<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1997
REGISTRATION NO. 33-21534
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
PRE-EFFECTIVE AMENDMENT NO. __ [ ]
POST-EFFECTIVE AMENDMENT NO. 12 [X]
AND/OR
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 13
------------------------
ENTERPRISE ACCUMULATION TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
------------------------
ATLANTA FINANCIAL CENTER
3343 PEACHTREE ROAD, STE. 450, ATLANTA, GA 30326
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
CATHERINE R. MCCLELLAN
ATLANTA FINANCIAL CENTER
3343 PEACHTREE ROAD, STE. 450, ATLANTA, GEORGIA 30326
(800) 432-4320
(REGISTRANT'S TELEPHONE NUMBER)
------------------------
It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b)
[X] On May 1, 1997 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)
[ ] pursuant to paragraph (a) of Rule 485 or 486
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24f-2 PROMULGATED UNDER THE INVESTMENT
COMPANY ACT OF 1940 AND HAS FILED ITS REPORT PURSUANT TO THAT RULE FOR THE YEAR
ENDED DECEMBER 31, 1996 ON FEBRUARY 24, 1997.
================================================================================
<PAGE> 2
CROSS REFERENCE SHEET
FORM N-1A
PART I
<TABLE>
<CAPTION>
ITEM CAPTION PROSPECTUS
- ---- ------------------------------------------- ------------------------------------------
<S> <C> <C>
1. Cover Page................................. Cover Page
2. Synopsis................................... Prospectus Summary
3. Condensed Financial Information............ Financial Highlights
4. General Description of Registrant.......... Investment Objectives and Policies;
Additional Information on Investment
Objectives and Policies; Additional
Information
5. Management of the Fund..................... Investment Management Agreement;
Additional Information; Investment
Techniques
5A. Management's Discussion of Fund's Please refer to Annual Report
Performance................................
6. Capital Stock and Other Securities......... Determination of Net Asset Value; Purchase
of Shares; Additional Information
7. Purchase of Securities..................... Purchase of Shares
8. Redemption or Repurchase................... Redemption of Shares
9. Legal Proceedings.......................... N/A
</TABLE>
PART B
<TABLE>
<CAPTION>
CAPTION STATEMENT OF ADDITIONAL INFORMATION
------------------------------------------- ------------------------------------------
<S> <C> <C>
10. Cover Page................................. Cover Page
11. Table of Contents.......................... Table of Contents
12. General Information and History............ N/A
13. Investment Objectives and Policies......... Investment of the Assets; Investment
Restrictions
14. Management of the Fund..................... Trustees and Officers
</TABLE>
REGISTRANT HAS REGISTERED AN INDEFINITE NUMBER OF SHARES UNDER THE
SECURITIES ACT OF 1933 PURSUANT TO RULE 24f-2 PROMULGATED UNDER THE INVESTMENT
COMPANY ACT OF 1940 AND HAS FILED ITS REPORT PURSUANT TO THAT RULE FOR THE YEAR
ENDED DECEMBER 31, 1996 ON FEBRUARY 24, 1997.
<PAGE> 3
ENTERPRISE ACCUMULATION TRUST
ATLANTA FINANCIAL CENTER
3343 PEACHTREE ROAD, N.E., STE. 450
ATLANTA, GEORGIA 30326-1022
(800) 432-4320
ENTERPRISE ACCUMULATION TRUST (the "Fund") is a registered open-end
diversified management investment company offering a broad range of investment
alternatives through its five Portfolios. It permits an investor the flexibility
of choosing among different investment objectives, through the following
Portfolios, each of which is a separate series of shares of beneficial interest
of the Fund ("Shares"). The Fund's principal Investment Adviser, Enterprise
Capital Management, Inc., selects, subject to shareholder approval, separate
sub-advisers referred to as "Portfolio Managers" that provide investment advice
for the Portfolios and that are selected on the basis of able investment
performance in their respective areas of responsibilities. The investment
objective of each Portfolio is as follows:
EQUITY PORTFOLIO: Seeks long term capital appreciation through investment
in a diversified portfolio of equity securities selected on the basis of a
value-oriented approach to investing.
SMALL CAP PORTFOLIO: Seeks capital appreciation through investment in a
diversified portfolio of equity securities of companies with market
capitalizations of under $1 billion.
INTERNATIONAL GROWTH PORTFOLIO: Seeks capital appreciation, primarily
through a diversified portfolio of non-United States equity securities.
MANAGED PORTFOLIO: Seeks growth of capital over time through investment in
a portfolio consisting of common stocks, bonds and cash equivalents, the
percentages of which will vary based on management's assessments of relative
investment values.
HIGH-YIELD BOND PORTFOLIO: Seeks maximum current income, primarily from
debt securities that are rated Ba or lower by Moody's Investor Service, Inc. or
BB by Standard & Poor's Corporation ("S&P").
Shares of the Fund are currently sold to variable accounts of life
insurance company affiliates of The Mutual Life Insurance Company of New York
("MONY") and a life insurance company affiliate of MONY that were established to
fund certain Flexible Payment Variable Annuity and Life Insurance contracts (the
"Contracts"). These variable accounts (the "Variable Accounts") invest in Shares
of the Fund in accordance with allocation instructions received from holders
(the "Contractholders") of the Contracts. Allocation rights are further
described in the attached prospectus for the Contracts. The Variable Accounts
will redeem Shares to the extent necessary to provide benefits under the
Contracts. In the future, Shares may be sold to certain other variable accounts
and affiliated entities of MONY. It is possible, although not presently
anticipated, that a material conflict could arise between and among the various
variable accounts which invest in the Fund. Such conflict could cause the
liquidation of assets of one or more of the Fund Portfolios to raise cash at
times not otherwise deemed advantageous by the Investment Adviser or Portfolio
Managers. See "Management of the Fund."
This Prospectus sets forth concisely information about the Fund that a
prospective investor ought to know before investing, and offers of sales of
shares of the Fund, must be accompanied by a current prospectus for one of the
Contracts and both should be retained for future reference. A Statement of
Additional Information dated May 1, 1997 has been filed with the Securities and
Exchange Commission and is available without charge upon written request to
MONY, Mail Drop 9-34, 1740 Broadway, New York, N.Y. 10019 [1-800-487-6669]. The
Statement of Additional Information (which is incorporated in its entirety by
reference in this Prospectus) contains more detailed information about the Fund
and its management, including more complete information about certain risk
factors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
ENTERPRISE CAPITAL MANAGEMENT, INC.
INVESTMENT ADVISER
PROSPECTUS DATED MAY 1, 1997
IN PURSUING ITS INVESTMENT OBJECTIVE, THE HIGH-YIELD BOND PORTFOLIO MAY
INVEST SIGNIFICANTLY IN LOWER-RATED BONDS, COMMONLY REFERRED TO AS "JUNK BONDS."
BONDS OF THIS TYPE ARE CONSIDERED TO BE SPECULATIVE WITH REGARD TO THE PAYMENT
OF INTEREST AND RETURN OF PRINCIPAL. INVESTMENT IN THESE TYPES OF SECURITIES
HAVE SPECIAL RISKS AND THEREFORE, MAY NOT BE SUITABLE FOR ALL INVESTORS.
INVESTORS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN
THIS PORTFOLIO.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY.................................................................... 3
FINANCIAL HIGHLIGHTS.................................................................. 5
INVESTMENT OBJECTIVES AND POLICIES.................................................... 5
Equity Portfolio.................................................................... 5
Small Cap Portfolio................................................................. 5
International Growth Portfolio...................................................... 6
Managed Portfolio................................................................... 7
High-Yield Bond Portfolio........................................................... 7
ADDITIONAL INFORMATION ON INVESTMENT OBJECTIVES AND POLICIES.......................... 8
INVESTMENT TECHNIQUES AND ASSOCIATED RISKS............................................ 8
INVESTMENT RESTRICTIONS............................................................... 13
MANAGEMENT OF THE FUND................................................................ 14
DETERMINATION OF NET ASSET VALUE...................................................... 16
PURCHASE OF SHARES.................................................................... 16
REDEMPTION OF SHARES.................................................................. 16
STATE LAW RESTRICTIONS................................................................ 16
DIVIDENDS, DISTRIBUTIONS AND TAXES.................................................... 17
CALCULATION OF PERFORMANCE............................................................ 18
ADDITIONAL INFORMATION................................................................ 18
APPENDIX.............................................................................. 20
</TABLE>
<PAGE> 5
PROSPECTUS SUMMARY
The Fund................... The Fund is a Massachusetts business trust which
issues its shares in series as is designated as a
"Portfolio". Together, the five Portfolios are
designed to enable an investor to choose a number
of investment alternatives to achieve financial
goals and to shift assets conveniently among
Portfolios when and if investment aims or
perception of the marketplace change.
Investment Objectives
and Restrictions......... The investment objective of each of the Portfolios
is set forth on the cover page of this Prospectus.
These objectives are described in more detail under
the heading "Investment Objectives and Policies."
Although each Portfolio will be actively managed by
experienced professionals, there can be no
assurance that the objectives will be achieved.
The value of the portfolio securities of each
Portfolio and therefore the Portfolio's net asset
value per share may increase or decrease because of
varying factors. There are generally two types of
risk associated with an investment in one or more
of the Portfolios: market (or interest rate) risk
and financial (or credit) risk. Market risk for
equities is the risk associated with movement of
the stock market in general. Market risk for fixed
income securities is the risk that interest rates
will change, thereby affecting their value.
Generally, the value of fixed income securities
declines as interest rates rise, and conversely,
their value rises as interest rates decline. The
second type of risk, financial or credit risk, is
associated with the financial condition and
profitability of an individual equity or fixed
income issuer. The financial risk in owning
equities is related to earnings stability and
overall financial soundness of individual issuers
and of issuers collectively which are part of a
particular industry. For fixed income securities,
credit risk relates to the financial ability of an
issuer to make periodic interest payments and
ultimately repay the principal at maturity. The
high-yield bonds in which the High-Yield Bond
Portfolio will invest are subject to greater risks
than lower yielding, higher rated fixed income
securities. (See "Additional Information on
Investment Objectives and Policies" for risk
aspects of the individual Portfolios).
Investment Adviser......... Enterprise Capital Management, Inc. ("Enterprise
Capital"), the investment adviser of each of the
Portfolios, serves also as investment adviser to
The Enterprise Group of Funds, Inc., a registered
investment company consisting of approximately
$1.02 billion of assets under management at March
31, 1997. Enterprise Capital is a subsidiary of The
Mutual Life Insurance Company of New York ("MONY")
which has approximately $20.2 billion total assets
under management. Portfolio Managers are as
follows: OpCap Advisors for the Equity and Managed
Portfolios; GAMCO Investors, Inc. for the Small
Cap; and Brinson Partners, Inc. for the
International Growth Portfolio; and Caywood-Scholl
Capital Management, Inc. for the High-Yield Bond
Portfolio.
Management Fee............. Enterprise Capital receives a monthly fee and pays
a portion of such fee to the respective Portfolio
Manager from each Portfolio at varying annual
percentage rates of average daily net assets, as
follows: .80 percent of average daily net assets
for the Equity, Small Cap, and Managed Portfolios
up to $400 million; .75 percent for assets from
$400
3
<PAGE> 6
million to $800 million; and .70 percent for assets
in excess of $800 million; .60 percent of average
daily net assets for the High-Yield Bond Portfolio
and .85 percent of average daily net assets for the
International Growth Portfolio.
Purchases and
Redemption of Shares..... Currently, shares of the Fund are sold at their net
asset value per share, without sales charge, for
allocation to the Variable Accounts as the
underlying investment for the Contracts.
Accordingly, the interest of the Contractholder
with respect to the Fund is subject to the terms of
the Contract as described in the accompanying
Prospectus for the Contract, which should be
reviewed carefully by a person considering the
purchase of a Contract. That Prospectus describes
the relationship between increases or decreases in
the net asset value of Fund shares and any
distributions on such shares, and the benefits
provided under a Contract. The rights of the
Variable Accounts as shareholders of the Fund
should be distinguished from the rights of a
Contractholder which are described in the Contract.
As long as shares of the Fund are sold for
allocation to the Variable Accounts, the terms
"shareholder" or "shareholders" in this Prospectus
shall refer to the Variable Accounts. Shares are
redeemed at their respective net asset values as
next determined after receipt of proper notice of
redemption.
The above is qualified in its entirety by the detailed information
appearing elsewhere in this Prospectus, the Statement of Additional Information,
and the accompanying Prospectus for the Contract.
4
<PAGE> 7
FINANCIAL HIGHLIGHTS
The financial highlights for each of the years presented below have been
audited by the Fund's independent accountants. This information should be read
in conjunction with the Trust's 1996 financial statements, financial highlights
and related notes thereto included in the Statement of Additional Information.
Further information regarding the performance of each Portfolio is available in
the Fund's Annual Report. Annual Reports may be obtained without charge upon
written request to MONY, Mail Drop 9-34, 1740 Broadway, New York, N.Y. 10019
(1-800-487-6669).
5
<PAGE> 8
ENTERPRISE ACCUMULATION TRUST
EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...... $ 23.35 $ 18.14 $ 17.95 $ 17.23 $ 15.24 $ 11.92 $ 12.50
-------- -------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income................... 0.37 0.33 0.28 0.18 0.17 0.24 0.30
Net realized and unrealized gain (loss)
on investments........................ 5.52 6.38 0.41 1.13 2.49 3.42 (0.58)
-------- -------- ------- ------- ------- ------- -------
Total from investment
operations................... 5.89 6.71 0.69 1.31 2.66 3.66 (0.28)
-------- -------- ------- ------- ------- ------- -------
Less dividends and distributions:
Dividends to shareholders from net
investment income..................... (0.09) (0.49) (0.18) (0.17) (0.24) (0.34) (0.21)
Distributions to shareholders from net
realized capital gains................ (0.29) (1.01) (0.32) (0.42) (0.43) -- (0.09)
-------- -------- ------- ------- ------- ------- -------
Total dividends and
distributions................ (0.38) (1.50) (0.50) (0.59) (0.67) (0.34) (0.30)
-------- -------- ------- ------- ------- ------- -------
Net asset value, end of year............ $ 28.86 $ 23.35 $ 18.14 $ 17.95 $ 17.23 $ 15.24 $ 11.92
======== ======== ======= ======= ======= ======= =======
Total return............................ 25.2% 38.4% 3.9% 7.8% 17.9% 31.2% (2.2)%
-------- -------- ------- ------- ------- ------- -------
Net assets, end of year (000)........... $314,907 $167,963 $ 88,583 $ 66,172 $33,581 $17,221 $10,248
-------- -------- ------- ------- ------- ------- -------
Ratio of net operating expenses to
average net assets.................... 0.81% 0.69% 0.67% 0.72% 0.79% 0.86% 0.92%
-------- -------- ------- ------- ------- ------- -------
Ratio of net operating expenses
(excluding waivers) to average net
assets................................ 0.81% 0.72% 0.69% 0.72% 0.79% 0.86% 0.99%
-------- -------- ------- ------- ------- ------- -------
Ratio of net investment income to
average net assets.................... 1.94% 1.94% 1.81% 1.47% 1.48% 2.09% 3.45%
-------- -------- ------- ------- ------- ------- -------
Ratio of net investment income
(excluding waivers) to average net
assets................................ 1.94% 1.91% 1.79% 1.47% 1.48% 2.09% 3.38%
-------- -------- ------- ------- ------- ------- -------
Portfolio turnover...................... 30% 29% 38% 15% 27% 41% 49%
-------- -------- ------- ------- ------- ------- -------
Average commission per share(D)......... $ 0.0567
--------
<CAPTION>
PERIOD OF
AUGUST 1, 1988 -
1989 DECEMBER 31, 1988
------ -----------------
<S> <C<C> <C>
Net asset value, beginning of year...... $10.19 $ 10.00(A)
------ ------
Income from investment operations:
Net investment income................... 0.26 --
Net realized and unrealized gain (loss)
on investments........................ 2.05 0.19
------ ------
Total from investment
operations................... 2.31 0.19
------ ------
Less dividends and distributions:
Dividends to shareholders from net
investment income..................... -- --
Distributions to shareholders from net
realized capital gains................ -- --
------ ------
Total dividends and
distributions................ -- --
------ ------
Net asset value, end of year............ $12.50 $ 10.19
====== ======
Total return............................ 22.7% 1.9%(C)
------ ------
Net assets, end of year (000)........... $5,997 $ 1,059
------ ------
Ratio of net operating expenses to
average net assets.................... 0.85% 0.85%(B)
------ ------
Ratio of net operating expenses
(excluding waivers) to average net
assets................................ 1.54% 6.79%(B)
------ ------
Ratio of net investment income to
average net assets.................... 3.93% 0.10%(B)
------ ------
Ratio of net investment income
(excluding waivers) to average net
assets................................ 3.24% (5.84)%(B)
------ ------
Portfolio turnover...................... 28% 0%
------ ------
Average commission per share(D).........
</TABLE>
- ---------------
(A) Initial public offering price per share.
(B) Annualized.
(C) Not annualized.
(D) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
6
<PAGE> 9
ENTERPRISE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year........ $ 18.48 $ 17.56 $ 18.62 $ 16.72 $ 15.11 $10.46 $12.06
-------- -------- -------- -------- ------- ------ ------
Income from investment operations:
Net investment income..................... 0.25 0.32 0.19 0.10 0.09 0.09 0.31
Net realized and unrealized gain (loss) on
investments............................. 1.82 1.75 (0.16) 2.98 3.05 4.86 (1.47)
-------- -------- -------- -------- ------- ------ ------
Total from investment
operations..................... 2.07 2.07 0.03 3.08 3.14 4.95 (1.16)
-------- -------- -------- -------- ------- ------ ------
Less dividends and distributions:
Dividends to shareholders from net
investment income....................... (0.12) (0.40) (0.10) (0.10) (0.10) (0.30) (0.15)
Distributions to shareholders from net
realized capital gains.................. (0.21) (0.75) (0.99) (1.08) (1.43) -- (0.29)
-------- -------- -------- -------- ------- ------ ------
Total dividends and
distributions.................. (0.33) (1.15) (1.09) (1.18) (1.53) (0.30) (0.44)
-------- -------- -------- -------- ------- ------ ------
Net asset value, end of year.............. $ 20.22 $ 18.48 $ 17.56 $ 18.62 $ 16.72 $15.11 $10.46
======== ======== ======== ======== ======= ====== ======
Total return.............................. 11.2% 12.3% 0.0% 19.5% 21.5% 48.1% (9.8)%
-------- -------- -------- -------- ------- ------ ------
Net assets, end of year (000)............. $192,704 $166,061 $144,880 $105,635 $31,211 $9,777 $2,744
-------- -------- -------- -------- ------- ------ ------
Ratio of net operating expenses to average
net assets.............................. 0.84% 0.69% 0.66% 0.74% 0.86% 1.00% 1.02%
-------- -------- -------- -------- ------- ------ ------
Ratio of net operating expenses (excluding
waivers) to average net assets.......... 0.84% 0.72% 0.67% 0.74% 0.86% 1.19% 1.62%
-------- -------- -------- -------- ------- ------ ------
Ratio of net investment income to average
net assets.............................. 1.35% 1.86% 1.30% 1.06% 1.05% 1.41% 3.32%
-------- -------- -------- -------- ------- ------ ------
Ratio of net investment income (excluding
waivers) to average net assets.......... 1.35% 1.83% 1.29% 1.06% 1.05% 1.22% 2.38%
-------- -------- -------- -------- ------- ------ ------
Portfolio turnover........................ 137% 70% 58% 70% 105% 120% 44%
-------- -------- -------- -------- ------- ------ ------
Average commission per share(D)........... $ 0.0480
--------
<CAPTION>
PERIOD OF
AUGUST 1, 1988 -
1989 DECEMBER 31, 1988
------ -----------------
<S> <C<C> <C>
Net asset value, beginning of year........ $10.19 $ 10.00(A)
------ ------
Income from investment operations:
Net investment income..................... 0.17 --
Net realized and unrealized gain (loss) on
investments............................. 1.70 0.19
------ ------
Total from investment
operations..................... 1.87 0.19
------ ------
Less dividends and distributions:
Dividends to shareholders from net
investment income....................... -- --
Distributions to shareholders from net
realized capital gains.................. -- --
------ ------
Total dividends and
distributions.................. -- --
------ ------
Net asset value, end of year.............. $12.06 $ 10.19
====== ======
Total return.............................. 18.4% 1.9%(C)
------ ------
Net assets, end of year (000)............. $2,302 $ 571
------ ------
Ratio of net operating expenses to average
net assets.............................. 0.95% 0.95%(B)
------ ------
Ratio of net operating expenses (excluding
waivers) to average net assets.......... 2.38% 9.22%(B)
------ ------
Ratio of net investment income to average
net assets.............................. 2.48% 0.23%(B)
------ ------
Ratio of net investment income (excluding
waivers) to average net assets.......... 1.05% (8.04)%(B)
------ ------
Portfolio turnover........................ 58% 0%
------ ------
Average commission per share(D)...........
</TABLE>
- ---------------
(A) Initial public offering price per share.
(B) Annualized.
(C) Not annualized.
(D) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
7
<PAGE> 10
w
ENTERPRISE ACCUMULATION TRUST
MANAGED PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990
---------- ---------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year....... $ 28.06 $ 20.82 $ 21.35 $ 20.11 $ 17.56 $ 12.43 $ 13.80
---------- ---------- -------- -------- -------- ------- -------
Income from investment operations:
Net investment income.................... 0.59 0.40 0.40 0.46 0.25 0.29 0.31
Net realized and unrealized gain (loss)
on investments......................... 5.99 8.97 0.15 1.55 2.95 5.31 (0.81)
---------- ---------- -------- -------- -------- ------- -------
Total from investment
operations.................... 6.58 9.37 0.55 2.01 3.20 5.60 (0.50)
---------- ---------- -------- -------- -------- ------- -------
Less dividends and distributions:
Dividends to shareholders from net
investment income...................... (0.06) (0.75) (0.46) (0.24) (0.27) (0.39) (0.28)
Distributions to shareholders from
net realized capital gains............. (0.27) (1.38) (0.62) (0.53) (0.38) (0.08) (0.59)
---------- ---------- -------- -------- -------- ------- -------
Total dividends and
distributions................. (0.33) (2.13) (1.08) (0.77) (0.65) (0.47) (0.87)
---------- ---------- -------- -------- -------- ------- -------
Net asset value, end of year............. $ 34.31 $ 28.06 $ 20.82 $ 21.35 $ 20.11 $ 17.56 $ 12.43
========== ========== ======== ======== ======== ======= =======
Total return............................. 23.5% 46.9% 2.6% 10.4% 18.6% 46.0% (3.6)%
---------- ---------- -------- -------- -------- ------- -------
Net assets, end of year (000)............ $1,935,343 $1,264,718 $689,252 $525,163 $236,175 $98,468 $45,955
---------- ---------- -------- -------- -------- ------- -------
Ratio of net operating expenses to
average net assets..................... 0.74% 0.67% 0.64% 0.66% 0.69% 0.73% 0.80%
---------- ---------- -------- -------- -------- ------- -------
Ratio of net operating expenses
(excluding waivers) to average net
assets................................. 0.74% 0.67% 0.64% 0.66% 0.69% 0.73% 0.80%
---------- ---------- -------- -------- -------- ------- -------
Ratio of net investment income to
average net assets..................... 2.16% 1.80% 2.23% 3.21% 2.06% 2.42% 3.79%
---------- ---------- -------- -------- -------- ------- -------
Ratio of net investment income (excluding
waivers) to average net assets......... 2.16% 1.80% 2.23% 3.21% 2.06% 2.42% 3.79%
---------- ---------- -------- -------- -------- ------- -------
Portfolio turnover....................... 29% 31% 33% 21% 23% 57% 112%
---------- ---------- -------- -------- -------- ------- -------
Average commission per share(D).......... $ 0.0531
----------
<CAPTION>
PERIOD OF
AUGUST 1, 1988 -
1989 DECEMBER 31, 1986
------- -----------------
<S> <C> <C>
Net asset value, beginning of year....... $ 10.44 $ 10.00(A)
------- ------
Income from investment operations:
Net investment income.................... 0.34 0.05
Net realized and unrealized gain (loss)
on investments......................... 3.06 0.39
------- ------
Total from investment
operations.................... 3.40 0.44
------- ------
Less dividends and distributions:
Dividends to shareholders from net
investment income...................... (0.03) --
Distributions to shareholders from
net realized capital gains............. (0.01) --
------- ------
Total dividends and
distributions................. (0.04) --
------- ------
Net asset value, end of year............. $ 13.80 $ 10.44
======= ======
Total return............................. 32.6% 4.4%(C)
------- ------
Net assets, end of year (000)............ $22,459 $ 3,238
------- ------
Ratio of net operating expenses to
average net assets..................... 0.85% 0.85%(B)
------- ------
Ratio of net operating expenses
(excluding waivers) to average net
assets................................. 1.05% 3.37%(B)
------- ------
Ratio of net investment income to
average net assets..................... 5.10% 3.88%(B)
------- ------
Ratio of net investment income (excluding
waivers) to average net assets......... 4.09% 1.36%(B)
------- ------
Portfolio turnover....................... 196% 38%
------- ------
Average commission per share(D)..........
</TABLE>
- ---------------
(A) Initial public offering price per share.
(B) Annualized.
(C) Not annualized.
(D) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
8
<PAGE> 11
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, PERIOD OF
------------------- NOVEMBER 18,1994 -
1996 1995 DECEMBER 31,1994
------- ------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of year.................... $ 5.39 $ 4.96 $ 5.00(A)
------- ------- -------
Income from investment operations:
Net investment income................................. 0.05 0.04 --
Net realized and unrealized gain (loss) on
investments......................................... 0.63 0.67 (0.04)
------- ------- -------
Total from investment operations............ 0.68 0.71 (0.04)
------- ------- -------
Less dividends and distributions:
Dividends to shareholders from net investment
income.............................................. -- (0.04) --
Distributions to shareholders from net realized
capital gains....................................... (0.02) (0.24) --
------- ------- -------
Total dividends and distributions........... (0.02) (0.28) --
------- ------- -------
Net asset value, end of year.......................... $ 6.05 $ 5.39 $ 4.96
======= ======= =======
Total return.......................................... 12.7% 14.6% (0.8%)(C)
------- ------- -------
Net assets, end of year (000)......................... $52,768 $18,598 $ 3,247
------- ------- -------
Ratio of net operating expenses to average net
assets.............................................. 1.38% 1.55% 1.55%(B)
------- ------- -------
Ratio of net operating expenses (excluding waivers) to
average net assets.................................. 1.38% 2.21% 8.85%(B)
------- ------- -------
Ratio of net investment income to average net
assets.............................................. 1.32% 1.17% 0.80%(B)
------- ------- -------
Ratio of net investment income (excluding waivers) to
average net assets.................................. 1.32% 0.51% (6.34%)(B)
------- ------- -------
Portfolio turnover.................................... 21% 27% 0%
------- ------- -------
Average commission per share(D)....................... $0.0224
-------
</TABLE>
- ---------------
(A) Initial public offering price per share.
(B) Annualized.
(C) Not annualized.
(D) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
9
<PAGE> 12
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, PERIOD OF
------------------- NOVEMBER 18, 1994 -
1996 1995 DECEMBER 31,1994
------- ------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of year.................... $ 5.31 $ 4.98 $ 5.00(A)
------- ------- -------
Income from investment operations:
Net investment income................................. 0.45 0.45 0.04
Net realized and unrealized gain (loss) on
investments......................................... 0.21 0.35 (0.01)
------- ------- -------
Total from investment operations............ 0.66 0.80 0.03
Less dividends and distributions:
Dividends to shareholders from net investment
income.............................................. (0.45) (0.45) (0.05)
Distributions to shareholders from net realized
capital gains....................................... (0.01) (0.02) --
------- ------- -------
Total dividends and distributions........... (0.46) (0.47) (0.05)
------- ------- -------
Net asset value, end of year.......................... $ 5.51 $ 5.31 $ 4.98
======= ======= =======
Total return.......................................... 12.9% 16.6% 0.5%(C)
------- ------- -------
Net assets, end of year (000)......................... $34,411 $15,223 $ 1,421
------- ------- -------
Ratio of net operating expenses to average net
assets.............................................. 0.85% 0.85% 0.85%(B)
------- ------- -------
Ratio of net operating expenses (excluding waivers) to
average net assets.................................. 0.94% 1.59% 7.80%(B)
------- ------- -------
Ratio of net investment income to average net
assets.............................................. 8.57% 8.51% 7.84%(B)
------- ------- -------
Ratio of net investment income (excluding waivers) to
average net assets.................................. 8.48% 7.77% 0.80%(B)
------- ------- -------
Portfolio turnover.................................... 175% 115% 0%
------- ------- -------
</TABLE>
- ---------------
(A) Initial public offering price per share.
