement and
to the registration of Form ADV (File No. 801-27181) of Enterprise
Capital Management, Inc. filed under the Investment Adviser Act of
1940, which is incorporated herein by reference.
Montag & Caldwell, Inc., Retirement System Investors Inc., OpCap
Advisors, 1740 Advisers, Inc., Provident Investment Counsel, Inc., Fred
Alger Management, Inc. William D. Witter, Inc., GAMCO Investors, Inc.,
Vontobel USA Inc., Sanford C. Bernstein & Co., Inc., TCW Funds
Management, Inc., Caywood-Scholl Capital Management, and MBIA Capital
Management Corp.; the Fund Managers of certain of the Funds of the
Registrant, are primarily engaged in the business of rendering
investment advisory services. Reference is made to the recent Form ADV
and schedules thereto on file with the Commission for a description of
the names and employment of the directors and officers of the following
Fund Managers, and other required information:
<TABLE>
<CAPTION>
File No.
--------
<S> <C>
Montag & Caldwell, Inc. 801-15398
Retirement System Investors Inc. 801-36893
OpCap Advisors 801-27180
1740 Advisers, Inc. 801-08176
Provident Investment Counsel, Inc. 801-30020
Fred Alger Management, Inc. 801-06709
William D. Witter, Inc. 801-12695
GAMCO Investors, Inc. 801-14132
Vontobel USA Inc. 801-34910
Sanford C. Bernstein & Co., Inc. 801-10488
TCW Funds Management, Inc. 801-29075
Caywood-Scholl Capital Management 801-26996
MBIA Capital Management Corp. 801-46649
</TABLE>
Item 27. Principal Underwriters.
(a) Enterprise Fund Distributors, Inc. is the principal
underwriter of the Funds' shares.
(b) The information contained in the registration on Form BD of
Enterprise Fund
<PAGE> 228
Distributor's Inc. (File No. 8-8-815577), filed under the
Securities Exchange Act of 1934, is incorporated herein by
reference.
(c) Inapplicable.
Item 28. Location and Accounts and Records.
<TABLE>
<CAPTION>
Entity Function Address
- ------ -------- -------
<S> <C> <C>
The Enterprise Group of Registrant Atlanta Financial Center
Funds, Inc. 3343 Peachtree Road, N.E.
Suite 450
Atlanta, GA 30326
Enterprise Capital Investment Adviser Same as above.
Management, Inc.
Enterprise Fund Distributors, Distributor Same as above.
Inc.
State Street Bank and Trust Custodian One Heritage Drive
Company The Joseph Palmer
Building
North Quincy, MA 02171
National Financial Data Transfer Agent and 330 W. 9th Street
Services, Inc. Dividend Disbursing Agent Kansas City, MO 64105
</TABLE>
The records of the Fund Managers are kept at the following locations:
<TABLE>
<S> <C>
Growth Fund Montag & Caldwell, Inc.
3455 Peachtree Road, N.E.
Suite 1200
Atlanta, GA 30326-3248
Growth & Income Fund Retirement Systems Investors Inc.
317 Madison Avenue
New York, NY 10017
Equity Fund OpCap Advisors
One World Financial Center
New York, NY 10281
Equity Income Fund 1740 Advisers, Inc.
1740 Broadway
New York, NY 10019
Capital Appreciation Fund Provident Investment Counsel, Inc.
300 North Lake Avenue
Pasadena, CA 91101
Multi-Cap Growth Fund Fred Alger Management, Inc.
1 World Trade Center
Suite 9333
New York, NY 10048
</TABLE>
<PAGE> 229
<TABLE>
<S> <C>
Small Company Growth Fund William D. Witter, Inc.
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Small Company Value Fund GAMCO Investors, Inc.
One Corporate Center
Rye, NY 10580
International Growth Fund Vontobel USA Inc.
450 Park Avenue
New York, New York 10022
Global Financial Services Fund Sanford C. Bernstein & Co., Inc.
767 Fifth Avenue
New York, NY 10153-0185
Internet Fund Fred Alger Management, Inc.
1 World Trade Center
Suite 9333
New York, New York 10048
Government Securities Fund TCW Funds Management, Inc.
865 South Figueroa Street, Suite 1800
Los Angeles, CA 90017
High-Yield Bond Fund Caywood-Scholl Capital Management
4350 Executive Drive, Suite 125
San Diego, CA 92121
Tax-Exempt Income Fund MBIA Capital Management Corp.
113 King Street
Armonk, NY 10504
Balanced Fund Montag & Caldwell, Inc.
3455 Peachtree Road, N.E.
Suite 1200
Atlanta, GA 30326-3248
Managed Fund OpCap Advisors
One World Financial Center
New York, NY 10281
Money Market Fund Enterprise Capital Management, Inc.
Atlanta Financial Center
3343 Peachtree Road, N.E.,
Suite 450
Atlanta, GA 30326
</TABLE>
Item 29. Management Services.
Inapplicable.
Item 30. Undertakings.
Inapplicable.
<PAGE> 230
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia, on the 30th day of June 1999.
THE ENTERPRISE GROUP OF FUNDS,
INC.
By: /s/ Victor Ugolyn
---------------------------------------
Victor Ugolyn
Chairman, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement of the Registrant has
been signed below by the following persons in the capacities and on the date
indicated:
<TABLE>
<S> <C> <C>
/s/ Victor Ugolyn
- --------------------------------- Chairman, President and Chief June 30, 1999
Victor Ugolyn Executive Officer
/s/ Phillip G. Goff
- --------------------------------- Principal Financial and Accounting June 30, 1999
Phillip G. Goff Officer
*
- ---------------------------------
Arthur T. Dietz Director June 30, 1999
*
- ---------------------------------
Samuel J. Foti Director June 30, 1999
*
- ---------------------------------
Arthur Howell Director June 30, 1999
*
- ---------------------------------
Lonnie H. Pope Director June 30, 1999
*
- ---------------------------------
William A. Mitchell, Jr. Director June 30, 1999
*
- ---------------------------------
Michael I. Roth Director June 30, 1999
By: /s/ Catherine R. McClellan
------------------------------
(Attorney-in-Fact)
</TABLE>
<PAGE> 231
[EXHIBIT INDEX]
<TABLE>
<CAPTION>
Exhibit Description
Number -----------
------
<S> <C>
(a)(i) Registrant's Charter (Articles of Incorporation)
(a)(ii) Amendments to Charter (Articles of Incorporation)
(b)(i) By-Laws
(b)(ii) Amendment to By-Laws
(d)(xiv) Fund Manager's Agreement between The Enterprise
Group of Funds, Inc., Enterprise Capital, and
Fred Alger Management, Inc.
(d)(xv) Fund Manager's Agreement between The Enterprise
Group of Funds, Inc., Enterprise Capital, and
Fred Alger Management, Inc.
(d)(xvi) Fund Manager's Agreement between The Enterprise
Group of Funds, Inc., Enterprise Capital, and
Montag & Caldwell, Inc.
(e)(i) General Distributor's Agreement.
(g) Form of Custodian Contract.
(i) Opinion and Consent of Counsel
(j) Consent of PricewaterhouseCoopers LLP
</TABLE>
<PAGE> 1
EXHIBIT (A)(I)
ARTICLES OF INCORPORATION
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
ARTICLE I
The undersigned, Howard N. Mead, whose post office address is 420
Atlanta Financial Center, 3333 Peachtree Road, N.E., Atlanta, Georgia 30326,
being at least 18 years of age, does hereby act as an incorporator, under and by
virtue of the General Corporation Laws of the State of Maryland authorizing the
formation of corporations and with the intention of forming a corporation.
ARTICLE II
NAME
The name of the corporation (hereinafter referred to as the
"Corporation") is The Enterprise Group of Funds, Inc.
ARTICLE III
PURPOSE AND POWERS
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it are as
follows:
(1) To conduct and carry on the business of an investment company of
the management type.
(2) To hold, invest and reinvest its assets in securities, and in
connection therewith to hold part or all of its assets in cash.
<PAGE> 2
(3) To issue and sell shares of its own capital stock in such amounts
and on such terms and conditions, for such purposes and for such amount or kind
of consideration now or hereafter permitted by the General Corporation Law of
the State of Maryland and by these Articles of Incorporation, as its Board of
Directors may determine, provided, however, that the value of the consideration
per share to be received by the Corporation upon the sale or other disposition
of any shares of its capital stock shall be not less than the net asset value
per share of such capital stock outstanding at the time of such event.
(4) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholders
of the Corporation) shares of its capital stock, in any manner and to the extent
now or hereafter permitted by the General Corporation Law of the State of
Maryland and by these Articles of Incorporation.
(5) To do any and all such further acts or things and to exercise any
and all such further powers or rights as may be necessary, incidental,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of any of the foregoing purposes or objects.
The Corporation shall be authorized to exercise and enjoy all the
powers, rights and privileges granted to, or conferred upon, corporations by the
General Corporation Law of the State of Maryland now or hereafter in force, and
the enumeration of the foregoing shall not be deemed to exclude any powers,
rights or privileges so granted or conferred.
ARTICLE IV
PRINCIPAL OFFICE AND RESIDENT AGENT
FOURTH: The post office address of the principal office of the Corporation in
this State is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202.
-2-
<PAGE> 3
The name of the resident agent of the corporation in this State is The
Corporation Trust Incorporated, a corporation of this State, and the post office
address of the resident agent is 32 South Street, Baltimore, Maryland 21202.
ARTICLE V
CAPITAL STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is Three Hundred Million (300,000,000) shares of Common
Stock of the par value of Ten Cents ($0.10) per share and of the aggregate par
value of $30,000,000. The Board of Directors is authorized to and shall issue
the Common Stock in one or more series, each of which series shall be called a
"Portfolio." Each Portfolio shall have such distinctive designations as may be
stated in the resolution or resolutions providing for the issuance of such stock
adopted by the Board of Directors. In such resolution or resolutions providing
for the issuance of shares of each Portfolio, the Board of Directors is hereby
expressly authorized and empowered to fix the number of shares constituting such
Portfolio.
(a) The holders of each share of Common Stock of the Corporation shall
be entitled to one vote for each full share, and a fractional vote for each
fractional share, irrespective of the Portfolio, then standing in his name on
the books of the Corporation. On any matter submitted to a vote of Stockholders,
all shares of Common Stock of the Corporation then issued and outstanding and
entitled to vote shall be voted in the aggregate and not by Portfolio except
that: (1) when otherwise expressly required by the Maryland General Corporation
law or the Investment Company Act of 1940, as amended, shares shall be voted by
individual Portfolio; (2) only shares of a Portfolio are entitled to vote on
matters concerning only that Portfolio; and (3) on matters relating to all
Portfolios, but affecting the Portfolios differently, separate votes by
Portfolio are required.
(b) Each Portfolio of Common Stock of the Corporation shall have the
following powers, preferences or other special rights, and the qualifications,
restrictions, and limitations thereof shall be as follows:
-3-
<PAGE> 4
(1) The shares of each Portfolio, when issued, will be fully
paid and non-assessable, will have no preference, preemptive, conversion,
exchange, or similar rights, and will be freely transferable.
(2) The Board of Directors may from time to time declare and
pay dividends or distributions, in stock or in cash, on all shares of any
Portfolio, the amount of such dividends and distributions and the payment of
them being wholly in the discretion of the Board of Directors. Such dividends or
distributions may differ in amounts, kind and time of payment or distribution
among the Portfolios.
(i) Dividends or distributions on shares of any class of stock
shall be paid only out of earned surplus or other lawfully available
assets belonging to such class.
(ii) Inasmuch as one goal of the Corporation is to qualify
each Portfolio as a "regulated investment company" under the Internal
Revenue Code of 1954, as amended, or any successor or comparable
statute thereto, and Regulations promulgated thereunder, and inasmuch
as the computation of net income and gains for Federal income tax
purposes may vary from the computation thereof on the books of the
Corporation, the Board of Directors shall have the power in its
discretion to distribute in any fiscal years as dividends on the stock
of any Portfolio, including dividends designated in whole or in part as
capital gains distributions, amounts sufficient in the opinion of the
Board of Directors, to enable any such Portfolio to qualify as a
regulated investment company and to avoid liability for the Portfolio
for Federal income tax in respect of that year.
(3) The assets belonging to any Portfolio shall be charged
with the liabilities in respect of such Portfolio, and each Portfolio shall also
be charged with its share of the general liabilities of the Corporation in
proportion to the assets value of the respective Portfolios. The determination
of the Board of Directors shall be conclusive as to the amount of liabilities,
the allocation of the same as to a given Portfolio, and whether the same or
general assets of the Corporation are allocable to one or more Portfolios.
-4-
<PAGE> 5
ARTICLE VI
PROVISIONS FOR DEFINING, LIMITING, AND REGULATING
CERTAIN POWERS OF THE CORPORATION AND OF
THE DIRECTORS AND STOCKHOLDERS
(1) The number of directors of the Corporation shall be eight (8),
which number may be increased pursuant to the bylaws of the Corporation but
shall never be less than three (3). The names of the directors who shall act
until the first annual meeting or until their successors are duly elected and
qualified are:
Arthur T. Dietz
Weaver H. Gaines, Jr.
Arthur Howell
James D. Mallory, Jr.
William A. Mitchell, Jr.
Lonnie H. Pope
John F. Schaffner
E. James Wisner
(2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, whether now
or hereafter authorized, for such consideration as the Board of Directors may
deem advisable, subject to such limitations as may be set forth in these
Articles of Incorporation or in the bylaws of the Corporation or in the General
Corporation Law of the State of Maryland.
(3) No holder of stock of the Corporation shall, as such holder, have
any right to purchase or subscribe for any shares of the capital stock of the
Corporation or any other security of the Corporation which it may issue or sell
(whether out of the number of shares authorized by these Articles of
Incorporation, or out of any shares of the capital
-5-
<PAGE> 6
stock of the Corporation acquired by it after the issue thereof, or otherwise)
other than such right, if any, as the Board of Directors, in its discretion, may
determine.
(4) Each director and each officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the General Laws
of the State of Maryland.
(5) The Board of Directors of the Corporation may make, alter to repeal
from time to time any of the bylaws of the Corporation except any particular
bylaw which is specified as not subject to alteration or repeal by the Board of
Directors, subject to the requirements of the Investment Company Act of 1940, as
amended.
ARTICLE VII
REDEMPTION, EXCHANGE, FRACTIONAL SHARES,
AND OWNERSHIP RECORD
(1) Each holder of shares of a particular Portfolio shall have the
right at such times and on such terms and conditions as may be permitted by the
Corporation to require the Corporation to redeem all or any part of his shares
of that Portfolio at a redemption price per share equal to the net asset value
per share of that Portfolio next determined in accordance with Article VII (2)
after the shares are properly tendered for redemption. Payment of the redemption
price shall be in cash; provided, however, that if the Board of Directors
determines, which determination shall be conclusive, that conditions exist which
make payment wholly in cash as to one or more Portfolios unwise or undesirable,
the Corporation may make payment wholly or partly in securities or other assets
belonging to the Portfolio of which the shares being redeemed are part at the
value of such securities or assets used in such determination of net asset
value.
Notwithstanding the foregoing, the Corporation may postpone
payment of the redemption price and may suspend the right of the holders of
shares of any Portfolio to require the Corporation to redeem shares of that
Portfolio during any period
-6-
<PAGE> 7
or at any time when and to the extent permissible under the Investment Company
Act of 1940, as amended.
Furthermore, the Board of Directors may, at its option and on
not less than thirty (30) days notice, require redemption of all shares of
record of any one holder of share of any Portfolio when that holder's total
shareholdings of such Portfolio have a net asset value of $200 or less at the
date of notice of such redemption. such a redemption will not be completed if
the shareholder purchases sufficient shares during the thirty day notice period
to bring the net asset value of the holder's shares in such Portfolio above
$200.
(2) The net asset value per share of any Portfolio shall be the
quotient obtained by dividing the value of the net assets of that Portfolio
(being the value of the assets belonging to that Portfolio less the liabilities
belonging to that Portfolio) by the total number of share of that Portfolio
outstanding.
The Board of Directors may determine to maintain the net asset
value per share of any Portfolio at a designated constant dollar amount. In
connection therewith, the Board of Directors may adopt procedures not
inconsistent with the Investment Company Act of 1940, as amended, for the
continuing declarations of income attributable to that Portfolio as dividends
payable in additional shares of that Portfolio at the designated constant dollar
amount and for the redemption of shares as necessary to maintain a constant net
asset value in the event of any losses attributable to that Portfolio.
(3) All shares of each particular Portfolio shall represent an equal
proportionate interest in the assets belonging to that Portfolio (subject to the
liabilities belonging to that Portfolio), and each share of any particular
Portfolio shall be equal to each other share of that Portfolio. The Board of
Directors may from time to time divide or combine the shares of that Portfolio
without thereby changing the proportionate beneficial interest in the assets
belonging to that Portfolio or in any way affecting the rights of shares of any
other Portfolio.
-7-
<PAGE> 8
(4) Subject to compliance with the requirements of the Investment
Company Act of 1940, as amended, the Board of Directors shall have the authority
to provide that holders of shares of any Portfolio shall have the right to
convert or exchange said shares into shares of one or more other Portfolios of
shares in accordance with such requirements and procedures as may be established
by the Board of Directors.
(5) The Corporation may issue, sell, redeem, repurchase, and otherwise
deal in and with shares of its capital stock of all or any Portfolios in
fractional denominations to the same extent as its whole shares, and shares in
fractional denominations shall be shares of capital stock of all and any
Portfolios having proportionately to the respective fractions represented
thereby all the rights of whole shares of all or any Portfolio, including,
without limitation, the right to vote, the right to receive dividends and
distributions, and the right to participate upon liquidation of the Corporation,
provided that the issue of shares in fractional denominations or certificates
thereof of all or any Portfolio shall be limited to such transactions and be
made upon such terms as may be fixed by or under authority of the bylaws.
(6) The Corporation may issue shares in open account form without
issuance or delivery of certificates therefor, in which case the ownership of
such shares shall be reflected exclusively by entry on the books of the
Corporation.
ARTICLE VIII
DETERMINATION BINDING
Any determination made in good faith, so far as accounting matters are involved,
in accordance with accepted accounting practice by or pursuant to the direction
of the Board of Directors, as to the amount of assets, obligations or
liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payment dividends, as t the amount of any reserves or
charges set up and the propriety thereof, as to the time of or purpose for
creating reserves or as to the use, alteration or cancellation of any reserves
or charges (whether or not any obligation or liability for which such reserves
or charges shall have been created shall have been paid or discharged or shall
be then or thereafter required to
-8-
<PAGE> 9
be paid or discharged), as to the price of any security owned by the Corporation
or as to any other matters relating to the issuance, sale, redemption or other
acquisition or disposition of securities or shares of capital stock of the
Corporation, and any reasonable determination made in good faith by the Board of
Directors as to whether any transaction constitutes a purchase of securities on
"margin," a sale of securities "short," or an underwriting of the sale of, or a
participation in any underwriting or selling group in connection with the public
distribution of, any securities, shall be final and conclusive, and shall be
binding upon the Corporation and all holders of its capital stock, past, present
and future, and shares of the capital stock of the Corporation are issued and
sold on the condition and understanding, evidenced by the purchase of shares of
capital stock or acceptance of share certificates, that any and all such
determinations shall be binding as aforesaid. No provision of these Articles of
Incorporation shall be effective to (a) require a waiver of compliance with any
provision of the Securities Act of 1933, as amended, or the Investment Company
Act of 1904, as amended, or of any valid rule, regulation or order of the
Securities and Exchange Commission thereunder or (b) protect or purport to
protect any director or officer of the Corporation against any liability the
Corporation or its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless disregard
of the duties involved in the conduct of his office.
ARTICLE IX
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
ARTICLE X
AMENDMENT
The Corporation reserves the right from time to time to make any
amendment of its charter, now or hereafter authorized by law, including any
amendment which alters the contract rights, as expressly set forth in its
charter, of any outstanding stock.
-9-
<PAGE> 10
IN WITNESS WHEREOF, the undersigned incorporator of The Enterprise
Group of Funds, Inc. hereby executes the foregoing Articles of Incorporation and
acknowledges the same to be his act and further acknowledges that, to the best
of his knowledge, the matters and facts set forth therein are true in all
material respects under the penalties of perjury.
Dated the 29th day of July, 1987.
/s/ HOWARD N. MEAD
Howard N. Mead
-10-
<PAGE> 1
Exhibit (a)(ii)
ARTICLES OF MERGER
OF
ALPHA FUND, INC.
(A Georgia Corporation)
WITH AND INTO
THE ENTERPRISE GROUP OF FUNDS, INC.
(A Maryland Corporation)
1.
The Agreement and Plan of Merger attached hereto as Exhibit A and
incorporated herein by reference (the "Agreement and Plan of Merger") was duly
approved and adopted on July 22, 1987, by the Board of Directors and on
September 14, 1987 by the shareholders of Alpha Fund, Inc. and on September 14,
1987 by the Board of Directors and the sole shareholder of The Enterprise Group
of Funds, Inc. The terms and conditions of the merger were advised, authorized
and approved by each of such corporations in the manner and by the vote required
by its charter, by-laws and by the laws of its state of incorporation.