(B) Annualized.
(C) Not Annualized.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of each Portfolio of the Fund are
described below. Investment objectives of each Portfolio are fundamental
policies which cannot be changed for any Portfolio without a majority vote of
the shareholders of that Portfolio; investment policies are not fundamental and
may be adjusted by the Portfolio Managers, subject to the oversight of
Enterprise Capital, at any time, usually in response to its perception of
developments in the securities markets. The extent to which a Portfolio will be
able to achieve its distinct investment objectives depends upon each Portfolio
Manager's ability to evaluate and develop the information it receives into a
successful investment program. Although each Portfolio will be managed by
experienced professionals, there can be no assurance that any Portfolio will
achieve its investment objectives. The values of the securities held in each
Portfolio will fluctuate and the net asset value per share at the time shares
are redeemed may be more or less than the net asset value per share at the time
of purchase. Investors should also refer to "Investment Techniques" for
additional information concerning the investment techniques employed for some or
all of the Portfolios.
10
<PAGE> 13
EQUITY PORTFOLIO
The investment objective of the Equity Portfolio is long-term capital
appreciation through investment in securities (primarily equity securities) of
companies that are believed by the Portfolio Manager to be undervalued in the
marketplace in relation to factors such as the companies' assets or earnings. It
is the Portfolio Manager's intention to invest in securities of companies which
in the Portfolio Manager's opinion possess one or more of the following
characteristics: undervalued assets, valuable consumer or commercial franchises,
securities valuation below peer companies, substantial and growing cash flow
and/or a favorable price to book value relationship. Investment policies aimed
at achieving the Portfolio's objective are set in a flexible framework of
securities selection which primarily includes equity securities, such as common
stocks, preferred stocks, convertible securities, rights and warrants in
proportions which vary from time-to-time. Under normal circumstances at least
65% of the Portfolio's assets will be invested in equity securities. The
Portfolio will invest primarily in stocks listed on the New York Stock Exchange.
In addition, it may also purchase securities listed on other domestic securities
exchanges, securities traded in the domestic over-the-counter market and foreign
securities provided that they are listed on a domestic or foreign securities
exchange or represented by American Depository Receipts listed on a domestic
securities exchange or traded in the United States over-the-counter market.
SMALL CAP PORTFOLIO
The investment objective of the Small Cap Portfolio is to seek capital
appreciation through investments in a diversified portfolio consisting primarily
of equity securities of companies with market capitalizations of under $1
billion. Smaller-capitalization companies are often under-priced for the
following reasons: (i) institutional investors, which currently represent a
majority of the trading volume in the shares of publicly-traded companies, are
often less interested in such companies because in order to acquire an equity
position that is large enough to be meaningful to an institutional investor,
such an investor may be required to buy a large percentage of the company's
outstanding equity securities and (ii) such companies may not be regularly
researched by stock analysts, thereby resulting in greater discrepancies in
valuation. The Portfolio may also purchase securities in initial public
offerings, or shortly after such offerings have been completed, when the
Portfolio Manager believes that such securities have greater-than-average market
appreciation potential. Under normal circumstances at least 65% of the
Portfolio's assets will be invested in equity securities. The majority of
securities purchased by the Portfolio will be traded on the New York Stock
Exchange, the American Stock Exchange or in the over-the-counter market, and
will also include options, warrants, bonds, notes and debentures which are
convertible into or exchangeable for, or which grant a right to purchase or
sell, such securities. In addition, the Portfolio may also purchase foreign
securities provided that they are listed on a domestic or foreign securities
exchange or are represented by American Depository Receipts listed on a domestic
securities exchange or traded in the United States over-the-counter market.
In pursuing its objective, the Portfolio's strategy will be to invest in
stocks of companies with value that may not be fully reflected by current stock
price. Since small companies tend to be less actively followed by stock
analysts, the market may overlook favorable trends and then adjust its valuation
more quickly once investor interest is surfaced. The Portfolio Manager seeks out
companies in the public market that are selling at a discount to their private
market value (PMV) measured using proprietary research techniques in areas of
core competencies. The Portfolio Manager then determines whether there is an
emerging catalyst that will focus investor attention on the underlying assets of
the company. Small companies may be subject to a valuation catalyst such as
increased investor attention, takeover efforts or a change in management.
INTERNATIONAL GROWTH PORTFOLIO
The International Growth Portfolio seeks capital appreciation, primarily
through a diversified portfolio of non-United States equity securities. It is a
fundamental policy of the Portfolio that it will invest at least 80% of the
value of its assets (except when maintaining a temporary defensive position) in
equity securities of companies domiciled outside the United States. That portion
of the Portfolio not invested in equity securities is, in normal circumstances,
invested in U.S. and foreign government securities, high grade commercial paper,
certificates of deposit, foreign currency, bankers acceptances, cash and cash
equivalents, time deposits,
11
<PAGE> 14
repurchase agreements and similar money market instruments, both foreign and
domestic. The Portfolio may invest in convertible debt securities of foreign
issuers which are convertible into equity securities at such time as a market
for equity securities is established in the country involved.
The Portfolio Manager's investment perspective for the Portfolio is to
invest in the equity securities of non-U.S. markets and companies which are
believed to be undervalued based upon internal research and proprietary
valuation systems. This international equity strategy reflects the Portfolio
Manager's decisions concerning the relative attractiveness of asset classes, the
individual international equity markets, industries across and within those
markets, other common risk factors within those markets and individual
international companies. The Portfolio Manager initially identifies those
securities which it believes to be undervalued in relation to the issuer's
assets, cash flow, earnings and revenues. The relative performance of foreign
currencies is an important factor in the Portfolio's performance. The Portfolio
Manager may manage the Portfolio's exposure to various currencies to take
advantage of different yield, risk and return characteristics. The Portfolio
Manager's proprietary valuation model determines which securities are potential
candidates for inclusion in the Portfolio.
The benchmark for the fund is the European, Australian, Far East ("EAFE")
Index (the "Benchmark"). The Benchmark is a market driven broad based index
which includes non-U.S. equity markets in terms of capitalization and
performance. The Benchmark is designed to provide a representative total return
for all major stock exchanges located outside the U.S. From time-to-time, the
Portfolio Manager may substitute securities in an equivalent index when it
believes that such securities in the index more accurately reflect the relevant
international market.
As a general matter, the Portfolio Manager will purchase for the Fund only
securities contained in the underlying index relevant to the Benchmark. The
Portfolio Manager will attempt to enhance the long-term return and risk
performance of the Portfolio relative to the Benchmark by deviating from the
normal Benchmark mix of country allocation and currencies in reaction to
discrepancies between current market prices and fundamental values. The active
management process is intended to produce a superior performance relative to the
Benchmark index.
The Portfolio Manager will purchase securities of companies domiciled in a
minimum of eight to 12 countries outside the United States.
MANAGED PORTFOLIO
The investment objective of the Managed Portfolio is to achieve growth of
capital over time through investment in a portfolio consisting of common stocks,
bonds and cash equivalents, the percentages of which will vary based on the
Portfolio Manager's assessments of the relative outlook for such investments. In
seeking to achieve its investment objective, the types of equity securities in
which the Portfolio may invest are likely to be the same as those in which the
Equity Portfolio invests, although securities of the type in which the Small Cap
Portfolio invests may, to a lesser extent, be included. Debt securities are
expected to be predominantly investment grade intermediate to long term U.S.
Government and corporate debt, although the Portfolio will also invest in
high-quality short-term money market and cash equivalent securities and may
invest almost all of its assets in such securities when the Portfolio Manager
deems it advisable in order to preserve capital. In addition, the Portfolio may
also purchase foreign securities provided that they are listed on a domestic or
foreign securities exchange or are represented by American Depository Receipts
listed on a domestic securities exchange or traded in the United States
over-the-counter market.
The allocation of the Portfolio's assets among the different types of
permitted investments will vary from time-to-time based upon the Portfolio
Manager's evaluation of economic and market trends and its perception of the
relative values available from such types of securities at any given time. There
is neither a minimum nor a maximum percentage of the Portfolio's assets that
may, at any given time, be invested in any of the types of investments
identified above. Consequently, while the Portfolio will earn income to the
extent it is invested in bonds or cash equivalents, the Portfolio does not have
any specific income objective.
12
<PAGE> 15
HIGH-YIELD BOND PORTFOLIO
The investment objective of the High-Yield Bond Portfolio is maximum
current income, primarily from debt securities that are rated Ba or lower by
Moody's or BB or lower by S&P. It is a fundamental policy of the Portfolio that
it will invest at least 80% of the value of its total assets (except when
maintaining a temporary defensive position) in high-yielding, income-producing
corporate bonds that are rated B3 or better by Moody's or B- or better by S&P.
The corporate bonds in which the Portfolio invests are high-yielding but
normally carry a greater credit risk than bonds with higher ratings. In
addition, such bonds may involve greater volatility of price than higher-rated
bonds. For a discussion of High-Yield Securities and related risks, see
"Investment Techniques and Associated Risks -- High-Yield Securities" at page
14.
The Portfolio's investments are selected by the Portfolio Manager after
careful examination of the economic outlook to determine those industries that
appear favorable for investments. Industries going through a perceived decline
generally are not candidates for selection. After the industries are selected,
bonds of issuers within those industries are selected based on their
creditworthiness, their yields in relation to their credit and the relative
strength of their common stock prices. Companies near or in bankruptcy are not
considered for investment. The Portfolio does not purchase bonds which are rated
Ca or lower by Moody's or CC or lower by S&P or which, if unrated, in the
judgment of the Portfolio Manager have characteristics of such lower-grade
bonds. Should an investment purchased with the above-described credit quality
requisites be downgraded to Ca or lower or CC or lower, the Portfolio Manager
shall have discretion to hold or liquidate the security.
Subject to the restrictions described above, under normal circumstances, up
to 20% of the Portfolio's assets may include: (1) bonds rated Caa by Moody's or
CCC by S&P; (2) unrated debt securities which, in the judgment of the Portfolio
Manager have characteristics similar to those described above; (3) convertible
debt securities; (4) puts, calls and futures as hedging devices; (5) foreign
issuer debt securities; and (6) short-term money market instruments, including
certificates of deposit, commercial paper, U.S. Government Securities and other
income-producing cash equivalents. For a discussion on options and futures and
their related risks, see "Investment Techniques and Associated Risks," at page
14.
ADDITIONAL INFORMATION ON INVESTMENT OBJECTIVES AND POLICIES
For the Equity and Small Cap Portfolios, at times when the investment
climate is viewed as favorable, common stocks will be heavily emphasized. Under
normal circumstances, at least 65% of each Portfolio's total assets will be
invested in common stocks or securities convertible into common stocks.
Under normal conditions, no less than 80% of the total assets of the
International Growth and High-Yield Bond Portfolios will be invested in equity
or debt securities identified in the respective Portfolio policies listed above.
In the event that future economic or financial conditions adversely affect
equity securities, or stocks are considered overvalued, each of the Equity,
Small Cap, and International Growth Portfolios may temporarily invest a
substantial portion of its assets in debt securities, with an emphasis on money
market instruments or cash and cash equivalents, until the Portfolio Manager
determines that market conditions warrant returning to investments in equity
securities. Please refer to the discussion on "Defensive Tactics" at page 18.
Each Portfolio will in the normal course have varying amounts of cash
assets which have not yet been invested in accordance with its objectives. This
cash will be temporarily invested in high quality short-term money market
securities and cash equivalents.
Management of Assets
The Portfolio Managers intend to manage each Portfolio's assets by buying
and selling securities to help attain its investment objective. This may result
in increases or decreases in a Portfolio's current income available for
distribution to its shareholders. While none of the Portfolios is managed with
the intent of generating short-term capital gains, each of the Portfolios may
dispose of investments (including money
13
<PAGE> 16
market instruments) regardless of the holding period if, in the opinion of the
Portfolio 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.
During periods of unusual market conditions when the Portfolio Manager
believes that investing for defensive purposes is appropriate, or in order to
meet anticipated redemption requests, part or all of the assets of one or more
of the Portfolios may be invested in cash or cash equivalents including
obligations listed below.
The portfolio turnover rates of the Portfolios cannot be accurately
predicted. Nevertheless, it is anticipated that the International Growth
Portfolio will have an annual turnover rate (excluding turnover of securities
having a maturity of one year or less) of 100% or less. A 100% annual turnover
rate would occur, for example, if all the securities in a Portfolio's investment
portfolio were replaced once in a period of one year.
INVESTMENT TECHNIQUES AND ASSOCIATED RISKS
The investment techniques or instruments described below are used for the
Portfolios' investment programs:
Short-Term Investments. Each Portfolio 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 instruments"). 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 Portfolio may invest include
government obligations, certificates of deposit, bankers' acceptances,
commercial paper, short-term corporate securities and repurchase agreements. The
International Growth Portfolio may invest in all of the above, both foreign and
domestic, including foreign currency, foreign time deposits, and foreign bank
acceptances.
Repurchase Agreements. Each Portfolio may acquire securities subject to
repurchase agreements. Under a typical repurchase agreement, a Portfolio would
acquire a debt security for a relatively short period (usually for one day and
not for more than one week) subject to an obligation of the seller to repurchase
and of the Portfolio to resell the debt security at an agreed-upon higher price,
thereby establishing a fixed investment return during the Portfolio's holding
period. A Portfolio will enter into repurchase agreements with member banks of
the Federal Reserve System having total assets in excess of $500 million and
with dealers registered with the Securities and Exchange Commission. Under each
repurchase agreement the selling institution will be required to maintain as
collateral securities whose market value is at least equal to the repurchase
price. Repurchase agreements could involve certain risks in the event of default
or insolvency of the selling institution, including costs of disposing of
securities held as collateral and any loss resulting from delays or restrictions
upon the Portfolio's ability to dispose of securities. Pursuant to guidelines
established by the Fund's Board of Trustees, the Portfolio Manager considers the
creditworthiness of those banks and non-bank dealers with which a Portfolio
enters into repurchase agreements and monitors on an ongoing basis the value of
securities held as collateral to ensure that such value is maintained at the
required level. A Portfolio will not enter into a repurchase agreement with a
dealer if the agreement has a maturity beyond seven days.
Loans of Portfolio Securities. Each Portfolio may lend its portfolio
securities if such loans are secured continuously by collateral (cash, U.S.
Government or agency obligations or letters of credit) maintained on a daily
basis in an amount at least equal at all times to the market value of the
securities loaned and if the Portfolio does not incur any fees (other than the
transaction fees of its custodian bank) in connection with such loans. A
Portfolio may call the loan at any time on five days' notice and reacquire the
loaned securities. During the loan period, the Portfolio would continue to
receive the equivalent of the interest paid by the issuer on the securities
loaned and would also have the right to receive the interest on investment of
the cash collateral in short-term debt instruments. A portion of either or both
kinds of such interest may be paid to the
14
<PAGE> 17
borrower of such securities. It is not intended that the value of the securities
loaned, if any, would exceed 10% of the value of a Portfolio's total assets.
Securities loans must also meet applicable tests under the Internal Revenue Code
of 1986, as amended (the "Code"). A Portfolio could experience various costs or
losses if a borrower defaults on its obligation to return the borrowed
securities.
Options and Futures. To the extent permitted by Arizona and New York law,
each of the Equity, Small Cap and International Growth Portfolios intend to
engage in futures contracts or options on futures contracts for bona fide
hedging or other purposes, and to write calls and puts on individual securities.
When either the Equity, Small Cap or International Growth Portfolio anticipates
a significant market or market sector advance, the purchase of a futures
contract affords a hedge against not participating in the advance at a time when
such Portfolio is not fully invested ("anticipatory hedge"). Such a purchase of
a futures contract would serve as a temporary substitute for the purchase of
individual securities, which then may be purchased in an orderly fashion once
the market has stabilized. As individual securities are purchased, an equivalent
amount of futures contracts could be terminated by offsetting sales. Any such
Portfolio may sell futures contracts in anticipation of or in a general market
or market sector decline that may adversely affect the market value of such
Portfolio's securities ("defensive hedge"). To the extent that the Equity, Small
Cap or International Growth Portfolio of securities changes in value in
correlation with the underlying security or index, the sale of futures contracts
would substantially reduce the risk to the Portfolios of a market decline and by
so doing, provide an alternative to the liquidation of securities positions in
the Portfolios with attendant transaction costs. So long as the Commodity
Futures Trading Commission rules so require, none of the Equity, Small Cap or
International Growth Portfolios will enter into any financial futures or options
contract unless such transactions are for bona-fide hedging purposes, or for
other purposes only if the aggregate initial margins and premiums required to
establish such non-hedging positions would not exceed 5% of the liquidation
value of such Portfolio's assets. When writing put options, a Portfolio will
maintain in a segregated account at its Custodian liquid assets with a value
equal to at least the exercise price of the option to secure its obligation to
pay for the underlying security. As a result, such Portfolio forgoes the
opportunity of trading the segregated assets or writing calls against those
assets. There may not be a complete correlation between the price of options and
futures and the market prices of the underlying securities. The Portfolio may
lose the ability to profit from an increase in the market value of the
underlying security or may lose its premium payment. If due to a lack of a
market a Portfolio could not effect a closing purchase transaction with respect
to an over-the-counter ("OTC") option, it would have to hold the callable
securities until the call lapsed or was exercised.
The Managed Portfolio is authorized to, but does not presently intend to,
purchase, sell and write options and purchase and sell futures contracts for
hedging and other purposes. In the event that the Portfolio Manager intends in
the future to engage in such transactions, appropriate disclosures will be made
to existing and prospective shareholders.
Except as otherwise indicated, the Portfolio Managers may engage in the
following hedging transactions to seek to hedge all or a portion of a
Portfolio's assets against market value changes resulting from changes in equity
values, interest rates and currency fluctuations utilizing covered options,
futures and forwards. 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.
Call Options
The Portfolios may write (sell) call options that are listed on national
securities exchanges or are available in the over-the-counter market through
primary broker-dealers. Call options are short-term contracts with a duration of
nine months or less. Such Portfolios of the Fund may only write call options
which are "covered," meaning that the Portfolio either owns the underlying
security or has an absolute and immediate right to acquire that security,
without additional cash consideration, upon conversion or exchange of other
securities currently held in the Portfolio. In addition, no Portfolio will,
prior to the expiration of a call option, permit the call to become uncovered.
If a Portfolio writes a call option, the purchaser of the option has the right
to buy (and the Portfolio has the option to sell) the underlying security
against payment of the exercise price throughout the term of the option. The
Portfolio's obligation to deliver the underlying security against payment of the
exercise price would terminate either upon expiration of the option or earlier
if the Portfolio
15
<PAGE> 18
were to effect a "closing purchase transaction" through the purchase of an
equivalent option on an exchange. The Portfolio would not be able to effect a
closing purchase transaction after it had received notice of exercise. The
International Growth Portfolio may purchase and write covered call options on
foreign and U.S. securities and indices and enter into related closing
transactions.
Generally, such a Portfolio intends to write listed covered calls when it
anticipates that the rate of return from doing so is attractive, taking into
consideration the premium income to be received, the risks of a decline in
securities prices during the term of the option, the probability that closing
purchase transactions will be available if a sale of the securities is desired
prior to the exercise, or expiration of the options, and the cost of entering
into such transactions. A principal reason for writing calls on a securities
portfolio is to attempt to realize, through the receipt of premium income, a
greater return than would be earned on the securities alone. A covered call
writer such as a Portfolio, which owns the underlying security has, in return
for the premium, given 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 are a
relatively new and untested concept, it is impossible to predict the amount of
trading interest which may exist in such options, and there can be no assurance
that viable exchange and over-the-counter markets will develop or continue. The
Portfolios will write covered call options only if there appears to be a liquid
secondary market for such options. If, however, an option is written and a
liquid secondary market does not exist, it may be impossible to effect a closing
purchase transaction in the option. In that event, the Portfolio may not be able
to sell the underlying security until the option expires or the option is
exercised, even though it may be advantageous to sell the underlying security
before that time.
The Portfolios will only engage in hedging transactions against changes
resulting from market conditions in the values of securities owned or expected
to be owned by the Portfolios. Unless otherwise indicated, a Portfolio will not
enter into a hedging transaction (except for closing transactions) if,
immediately thereafter, the sum of the amount of the initial deposits and
premiums on open contracts and options would exceed 20% of the Portfolio's total
assets taken at current value.
PORTFOLIO TRANSACTIONS
The Portfolio Managers' primary consideration when executing security
transactions with broker-dealers is to obtain, and maintain the availability of,
execution at the most favorable prices and in the most effective manner
possible. A Portfolio Manager may select, under certain conditions, Oppenheimer
& Co., Inc., an affiliate of the OpCap Advisors, Inc., the Portfolio Manager of
the Equity, Small Cap and Managed Portfolios, to execute each Portfolio's
transactions. When selecting broker-dealers, other than Oppenheimer & Co., Inc.,
to execute a Portfolio's transactions, the Portfolio Managers may consider their
record of sales of shares of other investment company clients of the Portfolio
Managers. Selection of broker-dealers to execute portfolio transactions must be
done in a manner consistent with the foregoing primary consideration, the
"Conduct Rules" of the National Association of Securities Dealers, Inc. and such
other policies as the Board of Trustees may determine. (For a further discussion
of portfolio trading, see the Statement of Additional Information, "Investment
Management and Other Services.")
GENERAL RISKS ASSOCIATED WITH EQUITY (EQUITY, SMALL CAP, INTERNATIONAL GROWTH
AND MANAGED) PORTFOLIOS
The Equity Portfolios seek to reduce risk of loss of principal due to
changes in the value of individual stocks by investing in a diversified
portfolio of common stocks and through the use of options on stocks. Such
investment techniques do not, however, eliminate all risks. Investors should
expect the value of the Equity Portfolios and the net asset value of their
shares to fluctuate based on market conditions.
RISK ASPECTS OF THE INDIVIDUAL PORTFOLIOS
Small Cap Portfolio. The Small Cap Portfolio is expected to have greater
risk exposure and reward potential than a fund which invests primarily in
larger-capitalization companies. The trading volumes of securities of
smaller-capitalization companies are normally less than those of
larger-capitalization companies.
16
<PAGE> 19
This often translates into greater price swings, both upward and downward. Since
trading volumes are lower, new demand for the securities of such companies could
result in disproportionately large increases in the price of such securities.
The waiting period for the achievement of an investor's objectives might be
longer since these securities are not closely monitored by research analysts
and, thus, it takes more time for investors to become aware of fundamental
changes or other factors which have motivated the Portfolio's purchase.
Smaller-capitalization companies often achieve higher growth rates and
experience higher failure rates than do larger-capitalization companies.
It is the present intention of the Equity, Small Cap, International Growth
and Managed Portfolio Managers with respect to each of the respective Portfolios
to invest no more than 5 percent of its net assets in bonds rated below Baa3 by
Moody's or BBB by S&P (commonly known as "junk bonds"). In the event that the
Portfolio Managers intend in the future to invest more than 5% of the net assets
of any such Portfolio in junk bonds, appropriate disclosures will be made to
existing and prospective shareholders. For information about the possible risks
of investing in junk bonds see "High-Yield Securities" below and "Investment of
the Assets" in the Statement of Additional Information.
International Growth Portfolio. The International Growth Portfolio carries
additional risks associated with possibly less stable foreign securities and
currencies. Refer to "Foreign Currency Values and Transactions" and "Foreign
Securities" sections of the Statement of Additional Information.
Managed Portfolio. An investment in the Managed Portfolio will entail both
market and financial risk, the extent of which depends on the amount of the
Portfolio's assets which are committed to equity, longer term debt or money
market securities at any particular time. The Managed Portfolio may invest in
mortgage-backed securities. Such securities, while similar to other fixed-income
securities, involve additional risk because mortgage prepayments are passed
through to the holder of the mortgage-backed security and must be reinvested.
When interest rates fall, prepayments tend to rise. The Portfolio may have to
reinvest that portion of its assets invested in such securities more frequently
when interest rates are low than when interest rates are high.
Although the Managed Portfolio seeks to reduce credit risks, i.e., failure
of obligors to pay interest and principal, through careful selection of
investments, and it seeks to reduce market risks resulting from fluctuations in
the principal value of debt obligations due to changes in prevailing interest
rates by careful timing of maturities of investments, such risks cannot be
eliminated, and these factors will affect the net asset value of shares in the
Managed Portfolio. The value of debt obligations has an inverse relationship
with prevailing interest rates. The risks of investing in fixed income
securities are greater when such securities are high-yield securities.
HIGH-YIELD SECURITIES
Notwithstanding the investment policies and restrictions applicable to the
High-Yield Bond Portfolio which are 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 impacted by various
factors, as discussed below:
High-Yield Bond Market
The high-yield bond market is relatively new and has grown in the context
of a long economic expansion. Any downturn in the economy may have a negative
impact on the perceived ability of the issuer to make principal and interest
payments which may adversely affect the value of outstanding high-yield
securities and reduce market liquidity.
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Sensitivity to Interest Rate and Economic Changes
In general, the market prices of bonds bear an inverse relationship to
interest rates; as interest rates increase, the prices of bonds decrease. The
same relationship may hold for high-yield bonds, but in the past high-yield
bonds have been somewhat less sensitive to interest rate changes than treasury
and investment grade bonds. While the price of high-yield bonds may not decline
as much, relatively, as the prices of treasury or investment grade bonds decline
in an environment of rising interest rates, the market price, or value, of a
high-yield bond will be expected to decrease in periods of increasing interest
rates, negatively impacting the net asset value of the High-Yield Bond
Portfolio. High-yield bond prices may not increase as much, relatively, as the
prices of treasury or investment grade bonds in periods of decreasing interest
rates. Payments of principal and interest on bonds are dependent upon the
issuer's ability to pay. Because of the generally lower creditworthiness of
issuers of high-yield bonds, changes in the economic environment generally, or
in an issuer's particular industry or business, may severely impact the ability
of the issuer to make principal and interest payments and may depress the price
of high-yield securities more significantly than such changes would impact
higher rated, investment grade securities.
Payment Expectations
Many high-yield bonds contain redemption or call provisions which might be
expected to be exercised in periods of decreasing interest rates. Should bonds
in which the High-Yield Bond Portfolio has invested be redeemed or called during
such an interest rate environment, the Portfolio would have to sell such
securities without reference to their investment merit and reinvest the proceeds
received in lower-yielding securities, resulting in a decreased return for
investors in the High-Yield Bond Portfolio. In addition, such redemptions or
calls may reduce the High-Yield Bond Portfolio's asset base over which the
Portfolio's investment expenses may be spread.
Liquidity and Valuation
Because of periods of relative illiquidity, many high-yield bonds may be
thinly traded. As a result, the Board of Directors' ability to accurately value
high-yield bonds and determine the net asset value of the High-Yield Bond
Portfolio, as well as the Portfolio's ability to sell such securities, may be
limited. Public perception of and adverse publicity concerning high-yield
securities may have a significant negative impact on the value and liquidity of
high-yield securities, even though not based on fundamental investment analysis.
DEFENSIVE TACTICS
Any or all of the Portfolios may at times for defensive purposes, at the
determination of the Portfolio Manager, temporarily place all or a portion of
their assets in cash, short-term commercial paper (i.e. short-term unsecured
promissory notes issued by corporations to finance short-term credit needs),
United States Government Securities, high-quality debt securities (including
"Eurodollar" and "Yankee Dollar" obligations, i.e., U.S. issuer borrowings
payable overseas in U.S. funds and obligations of foreign issuers payable in
U.S. funds), non-convertible preferred stocks and obligations of banks when in
the judgment of the Portfolio Manager such investments are appropriate in light
of economic or market conditions. The International Growth Portfolio may invest
in all of the above, both foreign and domestic, including foreign currency,
foreign time deposits, and foreign bank acceptances. When a Portfolio takes a
defensive position, it may not be following the fundamental investment policy of
the Portfolio.
Tax Considerations
To the extent that the High-Yield Bond Portfolio invests in securities
structured as zero coupon bonds, the Portfolio will be required to report
interest income even though no cash interest payment is received until maturity
of the bond. Investors in the High-Yield Bond Portfolio would be taxed on this
interest income even though no cash distribution of such interest is received in
the year in which such income is taxed.
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INVESTMENT RESTRICTIONS
Each Portfolio is subject to certain investment restrictions which,
together with its investment objective, are fundamental policies changeable only
by shareholder vote. Under some of those restrictions, each Portfolio may not:
1. As to 75% of the assets of any Portfolio, invest more than 5% of
the value of its total assets in the securities of any one issuer, or
purchase more than 10% of the voting securities, or more than 10% of any
class of security, of any issuer (for this purpose all outstanding debt
securities of an issuer are considered as one class and all preferred stock
of an issuer are considered as one class).
2. Concentrate its investments in any particular industry, but if
deemed appropriate for attaining its investment objective, a Portfolio may
invest up to 25% of its total assets (valued at the time of investment) in
any one industry classification used by that Portfolio for investment
purposes.
3. Invest more than 5% of the value of its total assets in securities
of issuers having a record, together with predecessors, of less than three
years of continuous operation.
4. Make loans, except through the purchase of U.S. Government
securities and corporate debt obligations, repurchase agreements or lending
portfolio securities as described above under "Loans of Portfolio
Securities".
5. Borrow money in excess of 10% of the value of its total assets. It
may borrow only as a temporary measure for extraordinary or emergency
purposes and will make no additional investments while such borrowings
exceed 5% of the total assets. Such prohibition against borrowing does not
prohibit escrow or other collateral or margin arrangements in connection
with the hedging instruments which a Portfolio is permitted to use by any
of its other fundamental policies.
6. Invest more than 10% of its net assets in illiquid securities
(securities for which market quotations are not readily available) and
repurchase agreements which have a maturity of longer than seven days.
Other investment restrictions are described in the Statement of Additional
Information.
All percentage limitations apply immediately after a purchase or initial
investment and any subsequent change in any applicable percentage resulting from
market fluctuations or other changes in the amount of total assets does not
require elimination of any security from a Portfolio.
MANAGEMENT OF THE FUND
The Fund's Board of Trustees has overall responsibility for the management
of the Fund under the laws of Massachusetts governing the responsibilities of
trustees of a Massachusetts business trust. In general, such responsibilities
are comparable to those of directors of a Massachusetts business corporation.
The Board of Trustees of the Fund has undertaken to monitor the Fund for the
existence of any material irreconcilable conflict between the interests of
variable annuity Contractholders and variable life insurance Contractholders and
shall report any such conflict to the boards of MONY and MONY America. The
Boards of Directors of those companies have agreed to be responsible for
reporting any potential or existing conflicts to the Trustees of the Fund and,
at their own cost, to remedy such conflict up to and including establishing a
new registered management investment company and segregating the assets
underlying the variable annuity contracts and the variable life insurance
contracts. The Statement of Additional Information contains information about
the Trustees and Officers of the Fund.
INVESTMENT ADVISER AGREEMENT
Enterprise Capital provides administrative services to the Portfolios,
subject to the direction of the Board and in keeping with the stated investment
objectives of each Portfolio. Enterprise Capital and the Fund have entered into
Portfolio Manager Agreements with each of the Portfolio Managers discussed
below.
Enterprise Capital is assisted in this duty by Evaluation Associates, Inc.,
which has had 25 years of experience in evaluating investment advisers for
individuals and institutional investors. The oversight and
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management services provided by Enterprise Capital include (i) supervising the
Portfolio Managers' compliance with state and federal regulations, including the
Investment Company Act, (ii) evaluating the Portfolio Managers' performance,
(iii) analyzing the composition of the investment portfolios of each Portfolio
of the Fund and preparing reports thereon for the Board or any committee of the
board, (iv) evaluating each Portfolio's performance in comparison to similar
mutual funds and other market information, (v) conducting searches, upon a
request of the Board, for a replacement for any Portfolio Manager then serving
the Fund, and (vi) preparing presentations to shareholders which analyze the
Fund's overall investment program and performance.
Enterprise Capital and the Fund have received an exemptive order from the
Securities and Exchange Commission which permits Enterprise, subject to among
other things, initial Contractholder authority, to thereafter enter into or
amend Portfolio Manager Agreements without obtaining Contractholder approval
each time. Contractholders voted affirmatively to give the Fund this ongoing
authority. With Board approval, Enterprise Capital is permitted to employ new
Portfolio Managers for the Portfolios, change the terms of the Portfolio
Managers Agreements or enter into a new Agreement with that Portfolio Manager.
Contractholders of a Portfolio continue to have the right to terminate the
Portfolio Manager's Agreement for the Portfolio at any time by a vote of the
majority of the outstanding voting securities of the Portfolio. Contractholders
will be notified of any Portfolio Manager changes or other material amendments
to Portfolio Manager Agreement that occur under these arrangements.
Enterprise Capital is a subsidiary of MONY, one of the nation's largest
insurance companies. Enterprise Capital serves as the investment adviser to The
Enterprise Group of Funds, Inc., a registered investment company consisting of
13 separate investment portfolios with assets of $1.02 billion at March 31,
1997. Total assets under management at March 31, 1997 for MONY are approximately
$20.2 billion. Enterprise Capital's address is Atlanta Financial Center, 3343
Peachtree Road, Ste. 450, Atlanta, Georgia 30326-1022. MONY's address is 1740
Broadway, New York, New York 10019.
PORTFOLIO MANAGERS
Equity Portfolio
The Portfolio Manager of the Equity Portfolio is OpCap Advisors which is a
subsidiary of Oppenheimer Capital, a general partnership. The Portfolio Manager
and its affiliates had approximately $48.3 billion under management as of
December 31, 1996. Eileen Rominger, Managing Director of Oppenheimer Capital, is
responsible for the day-to-day management of the Portfolio. Ms. Rominger has
more than 18 years experience in the investment industry. The annual Management
Fee is .80% of average daily net assets up to $400 million; .75% of average
daily net assets from $400 million to $800 million; and .70% of average daily
net assets in excess of $800 million; and the Portfolio Manager receives .40% of
average daily net assets up to $1 billion; and .30% thereafter. Usual investment
minimum is $10 million. Representative clients include Pacific Telesis Group,
Caterpillar, Inc. and New York State Electric & Gas. OpCap's address is One
World Financial Center, New York, New York 10281.
Small Cap Portfolio
The Portfolio Manager of the Small Cap Portfolio is GAMCO Investors, Inc.
("GAMCO"). Its offices are located at One Corporate Center, Rye, New York 10580.
GAMCO is a majority owned subsidiary of Gabelli Funds, Inc. GAMCO's predecessor,
Gabelli & Company, Inc., was founded in 1977 by Mario J. Gabelli who has served
as its chief investment officer since inception. He is responsible for the
day-to-day management of the Portfolio and has more than 26 years of experience
in the investment industry. As of December 31, 1996, total assets under
management for all clients were $5.2 billion. Usual investment minimum is $1
million. The Management Fee is .75% and the Portfolio Manager receives .40% of
average daily net assets under management up to $1 billion and .30% thereafter.
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Managed Portfolio
The Portfolio Manager of the Managed Portfolio is OpCap Advisors, described
in the paragraph referencing the Equity Portfolio. Richard J. Glasebrook II,
Managing Director of Oppenheimer Capital, is responsible for the day-to-day
management of the Portfolio. He has more than 23 years of investment industry
experience. The annual Management Fee is .80% of average daily net assets up to
$400 million; .75% of average daily net assets from $400 million to $800
million; and .70% of average daily net assets in excess of $800 million; and the
Portfolio Manager receives .40% of average daily net assets up to $1 billion;
.30% of average daily net assets from $1 billion to $2 billion; and .25%
thereafter.
High-Yield Bond Portfolio
The Portfolio Manager of the High-Yield Bond Portfolio is Caywood-Scholl
Capital Management ("Caywood-Scholl"). This firm was formed in 1986 and is owned
by its employees. Mr. Caywood, Managing Director and Chief Executive Officer, is
responsible for the day to day management of the Portfolio. He has more than 28
years investment industry experience. Caywood-Scholl provides investment advice
exclusively with respect to high-yield, low grade fixed income instruments. As
of December 31, 1996, assets under management for all clients approximated $732
million. Usual investment minimum: $1 million. The address of Caywood-Scholl
Capital Management is 4350 Executive Drive, Suite 125, San Diego, California
92121. The annual Management Fee is .60% of average daily net assets; and the
Portfolio Manager receives .30% of average daily net assets up to $1 million and
.25% thereafter.
General Portfolio Information
Under the Investment Adviser Agreement, each Portfolio is responsible for
bearing organizational expenses, taxes and governmental fees; brokerage
commissions, interest and other expenses incurred in acquiring and disposing of
portfolio securities; trustees fees, out of pocket travel expenses and other
expenses for trustees who are not interested persons; legal, fund accounting and
audit expenses; custodian, dividend disbursing and transfer agent fees; and
other expenses not expressly assumed by Enterprise Capital under the Investment
Adviser Agreement.
The Statement of Additional Information contains more information about the
Investment Adviser Agreement, including a more complete description of the
management fee and expense arrangements, exculpation provisions and portfolio
transactions for the Fund.
DETERMINATION OF NET ASSET VALUE
The net asset value per share is calculated separately for each Portfolio.
The net asset value of each Portfolio is determined at the close of the regular
trading session ("Close") of the New York Stock Exchange ("NYSE") (currently
4:00 p.m. Eastern Time) each day the NYSE is open and on each other day on which
there is a sufficient degree of trading in any Portfolio's portfolio securities
affecting materially the value of such securities (if the Fund receives a
request to redeem its shares that day), by dividing the value of the Portfolio's
net assets by the number of shares outstanding. The Fund's Board of Trustees has
established procedures to value the Portfolios' securities to determine net
asset value; in general, those valuations are based on market value, with
special provisions for (i) securities (including restricted securities) not
having readily-available market quotations and (ii) short-term debt securities.
Further details are in the Statement of Additional Information.
PURCHASE OF SHARES
Investments in the Fund may be made by the Variable Accounts. Persons
desiring to purchase Contracts funded by any Portfolio or Portfolios of the Fund
should read this Prospectus in conjunction with the Prospectus of the
Contract(s).
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Shares of each Portfolio of the Fund are offered to the Variable Accounts
without sales charge at the respective net asset values of the Portfolios next
determined after receipt by the Fund of the purchase payment in the manner set
forth above under "Determination of Net Asset Value." Certificates representing
shares of the Fund will not be physically issued. Enterprise Fund Distributors,
Inc. acts without remuneration from the Fund as the exclusive Distributor of the
Fund's shares. The principal executive office of the Distributor is located at
Atlanta Financial Center, 3343 Peachtree Road, N.E., Suite 450, Atlanta, Georgia
30326-1022.
REDEMPTION OF SHARES
Shares of any Portfolio of the Fund can be redeemed by the Variable
Accounts at any time for cash, at the net asset value next determined after
receipt of the redemption request in proper form. The market value of the
securities in each of the Portfolios is subject to daily fluctuation and the net
asset value of each Portfolio's shares will fluctuate accordingly. The
redemption value of the Fund's shares may be either more or less than the
original cost to the Variable Account. Payment for redeemed shares is ordinarily
made within seven days after receipt by the Fund's transfer agent of redemption
instructions in proper form. The redemption privilege may be suspended and
payment postponed during any period when: (1) the New York Stock Exchange 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 portfolio securities or valuation of net assets not reasonably
practicable; (3) the Securities and Exchange Commission has by order permitted
such suspension.
STATE LAW RESTRICTIONS
The investments of the MONY America Variable Accounts are subject to the
provisions of the New York and Arizona insurance law, respectively, applicable
to the investments of life insurance company separate accounts. Although these
state law investment restrictions do not apply directly to the Fund, the
Portfolios will comply, without the approval of shareholders, with such
statutory requirements, as they exist or may be amended.
Under pertinent provisions of New York law, as they currently exist, the
assets of the Variable Accounts of MONY may be invested in any investments (1)
permitted by agreement between these Variable Accounts and their Contractholders
and (2) acquired in good faith and with that degree of care in acquiring
investments that an ordinarily prudent person in a like position would use under
similar circumstances. The only agreement with Contractholders pertaining to
investments permitted for the Variable Accounts is as described in the
prospectuses for the Contracts, namely that the Variable Accounts will invest
only in shares of the Fund. The investment of the assets of the Fund are subject
to the investment objectives, policies and restrictions applicable to the
Portfolios, as described in this prospectus (see "Investment Objectives And
Policies" at page 10 and "Investment Restrictions" at page 19 and Statement of
Additional Information, "Investment Restrictions").
The pertinent provisions of Arizona law, as they currently exist, are in
summary form as follows:
The assets of variable accounts established by MONY America may be invested
in any investments that are of the kind permitted and that satisfy the
qualitative requirements, but without regard to quantitative restrictions.
Bonds, debentures, notes, commercial paper and other evidences of indebtedness,
and preferred, guaranteed or preference stock must have received an investment
grade rating approved by the Director of Insurance. Funds may not be invested in
foreign banks (other than foreign branches of domestic banks) except that
investments may be made in obligations issued, assumed or guaranteed by the
International Bank for Reconstruction and Development. Investments not otherwise
permitted under Arizona law may be made in an amount not exceeding in the
aggregate 10 percent of assets and not exceeding 2 percent of assets as to any
one such investment.
Although compliance with New York and Arizona laws described above will
ordinarily result in compliance with any applicable laws of other states, under
some circumstances the laws of other states could impose additional
restrictions. Accordingly, if any state or other jurisdiction in which the
Variable Accounts
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propose to do business imposes limits applicable to the Variable Accounts, in
addition to any imposed by New York and Arizona law, the Fund will comply with
such further investment limits.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio intends to distribute substantially all of its net
investment income and any net realized capital gains. Dividends from net
investment income and any distributions of realized capital gains will be paid
in additional shares of the Portfolio paying the dividend or making the
distribution and credited to the shareholder's account unless the shareholder
elects to receive such dividends or distributions in cash.
Equity, Small Cap, International Growth and Managed Portfolios. Dividends
from net investment income, if any, on the Small Cap, Equity, International
Growth and Managed Portfolios will be declared and paid at least annually, and
any net realized capital gains will be declared and paid at least once per
calendar year.
High-Yield Bond Portfolio. Dividends from investment income are declared
and paid quarterly. Distributions of realized net short-term capital gains, if
any, and realized long-term capital gains will be declared and paid at least
once per calendar year.
Taxes. Because the Fund intends to distribute all of the net investment
income and capital gains of each Portfolio and otherwise qualify each Portfolio
as a regulated investment company under Subchapter M of the Internal Revenue
Code, it is not expected that any Portfolio of the Fund will be required to pay
any federal income tax on such income and capital gains. Since the Variable
Accounts are the shareholders of the Fund, no discussion is presented herein as
to the federal income tax consequences at the shareholder level. For information
concerning the federal income tax consequences to contractholders, see the
accompanying Prospectus for the Contracts.
CALCULATION OF PERFORMANCE
From time-to-time the performance of one or more of the Portfolios may be
advertised. The performance data contained in these advertisements is based upon
historical earnings and is not indicative of future performance. The data for
each Portfolio reflects the results of that Portfolio of the Fund and recurring
charges and deductions borne by or imposed on the Portfolio. As the performance
for any Portfolio does not include charges and deductions under the Contracts,
comparisons with other portfolios used in connection with different variable
accounts may not be useful. Set forth below for each Portfolio is the manner in
which the data contained in such advertisements will be calculated.
The performance data for these Portfolios will reflect the "yield" and
"total return". The "yield" of each of these Portfolios refers to the income
generated by an investment in that Portfolio over the 30 day period stated in
the advertisement and is the result of dividing that income by the value of the
Portfolio. The value of each Portfolio is the average daily number of shares
outstanding multiplied by the net asset value per share on the last day of the
period. "Total Return" for each of these Portfolios refers to the value a
Shareholder would receive on the date indicated if a $1,000 investment had been
made the indicated number of years ago. It reflects historical investment
results less charges and deductions of the Fund.
In addition, reference in advertisements may be made to various indices,
including, without limitation, the Standard & Poor's 500 Stock Index, the
Russell 2000 and the Lehman Brothers Corporate/Government Index, and various
rankings by independent evaluators such as Morningstar and Lipper Analytical
Services, Inc. in order to provide the reader a basis for comparison.
ADDITIONAL INFORMATION
Organization of the Fund. The Fund, under the name of Quest for Value
Accumulation Trust, was organized as a Massachusetts business trust on March 2,
1988 and is registered with the Securities and Exchange Commission as an
open-end diversified management investment company. The Fund changed its
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name to the Enterprise Accumulation Trust on September 16, 1994. When issued,
shares are fully paid and have no preemptive or conversion rights. The shares of
beneficial interest of the Fund, $0.01 par value, are divided into five separate
series. The shares of each series are freely-transferable and equal as to
earnings, assets and voting privileges with all other shares of that series.
There are no conversion, preemptive or other subscription rights. Upon
liquidation of the Fund or any Portfolio, shareholders of a Portfolio are
entitled to share pro rata in the net assets of that Portfolio available for
distribution to shareholders after all debts and expenses have been paid. The
shares do not have cumulative voting rights.
The Fund's Board of Trustees, whose responsibilities are comparable to
those of directors of a Massachusetts corporation, is empowered to issue
additional classes of shares, which classes may either be identical except as to
dividends or may have separate assets and liabilities; classes having separate
assets and liabilities are referred to as "series". The creation of additional
series and offering of their shares (the proceeds of which would be invested in
separate, independently managed portfolios with distinct investment objectives,
policies and restrictions) would not affect the interests of the current
shareholders in the existing Portfolios.
The assets received by the Fund on the sale of shares of each Portfolio and
all income, earnings, profits and proceeds thereof, subject only to the rights
of creditors, are allocated to each Portfolio, and constitute the assets of such
Portfolio. The assets of each Portfolio are required to be segregated on the
Fund's books of account. The Fund's Board of Trustees has agreed to monitor the
portfolio transactions and management of each of the Portfolios and to consider
and resolve any conflict that may arise. Direct expenses will be allocated to
each Portfolio and general expenses of the Fund will be prorated by total net
assets.
Voting. For matters affecting only one Portfolio, only the shareholders of
that Portfolio are entitled to vote. For matters relating to all the Portfolios
but affecting the Portfolios differently, separate votes by Portfolio are
required. Approval of an Investment Management or Portfolio Manager Agreements
and a change in fundamental policies would be regarded as matters requiring
separate voting by each Portfolio. To the extent required by law, the Variable
Accounts, which are the shareholders of the Fund, will vote the shares of the
Fund, or any Portfolio of the Fund, held in the Variable Accounts in accordance
with instructions from Contractholders, as described under the caption "Voting
Rights" in the accompanying Prospectus for the Contracts. Shares for which no
instructions are received from Contractholders, as well as shares which
Enterprise Capital or its parent, MONY, may own, will be voted in the same
proportion as shares for which instructions are received. The Fund does not
intend to hold annual meetings of shareholders. However, the Board of Trustees
will call special meetings of shareholders for action by shareholder vote as may
be requested in writing by holders of 10% or more of the outstanding shares of a
Portfolio or as may be required by applicable laws or the Declaration of Trust
pursuant to which the Fund has been organized.
Under Massachusetts law shareholders could, in certain circumstances, be
held personally liable as partners for Fund obligations. The Fund's Declaration
of Trust contains an express disclaimer of shareholder liability for acts or
obligations of the Fund and requires that notice of such disclaimer be given in
each instrument entered into or executed by the Fund. The Declaration of Trust
also provides for indemnification out of the Fund's property for any shareholder
held personally liable for any Fund obligation. Thus, the risk of loss to a
shareholder from being held personally liable for obligations of the Fund is
limited to the unlikely circumstance in which the Fund itself would be unable to
meet its obligations.
Custodian and Transfer Agent. The custodian of the assets of the Fund is
State Street Bank and Trust Company, P.O. Box 8505, Boston, MA 02266-8505, which
also acts as transfer agent and shareholder servicing agent for the Fund.
Contractholder Inquiries. Inquiries concerning the purchase and sale of
shares of the Fund as well as inquiries concerning dividends and account
statements should be directed to MONY. Inquiries concerning management and
investment policies of the Fund should be directed to Enterprise Capital, 3343
Peachtree Road, Ste. 450, Atlanta, Georgia 30326; or telephone 1-800-432-4320.
Annual Report. The Fund's latest annual report which includes the
Management's Discussion and Analysis, is available upon request and without
charge upon written request to MONY, Mail Drop 9-34, 1740 Broadway, New York,
N.Y. 10019.
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APPENDIX
DESCRIPTION OF COMMERCIAL PAPER AND CORPORATE BOND RATINGS
Commercial Paper Ratings
Moody's commercial paper ratings are opinions of the ability of issuers to
repay promissory obligations when due. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers: Prime 1 -- Superior Ability for Repayment;
Prime 2 -- Strong Ability for Repayment; Prime 3 -- Acceptable Ability for
Repayment.
S & P's commercial paper rating is a current assessment of the likelihood
of timely payment. Ratings are graded into four categories, ranging from "A" for
the highest quality obligations to "D" for the lowest. Issues assigned the
highest rating, "A", are regarded as having the greatest capacity for timely
payment. Issues in this category are delineated with the numbers "1", "2", and
"3" to indicate the relative degree of safety. The designation "A-1" indicates
that the degree of safety regarding timely payment is either overwhelming or
very strong. The "A+" designation is applied to those issues rated "A-1" which
possess overwhelming safety characteristics. Capacity for timely payment on
issues with the designation "A-2" is strong. However, the relative degree of
safety is not as high as for issues designated "A-1."
Fitch's commercial paper ratings represent Fitch's assessment of the
issuer's ability to meet its obligations in a timely manner. The assessment
places emphasis on the existence of liquidity. Ratings range from "F-1+" which
represents exceptionally strong credit quality to "F-4" which represents weak
credit quality.
Duff's short-term ratings apply to all obligations with maturities of under
one year, including commercial paper, the uninsured portion of certificates of
deposit, unsecured bank loans, master notes, bankers acceptances, irrevocable
letters of credit and current maturities of long-term debt. Emphasis is placed
on liquidity. Ratings range for Duff 1+ for the highest quality to Duff 5 for
the lowest, issuers in default. Issues rated Duff 1+ are regarded as having the
highest certainty of timely payment. Issues rated Duff 1 are regarded as having
very high certainty of timely payment.
Thomson's BankWatch, Inc. ("TBW") assigns only one Issuer Rating to each
company, based upon a qualitative and quantitative analysis of the consolidated
financials of an issuer and its subsidiaries. The rating incorporates TBW's
opinion of the vulnerability of the company to adverse developments which may
impact the marketability of its securities, as well as the issuer's ability to
repay principal and interest. Ratings range from "A" for highest quality to "E"
for the lowest, companies with very serious problems.
Bond Ratings
A bond rated "Aaa" by Moody's is judged to be the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is deemed secure. While
the various protective elements may change, such foreseeable changes are
unlikely to impair the fundamentally strong position of such issues. Bonds which
are 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.
Margins of protection on "Aa" bonds may not be as large as on "Aaa" securities
or fluctuations of protective elements may be of greater magnitude or there may
be other elements present which make the long-term risks appear somewhat larger
than "Aaa" securities. Bonds which are rated "A" possess many favorable
investment attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment some time in the future. Bonds rated "Baa" are considered medium
grade obligations whose interest payments and principal security appear adequate
for the present but may lack certain protective elements or may be
characteristically unreliable over any great length of time. Moody's applies
numerical modifiers "1", "2" and "3" in each 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
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<PAGE> 28
the issue ranks in the lower end of its generic rating category. Bonds rated
"Ba" are judged to have speculative elements and bonds rated below "Ba" are
speculative to a higher degree.
Debt rated "AAA" by S & P has the highest rating assigned by it. Capacity
to pay interest and repay principal is extremely strong. Debt rated "AA" has a
strong capacity to pay interest and repay principal and differs from "AAA"
issues only in small degree. Debt rated "A" has a strong capacity to pay
interest and repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories. Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally exhibits
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 debt in this category than in higher rated categories. Debt
rated "BB" and below is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal.
Debt rated "AAA", the highest rating by Fitch, is considered to be of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Debt rated "AA" is regarded as very high credit quality. The
obligor's ability to pay interest and repay principal is very strong. Debt rated
"A" is of high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than debt with higher ratings.
Debt rated "BBB" is of satisfactory credit quality. The obligor's ability to pay
interest and repay principal is adequate, however a change in economic
conditions may adversely affect timely payment. Plus (+) and minus (-) signs are
used with a rating symbol (except "AAA") to indicate the relative position
within the category.
Debt rated "AAA", the highest rating by Duff's, is considered to be of the
highest credit quality. The risk factors are negligible being only slightly more
than for risk-free U.S. Treasury debt. Debt rated "AA" is regarded as high
credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time-to-time because of economic conditions. Debt rated "A" is
considered to have average but adequate protection factors. Bonds rated "BBB"
are considered to have below average protection factors but still sufficient for
prudent investment. Bonds rated "BB" and below are below investment grade and
possess fluctuating protection factors and risk.
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<PAGE> 29
STATEMENT OF ADDITIONAL INFORMATION
Enterprise Accumulation Trust
Atlanta Financial Center
3343 Peachtree Road, N.E., Ste. 450
Atlanta, GA 30326-1022
(800) 432-4320
This Statement of Additional Information (the "Additional Statement") is
not a Prospectus. Investors should understand that this Additional Statement
should be read in conjunction with the Prospectus dated May 1, 1997 (the
"Prospectus") of Enterprise Accumulation Trust (the "Fund"). Mutual of New York
("MONY") contractowners can obtain copies of the Prospectus of the Fund by
written request to MONY, Mail Drop 9-34, 1740 Broadway, New York, NY 10019 or by
calling MONY at (800) 487-6669.
The date of this Additional Statement is May 1, 1997.
<PAGE> 30
TABLE OF CONTENTS
<TABLE>
<S> <C>
General Information and History....................................................... 2
Investment of Assets.................................................................. 2
Investment Restrictions............................................................... 7
Trustees and Officers................................................................. 9
Control Persons....................................................................... 10
Investment Management and Other Services.............................................. 10
Determination of Net Asset Value...................................................... 12
Dividends, Distribution and Taxes..................................................... 12
Portfolio Yield and Total Return Information.......................................... 13
Additional Information................................................................ 14
Financial Statements.................................................................. A-1
</TABLE>
<PAGE> 31
GENERAL INFORMATION AND HISTORY
The Fund was organized as a Massachusetts business trust under the name
Quest for Value Accumulation Trust on March 2, 1988. On September 16, 1994, it
changed its name to The Enterprise Accumulation Trust. In addition, the Fund's
Bond and Money Market Portfolios were reorganized, and all of their respective
assets were transferred to another registered investment company. The Fund
commenced offering the International Growth and High-Yield Bond Portfolios on
November 18, 1994.
INVESTMENT OF ASSETS
The investment objective and policies of each Portfolio of the Fund are
described in the Prospectus. A further description of the investments and
investment methods applicable to certain Portfolios appears below.
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 Portfolios 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 the 10% limit on illiquid
investments set forth in the Prospectus.
The commercial paper obligations which the Portfolios may buy are unsecured
and may include variable rate notes. The nature and terms of a variable rate
note (i.e., a "Master Note") permit a Portfolio to invest fluctuating amounts at
varying rates of interest pursuant to a direct arrangement between a Portfolio
as lender and the issuer as borrower. It permits daily changes in the amounts
borrowed. The Portfolio has 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 Portfolio and the issuer, it is not generally contemplated that they
will be traded; moreover, there is currently no secondary market for them. The
Portfolios 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 Portfolio 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 Portfolios 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
Portfolios may, within the limits set forth in the Prospectus, 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 Trustees
determines that a readily available market exists for such obligations, a
Portfolio will treat such obligations as subject to the 10% limit for illiquid
investments set forth in the Prospectus for each Portfolio unless such
obligations are payable at principal amount plus accrued interest on demand or
within seven days after demand.