2.
The surviving corporation of the merger will be The Enterprise Group of
Funds, Inc.
3.
The Enterprise Group of Funds, Inc. was incorporated under the
laws of the State of Maryland on July 30, 1987. The address of the principal
place of business of The Enterprise Group of Funds, Inc. in Maryland is c/o The
Corporation Trust Incorporated, 32 South Street, Baltimore, Baltimore County,
Maryland 21202. On the date of submission of the Agreement and Plan of Merger to
the sole shareholder of The Enterprise Group of Funds, Inc., there were 5,000
shares of common stock, $0.10 par value, of said corporation outstanding and
entitled to vote, and the Agreement and Plan of Merger was approved by the
unanimous written consent of the holders of all such 5,000 shares.
4.
Alpha Fund, Inc. was incorporated under the laws of the State of
Georgia on April 17, 1986. The address of its principal place of business is 250
Piedmont Avenue,
<PAGE> 2
Suite 2100, Atlanta, Georgia 30365. On the date of submission of the Agreement
and Plan of Merger to the shareholders of Alpha Fund, Inc., there were
3,729,520.146 shares of common stock, 33-1/3 cents par value, of said
corporation outstanding and entitled to vote, and the Agreement and Plan of
Merger was approved by the vote of the holders of 2,510,194.127 shares, the
affirmative vote of the holders of 2,486,346.764 shares being required to adopt
the Agreement and Plan of Merger.
5.
The merger contemplated by the Agreement and Plan of Merger shall
become effective as of the close of business on the latest of the dates on which
these Articles of Merger have been delivered to the Maryland State Department of
Assessments and Taxation (the "Department") and to the Georgia Secretary of
State (the "Secretary of State") and each of the Department and the Secretary of
State shall have accepted the Articles of Merger for record.
IN WITNESS WHEREOF, the undersigned have caused these Articles of
Merger to be executed by their duly authorized representatives, in several
counterparts, and their corporate seals affixed hereto this 14th day of
September, 1987.
ALPHA FUND, INC.
By: /s/ E. JAMES WISNER
-----------------------------------------
E. James Wisner, Chairman
and President
Attest: /s/ LEILANI S. HALL
-------------------------------------
Leilani S. Hall, Secretary
(CORPORATE SEAL)
THE ENTERPRISE GROUP OF FUNDS, INC.
By: /s/ E. JAMES WISNER
-----------------------------------------
E. James Wisner, Chairman
and President
Attest: /s/ LEILANI S. HALL
-------------------------------------
Leilani S. Hall, Secretary
(CORPORATE SEAL)
<PAGE> 3
STATE OF GEORGIA
COUNTY OF FULTON
Before me, a Notary Public in and for said County and State aforesaid
personally appeared E. James Wisner, who acknowledged himself to be the
President of Alpha Fund, Inc. (the "Corporation") and that he, as such officer
being authorized so to do, executed the foregoing Articles of Merger on behalf
of the Corporation for the purposes therein contained by signing the name of the
Corporation by himself as such officer, and certified and verified, under
penalties for perjury, that, to the best of his knowledge, information and
belief, all matters and facts stated in the foregoing Articles of Merger are
true and correct in all material respects.
WITNESS my hand and official seal in the County and State aforesaid
this day of September, 1987.
My commission expires: /s/ NINA ALTMAN
------------------------------------
Signature
My county of residence: /s/ NINA ALTMAN
/s/ Gwinnett ------------------------------------
Printed
NOTARY PUBLIC
STATE OF GEORGIA
COUNTY OF FULTON
Before me, a Notary Public in and for said County and State aforesaid
personally appeared E. James Wisner, who acknowledged himself to be the
President of The Enterprise Group of Funds, Inc. (the "Corporation") and that
he, as such officer being authorized so to do, executed the foregoing Articles
of Merger on behalf of the Corporation for the purposes therein contained by
signing the name of the Corporation by himself as such officer, and certified
and verified, under penalties for perjury, that, to the best of his knowledge,
information and belief, all matters and facts stated in the foregoing Articles
of Merger are true and correct in all material respects.
WITNESS my hand and official seal in the County and State aforesaid
this day of September, 1987.
My commission expires: /s/ NINA ALTMAN
------------------------------------
Signature
My county of residence: /s/ NINA ALTMAN
/s/ Gwinnett ------------------------------------
Printed
NOTARY PUBLIC
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
This is an AGREEMENT AND PLAN OF MERGER, dated September ____, 1987, by
and between ALPHA FUND, INC., a Georgia corporation ("Alpha") and THE ENTERPRISE
GROUP OF FUNDS, INC., a Maryland corporation ("Enterprise").
1. Corporations Proposing to Merge and Surviving Corporation.
The corporations proposing to merge are Alpha and Enterprise.
Upon the Effective Date of the Merger, as hereinafter defined, Alpha shall be
merged into Enterprise, which shall be the surviving corporation (the "Surviving
Corporation") after the merger (the "Merger") and shall continue to exist as a
corporation created and governed by the laws of the State of Maryland.
2. Terms and Conditions of the Merger.
Alpha and Enterprise shall perform and comply in all material
respects with any and all terms and conditions set forth herein.
3. Effective Date of the Merger.
The Merger shall be effective as of the close of business on
the date on which the Articles of Merger of Alpha with and into Enterprise shall
have been duly delivered to the Maryland State Department of Assessments and
Taxation and the Georgia Secretary of State (the "Departments") in accordance
with the laws of the States of Maryland and Georgia and the Departments each
shall have accepted the Articles of Merger for record (the date and time of the
later of such events being hereinafter referred to as the "Effective Date of the
Merger"). For tax and accounting purposes, the merger shall be deemed to be
effective as of the close of business on the business day next prior to the
Effective Date.
4. Effect of the Merger
At the Effective Date of the Merger, Alpha and Enterprise
shall be a single corporation, which shall be Enterprise, and the separate
existence of Alpha shall cease. The Surviving Corporation shall have all the
rights, privileges, immunities and powers of Alpha and of a corporation
organized under the Maryland General Corporation Law and shall be subject to all
the duties and liabilities of a corporation organized under the Maryland General
Corporation Law. The Surviving Corporation shall thereupon and thereafter
possess all the rights, privileges, immunities and franchises, of a public as
well as of a private nature, of each of Alpha and Enterprise; all property,
real, personal and mixed, and all debts due on whatever account, including
subscriptions to shares, and all other choses in action, and each and every
other interest of or belonging to or due to each of Alpha and Enterprise shall
be taken and deemed to be transferred to and vested in the Surviving Corporation
without further act or deed; and the title to any real estate, or any interest
therein, vested in Alpha or Enterprise shall not revert or be in any way
impaired by reason of the Merger. The Surviving Corporation shall thenceforth be
responsible and liable for all the liabilities and obligations of Alpha and
Enterprise, and any claim existing or action or proceeding pending by or against
Alpha or Enterprise may be prosecuted as if the Merger had not taken place, or
the Surviving Corporation may be
<PAGE> 5
substituted in its place. Neither the rights of creditors nor any liens upon the
property of Alpha or Enterprise shall be impaired by the Merger.
5. Manner and Basis of Converting Shares of Alpha into Shares of
Enterprise.
(a) At the Effective Date of the Merger, the sole shareholder
of Enterprise shall receive $0.10 for each of his shares of Enterprise and shall
surrender to Enterprise all certificates representing such shares, which shares
shall be cancelled and retired.
(b) At the Effective Date of the Merger, each outstanding
share (or fraction thereof) of the 33-1/3 cent par value Common Stock of Alpha
("Alpha Common Stock") shall thereupon automatically become and convert into one
newly-issued share (or the same fraction thereof) of the $0.10 par value voting
Growth Portfolio Common Stock of Enterprise ("Growth Portfolio Common Stock").
Any shares of Alpha Common Stock held as treasury stock by Alpha shall be
cancelled and retired and no consideration shall be issued or given in exchange
therefor.
(c) With respect to those shareholders of Alpha whose shares
are held on deposit by Alpha's transfer agent and who have not been issued
certificates representing their shares of Alpha Common Stock, appropriate book
entries will be made to evidence the conversion of each share of Alpha Common
Stock into one share of Growth Portfolio Common Stock, or the appropriate
fraction thereof.
(d) With respect to those shareholders of Alpha who have been
issued certificates representing shares of Alpha Common Stock, such certificates
shall automatically be deemed to represent an equal number of shares of Growth
Portfolio Common Stock without the necessity of being exchanged for new
certificates.
6. Articles of Incorporation.
Until altered, amended or repealed in accordance with the
Maryland General Corporation Law, the Articles of Incorporation of Enterprise as
in effect at the Effective Date of the Merger shall continue to be the Articles
of Incorporation of the Surviving Corporation.
7. Bylaws.
Until altered, amended or repealed as provided therein, the
bylaws of Enterprise as in effect at the Effective Date of the Merger shall
continue to be the bylaws of the Surviving Corporation.
8. Directors
The directors of the Surviving Corporation shall be the
directors of Alpha immediately prior to the Effective Date of the Merger.
<PAGE> 6
9. Officers.
The officers of the Surviving Corporation shall be the
officers of Alpha immediately prior to the Effective Date of the Merger.
10. Amendments.
This Agreement and Plan of Merger may be supplemented or
amended in any manner at any time and from time to time prior to the Effective
Date of the Merger by an agreement in writing signed by and on behalf of Alpha
and Enterprise, without any further action by the shareholders of Alpha or
Enterprise.
11. Termination.
This Agreement and Plan of Merger may be terminated or
abandoned at any time prior to the Effective Date of the Merger by an agreement
in writing signed by and on behalf of Alpha and Enterprise, without any further
action by the shareholders of Alpha or Enterprise.
12. Further Assurances.
If at any time the Surviving Corporation shall consider or be
advised that any further assignments or assurances or any other actions or
things are necessary or desirable to vest in the Surviving Corporation,
according to the terms hereof, the title of any property or rights of Alpha, the
last acting officers and directors of Alpha, or the corresponding officers and
directors of the Surviving Corporation, as appropriate, shall and will execute
and make all such proper assignments and assurances and do all such actions and
things necessary or proper to vest title in such property or rights in the
Surviving Corporation, and otherwise to carry out the purposes of this Agreement
and Plan of Merger.
13. Governing Law.
This Agreement and Plan of Merger and the legal relations
between the parties shall be governed by and construed in accordance with the
laws of the State of Maryland, and, to the extent applicable, the laws of the
State of Georgia.
-14-
<PAGE> 7
IN WITNESS WHEREOF, each of the parties has caused this Agreement and
Plan of Merger, pursuant to authority duly given by its respective Board of
Directors, and by its shareholders, to be duly executed on its behalf and in its
corporate name by its duly authorized officers and its corporate seal affixed
hereto, as of the date first above written.
ALPHA FUND, INC.
By: /s/ E. JAMES WISNER
-----------------------------------------
E. James Wisner, Chairman of
the Board and President
Attest: /s/ LEILANI S. HALL
-------------------------------------
Leilani S. Hall, Secretary
(CORPORATE SEAL)
THE ENTERPRISE GROUP OF FUNDS, INC.
By: /s/ E. JAMES WISNER
-----------------------------------------
E. James Wisner, Chairman of
the Board and President
Attest: /s/ LEILANI S. HALL
-------------------------------------
Leilani S. Hall, Secretary
(CORPORATE SEAL)
<PAGE> 8
STATE OF GEORGIA
COUNTY OF FULTON
Before me, a Notary Public in and for said County and State aforesaid
personally appeared E. James Wisner, who acknowledged himself to be the Chairman
of the Board and President of Alpha Fund, Inc. (the "Corporation") and that he,
as such officer being authorized so to do, executed the foregoing Agreement and
Plan of Merger on behalf of the Corporation for the purposes therein contained
by signing the name of the Corporation by himself as such officer, and certified
and verified, under penalties for perjury, that, to the best of his knowledge,
information and belief, all matters and facts stated in the foregoing Agreement
and Plan of Merger are true and correct in all material respects.
WITNESS my hand and official seal in the County and State aforesaid
this 14th day of September, 1987.
My commission expires: /s/ NINA ALTMAN
------------------------------------
Signature
My county of residence: /s/ NINA ALTMAN
/s/ Gwinnett ------------------------------------
Printed
NOTARY PUBLIC
STATE OF GEORGIA
COUNTY OF FULTON
Before me, a Notary Public in and for said County and State aforesaid
personally appeared E. James Wisner, who acknowledged himself to be the Chairman
of Board and President of The Enterprise Group of Funds, Inc. (the
"Corporation") and that he, as such officer being authorized so to do, executed
the foregoing Agreement and Plan of Merger on behalf of the Corporation for the
purposes therein contained by signing the name of the Corporation by himself as
such officer, and certified and verified, under penalties for perjury, that, to
the best of his knowledge, information and belief, all matters and facts stated
in the foregoing Agreement and Plan of Merger are true and correct in all
material respects.
WITNESS my hand and official seal in the County and State aforesaid
this 14th day of September, 1987.
My commission expires: /s/ NINA ALTMAN
------------------------------------
Signature
My county of residence: /s/ NINA ALTMAN
/s/ Gwinnett ------------------------------------
Printed
NOTARY PUBLIC
<PAGE> 9
ARTICLES SUPPLEMENTARY
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
I.
The name of the corporation, which was organized under Maryland General
Corporation Laws, is THE ENTERPRISE GROUP OF FUNDS, INC.
II.
The corporation is registered as an open-end company under the
Investment Company Act of 1904.
III.
The total number of shares of capital stock that the Corporation has authority
to issue has been increased from 300,000,000 shares of common stock, $.10 par
value, with an aggregate par value of $30,000,000 to 800,000,000 shares of
common stock, $.10 par value, with an aggregate par value of $80,000,000 by the
Board of Directors in accordance with Section 2-105(c) of the Maryland General
Corporation Law.
IN WITNESS WHEREOF, the undersigned President of The Enterprise Group
of Funds, Inc. hereby executes the foregoing Articles Supplementary and
acknowledges the same to be the act of The Enterprise Group of Funds, Inc. and
further acknowledges that, to the best of his knowledge, the matters and facts
set forth therein are true in all material respects under the penalties of
perjury.
Dated the 23 day of May, 1990.
The Enterprise Group of Funds, Inc.
By: /s/ KEITH E. MITCHELL
-------------------------------------
Keith E. Mitchell, President
Attest:
/s/ HELYN A. SYMONS
- ----------------------------------
Helyn Symons, Secretary
<PAGE> 10
ARTICLES OF AMENDMENT
THE ENTERPRISE GROUP OF FUNDS, INC.
The Enterprise Group of Funds, Inc., a Maryland Corporation, hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
The charter of the corporation is hereby amended as follows:
ARTICLE V
CAPITAL STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is Eight Hundred Million (800,000,000) shares of Common
Stock of the par value of Ten Cents ($0.10) per share and of the aggregate par
value of $80,000,000. The Board of Directors is authorized to and shall issue
the Common Stock in one or more classes or series, each of which series shall be
called a "Portfolio." Each Class and Portfolio shall have such distinctive
designations as may be stated in the resolution or resolutions providing for the
issuance of such stock adopted by the Board of Directors. In such resolution or
resolutions providing for the issuance of shares of each Class or Portfolio, the
Board of Directors is hereby expressly authorized and empowered to fix the
number of shares constituting such Class or Portfolio.
1) The Board of Directors may classify and reclassify any unissued
shares of capital stock into one or more additional or other classes or series
as may be established from time-to-time by setting or changing in any one or
more respects the designations, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of such shares of stock and pursuant to such
classification or reclassification to increase or decrease the number of
authorized shares of any existing class of series.
2) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of
<PAGE> 11
capital stock, the holders of each class or series of capital stock shall be
entitled to dividends and distributions in such amounts and at such time as may
be determined by the Board of Directors, and the dividends and distributions
paid with respect to the various classes or series of capital stock may vary
among such classes and series. Expenses related to the distribution of, and
other identified expenses that should properly be allocated to, the shares of a
particular class or series of capital stock may be charged to and borne solely
by a class or series of capital stock may be appropriately reflected (in a
manner determined by the Board of Directors) and cause differences in the net
asset value attributable to, and the dividend, redemption and liquidation rights
of, the shares of each class or series of capital stock.
(3) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class of capital
stock, on each matter submitted to a vote of stockholders, each holder of a
share of capital stock of the Corporation shall be entitled to one vote for each
share standing in such holder's name on the books of the Corporation,
irrespective of the class or series thereof, and all shares of all classes and
series shall vote together as a single class; provided, however, that (a) as to
any matter with respect to which a separate vote of any class or series is
required by the Investment Company Act of 1940, as amended, and in effect from
time-to-time, or any rules, regulations or orders issued thereunder, or by the
Maryland General Corporation Law, such requirement as to a separate vote by that
class or series shall apply in lieu of a general vote of all classes or series
as described above, (b) in the event that the separate vote requirements
referred to in (a) above apply with respect to one or more classes or series,
then, subject to paragraph (c) below, the shares of all other classes and series
not entitled to a separate class vote shall vote as a single class, and (c) as
to any matter which does not affect the interest of a particular class or
series, such class or series shall not be entitled to any vote and only the
holders of shares of one or more affected classes and series shall be entitled
to vote.
<PAGE> 12
(4) Notwithstanding any provisions of the Maryland General Corporation
Law regarding a greater proportion than a majority of the votes of all classes
or series of capital stock of the Corporation (or of any class or series
entitled to vote thereon as a separate class or series) to take or authorize any
action, the Corporation is hereby authorized (subject to the requirements of the
Investment Company Act of 1940, as amended, and in effect from time-to-time, and
any rules, regulations and orders issued thereunder) to take such action upon
the concurrence of a majority of the aggregate number of shares of a class or
series entitled to vote thereon as a separate class or series).
(5) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, in the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of all classes
and series of capital stock of the Corporation shall be entitled, after payment
or provision for payment of the debts and other liabilities of the Corporation,
to share ratably in the remaining net assets of the Corporation; provided,
however, that in the event the capital stock of the Corporation shall be
classified or reclassified into series, holders of any shares of capital stock
within such series shall be entitled to share ratably out of the assets
belonging to such series.
This amendment to the charter has been approved by the Directors and
the Shareholders.
We the undersigned President and Secretary swear under penalties of
perjury that the foregoing is a corporate act.
/s/ CATHERINE R. MCCLELLAN /s/ VICTOR UGOLYN
- ---------------------------------- ------------------------------------
Catherine R. McClellan, Secretary Victor Ugolyn, President
<PAGE> 13
State of Maryland PARRIS N. GLENDENING
DEPARTMENT OF Governor
ASSESSMENTS AND TAXATION RONALD W. WINEHOLT
Director
Charter Division PAUL B. ANDERSON
Administrator
- --------------------------------------------------------------------------------
ARTICLES OF AMENDMENT
(See instructions on previous page)
---------------------------------------------------
(1)
(2) The Enterprise Group of Funds, Inc., a Maryland corporation hereby
certified to the State Department of Assessments and Taxation of
Maryland that:
(3) The charter of the corporation is hereby amended as follows: The total
number of shares of capital stock that the Corporation has authority to
issue has been increased from 800,000,000 shares of common stock, $.10
par value, with an aggregate par value of $80,000,000 to 1,700,000,000
shares of common stock, $.10 par value, with an aggregate par value of
$170,000,000 to be designated by the Board of Directors for Class A,
Class B, Class C and Class Y shares of the Growth, Growth & Income,
Equity, Equity Income, Capital Appreciation, Small Company Income,
Small Company Growth, International Growth, Managed, Government
Securities, Tax-Exempt, High-Yield Bond and Money Market Portfolios.
-----------------------------------------------------------------------
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-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
This amendment of the charter of the corporation has been approved by
The Board of Directors in accordance with Section 2-105(c) of the Maryland
General Corporation Law,
We the undersigned President and Secretary swear under penalties of perjury that
the foregoing is a corporate act.
/s/ CATHERINE R. MCCLELLAN /s/ VICTOR UGOLYN
- ---------------------------------- ------------------------------------
SECRETARY PRESIDENT
MAIL TO: STATE DEPARTMENT OF ASSESSMENTS & TAXATION
301 WEST PRESTON STREET, ROOM 809
BALTIMORE, MD 2101
PHONE: 410-767-1350
<PAGE> 14
ARTICLES OF TRANSFER
Retirement System Fund, Inc., a Maryland corporation, on behalf of its
portfolios, Intermediate Term Fixed Income Fund, Money Market Fund, Emerging
Growth Equity Fund, and Core Equity Fund (the "Transferor"), and The Enterprise
Group of Funds, Inc. on behalf of its portfolios, Enterprise Government
Securities Portfolio, Enterprise Money Market Portfolio, Enterprise Small
Company Growth Portfolio, and Enterprise Growth and Income Portfolio (the
"Transferee"), hereby certify to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Transferor agrees to sell and transfer all or substantially
all of its net assets to the Transferee. The terms and conditions of the sale
and the manner of carrying the same into effect are more particularly set forth
in these Articles of Transfer (the "Articles"). The sale and transfer are to the
effective at 10:00 a.m., on July 17, 1997.
SECOND: The parties to these Articles are Retirement System Fund Inc.,
a corporation organized and existing under the laws of the State of Maryland,
and The Enterprise Group of Funds, Inc., a corporation organized and existing
under the laws of the State of Maryland.
THIRD: The Transferee was incorporated under the laws of the State of
Maryland on January 2, 1968.
FOURTH: The address and principal place of business of the Transferee
are as follows: Atlanta Financial Center 3343 Peachtree Road, N.E. Suite 450,
Atlanta, Georgia 30326.
FIFTH: The principal office of the Transferor in the State of Maryland
is located in Baltimore City, Maryland, and the principal place of business of
the Transferor is 317 Madison Avenue, New York, NY 10017.
SIXTH: The name and address of the Transferee's resident agent in the
State of Maryland are as follows: Corporation Trust Incorporated, 32 South St.,
Baltimore, MD 21202.
SEVENTH: The Transferee will acquire all of the net assets of the
Transferor, in exchange for the Class Y Shares of the Intermediate Term Fixed
Income Fund, Money Market Fund, Emerging Growth Equity Fund, and Core Equity
Fund, to be distributed pro rata by the Transferor to the holders of its shares,
and the Transferee will assume the Transferor's liabilities, if any, in
accordance with the terms and conditions set forth in an Agreement and Plan of
Reorganization between the parties dated July 17, 1997 (the "Agreement")>
<PAGE> 15
EIGHTH: The sale and transfer of assets reflected in these Articles
were duly advised by the Board of Directors of the Transferor at a meeting held
December 19, 1996, at which meeting the Board duly adopted a resolution
declaring such transfer and sale advisable substantially upon the terms and
conditions set forth in these Articles and directing that such sale and transfer
be submitted for action thereon by the shareholders of the Transferor. The sale
and transfer reflected by these Articles were duly approved by the holders of a
majority of the outstanding shares of the Transferor entitled to vote at a
meeting held on July 15, 1997.
NINTH: The purchase and transfer of assets reflected in these Articles
were duly approved by the Board of Directors of the Transferee at a meeting held
on February 20, 1997, at which meeting the Board duly adopted a resolution
approving the said purchase and transfer substantially upon the terms and
conditions set forth in these Articles.
TENTH: The terms and conditions of the transactions set forth in the
Articles were advised, authorized and approved by each of the parties to these
Articles in the manner and by the vote required by their respective
organizational documents and by the laws of their respective States of
incorporation or organization.
IN WITNESS WHEREOF, the corporation party to these Articles has caused
these Articles to be signed in its corporate name and on its behalf by its
respective President or Vice President and its corporate seals to be hereunto
affixed and attested by its Secretary or Assistant Secretary, and each officer
signing these Articles acknowledges them to be the corporate act of his or her
corporation and that, to the best of his or her knowledge, information and
belief, all matters and facts set forth therein with respect to the
authorization and approval thereof are true in all material respects and that
this verification is made under the penalties of perjury and each other party to
these Articles has caused these Articles to be signed by an officer thereunto
duly authorized and to be acknowledged on its behalf as the act of such party.
<PAGE> 16
<TABLE>
<S> <C>
Attest: THE ENTERPRISE GROUP OF FUNDS, INC.
on behalf of its portfolios ENTERPRISE
GOVERNMENT SECURITIES PORTFOLIO,
ENTERPRISE MONEY MARKET
PORTFOLIO, ENTERPRISE SMALL
COMPANY GROWTH PORTFOLIO and
ENTERPRISE GROWTH AND INCOME
PORTFOLIO
/s/ CATHERINE R. MCCLELLAN By: /s/ PHILLIP G. GOFF
- --------------------------------------- ---------------------------------------
Catherine R. McClellan, Secretary Phillip Goff, Vice President
[Affix Corporate Seal]
RETIREMENT SYSTEM FUND INC.
on behalf of its portfolios INTERMEDIATE
TERM FIXED INCOME FUND, MONEY
MARKET FUND, EMERGING GROWTH
EQUITY FUND and CORE EQUITY FUND
/s/ STEPHEN P. POLLAK By: /s/ JOHN MEUSER
- --------------------------------------- ---------------------------------------
Stephen P. Pollak, Secretary John Meuser, Sr. Vice Pres. Treasurer
</TABLE>
<PAGE> 17
THE ENTERPRISE GROUP OF FUNDS, INC.
ARTICLES SUPPLEMENTARY
THE ENTERPRISE GROUP OF FUNDS, INC., a Maryland corporation having its
principal office in Baltimore, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: The Board of Directors of the Corporation, an open-end
investment company and registered under the Investment Company Act of 1940, as
amended, and having authorized capital of eight hundred million (800,000,000)
shares of common stock, par value $.10 per share, has adopted resolutions as
follows:
(1) increase the number of authorized shares from one billion
seven hundred million (1,700,000,000) of common stock, $.10
par value, with an aggregate par value of $170,000,000 to two
billion five hundred million (2,500,000,000) shares of common
stock, $.10 par value, with an aggregate par value of two
hundred fifty million dollars ($250,000,000); and
(2) classify two hundred million (200,000,000) of the authorized,
unissued and unclassified shares of the common stock, par
value $.10 per share, with an aggregate par value of two
hundred thousand dollars ($200,000), as Class A Common Stock
(Global Financial Services); and
(3) classify two hundred million (200,000,000) of the authorized,
unissued and unclassified shares of the common stock, par
value $.10 per share, with an aggregate par value of two
hundred thousand dollars ($200,000), as Class B Common Stock
(Global Financial Services); and
(4) classify two hundred million (200,000,000) of the authorized,
unissued and unclassified shares of the common stock, par
value $.10 per share, with an aggregate par value of two
hundred thousand dollars ($200,000), as Class C Common Stock
(Global Financial Services); and
(5) classify two hundred million (200,000,000) of the authorized,
unissued and unclassified shares of the common stock, par
value $.10 per share, with an aggregate par value of two
hundred
<PAGE> 18
thousand dollars ($200,000), as Class Y Common Stock (Global
Financial Services).
SECOND: A description of the shares so classified with the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as set or
changed by the Board of Directors of the Corporation is as follows:
A description of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption of each class of common stock of the Corporation is set
forth in the Corporation's Charter, and has not been changed by the Board of
Directors of the Corporation.
THIRD: The shares aforesaid have been duly classified by the Board of
Directors of the Corporation pursuant to the authority and power contained in
the Charter of the Corporation.
IN WITNESS WHEREOF, The Enterprise Group of Funds, Inc. has caused
these presents to be signed in its name and on its behalf by its Chairman and
witnessed by its Secretary on September 22, 1998.
WITNESS THE ENTERPRISE GROUP OF FUNDS, INC.
- ----------------------------------- -----------------------------------
Catherine R. McClellan Victor Ugolyn
Secretary Chairman
THE UNDERSIGNED, Chairman of The Enterprise Group of Funds, Inc., who
executed on behalf of said corporation the foregoing Articles Supplementary to
the Charter, of which this certificate is made a part, hereby acknowledges that
the foregoing Articles Supplementary are the act of the said Corporation and
further certifies that, to the best of his knowledge, information and belief,
the matters and facts set forth therein with respect to the approval thereof are
true in all material respects, under the penalties of perjury.
-----------------------------------
Victor Ugolyn
Chairman
<PAGE> 1
Exhibit (b)(i)
BYLAWS
OF
The Enterprise Group of Funds, Inc.
ARTICLE ONE
SHARE CERTIFICATES
1.1 Share Certificates. Share certificates shall be issued in
consecutive order and shall be numbered in the order *in which they are issued.
They shall be signed by the President or a Vice President and countersigned by
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer, and the seal of the Corporation or a facsimile thereof shall be
affixed thereto. The signatures may be either manual or facsimile signatures. In
case any officer who has signed any certificate ceases to be an officer of the
Corporation before the certificate is issued, the certificate may nevertheless
be issued by the Corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue. On the stub of each share
certificate, which stubs shall be kept in the share records of the Corporation,
shall be entered the name and address of the owner of the shares, the number of
shares, and the date of issue. Each share certificate exchanged or returned
shall be cancelled and placed with its stub in the share records of the
Corporation.
1.2 Share Records; Transfer of Shares. The Corporation shall
maintain at its principal place of business or registered office or, if the
Corporation employs a transfer agent, at the office of the transfer agent, a
record of the names and addresses of its shareholders and the number of shares
held by each. Such share records shall, subject to reasonable regulations of the
Board of Directors as provided in the Articles of Incorporation or by applicable
law, during the usual business hours of every business day be open for the
inspection of any persons who are and for at least six months have been
stockholders of record of five per cent, in the aggregate, of the outstanding
capital stock of the Corporation. Transfers of shares of the Corporation shall
be made in the share records Of the Corporation upon surrender of the
certificate for such shares signed by the person in whose name the certificate
is registered or on his behalf by a person legally authorized to so sign (or
accompanied by a separate stock transfer power so signed) and otherwise in
accordance with and subject to the applicable provisions of the Uniform
Commercial Code as in effect in the State of Georgia and subject to such other
reasonable and lawful conditions and requirements as may be imposed by the
Corporation.
<PAGE> 2
1.3 Lost Certificates. The Chairman of the Board, if any, or the
President may issue a new share certificate in place of any certificate or
certificates previously issued by the Corporation and alleged to have been lost
or destroyed upon the making of an affidavit of that fact by the person claiming
the certificate to be lost or destroyed and, if he in his sole discretion deems
bond issued by a company approved by him in such sum as he it appropriate, the
delivery of a commercial indemnity may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been Lost or destroyed.
ARTICLE TWO
SHAREHOLDERS' MEETINGS
2.1 Annual Meetings of Shareholders. The annual meeting of
shareholders of the Corporation shall be held at such time on such business day
within the period commencing 60 days after the end of each fiscal year and
ending 91 days after the end of the Corporation's fiscal year and at such
place, within or without the State of Georgia, as may from time to time be
fixed by the Board of Directors or Executive Committee; provided that the
failure to hold the annual meeting shall not work a forfeiture or otherwise
affect valid corporate acts; provided further that the corporation is not
required to hold an annual meeting in any year in Which none of the following
is required to be acted on by shareholders under the Investment Company Act of
1940: (1) Election of Directors, (2) Approval of the Investment Advisory
Agreement, (3) Ratification of the Selection of Independent Public Accountants,
and (4) Approval of a Distribution Agreement.
2.2 Special Meetings of Shareholders. Special meetings of the
shareholders may be called at any time by the Board of Directors, the Executive
Committee, the Chairman of the Board, if any, or the President, and shall be
called by the Secretary upon the written request of the holder or holders of at
least 25 percent of the issued and outstanding shares of the Corporation. Such
request shall State the purpose or purposes of the proposed meeting. Special
meetings of the shareholders shall be held at such time and place, within or
without the State of Georgia, as may be determined by the person or persons
calling the meeting.
2.3 Notice. The Secretary or an Assistant Secretary or the
officer or persons calling the meeting shall deliver a written notice of the
place, day and time of each meeting of the shareholders, not less than 10 nor
more than 50 days before the date of the meeting, either personally or by first
class mail, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the United
States mail with first class postage thereon prepaid, addressed to the
shareholder at his address as it appears on the share records of the
Corporation. The notice of
<PAGE> 3
a special meeting of shareholders shall state the purpose or purposes for which
the meeting is called. Notice of a meeting of shareholders need not be given to
any shareholder who signs a waiver of notice, either before or after the
meeting. Attendance of a shareholder at a meeting, either in person or by Proxy,
shall of itself constitute waiver of notice of such meeting and waiver of any
and all objections to the place of the meeting, the time of the meeting, and the
manner in which it has been called or convened, except when a shareholder
attends the meeting solely for the purpose of stating, at the beginning of the
meeting, any such objection or objections to the transaction of business.
2.4 Closing of Transfer Books: Record Dates. The Board of
Directors may fix the time, not exceeding fifty days preceding the date of any
meeting of shareholders, any dividend payment date or any date for the allotment
of rights, during which the books of the Corporation shall be closed against
transfers of stock. If such books are closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders, such
books shall be closed for at least ten days immediately preceding such meeting.
In lieu of providing for the closing of the books against transfers of stock as
aforesaid, the Board of Directors may fix, in advance, a date, not exceeding
fifty days and not less than ten days preceding the date of any meeting of
shareholders, and not exceeding fifty days preceding any dividend payment date
or any date for the allotment of rights, as a record date for the determination
of the shareholders entitled to notice of and to vote at such meeting, or
entitled to receive such dividend or rights, as the case may be; and only
shareholders of record on such date shall be entitled to notice of and to vote
at such meeting or to receive such dividend or rights, as the case may be.
2.5 Presiding_Officer. The meetings of the shareholders shall be
presided over by the Chairman of the Board, or if he shall not be present, by
the President, or if he shall not be present, by a Vice President, or if none
of them is present, by a chairman to be elected at the meeting. The Secretary
of the Corporation, if present, shall act as secretary of such meetings, or if
he is not present, an Assistant Secretary shall so act; if neither the
Secretary nor an Assistant Secretary is present, then the meeting shall elect
its secretary.
2.6 Quorum; Adjournment. At all meetings of shareholders, a
majority of the outstanding shares of the Corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum for the transaction
of business, and, except as otherwise required by law or by the Articles of
Incorporation or Section 3.10 or Article Eight of the Bylaws, all resolutions
adopted and business transacted shall require the favorable vote of a majority
of the shares represented at the meeting and entitled to vote on the subject
matter. The holders of a majority of the shares represented at a meeting,
whether or not a quorum is present, may adjourn such meeting from time to
<PAGE> 4
time. This Section 2.6 may be altered, amended Or repeated only upon the
affirmative vote of the holders of the majority Of all of the shares of the
capital stock of the Corporation at the time outstanding and entitled to vote.
2.7 Voting and Inspectors. At all meetings of shareholders every
shareholder of record entitled to vote at such meeting shall be entitled to one
vote for each share of stock standing in his name on the books of the
Corporation (and such shareholders of record holding fractional shares shall
have proportionate voting rights as provided in the Articles of Incorporation)
on the date for the determination of shareholders entitled to vote at such
meeting, either in person or by proxy appointed by instrument in writing
subscribed by such shareholder or his duly authorized attorney. No proxy which
is dated more than three months before the meeting at which it is offered shall
be accepted, unless such proxy shall, on its face, name a longer period for
which it is to remain in force.
At any election of Directors, the Board of Directors prior
thereto may, or, if they have not so acted, the chairman of the meeting may,
and upon the request of the holders of ten per cent (10Z) of the shares
entitled to vote at such election shall, appoint two inspectors of election who
shall first subscribe an oath or affirmation to execute faithfully the duties
of inspectors at such election with strict impartiality and according to the
best of their ability, and shall after the election make a certificate of the
result of the vote taken. No candidate for the office of Director shall be
appointed such Inspector.
The chairman of the meeting may cause a vote by ballot to be
taken upon any election or matter, and such vote shall be taken upon the
request of the holders of ten per cent (10%) of the shares entitled to vote oil
such election or matter.
2.8 Concerning Validity of Proxies, Ballots, Etc. At every
meeting of the shareholders, all proxies shall be received and taken in charge
of and all ballots shall be received and canvassed by the secretary of the
meeting, who shall decide all questions touching the qualification of voters,
the validity of the proxies, and the acceptance or rejection of votes, unless
inspectors of election shall have been appointed as provided in Section 2.7, in
which event such inspectors of election shall decide all such questions.
2.9 Written Consent of Shareholders. Any action required to be
taken at a meeting of the shareholders of the Corporation, or any action that
may be taken at a meeting of the shareholders, may be taken without a meeting if
a consent in writing setting forth the action so taken shall be signed by all of
the shareholders entitled to vote with respect to the subject matter thereof.
<PAGE> 5
ARTICLE THREE
DIRECTORS
3.1 Powers of Board of Directors. Subject to the Bylaws or any
lawful agreement between or among the shareholders, the business and affairs of
the Corporation shall be managed by the Board of Directors.
3.2 Number of Directors; Conduct of Meetings of Board of
Directors. The Board of Directors shall consist eight directors, each of whom
shall be elected at an annual meeting of the shareholders, to serve until the
next succeeding annual meeting and until his successor is elected and qualified,
or until his earlier death, resignation or removal. Directors need not be
shareholders. A majority of said directors shall constitute a quorum for the
transaction of business. Except as otherwise provided in the Bylaws, all
resolutions adopted and all business transacted by the Board of Directors shall
require the affirmative vote of a majority of the directors present at a meeting
at which a quorum is present. The Chairman of the Board or, if there is no
Chairman of the Board and if the President is a director, the President shall
preside at all meetings of the Board of Directors; provided, however, that each
of the Chairman of the Board or the President may delegate his authority to
preside at Board of Directors meetings Pursuant to section 4.2 or 4.3,
respectively, of the Bylaws. If there is no Chairman of the Board and if the
President is not a director, the Board of Directors shall select a director as
chairman for each meeting.
3.3 Director Vacancies. Subject to the provisions of Section 3.4
of the Bylaws and to the provisions of the Investment Company Act of 1940, and
except as otherwise provided in this Section 3.3, any vacancy occurring in the
Board of Directors may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors, or by
the sole remaining director, as the case may be, or, if the vacancy is not so
filled, or if no director remains, by the shareholders. Any vacancy arising as
a result of the removal of a director by the shareholders may be filled by the
shareholders or, if the shareholders so authorize, by the remaining director or
directors, but only for the unexpired term of his predecessor in office.
3.4 Increase or Decrease in the Number of Directors. The Board of
Directors, by the vote of a majority of the entire Board or the shareholders,
upon the affirmative vote of the holders of a majority of all the shares of the
capital stock of the corporation at the time outstanding and entitled to vote,
may increase the number of Directors to a number not exceeding twelve (12) or
may decrease the number of Directors to a number not less than three (3), but
the tenure of office of any Director shall
<PAGE> 6
not be affected by such decrease made by the Board; provided, however, that no
person shall serve as a Director of the Corporation unless elected to that
office by the shareholders at an annual or a special meeting duly called for
that purpose; except that vacancies occurring between such meetings may be
filled in any otherwise Legal manner if immediately after filling any such
vacancy at least two-third of the Directors then holding office shall have been
elected to such office by the shareholders of the Corporation at such an annual
or special meeting.
3.5 Special Election to Fill Vacancies. In the event that at any
time Less than two-thirds of the Directors holding office at that time were so
elected by the shareholders, the Board of Directors or President shall forthwith
cause to be held as promptly as possible and in any event within sixty days a
meeting of the shareholders for the purpose of electing directors to fill any
existing vacancies in the Board of Directors. This Section 3.5 may be altered,
amended or repealed only upon the affirmative vote of the holders of a majority
of all the shares of capital stock of the Corporation at the time outstanding
and entitled to vote.
3.6 Meetings of Board of Directors; Notice. Regular meetings of
the Board of Directors shall be held at such time and on such notice, if any, as
the Directors may from time to time determine. The Board of Directors shall meet
annually or as soon as practicable after the annual Meeting of the shareholders
and such meeting may be without any notice to members of the Board, if convened
at the place of such annual meeting, on the same, or the next business day;
provided that the failure to hold the annual meeting shall not work a forfeiture
or otherwise affect valid corporate acts. A special meeting of the Board of
Directors may be called at any time by the President, the Chairman of the Board,
if any, or by a majority of the directors, on one day's notice, which may be
given orally or by personal delivery or by first class mail, telegram or
cablegram. The notice shall be deemed given when mailed or when the telegram or
cablegram is sent, addressed to the director at his address as it appears on the
share records of the Corporation or, if he is not a shareholder, at his business
address. Notice of a special meeting may be waived by an instrument in writing.
Attendance of a director at a meeting shall constitute a waiver of notice of the
meeting and waiver of any and all objections to the place of the meeting, the
time of the meeting and the manner in which it has been called or convened,
except when a director states, at the beginning of the meeting, any such
objection or objections to the transaction of business. Any meeting of the Board
of Directors may be held within or without the State of Georgia at such place as
may be determined by the person or persons calling the meeting.
3.7 Quorum. One-third of the entire Board of Directors shall
constitute a quorum for the transaction of business, provided that a quorum
shall in no case be less than two
<PAGE> 7
Directors. If at any meeting of the Board there shall be less than a quorum
present, a majority of those present may adjourn the meeting from time to time
until a quorum shall have been obtained. The action of a majority of the
Directors present at any meeting at which there is a quorum shall be the action
of the Board of Directors, except as may be otherwise specifically provided by
statute, by the Articles of Incorporation, by these Bylaws or by any contract or
agreement to which the Corporation is a party.