Lower Rated Bonds. Each Portfolio, other than the High-Yield Bond
Portfolio, may invest up to 5%, and the High-Yield Bond Portfolio may invest up
to 100%, of its assets in bonds rated below Baa3 by Moody's Investors Service,
Inc. ("Moody's") or BBB by Standard & Poor's Corporation ("S&P"). Securities
rated
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<PAGE> 32
less than "Baa" by Moody's or "BBB" by S&P are classified as non-investment
grade securities and are considered speculative by those rating agencies. It is
the Fund's policy not to rely exclusively on ratings issued by credit rating
agencies but to supplement such ratings with the respective Portfolio Manager's
own independent and ongoing review of credit quality. Junk bonds may be issued
as a consequence of corporate restructuring, such as leveraged buyouts, mergers,
acquisitions, debt recapitalizations, or similar events or by smaller or highly
leveraged companies. Although the growth of the high yield securities market in
the 1980s had paralleled a long economic expansion, recently many issuers have
been affected by adverse economic and market conditions. It should be recognized
that an economic downturn or increase in interest rates is likely to have a
negative effect on (i) the high yield bond market, (ii) the value of high yield
securities and (iii) the ability of the securities' issuers to service their
principal and interest payment obligations, to meet their projected business
goals or to obtain additional financing. The market for junk bonds may be less
liquid than the market for investment grade bonds. In periods of reduced market
liquidity, junk bond prices may become more volatile and may experience sudden
and substantial price declines. Also, there may be significant disparities in
the prices quoted for junk bonds by various dealers. Under such conditions, a
Portfolio may find it difficult to value its junk bonds accurately. Under such
conditions, a Portfolio may have to use subjective rather than objective
criteria to value its junk bond investments accurately and rely more heavily on
the judgment of the Fund's Board of Trustees. Prices for junk bonds also may be
affected by legislative and regulatory developments. For example, recent federal
rules require that savings and loans gradually reduce their holdings of
high-yield securities. Also, from time to time, Congress has considered
legislation to restrict or eliminate the corporate tax deduction for interest
payments or to regulate corporate restructuring such as takeovers, mergers or
leveraged buyouts. Such legislation, if enacted, may depress the prices of
outstanding junk bonds.
Stock Index Futures and Related Options. Unlike when a Portfolio purchases
or sells a security, no price is paid or received by the Portfolio upon the
purchase or sale of a futures contract. Instead, the Portfolio will be required
to deposit with its broker an amount of cash or U.S. Treasury bills equal to
approximately 5% of the contract amount. This is known as initial margin. Such
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Portfolio upon termination of the futures
contract assuming all contractual obligations have been satisfied. In addition,
because under current futures industry practice daily variations in gains and
losses on open contracts are required to be reflected in cash in the form of
variation margin payments, the Portfolio may be required to make additional
payments during the term of the contract to its broker. Such payments would be
required where during the term of a stock index futures contract purchased by
the Portfolio, the price of the underlying stock index declined, thereby making
the Portfolio's position less valuable. In all instances involving the purchase
of stock index futures contracts by the Portfolio resulting in a net long
position, an amount of cash and cash equivalents equal to the market value of
the futures contracts will be deposited in a segregated account with the Fund's
custodian to collateralize the position and thereby insure that the use of such
futures is unleveraged. At any time prior to the expiration of the futures
contract, the Portfolio may elect to close the position by taking an opposite
position which will operate to terminate the Portfolio's position in the futures
contract.
There are several risks in connection with the use of stock index futures
in the Portfolios as a hedging device. One risk arises because of the imperfect
correlation between the price of the stock index future and the price of the
securities which are the subject of the hedge. This risk of imperfect
correlation increases as the composition of the Portfolio diverges from the
securities included in the applicable stock index. The price of the stock index
future may move more than or less than the price of the securities being hedged.
If the price of the stock index future moves less than the price of the
securities which are the subject of the hedge, the hedge will not be fully
effective, but, if the price of the securities being hedged has moved in an
unfavorable direction, the Portfolios would be in a better position than if it
had not hedged at all. If the price of the securities being hedged has moved in
a favorable direction this advantage will be partially offset by the stock index
future. If the price of the stock index futures moves more than the price of the
stock the Portfolio will experience a loss or a gain on the future which will
not be completely offset by movement in the price of the securities which are
the subject of the hedge. To compensate for the imperfect correlation of
movements in the price of securities being hedged and movements in the price of
the stock index futures, the Portfolio may buy or sell stock index futures in a
greater dollar amount than the dollar amount of the securities being hedged
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<PAGE> 33
if the historical volatility of the prices of such securities has been greater
than the historical volatility of the index. Conversely, the Portfolio may buy
or sell fewer stock index futures contracts if the historical volatility of the
price of the securities being hedged is less than the historical volatility of
the stock index. It is possible that where the Portfolio has sold futures to
hedge against a decline in the market, the market may advance and the Portfolio
may decline. If this occurred, the Portfolio would lose money on the futures and
also experience a decline in the value of its securities. While this should
occur, if at all, for a very brief period or to a very small degree, the
Portfolio Manager believes that over time the value of a diversified portfolio
will tend to move in the same direction as the market indices upon which the
futures are based. It is also possible that if the Portfolio has hedged against
the possibility of a decline in the market adversely affecting stocks it held
and stock prices increase instead, the Portfolio will lose part or all of the
benefit of the increased value of its stock which it had hedged because it will
have offsetting losses in its futures positions. In addition, in such
situations, if the Portfolio has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. Such sales of securities
may be, but will not necessarily be, at increased prices which reflect the
rising market. The Portfolio may also have to sell securities at a time when it
may be disadvantageous to do so.
Where futures are purchased to hedge against a possible increase in the
price of stocks before the Portfolio is able to invest its cash (or cash
equivalents) in stock (or options) in an orderly fashion, it is possible the
market may decline instead. If the Portfolio then concluded to not invest in
stock or options at the time because of concern as to possible further market
decline or for other reasons, the Portfolio will realize a loss on the futures
contract that is not offset by a reduction in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the stock index future and the
portion of the portfolio being hedged, the price of stock index futures may not
correlate perfectly with movements in the stock index due to certain market
distortions. All participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the index and
futures markets. Moreover, the deposit requirements in the futures market are
less onerous than margin requirements in the securities market and may therefore
cause increased participation by speculators in the market. Such increased
participation may also cause temporary price distortions. Due to the possibility
of price distortion in the futures market and because of the imperfect
correlation between movements in the stock index and movements in the price of
stock index futures, the value of stock index futures contracts as a hedging
device may be reduced.
Currently, stock index futures contracts can be purchased or sold with
respect to several different stock indices, each based on a different measure of
market performance. Positions in stock index futures may be closed out only on
an exchange or board of trade which provides a secondary market for such
futures. Although the Portfolios intend to purchase or sell futures only on
exchanges or boards of trade where there appears to be an active secondary
market, as with stock options, there is no assurance that a liquid secondary
market or an exchange or board of trade will exist for any particular contract
or at any particular time. In such event it may not be possible to close a
futures position and in the event of adverse price movements, the Portfolio
would continue to be required to make daily cash payments of variation margin.
However, in the event futures contracts have been used to hedge portfolio
securities, such securities will not be sold until the futures contract can be
terminated. In such circumstances, an increase in the price of the securities,
if any, may partially or completely offset losses on the futures contract.
However, as described above, there is no guarantee that the price of securities
will, in fact, correlate with the price movements in the futures contract and
thus provide an offset to losses on a futures contract.
In addition, if the Portfolio has insufficient cash it may at times have to
sell securities to meet variation margin requirements. Such sales may have to be
effected at a time when it is disadvantageous to do so.
Financial Futures. No price is paid or received upon the purchase of a
financial future. Upon entering into a futures transaction, a Portfolio will be
required to deposit an initial margin payment equal to a specified percentage of
the contract value. Initial margin payments will be deposited with the Fund's
custodian bank in an account registered in the futures commission merchant's
name; however the futures commission merchant can gain access to that account
only under specified conditions. As the future is marked to market to reflect
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<PAGE> 34
changes in its market value, subsequent payments, called variation margin, will
be made to or from the futures commission merchant on a daily basis. Prior to
expiration of the future, if the Portfolio elects to close out its position by
taking an opposite position, a final determination of variation margin is made,
additional cash is required to be paid by or released to the Portfolio, and any
loss or gain is realized for tax purposes. Although financial futures by their
terms call for the actual delivery or acquisition of the specified debt
security, in most cases the obligation is fulfilled by closing out the position.
All futures transactions are effected through a clearing house associated with
the exchange on which the contracts are traded. At present, no Portfolio intends
to enter into financial futures and options on such futures if after any such
purchase, the sum of initial margin deposits on futures and premiums paid on
futures options would exceed 5% of a Fund's total assets. This limitation is not
a fundamental policy.
Writing Calls. When any of the Equity, Small Cap or International Growth
Portfolio writes a call, it receives a premium and agrees to sell the callable
securities to a purchaser of a corresponding call during the call period
(usually not more than 9 months) at a fixed exercise price (which may differ
from the market price of the underlying securities) regardless of market price
changes during the call period. If the call is exercised, the Portfolio forgoes
any possible profit from an increase in market price over the exercise price. A
Portfolio may, in the case of listed options, purchase calls in "closing
purchase transactions" to terminate a call obligation. A profit or loss will be
realized, depending upon whether the net of the amount of option transaction
costs and the premium received on the call written is more or less than the
price of the call subsequently purchased. A profit may be realized if the call
lapses unexercised, because the Portfolio retains the underlying security and
the premium received. Sixty percent of any such profits are considered long-term
gains and forty percent are considered short-term gains for tax purposes. If,
due to a lack of a market, a Portfolio could not effect a closing purchase
transaction, it would have to hold the callable securities until the call lapsed
or was exercised. The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the facilities of
the Options Clearing Corporation ("OCC") in connection with listed calls, as to
the securities on which the Portfolio has written calls, or as to other
acceptable escrow securities, so that no margin will be required for such
transactions. OCC will release the securities on the expiration of the calls or
upon the Portfolio's entering into a closing purchase transaction.
An option position may be closed out only on a market which provides
secondary trading for options of the same series, and there is no assurance that
a liquid secondary market will exist for any particular option. A Portfolio's
option activities may affect its turnover rate and brokerage commissions. The
exercise of calls written by a Portfolio may cause the Portfolio to sell
securities to cover the call, thus increasing its turnover rate in a manner
beyond the Portfolio's control.
Call Options. The Portfolios may write (sell) call options that are listed
on national securities exchanges or are available in the over-the-counter market
through primary broker-dealers. Call options are short-term contracts with a
duration of nine months or less. Such Portfolios of the Fund may only write call
options which are "covered," meaning that the Portfolio either owns the
underlying security or has an absolute and immediate right to acquire that
security, without additional cash consideration, upon conversion or exchange of
other securities currently held in the Portfolio. In addition, no Portfolio
will, prior to the expiration of a call option, permit the call to become
uncovered. If a Portfolio writes a call option, the purchaser of the option has
the right to buy (and the Portfolio has the option to sell) the underlying
security against payment of the exercise price throughout the term of the
option. The Portfolio's obligation to deliver the underlying security against
payment of the exercise price would terminate either upon expiration of the
option or earlier if the Portfolio were to effect a "closing purchase
transaction" through the purchase of an equivalent option on an exchange. The
Portfolio would not be able to effect a closing purchase transaction after it
had received notice of exercise. The International Growth Portfolio may purchase
and write covered call options on foreign and U.S. securities and indices and
enter into related closing transactions.
Generally, such a Portfolio intends to write listed covered calls when it
anticipates that the rate of return from doing so 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
5
<PAGE> 35
realize, through the receipt of premium income, a greater return than would be
earned on the securities alone. A covered call writer such as a Portfolio, which
owns the underlying security has, in return for the premium, given 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 are a
relatively new and untested concept, it is impossible to predict the amount of
trading interest which may exist in such options, and there can be no assurance
that viable exchange and over-the-counter markets will develop or continue. The
Portfolios will write covered call options only if there appears to be a liquid
secondary market for such options. If, however, an option is written and a
liquid secondary market does not exist, it may be impossible to effect a closing
purchase transaction in the option. In that event, the Portfolio may not be able
to sell the underlying security until the option expires or the option is
exercised, even though it may be advantageous to sell the underlying security
before that time.
FOREIGN CURRENCY VALUES AND TRANSACTIONS
Investments in foreign securities will usually involve currencies of
foreign countries, and the value of the assets of the International Growth
Portfolio (and of the other Portfolios that may invest in foreign securities to
a much lesser extent) as measured in United States dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the International Growth Portfolio may incur
costs in connection with conversions between various currencies.
The normal currency allocation of the International Growth Portfolio is
identical to the currency mix of the Benchmark. The Portfolio expects to
maintain this normal currency exposure when global currency markets are fairly
priced relative to each other and relative to associated risks. The Portfolio
may actively deviate from such normal currency allocations to take advantage of
or to protect the Portfolio from risk and return characteristics of the
currencies and short-term interest rates when those prices deviate significantly
from fundamental value. Deviations from the Benchmark are determined by the
Portfolio Manager based upon its research.
To manage exposure to currency fluctuations, the Portfolio may alter equity
or money market exposures (in its normal asset allocation mix as previously
identified), enter into forward currency exchange contracts, buy or sell
options, futures or options on futures relating to foreign currencies and may
purchase securities indexed to currency baskets. The Portfolio will also use
these currency exchange techniques in the normal course of business to hedge
against adverse changes in exchange rates in connection with purchases and sales
of securities. Some of these strategies may require the Portfolio to set aside
liquid assets in a segregated custodial account to cover its obligations. These
techniques are further described below.
The Portfolio may conduct its foreign currency exchange transactions on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market or through entering into contracts to purchase or sell foreign
currencies at a future date (i.e., "forward foreign currency" contract or
"forward" contract). A forward contract involves an obligation to purchase or
sell a specific currency amount at a future date, which may be any fixed number
of days from the date of the contract, agreed upon by the parties, at a price
set at the time of the contract. The Portfolio will convert currency on a spot
basis from time to time and investors should be aware of the potential costs of
currency conversion.
When the Portfolio Manager believes that the currency of a particular
country may suffer a significant decline against the U.S. dollar or against
another currency, the Portfolio may enter into a currency contract to sell, for
a fixed amount of U.S. dollars or other appropriate currency, the amount of
foreign currency approximating the value of some or all of the Portfolio's
securities denominated in such foreign currency.
At the maturity of a forward contract, the Portfolio may either sell a
portfolio security and make delivery of the foreign currency, or it may retain
the security and terminate its contractual obligation to deliver the foreign
currency by repurchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
foreign currency. The Portfolio may realize a gain or loss from currency
transactions.
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<PAGE> 36
The Portfolio also may purchase and write put and call options on foreign
currencies (traded on U.S. and foreign exchanges or over-the-counter markets) to
manage the Portfolio's exposure to changes in currency exchange rates. Call
options on foreign currency written by the Portfolio will be "covered", which
means that the Fund will own an equal amount of the underlying foreign currency.
With respect to put options on foreign currency written by the Portfolio, the
Portfolio will establish a segregated account with its custodian bank consisting
of cash, U.S. government securities or other high grade liquid debt securities
in amount equal to the amount the Portfolio would be required to pay upon
exercise of the put.
Foreign Securities
As noted above, under normal circumstances the International Growth
Portfolio will invest primarily in foreign securities. All other Portfolios,
except the Government Securities Portfolio, may, subject to the 10% limitation,
invest in foreign securities as well as both sponsored and unsponsored American
Depository Receipts ("ADRs"), and European Depository Receipts ("EDRs") which
are securities of U.S. issuers backed by securities of foreign issuers. There
may be less information available about unsponsored ADRs and EDRs, and
therefore, they may carry higher credit risks. The Portfolios may also invest in
securities of foreign branches of domestic banks and domestic branches of
foreign banks.
Investments in foreign equity and debt securities involve risks different
from those encountered when investing in securities of domestic issuers. The
appropriate Portfolio Managers and Enterprise Capital, subject to the overall
review of the Fund's Trustees, 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.
INVESTMENT RESTRICTIONS
The Fund's significant investment restrictions applicable to the Portfolios
are described in the Prospectus. The following are also fundamental policies
and, together with the restrictions and other fundamental policies described in
the Prospectus, cannot be changed without the vote of a majority of the
outstanding voting securities of that Portfolio. Such a majority is defined as
the lesser of (a) 67% or more of the shares of the Portfolio present at the
meeting of shareholders of the Fund, if the holders of more than 50% of the
outstanding shares of the Portfolio are present or represented by proxy or (b)
more than 50% of the outstanding shares of the Portfolio. For the purposes of
the following restrictions and those contained in the Prospectus: (i) all
percentage limitations apply immediately after a purchase or initial investment;
and (ii) any subsequent change in any applicable percentage resulting from
market fluctuations or other changes in the amount of total assets does not
require elimination of any security from the Portfolio.
Each Portfolio of the Fund may not:
1. Make loans of money or securities, except (a) by the purchase of
debt obligations in which the Portfolio may invest consistent with its
investment objectives and policies; (b) by investing in repurchase
agreements; or (c) by lending its portfolio securities, not in excess of
10% of the value of a Portfolio's total assets, made in accordance with
guidelines adopted by the Fund's Board of Trustees, including maintaining
collateral from the borrower equal at all times to the current market value
of the securities loaned.
2. Invest in securities of any issuer if, to the knowledge of the
Fund, any officer or trustee of the Fund or any officer or director of the
Investment Adviser or the Portfolio Manager owns more than 1/2 of 1% of the
outstanding securities of such issuer, and such officers, trustees and
directors who own more than 1/2 of 1% own in the aggregate more than 5% of
the outstanding voting securities of such issuer.
7
<PAGE> 37
3. Pledge its assets or assign or otherwise encumber them in excess of
10% of its net assets (taken at market value at the time of pledging) and
then only to secure borrowings effected within the limitations set forth in
the Prospectus.
4. Purchase or sell real estate; however, the Portfolios may purchase
marketable securities of issuers which engage in real estate operations or
which invest in real estate or interests therein, and securities which are
secured by real estate or interests therein.
5. Purchase securities on margin (except for such short-term loans as
are necessary for the clearance of purchases of portfolio securities) or
sell securities short except "against the box." (Collateral arrangements in
connection with transactions in options and futures are not deemed to be
margin transactions.)
6. Purchase or sell physical commodities or physical commodity futures
contracts, or oil, gas or mineral exploration or developmental programs,
except that a Portfolio may invest in the securities of companies which
operate, invest in, or sponsor such programs.
7. Engage in the underwriting of securities except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in disposing
of a portfolio security.
8. Invest for the purposes of exercising control or management of
another company.
9. Issue senior securities as defined in the Act except insofar as the
Fund may be deemed to have issued a senior security by reason of: (a)
entering into any repurchase agreement; (b) borrowing money in accordance
with restrictions described above; or (c) lending portfolio securities.
10. Purchase securities of other investment companies, except in
connection with a merger, consolidation, reorganization or acquisition of
assets.
11. Invest more than 5% of the value of its total assets in warrants
not listed on either the New York or American Stock Exchange. However, the
acquisition of warrants attached to other securities is not subject to this
restriction.
12. Invest more than 10% of its total assets in securities which are
restricted as to disposition under the federal securities laws or
otherwise. This restriction shall not apply to securities received as a
result of a corporate reorganization or similar transaction affecting
readily marketable securities already held by the respective Portfolios;
however, each Portfolio will attempt to dispose in an orderly fashion of
any securities received under these circumstances to the extent that such
securities, together with other unmarketable securities, exceed 10% of that
Portfolio's total assets.
8
<PAGE> 38
TRUSTEES AND OFFICERS
The trustees and officers of the Fund, and their principal occupations
during the past five years, are set forth below. Trustees who are "interested
persons", as defined in the 1940 Act, are denoted by an asterisk. As to their
duties relative to the Fund, the address of each is Atlanta Financial Center,
3343 Peachtree Road, N.E., Ste. 450, Atlanta, GA 30326-1022. As of March 1,
1997, the trustees and officers of the Fund as a group owned none of its
outstanding shares.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION PAST FIVE YEARS
- ------------------------------ -----------------------------------------------------------
<S> <C>
Arthur T. Dietz (73) President, ATD Advisory Corp., 1996 to present; President
Trustee and Chief Executive Officer, Strategic Portfolio
Management, Inc., 1987-1996; Mills B. Lane Professor of
Finance and Banking, Emory University, 1954-1988; Director,
The Enterprise Group of Funds, Inc.; Director, Medical
Synergies, Inc.
*Samuel J. Foti (45) President and Chief Operating Officer, MONY since 1994;
Trustee Executive Vice President, MONY (1991-1994); Trustee, MONY
since 1993; Senior Vice President and Chief Marketing
Officer, MONY (1989-1991).
Arthur Howell (78) Of Counsel, law firm of Alston & Bird, Atlanta, Georgia;
Trustee President and Chairman of the Board, Summit Industries,
Inc.; Secretary of the Executive Committee, Crescent
Banking Co., Inc.; Director, The Enterprise Group of Funds,
Inc.
William A. Mitchell, Jr. (59) President, Carter & Associates (real estate development),
Trustee Atlanta, Georgia; Director, The Enterprise Group of Funds,
Inc.
Lonnie H. Pope (63) President and Chief Executive Officer of AFF, Inc. (creator
Trustee and manufacturer of aromatics, flavors and fragrances),
Marietta, Georgia (1980-1996); Director, The Enterprise
Group of Funds, Inc.
*Michael I. Roth (51) Chairman and Chief Executive Officer, MONY since 1993;
Trustee President and Chief Executive Officer, MONY (1991-1993);
Executive Vice President and Chief Financial Officer,
Primerica Corporation (1987); Executive Vice President,
Primerica Corporation (1982-1987); Director, The Enterprise
Group of Funds, Inc.; Director, American Council of Life
Insurance (ACLI).
*Victor Ugolyn (49) Chairman, President and Chief Executive Officer, The
Trustee Enterprise Group of Funds, Inc. since 1991; Chairman,
President and Chief Executive Officer, Chairman, President
and Enterprise Capital and Enterprise Fund Distributors,
Inc. since 1991; Vice Chief Executive Officer Chairman and
Chief Marketing Officer, Value Line Securities, Inc.
(1986-1991).
Catherine R. McClellan (41) Secretary, The Enterprise Group of Funds, Inc.; Senior Vice
Secretary President, Secretary and Chief Counsel, Enterprise Capital
Management, Inc.; Secretary and Chief Counsel, Enterprise
Fund Distributors, Inc.
Herbert M. Williamson (45) Assistant Secretary and Treasurer, The Enterprise Group of
Asst. Secretary, Treasurer Funds, Inc.; Vice President, Assistant Secretary and
Treasurer, Enterprise Capital Management, Inc.; and
Assistant Secretary and Treasurer, Enterprise Fund
Distributors, Inc.
</TABLE>
9
<PAGE> 39
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATION PAST FIVE YEARS
- ------------------------------ -----------------------------------------------------------
<S> <C>
Phillip G. Goff (33) Vice President and Chief Financial Officer, The Enterprise
Vice President Group of Funds, Enterprise Capital Management, Inc. and
Enterprise Fund Distributors, Inc., 1995 to present;
Coopers & Lybrand, L.L.P. 1986-1995.
</TABLE>
Remuneration of Officers and Trustees. All officers of the Fund are
officers of Enterprise Capital and receive no salary or fee from the Fund. The
Trustees, other than Messrs. Foti, Roth and Ugolyn will be paid an annual fee of
$10,000 plus $500 for each trustees' meeting attended and $500 for each
committee meeting attended.
The following sets forth compensation paid to each of the Trustees during
1996:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
PENSION OR ESTIMATED
AGGREGATE RETIREMENT ANNUAL TOTAL
COMPENSATION BENEFITS BENEFITS COMPENSATION
FROM ACCRUED AS UPON FROM REGISTRANT
NAME REGISTRANT PART OF RETIREMENT PAID TO DIRECTORS
--------------------------------- ------------ ---------- ---------- -----------------
<S> <C> <C> <C> <C>
Arthur T. Dietz.................. $8,850 None None $23,350
Arthur Howell.................... $8,850 None None $23,350
William A. Mitchell, Jr.......... $7,750 None None $21,250
Lonnie H. Pope................... $8,850 None None $23,350
</TABLE>
- ---------------
- - Each Director received fees for services as a Director of The Enterprise Group
of Funds, Inc.
CONTROL PERSONS
As of the date of this Additional Statement MONY and MONY Life Insurance
Company of America ("MONY America"), its wholly-owned subsidiary, through their
respective Variable Accounts, own all of the Fund's outstanding shares. The
shares held by the Variable Accounts generally will be voted in accordance with
instructions of Contractholders. Under certain circumstances, however, MONY and
MONY America may disregard voting instructions received from Contractholders.
The Fund might nonetheless be deemed to be controlled by MONY and MONY America
by virtue of the definitions contained in the 1940 Act although the Fund
disclaims such control.
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Investment Adviser provides oversight and management services to the
Fund which include, but are not limited to, (1) supervising the sub-adviser's
compliance with federal and state regulations, including the Investment Company
Act of 1940, (2) evaluating the portfolio managers' performance, (3) analyzing
the composition of the investment portfolios of each Portfolio of the Fund and
preparing reports thereon for the Board or any committee of the Board, (4)
evaluating each Portfolio's performance in comparison to similar mutual funds
and other market information, (5) conducting searches, upon request of the
Board, for a replacement for any portfolio manager then serving the Fund, and
(6) preparing presentations to shareholders which analyze the Fund's overall
investment program and performance.
The Portfolio Manager Agreements. Under the Portfolio Manager Agreements,
the Portfolio Managers, subject to the oversight of Enterprise Capital, are
required to: (i) regularly provide investment advice and recommendations to the
respective Portfolios of the Fund with respect to their investments, investment
policies and the purchase and sale of securities; (ii) supervise continuously
and determine the securities to be purchased or sold by the respective
Portfolios of the Fund and the portion, if any, of the assets of these
Portfolios of the Fund to be held uninvested; and (iii) arrange for the purchase
of securities and other investments by the respective Portfolios of the Fund and
the sale of securities and other investments held by each of these Portfolios of
the Fund.
10
<PAGE> 40
Expenses not expressly assumed by the Investment Adviser under the Advisory
Agreement or by Enterprise Fund Distributors, Inc. (the "Distributor") are paid
by the Fund. The Advisory Agreement lists examples of expenses paid by the Fund,
of which the major categories relate to interest, taxes, fees to non-interested
trustees, legal and audit expenses, custodian and transfer agent expenses, stock
issuance costs, certain printing and registration costs, and non-recurring
expenses, including litigation. Under the Advisory Agreement, the Investment
Adviser guarantees that the total expenses of the Fund in any fiscal year,
exclusive of taxes, interest, brokerage fees and distribution expense
reimbursements shall not exceed, and the Investment Adviser undertakes to pay or
refund to the Fund any amount by which such expenses do exceed, the most
restrictive state law provisions in effect in states where shares of a Portfolio
of the Fund are qualified to be sold. The payment of the management fee at the
end of any month will be reduced or postponed so that at no time will there be
any accrued but unpaid liability for the payment of the management fee under
this expense limitation.
ADVISORY FEES PAID
<TABLE>
<CAPTION>
1994 1995* 1996**
---------- ---------- -----------
<S> <C> <C> <C>
Equity........................................ $ 274,412 $ 752,635 $ 1,743,990
Small Cap..................................... 447,052 907,835 1,316,050
Managed....................................... 2,260,164 5,852,587 11,086,850
High-Yield Bond............................... 853 49,627 143,878
International Growth.......................... 1,850 94,931 303,177
</TABLE>
- ---------------
* The Adviser has reallowed the following amounts of its advisory fees to the
Portfolios during 1995: Equity -- $35,480, Small Cap -- $41,237;
Managed -- $57,047; High-Yield Bond -- $61,596; and International
Growth -- $74,222.
** The Adviser has reallowed $21,526 to the High-Yield Bond Portfolio during
1996.
The Advisory Agreement provides that in the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard for its obligations
thereunder, Enterprise Capital or the Portfolio Manager, 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 Investment Adviser
to act as investment adviser for any other person or firm.
The Advisory Agreement and Portfolio Manager Agreements were approved by
the Fund's Board of Trustees, including a majority of the Trustees who are not
"interested persons" of the Fund (as defined in the Act) and who have no direct
or indirect financial interest in such Agreements on October 25, 1994, and by
the shareholders of the Equity, Small Cap and Managed Portfolios on May 18, 1989
and the International Growth and High-Yield Bond Portfolios on November 18,
1994.
Portfolio Transactions. Portfolio decisions are based upon recommendations
and the judgment of the Portfolio Managers. Prices of portfolio securities
purchased from underwriters of new issues include a commission or concession
paid by the issuer to the underwriter, and prices of securities purchased from
dealers include a spread between the bid and asked prices. The Fund seeks to
obtain prompt execution of orders at the most favorable net price.