3.8 Written Consent of Directors. Any action required to be taken
at a meeting of the Board of Directors, or any action that may be taken at a
meeting of the Board of Directors, may be taken without a meeting if a consent
in writing setting forth the action taken shall be signed by all the directors
and shall be filed with the minutes of the proceedings of the directors.
3.9 Telephonic Meetings of Board of Directors. Any action
required to be taken at a meeting of the Board of Directors, or any action that
may be taken at a meeting of the Board of Directors, may be taken at a meeting
held by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other.
Participation in such a meeting shall constitute presence in person at such
meeting. In all other respects the provisions of Article Three of the Bylaws
with respect to meetings of the Board of Directors shall apply to such a
meeting.
3.10 Removal of Directors. At any shareholders' meeting with
respect to which notice of such purpose has been given, the entire Board of
Directors or any individual director may be removed, with or without cause, by
the affirmative vote of the holders of a majority of the shares of the
Corporation then outstanding and entitled to vote.
3.11 Executive Committee. The Board of Directors may, in each
year, by the affirmative vote of a majority of the entire Board, appoint from
the Directors an Executive Committee to consist of such number of Directors (not
less than three) as the Board may from time to time determine. The Board of
Directors by Such affirmative vote shall have power at any time to change the
members of such Committee and may fill vacancies in the Committee by appointment
from the Directors. When the Board of Directors is not in session, the Executive
Committee shall have and may exercise any or all of the powers of the Board of
Directors in the management of the business and affairs of the Corporation
(including the power to authorize the seal of the Corporation to be affixed to
all papers which may require it) except as provided by law or by any contract or
agreement to which the Corporation is a party and except the power to increase
or decrease the size of, or fill vacancies on, the Board, to remove or appoint
executive officers or to dissolve or change the permanent membership of the
Executive Committee, and the power to make or amend the Bylaws of the
Corporation. The Executive Committee may
<PAGE> 8
fix its own rules of procedure, and may meet when and as provided by such rules
or by resolution of the Board of Directors, but in every case the presence of a
majority shall be necessary to constitute a quorum. In the absence of any member
of the Executive Committee, the members thereof present at any meeting, whether
or not they constitute a quorum, may appoint a member of the Board of Directors
to act in the place of such absent member.
3.12 Other Committees. The Board of Directors, by the affirmative
vote of a majority of the entire Board, may appoint other committees which shall
in each case consist of such number of members (not less than two) and shall
have and may exercise, to the extent permitted by law, such powers as the Board
may determine in the resolution appointing them. A majority of all members of
any such committee may determine its action, and fix the time and place of its
meetings, unless the Board of Directors shall otherwise provide. The Board of
Directors shall hale power at any time to change the members and, to the extent
permitted by law, the powers of any such committee, to fill vacancies, and to
discharge any such committee.
3.13 Compensation of Directors. Directors shall be entitled to
receive such compensation from the Corporation for their services as may from
Lime to time be voted by the Board of Directors.
3.14 Qualification of Directors. No person shall be elected a
Director of the Corporation after he or she shall have attained the age of 72.
ARTICLE FOUR
OFFICERS
4.1 Officers; Election. The Board of Directors shall elect, as
soon as practicable after the annual meeting of shareholders, a President (who
shall be a member of the Board of Directors), a Secretary and a Treasurer and
may elect a Chairman of the Board (who shall be a member of the Board of
Directors), one or more Vice Presidents, and one or more assistant officers. Any
two or more offices may be held by the same person except the offices of
President and Secretary and the offices of President and Vice President, but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity, if such instrument is required by law or by these Bylaws to be
executed, acknowledged or verified by two or more officers.
4.2 Chairman of the Board. The Board of Directors may, in each
year, by the affirmative vote of a majority of the entire Board, appoint from
the Directors a Chairman and a Vice Chairman. The Chairman of the Board, if any,
shall preside at all meetings of the shareholders and of the Board of Directors.
He may delegate his authority to preside at such meetings to any
<PAGE> 9
other director or to an officer of the Corporation. The Vice Chairman may act as
Chairman, in the absence of the Chairman.
4.3 President. The President shall be the chief executive officer
of the Corporation, and shall be responsible for the administration of the
Corporation, including general supervision of the policies of the Corporation
and general and active management of the financial affairs of the Corporation.
He shall have the authority to execute bonds, mortgages or other contracts,
agreements or instruments on behalf of the Corporation. If there is no Chairman
of the Board, or if the Chairman of the Board is absent and has not delegated
his authority to preside, the President shall preside at meetings of the
shareholders and, if he is a director, at meetings of the Board of Directors of
the Corporation. He may delegate his authority to preside at such meetings to
any other director or to an officer of the Corporation. The President shall have
the authority to institute or defend legal proceedings when the directors are
deadlocked.
4.4 Secretary. The Secretary shall keep minutes of all meetings
of the shareholders and Board of Directors, shall have charge of the minute
books, share records and seal of the Corporation, shall have the authority to
certify as to the corporate books and records, and shall perform such other
duties and have such other powers as may from time to time be delegated to him
by the President or the Board of Directors.
4.5 Treasurer. The Treasurer shall be charged with the management
of the financial affairs of the Corporation. He shall in general perform all of
the duties incident co the office of treasurer and such ocher duties as from
time to time may be assigned to him by the President or the Board of Directors.
4.6 Vice President. The Vice President, if any, shall perform
such duties and exercise such powers as the President or the Board of Directors
shall request or delegate and, unless the Board of Directors or the President
otherwise provides, shall perform such other duties as are generally performed
by vice presidents with equivalent restrictions, if any, on title. In the
absence of the President or in the event of his death or inability to act, the
Vice President shall perform the duties of the President, and when so acting,
shall have all the powers of and be subject to all the restrictions upon the
President; provided, however, that if there is more than one Vice President, any
Vice President shall have the authority to execute bonds, mortgages or other
contracts or agreement on behalf of the Corporation, subject to all the
restrictions upon the President relating to such functions, but all other duties
of the President shall be performed by the Vice President designated to perform
such duties at the Lime of his election, or in the absence of any designation,
then by the Vice President with the most seniority in office (or if more than
one Vice President is elected at the
<PAGE> 10
same meeting, by the Vice President first listed, in the resolution electing
them), and when so acting shall have all the powers of and be subject to all the
restrictions upon the President.
4.7 Appointment of Officers and Agents. The Board of Directors
or the Executive Committee may appoint one or more Vice Presidents and such
other officers, assistant officers and agents as the Board of Directors or the
Executive Committee may determine. Any such officers, assistant officers or
agents so appointed shall perform such duties as are set Forth in the Bylaws and
as the action appointing him provides, and, unless such action otherwise
provides, such appointed officers and assistant officers shall perform such
duties as are generally performed by elected officers or assistant officers
having the same title.
4.8 Term of Office. The term of office of all officers shall be
one year and until their respective successors are chosen and qualified,
subject, however, to the provisions for removal contained in the Articles of
Incorporation and by Bylaws.
4.9 Removal of Officers and Agents. Any officer, assistant
officer or agent may be removed at any time with or without cause by the vote of
a majority of the entire Board of Directors.
4.10 Vacancies. Any vacancy, however occurring, in any office may
be filled by the Board of Directors.
ARTICLE FIVE
SEAL
The seal of the Corporation shall be in such Form as the Board of
Directors may from time to time determine. In the event it is inconvenient to
use such a seal at any time, the words "Corporate Seal" or the word "Seal"
accompanying the signature of an officer signing For and on behalf Of the
Corporation shall be the seal of the Corporation. The seal shall be in the
custody of the Secretary and affixed by him on the share certificates and such
ocher papers as may be directed by law, by the Bylaws or by the Board of
Directors.
ARTICLE SIX
FISCAL YEAR
The fiscal year of the Corporation shall be fixed by the Board of
Directors.
<PAGE> 11
ARTICLE SEVEN
INDEMNIFICATION AND INSURANCE
7.1 Indemnification. Each director and officer (and his heirs,
executors and administrators) shall be Indemnified by the Corporation against
reasonable costs and expenses incurred by him in connection with any action,
suit or proceeding to which he may be made a party by reason of his being or
having been a director or officer of the Corporation if his standard of conduct
was such that he acted in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful, except in relation to any action, suits or proceedings in which he
has been adjudged liable because of negligence or misconduct, which shall be
deemed to include willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office. Upon a
determination that the director or officer has met the required standard of
conduct stated above and in the absence of an adjudication which expressly
absolves the director or officer of liability to the Corporation or its
shareholders for negligence and misconduct, within the meaning thereof as used
herein, or in the event of a settlement, each director and officer (and his
heirs, executors, and administrators) shall be indemnified by the Corporation
against payments made, including reasonable costs and expenses, provided that
such indemnity shall be conditioned upon the following: (a) the prior
determination chat the officer or director acted in a manner he reasonably
believed to be in the best interests of the Corporation and, with respect to any
criminal action Or proceeding, had no reasonable cause to believe his conduct
was unlawful, which determination shall be made by: (1) the board of Directors
by a majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding; (2) if suck a quorum is not obtainable or, even
if obtainable, a quorum OF disinterested directors so directs, by independent
legal counsel in a written opinion; or (3) by the affirmative vote of a majority
of the shares entitled to vote thereon; and (b) upon the prior determination
that the director or officer has no liability by reason of negligence or
misconduct, within the meaning thereof as used herein, which determination shall
be made by: (1) a resolution of two-thirds of those members of the Board of
Directors of the Corporation who are not involved in the action, suit or
proceeding; or (2) if a majority of the members of the Board of Directors of the
Corporation are involved in the action, suit or proceeding, by a written opinion
of independent counsel. Amounts paid in settlement shall not exceed costs, fees
and expenses which would have been reasonably incurred if the action, suit or
proceeding had been litigated to a conclusion. Such a determination by the Board
of Directors or by independent counsel, and the Payments of amounts by the
Corporation on the basis thereof shall not Prevent a shareholder from
challenging
<PAGE> 12
such indemnification by appropriate legal proceedings on the grounds that the
person indemnified was liable to the Corporation or its security holders by
reason of negligence or misconduct, within the meaning thereof as used herein.
The foregoing rights and indemnification shall not be exclusive of any other
rights to which the officers and directors may be entitled according to law.
7.2 Insurance. The Corporation may purchase and maintain
insurance at its expense, to protect itself and any such person against any such
liability, cost, payment or expense whether or not the Corporation would have
the power to indemnify such person against such liability.
ARTICLE EIGHT
MISCELLANEOUS
8.1 Reports to Shareholders. The books of account of the
Corporation shall be examined by an independent firm of public accountants at
the close of each annual fiscal period of the Corporation and at such if any, as
may be directed by the Board of Directors of the other times, corporation. A
report to the shareholders based upon each such annual examination shall be
mailed to each shareholder of the Corporation, of record on such date with
respect to each such report as may be determined by the Board of Directors, at
his address as the same appears on the books of the Corporation. Each such
report shall show the assets and Liabilities of the Corporation as of the close
of the annual period covered by the Report and the securities in which the funds
of the Corporation were then invested; such report shall also show the
Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual period covered by
the report and any amount paid during such period to any security dealer, legal
counsel, transfer agent, dividend disbursing agent, registrar or custodian
having a partner, officer or director who was also an officer or director of the
Corporation at any time during such period, and shall set forth such other
matters as the Board of Directors or such independent firm of public accountants
shall determine.
8.2 Custodianship. All securities owned by the Corporation and
all cash, including, without limiting the generality of the foregoing, the
proceeds from sales of securities owned by the Corporation and from the issuance
of shares of the capital stock of the Corporation, payments of Principal upon
securities owned by the Corporation and distributions in respect of securities
owned by the Corporation which at the time of payment are represented by the
distributing corporation to be capital distributions, shall be held by a
custodian which shall be a trust company or a bank of good standing, having a
capital, surplus and undivided profits aggregating not less than ten million
dollars ($10,000,000). The terms of custody of such securities and cash shall
include
<PAGE> 13
provisions to the effect that the custodian shall deliver securities owned by
the Corporation only (a) upon sales of such securities for the account of the
Corporation and receipt by the custodian of payment therefor, (b) when such
securities are called, redeemed or retired or otherwise become payable, (c) for
examination by any broker selling any such securities in accordance with street
delivery" custom, (d) in exchange for or upon conversion into other securities
alone or other securities and cash whether pursuant to any plan of merger,
consolidation, reorganization, recapitalization or readjustment, or otherwise,
(e) upon conversion of such securities pursuant to their terms into other
securities, upon exercise of subscription, purchase or other similar rights
represented BY such securities, (g) for the purpose of exchanging interim
receipts or temporary securities for definitive securities, (h) for the purpose
of redeeming in kind shares of the capital stock of the Corporation upon
delivery thereof to the Corporation, or (i) for other proper corporate purposes.
Such terms of custody shall also include provisions to the effect that the
custodian shall hold the securities and funds of the Corporation in a separate
account or accounts and shall have sole power to release and deliver any such
securities and draw upon any such account, that the custodian shall deliver or
pay our of any such account any of the securities or funds of the Corporation
only on receipt by such custodian of written instructions from two or more
persons authorized by the Board of Directors to give such instructions on behalf
of the Corporation provided, however, that any such delivery or payment shall be
made "for other proper corporate purposes" (referred to in (i) above and at the
end of the next succeeding sentence) only on receipt by such custodian of a
certified resolution of the Board of Directors authorizing such delivery or
payment and containing such details as may be required by the terms of custody.
Such terms of custody shall also include provisions to the effect that the
custodian shall deliver cash of the Corporation required by this Section 8.2 to
be deposited with the custodian only upon the purchase of securities for the
portfolio of the Corporation and the delivery of such securities to the
custodian, for the purchase or redemption of shares of the capital stock of the
Corporation, for the payment of interest, dividends, taxes, management or
supervisory fees or operating expenses, for payments in connection with the
conversion, exchange or surrender of securities owned by the Corporation, or for
other proper corporate purposes. Upon the resignation or inability to serve of
any such custodian the Corporation shall (a) use its best efforts to obtain a
successor custodian, (b) require the cash and securities of the Corporation held
by the custodian to be delivered directly to the successor custodian, and (c) in
the event that no successor custodian can be found, submit to the stockholders
of the Corporation, before permitting delivery of such cash and securities to
anyone other than a successor custodian, the question whether the Corporation
shall be dissolved or shall [unction without a custodian; provided, however,
that nothing herein contained shall prevent the termination of any agreement
between the Corporation and any such
<PAGE> 14
custodian by the affirmative vote of the holders of a majority of all the shares
of the capital stock of the Corporation at the time outstanding and entitled to
vote. Upon its resignation or inability to serve, the Custodian may deliver any
assets of the Corporation held by it to a qualified bank or trust company
selected by it, such assets to be held subject to the terms of custody which
governed such retiring custodian, pending action by the Corporation as set forth
in this Section 8.2.
8.3 Abstention of Interested Persons. Anything in the Articles Of
Incorporation of the Corporation to the contrary notwithstanding, in any case
where an officer or Director of the Corporation or of any investment adviser of
the Corporation, or a member of any committee of the Corporation, is also an
officer or director of another corporation and the Purchase or sale of the
securities issued by such other corporation is under consideration, the officer,
director or committee member concerned will abstain from participating in any
decision made on behalf of the Corporation to purchase or sell any securities
issued by such other 'Corporation.
8.4 Investments in Corporation's Securities by Certain Interested
Parties. Anything in the Articles of Incorporation to the contrary
notwithstanding, any sponsor, principal underwriter, investment adviser and
subadviser of the Corporation, the officers and directors of such sponsor,
principal underwriter, investment adviser or subadviser, and the officers and
directors of the Corporation shall be prohibited From taking long or short
positions in the securities issued by the Corporation; provided, however: (a)
such prohibition shall not prevent such sponsor or principal underwriter from
purchasing from the Corporation shares issued by the Corporation provided that
orders to Purchase from the Corporation are entered with the Corporation by Such
sponsor or principal underwriter upon receipt by such sponsor or principal
underwriter of purchase orders for the shares of the Corporation and provided
such purchases are not in excess of purchase orders received by such sponsor or
principal underwriter; (b) such prohibition shall not prevent such sponsor or
principal underwriter from maintaining a market for the securities issued by the
Corporation in the capacity of agent for the Corporation; and (c) such
prohibition shall not prevent the purchase From the Corporation of shares issued
by the Corporation by the officers or directors of the Corporation or of any
sponsor, principal underwriter, investment adviser or subadviser or any ocher
person or entity described in an appropriate part of the Investment Company Act
of 1940, as amended, or any rule or regulation thereunder at the price available
to the public at the moment of such purchase, less such deduction of sales
charges as may be permitted by the Investment Company Act of 1940 or any rules
or regulations issued thereunder.
8.5 Amendment of Investment Advisory Agreements. Anything in the
Articles of Incorporation to the contrary notwithstanding, any agreement between
any investment adviser of the Corporation and the
<PAGE> 15
Corporation shall not be amended, transferred, assigned, sold or in any manner
hypothecated or pledged without affirmative vote or written consent of the
holders of a majority of the outstanding voting securities of the Corporation;
provided, however, that this limitation shall not prevent completion without
shareholder approval of minor amendments to any agreement between any investment
adviser of the Corporation and the Corporation which may be required by federal
or state regulatory bodies. Furthermore, in the event of the cancellation or
expiration by 'its own terms of any agreement between any investment adviser of
the Corporation and the Corporation, no new agreement shall become effective
without the affirmative vote or written consent of the holders of a majority of
the outstanding voting securities of the Corporation (as used herein, the term
"vote of a majority of the outstanding voting securities" of the Corporation
shall have the meaning as defined in the Investment Company Act Of 1940, as
amended).
ARTICLE NINE
BRANCH OFFICERS -- BOOKS AND RECORDS
The Corporation shall have power to have an office or offices
and, subject to the provisions of the law of the State of Georgia, to keep the
books of the Corporation outside of said State, at such places as fray from
time to time be designated by the Board of Directors.
ARTICLE TEN
POLICIES, OF THE CORPORATION
The following restrictions shall apply only to the Growth
Portfolio common stock of the Fund.
It is the policy of the Corporation:
(a) Not to borrow money except that the right is reserved to
borrow from banks as a temporary measure for emergency purposes, provided that
such borrowings may not be in excess of the lesser of: (i) 10% of the
Corporation's total assets taken at cost; (10 5% of the value of the
Corporation's assets at the time the loan is made; or (110 33-1/37%' of the
value of the Corporation's total assets less liabilities other than such
borrowings. The Corporation will not pledge, mortgage or hypothecate its assets
taken at market value to an extent greater than the lesser of 10% of the value
of its net assets or 15% of the value of its total assets taken at cost.
(b) Not to concentrate its investments in industries. The
Corporation will not invest more than 25% of the value of its assets in any one
industry at any time.
(c) Not to purchase securities on margin, but the Corporation may
obtain such short-term credits as may be necessary for the clearance of
Purchases and sales of securities.
<PAGE> 16
(d) Not to make short sales of securities, unless at the time of
such sale, the Corporation owns, or has the right to acquire as the result Of
the ownership of convertible or exchangeable securities, an equal amount .Of
such securities, and it will retain such securities so long as it is in a short
position as to them. In no event will the Corporation make short sales of
securities in such manner that the value of its net assets used to cover such
sales would exceed 15% of the value of its net assets.
(e) Not to participate on a joint or joint and several basis in
any trading account in securities.
(f) Not to act as underwriter of securities of other issuers. It
is the policy of the Corporation to invest in securities which are subject to
legal or contractual restrictions on resale or are otherwise not readily
saleable to the extent deemed appropriate in view of the investment objectives
of the Corporation. However, the Corporation will not invest more than 5% of the
value of its assets in such securities.
(g) Not to purchase the securities of any issuer, except
securities of the United States Government or any instrumentality thereof, if
after such purchase, more than 5% of the value of the Corporation's assets would
be invested in the securities of such issuer.
(h) Not to purchase securities of any issuer if, as a result of
such purchase, the Corporation would thereupon hold more than 10% of outstanding
securities, or more than 10% of the voting securities, of such issuer.
(i) Not to purchase the securities of any company which has been
in continuous operation for less than 3 years (including the operations of
predecessor companies) if such purchase at the time thereof would cause more
than 5% of the total assets taken at market value of the Corporation to be
invested in securities of all such companies taken at cost.
(j) Not to purchase or sell. any securities (other than stock
issued by the Corporation) from or- to any of the following persons acting as
principals: (i) any officer or director of the Corporation, (ii) any partnership
of which any officer or director of the Corporation 'is a member, (iii) any
corporation or association of which any officer or director of the Corporation
is an officer, director or trustee, (iv) any person or organization furnishing
managerial or supervisory services to the Corporation, (v) any officer,
director, partner or trustee of, or person owning of
<PAGE> 17
record 10% or more of the stock of, any person or organization furnishing such
managerial or supervisory services, (vi) any partnership of which any officer,
director, partner or trustee of, or person owning of record 10% or more of the
stock of, any person or organization furnishing; such managerial or supervisory
services, is a member, or (vii) any corporation or association of which any
officer, director, partner or trustee of, or person owning of record 10% or more
of the stock of, any person or organization furnishing such managerial. or
supervisory services, is an officer, director or trustee.
(k) Not to purchase securities of any issuer if any officer or
director of the Corporation, any person or organization furnishing managerial or
supervisory services to the Corporation, or any officer, director, partner or
trustee of any person or organization furnishing such Managerial or supervisory
services owns beneficially more than 1/2 or 1% of the outstanding securities of
such issuer and such persons or organizations so owning more than 1/2 of 1% of
such securities together own beneficially more than 5% of such securities.
(l) Not to buy and sell real estate.
(m) Not to purchase or sell commodities or commodity contracts.
(n) Not to make loans except by the purchase of a portion or an
issue of bonds or other obligations of types commonly offered privately and
purchased by financial institutions. The Corporation will purchase such debt
securities to the extent deemed appropriate in view of the investment
objectives, but in no event will the Corporation invest more than 5% or the
value Of its assets in securities which are subject to legal or contractual
restrictions on resale or are otherwise not readily saleable.
(o) Not to invest in companies for the purpose of exercising
control or management thereof.
(p) Not to purchase the securities of any other investment
company except in the open market in a transaction involving no commission or
profit to a sponsor or a dealer (other than the customary brokers commission) or
as a part of a merger, consolidation or acquisition.
ARTICLE ELEVEN
AMENDMENT OF BYLAWS
Except as provided in Sections 2.6, 3.5 and Article Eleven of the
Bylaws, the Bylaws Of the Corporation may be altered, amended, added to or
repealed by the shareholders or by majority vote of the entire Board of
Directors; but any such alteration, amendment, addition or repeal of the Bylaws
by action of the Board of Directors may be altered or repealed by the
Stockholders. After the initial issue of any shares of capital stock of the
Corporation, Sections 8.2 and 8.3 and Article Eleven of the Bylaws may be
altered, amended or repealed only upon the affirmative vote or the holders of
the majority of all the shares of the capital stock of the Corporation at the
time outstanding and entitled to vote. Article Ten of the Bylaws may be altered,
amended or repealed only upon the affirmative vote of the holders of the
majority of all the shares of the Growth Portfolio common stock of the
Corporation at the time outstanding and entitled to vote.
ARTICLE TWELVE
ADVISORY BOARD
12.1 Tenure and Duties. There shall be an Advisory Board
consisting of members appointed by the Board of Directors to serve for terms
established by the Board of Directors at the pleasure of the Directors. The
duties of the Advisory Board shall be to make advisory recommendations as to the
investments of the Corporation, provided, always, however, that members of the
Advisory Board may not serve the Corporation in any other capacity and that the
Advisory Board shall not have the power or authority to determine that any
security or other investment shall be purchased or sold by the Corporation or
that the Corporation shall do or refrain from doing any other act or thing.
12.2 Other Provisions. All other provisions with respect to the
operation of the Advisory Board shall be as set forth by appropriate resolutions
of the Board of Directors provided that the Directors may take no action if the
effect of such action would be to give the Advisory Board any power or authority
not permitted by the immediately-preceding section.
<PAGE> 1
EXHIBIT (B)(II)
AMENDMENT TO BY-LAWS
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
The following paragraph supersedes Section 3.2, Number of Directors;
Conduct of Meetings of Board of Directors of the By-Laws of The Enterprise Group
of Funds, Inc.:
The Board of Directors shall consist seven directors, each of whom
shall be elected at an annual meeting of the shareholders, to serve until the
next succeeding annual meeting and until his successor is elected and qualified,
or until his earlier death, resignation or removal. Directors need not be
shareholders. A majority of said directors shall constitute a quorum for the
transaction of business. Except as otherwise provided in the Bylaws, all
resolutions adopted and all business transacted by the Board of Directors shall
require the affirmative vote of a majority of the directors present at a meeting
at which a quorum is present. The Chairman of the Board or, if there is no
Chairman of the Board and if the President is a director, the President shall
preside at all meetings of the Board of Directors; provided, however, that each
of the Chairman of the Board or the President may delegate his authority to
preside at Board of Directors meetings Pursuant to section 4.2 or 4.3,
respectively, of the Bylaws. If there is no Chairman of the Board and if the
President is not a director, the Board of Directors shall select a director as
chairman for each meeting.
<PAGE> 1
EXHIBIT (D)(XIV)
MULTI-CAP FUND
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
FUND MANAGER'S AGREEMENT
THIS AGREEMENT, made the 30th day of June, 1999, is among The
Enterprise Group of Funds, Inc. (the "Fund"), a Maryland corporation, Enterprise
Capital Management, Inc., a Georgia corporation (hereinafter referred to as the
"Adviser"), and Fred Alger Management, INC., a New York Corporation,
(hereinafter referred to as the "Fund Manager").
BACKGROUND INFORMATION
(A) The Adviser has entered into an Investment Adviser's Agreement with
the Fund ("Investment Adviser's Agreement"). Pursuant to the Investment
Adviser's Agreement, the Adviser has agreed to render investment advisory and
certain other management services to all of the portfolios of the Fund, and the
Fund has agreed to employ the Adviser to render such services and to pay to the
Adviser certain fees therefore. The Investment Adviser's Agreement recognizes
that the Adviser may enter into agreements with other investment advisers who
will serve as fund managers to the Portfolios.
(B) The parties hereto wish to enter into an agreement whereby the Fund
Manager will provide to the Multi-Cap Fund of the Fund (the "Multi-Cap Fund")
securities investment advisory services for the Multi-Cap Fund.
WITNESSETH THAT:
In consideration of the mutual covenants herein contained, the Fund,
Adviser and the Fund Manager agree as follows:
(1) The Fund and Adviser hereby employ the Fund Manager to
render certain investment advisory services to the Multi-Cap Fund, as set forth
herein. The Fund Manager hereby accepts such employment and agrees to perform
such services on the terms herein set forth, and for the compensation herein
provided.
(2) The Fund Manager shall furnish the Multi-Cap Fund advice
with respect to the investment and reinvestment of the assets of the Multi-Cap
Fund, or such portion of the assets of the Multi-Cap Fund as the Adviser shall
specify from time to time, in accordance with the investment objectives,
restrictions and limitations applicable to the Multi-Cap Fund which are set
forth in the Fund's most recent Registration Statement.
(3) The Fund Manager shall perform a monthly reconciliation of
the Multi-Cap Fund to the holdings report provided by the Fund's custodian and
bring any material or significant variances regarding holdings or valuations to
the attention of the Adviser.
(4) The Fund Manager shall for all purposes herein be deemed
to be an independent contractor. The Fund Manager has no authority to act for or
represent the Fund or the Portfolios in any way except to direct securities
transactions pursuant to its investment advice hereunder. The Fund Manager is
not an agent of the Fund or the Portfolios.
<PAGE> 2
(5) It is understood that the Fund Manager does not, by this
Agreement, undertake to assume or pay any costs or expenses of the Fund or the
Portfolios.
(6) (a) The Adviser agrees to pay the Fund Manager for its
services to be furnished under this Agreement, with respect to each calendar
month after the effective date of this Agreement, on the twentieth (20th) day
after the close of each calendar month, a sum equal to 0.03333 of 1% of the
average of the daily closing net asset value of the Multi-Cap Fund managed by
the Fund Manager during such month (that is, 0.40 of 1% per year) of assets
under management.
(6) (b) The payment of all fees provided for hereunder shall
be prorated and reduced for sums payable for a period less than a full month in
the event of termination of this Agreement on a day that is not the end of a
calendar month.
(6) (c) For the purposes of this Paragraph 6, the daily
closing net asset values of the Portfolio shall be computed in the manner
specified in the Registration Statement for the computation of the value of such
net assets in connection with the determination of the net asset value of the
Multi-Cap Fund shares.
(7) The services of the Fund Manager hereunder are not to be
deemed to be exclusive, and the Fund Manager is free to render services to
others and to engage in other activities so long as its services hereunder are
not impaired thereby. Without in any way relieving the Fund Manager of its
responsibilities hereunder, it is agreed that the Fund Manager may employ others
to furnish factual information, economic advice and/or research, and investment
recommendations, upon which its investment advice and service is furnished
hereunder.
(8) In the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or reckless disregard of
its obligations and duties hereunder, the Fund Manager shall not be liable to
the Fund, the Multi-Cap Fund or the Adviser or to any shareholder or
shareholders of the Fund, the Multi-Cap Fund or the Adviser for any mistake of
judgment, act or omission in the course of, or connected with, the services to
be rendered by the Fund Manager hereunder.
(9) The Fund Manager will take necessary steps to prevent the
investment professionals of the Fund Manager who are responsible for investing
assets of the Multi-Cap Fund from taking, at any time, a short position in any
shares of any holdings of the Multi-Cap Fund for any accounts in which such
individuals have a beneficial interest, excluding short positions, including
without limitation, short against-the-box positions, effected for tax reasons.
The Fund Manager also will cooperate with the Fund in adopting a written policy
prohibiting insider trading with respect to Multi-Cap Fund transactions insofar
as such transactions may relate to the Fund Manager.
(10) In connection with the management of the investment and reinvestment of the
assets of the Multi-Cap Fund, the Fund Manager is authorized to select the
brokers or dealers that will execute purchase and sale transactions for the
Multi-Cap Fund, and is directed to use its best efforts to obtain the best
available price and most favorable execution with respect to such purchases and
sales of portfolio securities for the Multi-Cap Fund. Subject to this primary
requirement, and maintaining as its first consideration the benefits for the
Multi-Cap Fund and its shareholders, the Fund Manager shall have the right,
subject to the approval of the Board of Directors of the Fund and of the
Adviser, to follow a policy of selecting brokers and dealers who furnish
statistical research and other services to the Multi-
<PAGE> 3
Cap Fund, the Adviser, or the Fund Manager and, subject to the Conduct Rules of
the National Association of Securities Dealers, Inc., to select brokers and
dealers who sell shares of the Portfolios.
(11) The Fund may terminate this Agreement by thirty (30) days
written notice to the Adviser and the Fund Manager at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors, or by vote of
a majority of its outstanding voting securities. The Adviser may terminate this
Agreement by thirty (30) days written notice to the Fund Manager and the Fund
Manager may terminate this Agreement by thirty (30) days written notice to the
Adviser, without the payment of any penalty. This Agreement shall immediately
terminate in the event of its assignment, unless an order is issued by the
Securities and Exchange Commission conditionally or unconditionally exempting
such assignment from the provision of Section 15 (a) of the Investment Company
Act of 1940, in which event this Agreement shall remain in full force and
effect.
(12) Subject to prior termination as provided above, this
Agreement shall continue in force from the date of execution until December 31,
1999 and from year to year thereafter if its continuance after said date: (1) is
specifically approved on or before said date and at least annually thereafter by
vote of the Board of Directors of the Fund, including a majority of those
Directors who are not parties to this Agreement of interested persons of any
such party, or by vote of a majority of the outstanding voting securities of the
Fund, and (2) is specifically approved at least annually by the vote of a
majority of Directors of the Fund who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
(13) The Adviser shall indemnify and hold harmless the Fund
Manager, its officers and directors and each person, if any, who controls the
Fund Manager within the meaning of Section 15 of the Securities Act of 1933 (any
and all such persons shall be referred to as "Indemnified Party"), against any
loss, liability, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages or expense and
reasonable counsel fees incurred in connection therewith), arising by reason of
any matter to which this Fund Manager's Agreement relates. However, in no case
(i) is this indemnity to be deemed to protect any particular Indemnified Party
against any liability to which such Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under this Fund Manager's Agreement or (ii) is the Adviser to be
liable under this indemnity with respect to any claim made against any
particular Indemnified Party unless such Indemnified Party shall have notified
the Adviser in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Fund Manager or such controlling persons.
The Fund Manager shall indemnify and hold harmless the Adviser
and each of its directors and officers and each person if any who controls the
Adviser within the meaning of Section 15 of the Securities Act of 1933, against
any loss, liability, damage or expense described in the foregoing indemnity, but
only with respect to the Fund Manager's willful misfeasance, bad faith or gross
negligence in the performance of its duties under this Fund Manager's Agreement.
In case any action shall be brought against the Adviser or any person so
indemnified, in respect of which indemnity may be sought against the Fund
Manager, the Fund Manager shall have the rights and duties given to the Adviser,
and the Adviser and each person so indemnified shall have the rights and duties
given to the Fund Manager by the provisions of subsection (i) and (ii) of this
Paragraph 13.
<PAGE> 4
(14) Except as otherwise provided in Paragraph 13 hereof and
as may be required under applicable federal law, this Fund Manager's Agreement
shall be governed by the laws of the State of Georgia.
(15) The Fund Manager agrees to notify the parties within a
reasonable period of time regarding a material change in the membership of the
Fund Manager.
(16) The terms "vote of a majority of the outstanding voting
securities," "assignment" and "interested persons," when used herein, shall have
the respective meanings specified in the Investment Company Act of 1940 as now
in effect or as hereafter amended.
(17) Unless otherwise permitted, all notices, instructions and
advice with respect to security transactions or any other matters contemplated
by this Agreement shall be deemed duly given when received in writing:
<TABLE>
<S> <C>
by the Fund Manager: Fred Alger Management, Inc.
1 World Trade Center, Suite 9333
New York, NY 10048
by the Adviser: Enterprise Capital Management, Inc.
3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326-1022
by the Fund: The Enterprise Group of Funds, Inc. c/o Enterprise Capital Management, Inc.
3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326-1022
</TABLE>
or by such other person or persons at such address or addresses as shall be
specified by the applicable party, in each case, in a notice similarly given.
Each party may rely upon any notice or other communication from the other
reasonably believed by it to be genuine.
(18) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall constitute one and the same agreement.
(19) This Agreement constitutes the entire agreement between
the Fund Manager, the Adviser and the Fund relating to the Multi-Cap Fund.
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized officers and their corporate seals hereunder duly
affixed and attested, as of the date first above written.
THE ENTERPRISE GROUP OF FUNDS, INC.
(SEAL)
ATTEST: /s/ CATHERINE R. MCCLELLAN By: /s/ VICTOR UGOLYN
--------------------------- --------------------------------------
Secretary Victor Ugolyn, Chairman, President
and Chief Executive Officer
ENTERPRISE CAPITAL MANAGEMENT, INC.
(SEAL)
ATTEST: /s/ CATHERINE R. MCCLELLAN By: /s/ VICTOR UGOLYN
--------------------------- --------------------------------------
Secretary Victor Ugolyn, Chairman, President
and Chief Executive Officer
FRED ALGER MANAGEMENT, INC.
(SEAL)
ATTEST: /s/ MARY MARSDEN-COCHRAN By: /s/ DAVID ALGER
--------------------------- --------------------------------------
Secretary
Name: David Alger
------------------------------------
Title: CEO
-----------------------------------
<PAGE> 1
EXHIBIT (D)(XV)
INTERNET FUND
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
FUND MANAGER'S AGREEMENT
THIS AGREEMENT, made the 30 day of June, 1999, is among The Enterprise
Group of Funds, Inc. (the "Fund"), a Maryland corporation, Enterprise Capital
Management, Inc., a Georgia corporation (hereinafter referred to as the
"Adviser"), and Fred Alger Management, Inc., a New York corporation,
(hereinafter referred to as the "Fund Manager").
BACKGROUND INFORMATION
(A) The Adviser has entered into an Investment Adviser's Agreement with
the Fund ("Investment Adviser's Agreement"). Pursuant to the Investment
Adviser's Agreement, the Adviser has agreed to render investment advisory and
certain other management services to all of the portfolios of the Fund, and the
Fund has agreed to employ the Adviser to render such services and to pay to the
Adviser certain fees therefore. The Investment Adviser's Agreement recognizes
that the Adviser may enter into agreements with other investment advisers who
will serve as fund managers to the Portfolios.
(B) The parties hereto wish to enter into an agreement whereby the Fund
Manager will provide to the Internet Fund of the Fund (the "Internet Fund")
securities investment advisory services for the Internet Fund.
WITNESSETH THAT:
In consideration of the mutual covenants herein contained, the Fund,
Adviser and the Fund Manager agree as follows:
(1) The Fund and Adviser hereby employ the Fund Manager to
render certain investment advisory services to the Internet Fund, as set forth
herein. The Fund Manager hereby accepts such employment and agrees to perform
such services on the terms herein set forth, and for the compensation herein
provided.
(2) The Fund Manager shall furnish the Internet Fund advice
with respect to the investment and reinvestment of the assets of the Internet
Fund, or such portion of the assets of the Internet Fund as the Adviser shall
specify from time to time, in accordance with the investment objectives,
restrictions and limitations applicable to the Internet Fund which are set forth
in the Fund's most recent Registration Statement.
(3) The Fund Manager shall perform a monthly reconciliation of
the Internet Fund to the holdings report provided by the Fund's custodian and
bring any material or significant variances regarding holdings or valuations to
the attention of the Adviser.
(4) The Fund Manager shall for all purposes herein be deemed
to be an independent contractor. The Fund Manager has no authority to act for or
represent the Fund or the Portfolios in any way except to direct securities
transactions pursuant to its investment advice hereunder. The Fund Manager is
not an agent of the Fund or the Portfolios.
<PAGE> 2
(5) It is understood that the Fund Manager does not, by this
Agreement, undertake to assume or pay any costs or expenses of the Fund or the
Portfolios.
(6) (a) The Adviser agrees to pay the Fund Manager for its
services to be furnished under this Agreement, with respect to each calendar
month after the effective date of this Agreement, on the twentieth (20th) day
after the close of each calendar month, a sum equal to 0.03333 of 1% of the
average of the daily closing net asset value of the Internet Fund managed by the
Fund Manager during such month (that is, 0.40 of 1% per year) of assets under
management.
(6) (b) The payment of all fees provided for hereunder shall
be prorated and reduced for sums payable for a period less than a full month in
the event of termination of this Agreement on a day that is not the end of a
calendar month.
(6) (c) For the purposes of this Paragraph 6, the daily
closing net asset values of the Portfolio shall be computed in the manner
specified in the Registration Statement for the computation of the value of such
net assets in connection with the determination of the net asset value of the
Internet Fund shares.
(7) The services of the Fund Manager hereunder are deemed to
be exclusive as to providing internet advisory management for a period of two
years from date of the Internet Fund's effectiveness. The exclusive relationship
shall be extended for a third year, provided that the Internet Fund's assets
under management reach $250,000,000 as of the second anniversary of the
effectiveness of the Internet Fund. The Fund Manager is free to render services
to others and to engage in other activities so long as its services hereunder
are not impaired thereby. Without in any way relieving the Fund Manager of its
responsibilities hereunder, it is agreed that the Fund Manager may employ others
to furnish factual information, economic advice and/or research, and investment
recommendations, upon which its investment advice and service is furnished
hereunder.
(8) In the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or reckless disregard of
its obligations and duties hereunder, the Fund Manager shall not be liable to
the Fund, the Internet Fund or the Adviser or to any shareholder or shareholders
of the Fund, the Internet Fund or the Adviser for any mistake of judgment, act
or omission in the course of, or connected with, the services to be rendered by
the Fund Manager hereunder.
(9) The Fund Manager will take necessary steps to prevent the
investment professionals of the Fund Manager who are responsible for investing
assets of the Internet Fund from taking, at any time, a short position in any
shares of any holdings of the Internet Fund for any accounts in which such
individuals have a beneficial interest, excluding short positions, including
without limitation, short against-the-box positions, effected for tax reasons.
The Fund Manager also will cooperate with the Fund in adopting a written policy
prohibiting insider trading with respect to Internet Fund transactions insofar
as such transactions may relate to the Fund Manager.
(10) In connection with the management of the investment and
reinvestment of the assets of the Internet Fund, the Fund Manager is authorized
to select the brokers or dealers that will execute purchase and sale
transactions for the Internet Fund, and is directed to use its best efforts to
obtain the best available price and most favorable execution with respect to
such purchases and sales of portfolio securities for the Internet Fund. Subject
to this primary requirement, and maintaining as its first consideration the
benefits for the Internet Fund and its shareholders, the Fund Manager shall have
the
<PAGE> 3
right, subject to the approval of the Board of Directors of the Fund and of the
Adviser, to follow a policy of selecting brokers and dealers who furnish
statistical research and other services to the Internet Fund, the Adviser, or
the Fund Manager and, subject to the Conduct Rules of the National Association
of Securities Dealers, Inc., to select brokers and dealers who sell shares of
the Portfolios.
(11) The Fund may terminate this Agreement by thirty (30) days
written notice to the Adviser and the Fund Manager at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors, or by vote of
a majority of its outstanding voting securities. The Adviser may terminate this
Agreement by thirty (30) days written notice to the Fund Manager and the Fund
Manager may terminate this Agreement by thirty (30) days written notice to the
Adviser, without the payment of any penalty. This Agreement shall immediately
terminate in the event of its assignment, unless an order is issued by the
Securities and Exchange Commission conditionally or unconditionally exempting
such assignment from the provision of Section 15 (a) of the Investment Company
Act of 1940, in which event this Agreement shall remain in full force and
effect.