Transactions may be directed to dealers during the course of an
underwriting in return for their brokerage and research services, which are
intangible and on which no dollar value can be placed. There is no formula for
such allocation. The research information may or may not be useful to the Fund
and/or other accounts of the Portfolio Managers; information received in
connection with directed orders of other accounts managed by the Portfolio
Managers or its affiliates may or may not be useful to the Fund. Such
information may be in written or oral form and includes information on
particular companies and industries as well as market, economic or institutional
activity areas. It serves to broaden the scope and supplement the research
activities of the Portfolio Managers, to make available additional views for
consideration and comparison, and to enable the Portfolio Managers to obtain
market information for the valuation of securities held by the Fund.
11
<PAGE> 41
Sales of shares of the Fund, subject to applicable rules covering the
Distributor's activities in this area, will also be considered as a factor in
the direction of portfolio transactions to brokers and dealers, but only in
conformity with the price, execution and other considerations and practices
discussed above.
It is the practice of the Portfolio Managers to cause purchase or sale
transactions to be allocated among the Fund and others whose assets it manages
in such manner as it deems equitable. In making such allocations among the Fund
and other client accounts, the main factors considered are the respective
investment objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size of
investment commitments generally held, and the opinions of the persons
responsible for managing the portfolios of each Fund and other client accounts.
When possible, concurrent orders to purchase or sell the same security by more
than one of the accounts managed by the Portfolio Managers or an affiliate are
combined, which in some cases could have a detrimental effect on the price or
volume of the security in a particular transaction as far as a Fund is
concerned. Transactions effected pursuant to such combined orders are averaged
as to price and allocated in accordance with the purchase or sale orders
actually placed for such account.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each of the Portfolios of the Fund is
determined each day the New York Stock Exchange (the "NYSE") is open, at the
close of the regular trading session of the NYSE that day, by dividing the value
of the Portfolio's net assets by the number of shares outstanding.
Investment securities (other than debt securities) listed on a national
securities exchange or designated as national market system securities are
valued each business day at the last reported sale price; if there are no such
reported sales, the securities are valued at their last quoted bid price. Other
securities traded in the over-the-counter market but not designated as national
market system securities are valued at the last quoted bid price. Investment
debt securities (other than short-term obligations) are valued each business day
by an independent pricing service approved by the Board of Trustees. Investments
are valued by the pricing service using methods which include current market
quotations from a major market maker in the securities and trader-reviewed
"matrix" prices. Short-term debt securities having a remaining maturity of more
than sixty days are valued on a "marked-to-market" basis, that is, at prices
based upon market quotations for securities of similar type, yield, quality and
maturity. Short-term debt securities having a remaining maturity of sixty days
or less are valued at amortized cost, which approximates market value. Any
securities or other assets for which market quotations are not readily available
are valued at their fair value as determined in good faith by the Board of
Trustees.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The dividend policies of the Portfolios are discussed in the Prospectus. In
computing interest income, the Portfolios will amortize any discount or premium
resulting from the purchase of debt securities except for mortgage- or other
receivables-backed obligations subject to monthly payment of principal and
interest. Gains or losses resulting from unamortized discount or premium on
securities issued prior to July 19, 1984 will be treated as capital gains or
losses when realized. With respect to market discount on bonds issued after July
18, 1984, a portion of any capital gain realized upon disposition may be
recharacterized as taxable ordinary income in accordance with the 1984 Tax
Reform Act.
Capital Gains and Losses. Gains or losses on the sales of securities by
the Fund will be long-term capital gains or losses if the securities have been
held by the Fund for more than twelve months, regardless of how long you have
held your shares. Gains or losses on the sale of securities held for twelve
months or less will be short-term capital gains or losses. To the extent that
net capital losses are carried forward and are used to offset future capital
gains, it is probable that the gains so offset will not be distributed to
shareholders.
12
<PAGE> 42
PORTFOLIO YIELD AND TOTAL RETURN INFORMATION
The average annual total return for the year ended March 31, 1997 and the
period from inception through March 31, 1997 is shown in the following table:
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE FIVE YEARS
ENDED ENDED FOR THE PERIOD
MARCH 31, 1997 MARCH 31, 1997 FROM INCEPTION TO
PORTFOLIO (ONE YEAR) (FIVE YEAR) MARCH 31, 1997(1)
------------------------------------- -------------- ------------------ -----------------
<S> <C> <C> <C>
Equity............................... 15.25% 17.19% 16.24%
Small Cap............................ 15.47% 11.14% 13.66%
International Growth................. 11.03% N/A 11.63%
Managed.............................. 15.25% 18.39% 19.74%
High-Yield Bond...................... 12.65% N/A 12.99%
</TABLE>
- ---------------
(1) Reflects waiver of advisory fees and assumption of other expenses by the
Portfolio Manager in its previous role as Investment Advisor. Without such
waivers and assumptions, the average annual total return during the period
would have been lower.
The table above assumes that a $1,000 payment was made at the beginning of
the period shown, that no further payments were made, and that any distributions
from the assets of the Portfolio were reinvested. The table reflects the
historical rates of return, and deductions for all charges, expenses and fees of
the Fund.
For the Equity, Small Cap and International Growth Portfolios and for the
equity securities of the Managed Portfolio, net investment income is the net of
the dividends accrued (1/360 of the stated dividend rate multiplied by the
number of days the particular security is in the Portfolio) on all equity
securities during the 30-day period and expenses accrued for the period. It does
not reflect capital gains or losses. For the Portfolios, net investment income
is the net of interest earned on the obligation held by the Portfolio and
expenses accrued for the period. Interest earned on the obligation is determined
by (i) computing the yield to maturity based on the market value of each
obligation held in the corresponding Portfolio and on the day before the
beginning of the period with respect to debt obligations held by the Equity,
Managed, International Growth and Small Cap Portfolios (or as to obligations
purchased during that 30-day period, based on the purchase price plus accrued
interest); (ii) dividing the yield to maturity for each obligation by 360; (iii)
multiplying that quotient by the market value of each obligation (including
actual accrued interest) for each day of the subsequent 30-day month that the
obligation is in the Portfolio; and (iv) totaling the interest on each
obligation. Discount or premium amortization is recomputed at the beginning of
each 30-day period and with respect to discount and premium on mortgage- or
other receivables-backed obligations subject to monthly payment of principal and
interest; discount and premium is not amortized on the remaining security. Gain
or loss attributable to actual monthly paydowns is reflected as an increase or
decrease in interest income during that period.
The yield shown reflects deductions for all charges, expenses and fees of
the Fund. The table does not reflect charges and deductions which are, or may
be, imposed under the Contracts.
Net investment income of a Portfolio less all charges and expenses of the
Fund with respect to that Portfolio is divided by the product of the average
daily number of shares outstanding and the net asset value of one share on the
last day of the period. The sum of the quotient + 1 is raised to the 6th power.
1 is subtracted from this result and then multiplied by 2.
13
<PAGE> 43
ADDITIONAL INFORMATION
Description of the Fund. It is not contemplated that regular annual
meetings of shareholders will be held. Shareholders have the right, upon the
declaration in writing or vote of a majority of the outstanding shares of the
Fund, to remove a Trustee. The Trustees will call a meeting of shareholders to
vote on the removal of a Trustee upon written request of the record holders (for
at least six months) of 10% of its outstanding shares. In addition, 10
shareholders holding the lesser of $25,000 or 1% of the Fund's outstanding
shares may advise the Trustees in writing that they wish to communicate with
other shareholders for the purpose of requesting a meeting to remove a Trustee.
The Trustees will then either give the applicants access to the Fund's
shareholder list or mail the applicants' communication to all other shareholders
at the applicants' expense.
The Declaration of Trust contains an express disclaimer of shareholder
liability for the Fund's obligations, and provides that the Fund shall indemnify
any shareholder who is held personally liable for the obligations of the Fund.
It also provides that the Fund shall assume, upon request, the defense of any
claim made against any shareholder for any act or obligation of the Fund and
shall satisfy any judgment thereon. Thus, while Massachusetts law permits a
shareholder of a trust (such as the Fund) to be held personally liable as a
partner under certain circumstances, the risk of a shareholder incurring any
financial loss on account of shareholder liability is limited to the relatively
remote circumstance in which the Fund itself would be unable to meet the
obligations described above.
Possible Additional Portfolio Series. If additional Portfolios are created
by the Board of Trustees, shares of each such Portfolio will be entitled to vote
as a class only to the extent permitted by the Act (see below) or as permitted
by the Board of Trustees. Income and operating expenses would be allocated
fairly among two or more Portfolios by the Board of Trustees.
Under Rule 18f-2 under the Act, any matter required to be submitted to a
vote of shareholders of any investment company which has two or more series
outstanding is not deemed to have been effectively acted upon unless approved by
the holders of a "majority" (as defined in that Rule) of the voting securities
of each series affected by the matter. Such separate voting requirements do not
apply to the election of trustees or the ratification of the selection of
independent accountants. The Rule contains special provisions for cases in which
an advisory agreement is approved by one or more, but not all, series. A change
in investment policy may go into effect as to one or more series whose holders
so approve the change even though the required vote is not obtained as to the
holders of other affected series.
Distribution Agreement. Under the Distribution Agreement between each
Portfolio and the Distributor, the Distributor acts as the Portfolio's agent in
the continuous public offering of its shares. Expenses normally attributed to
sales, including advertising and the cost of printing and mailing prospectuses
other than those furnished to existing shareholders, are borne by the
Distributor.
Independent Accountants. Coopers & Lybrand L.L.P. serves as independent
accountants of the Fund; their services include auditing the annual financial
statements of each Portfolio as well as other related services. Coopers &
Lybrand L.L.P. also serves as independent accountants for the Investment Adviser
and its affiliates.
14
<PAGE> 44
<PAGE> 1
ENTERPRISE ACCUMULATION TRUST
EQUITY PORTFOLIO
OPCAP ADVISORS
NEW YORK, NEW YORK
The objective of Enterprise Accumulation Trust Equity Portfolio is to seek
long term capital appreciation through investment in a diversified portfolio of
equity securities selected on the basis of a value-oriented approach to
investing.
The Equity Portfolio had an excellent year in 1996, providing a total
return of 25.2%. This performance exceeded the total return of 22.9% with
dividends included for the Standard & Poor's 500 Index (S&P 500), an unmanaged
index of 500 of the largest corporations weighted by market capitalization.
Through the consistent application of our value disciplines, the Portfolio
has produced above-market returns over extended periods. For the five years
ended December 31, 1996, the Portfolio's average annual return of 18.0% was well
ahead of the 15.2% average annual return of the S&P 500. Since its inception on
August 1, 1988, the Portfolio has generated an average annual return of 16.7%,
exceeding the 16.0% average annual return of the S&P 500.
OpCap achieved these results by remaining disciplined in our value approach
even as the stock market advanced to new highs. The stocks owned by the
Portfolio had an average price-earnings ratio of 14.2 at the end of 1996, a
significant discount from the price-earnings ratio of 19.5 for the S&P 500.
Despite this discount, the companies in the Portfolio generated what we believe
to be high and potentially sustainable levels of earnings and cash flow. By
investing in quality, undervalued businesses, OpCap seeks to control risk and
outperform the market over time. As we enter the new year, we believe the
quality of the businesses we own, their low relative valuations and the ability
of company managements to maximize shareholder returns may help limit risk if
the market declines and may provide significant opportunity for reward.
The Portfolio owns a diverse group of undervalued companies with superior
business characteristics. A "superior" company, in our view, has a powerful
competitive position, a well-thought-out business strategy, excellent earnings
and high cash flow, and a shareholder-oriented management. OpCap continues to
find a number of undervalued quality companies in the insurance, banking and
miscellaneous financial services sector, which represented as of year-end about
one-third of the Portfolio's net assets. Each of the financial companies in the
Portfolio has a unique business franchise with competitive advantages, such as
low-cost distribution, highly automated processing, dominant market share and/or
high customer retention. In all cases, company management is focused on using
the company's cash flow to increase shareholder value. Business results of these
companies continue to improve regardless of the interest rate environment.
As of December 31, 1996, assets were allocated 86% to common stocks and 14%
to cash and cash equivalents. The Portfolio's five largest equity positions at
the end of the year were Ace, Ltd., a Bermuda-based provider of excess directors
and officers liability insurance, representing 4.9% of the Portfolio's net
assets: EXEL, Ltd., a strongly capitalized specialty insurance company, also
based in Bermuda, 4.4% of net assets; Wells Fargo & Company, a leading bank in
the Western United States, 3.8% of net assets; Caterpillar, Inc., which
manufacturers earth-moving equipment and diesel engines and other products, 3.5%
of net assets; and LucasVarity PLC, which manufactures automotive components,
diesel engines and other products, 3.1% of net assets.
Major industry positions were in the insurance sector, 22.4% of the
Portfolio's net assets; transportation, 7.2% of net assets; banking, 6.8% of net
assets; aerospace, 5.7% of net assets; and miscellaneous financial services,
5.5% of net assets.
100
<PAGE> 2
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
ENTERPRISE ACCUMULATION TRUST EQUITY PORTFOLIO FROM INCEPTION (8/1/88)
THROUGH 12/31/96 AND TOTAL RETURN ON S&P 500 INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) EQUITY PORTFOLIO S&P 500
<S> <C> <C>
8/1/88 10000 10000
12/31/88 10190 10367
12/31/89 12500 13651
12/31/90 12223 13228
12/31/91 16038 17250
12/31/92 18909 18565
12/31/93 20393 20432
12/31/94 21182 20693
12/31/95 29325 28466
12/31/96 36721 34987
</TABLE>
* Past Performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
The line graph above does not reflect Variable Account expenses.
SMALL CAP PORTFOLIO
GAMCO INVESTORS, INC.
RYE, NEW YORK
The objective of Enterprise Accumulation Trust Small Cap Portfolio is to
seek capital appreciation through investments in a diversified portfolio
consisting primarily of equity securities of companies with market
capitalizations of under $1 billion.
OpCap Advisors was the investment adviser to Enterprise Accumulation Trust
Small Cap Portfolio from inception on August 1, 1988 through May 31, 1996. GAMCO
Investors became manager of the Portfolio on June 1, 1996.
GAMCO's focus is on free cash flow. GAMCO believes free cash flow is the
best barometer of a business' value. Rising free cash flow often foreshadow net
earnings improvement. GAMCO also looks at long-term earnings trends. In
addition, GAMCO analyzes on and off balance sheet assets and liabilities. GAMCO
wants to know everything that will add to or detract from private market value
estimates. Finally, GAMCO looks for a catalyst: something happening in the
company's industry or indigenous to the company itself that may surface value.
For the twelve months ended December 31, 1996, the Small Cap Portfolio had
a total return of 11.2%, below the total return of 16.5% of the Russell 2000
Index, an unmanaged index composed of small stocks traded on the NASDAQ, the New
York and American Stock Exchanges. For five years ended December 31, 1996, the
Portfolio's average annual return was 12.6% versus the 15.6% return of the
Russell 2000 Index. Since inception August 1, 1988 through December 31, 1996 the
Small Cap Portfolio had an average annual total return of 13.6% compared with
13.1% for the Russell 2000 Index.
Media and communication stocks remain undervalued, as investors are
focusing on companies with visible earnings growth. Regulatory changes as well
as strong cash flows may benefit many of these companies in future quarters.
Cable stocks, for example, declined on fear of competition from direct broadcast
satellite but may enjoy strong cash flows and revenue streams from such services
as Internet access.
101
<PAGE> 3
Top holdings in the Portfolio at year end included Culbro Corporation,
Coltec Industries, Inc., Chris Craft Industries, Inc., Tele Communications,
Inc., and Precision Castparts Corporation, with major industry concentrations in
the broadcasting/media, aerospace, automotive, machinery and telecommunication
sectors.
GAMCO will continue to focus on value. GAMCO favors industries and
individual companies in the early stages of sustainable earnings uptrends and
other fundamentally attractive opportunities that participated only marginally
in the 1996 bull market. Aerospace component manufacturers may experience
superior earnings gains for the next three to five years as airlines throughout
the world continue to rebuild and refurbish their fleets. Auto aftermarket
companies are positioned so that they may grow earnings as the economy and new
car sales slow. As Personal Communication Services (PCS) systems come on-line in
the year ahead, cellular telephone companies, which have been under the cloud of
future competition from PCS, will have an opportunity to demonstrate the long
term viability of what GAMCO believes will remain a good growth business.
Entertainment software and cable network stocks, which were panned in 1996, may
get more favorable reviews from investors in the year ahead.
Finally, and perhaps most importantly for 1997, corporate restructurings,
in the form of mergers and sales and spin-offs of assets, may continue at a
feverish pace. There is strong global appetite for extending product lines and
distribution systems via acquisitions. The world is awash in liquidity and stock
is an increasingly valuable currency. In response, corporate managements that
hope to remain independent may be under pressure to surface the value of their
businesses by selling underperforming divisions, spinning off undervalued assets
and repurchasing shares. Deals and corporate events of this nature may trigger
some of the biggest small company stock advances in 1997.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
ENTERPRISE ACCUMULATION TRUST SMALL CAP PORTFOLIO FROM INCEPTION (8/1/88)
THROUGH 12/31/96 AND TOTAL RETURN ON RUSSELL 2000 INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) SMALL CAP PORTFOLIO RUSSELL 2000
<S> <C> <C>
8/1/88 10000 10000
12/31/88 10190 9936
12/31/89 12060 11549
12/31/90 10883 9296
12/31/91 16120 13577
12/31/92 19584 16078
12/31/93 23405 19117
12/31/94 23409 18769
12/31/95 26284 24106
12/31/96 29231 28082
</TABLE>
* Past Performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
The line graph above does not reflect Variable Account expenses.
102
<PAGE> 4
MANAGED PORTFOLIO
OPCAP ADVISORS
NEW YORK, NEW YORK
The objective of Enterprise Accumulation Trust Managed Portfolio is to seek
growth of capital over time through investment in a portfolio consisting of
common stocks, bond and cash equivalents, the percentages of which will vary
based on management's assessments of relative investment values.
Continuing its solid long-term performance, the Managed Portfolio provided
a total return of 23.5% in 1996. This return was slightly ahead of the total
return of 22.9% with dividends included for the Standard & Poor's 500 Index (S&P
500), an unmanaged index of 500 of the largest corporations weighted by market
capitalization.
The Portfolio has been a consistently strong performer over time. For the
five years ended December 31, 1996, the Portfolio delivered an average annual
return of 19.5%, handily surpassing the 15.2% average annual return of the S&P
500. Since its inception on August 1, 1988, the Portfolio has provided an
average annual return of 20.3%, surpassing the 16.1% return for the S&P 500.
The Portfolio invests in stocks, bonds and cash equivalents, with a bias
toward stocks. The Portfolio owns undervalued businesses with high cash flow.
OpCap Advisors investment style specifically attempts to avoid forecasting the
stock market or the economy. Instead, OpCap Advisors focuses on individual
companies and tries to understand where their businesses are going over the next
several years, not on where the market is heading in the next quarter.
The Portfolio had a cash position of 10% at year-end. In addition to its
cash position, the Portfolio's assets were allocated 89% to common stocks and
securities convertible into common stocks and 1% to Treasury bonds and notes.
The Portfolio's five largest positions at year-end were Wells Fargo &
Company, a leading bank in the Western United States, representing 7.6% of net
assets; McDonnell Douglas Corporation, the nation's largest manufacturer of
military aircraft and an important competitor in commercial aircraft, 5.9% of
net assets; Citicorp, a leading bank and financial services company, 5.3% of net
assets; Federal Home Loan Mortgage Corporation (Freddie Mac), the second largest
insurer of home mortgages in the United States, 4.8% of net assets; and DuPont
(E.I.) de Nemours & Company, a major industrial company operating in chemicals,
fibers, polymers, petroleum and diversified business, 4.4% of net assets. OpCap
Advisors remains comfortable with the Portfolio's largest equity holdings and is
prepared to buy more shares on price weakness.
103
<PAGE> 5
Major industry positions were in the banking sector, 14.5% of the
Portfolio's net assets; miscellaneous financial services, 11.6% of net assets;
aerospace, 8.4% of net assets; chemicals, 7.5% of net assets; and machinery,
6.9% of net assets.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
ENTERPRISE ACCUMULATION TRUST MANAGED PORTFOLIO FROM INCEPTION (8/1/88)
THROUGH 12/31/96 AND TOTAL RETURN ON S&P 500 INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) MANAGED PORTFOLIO S&P 500
<S> <C> <C>
8/1/88 10000 10000
12/31/88 10440 10367
12/31/89 13836 13651
12/31/90 13336 13228
12/31/91 19468 17250
12/31/92 23098 18565
12/31/93 25498 20432
12/31/94 26152 20693
12/31/95 38416 28466
12/31/96 47433 34987
</TABLE>
* Past Performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
The line graph above does not reflect Variable Account expenses.
INTERNATIONAL GROWTH PORTFOLIO
BRINSON PARTNERS, INC.
CHICAGO, ILLINOIS
The objective of Enterprise Accumulation Trust International Growth
Portfolio is to seek capital appreciation, primarily through a diversified
portfolio of non-U.S. equity securities.
For 1996, the Portfolio returned 12.7% versus the EAFE Index return of
6.1%. The EAFE Index is an unmanaged index composed of stocks representing the
stock markets of Europe, Australia, New Zealand and the Far East. Since November
30, 1994, through December 31, 1996, the Portfolio returned an average annual
return of 13.3% versus the EAFE Index return of 8.6%. Since inception on
November 18, 1994, the Portfolio has generated average annual returns of 12.3%
Throughout 1996, Enterprise Accumulation Trust International Growth
Portfolio benefited from its active strategies in currency allocation and
security selection. Market allocation slightly detracted from performance during
the year. The underweight in the Japanese yen, Swiss franc, German deutschemark
and offsetting overweights primarily in the U.S. dollar, were all successful
strategies. Stock selection was very strong within the Japanese equity market.
Honda and Toyota hit record highs in Japan in 1996. Underweighting the
financials and overweighting the pharmaceuticals, precision instruments and
electrical machinery industries all contributed to portfolio returns. The
Portfolio's overweight in cash and underweight market positions in Sweden, Hong
Kong and Switzerland detracted slightly from performance. This was partially
offset by positive results from overweights in the Netherlands, Spain, and
Belgium and underweights in Japan and Singapore.
104
<PAGE> 6
At year-end the Portfolio's largest holdings included Royal Dutch Petroleum
(Netherlands), Telecom Corp. of NZ (New Zealand), Matsushita Electric Industrial
(Japan), Unilever (United Kingdom and Netherlands), and British Telecom (United
Kingdom). Major country concentrations focused on Japan, United Kingdom, France,
Germany and the Netherlands.
While 1997 economic growth expectations are picking up for most countries,
several markets are not expected to maintain last year's strong growth into
1997. The inflation outlook remains relatively benign for most developed
markets. Despite an environment of good Gross Domestic Product growth, the
combination of fiscal restraint and downward wage pressures may help to keep
inflation under control.
The Portfolio continues to target a 5% strategic cash position, reflecting
our view that non-U.S equity markets are overpriced. The Japanese equity market
is notably more overpriced than most of the other non-U.S. markets. Given
Brinson's valuation analysis and fundamental considerations, the Portfolio is
underweight in Japan by 6.5%.
The other non-U.S. equity markets (excluding Japan) are overweight by 1.5%.
Brinson continues to emphasize New Zealand, Australia and, in Europe, France,
Netherlands, Belgium and Finland. The Portfolio remains modestly overweight in
Spain and the United Kingdom and neutrally positioned in Italy. The outlook for
German earnings has become more favorable. Throughout Europe, there is growing
evidence of an awareness by company managements of shareholder value. This has
been pronounced in Germany, where a number of companies have started to
restructure.
Canada has enjoyed a period of declining interest rates, an improving
fiscal picture and a somewhat undervalued Canadian dollar that has supported its
exporters. At this point, however, Brinson views interest rates as being
unsustainably low and currency at or close to fair value. Brinson's fundamental
analysis indicates that this market has become more expensive. The Portfolio is
invested, but quite underweight, in Hong Kong and Switzerland with lesser
underweights held in Canada and Malaysia. Currency strategy continues to favor
the U.S. dollar over the less attractive Japanese yen, German deutschemark,
Swiss franc and French franc.
As with all international growth funds, Enterprise Accumulation Trust
International Growth Portfolio carries additional risks associated with possibly
less stable foreign securities and currencies, lack of uniform accounting
standards and political instability.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
ENTERPRISE ACCUMULATION TRUST INTERNATIONAL GROWTH PORTFOLIO FROM INCEPTION
(11/30/94) THROUGH 12/31/96 AND TOTAL RETURN ON EAFE INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) INTERNATIONAL PORTFOLIO EAFE
<S> <C> <C>
11/30/94 10000 10000
12/31/94 10040 10063
12/31/95 11510 11191
12/31/96 12967 11868
</TABLE>
* Past Performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
The line graph above does not reflect Variable Account expenses.
105
<PAGE> 7
HIGH-YIELD BOND PORTFOLIO
CAYWOOD-SCHOLL CAPITAL MANAGEMENT
SAN DIEGO, CALIFORNIA
The objective of Enterprise Accumulation Trust High-Yield Bond Portfolio is
to seek maximum current income, primarily from debt securities that are rated Ba
or lower by Moody's Investors Service or BB or lower by Standard & Poor's
Corporation.
The Portfolio returned 12.9% for 1996, versus 8.9% for the Lehman Brothers
BB Index, an unmanaged index composed of all issues rated below Baa by Moody's
and all issues rated BB by Standard & Poors. Since November 30, 1994 through
December 31, 1996, the High-Yield Bond Portfolio had an average annual total
return of 14.7% versus the Lehman Brothers BB Index which returned 15%. Since
inception on November 18, 1994, the Portfolio has generated average annual
returns of 14.1%.
Five elements helped the high yield bond market, and specifically the
High-Yield Bond Portfolio, to post solid returns in 1996. Investors poured $16.0
billion of new money into the high-yield market in 1996 which helped keep the
market technicals favorably balanced through much of the year. Secondly, for the
second year in a row the investment grade buyer was evident in the high-yield
market. With spreads on investment grade bonds remaining historically tight,
corporate fixed income buyers participated heavily in many BB new issues. In
addition, new issues for 1996 totaled $72 billion, more than doubling the $31
billion issued in 1995. The quality of the new issues continued to deteriorate,
with approximately 72% of the new issuance rated single B or lower. The
telecommunications sector dominated the new issuance, accounting for 28% of the
merchandise. Also, a receptive initial public offering environment and/or strong
stock market generally is supportive to the high-yield market for it allowed
issuers to improve their balance sheet through issuance of equity. This
potential financial flexibility reduces credit risk. Finally, defaults were
surprisingly light in 1996 with 16 defaults representing $4.2 billion. This
compares to 30 issues and $8.2 billion in 1995. Defaults as a percent of the
market have been less than 3% for five consecutive years. This trend has
bolstered the legitimacy of the high-yield market as an asset class for pension
funds and fiduciary investors.
In 1997 high-yield bond performance may be influenced primarily by three
factors. Credit risk is expected to increase somewhat and the yield advantage of
high-yield bonds over treasuries may also increase modestly. Overall growth of
corporate profitability may moderate with businesses experiencing more
difficulty in passing along production cost increases. Next, new issuance for
1997 may decline to $40 to $50 billion due to a smaller calendar of offerings by
the telecommunications industry. Finally, capital flows into the high-yield
market may continue to grow contingent on the absolute yield advantage and
return over treasuries and the perceived credit risk. Interest among pension
funds and foundations has increased. Sales of new mutual fund shares has brought
the sector to prominence, owning approximately 20% of the universe. During the
relatively low interest rates of the past several years, the insurance industry
has also remained a steady buyer of high-yield bonds. Reinvestment of coupons
has been a stabilizing factor which may potentially repeat in 1997.
The economic and monetary climate for high-yield bonds may be somewhat less
favorable in 1997 while still offering substantial relative performance
opportunities over treasuries and investment grade bonds. The relative
performance of high-yield bonds in 1997 may not be quite as outstanding, as in
1996, but still very rewarding. High-yield bonds may not perform as well in
relative terms if interest rates were to substantially decline. The high-yield
sector has historically performed very well during periods of moderately rising
interest rates.
Managing this sector in 1997 for competitive returns could be more
difficult, requiring greater scrutiny of credit quality. Caywood-Scholl's
investment policy of maintaining broad diversification among favorable
industries and issuers should help the Portfolio in seeking to capture solid
risk adjusted returns in this investment environment.