(12) Subject to prior termination as provided above, this
Agreement shall continue in force from the date of execution until December 31,
1999 and from year to year thereafter if its continuance after said date: (1) is
specifically approved on or before said date and at least annually thereafter by
vote of the Board of Directors of the Fund, including a majority of those
Directors who are not parties to this Agreement of interested persons of any
such party, or by vote of a majority of the outstanding voting securities of the
Fund, and (2) is specifically approved at least annually by the vote of a
majority of Directors of the Fund who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
(13) The Adviser shall indemnify and hold harmless the Fund
Manager, its officers and directors and each person, if any, who controls the
Fund Manager within the meaning of Section 15 of the Securities Act of 1933 (any
and all such persons shall be referred to as "Indemnified Party"), against any
loss, liability, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages or expense and
reasonable counsel fees incurred in connection therewith), arising by reason of
any matter to which this Fund Manager's Agreement relates. However, in no case
(i) is this indemnity to be deemed to protect any particular Indemnified Party
against any liability to which such Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under this Fund Manager's Agreement or (ii) is the Adviser to be
liable under this indemnity with respect to any claim made against any
particular Indemnified Party unless such Indemnified Party shall have notified
the Adviser in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Fund Manager or such controlling persons.
The Fund Manager shall indemnify and hold harmless
the Adviser and each of its directors and officers and each person if any who
controls the Adviser within the meaning of Section 15 of the Securities Act of
1933, against any loss, liability, damage or expense described in the foregoing
indemnity, but only with respect to the Fund Manager's willful misfeasance, bad
faith or gross negligence in the performance of its duties under this Fund
Manager's Agreement. In case any action shall be brought against the Adviser or
any person so indemnified, in respect of which indemnity may be sought against
the Fund Manager, the Fund Manager shall have the rights and duties given to the
Adviser, and the Adviser and each person so indemnified shall have the rights
and duties given to the Fund Manager by the provisions of subsection (i) and
(ii) of this Paragraph 13.
<PAGE> 4
(14) Except as otherwise provided in Paragraph 13 hereof and
as may be required under applicable federal law, this Fund Manager's Agreement
shall be governed by the laws of the State of Georgia.
(15) The Fund Manager agrees to notify the parties within a
reasonable period of time regarding a material change in the membership of the
Fund Manager.
(16) The terms "vote of a majority of the outstanding voting
securities," "assignment" and "interested persons," when used herein, shall have
the respective meanings specified in the Investment Company Act of 1940 as now
in effect or as hereafter amended.
(17) Unless otherwise permitted, all notices, instructions and
advice with respect to security transactions or any other matters contemplated
by this Agreement shall be deemed duly given when received in writing:
by the Fund Manager: Fred Alger Management, Inc.
1 World Trade Center, Suite 9333
New York, NY 10048
by the Adviser: Enterprise Capital Management, Inc.
3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326-1022
by the Fund: The Enterprise Group of Funds, Inc.
c/o Enterprise
Capital Management, Inc.
3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326-1022
or by such other person or persons at such address or addresses as shall be
specified by the applicable party, in each case, in a notice similarly given.
Each party may rely upon any notice or other communication from the other
reasonably believed by it to be genuine.
(18) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall constitute one and the same agreement.
(19) This Agreement constitutes the entire agreement between
the Fund Manager, the Adviser and the Fund relating to the Internet Fund.
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized officers and their corporate seals hereunder duly
affixed and attested, as of the date first above written.
THE ENTERPRISE GROUP OF FUNDS, INC.
(SEAL)
ATTEST: /s/ CATHERINE R. McCLELLAN By: /s/ VICTOR UGOLYN
--------------------------- ------------------------------------
Secretary Victor Ugolyn, Chairman, President
and Chief Executive Officer
ENTERPRISE CAPITAL MANAGEMENT, INC.
(SEAL)
ATTEST: /s/ CATHERINE R. McCLELLAN By: /s/ VICTOR UGOLYN
--------------------------- ------------------------------------
Secretary Victor Ugolyn, Chairman, President
and Chief Executive Officer
FRED ALGER MANAGEMENT, INC.
(SEAL)
ATTEST: /s/ MARY MARSDEN-COCHRAN By: /s/ DAVID D. ALGER
--------------------------- ------------------------------------
Secretary
Name: David D. Alger
----------------------------------
Title: CEO
---------------------------------
<PAGE> 1
Exhibit (d)(xvi)
BALANCED FUND
OF
THE ENTERPRISE GROUP OF FUNDS, INC.
FUND MANAGER'S AGREEMENT
THIS AGREEMENT, made the 30th day of June, 1999, is among The
Enterprise Group of Funds, Inc. (the "Fund"), a Maryland corporation, Enterprise
Capital Management, Inc., a Georgia corporation (hereinafter referred to as the
"Adviser"), and Montag & Caldwell, Inc., a Georgia corporation, (hereinafter
referred to as the "Fund Manager").
BACKGROUND INFORMATION
(A) The Adviser has entered into an Investment Adviser's Agreement with
the Fund ("Investment Adviser's Agreement"). Pursuant to the Investment
Adviser's Agreement, the Adviser has agreed to render investment advisory and
certain other management services to all of the portfolios of the Fund, and the
Fund has agreed to employ the Adviser to render such services and to pay to the
Adviser certain fees therefore. The Investment Adviser's Agreement recognizes
that the Adviser may enter into agreements with other investment advisers who
will serve as fund managers to the Portfolios.
(B) The parties hereto wish to enter into an agreement whereby the Fund
Manager will provide to the Balanced Fund of the Fund (the "Balanced Fund")
securities investment advisory services for the Balanced Fund.
WITNESSETH THAT:
In consideration of the mutual covenants herein contained, the Fund,
Adviser and the Fund Manager agree as follows:
(1) The Fund and Adviser hereby employ the Fund Manager to
render certain investment advisory services to the Balanced Fund, as set forth
herein. The Fund Manager hereby accepts such employment and agrees to perform
such services on the terms herein set forth, and for the compensation herein
provided.
(2) The Fund Manager shall furnish the Balanced Fund advice
with respect to the investment and reinvestment of the assets of the Balanced
Fund, or such portion of the assets of the Balanced Fund as the Adviser shall
specify from time to time, in accordance with the investment objectives,
restrictions and limitations applicable to the Balanced Fund which are set forth
in the Fund's most recent Registration Statement.
(3) The Fund Manager shall perform a monthly reconciliation of
the Balanced Fund to the holdings report provided by the Fund's custodian and
bring any material or significant variances regarding holdings or valuations to
the attention of the Adviser.
(4) The Fund Manager shall for all purposes herein be deemed
to be an independent contractor. The Fund Manager has no authority to act for or
represent the Fund or the Portfolios in any way except to direct securities
transactions pursuant to its investment advice hereunder. The Fund Manager is
not an agent of the Fund or the Portfolios.
<PAGE> 2
(5) It is understood that the Fund Manager does not, by this
Agreement, undertake to assume or pay any costs or expenses of the Fund or the
Portfolios.
(6) (a) The Adviser agrees to pay the Fund Manager for its
services to be furnished under this Agreement, with respect to each calendar
month after the effective date of this Agreement, on the twentieth (20th) day
after the close of each calendar month, a sum equal to 0.025 of 1% of the
average of the daily closing net asset value of the Balanced Fund managed by the
Fund Manager during such month (that is, 0.30 of 1% per year) for the first
$100,000,000 of assets under management; and a sum equal to 0.0208 of 1% of the
average of the daily closing net asset value of the Balanced Fund during such
month (that is, 0.25 of 1% per year) for the next $100,000,000 of assets under
management (up to $200,000,000); and a sum equal to .0167 of 1% of the average
of the daily closing net asset value of the Balanced Fund during such month
(that is .2 of 1% per year) for assets under management over $200,000,000.
(6) (b) The payment of all fees provided for hereunder shall
be prorated and reduced for sums payable for a period less than a full month in
the event of termination of this Agreement on a day that is not the end of a
calendar month.
(6) (c) For the purposes of this Paragraph 6, the daily
closing net asset values of the Portfolio shall be computed in the manner
specified in the Registration Statement for the computation of the value of such
net assets in connection with the determination of the net asset value of the
Balanced Fund shares.
(7) The services of the Fund Manager hereunder are not to be
deemed to be exclusive, and the Fund Manager is free to render services to
others and to engage in other activities so long as its services hereunder are
not impaired thereby. Without in any way relieving the Fund Manager of its
responsibilities hereunder, it is agreed that the Fund Manager may employ others
to furnish factual information, economic advice and/or research, and investment
recommendations, upon which its investment advice and service is furnished
hereunder.
(8) In the absence of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or reckless disregard of
its obligations and duties hereunder, the Fund Manager shall not be liable to
the Fund, the Balanced Fund or the Adviser or to any shareholder or shareholders
of the Fund, the Balanced Fund or the Adviser for any mistake of judgment, act
or omission in the course of, or connected with, the services to be rendered by
the Fund Manager hereunder.
(9) The Fund Manager will take necessary steps to prevent the
investment professionals of the Fund Manager who are responsible for investing
assets of the Balanced Fund from taking, at any time, a short position in any
shares of any holdings of the Balanced Fund for any accounts in which such
individuals have a beneficial interest, excluding short positions, including
without limitation, short against-the-box positions, effected for tax reasons.
The Fund Manager also will cooperate with the Fund in adopting a written policy
prohibiting insider trading with respect to Balanced Fund transactions insofar
as such transactions may relate to the Fund Manager.
(10) In connection with the management of the investment and
reinvestment of the assets of the Balanced Fund, the Fund Manager is authorized
to select the brokers or dealers that will execute purchase and sale
transactions for the Balanced Fund, and is directed to use its best efforts to
obtain the best available price and most favorable execution with respect to
such purchases and sales of
<PAGE> 3
portfolio securities for the Balanced Fund. Subject to this primary requirement,
and maintaining as its first consideration the benefits for the Balanced Fund
and its shareholders, the Fund Manager shall have the right, subject to the
approval of the Board of Directors of the Fund and of the Adviser, to follow a
policy of selecting brokers and dealers who furnish statistical research and
other services to the Balanced Fund, the Adviser, or the Fund Manager and,
subject to the Conduct Rules of the National Association of Securities Dealers,
Inc., to select brokers and dealers who sell shares of the Portfolios.
(11) The Fund may terminate this Agreement by thirty (30) days
written notice to the Adviser and the Fund Manager at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors, or by vote of
a majority of its outstanding voting securities. The Adviser may terminate this
Agreement by thirty (30) days written notice to the Fund Manager and the Fund
Manager may terminate this Agreement by thirty (30) days written notice to the
Adviser, without the payment of any penalty. This Agreement shall immediately
terminate in the event of its assignment, unless an order is issued by the
Securities and Exchange Commission conditionally or unconditionally exempting
such assignment from the provision of Section 15 (a) of the Investment Company
Act of 1940, in which event this Agreement shall remain in full force and
effect.
(12) Subject to prior termination as provided above, this
Agreement shall continue in force from the date of execution until December 31,
1999 and from year to year thereafter if its continuance after said date: (1) is
specifically approved on or before said date and at least annually thereafter by
vote of the Board of Directors of the Fund, including a majority of those
Directors who are not parties to this Agreement of interested persons of any
such party, or by vote of a majority of the outstanding voting securities of the
Fund, and (2) is specifically approved at least annually by the vote of a
majority of Directors of the Fund who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
(13) The Adviser shall indemnify and hold harmless the Fund
Manager, its officers and directors and each person, if any, who controls the
Fund Manager within the meaning of Section 15 of the Securities Act of 1933 (any
and all such persons shall be referred to as "Indemnified Party"), against any
loss, liability, damage or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, damages or expense and
reasonable counsel fees incurred in connection therewith), arising by reason of
any matter to which this Fund Manager's Agreement relates. However, in no case
(i) is this indemnity to be deemed to protect any particular Indemnified Party
against any liability to which such Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under this Fund Manager's Agreement or (ii) is the Adviser to be
liable under this indemnity with respect to any claim made against any
particular Indemnified Party unless such Indemnified Party shall have notified
the Adviser in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Fund Manager or such controlling persons.
The Fund Manager shall indemnify and hold harmless the Adviser
and each of its directors and officers and each person if any who controls the
Adviser within the meaning of Section 15 of the Securities Act of 1933, against
any loss, liability, damage or expense described in the foregoing indemnity, but
only with respect to the Fund Manager's willful misfeasance, bad faith or gross
negligence in the performance of its duties under this Fund Manager's Agreement.
In case any action shall be brought against the Adviser or any person so
indemnified, in respect of which indemnity may be sought against the Fund
Manager, the Fund Manager shall have the rights and duties given to the
<PAGE> 4
Adviser, and the Adviser and each person so indemnified shall have the rights
and duties given to the Fund Manager by the provisions of subsection (i) and
(ii) of this Paragraph 13.
(14) Except as otherwise provided in Paragraph 13 hereof and
as may be required under applicable federal law, this Fund Manager's Agreement
shall be governed by the laws of the State of Georgia.
(15) The Fund Manager agrees to notify the parties within a
reasonable period of time regarding a material change in the membership of the
Fund Manager.
(16) The terms "vote of a majority of the outstanding voting
securities," "assignment" and "interested persons," when used herein, shall have
the respective meanings specified in the Investment Company Act of 1940 as now
in effect or as hereafter amended.
(17) Unless otherwise permitted, all notices, instructions and
advice with respect to security transactions or any other matters contemplated
by this Agreement shall be deemed duly given when received in writing:
by the Fund Manager: Montag & Caldwell, Inc.
1100 Atlanta Financial Center
3343 Peachtree Road, N.E.
Atlanta, GA 30326
by the Adviser: Enterprise Capital Management, Inc.
3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326-1022
by the Fund: The Enterprise Group of Funds, Inc. c/o Enterprise
Capital Management, Inc.
3343 Peachtree Road, N.E., Suite 450
Atlanta, GA 30326-1022
or by such other person or persons at such address or addresses as shall be
specified by the applicable party, in each case, in a notice similarly given.
Each party may rely upon any notice or other communication from the other
reasonably believed by it to be genuine.
(18) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which,
when taken together, shall constitute one and the same agreement.
(19) This Agreement constitutes the entire agreement between
the Fund Manager, the Adviser and the Fund relating to the Balanced Fund.
<PAGE> 5
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized officers and their corporate seals hereunder duly
affixed and attested, as of the date first above written.
THE ENTERPRISE GROUP OF FUNDS, INC.
(SEAL)
ATTEST: /s/ CATHERINE R. McCLELLAN By: /s/ VICTOR UGOLYN
---------------------------- -------------------------------------
Secretary Victor Ugolyn, Chairman, President
and Chief Executive Officer
ENTERPRISE CAPITAL MANAGEMENT, INC.
(SEAL)
ATTEST: /s/ CATHERINE R. McCLELLAN By: /s/ VICTOR UGOLYN
---------------------------- -------------------------------------
Secretary Victor Ugolyn, Chairman, President
and Chief Executive Officer
MONTAG & CALDWELL, INC.
(SEAL)
ATTEST: /s/ ELIZABETH CHESTER By: RONALD E. CANAKARIS
---------------------------- -------------------------------------
Secretary
Name:
-----------------------------------
Title:
----------------------------------
<PAGE> 1
Exhibit (e)(i)
THE ENTERPRISE GROUP OF FUNDS, INC.
DISTRIBUTOR'S AGREEMENT
THIS AMENDED AND RESTATED DISTRIBUTOR'S AGREEMENT (hereinafter, the
"Agreement") is made by and between THE ENTERPRISE GROUP OF FUNDS, INC. (the
"Fund") and ENTERPRISE FUND DISTRIBUTORS, INC. (the "Distributor").
WITNESSETH THAT:
1. APPOINTMENT OF FUND DISTRIBUTOR. The Fund hereby appoints
Distributor as the exclusive distributor to sell, as agent and not as principal,
shares of the $1.00 par value common stock of each class of the Portfolios of
the Fund (hereinafter called the "Shares") during the term of this Agreement.
Distributor hereby accepts such appointment and, during the continuance of this
Agreement, agrees to use its best efforts to increase the sale and distribution
of the Shares.
It is recognized that the terms of this Agreement may be varied by
amendment from time to time as to specific Portfolios of the Fund.
The appointment of Distributor and its acceptance shall not be deemed
to be a commitment by Distributor for the purchase of any specific number of
shares.
2. AGREEMENT TO SELL SHARES THROUGH DISTRIBUTOR. The Fund hereby agrees
to sell Shares through Distributor exclusively, at any time or from time to
time, on or after the effective date of this Agreement, upon the terms and
conditions below stated, provided at the time of any such sale there is a
Registration Statement in effect.
This Agreement to sell shall not apply to Shares issued or transferred
(a) in connection with the merger or consolidation of the Fund with any other
investment company or trust, or the acquisition of all or substantially all of
the assets or of the outstanding shares of any investment company or trust, or
(b) pursuant to an offer of exchange exempted under Section 22(d) of the
Investment Company Act of 1940 by reason of the fact that said offer is
permitted by Section 11 of the Act, or (c) upon the sale to a registered unit
investment trust which is the issuer of periodic payment plan certificates, the
net proceeds of which are invested in redeemable securities, or (d) in
connection with the pro rata distribution directly to holders of Shares in the
nature of a stock dividend or split-up, or (e) upon the exercise of any such
rights as the shareholders of the Fund may have to purchase Shares on a pro rata
basis, or (f) in connection with reinvestment of dividends and distributions by
shareholders, or (g) pursuant to sales exempted from Section 22 (d) of the
Investment Company Act of 1940 by rule or regulation of the Commission, except
as may otherwise be provided in the current Prospectus of the Fund, or (h) to
meet the requirements of similar programs using the shares of a foreign
investment company approved by the Fund and having the Shares as its investment
medium.
<PAGE> 2
3. SOLICITATION OF ORDERS. The Distributor is authorized, and shall use
its best efforts, to enter into agreements with broker-dealers and other
financial institutions (the "Retail Broker-Dealers") (which may include
affiliates of the Distributor) that are lawfully registered under federal law
and any applicable state law, providing for such Retail Broker-Dealers to obtain
from investors unconditional orders for Shares authorized for issue by the Fund.
The Distributor may, at its discretion refuse to accept orders for such Shares
from any applicant and may provide similar discretion to the Retail
Broker-Dealers.
A. DISTRIBUTOR NOT AGENT OF FUND IN RESPECT TO DEALERS
In making agreements with Retail Broker-Dealers or others, the
Distributor shall act only in its own behalf as principal and in no sense as
agent for the Fund and shall be agent for the Fund only in respect of sales and
repurchases of Shares.
B. TERMS
All Shares shall be sold for cash on delivery.
C. DELIVERY
The Fund agrees to instruct its transfer agent that, upon presentation
of a receipted statement evidencing that the Custodian has received payment
therefor for the Fund's account, the Custodian shall deliver to Distributor
certificates for Shares so paid for in definitive form registered in such names
and in such amounts as Distributor shall request in writing.
D. ADJUSTMENT FOR ERROR AND DELAY
The purchase price of any Shares sold by or repurchased by Distributor
under this Agreement will be subject to reasonable adjustment for clerical
errors, delays and errors of transmission, and cancellation of orders.
4. RESTRICTIONS ON RESALE BY DISTRIBUTOR. Distributor will, in
transactions with others than the Fund, sell Shares only at the then applicable
public offering price as set forth in the Fund's Prospectus (i.e. net asset
value plus any applicable sales charge). Shares so sold by Distributor to cover
telegraphic orders addressed to it at any of its offices may be sold at the
applicable price at the time of transmittal as indicated by the telegraphic time
stamp thereon, and Shares sold by it to cover other orders may be sold at the
applicable price at the time of receipt in any of its offices.
Distributor will not make any short sales of Shares.
5. IMPOSITION OF CONTINGENT DEFERRED SALES CHARGES. The Fund may impose
a Contingent Deferred Sales Charge ("CDSC") upon redemptions within a fixed
period of time of Shares sold hereunder which CDSC shall be paid to the
Distributor. Any such CDSC shall be the amount stated in the Fund's Prospectus.
2
<PAGE> 3
6. DISTRIBUTOR AS AGENT FOR REPURCHASE OF SHARES. During the term of
this Agreement, Distributor is authorized to act as Agent for the Fund to
repurchase Shares tendered to the Fund upon the terms and conditions of
repurchase set forth in the Prospectus. Unless and until Distributor is notified
of the suspension of the right of redemption in accordance with any rights so
reserved in the Prospectus, Distributor is authorized to repurchase Shares
tendered at the prices determined in the manner set forth in the Prospectus, and
all such repurchases of Shares by Distributor as Agent for the Fund prior to
receipt of such notice shall be honored by the Fund. Distributor will not as
such Agent repurchase any Shares after receipt from the Fund of written notice
that the right of redemption is suspended.
The Fund will pay or direct its Custodian to pay from the Fund's
account the repurchase price of any Shares repurchased by its Agent against
delivery of the certificates representing such Shares in proper form for
transfer to the Fund. Tenders by telegraph to any of Distributor's offices will
be deemed to have been made at the telegraphic time of transmittal stamped on
the telegram.
Distributor agrees to notify the Fund each day of the number of Shares
which it has repurchased as Agent and of the applicable price or prices at which
such repurchases were made, and to present the certificates for the said Shares
to the Custodian for payment as the same are received in proper form for
transfer to the Fund.
Distributor accepts its appointment as Agent to repurchase Shares and
agrees to act in such capacity without any compensations other than as provided
by other items of this Agreement.
7. REPRESENTATIONS AND WARRANTIES OF THE FUND. The Fund represents and
warrants that:
(a) A Registration Statement with respect to the Shares has
been filed with the Commission and is effective under the Act.
(b) At the time of any sales of Shares by the Distributor on
behalf of the Fund hereunder, the Registration Statement then in effect
under the Act and Prospectus will fully comply with the provisions of
the Act and the Rules and Regulations of the Commission thereunder, and
neither the Registration Statement, the Prospectus nor the Statement of
Additional Information will contain any untrue statement of material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading; providing
that the foregoing representation and warranty shall not apply to
statements or omissions in such Registration Statement. Prospectus or
Statement of Additional Information made in reliance upon and in
conformity with information furnished in writing to the Fund by the
Distributor.
3
<PAGE> 4
(c) The presently outstanding Shares of the Fund are validly
issued, fully paid and nonassessable Shares; and the Shares to be sold
hereunder, upon issue and receipt of considerations therefor, will be
validly issued, fully paid, and nonassessable Shares of the Fund.
(d) The Fund is a duly registered, open-end investment company
of the management type under the Investment Company Act of 1940; the issue and
sale of Shares to be sold hereunder, upon receipt of the consideration therefor,
will conform to the requirements of the Investment Company Act of 1940.
8. REPRESENTATIONS AND WARRANTIES OF THE DISTRIBUTOR. Distributor
hereby represents and warrants that it is a member of the National Association
of Securities Dealers, Inc. and it is registered as a broker-dealer under the
Securities Exchange Act of 1934 and that such membership and registration shall
be in effect at all times in which it is engaged in selling the Shares
hereunder.
9. INDEMNIFICATION BY FUND. The Fund agrees to indemnify, defend and
hold Distributor, its officers and directors, and any person who controls it,
within the meaning of Section 15 of the Act, free and harmless from and against
any and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities, and any counsel
fees incurred in connection therewith) which Distributor, its officers,
directors or any such controlling person may incur under the Act, or under
common law or otherwise, arising out of or based upon any untrue statement of
material fact contained in the Fund's Registration Statement, Prospectus or
Statement of Additional Information or arising out of or based upon any alleged
omission to state a material fact required to be stated in either thereof or
necessary to make the statements in either thereof not misleading, except
insofar as such claims, demands, liabilities or expenses arise out of or are
based upon any such untrue statement or omission or alleged untrue statement or
omission made in reliance and in conformity with information furnished in
writing by Distributor to the Fund for use in the Fund's Registration Statement,
Prospectus or Statement of Additional Information.
This Indemnity Agreement, to the extent that it might require indemnity
of any person who is also an officer or director of the Fund or who controls the
Fund within the meaning of Section 15 of the Act shall not inure to the benefit
of such officer, director or controlling person unless a court of competent
jurisdiction shall determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy as expressed in
the Act.
In no event shall anything contained herein be so construed as to
protect the Distributor against any liability to the Fund or its security
holders to which Distributors would otherwise be subject by reason of willful
misfeasance, bad faith, or gross negligence in the performance of its duties or
by reason of its reckless disregard of its obligations under this Agreement. The
Fund's agreement to indemnify Distributor, its officers and directors and any
such controlling person as aforesaid is conditioned upon the Fund being notified
within ninety days of any action brought against Distributor, its officers or
directors, or any such controlling person, such notification to be given by
letter or telegram addressed to the Fund as its principal business office.
4
<PAGE> 5
10. INDEMNIFICATION BY DISTRIBUTOR. Distributor agrees to indemnify,
defend and hold the Fund, its officers and directors and any person who controls
the Fund, if any, within the meaning of Section 15 of Act of 1933, free and
harmless from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands, or
liabilities and any counsel fees incurred in connection therewith) which the
Fund, its directors or officers or any such controlling person may incur under
the Act or under common law or otherwise; but only to the extent that such
liability or expense incurred by the Fund, its directors or officers or any such
controlling person may incur under the Act or under common law or otherwise; but
only to the extent that such liability or expense incurred by the Fund, its
directors or officers, or such controlling person resulting from such claims or
demands shall arise out of or be based upon any alleged untrue statement of a
material fact contained in information furnished in writing by Distributor to
the Fund for use in the Fund's Registration Statement, Prospectus or Statement
of Additional Information or shall arise out of or be based upon any alleged
omissions to state a material fact in connection with such information required
to be stated in the Registration Statement, Prospectus or Statement of
Additional Information or necessary to make such information not misleading.
Distributor's agreement to indemnify the Fund, its directors and
officers, and any such controlling person as aforesaid is conditioned upon the
Distributor being notified within ninety days of any action brought against the
Fund, its officers or directors or any such controlling person, such
notification being given by letter or telegram addressed to Distributor at its
principal business office.
11. EXTENT AND EFFECTIVENESS OF INDEMNITY PROVISIONS, WARRANTIES AND
REPRESENTATIONS. The indemnity agreements, warranties and representations
contained in this Agreement shall remain operative and in full force and effect
regardless of: (a) any termination of this contract; (b) any investigation made
by or on behalf of either of the parties hereto or by any person controlling
either party; and (c) acceptance of and payment hereunder for any of the Shares.
The indemnity agreements, warranties and representations made in this
Agreement are made with the understanding that neither the individual members of
the Board of Directors or the individual officers or any of the individual
shareholders of either the Fund or Distributor shall be personally liable
thereunder.
Nothing contained in this Agreement shall be deemed to protect either
party from any liability to the other party or to protect the members of either
party's Board of Directors or officers or shareholders from any liability to
which such persons would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties under this Agreement.
12. CERTAIN EXPENSE TO BE PAID BY DISTRIBUTOR. During the continuance
of this Agreement, Distributor will:
5
<PAGE> 6
(i) Select the States in which it desires the Shares to be
offered for sale and will undertake to qualify or maintain the
qualification thereof for lawful offering and sale therein under the
so-called "Blue Sky" Laws of such States respectively, except that fees
and charges (including legal fees) in connection therewith will be
borne by the Fund;
(ii) Prepare the sales literature and assist in the
preparation of prospectuses and registration statements pertinent to
any such offering or sale;
(iii) Bear the expenses occasioned by the printing and
distribution of such prospectuses (except for the expenses of
prospectuses required to be delivered to current Fund shareholders) and
the printing and distribution of such sales literature; and
(iv) Bear the expense of advertising the offering of the
Shares; and
(v) Make such other expenditures as it deems appropriate.
The Fund will cooperate with Distributor to the extent of supplying all
necessary documents, exhibits and information, and will execute and permit to be
filed with the proper public bodies, such applications, including amendments and
renewals thereof, instruments, papers and exhibits as may be appropriate to
enable the Shares to be offered for sale under the "Blue Sky" Laws of such
States as Distributor shall reasonably determine, and will cooperate with
Distributor and its counsel in the presentation of said applications (including
amendments and renewals thereof), to the end that the Shares may be qualified in
such States under the respective "Blue Sky" Laws thereof; provided that the Fund
shall not be required to amend its Articles of Incorporation or By-Laws to
comply with the laws of any State, to maintain an office in any State, to change
the terms of the offering of its capital stock in any State from the terms set
forth in its Registration Statement and Prospectus, to qualify as a foreign
corporation in any State or to consent to service of process in any State other
than with respect to claims arising out of the offering of its capital stock.
13. CERTAIN INFORMATION TO BE FURNISHED BY THE FUND. The Fund shall
furnish Distributor for its use in connection with the sale of the Fund shares
such information with respect to the Fund and its Shares as Distributor may
reasonably request.
Without limiting the generality of the foregoing, the Fund shall
furnish to Distributor the following information:
(a) The Fund will furnish the determinations of the net asset value of
the Portfolios of Fund Shares with such frequency and as of such times and will
cause the offering price to be effective for such periods as are set forth in
the Prospectus or Statement of Additional Information of the Fund. These
determinations shall be furnished as often as they are made, and the
computations underlying these determinations shall also be made available.
The Fund will advise Distributor immediately of:
6
<PAGE> 7
(i) Any request of the Commission for amendments to the
Registration Statement, Prospectus or Statement of Additional
Information; or for additional information;
(ii) Any stop order suspending the effectiveness of the
registration statement, prospectus or Statement of Additional
Information;
(iii) The happening of any event which makes untrue any
statement, or which requires the making of any change, in the
Registration Statement, Prospectus or Statement of Additional
Information in order to make the statements therein not misleading;
(iv) All action of the Commission with respect to any
amendments to the Registration Statement, Prospectus or Statement of
Additional Information which may from time to time be filed with the
Commission under the Act; and
(v) The commencement of any litigation or proceedings
against the Fund or any of its officers or directors in connection with
the issue and sale of any shares of its capital stock.
14. FUND'S RIGHT TO SUSPEND THE SALES OF SHARES. Anything to the
contrary in this Agreement notwithstanding, the Fund may suspend the offering
price currently in effect and may, without incurring any liability under any of
the provisions of this Agreement, decline to accept or confirm any orders for or
make any sales of any shares of the Fund's capital stock under this Agreement
until such time as it shall deem it advisable to accept and confirm such orders
and to make such sales, and, during any period during which the offering price
currently in effect shall be suspended or during which the Fund shall decline to
accept or confirm any such orders or make any such sales, the Fund shall be
under no obligation to confirm or accept any such orders or make any such sales
at any price.
15. REPORTS OF DISPOSITION OF MONIES. The Fund, and the Distributor to
the extent applicable, shall require any person authorized to direct the
disposition of monies paid or payable by the Fund pursuant to this Agreement or
any plans of distribution pursuant to Rule 12b-1 under the Investment Company
Act of 1940 to provide at least quarterly to the Board of Directors of the Fund
a written report of the amounts so expended and the purposes for which such
expenditures were made. The Board of Directors will review such reports
promptly, and at least quarterly.
16. TERMINATION. The Fund may terminate this Agreement at any time,
without the payment of any penalty, by vote of a majority of those directors of
the Fund who are not interested persons of the Fund and who have no direct or
indirect financial interest in this Agreement, or by vote of a majority of its
outstanding voting securities; and Distributor may terminate this Agreement by
sixty days written notice to the Fund at any time without the payment of any
penalty. This Agreement may be assigned by the Fund, but may not be assigned by
Distributor. This Agreement will immediately terminate in the event of its
assignment.
7
<PAGE> 8
17. TERM OF AGREEMENT. This Agreement shall not be effective unless it
has been approved by a vote of the Board of Directors of the Fund, including a
majority of those directors of the Fund who are not interested persons of the
Fund and who have no direct or indirect financial interest in this Agreement,
cast in person at a meeting called for the purpose of voting on such approval.
Subject to prior termination as provided above, this Agreement shall continue in
force for one (1) year from the date of its effectiveness and from year to year
thereafter, if its continuance after said date is specifically approved on or
before said date and at least annually thereafter by vote or the Board of
Directors of the Fund, including a majority of those directors who are not
parties to this Agreement or interested persons of any such party and who have
no direct or indirect financial interest in this Agreement, cast in person at
meeting called for the purpose of voting on such approval.
18. DEFINITIONS. The terms "assignment," "Commission," "interested
persons," and "vote of a majority of the outstanding voting securities", when
used herein, shall have the respective meanings specified in the federal
Investment Company Act of 1940 as now or hereunder in effect.
The term "Act" when used herein shall mean the Securities Act of 1933.
The term "Registration Statement" shall mean the Registration Statement
then in effect under the Act with respect to the Fund's Shares.
The term "Prospectus" shall mean the Prospectus then constituting a
part of the Registration Statement as well as any amendments and supplements to
the Prospectus then constituting a part of the Registration Statement.
19. MISCELLANEOUS. This Agreement shall be governed by the laws of
Georgia and shall be binding on the parties hereto, their successors and assigns
to the extent permitted by law.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
this 1st day of March, 1998.
THE ENTERPRISE GROUP OF FUNDS, INC.
By:/s/ CATHERINE R. MCCLELLAN
-----------------------------------------
Catherine R. McClellan
Secretary
ENTERPRISE FUND DISTRIBUTORS, INC.
By:/s/ CATHERINE R. MCCLELLAN
-----------------------------------------
Catherine R. McClellan
Senior Vice President and Secretary
8
<PAGE> 1
Exhibit (g)
October 6, 1998
State Street Bank and Trust Company
1776 Henitage Drive
North Quincy, MA 02171
Ladies and Gentlemen:
This is to advise you that The Enterprise Group of Funds, Inc., has established
a new series of shares to be known as the Global Financial Services Fund. In
accordance with the Additional Funds provision in Section 17 of the Custodian
Contract dated May 23, 1990, and Article 8 of the Transfer Agency and Service
Agreement dated May 23, 1990, between the Fund and State Street Bank and Trust
Company, the Fund hereby requests that you act as Custodian and Transfer Agency
and Service Agent for the new series under the terms of the respective
contracts.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Fund and retaining one copy for your
records.
By /s/ Phillip G. Goff
-----------------------------------------
Agreed to this 6th day of October, 1998
--- -------
State Street Bank and Trust Company
By /s/ CHARLES R. WHITTEMORE, JR.
-----------------------------------------
Vice President
<PAGE> 2
April 28, 1997
State Street Bank & Trust Company
1776 Heritage Drive
North Quincy. MA 02171
Gentlemen:
This is to advise you that The Enterprise Group of Funds, Inc., has established
a new series of shares to be known as the Enterprise Equity Portfolio. In
accordance with the Additional Funds provision in Section 17 of the Custodian
Contract dated May 23, 1990 and Article 8 of the Transfer Agency and Service
Agreement dated May 23, 1990 between the Fund and State Street Bank and Trust
Company, the Fund hereby requests that you act as Custodian and Transfer Agency
and Service Agent for the new series under the terms of the respective
contracts.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Fund and retaining one copy for your
records.
By /s/ Phillip G. Goff
-----------------------------------------
Agreed to this 29th day of April, 1997
----
State Street Bank and Trust Company
By /s/ DON DEMARCO
-----------------------------------------
Vice President
<PAGE> 3
State Street Bank & Trust Company
1776 Heritage Drive
North Quincy, MA 02171
Gentlemen:
This is to advise you that The Enterprise Group of Funds, Inc. has established a
new series of shares to be known as the Enterprise Managed Portfolio. In
accordance with the Additional Funds provision in Section 17 of the Custodian
Contract dated May 23, 1990 and Article 8 of the Transfer Agency and Service
Agreement dated May 23, 1990 between the Fund and State Street Bank and Trust
Company, the Fund hereby requests that you act as Custodian and Transfer Agent
for the new series under the terms of the respective contracts.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Fund and retaining one copy for your
records.
By /s/ Herbert Williamson
-----------------------------------------
Agreed to this 21st day of March 1995.
---- -----
State Street Bank and Trust Company
By /s/ CHARLES R. WHITTEMORE, JR.
-----------------------------------------
Vice President
<PAGE> 4
State Street Bank & Trust Company
1776 Heritage Drive
North Quincy, MA 02171
Gentlemen:
This is to advise you that The Enterprise Group of Funds, Inc. has established a
new series of shares to be known as Enterprise Small Company Portfolio. In
accordance with the Additional Funds provision in Section 17 of the Custodian
Contract dated May 23, 1990 and Article 8 of the Transfer Agency and Service
Agreement dated May 23, 1990 between the Fund and State Street Bank and Trust
Company, the Fund hereby requests that you act as Custodian and Transfer Agent
for the new series under the terms of the respective contracts.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Fund and retaining one copy for your
records.
By /s/ Leilani S. Hall
-----------------------------------------
Agreed to this 8th day of September, 1993
--- ---------
State Street Bank and Trust Company
By /s/
-----------------------------------------
Vice President
<PAGE> 5
April 9, 1992
State Street Bank and Trust Company
1776 Heritage Drive No.
Quincy, MA 02171
Attention: R.H. La Fleur
Fiduciary Control A2N
This is to advise you that The Enterprise Group of Funds, Inc. desires to make
two additional Series subject to our custody agreement.
In accordance with the Additional Funds provision in Article 17 of the Custodian
Contract dated May 23, 1990 between the Fund and State Street Bank and Trust
Company, the Fund hereby requests that you act as Custodian for International
Growth Portfolio and Precious Metals Portfolio, and render to the Series such
services as Custodian as are provided under the terms of the Contract.
Please acknowledge your agreement to the foregoing by executing two counterparts
of this letter, returning one to Enterprise and retaining one for your records.
The Enterprise Group of Funds, Inc.
By: /s/ Leilani S. Hall
----------------------------------------
Leilani S. Hall, Vice President
Agreed to this 15th day of April, 1992
---- -----
State Street Bank and Trust Company
By: /s/
----------------------------------------
Vice President
<PAGE> 6
April 9, 1992
State Street Bank and Trust Company
1776 Heritage Drive No.
Quincy, MA 02171
Attention: R.H. La Fleur
Fiduciary Control A2N
This is to advise you that The Enterprise Group of Funds, Inc. desires to make
two additional Series subject to our custody agreement.
In accordance with the Additional Funds provision in Article 17 of the Custodian
Contract dated May 23, 1990 between the Fund and State Street Bank and Trust
Company, the Fund hereby requests that you act as Custodian for International
Growth Portfolio and Precious Metals Portfolio, and render to the Series such
services as Custodian as are provided under the terms of the Contract.
Please acknowledge your agreement to the foregoing by executing two counterparts
of this letter, returning one to Enterprise and retaining one for your records.
The Enterprise Group of Funds, Inc.
By: /s/ Leilani S. Hall
----------------------------------------
Leilani S. Hall, Vice President
Agreed to this 15th day of April, 1992
---- -----
State Street Bank and Trust Company
By: /s/
----------------------------------------
Vice President
<PAGE> 7
Schedule A
The following foreign banking institutions and foreign securities depositories
have been approved by the Board of Directors of The Enterprise Group of Funds,
Inc. for use as sub-custodians for the Fund's securities and other assets:
Australia and New Zealand Banking Group Limited (ANZ)
Giozentrole und Bank der oesterreichischen Sparkassen AG (Austria)
Banque Bruyelles Lambert (Belgium)
Canada Trust Company
Cedel
Citibank, N.A.-Chile
Den Danske Bank (Denmark)
Euroclear
Kansallis-Osake-Pankki (Finland)
Credit Commercial De France
Berliner Handels-und Frankfurter Bank (Germany)
Standard Charter Bank, Hong Kong
Bank of Ireland
Credito Italiano Sumitomo Trust & Banking Co., Ltd. (Japan)
Standard Charter Bank, Kuala Lumpur (Malaysia)
Citibank, N.A.-Mexico
Bank Mees & Hope N.V. (Netherlands)
Christiania Bank OG Kredit Kasse (Norway)
Standard Chartered Bank, Manila
The Development Bank of Singapore, Ltd.