106
<PAGE> 8
Like all investments in high-yield bond funds, an investment in the
High-Yield Bond Portfolio carries an increased risk that issuers of securities
in which the High-Yield Bond Portfolio invests may default in the payment of
principal and interest as compared to the risk of such defaults in other Income
Portfolios. In addition, an investment in the High-Yield Bond Portfolio may be
subject to certain other risks relating to the market price, relative liquidity
in the secondary market and sensitivity to interest rate and economic changes on
the noninvestment grade securities in which the High-Yield Bond Portfolio
invests that are higher than may be associated with higher rated, investment
grade securities.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
ENTERPRISE ACCUMULATION TRUST HIGH-YIELD BOND PORTFOLIO FROM INCEPTION
(11/30/94)
THROUGH 12/31/96 AND TOTAL RETURN ON LEHMAN BB INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) HIGH-YIELD BOND LEHMAN BB
<S> <C> <C>
11/30/94 10000 10000
12/31/94 10111 10079
12/31/95 11788 12280
12/31/96 13312 13376
</TABLE>
* Past Performance is not predictive of future performance.
Assumes reinvestment of all dividends and distributions.
The line graph above does not reflect Variable Account expenses.
The views expressed in this report reflect those of the portfolio managers
only through the end of the period of the report as stated on the cover. The
managers' views are subject to change at any time based on market and other
conditions.
107
<PAGE> 9
ENTERPRISE ACCUMULATION TRUST
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 86.06% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 5.72%
AlliedSignal Inc. 45,920 $ 3,076,640
Lockheed Martin Corporation 86,000 7,869,000
McDonnell Douglas Corporation 110,506 7,072,384
-------------------
18,018,024
AUTOMOTIVE -- 3.10%
LucasVarity PLC 257,000 9,766,000
BANKING -- 6.76%
Citicorp 90,544 9,326,032
Wells Fargo & Company 44,362 11,966,649
-------------------
21,292,681
BROADCASTING -- 0.07%
TCI Satellite Entertainment Inc. 21,000 207,375
CABLE -- 1.08%
Tele Communications Inc.* 260,000 3,396,250
CHEMICALS -- 3.20%
Du Pont (E. I.) de Nemours &
Company 60,000 5,662,500
Hercules Inc. 102,202 4,420,236
-------------------
10,082,736
CONGLOMERATES -- 1.43%
General Electric Company 45,544 4,503,163
CONSUMER PRODUCTS -- 2.42%
Avon Products Inc. 72,756 4,156,187
Mattel Inc. 124,875 3,465,281
-------------------
7,621,468
DRUGS & MEDICAL PRODUCTS -- 3.52%
Becton, Dickinson & Company 186,158 8,074,603
Warner-Lambert Company 40,252 3,018,900
-------------------
11,093,503
ELECTRONICS -- 3.13%
Adaptec Inc. 100,000 4,000,000
Arrow Electronics Inc.* 78,462 4,197,717
Electronic Arts Inc.* 55,000 1,646,563
-------------------
9,844,280
ENERGY -- 1.48%
Triton Energy Ltd.* 96,004 4,656,194
HEALTH CARE -- 4.27%
Columbia/HCA Healthcare
Corporation 160,000 6,520,000
Ornda Healthcorp 22,000 643,500
Tenet Healthcare Corporation* 287,000 6,278,125
-------------------
13,441,625
INSURANCE -- 22.36%
Ace Ltd. 257,000 15,452,125
AFLAC Inc. 185,128 7,914,222
American International Group
Inc. 40,612 4,396,249
Everest Reinsurance Holdings 175,000 5,031,250
EXEL Ltd. 372,348 14,102,680
General Re Corporation 25,000 3,943,750
Mid Ocean Ltd. 150,000 7,875,000
Progressive Corporation (Ohio) 76,421 5,148,865
Renaissance Holdings Ltd. 150,000 4,950,000
Transamerica Corporation 20,126 1,589,954
-------------------
70,404,095
MACHINERY -- 5.26%
Caterpillar Inc. 148,000 11,137,000
Tenneco Inc. 120,000 5,415,000
-------------------
16,552,000
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
-----------------------------------------
<S> <C> <C>
METALS & MINING -- 0.47%
Freeport McMoRan Copper & Gold
(Class B) 49,431 $ 1,476,751
MISC. FINANCIAL SERVICES -- 5.53%
Countrywide Credit Industries
Inc. 316,088 9,048,019
Federal Home Loan Mortgage
Corporation 76,045 8,374,456
-------------------
17,422,475
PAPER & FOREST PRODUCTS -- 0.41%
Champion International
Corporation 30,000 1,297,500
PRINTING & PUBLISHING -- 1.99%
Donnelley R R & Sons Company 200,000 6,275,000
RESTAURANTS -- 1.98%
McDonalds Corporation 138,000 6,244,500
RETAIL -- 2.89%
May Department Stores Company 194,712 9,102,786
TELECOMMUNICATIONS -- 1.66%
Sprint Corporation 131,000 5,223,625
TRANSPORTATION -- 7.15%
AMR Corporation* 89,000 7,843,125
Canadian Pacific Limited 155,000 4,107,500
Carnival Corporation 210,000 6,930,000
CSX Corporation 86,000 3,633,500
-------------------
22,514,125
UTILITIES -- 0.18%
El Paso Natural Gas Company 11,160 563,580
-------------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $200,062,464) 270,999,736
- ----------------------------------------------------------------------------
COMMERCIAL PAPER -- 13.73%
- ----------------------------------------------------------------------------
Ford Motor Credit Company
5.40% due 01/23/97 $13,000,000 12,957,100
Norwest Financial Inc.
5.35% due 01/15/97 10,340,000 10,318,487
Deere (John) Capital Corporation
5.38% due 01/22/97 10,000,000 9,968,617
Household Finance Corporation
5.40% due 01/08/97 10,000,000 9,989,500
-------------------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $43,233,704) 43,233,704
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.73%
- ----------------------------------------------------------------------------
State Street Bank & Trust Repurchase
Agreement, 4.75% due 01/02/97
Collateral: U.S. Treasury Note
$5,560,000, 5.625% due 11/30/98
Value $5,565,805 5,455,000 5,455,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $5,455,000) 5,455,000
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $248,751,168) $ 319,688,440
OTHER ASSETS LESS LIABILITIES -- (1.52)% (4,781,508)
-------------------
NET ASSETS 100% $ 314,906,932
===============================================================
</TABLE>
(*) Non-income producing
See accompanying notes to financial statements.
108
<PAGE> 10
ENTERPRISE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 94.97% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------------
<S> <C> <C>
ADVERTISING -- 1.55%
Ackerley Inc. 130,000 $ 1,527,500
Katz Media Group Inc.* 130,000 1,462,500
-------------------
2,990,000
AEROSPACE -- 11.40%
Coltec Industries Inc.* 300,000 5,662,500
Curtiss Wright Corporation 30,000 1,511,250
Gencorp Inc. 260,000 4,712,500
Moog Inc.* 24,000 561,000
Precision Castparts Corporation 100,000 4,962,500
Sequa Corporation (Class A) 25,000 981,250
Sequa Corporation (Class B) 20,000 1,000,000
SPS Technologies Inc. 40,000 2,570,000
-------------------
21,961,000
AUTOMOTIVE -- 7.34%
Clarcor Inc. 125,000 2,765,625
Echlin Inc. 70,000 2,213,750
Federal Mogul Corporation 60,000 1,320,000
Navistar International
Corporation Inc.* 100,000 912,500
Scheib Earl Inc. 85,000 595,000
Standard Motor Products Inc. 160,000 2,220,000
Wynns International Inc. 130,000 4,111,250
-------------------
14,138,125
BROADCASTING -- 10.76%
BET Holdings Inc.* 60,000 1,725,000
BHC Communications Inc. 10,000 1,013,750
Chris Craft Industries Inc. 130,000 5,443,750
Echostar Communications
Corporation 16,000 352,000
Gaylord Entertainment Company 88,000 2,013,000
Gray Communications Systems Inc. 30,000 566,250
Gray Communications Systems Inc.
(Class B) 60,000 1,020,000
HSN Inc. 150,000 3,562,500
International Family
Entertainment Inc. 200,000 3,100,000
Lin Television Corporation* 20,000 845,000
Paxson Communications
Corporation 60,000 472,500
United International Holdings
Inc.* 50,000 612,500
-------------------
20,726,250
CABLE -- 4.38%
AFC Cable Systems Inc.* 10,000 238,750
Cablevision Systems Corporation* 100,000 3,062,500
Tele Communications Inc.* 180,000 5,141,250
-------------------
8,442,500
CHEMICALS -- 4.27%
Church & Dwight Inc. 105,000 2,401,875
Lawter International Inc. 100,000 1,262,500
Loctite Corporation 75,000 4,565,625
-------------------
8,230,000
CONSUMER DURABLES -- 2.16%
Dynamics Corporation of America 13,500 381,375
Envirosource Inc.* 100,000 268,750
Oneida Ltd. 90,000 1,620,000
Syratech Corporation 60,000 1,890,000
-------------------
4,160,125
CONSUMER SERVICES -- 3.24%
Berlitz International Inc.* 28,500 591,375
Rollins Inc. 205,000 4,100,000
Wackenhut Corporation 90,000 1,552,500
-------------------
6,243,875
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
-----------------------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT -- 2.11%
Ametek Inc. 60,000 $ 1,335,000
Thomas Industries Inc. 131,000 2,734,625
-------------------
4,069,625
ELECTRONICS -- 1.64%
CTS Corporation 74,000 3,163,500
ENERGY -- 0.20%
Kaneb Services Inc.* 120,000 390,000
ENTERTAINMENT & LEISURE -- 4.01%
Aztar Corporation* 260,000 1,820,000
Churchill Downs Inc. 14,500 522,000
GC Companies Inc. 50,000 1,731,250
Jackpot Enterprises Inc. 200,000 1,950,000
Spectravision Inc. (Class B)*(a) 274,617 0
Spelling Entertainment Group
Inc. 220,000 1,622,500
Trans Lux Corporation 8,000 88,000
-------------------
7,733,750
FOOD & BEVERAGES & TOBACCO -- 5.58%
Celestial Seasonings Inc.* 50,000 987,500
Culbro Corporation* 105,000 6,811,875
Tootsie Roll Industries Inc. 40,000 1,585,000
Whitman Corporation 60,000 1,372,500
-------------------
10,756,875
HEALTH CARE -- 0.11%
Spacelabs Inc.* 10,000 205,000
INSURANCE -- 1.47%
Capsure Holdings Corporation* 25,000 284,375
Liberty Corporation 65,000 2,551,250
-------------------
2,835,625
MACHINERY -- 5.75%
Baldwin Technology Company Inc.* 100,000 250,000
Briggs & Stratton Corporation 40,000 1,760,000
Donaldson Inc. 5,000 167,500
Franklin Electric Inc. 22,000 1,028,500
Goulds Pumps Inc. 175,000 4,014,062
Idex Corporation 22,000 877,250
Katy Industries Inc. 130,000 1,885,000
Kollmorgen Corporation 100,000 1,100,000
-------------------
11,082,312
MANUFACTURING -- 2.57%
Aptargroup Inc. 15,000 528,750
Crane Company 90,000 2,610,000
Mark IV Industries Inc. 30,000 678,750
Oil Dri Corporation of America 75,000 1,125,000
-------------------
4,942,500
METALS & MINING -- 1.83%
Calmat Company 65,000 1,218,750
Handy & Harman 100,842 1,764,735
Trinova Corporation 15,000 545,625
-------------------
3,529,110
MISC. FINANCIAL SERVICES -- 2.50%
Data Broadcasting 50,000 350,000
Midland Company 60,500 2,329,250
Pioneer Group Inc. 90,000 2,137,500
-------------------
4,816,750
PAPER PRODUCTS -- 0.31%
Nashua Corporation 50,000 600,000
PHARMACEUTICALS -- 1.78%
Carter Wallace Inc. 220,000 3,437,500
</TABLE>
109
<PAGE> 11
ENTERPRISE ACCUMULATION TRUST
SMALL CAP PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
PRINTING & PUBLISHING -- 4.81%
Lee Enterprises Inc. 60,000 $ 1,395,000
Media General Inc. 105,000 3,176,250
Meredith Corporation 30,000 1,582,500
Providence Journal Company* 61,300 1,877,312
Pulitzer Publishing Company 26,666 1,236,636
-------------------
9,267,698
REAL ESTATE -- 1.89%
Catellus Development
Corporation* 170,000 1,933,750
Santa Anita Realty Enterprises
Inc. 65,000 1,706,250
-------------------
3,640,000
RETAIL -- 3.58%
Brunos Inc.* 42,500 733,125
Giant Foods Inc. 80,000 2,760,000
Neiman Marcus Group Inc. 120,000 3,060,000
Phar Mor Inc.* 65,000 353,438
-------------------
6,906,563
SECURITY & INVESTIGATION SERVICES -- 0.83%
Pittway Corporation 30,000 1,605,000
TELECOMMUNICATIONS -- 6.17%
Aerial Communications Inc. 80,000 650,000
Associated Group Inc.* 35,000 1,076,250
C Tec Corporation* 70,000 1,662,500
Cellular Communications Puerto
Rico* 102,500 2,024,375
Centennial Cellular Corporation* 180,000 2,182,500
Comsat Corporation 108,000 2,659,500
Telephone & Data Systems Inc. 45,000 1,631,250
-------------------
11,886,375
TRANSPORTATION -- 2.73%
GATX Corporation 100,000 4,850,000
Hudson General Corporation 11,000 409,750
-------------------
5,259,750
TOTAL COMMON STOCKS
(IDENTIFIED COST $185,070,207) 183,019,808
- ----------------------------------------------------------------------------
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
U.S. TREASURY BILLS -- 4.50%
- ----------------------------------------------------------------------------
U.S. Treasury Bill
4.51% due 01/23/97 619,000 $ 617,294
U.S. Treasury Bill
4.59% due 01/23/97 3,635,000 3,624,804
U.S. Treasury Bill
4.47% due 01/30/97 470,000 468,308
U.S. Treasury Bill
4.90% due 01/02/97 100,000 99,986
U.S. Treasury Bill
4.90% due 01/09/97 300,000 299,673
U.S. Treasury Bill
4.96% due 01/09/97 335,000 334,631
U.S. Treasury Bill
4.96% due 02/13/97 669,000 665,037
U.S. Treasury Bill
4.96% due 02/20/97 913,000 906,711
U.S. Treasury Bill
4.965% due 01/30/97 1,000,000 996,000
U.S. Treasury Bill
4.995% due 02/06/97 660,000 656,703
TOTAL U.S. TREASURY BILLS
(IDENTIFIED COST $8,669,146) 8,669,147
- ----------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 0.57%
- ----------------------------------------------------------------------------
State Street Bank & Trust Repurchase
Agreement, 4.00% due 01/02/97
Collateral: U.S. Treasury Note
$1,095,000, 5.875%, due
07/31/97 Value $1,124,141 1,100,000 1,100,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $1,100,000) 1,100,000
- ----------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $194,839,353) $ 192,788,955
OTHER ASSETS LESS LIABILITIES -- (0.04)% (85,136)
-------------------
NET ASSETS 100% $ 192,703,819
============================================================================
</TABLE>
(*) Non-income producing
(a) In bankruptcy
See accompanying notes to financial statements.
110
<PAGE> 12
ENTERPRISE ACCUMULATION TRUST
MANAGED PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 87.92% PRINCIPAL AMOUNT VALUE
---------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 8.41%
Lockheed Martin Corporation 400,000 $ 36,600,000
Loral Space & Communications 600,000 11,025,000
McDonnell Douglas Corporation 1,800,000 115,200,000
-------------------
162,825,000
BANKING -- 14.48%
Citicorp 999,000 102,897,000
First Empire State Corporation 100,000 28,800,000
Wells Fargo & Company 550,733 148,560,227
-------------------
280,257,227
BROADCASTING -- 0.23%
TCI Satellite Entertainment
Inc. 450,000 4,443,750
CABLE -- 3.54%
Tele Communications Inc. 5,250,000 68,578,125
CHEMICALS -- 7.53%
Du Pont (E. I.) de Nemours &
Company 900,000 84,937,500
Hercules Inc. 1,000,000 43,250,000
Monsanto Company 450,000 17,493,750
-------------------
145,681,250
CONSTRUCTION -- 0.28%
Newport News Shipbuilding Inc. 360,000 5,400,000
CONSUMER PRODUCTS -- 3.87%
Mattel Inc. 2,700,000 74,925,000
CRUDE & PETROLEUM -- 0.94%
Union Pacific Resources Group
Inc. 625,000 18,281,250
DRUGS & MEDICAL PRODUCTS -- 2.80%
Becton, Dickinson & Company 1,250,000 54,218,750
ENERGY -- 0.98%
Triton Energy Ltd. 389,200 18,876,200
ENTERTAINMENT & LEISURE -- 0.62%
Harrahs Entertainment Inc. 600,000 11,925,000
INSURANCE -- 6.38%
Ace Ltd. 400,000 24,050,000
EXEL Ltd. 1,600,000 60,600,000
Transamerica Corporation 204,600 16,163,400
Travelers Inc. 500,000 22,687,500
-------------------
123,500,900
MACHINERY -- 6.92%
Caterpillar Inc. 700,000 52,675,000
Tenneco Inc. 1,800,000 81,225,000
-------------------
133,900,000
METALS & MINING -- 3.32%
Freeport McMoRan Copper & Gold
(Class B) 2,150,000 64,231,250
MISC. FINANCIAL
SERVICES -- 11.60%
American Express Company 400,000 22,600,000
Countrywide Credit Industries
Inc. 1,700,000 48,662,500
Federal Home Loan Mortgage
Corporation 850,000 93,606,250
Federal National Mortgage
Association 1,600,000 59,600,000
-------------------
224,468,750
PAPER & FOREST PRODUCTS -- 2.01%
Champion International
Corporation 900,000 38,925,000
PRINTING & PUBLISHING -- 0.81%
Donnelley R R & Sons Company 500,000 15,687,500
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
REAL ESTATE -- 0.77%
Security Capital Group Inc.
(A) 11,908 $ 14,822,840
RESTAURANTS -- 3.51%
McDonalds Corporation 1,500,000 67,875,000
TECHNOLOGY -- 5.68%
Intel Corporation 350,000 45,828,125
National Semiconductor
Corporation* 2,200,000 53,625,000
Unitrode Corporation* 360,000 10,575,000
-------------------
110,028,125
TRANSPORTATION -- 3.11%
Union Pacific Corporation 1,000,000 60,125,000
UTILITIES -- 0.13%
El Paso Natural Gas Company 50,000 2,525,000
TOTAL COMMON STOCKS
(IDENTIFIED COST $1,181,588,338) 1,701,500,917
- --------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 0.03%
- --------------------------------------------------------------------------
RETAIL -- 0.03%
Venture Stores 32,922 604,942
TOTAL CONVERTIBLE PREFERRED STOCKS
(IDENTIFIED COST $1,566,100) 604,942
- --------------------------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 0.59%
- --------------------------------------------------------------------------
REAL ESTATE -- 0.59%
Security Capital Group Inc.
(A) 12.00% due 06/30/14 9,442,819 11,334,984
TOTAL CONVERTIBLE CORPORATE BONDS
(IDENTIFIED COST $9,054,974) 11,334,984
- --------------------------------------------------------------------------
U.S. TREASURY BONDS -- 0.45%
- --------------------------------------------------------------------------
U.S. Treasury Bond
6.25% due 08/15/23 9,300,000 8,722,005
TOTAL U.S. TREASURY BONDS
(IDENTIFIED COST $8,673,858) 8,722,005
- --------------------------------------------------------------------------
U.S. TREASURY NOTES -- 0.66%
- --------------------------------------------------------------------------
U.S. Treasury Note
7.875% due 04/15/98 8,370,000 8,585,277
U.S. Treasury Note
7.875% due 08/15/01 3,952,500 4,213,681
-------------------
12,798,958
TOTAL U.S. TREASURY NOTES
(IDENTIFIED COST $12,356,079) 12,798,958
- --------------------------------------------------------------------------
COMMERCIAL PAPER -- 8.61%
- --------------------------------------------------------------------------
Beneficial Corporation
5.48% due 01/22/97 11,000,000 10,964,836
Ford Motor Credit Company
5.38% due 01/09/97 60,000,000 59,928,267
General Motors Acceptance
Corporation,
5.52% due 01/27/97 61,055,000 60,811,594
Household Finance Corporation
5.32% due 01/06/97 35,000,000 34,974,139
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $166,678,836) 166,678,836
- --------------------------------------------------------------------------
</TABLE>
111
<PAGE> 13
ENTERPRISE ACCUMULATION TRUST
MANAGED PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 1.61%
- --------------------------------------------------------------------------
State Street Bank & Trust Repurchase
Agreement, 4.75% due 01/02/97
Collateral: U.S. Treasury
Note $31,410,000, 6.25% due
4/30/01 Value $31,843,866 31,215,000 $ 31,215,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $31,215,000) 31,215,000
- --------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $1,411,133,185) $ 1,932,855,642
OTHER ASSETS LESS LIABILITIES -- 0.13% 2,487,839
-------------------
NET ASSETS 100% $ 1,935,343,481
==========================================================================
</TABLE>
(*) Non-income producing
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(A) Restricted securities as of December 31, 1996:
<TABLE>
<CAPTION>
% OF
DATES OF PAR/ AGGREGATE NET
DESCRIPTION ACQUISITION SHARES UNIT COST UNIT VALUE COST VALUE ASSETS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Security Capital
Group, Inc.