Banco Hispano Americano (Spain)
Skandinaviska Enskilda Banken (Sweden)
Union Bank of Switzerland
Central Trust of China, Taipei
Standard Charter Bank, Bangkok
State Street London Limited (United Kingdom)
Certified:
/s/ LEILANI S. HALL
- ---------------------------------------
Fund's Authorized Officer
Date: November 25, 1991
<PAGE> 8
CUSTODIAN CONTRACT
Between
THE ENTERPRISE GROUP OF FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
21E1089
WP0991C
<PAGE> 9
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
1. Employment of Custodian and Property to be Held By
It 2
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States 3
2.1 Holding Securities 3
2.2 Delivery of Securities 3
2.3 Registration of Securities 9
2.4 Bank Accounts 9
2.5 Availability of Federal Funds 10
2.6 Collection of Income 11
2.7 Payment of Fund Monies 12
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased 15
2.9 Appointment of Agents 15
2.10 Deposit of Fund Assets in Securities System 15
2.10A Fund Assets Held in the Custodian's Direct
Paper System 18
2.11 Segregated Account 20
2.12 Ownership Certificates for Tax Purposes 22
2.13 Proxies 22
2.14 Communications Relating to Portfolio
Securities
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States 23
3.1 Appointment of Foreign Sub-Custodians 23
3.2 Assets to be Held 24
3.3 Foreign Securities Depositories 24
3.4 Segregation of Securities 24
3.5 Agreements with Foreign Banking Institutions 25
3.6 Access of Independent Accountants of the Fund 26
3.7 Reports by Custodian 26
3.8 Transactions in Foreign Custody Account 27
3.9 Liability of Foreign Sub-Custodians 27
3.10 Liability of Custodian 28
3.11 Reimbursement for Advances 29
3.12 Monitoring Responsibilities 30
3.13 Branches of U.S. Banks 30
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund 31
5. Proper Instructions 32
6. Actions Permitted Without Express Authority 33
7. Evidence of Authority 33
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net
Income 34
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
<S> <C> <C>
9. Records 35
10. Opinion of Fund's Independent Accountants 36
11. Reports to Fund by Independent Public Accountants 36
12. Compensation of Custodian 36
13. Responsibility of Custodian 37
14. Effective Period, Termination and Amendment 39
15. Successor Custodian 40
16. Interpretive and Additional Provisions 42
17. Additional Funds 43
18. Massachusetts Law to Apply 43
19. Prior Contracts 43
</TABLE>
<PAGE> 11
CUSTODIAN CONTRACT
This Contract between The Enterprise Group of Funds, Inc., a
corporation organized and existing under the laws of Maryland, having its
principal place of business at Suite 290, 1200 Ashwood Parkway, Atlanta, Georgia
30338 hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate
series, with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in nine series, of which the
following six domestic series: the Growth Portfolio, Growth and Income
Portfolio, Capital Appreciation Portfolio, Government Securities Portfolio,
High-Yield Bond Portfolio, Tax-Exempt Portfolio, and Money Market Portfolio are
made subject to this Contract in accordance with Article 17, being herein
referred to as the "Portfolio(s)";
WHEREAS, the Fund does not at the effective date of this
agreement intend to retain the Custodian to serve as custodian of the global
portfolios of the Fund, specifically the International Growth Portfolio and the
Precious Metals Portfolio, but may at some future date place such assets under
the custody of the Custodian, at which time the provisions of Article 3 shall
become effective;
NOW THEREFOR, in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the
assets of the Portfolios of the Fund, including securities which the Fund, on
behalf of the applicable Portfolio desires to be held in places within the
United States ("domestic securities") and securities it desires to be held
outside the United States ("foreign securities") pursuant to the provisions of
the Articles of Incorporation. The Fund on behalf of the Portfolio(s) agrees to
deliver to the Custodian all securities. and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by the Portfolio(s) from time to time,
and the cash consideration received by it for such new or treasury shares of
beneficial interest of the Fund representing interests in the Portfolios,
("Shares") as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of a Portfolio held or received by the Portfolio
and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Article 5), the Custodian shall on behalf of the applicable Portfolio(s) from
time to time employ one or more sub-custodians, located in the United States but
only in accordance with an applicable vote by the Board of Directors of the Fund
on behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the
<PAGE> 12
Fund's foreign securities on behalf of the applicable Portfolio(s) the foreign
banking institutions and foreign securities depositories designated in Schedule
A hereto but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the
Fund Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury, collectively referred to herein as "Securities System" and
(b) commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
pursuant to Section 2.10A.
2.2 The Custodian shall release and deliver domestic securities owned by a
Portfolio held by the Custodian or in a Securities System account of
the Custodian or in the Custodian's Direct Paper book entry system
account ("Direct Paper System Account") only upon receipt of Proper
Instructions from the Fund on behalf of the applicable Portfolio, which
may be continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
<PAGE> 13
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if. any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Portfolio of the Fund;
<PAGE> 14
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the applicable Portfolio, a certified copy of a resolution
of the Board of Directors or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized
in writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in
"street name", the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities and to notify the
Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender or
exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a majority of the
Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as
<PAGE> 15
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf
of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of
such Portfolio which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on
the date of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income, as
collected, to such Portfolio's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation as
and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to
which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against
<PAGE> 16
delivery of the receipt evidencing purchase by the Portfolio
of securities owned by the Custodian along with written
evidence of the agreement by the Custodian to repurchase such
securities from the Portfolio or (e) for transfer to a time
deposit account of the Fund in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant
to Proper Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses (including payments of commissions) of the Fund
whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by
the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
<PAGE> 17
2.10 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a
Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
Securities System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon M receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon (i)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the Securities System of
transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's transactions in
the Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the Securities System by reason of any
<PAGE> 18
negligence, misfeasance or misconduct of the Custodian or any
of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Fund, it shall be entitled to
be subrogated to the rights of the Custodian with respect to
any claim against the Securities System or any other person
which the Custodian may have as a consequence of any such loss
or damage if and to the extent that the Portfolio has not been
made whole for any such loss or damage.
2.10A Fund Assets Held in the Custodian's Direct Paper System The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
an account ("Account") of the Custodian in the Direct Paper
System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Securities System for the account of
the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities
<PAGE> 19
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act) relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased
or sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for
other proper corporate purposes, but only, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.
2.13 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.14 Communications Relating to Portfolio Securities
Subject to the provisions of Section 2.3, the Custodian shall transmit
promptly to the Fund for each Portfolio all written information
(including, without limitation, pendency of calls and maturities of
domestic securities and expirations of rights in connection therewith
and notices of exercise of call and put options written by the Fund on
behalf of the Portfolio and the maturity of futures contracts purchased
or sold by the Portfolio) received by the Custodian from issuers of the
securities being held for the Portfolio. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Portfolio
all written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or
his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Portfolio
<PAGE> 20
shall notify the Custodian at least three business days prior to the
date on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians
The Fund may, upon ninety days prior written notice (unless such period
of notice is waived by the Custodian) request the Custodian to custody
the global assets of the Fund, whereupon this Article 3 shall become
effective. In such event, the Fund hereby authorizes and instructs the
Custodian to employ as sub-custodians for the Portfolio's securities
and other assets maintained outside the United States the foreign
banking institutions and foreign securities depositories designated on
Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with
a certified resolution of the Fund's Board of Directors, the Custodian
and the Fund may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule l7f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Portfolio's foreign securities
transactions.
3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon
in writing by the Custodian and the Fund, assets of the Portfolios
shall be maintained in foreign securities depositories only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4 Segregation of Securities. The Custodian shall identify on its books as
belonging to each applicable Portfolio of the Fund, the foreign
securities of such Portfolios held to which the Custodian employs a
foreign banking institution shall require that such institution
establish a custody account for the Custodian on behalf of the Fund for
each applicable Portfolio of the Fund and physically segregate in each
account, securities and other assets of the Portfolios, and, in the
event that such institution deposits the securities of one or more of
the Portfolios in a foreign securities depository, that it shall
identify on its books as belonging to the Custodian, as agent for each
applicable Portfolio, the securities so deposited.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a
<PAGE> 21
claim of payment for their safe custody or administration; (b)
beneficial ownership for the assets of each Portfolio will be freely
transferable without the payment of money or value other than for
custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to each applicable Portfolio; (d)
officers of or auditors employed by, or other representatives of the
Custodian, including to the extent permitted under applicable law the
independent public accountants for the Fund, will be given access to
the books and records of the foreign banking institution relating to
its actions under its agreement with the Custodian; and (e) assets of
the Portfolios held by the foreign sub-custodian will be subject only
to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate. to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity of
the entity having physical possession of such securities.
3.8 Transactions in Foreign Custody Account (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Fund held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of each applicable Portfolio and delivery of
securities maintained for the account of each applicable Portfolio may
be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer) against
a receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer. (c) Securities maintained in
the custody of a foreign sub-custodian may be maintained in the name of
such entity's nominee to the same extent as set forth in Section 2.3 of
this Contract, and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement
pursuant to which the Custodian employs a foreign banking institution
as a foreign sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify, and
hold harmless, the Custodian and each
<PAGE> 22
Fund from and against any loss, damage, cost, expense, liability or
claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall
be entitled to be subrogated to the rights of the Custodian with
respect to any claims against a foreign banking institution as a
consequence of any such loss, damage, cost, expense, liability or claim
if and to the extent that the Fund has not been made whole for any such
loss, damage, cost, expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's
own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable
Portfolio shall be security therefor and should the Fund fail to repay
the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Portfolios assets to the extent
necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns of
a material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million
<PAGE> 23
(U.S. dollars or the equivalent thereof) or that its shareholders'
equity has declined below $200 million (in each case computed in
accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks
(a) Except as otherwise set forth in this Contract, the provisions
hereof shall not apply where the custody of the Portfolios assets are maintained
in a foreign branch of a banking institution which is a "bank" as defined by
Section 2(a)(5) of the Investment Company Act of 1940 meeting the qualification
set forth in Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b) Cash held
for each Portfolio of the Fund in the United Kingdom shall be maintained in an
interest bearing account established for the Fund with the Custodian's London
branch, which account shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for Shares of that
Portfolio issued or sold from time to time by the Fund. The Custodian
will provide timely notification to the Fund on behalf of each such
Portfolio and the Transfer Agent of any receipt by it of payments for
Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes
of the Board of Directors of the Fund pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make funds
available for payment to holders of Shares who have delivered to the
Transfer Agent a request for redemption or repurchase of their Shares.
In connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall
honor checks drawn on the Custodian by a holder of Shares, which checks
have been furnished by the Fund to the holder of Shares, when presented
to the Custodian in accordance with such procedures and controls as are
mutually agreed upon from time to time between the Fund and the
Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of
Directors shall have from time to time authorized. Each such writing
shall set forth the specific transaction or type of transaction
involved, including a specific statement of the purpose for which such
action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been
given by a person authorized to give such instructions with respect to
the transaction involved. The Fund shall cause all oral instructions to
be confirmed in writing. Upon receipt of a certificate of the Secretary
or an Assistant Secretary as to the authorization by the Board of
Directors of the Fund accompanied by a detailed description of
procedures approved by the Board of Directors, Proper Instructions may
include communications effected directly between electromechanical or
<PAGE> 24
electronic devices provided that the Board of Directors and the
Custodian are satisfied that such procedures afford adequate safeguards
for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian
pursuant to any three - party agreement which requires a segregated
asset account in accordance with Section 2.11.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Fund on behalf of the Portfolio
on a monthly basis and in no event shall the payments exceed
$1,000 per month without prior approval of an officer of the
Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Portfolio except as otherwise directed by the Board of
Directors of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by or
on behalf of the Fund. The Custodian may receive and accept a certified
copy of a vote of the Board of Directors of the Fund as conclusive
evidence (a) of the authority of any person to act in accordance with
such vote or (b) of any determination or of any action by the Board of
Directors pursuant to the Articles of Incorporation as described in
such vote, and such vote may be considered as in full force and effect
until receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors of the Fund
to keep the books of account of each Portfolio and/or compute the net
asset value per share of the outstanding shares of each Portfolio or,
if directed in writing to do so by the Fund on behalf of the Portfolio,
shall itself keep such books of account and/or compute such net asset
value per share. If so directed, the Custodian shall also calculate
daily the net income of the Portfolio as described in the Fund's
currently effective prospectus related to such Portfolio and shall
advise the Fund and the Transfer Agent daily of the total amounts
<PAGE> 25
of such net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically of the
division of such net income among its various components. The
calculations of the net asset value per share and the daily income of
each Portfolio shall be made at the time or times described from time
to time in the Fund's currently effective prospectus related to such
Portfolio.
The Custodian is expressly authorized to rely upon the accounting books
and records of the Portfolios as they existed at the commencement of
the Custodian's services pursuant to this Section 8 provided, however,
that any discrepancy identified in such books and records by the
Custodian shall be reconciled and/or disclosed to an officer of the
Fund. The Custodian shall use reasonable efforts to identify said
discrepancies. The Fund hereby agrees to hold harmless and to indemnify
the Custodian against any loss, expense or other liability arising from
errors, omissions or inaccuracies in the recordkeeping of the
Portfolios prior to the commencement of the Custodian's services
hereunder.
9. Records
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this
Contract in such manner as will meet the obligations of the Fund under
the Investment Company Act of 1940, with particular attention to
Section 31 thereof and Rules 3la-l and 3la-2 thereunder. All such
records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Fund and employees
and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian and shall,
when requested to do so by the Fund and for such compensation as shall
be agreed upon between the Fund and the Custodian, include certificate
numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action as the Fund on behalf of each
applicable Portfolio may from time to time request, to obtain from year to year
favorable opinions from the Fund's independent accountants with respect to its
activities hereunder in connection with the preparation of the Fund's Form N-lA,
and Form N-SAR or other annual reports to the Securities and Exchange Commission
and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with
reports by independent public accountants on the accounting system,
internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including
securities deposited and/or maintained in a Securities System, relating
to the services provided by the Custodian under this Contract; such
reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that
any
<PAGE> 26
material inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between the Fund on behalf of each applicable Portfolio and the
Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it
or delivered by it pursuant to this Contract and shall be held harmless
in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by
the proper party or parties, including any futures commission merchant
acting pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of reasonable
care in carrying out the provisions of this Contract, but shall be kept
indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It
shall be entitled to rely on and may act upon advice of counsel (who
may be counsel for the Fund) on all matters, and shall be without
liability for any action reasonably taken or omitted pursuant to such
advice provided, however, that the Custodian shall give prompt notice
to the Fund of the circumstances relating to the matter for which it
seeks such advice of counsel. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by
check shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3
to the same extent as set forth in Article I hereof with respect to
sub-custodians located in the United States (except as specifically
provided in Article 3.10) and, regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign
securities depository or a branch of a U.S. bank as contemplated by
paragraph 3.11 hereof, the Custodian shall not be liable for any loss,
damage, cost, expense, liability or claim resulting from, or caused by,
the direction of or authorization by the Fund to maintain custody or
any securities or cash of the Fund in a foreign country including, but
not limited to, losses resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism.
If the Fund on behalf of a Portfolio expressly requires the Custodian
to take any action with respect to securities, which action involves
the payment of money or which action may, in the opinion of the
Custodian, result in the Custodian or its nominee assigned to the Fund
or the Portfolio being liable for the payment of money or incurring
liability of some other form, the Fund on behalf of the Portfolio, as a
prerequisite to requiring the Custodian to take such action, shall
provide indemnity to the Custodian in an amount and form satisfactory
to it.
<PAGE> 27
If the Fund expressly requires the Custodian to advance cash or
securities for any purpose for the benefit of a Portfolio including the
purchase or sale of foreign exchange or of contracts for foreign
exchange or in the event that the Custodian expenses, assessments,
claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own
negligent action, negligent failure to act or willful misconduct, any
property at any time held for the account of the applicable Portfolio
shall be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Portfolio's assets to the extent
necessary to obtain reimbursement.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties
hereto and may be terminated by either party by an instrument in
writing delivered or mailed, postage prepaid to the other party, such
termination to take effect not sooner than ninety (90) days after the
date of such delivery or mailing; provided, however that the Custodian
shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such
Portfolio and the receipt of an annual certificate of the Secretary or
an Assistant Secretary that the Board of Directors has reviewed the use
by such Portfolio of such Securities System, as required in each case
by Rule 17f-4 under the Investment Company Act of 1940, as amended and
that the Custodian shall not with respect to a Portfolio act under
Section 2.10A hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board
of Directors has approved the initial use of the Direct Paper System by
such Portfolio and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Directors has
reviewed the use by such Portfolio of the Direct Paper System; provided
further, however, that the Fund shall not amend or terminate this
Contract in contravention of any applicable federal or state
regulations, or any provision of the Articles of Incorporation, and
further provided, that the Fund on behalf of one or more of the
Portfolios may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Custodian by giving
notice as described above to the Custodian, or (ii) immediately
terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the
Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as
of the date of such termination and shall likewise reimburse the
Custodian for its reasonable costs, expenses and disbursements.
15. Successor Custodian
<PAGE> 28
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian
shall, upon termination, deliver to such successor custodian at the
office of the Custodian, duly endorsed and in the form for transfer,
all securities of each applicable Portfolio then held by it hereunder
and shall transfer to an account of the successor custodian all of the
securities of each such Portfolio held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board
of Directors of the Fund, deliver at the office of the Fund and
transfer such securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been
delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to
deliver to a bank or trust company, which is a "bank" as defined in the
Investment Company Act of 1940, doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report,
of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio
and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract on behalf of each
applicable Portfolio and to transfer to an account of such successor
custodian all of the securities of each such Portfolio held in any
Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing
to failure of the Fund to procure the certified copy of the vote
referred to or of the Board of Directors to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its
services during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this
Contract relating to the duties and obligations of the Custodian shall
remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund on behalf of each of the Portfolios, may from time to time
agree on such provisions interpretive of or in addition to the
provisions of this Contract as may in their joint opinion be consistent
with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and
shall be annexed hereto, provided that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Articles of Incorporation of the
Fund. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Contract.
17. Additional Funds
<PAGE> 29
In the event that the Fund desires to have the Custodian render
services as custodian under the terms hereof to one or more series of
Shares in addition to the Growth Portfolio, Growth and Income
Portfolio, Capital Appreciation Portfolio, Government Securities
Portfolio, High-Yield Bond Portfolio, Tax-Exempt Income Portfolio, and
Money Market Portfolio it shall so notify the Custodian in writing, and
if the Custodian agrees in writing to provide such services, such
series of Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund on behalf of each of the Portfolios
and the Custodian relating to the custody of the Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as the 23rd day of May, 1990.
ATTEST THE ENTERPRISE GROUP OF FUNDS, INC.
/s/ CATHERINE R MCCLELLAN LEILANI S. HALL
- ------------------------------- ------------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/
- ------------------------------- ------------------------------------
Assistant Secretary Vice President
<PAGE> 30
SCHEDULE A
The following foreign banking institutions and foreign
securities depositories have been approved by the Board of Directors of The
Enterprise Group of Funds, Inc. for use as sub-custodians for the Fund's
securities and other assets:
(Insert banks and securities depositories)
Citibank, N.A.
Certified:
/s/ LEILANI S. HALL
- -------------------------------
Fund's Authorized Officer
Date: May 23rd, 1990
------------------
<PAGE> 31
SCHEDULE A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of The Enterprise
Group of Funds, Inc. for use as sub-custodians for the Fund's securities and
other assets:
Australia and New Zealand Banking Group Limited (ANZ)
Giozentrole, und Bank der oesterreichischen Sparkassen AG (Austria)
Banque Bruyelles Lambert (Belgium)
Canada Trust C0XPanY
Cedel
Citibank, N.A.-Chile
Den Danske Bank (Denmark)
Euroclear
Kansallis-Osake-Pankki (Finland)
Cradit Commercial De France
Berliner Handels-und Frankfurter Bank (Germany)
Standard Charter Bank, Hong Kong
Bank of Ireland Credito Italiano Sumitomo Trust & Banking Co., Ltd. (Japan)
Standard Charter Bank, Kuala Lumpur (Malaysia)
Citibank, N.A.-Mexico
Bank Mees & Hope N.V. (Netherlands)
Christiania Bank OG Kredit Kassa (Norway)
Standard Chartered Bank, Manila
The Development Bank of Singapore, Ltd.
Banco Hispano Americano (Spain)
Skandinaviska Enskilda Banken (Sweden)
Union Bank of Switzerland
Central Trust of China, Taipei
Standard Charter Bank, Bangkok
state Street London Limited (United Kingdom)
Certified:
/s/ LEILANI S. HALL
- --------------------------------
Fund's Authorized officer
<PAGE> 1
EXHIBIT (i)
PAGE 1
June 30, 1999
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Re: The Enterprise Group of Funds, Inc.
Registration Statement No. 2-28097
Dear Sir or Madam:
I am counsel to The Enterprise Group of Funds, Inc., (the "Fund"), and in so
acting, have reviewed Post-Effective Amendment No. 55 (the "Post Effective
Amendment") to the Fund's Registration Statement on Form N-1A, Registration
File No. 2-28097. Representatives of the Fund have advised that the Fund will
file the Post-Effective Amendment pursuant to paragraph (b) of Rule 485 ("Rule
485") promulgated under the Securities Act of 1933. In connection therewith,
the Fund has requested that I provide this letter.
In my examination of the Post-Effective Amendment, I have assumed the
conformity to the originals of all documents submitted to me as copies.
Based upon the foregoing, I hereby advise you that:
(1) the Fund is a corporation duly incorporated and validly existing
in good standings under the laws of the State of Maryland;
(2) the Common Stock to be offered has been duly authorized and, when
sold as contemplated in the Amendments, will be validly issued, fully paid and
nonassessable; and
(3) the prospectus included as part of the Post-Effective Amendment
does not include disclosure which I believe would render it ineligible to
become effective pursuant to Paragraph (b) of Rule 485.
Very truly yours,
Catherine R. McClellan
lah
<PAGE> 1
PAGE 1
EXHIBIT (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in Post-Effective Amendment No. 55
to the Registration Statement of the Enterprise Group of Funds, Inc. on Form
N-1A under the Securities Act of 1933 (File Number 2-28097) of our report dated
February 17, 1999, on our audit of the financial statements and financial
highlights of The Enterprise Group of Funds, Inc. appearing in the Registrant's
1998 Annual Report which is incorporated by reference in the Post-Effective
Amendment to the Registration Statement. We also consent to the reference of our
Firm under the captions "Financial Highlights" in the Prospectus and
"Independent Accountants" in the Statement of Additional Information.
PricewaterhouseCoopers LLP
Atlanta, Georgia
June 29, 1999