12.00%, 6/30/14... 7/1/94-9/15/94 $ 8,162,361 $0.94 $ 1.20 $ 7,699,650 $ 9,797,947 0.51%
12/31/94-12/31/95 271,825 1.00 1.20 271,825 326,294 0.02
7/1/96-11/26/96 1,008,633 1.07 1.20 1,076,026 1,210,743 0.06
Security Capital
Group, Inc. Common
Stock............. 3/7/94-11/26/96 11,908 $777.02-$1,128.06 $1,244.78 10,376,171 14,822,840 0.77
----------- ----------- ------
$19,423,672 $26,157,824 1.36%
========== ========== ======
</TABLE>
112
<PAGE> 14
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 91.24% PRINCIPAL AMOUNT VALUE
---------------------------------------------------------------
<S> <C> <C>
AUSTRALIA -- 4.55%
Amcor LTD 16,500 $ 106,101
Boral LTD 22,400 63,741
Broken Hill Proprietary 38,900 554,080
CRA LTD 13,763 216,055
David Jones LTD 70,000 97,369
Lend Lease Corporation 5,205 100,947
Mim Holdings LTD 56,775 79,425
National Australia Bank 21,000 247,039
News Corporation 48,042 253,556
Pacific Dunlop LTD 29,000 73,762
Qantas Airways LTD 40,164 67,041
Santos LTD 26,000 105,397
Westpac Bank Corporation 43,000 244,718
WMC LTD 20,000 126,063
Woolworths LTD 28,000 67,435
-------------------
2,402,729
BELGIUM -- 2.87%
Bruxelles Lambert Groupe 650 $ 83,689
Delhaize Le Lion 1,300 77,236
Electrabel 1,120 265,108
Fortis AG 1,019 163,477
Fortis AG (Rts) 19 9
Generale De Banque 300 107,557
Generale De Banque (Wts)* 300 4,350
Kredietbank 620 203,231
Petrofina SA 575 183,043
Society General De Belgique 1,100 86,329
Solvay 210 128,571
Tractebel CAP 300 139,705
Union Miniere* 1,100 74,541
-------------------
1,516,846
CANADA -- 2.53%
Alcan Aluminum LTD 2,800 $ 94,574
Bank Montreal Quebec 2,500 79,603
Barrick Gold Corporation 1,700 48,729
BCE Inc. 1,600 77,061
Canadian National Railway
Company 2,000 76,097
Canadian Pacific LTD 6,500 171,128
Hudsons Bay Company 2,700 45,154
Imperial Oil LTD 2,300 108,340
Moore Corporation LTD 2,500 51,851
Noranda Inc. 2,900 64,701
Northern Telecom LTD 1,200 74,666
Nova Corporation Alberta 4,400 39,042
Royal Bank Canada Montreal
Quebec 2,900 101,870
Seagram LTD 2,500 99,047
Thomson Corporation 6,300 139,177
Transcanada Pipelines LTD 3,800 66,603
-------------------
1,337,643
FINLAND -- 1.45%
Merita A LTD* 26,000 $ 80,826
Nokia (Ab) Oy 6,400 371,200
Outokumpu Oy 4,200 71,674
Pohjola 1,400 31,500
Sampo Vakuutusosak 900 71,022
Upm Kymmene Oy 6,700 140,554
-------------------
766,776
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
FRANCE -- 9.46%
Accor 1,324 $ 167,653
Alcatel Alsthom 1,876 150,702
Axa 800 50,882
Banque National Paris 6,800 263,167
Cep Communications 400 28,255
Cep Communications (Wts)* 400 459
Cie Bancaire 1,487 175,970
Cie De St Gobain 2,289 323,817
Cie De Suez 3,082 131,038
Colas 300 43,365
Credit Local de France 2,859 249,064
Danone 700 97,543
Generale Des Eaux 3,369 417,513
L'Oreal 200 75,320
Lafarge Coppee SA 1,500 89,997
LVMH Moet Hennessy 1,440 402,151
Michelin* 3,828 206,654
Pechiney 2,959 123,983
Peugeot SA* 3,025 340,484
Rhone Poulenc SA 7,000 238,662
Seita 3,000 125,470
Societe Generale 2,655 287,068
Society Elf Aquitaine 3,020 274,905
Total SA 4,727 384,464
UAP 5,304 134,427
Usinor Sacilor 14,200 206,630
-------------------
4,989,643
GERMANY -- 6.99%
Allianz AG Holdings 188 $ 342,085
BASF AG 4,800 184,913
Bayer AG 6,550 267,312
Bayer Motoren Werk 300 209,189
Commerzbank AG 5,000 127,047
Daimler Benz AG* 2,750 189,433
Deutsche Bank AG 5,300 247,641
Deutsche Telekom 8,050 169,757
Hochtief AG 1,500 59,462
Hoechst AG 2,300 108,662
Manitoba AG 400 96,959
Mannesmann AG 470 203,724
Metro AG 1,680 135,378
Muenchener Ruckvers 93 232,379
Preussag AG 650 147,209
RWE AG 3,500 148,297
Schering AG 2,300 194,158
Siemens AG 1,700 80,095
Thyssen AG 900 159,670
Veba AG 4,100 237,133
Volkswagen AG 350 145,568
-------------------
3,686,071
HONG KONG -- 1.39%
Cheung Kong Holdings 7,000 $ 62,221
China Light & Power 15,000 66,714
Guoco Group 10,000 55,983
Hang Seng Bank 7,000 85,074
Hong Kong Telecommunications 28,000 45,071
Hutchison Whampoa 17,000 133,525
New World Development Company 12,000 81,065
Sun Hung Kai Properties 4,000 49,001
Swire Pacific 9,000 85,817
Wharf Holdings 14,000 69,869
-------------------
734,340
</TABLE>
113
<PAGE> 15
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
IRELAND -- 0.14%
Smurfit Jefferson 26,000 $ 75,056
ITALY -- 2.68%
Assic Generali 8,470 $ 160,522
Danieli Di Risp 7,000 29,301
Edison 8,000 50,626
Eni (ADR) 3,300 170,363
Eni SPA 19,000 97,505
IMI 20,000 171,391
INA 38,000 49,498
Italgas 10,000 41,760
Mediobanca SPA 4,000 21,582
Montedison SPA* 216,580 147,623
Rinascente 8,000 46,407
Rinascente (Wts)* 400 176
Rinascente Louisiana 10,000 25,577
SAI Di Risp 10,000 35,564
Telecom Italia Di Risp 103,000 200,976
Telecom Italia Mobile Di Risp 115,000 164,123
-------------------
1,412,994
JAPAN -- 24.86%
Amada Company 23,000 $ 178,741
Asahi Glass Company 28,000 263,535
Bank of Tokyo Mits 21,600 401,002
Canon Inc. 20,000 442,103
Canon Sales Company Inc. 7,700 171,540
Citizen Watch Company 23,000 164,839
Dai Nippon Printing 21,000 368,103
Daiichi Pharm Company 16,000 256,973
Daikin Kogyo 24,000 213,453
Daiwa House Industries 11,000 141,525
Fanuc 9,000 288,317
Fujitsu 13,000 121,233
Hitachi 47,000 438,304
Honda Motor Company 6,000 171,488
Inax Corporation 28,000 207,443
Isetan Company 7,000 90,666
Ito Yokado Company 8,000 348,156
Kaneka Corporation 13,000 66,566
Keio Teito Electric Railway 24,000 117,296
Kintetsu 28,000 174,804
Kirin Brewery Company 24,000 236,249
Kokuyo Company 5,000 123,478
Kuraray Company 20,000 184,785
Kyocera Corporation 2,000 124,687
Maeda Road Construction 4,000 46,283
Matsushita Electric Industrial
Indiana 38,000 620,154
Mitsubishi Paper 29,000 113,436
NGK 38,000 360,936
Nintendo Company 1,700 121,691
Nippon Denso 16,000 385,459
Nippon Meat Packer 15,000 194,284
Nippon Steel Corporation 22,000 64,968
Okumura Corporation 24,000 145,894
Osaka Gas Company 91,000 249,089
Sankyo Company 17,000 481,478
Sanwa Bank 12,000 163,716
Secom Company 5,000 302,651
Seino Transportation 7,000 77,368
Sekisui House 45,000 458,510
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
Shinmaywa Industries 21,000 $ 154,676
Sony Corporation 6,600 432,553
Sumitomo Bank 24,000 346,084
Sumitomo Electric Industries 19,000 265,780
Takeda Chemical Industries 17,000 356,705
TDK Corporation 4,000 260,772
Tokio Marine & Fire 20,000 188,239
Tokyo Electric Power 10,400 228,098
Tokyo Steel Manufacturing 16,600 236,508
Tonen Corporation 17,000 198,169
Toray Industries Inc. 92,000 567,999
Toshiba Corporation 53,000 333,166
Toyo Suisan Kaisha 12,000 120,197
Toyota Motor Corporation 6,000 172,524
Yamazaki Baking Company 11,000 175,719
-------------------
13,118,392
MALAYSIA -- 1.14%
Hume Industries 11,000 $ 69,253
Kuala Lumpur Kepong 20,000 50,683
Land & General 16,000 38,329
Malayan Bank Berhad 4,000 44,348
Malaysia International Shipping 11,000 32,667
Nestle Malay Berhad 2,000 16,076
Public Bank Berhad 20,000 42,368
Resorts World Berhad 10,000 45,535
Sime Darby Berhad 18,000 70,917
Telekom Malaysia 7,000 62,364
Tenaga Nasional 22,000 105,405
YTL Corporation 4,000 21,540
-------------------
599,485
NETHERLANDS -- 5.71%
Abn Amro Holdings 3,826 $ 249,083
Akzo Nobel 600 82,016
DSM 900 88,827
Ing NTFL 10,602 381,954
Klm 2,200 61,929
Kon Hoogovens & Staalf 1,800 75,065
KPN 6,729 256,844
Philips Electronic 3,000 121,633
Royal Dutch Petroleum 5,950 1,043,878
Unilever 2,170 384,102
Vendex International 3,821 163,552
Ver Ned Uitgevers 4,900 102,456
-------------------
3,011,339
NEW ZEALAND -- 3.05%
Brierley Investment LTD 288,000 $ 266,723
Carter Holt Harvey 99,000 224,666
Fletcher Challenge Building
Division 33,250 102,253
Fletcher Challenge Energy
Division 36,250 105,073
Fletcher Challenge Forest
Division 62,398 104,548
Fletcher Challenge Paper
Division 65,500 134,751
Telecom Corporation of New
Zealand 116,000 592,096
Telecom Corporation of New
Zealand (ADR) 1,000 81,000
-------------------
1,611,110
SINGAPORE -- 0.05%
Jardine Matheson 4,400 $ 29,040
</TABLE>
114
<PAGE> 16
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
SPAIN -- 3.31%
Acerinox SA 500 $ 72,251
Banco Bilbao Vizcaya 2,300 124,190
Banco Central Hispanoamericano 2,370 60,881
Banco Intercontinental 300 46,516
Banco Popular 580 113,923
Banco Santander SA 2,500 160,023
Corporacion Mapfre 1,100 67,021
Empresa Nac Electricid 2,900 206,401
Fomento De Construcciones Y
Contra 900 83,882
Gas Natural SDG SA 300 69,786
Iberdrola SA 13,900 197,004
Repsol SA 3,300 126,586
Repsol SA (ADR) 1,000 38,125
Sevillana De Electricidad 5,501 62,499
Telefonica De Espana 9,700 225,269
Vallehermoso SA 2,500 54,208
Viscofan Envoltura 2,500 36,588
-------------------
1,745,153
SWITZERLAND -- 1.70%
ABB AG Series A 50 $ 62,196
CS Holding 500 51,363
Nestle SA 244 261,956
Novartis AG 187 214,173
Roche Holdings AG 20 155,622
Schweizerische Bankgesellschaft 61 53,458
Societe General Surveillance
Holding 13 31,954
Zurich Verischerung 237 65,868
-------------------
896,590
UNITED KINGDOM -- 19.36%
Abbey National 12,000 $ 157,067
Bank Of Scotland 20,000 105,534
Bass 7,500 105,619
BAT Industries 46,200 383,087
Booker 13,000 88,641
British Energy 100,000 250,128
British Gas 94,000 360,733
British Petroleum 44,739 536,531
British Steel 79,000 216,550
British Telecom 89,000 602,279
Charter 10,940 139,069
Coats Viyella 47,900 109,964
FKI 43,500 151,285
General Electric 90,900 596,449
Glaxo Holdings 14,200 231,112
Grand Metropolitan 59,000 462,943
Guinness 44,600 350,718
Hanson 83,200 116,882
Hillsdown Holdings 65,000 222,717
House of Fraser 78,000 203,118
HSBC Holdings 15,500 346,539
Imperial Chemical Industries 4,000 52,733
Legal & General 33,500 213,787
Lloyds TSB Group 77,264 570,512
Marks & Spencer 36,500 307,658
Mirror Group PLC 32,000 117,869
National Power 22,000 183,930
National Westminster Bank 12,700 149,258
Northern Foods 38,000 131,506
Peninsular and Oriental Steam 36,500 369,565
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
Reckitt & Colman 5,700 $ 70,603
Redland 12,500 79,022
RJB Mining 30,000 219,354
Royal Sun Alliance 22,005 167,950
Rtz Corporation 15,100 242,655
Sainsbury J 31,000 205,534
Scottish Hydro 25,400 142,296
Sears 85,000 136,885
Sedgwick Group 59,000 132,414
Smithkline Beecham 18,000 249,169
TESCO 25,000 151,619
Thames Water 19,000 198,886
Unilever 9,300 225,450
Vodafone Group 20,300 85,902
Yorkshire Water 6,000 72,469
-------------------
10,213,991
TOTAL COMMON STOCKS
(IDENTIFIED COST $44,982,418) $ 48,147,198
- -----------------------------------------------------------------------------
PREFERRED STOCK -- 0.56%
- -----------------------------------------------------------------------------
AUSTRALIA -- 0.09%
News Corporation 10,000 $ 44,512
GERMANY -- 0.20%
Henkel Kgaa 2,100 $ 105,491
ITALY -- 0.27%
Fiat SPA 86,000 $ 142,011
TOTAL PREFERRED STOCK
(IDENTIFIED COST $302,839) $ 292,014
- -----------------------------------------------------------------------------
COMMERCIAL PAPER -- 8.27%
- -----------------------------------------------------------------------------
Bell Atlantic Financial Services
5.75% due 01/09/97 1,000,000 $ 998,722
Bell Atlantic Network Funding
5.80% due 01/09/97 1,000,000 998,711
Browning Ferris Industries Inc.
6.40% due 01/02/97 1,343,000 1,342,761
Duracell
6.75% due 01/02/97 1,025,000 1,024,808
-------------------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $4,365,002) $ 4,365,002
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $49,650,259) $ 52,804,214
OTHER ASSETS LESS LIABILITIES -- (0.07)% (35,913)
-------------------
NET ASSETS 100% $ 52,768,301
=============================================================================
</TABLE>
(*) Non-income Producing
(Rts) Rights
(Wts) Warrants
ADR American Depository Receipts
These abbreviations signify incorporation:
AG Aktien Gesellschaft
LTD Limited
SA Societe Anonyme
SPA Societa Per Azoine
See accompanying notes to financial statements.
115
<PAGE> 17
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CORPORATE BONDS, CONVERTIBLE
SECURITIES & COMMON NUMBER OF SHARES OR
STOCKS -- 86.51% PRINCIPAL AMOUNT VALUE
---------------------------------------------------------------
<S> <C> <C>
ADVERTISING -- 0.45%
Universal Outdoor Inc.
9.75% due 10/15/06 $ 150,000 $ 154,875
AEROSPACE -- 0.65%
Rohr Inc.
11.625% due 05/15/03 200,000 223,000
BASIC INDUSTRIES -- 1.35%
Maxxam Group Inc.
11.25% due 08/01/03 200,000 205,000
Unifrax Investment Corporation
10.50% due 11/01/03 250,000 258,438
-------------------
463,438
BROADCASTING -- 9.73%
Brooks Fiber Properties Inc.
Zero Coupon due 11/01/06 600,000 382,500
Comcast UK Cable LP
Zero Coupon due 11/15/07 550,000 388,437
Kabelmedia Holding
Zero Coupon due 08/01/06 350,000 195,125
Phonetel Technologies Inc.
12.00% due 12/15/06 250,000 258,750
Rogers Communications Inc.
Zero Coupon due 05/20/13 250,000 96,875
Rogers Communications Inc.
9.125% due 01/15/06 100,000 98,750
Rogers Communications Inc.
10.875% due 04/15/04 300,000 315,000
Sprint Spectrum LP
Zero Coupon due 08/15/06 650,000 440,375
Sprint Spectrum LP
11.00% due 08/15/06 400,000 433,000
Telewest PLC
Zero Coupon due 10/01/07 400,000 278,000
Telewest PLC
9.625% due 10/01/06 450,000 461,250
-------------------
3,348,062
CABLE -- 3.76%
Cablevision Systems Corporation
9.25% due 11/01/05 300,000 296,250
Century Communications
Corporation,
9.50% due 03/01/05 500,000 512,500
Lodgenet Entertainment
Corporation,
10.25% due 12/15/06 350,000 350,000
TCI Communications Inc.
6.875% due 02/15/06 150,000 135,510
-------------------
1,294,260
CHEMICALS -- 5.85%
Freedom Chemical Company
10.625% due 10/15/06 400,000 417,000
General Chemical Corporation
9.25% due 08/15/03 100,000 102,500
Pioneer Americas Acquisition
Corporation, 13.375% due
04/01/05 400,000 457,000
Rexene Corporation
11.75% due 12/01/04 250,000 280,312
Terra Industries Inc.
10.50% due 06/15/05 150,000 163,313
Texas Petrochemical Corporation
11.125% due 07/01/06 550,000 591,250
-------------------
2,011,375
CONSUMER DURABLES -- 0.96%
Samsonite Corporation
11.125% due 07/15/05 300,000 329,250
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
CONSUMER NON-DURABLES -- 5.63%
Brown Group Inc.
9.50% due 10/15/06 $ 450,000 $ 453,109
E & S Holdings Corporation
10.375% due 10/01/06 600,000 627,000
Herff Jones Inc.
11.00% due 08/15/05 350,000 377,125
Speedy Muffler King Inc.
10.875% due 10/01/06 450,000 481,500
-------------------
1,938,734
CONSUMER SERVICES -- 0.45%
Safelite Glass Corporation
9.875% due 12/15/06 150,000 154,125
CONTAINERS -- 1.37%
MVE Inc.
12.50% due 02/15/02 350,000 367,500
Plastic Containers Inc.
10.00% due 12/15/06 100,000 103,250
-------------------
470,750
ENERGY -- 5.73%
Clark USA Inc.
10.875% due 12/01/05 350,000 363,125
Kelley Oil & Gas Corporation
10.375% due 10/15/06 350,000 363,125
Maxus Energy Corporation
9.375% due 11/01/03 500,000 508,750
Mesa Operating Company
10.625% due 07/01/06 450,000 489,375
USX Marathon Group, Convertible
Debt, Zero Coupon due 08/09/05 12,000 5,610
YPF Sociedad Anonima
8.00% due 02/15/04 250,000 240,625
-------------------
1,970,610
ENTERTAINMENT & LEISURE -- 1.99%
AMF Group Inc.
10.875% due 03/15/06 500,000 527,500
Cobblestone Golf Group Inc.
11.50% due 06/01/03 150,000 156,375
-------------------
683,875
FINANCE -- 1.45%
First Nationwide Escrow
Corporation,
10.625% due 10/01/03 100,000 107,750
Homeside Inc.
11.25% due 05/15/03 350,000 391,563
-------------------
499,313
FOOD & BEVERAGES & TOBACCO -- 0.78%
Cott Corporation
9.375% due 07/01/05 50,000 51,500
Keebler Corporation
10.75% due 07/01/06 200,000 216,000
-------------------
267,500
GAMING -- 1.95%
Casino Magic Corporation
11.50% due 10/15/01 250,000 225,000
Harrahs Jazz (a)
14.25% due 11/15/01 100,000 49,250
Trump Atlantic City Associates
11.25% due 05/01/06 400,000 395,000
-------------------
669,250
</TABLE>
116
<PAGE> 18
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
HEALTH CARE -- 5.04%
Dade International Inc.
11.125% due 05/01/06 $ 350,000 $ 378,000
Mariner Health Group Inc.
9.50% due 04/01/06 200,000 195,000
Maxxim Medical Inc.
10.50% due 08/01/06 500,000 522,500
Mediq Inc.
7.50% due 07/15/03 425,000 376,125
Quest Diagnostics Inc.
10.75% due 12/15/06 250,000 262,500
-------------------
1,734,125
HOTELS & RESTAURANTS -- 3.09%
Foodmaker Corporation
9.75% due 11/01/03 250,000 242,813
H M H Properties Inc.
9.50% due 05/15/05 450,000 469,125
Hammon John Q. Hotels
8.875% due 02/15/04 250,000 246,875
Wyndham Hotel Corporation
10.50% due 05/15/06 100,000 106,000
-------------------
1,064,813
MACHINERY -- 1.07%
Mettler Toledo Inc.
9.75% due 10/01/06 350,000 368,375
MANUFACTURING -- 0.43%
Materials Corporation America
8.625% due 12/15/06 150,000 149,625
METALS & MINING -- 8.60%
AK Steel Corporation
9.125% due 12/15/06 250,000 256,875
Euramax International
11.25% due 10/01/06 250,000 258,750
Kaiser Aluminum & Chemical
Corporation,
10.875% due 10/15/06 250,000 264,062
Kaiser Aluminum & Chemical
Corporation,
12.75% due 02/01/03 300,000 320,625
Oregon Steel Mills Inc.
11.00% due 06/15/03 600,000 634,500
United States Can Corporation
10.125% due 10/15/06 450,000 472,500
WCI Steel Inc.
10.00% due 12/01/04 500,000 506,250
Wheeling Pittsburgh Corporation
9.375% due 11/15/03 $ 250,000 246,250
-------------------
2,959,812
PAGING SERVICES -- 1.91%
Pagemart Nationwide Inc. 875 9,844
Paging Network Inc.
8.875% due 02/01/06 $ 300,000 286,500
Paging Network Inc.
10.125% due 08/01/07 100,000 101,750
Printpack Inc.
10.625% due 08/15/06 250,000 260,625
-------------------
658,719
PAPER & FOREST PRODUCTS -- 3.92%
Crown Paper Company
11.00% due 09/01/05 450,000 421,875
Riverwood International
Corporation,
10.25% due 04/01/06 400,000 392,000
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
SD Warren Company
12.00% due 12/15/04 $ 300,000 $ 324,375
Stone Container Corporation
10.75% due 10/01/02 200,000 210,500
-------------------
1,348,750
PAPER PRODUCTS -- 1.22%
Four M Corporation
12.00% due 06/01/06 400,000 421,000
RETAIL -- 7.24%
Ann Taylor Inc.
8.75% due 06/15/00 200,000 195,750
Brunos Inc.
10.50% due 08/01/05 250,000 264,375
Cole National Group Inc.
9.875% due 12/31/06 500,000 515,000
Corporate Express Inc.
9.125% due 03/15/04 350,000 356,562
Penn Traffic Company
11.50% due 04/15/06 150,000 131,625
Ralphs Grocery Company
10.45% due 06/15/04 500,000 531,250
Smiths Food & Drug
11.25% due 05/15/07 450,000 498,375
-------------------
2,492,937
TELECOMMUNICATIONS -- 7.07%
American Communications Services
Inc.,
Zero Coupon due 11/01/05 $ 400,000 238,000
American Communications Services
Inc. (Wts)* 300 28,200
Echostar Communications
Corporation,
Zero Coupon due 06/01/04 $ 500,000 415,000
ICG Holdings Inc.
Zero Coupon due 05/01/06 300,000 195,750
Jacor Communications Company
9.75% due 12/15/06 250,000 256,875
MFS Communications Inc.
Zero Coupon due 01/15/06 300,000 218,250
Teleport Communications Group
Zero Coupon due 07/01/07 800,000 551,000
Teleport Communications Group
9.875% due 07/01/06 500,000 531,250
-------------------
2,434,325
TEXTILES -- 1.49%
Carter William Company
10.375% due 12/01/06 500,000 512,500
UTILITIES -- 1.34%
Ferrellgas Partners LP
9.375% due 06/15/06 300,000 303,000
Midland Funding Corporation I
10.33% due 07/23/02 147,405 157,540
-------------------
460,540
WASTE MANAGEMENT -- 1.99%
Allied Waste North America Inc.
10.25% due 12/01/06 650,000 684,125
TOTAL CORPORATE BONDS, CONVERTIBLE
SECURITIES & COMMON STOCKS
(IDENTIFIED COST $28,744,123) 29,768,063
- -----------------------------------------------------------------------------
</TABLE>
117
<PAGE> 19
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
<S> <C> <C>
U.S. TREASURY BILLS -- 1.16%
- -----------------------------------------------------------------------------
U.S. Treasury Bill
4.727% due 01/02/97 $ 200,000 $ 199,973
U.S. Treasury Bill
4.90% due 01/02/97 200,000 199,973
TOTAL U.S. TREASURY BILLS
(IDENTIFIED COST $399,947) 399,946
- -----------------------------------------------------------------------------
FOREIGN BONDS -- 5.73%
- -----------------------------------------------------------------------------
BASIC INDUSTRIES -- 2.11%
Cemex S A
12.75% due 07/15/06 650,000 726,375
BROADCASTING -- 1.24%
Grupo Televisa S A
11.375% due 05/15/03 400,000 428,000
GOVERNMENT BOND -- 1.21%
Mexico United Mexican States
9.75% due 02/06/01 400,000 414,500
TRANSPORTATION -- 1.17%
Transportacion Maritima Mexica
10.00% due 11/15/06 400,000 403,500
TOTAL FOREIGN BONDS
(IDENTIFIED COST $1,907,727) 1,972,375
- -----------------------------------------------------------------------------
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -------------------
PREFERRED STOCK -- 0.89%
- -----------------------------------------------------------------------------
DRUGS & MEDICAL PRODUCTS -- 0.89%
Fresenius Med Care Capital Trust 300 $ 306,750
TOTAL PREFERRED STOCK
(IDENTIFIED COST $301,500) 306,750
- -----------------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.75%
- -----------------------------------------------------------------------------
State Street Bank & Trust Repurchase
Agreement, 4.00% due 01/02/97
Collateral: U.S. Treasury Note
$1,315,000, 5.625% due 11/30/98
Value $1,316,373 1,290,000 1,290,000
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $1,290,000) 1,290,000
- -----------------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $32,643,297) $ 33,737,134
OTHER ASSETS LESS LIABILITIES -- 1.96% 673,974
-------------------
NET ASSETS 100% $ 34,411,108
=============================================================================
</TABLE>
(*) Non-income producing
(a) In bankruptcy; Portfolio ceased accrual of interest.
(Wts) Warrants
See accompanying notes to financial statements.
118
<PAGE> 20
ENTERPRISE ACCUMULATION TRUST
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
INTERNATIONAL HIGH-YIELD
EQUITY SMALL CAP MANAGED GROWTH BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value..................... $319,688,440 $192,788,955 $1,932,855,642 $ 52,804,214 $33,737,134
Foreign currency at value
(cost-$236,255)......................... -- -- -- 242,411 --
Cash...................................... 2,674 2,802 109 1,492 3,112
Receivable for foreign currency sold
(net)................................... -- -- -- 183,103 --
Receivable for investments sold........... -- 249,169 6,938,074 -- --
Receivable for fund shares sold........... 646,367 163,224 2,022,043 82,773 91,156
Dividends receivable...................... 246,068 643,524 1,526,132 143,480 --
Interest receivable....................... 721 122 1,052,195 -- 666,475
------------ ------------ -------------- ----------- -----------
Total assets.................... 320,584,270 193,847,796 1,944,394,195 53,457,473 34,497,877
------------ ------------ -------------- ----------- -----------
LIABILITIES:
Payable for investments purchased......... 5,358,652 846,596 7,250,312 592,438 --
Payable for fund shares redeemed.......... 86,143 145,104 465,188 24,637 57,211
Investment advisory fee payable........... 208,310 127,798 1,192,285 36,169 20,092
Other accrued expenses.................... 24,233 24,479 142,929 35,928 9,466
------------ ------------ -------------- ----------- -----------
Total liabilities............... 5,677,338 1,143,977 9,050,714 689,172 86,769
------------ ------------ -------------- ----------- -----------
NET ASSETS:
Accumulated paid-in capital............... 226,820,689 163,574,002 1,292,557,092 47,305,614 32,975,567
Accumulated undistributed net investment
income.................................. 4,530,803 2,394,864 34,357,920 475,333 --
Accumulated undistributed net realized
gain (loss) on investments.............. 12,618,168 28,785,351 86,706,012 1,649,700 341,705
Net unrealized appreciation (depreciation)
on investments and translation of
foreign currencies denominated
amounts................................. 70,937,272 (2,050,398) 521,722,457 3,337,654 1,093,837
------------ ------------ -------------- ----------- -----------
Total Net Assets................ $314,906,932 $192,703,819 $1,935,343,481 $ 52,768,301 $34,411,108
============ ============ ============== =========== ===========
Fund shares outstanding................... 10,912,024 9,529,671 56,400,378 8,715,254 6,249,987
------------ ------------ -------------- ----------- -----------
Net asset value per share................. $28.86 $20.22 $34.31 $6.05 $5.51
============ ============ ============== =========== ===========
INVESTMENTS AT COST....................... $248,751,168 $194,839,353 $1,411,133,185 $ 49,650,259 $32,643,297
</TABLE>
See accompanying notes to financial statements.
119
<PAGE> 21
ENTERPRISE ACCUMULATION TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
INTERNATIONAL HIGH-YIELD
EQUITY SMALL CAP MANAGED GROWTH BOND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ----------- ------------ ------------- ----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends................................ $4,249,709 $ 2,501,418 $ 31,939,901 $ 819,842* $ --
Interest................................. 2,183,675 1,407,349 14,249,437 143,453 2,257,800
----------- ----------- ------------ ---------- ----------
Total............................... 6,433,384 3,908,767 46,189,338 963,295 2,257,800
----------- ----------- ------------ ---------- ----------
OPERATING EXPENSES:
Investment advisory fee.................. 1,743,990 1,316,050 11,086,850 303,177 143,878
Custodian and fund accounting fees....... 76,326 82,683 218,756 164,944 58,262
Reports and notices to shareholders...... 56,231 52,197 433,061 7,516 5,969
Trustees' fees and expenses.............. 14,855 12,953 54,458 8,949 8,532
Audit and legal fees..................... 19,598 17,802 75,522 12,963 12,410
Miscellaneous............................ (8,419) 10,323 (37,257) (3,702) (3,795)
----------- ----------- ------------ ---------- ----------
Total operating expenses............ 1,902,581 1,492,008 11,831,390 493,847 225,256
Less: expense reimbursement......... -- -- -- -- (21,526)
----------- ----------- ------------ ---------- ----------
Total operating expense, net of
reimbursement..................... 1,902,581 1,492,008 11,831,390 493,847 203,730
----------- ----------- ------------ ---------- ----------
NET INVESTMENT INCOME............. 4,530,803 2,416,759 34,357,948 469,448 2,054,070
----------- ----------- ------------ ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS -- NET:
Net realized gain on security
transactions........................... 12,678,406 28,896,623 86,738,070 1,045,447 364,910
Net realized gain of foreign currency
transactions........................... -- -- -- 784,826 --
Net realized (loss) on futures
transactions........................... -- (900) -- -- (22,678)
----------- ----------- ------------ ---------- ----------
Net realized gain on investments......... 12,678,406 28,895,723 86,738,070 1,830,273 342,232
Net change in unrealized gain (loss) on
investments and translation of foreign
currencies denominated amounts......... 34,566,579 (12,857,423) 213,973,719 2,175,265 789,178
----------- ----------- ------------ ---------- ----------
Net realized and unrealized gain
(loss) on investments............. 47,244,985 16,038,300 300,711,789 4,005,538 1,131,410
----------- ----------- ------------ ---------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................... $51,775,788 $18,455,059 $335,069,737 $ 4,474,986 $3,185,480
=========== =========== ============ ========== ==========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
* Net of foreign taxes withheld of $128,202.
120
<PAGE> 22
(This page intentionally left blank)
121
<PAGE> 23
ENTERPRISE ACCUMULATION TRUST
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY PORTFOLIO SMALL CAP PORTFOLIO
----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income......................... $ 4,530,803 $ 2,428,089 $ 2,416,759 $ 2,814,727
Net realized gain (loss) on investments....... 12,678,406 6,085,294 28,896,623 5,376,891
Net realized (loss) on futures................ -- -- (900) (22,493)
Net change in unrealized gain (loss) on
investments................................ 34,566,579 30,328,567 (12,857,423) 9,411,583
------------ ------------ ------------ ------------
Net increase in net assets resulting from
operations............................... 51,775,788 38,841,950 18,455,059 17,580,708
------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income......................... (983,203) (2,889,772) (1,108,977) (3,411,512)
Net realized gains............................ (3,099,385) (5,969,884) (2,010,186) (6,433,570)
------------ ------------ ------------ ------------
Total dividends and distributions to
shareholders.......................... (4,082,588) (8,859,656) (3,119,163) (9,845,082)
------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from sales....................... 141,947,982 62,629,132 53,086,228 44,205,647
Reinvestment of dividends and distributions... 4,082,588 8,859,656 3,119,163 9,845,082
Cost of shares redeemed....................... (46,779,501) (22,091,871) (44,898,602) (40,604,991)
------------ ------------ ------------ ------------
Net increase in net assets from fund share
transactions.................................. 99,251,069 49,396,917 11,306,789 13,445,738
------------ ------------ ------------ ------------
Total increase in net assets............. 146,944,269 79,379,211 26,642,685 21,181,364
NET ASSETS:
Beginning of year............................. 167,962,663 88,583,452 166,061,134 144,879,770
------------ ------------ ------------ ------------
End of year................................... $314,906,932 $167,962,663 $192,703,819 $166,061,134
============ ============ ============ ============
SHARES ISSUED AND REDEEMED:
Issued........................................ 5,377,143 2,917,293 2,712,554 2,482,444
Issued in reinvestment of dividends and
distributions.............................. 141,462 427,111 154,261 562,375
Redeemed...................................... (1,801,187) (1,033,626) (2,320,780) (2,310,588)
------------ ------------ ------------ ------------
Net increase............................... 3,717,418 2,310,778 546,035 734,231
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
122
<PAGE> 24
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH
MANAGED PORTFOLIO PORTFOLIO HIGH-YIELD BOND PORTFOLIO
--------------------------------- ----------------------------- -----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1996 1995 1996 1995
-------------- -------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ 34,357,948 $ 17,600,171 $ 469,448 $ 130,728 $ 2,054,070 703,962
86,738,070 41,673,988 1,830,273 791,046 364,910 88,147
-- -- -- -- (22,678) --
213,973,719 289,371,401 2,175,265 1,149,623 789,178 307,380
-------------- -------------- ----------- ----------- ------------ ------------
335,069,737 348,645,560 4,474,986 2,071,397 3,185,480 1,099,489
-------------- -------------- ----------- ----------- ------------ ------------
(3,366,114) (28,468,170) -- (132,550) (2,054,070) (703,962)
(15,402,221) (52,222,032) (190,139) (775,819) (33,884) (51,705)
-------------- -------------- ----------- ----------- ------------ ------------
(18,768,335) (80,690,202) (190,139) (908,369) (2,087,954) (755,667)
-------------- -------------- ----------- ----------- ------------ ------------
602,776,605 369,378,051 36,234,262 18,493,638 22,145,776 16,124,613
18,768,335 80,690,202 190,139 908,369 2,087,926 755,667
(267,220,838) (142,557,183) (6,539,162) (5,213,592) (6,143,188) (3,422,241)
-------------- -------------- ----------- ----------- ------------ ------------
354,324,102 307,511,070 29,885,239 14,188,415 18,090,514 13,458,039
-------------- -------------- ----------- ----------- ------------ ------------
670,625,504 575,466,428 34,170,086 15,351,443 19,188,040 13,801,861
1,264,717,977 689,251,549 18,598,215 3,246,772 15,223,069 1,421,208
-------------- -------------- ----------- ----------- ------------ ------------
$1,935,343,481 $1,264,717,977 $ 52,768,301 $ 18,598,215 $ 34,411,109 $ 15,223,069
============== ============== =========== =========== ============ ============
19,459,858 14,304,013 6,375,789 3,624,156 4,149,703 3,082,804
547,022 3,287,658 32,357 167,698 389,665 143,495
(8,684,392) (5,611,704) (1,143,764) (996,098) (1,154,032) (647,136)
-------------- -------------- ----------- ----------- ------------ ------------
11,322,488 11,979,967 5,264,382 2,795,756 3,385,336 2,579,163
============== ============== =========== =========== ============ ============
</TABLE>
See accompanying notes to financial statements.
123
<PAGE> 25
ENTERPRISE ACCUMULATION TRUST
EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.................... $ 23.35 $ 18.14 $ 17.95 $ 17.23 $ 15.24
-------- -------- ------- ------- -------
Income from investment operations:
Net investment income............................... 0.37 0.33 0.28 0.18 0.17
Net realized and unrealized gain on investments..... 5.52 6.38 0.41 1.13 2.49
-------- -------- ------- ------- -------
Total from investment operations............ 5.89 6.71 0.69 1.31 2.66
-------- -------- ------- ------- -------
Less dividends and distributions:
Dividends to shareholders from net investment
income........................................... (0.09) (0.49) (0.18) (0.17) (0.24)
Distribution to shareholders from net capital
gains............................................ (0.29) (1.01) (0.32) (0.42) (0.43)
-------- -------- ------- ------- -------
Total dividends and distributions........... (0.38) (1.50) (0.50) (0.59) (0.67)
-------- -------- ------- ------- -------
Net asset value, end of year.......................... $ 28.86 $ 23.35 $ 18.14 $ 17.95 $ 17.23
======== ======== ======= ======= =======
Total return................................ 25.2% 38.4% 3.9% 7.8% 17.9%
-------- -------- ------- ------- -------
Net assets, end of year (000)......................... $314,907 $167,963 $88,583 $66,172 $33,581
-------- -------- ------- ------- -------
Ratio of net operating expenses to average net
assets.............................................. 0.81% 0.69% 0.67% 0.72% 0.79%
-------- -------- ------- ------- -------
Ratio of net operating expenses (excluding waivers) to
average net assets.................................. 0.81% 0.72% 0.69% 0.72% 0.79%
-------- -------- ------- ------- -------
Ratio of net investment income to average net
assets.............................................. 1.94% 1.94% 1.81% 1.47% 1.48%
-------- -------- ------- ------- -------
Ratio of net investment income (excluding waivers) to
average net assets.................................. 1.94% 1.91% 1.79% 1.47% 1.48%
-------- -------- ------- ------- -------
Portfolio turnover.................................... 30% 29% 38% 15% 27%
-------- -------- ------- ------- -------
Average commission per share (a)...................... $ 0.0567
--------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(a) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
124
<PAGE> 26
ENTERPRISE ACCUMULATION TRUST
SMALL CAP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.................. $ 18.48 $ 17.56 $ 18.62 $ 16.72 $ 15.11
-------- -------- -------- -------- -------
Income from investment operations:
Net investment income............................. 0.25 0.32 0.19 0.10 0.09
Net realized and unrealized gain (loss) on
investments.................................... 1.82 1.75 (0.16) 2.98 3.05
-------- -------- -------- -------- -------
Total from investment operations.......... 2.07 2.07 0.03 3.08 3.14
-------- -------- -------- -------- -------
Less dividends and distributions:
Dividends to shareholders from net investment
income......................................... (0.12) (0.40) (0.10) (0.10) (0.10)
Distribution to shareholders from net capital
gains.......................................... (0.21) (0.75) (0.99) (1.08) (1.43)
-------- -------- -------- -------- -------
Total dividends and distributions......... (0.33) (1.15) (1.09) (1.18) (1.53)
-------- -------- -------- -------- -------
Net asset value, end of year........................ $ 20.22 $ 18.48 $ 17.56 $ 18.62 $ 16.72
======== ======== ======== ======== =======
Total return.............................. 11.2% 12.3% 0.0% 19.5% 21.5%
-------- -------- -------- -------- -------
Net assets, end of year (000)....................... $192,704 $166,061 $144,880 $105,635 $31,211
-------- -------- -------- -------- -------
Ratio of net operating expenses to average net
assets............................................ 0.84% 0.69% 0.66% 0.74% 0.86%
-------- -------- -------- -------- -------
Ratio of net operating expenses (excluding waivers)
to average net assets............................. 0.84% 0.72% 0.67% 0.74% 0.86%
-------- -------- -------- -------- -------
Ratio of net investment income to average net
assets............................................ 1.35% 1.86% 1.30% 1.06% 1.05%
-------- -------- -------- -------- -------
Ratio of net investment income (excluding waivers)
to average net assets............................. 1.35% 1.83% 1.29% 1.06% 1.05%
-------- -------- -------- -------- -------
Portfolio turnover.................................. 137% 70% 58% 70% 105%
-------- -------- -------- -------- -------
Average commission per share (a).................... $ 0.0480
--------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(a) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
125
<PAGE> 27
ENTERPRISE ACCUMULATION TRUST
MANAGED PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
---------- ---------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.............. $ 28.06 $ 20.82 $ 21.35 $ 20.11 $ 17.56
---------- ---------- -------- -------- --------
Income from investment operations:
Net investment income......................... 0.59 0.40 0.40 0.46 0.25
Net realized and unrealized gain (loss) on
investments................................ 5.99 8.97 0.15 1.55 2.95
---------- ---------- -------- -------- --------
Total from investment operations...... 6.58 9.37 0.55 2.01 3.20
---------- ---------- -------- -------- --------
Less dividends and distributions:
Dividends to shareholders from net investment
income..................................... (0.06) (0.75) (0.46) (0.24) (0.27)
Distribution to shareholders from net capital
gains...................................... (0.27) (1.38) (0.62) (0.53) (0.38)
---------- ---------- -------- -------- --------
Total dividends and distributions..... (0.33) (2.13) (1.08) (0.77) (0.65)
---------- ---------- -------- -------- --------
Net asset value, end of year.................... $ 34.31 $ 28.06 $ 20.82 $ 21.35 $ 20.11
========== ========== ======== ======== ========
Total return.......................... 23.5% 46.9% 2.6% 10.4% 18.6%
---------- ---------- -------- -------- --------
Net assets, end of year (000)................... $1,935,343 $1,264,718 $689,252 $525,163 $236,175
---------- ---------- -------- -------- --------
Ratio of net operating expenses to average net
assets........................................ 0.74% 0.67% 0.64% 0.66% 0.69%
---------- ---------- -------- -------- --------
Ratio of net operating expenses (excluding
waivers) to average net assets................ 0.74% 0.67% 0.64% 0.66% 0.69%
---------- ---------- -------- -------- --------
Ratio of net investment income to average net
assets........................................ 2.16% 1.80% 2.23% 3.21% 2.06%
---------- ---------- -------- -------- --------
Ratio of net investment income (excluding
waivers) to average net assets................ 2.16% 1.80% 2.23% 3.21% 2.06%
---------- ---------- -------- -------- --------
Portfolio turnover.............................. 29% 31% 33% 21% 23%
---------- ---------- -------- -------- --------
Average commission per share (a)................ $ 0.0531
----------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(a) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
126
<PAGE> 28
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, PERIOD OF
------------------- NOVEMBER 18, 1994-
1996 1995 DECEMBER 31, 1994
------- ------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of year................................... $ 5.39 $ 4.96 $ 5.00
------- ------- ------
Income from investment operations:
Net investment income........................................... 0.05 0.04 --
Net realized and unrealized gain (loss) on investments.......... 0.63 0.67 (0.04)
------- ------- ------
Total from investment operations........................... 0.68 0.71 (0.04)
------- ------- ------
Less dividends and distributions:
Dividends to shareholders from net investment income............ -- (0.04) --
Distribution to shareholders from net capital gains............. (0.02) (0.24) --
------- ------- ------
Total dividends and distributions.......................... (0.02) (0.28) --
------- ------- ------
Net asset value, end of year......................................... $ 6.05 $ 5.39 $ 4.96
======= ======= ======
Total return............................................... 12.7% 14.6% (0.8)%**
------- ------- ------
Net assets, end of year (000)........................................ $52,768 $18,598 $ 3,247
------- ------- ------
Ratio of net operating expenses to average net assets................ 1.38% 1.55% 1.55%*
------- ------- ------
Ratio of net operating expenses (excluding waivers) to average net
assets............................................................. 1.38% 2.21% 8.85%*
------- ------- ------
Ratio of net investment income to average net assets................. 1.32% 1.17% 0.80%*
------- ------- ------
Ratio of net investment income (excluding waivers) to average net
assets............................................................. 1.32% 0.51% (6.34)%*
------- ------- ------
Portfolio turnover................................................... 21% 27% 0%
------- ------- ------
Average commission per share (a)..................................... $0.0224
-------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
* Annualized.
** Not Annualized.
(a) Disclosure not applicable to periods prior to 1996. Represents average
commission rate per share charged to the fund on purchases and sales of
equity investments on which commissions were charged during the period.
127
<PAGE> 29
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31, PERIOD OF
------------------- NOVEMBER 18, 1994-
1996 1995 DECEMBER 31, 1994
------- ------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of year................................... $ 5.31 $ 4.98 $ 5.00
------- ------- ------
Income from investment operations:
Net investment income........................................... 0.45 0.45 0.04
Net realized and unrealized gain (loss) on investments.......... 0.21 0.35 (0.01)
------- ------- ------
Total from investment operations........................... 0.66 0.80 0.03
------- ------- ------
Less dividends and distributions:
Dividends to shareholders from net investment income............ (0.45) (0.45) (0.05)
Distribution to shareholders from net capital gains............. (0.01) (0.02) --
------- ------- ------
Total dividends and distributions.......................... (0.46) (0.47) (0.05)
------- ------- ------
Net asset value, end of year......................................... $ 5.51 $ 5.31 $ 4.98
------- ------- ------
Total return............................................... 12.9% 16.6% 0.5%**
------- ------- ------
Net assets, end of year (000)........................................ $34,411 $15,223 $1,421
------- ------- ------
Ratio of net operating expenses to average net assets................ 0.85% 0.85% 0.85%*
------- ------- ------
Ratio of net operating expenses (excluding waivers) to average net
assets............................................................. 0.94% 1.59% 7.80%*
------- ------- ------
Ratio of net investment income to average net assets................. 8.57% 8.51% 7.84%*
------- ------- ------
Ratio of net investment income (excluding waivers) to average net
assets............................................................. 8.48% 7.77% 0.80%*
------- ------- ------
Portfolio turnover................................................... 175% 115% 0%
------- ------- ------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
* Annualized.
** Not Annualized.
128
<PAGE> 30
ENTERPRISE ACCUMULATION TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION OF THE TRUST
Enterprise Accumulation Trust (the "Trust") was organized as a
Massachusetts business trust and is registered under the Investment Company Act
of 1940 as a diversified, open-end management investment company. The Trust is
authorized to issue an unlimited number of five classes of shares of beneficial
interest at $.01 par value: the Equity Portfolio, the Small Cap Portfolio, the
Managed Portfolio, the International Growth Portfolio and the High-Yield Bond
Portfolio. The Trust serves as an investment vehicle for MONYMaster, a flexible
payment variable annuity policy, and MONY Equity Master, a flexible premium
variable universal life insurance policy, both issued by MONY America, a
wholly-owned subsidiary of The Mutual Life Insurance Company of New York, Inc.
("MONY"). The following is a summary of significant accounting policies
consistently followed by the Trust in the preparation of its financial
statements.
2. SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments -- The Equity, Small Cap, Managed, International
Growth and High-Yield Bond Portfolios: 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 sales price; if there are no such reported 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 Trustees. 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 Trustees.
Special Valuation Risk -- The high-yield securities in which the High-Yield
Bond Portfolio may invest may be considered speculative in regard to the
issuer's continuing ability to meet principal and interest payments. The value
of the lower rated securities in which the High-Yield Bond Portfolio may invest
will be affected by the credit worthiness of individual issuers, general
economic and specific industry conditions, and will fluctuate inversely with
changes in interest rates. In addition, the secondary trading market for lower
quality bonds may be less active and less liquid than the trading market for
higher quality bonds.
Repurchase Agreements -- Each Portfolio may acquire securities subject to
repurchase agreements. Under a typical repurchase agreement, a Portfolio would
acquire a debt security for a relatively short period (usually for one day and
not for more than one week) subject to an obligation of the seller to repurchase
and of the Portfolio to resell the debt security at an agreed-upon higher price,
thereby establishing a fixed investment return during the Portfolio's holding
period. Under each repurchase agreement, the selling institution is required to
maintain, as collateral, securities whose market value (including interest) is
at least equal to the repurchase price.
Futures Contracts -- Upon entering into such a contract, a Portfolio is
required to deposit with the broker an amount of cash or securities equal to the
minimum "initial margin" requirements of the exchange. Pursuant to the contract,
the Portfolio agrees to receive from or pay to the broker an amount of cash
equal to the daily fluctuation in the value of the contract. Such receipts or
payments, known as "variation margin," are recorded by the Portfolio as
unrealized appreciation or depreciation. When the contract is closed the
Portfolio records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and value at the time it was
closed and reverses any unrealized appreciation or depreciation previously
recorded. There were no open futures contracts held in any of the Portfolios at
December 31, 1996.
Foreign Currency Translation -- Securities, other assets and liabilities of
the International Growth Portfolio whose values are initially expressed in
foreign currencies are translated to U.S. dollars at the bid price of such
currency against U.S. dollars last quoted by a major bank. Dividend and interest
income and certain expenses denominated in foreign currencies are marked-
to-market daily based on daily exchange rates and exchange gains and losses are
realized upon ultimate receipt or disbursement. The Trust does not isolate that
portion of its realized and unrealized gains on investments from changes in
foreign exchange rates from fluctuations arising from changes in the market
prices of the investments.
129
<PAGE> 31
ENTERPRISE ACCUMULATION TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
Security Transactions and Other Income -- Security transactions are
accounted for on the trade date. In determining the gain or loss from the sale
of securities, the cost of securities sold has been determined on the basis of
identified cost. Dividend income is recorded on the ex-dividend date and
interest income is accrued as earned. Discounts or premiums on debt securities
purchased are accreted or amortized to interest income over lives of the
respective securities.
Expenses -- Each portfolio bears expenses incurred specifically on its
behalf as well as a portion of the common expenses of the Trust.
Federal Income Taxes -- It is the Trust's policy to comply with the
requirements of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to
shareholders; accordingly, no Federal income tax provision is required.
Use of Estimates in Preparation of Financial Statement -- Preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that may affect the
reported amounts of assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Dividends and Distributions -- The Equity, Small Cap, Managed and
International Growth Portfolios: Dividends and distributions to shareholders
from net investment income and net realized capital gains, if any, are declared
and paid at least annually. The High-Yield Bond Portfolio: Dividends from net
investment income are declared daily and paid monthly. Distributions from net
realized capital gains, if any, are declared and paid at least annually.
3. FORWARD CURRENCY CONTRACTS
As part of its investment program, the International Growth Portfolio
utilizes forward currency exchange contracts to manage exposure to currency
fluctuations and hedge against adverse changes in connection with purchases and
sales of securities. The Portfolio enters into forward contracts only for
hedging purposes. At December 31, 1996, the International Growth Portfolio had
entered into various forward currency exchange contracts under which it is
obligated to exchange currencies at specified future dates. Risks arise from the
possible inability of counterparties to meet the terms of their contracts and
from movements in currency values. Outstanding contracts at December 31, 1996
are as follows.
<TABLE>
<CAPTION>
CONTRACT TO NET UNREALIZED
SETTLEMENT --------------------------------------- APPRECIATION/
DATE RECEIVE DELIVER (DEPRECIATION)
- ---------- ----------------- ----------------- --------------
<S> <C> <C> <C>
1/17/97 USD 897,192 AUD 1,140,000 $ (8,721)
1/17/97 BEL 5,500,000 USD 181,818 (8,255)
1/17/97 USP 1,095,283 BEL 34,000,000 22,350
1/17/97 CAD 630,000 DEM 709,286 (846)
1/17/97 CHF 700,000 USD 588,631 (64,745)
1/17/97 USD 1,377,797 CHF 1,700,000 105,503
1/17/97 USD 2,330,091 DEM 3,500,000 53,062
1/17/97 DEM 1,100,000 USD 749,319 (33,681)
1/17/97 USD 574,035 ESP 73,000,000 11,988
1/17/97 USD 4,500,510 FRF 23,000,000 63,174
1/17/97 USD 577,481 GBP 375,000 (64,750)
1/17/97 USD 387,893 HKD 3,000,000 2
1/17/97 ITL 1,980,000,000 USD 1,276,513 27,490
1/17/97 USD 1,285,005 ITL 1,980,000,000 (18,998)
1/17/97 USD 4,504,124 JPY 485,000,000 306,142
1/17/97 JPY 300,000,000 USD 2,855,511 (258,821)
1/17/97 USD 2,785,813 NLG 4,700,000 60,490
1/17/97 NLG 300,000 USD 182,238 (8,281)
--------------
$183,103
===========
</TABLE>
Net unrealized appreciation on these contracts at December 31, 1996 is
included in receivable for foreign currency sold, net, in the accompanying
financial statements.
130
<PAGE> 32
ENTERPRISE ACCUMULATION TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
4. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment advisory fee is payable monthly to Enterprise Capital
Management, Inc. ("Enterprise Capital"), a wholly-owned subsidiary of MONY, and
is computed as a percentage of each Portfolio's net assets as of the close of
business each day and is as follows: for each of the Equity, Small Cap, and
Managed Portfolios, .80% for the first $400 million, .75% for the next $400
million, and .70% for net assets over $800 million; .85% for the International
Growth Portfolio and .60% for the High-Yield Bond Portfolio. Prior to May 1,
1996, the advisory fee was .60% of net assets for the Equity, Small Cap and
Managed Portfolios.
Enterprise Capital has agreed to reimburse the Portfolios for expenses
incurred in excess of a percentage of average net assets. The percentages are as
follows: Equity -- .95% beginning May 1, 1996, Small Cap -- .95% beginning May
1, 1996, Managed -- .95% beginning May 1, 1996, International Growth
Portfolio -- 1.55% and High-Yield Bond Portfolio -- .85%.
Enterprise Capital has entered into sub-advisory agreements with various
investment advisers as Portfolio Managers for the Trust. A portion of the
management fee received by Enterprise Capital is paid to the Portfolio Manager.
5. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1996, purchases and sales proceeds of
investment securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT
OBLIGATIONS STOCKS AND BONDS
--------------------- ---------------------------
PORTFOLIO PURCHASES SALES PURCHASES SALES
- ------------------------------------------------------------- ---------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Equity....................................................... -- -- $148,840,825 $ 57,945,028
Small Cap.................................................... -- -- 238,027,032 215,099,853
Managed...................................................... -- -- 671,652,658 400,834,012
International Growth......................................... -- -- 35,531,628 6,880,709
High-Yield Bond.............................................. $1,008,179 $999,102 55,879,483 39,536,822
</TABLE>
6. UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS AND DISTRIBUTIONS
At December 31, 1996, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investment for Federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
NET APPRECIATION
PORTFOLIO TAX COST APPRECIATION DEPRECIATION (DEPRECIATION)
- --------------------------------------------------- -------------- -------------- ------------ ----------------
<S> <C> <C> <C> <C>
Equity............................................. $ 248,752,199 $ 73,418,350 $ (2,482,109) $ 70,936,241
Small Cap.......................................... 195,154,775 12,301,190 (14,667,010) (2,365,820)
Managed............................................ 1,411,155,370 563,491,741 (41,791,469) 521,700,272
International Growth............................... 49,732,984 5,109,830 (2,038,600) 3,071,230
High-Yield Bond.................................... 32,660,614 1,169,931 (93,411) 1,076,520
</TABLE>
The capital gains dividend distribution paid to shareholders, taken in
additional shares, is as follows:
<TABLE>
<CAPTION>
LONG TERM
CAPITAL
GAINS
----------
<S> <C>
Equity Portfolio............................................................................... $ 971,495
Small Cap Portfolio............................................................................ 2,010,188
Managed Portfolio.............................................................................. 9,271,826
International Growth Portfolio................................................................. 15,310
</TABLE>
131
<PAGE> 33
ENTERPRISE ACCUMULATION TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options transactions, losses deferred due to wash sales, foreign
currency transactions investments in passive foreign investment companies and
excise tax regulations.
Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital. Any taxable
gain remaining at fiscal year end is distributed in the following year.
132
<PAGE> 34
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Enterprise Accumulation Trust:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments, of each of the portfolios of Enterprise
Accumulation Trust (Equity, Small Cap, Managed, International Growth and
High-Yield Bond Portfolios) as of December 31, 1996 and the related statements
of operations for the year then ended, and the statements of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
highlights for each of the two years in the period ended December 31, 1993 were
audited by other auditors, whose report dated February 18, 1994, expressed an
unqualified opinion thereon.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Enterprise Accumulation Trust (Equity, Small Cap, Managed, International Growth
and High-Yield Bond Portfolios) as of December 31, 1996, the results of their
operations for the year then ended, and the changes in their net assets for each
of the two years in the period then ended, and their financial highlights for
each of the three years in the period then ended in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
February 20, 1997
133
<PAGE> 35
TRUSTEES AND PRINCIPAL OFFICERS
<TABLE>
<S> <C>
Victor Ugolyn Trustee, Chairman, President and
Chief Executive Officer
Arthur T. Dietz Trustee
Samuel J. Foti Trustee
Arthur Howell Trustee
William A. Mitchell, Jr. Trustee
Lonnie H. Pope Trustee
Michael I. Roth Trustee
Phillip G. Goff Vice President
Catherine R. McClellan Secretary
Herbert M. Williamson Treasurer
</TABLE>
INVESTMENT ADVISER
Enterprise Capital Management, Inc.
Atlanta Financial Center
3343 Peachtree Road, Suite 450
Atlanta, Georgia 30326
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
P. O. Box 1713
Boston, Massachusetts 02105
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1100 Campanile Building
1155 Peachtree Street
Atlanta, Georgia 30309
This report is authorized for distribution only to shareholders and to
others who have received a copy of this Trust's prospectus.
134
<PAGE> 45
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
FINANCIAL STATEMENTS:
Included in the Prospectus:
Financial Highlights
Included in Part B:
Schedule of Investments, Statement of Assets and Liabilities, Statement
of Operations, Statement of Changes in Net Assets, Notes to Financial
Statements, and Report of Independent Accountants for the year ended
December 31, 1996 for the Enterprise Accumulation Trust.
Included in Part C:
None
EXHIBITS:
<TABLE>
<C> <S>
(1) Declaration of Trust, as amended -- previously filed with original Registration
Statement on Form N-1A on 4/28/88.
(2) By-laws of Registrant.*
(3) Not Applicable.
(4) Not Applicable.
(5) Investment Sub-Advisory Agreement.
(6) Distribution Agreement.*
(7) Not Applicable.
(8) Custody Agreement -- previously filed with Post-Effective Amendment No. 2 on
5/1/90.
(9) Not Applicable.
(10) Opinion of Counsel: Filed herewith.
(11) Consent of Independent Accountants: Filed herewith.
(12) Not Applicable.
(13) Agreement relating to initial capital.*
(14) Not Applicable.
(15) Not Applicable.
(16) Performance Calculations -- previously filed with Post-Effective Amendment No. 1
on 5/1/89.
</TABLE>
- ---------------
* Previously filed with Pre-Effective Amendment No. 1 on 7/13/88.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
As of the date of this Post-Effective Amendment variable accounts of life
insurance company affiliates of the Mutual Life Insurance Company of New York
("MONY") owns all the outstanding shares of the registrant as described in the
Registrant's Statement of Additional Information. Shares of the Registrant will
be voted as directed by persons having interests in the respective Variable
Accounts. Registrant might be deemed to be controlled by such insurance company
affiliates of MONY although Registrant declaims such control.
The Subsidiaries of MONY are as follows: Ares Holdings, Inc., MONY CS,
Inc., MONY Brokerage, Inc., MONY Credit Corporation, 1740 Advisers, Inc., MONY
Securities Corp., MONY Life Insurance Company of America, Enterprise Capital
Management, Inc., 1740 Ventures, Inc., MONY International Holdings, Inc.
<PAGE> 46
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF RECORD
HOLDERS AS OF
TITLE OF CLASS MAY 1, 1997
------------------------------------------------------------- ----------------
<S> <C>
Shares of Beneficial Interest
Equity Portfolio............................................. 4
High-Yield Bond Portfolio.................................... 4
Managed Portfolio............................................ 4
Small Cap Portfolio.......................................... 4
International Growth Portfolio............................... 4
</TABLE>
ITEM 27. INDEMNIFICATION
See Registration Statement, Form N-1A, File No. 33-15489, July 1, 1987,
Item No. 27, which is incorporated herein by reference.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Investment Management Agreement" in the Prospectus and "Investment
Management and Other Services" in the Additional Statement regarding the
business of the investment adviser and sub-adviser. For information as to the
business, profession, vocation or employment of a substantial nature of each of
the officers and directors of the investment adviser, reference is made to
"Trustees and Officers" in the Additional Statement and investment adviser's
Form ADV filed under the Investment Advisers Act of 1940, File No. 801-27181,
incorporated herein by reference. For information regarding the sub-adviser,
reference is made to sub-adviser's Form ADV filed under the Investment Advisers
Act of 1940, File No. 801-27180, incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITER
(a) Enterprise Fund Distributors, Inc. acts as principal underwriter for
the Registrant and The Enterprise Group of Funds, Inc.
(b) Set forth below is certain information pertaining to the partners and
officers of Enterprise Fund Distributors, Registrant's Principal
Underwriter; the Principal Business Address of each is Atlanta
Financial Center, 3343 Peachtree Road, N.E., Suite 450, Atlanta,
Georgia 30326-1022.
(c) Not applicable.
ITEM 30. LOCATION OF REQUIRED RECORDS -- RULE 31A-1
(Except those maintained by Custodian and Transfer Agent)
Enterprise Capital Management, Inc.
3343 Peachtree Road, Ste. 450
Atlanta, GA 30326
OpCap Advisors
One World Financial Center
New York, New York 10281
GAMCO Investors, Inc.
One Corporate Center
Rye, New York 10580
Brinson Partners, Inc.
209 S. LaSalle Street
Suite 111
Chicago, Illinois 60604
<PAGE> 47
Caywood-Scholl Capital Management
4350 Executive Drive
Suite 125
San Diego, CA 92121
ITEM 31. MANAGEMENT SERVICES
Not Applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Registrant hereby undertakes to assist shareholder communication in
accordance with the provisions of Section 16 of the Investment Company
Act of 1940.
<PAGE> 48
SIGNATURES
Pursuant to the requirement 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 April 27, 1997.
ENTERPRISE ACCUMULATION TRUST
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 dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------------------ ------------------------- ---------------
<C> <S> <C>
/s/ Victor Ugolyn Chairman, President and April 29, 1997
- ------------------------------------------ Chief Executive Officer
Victor Ugolyn
/s/ Phillip G. Goff Principal Financial and April 29, 1997
- ------------------------------------------ Accounting Officer
Phillip G. Goff
/s/ Samuel J. Foti Director April 29, 1997
- ------------------------------------------
Samuel J. Foti
/s/ Arthur T. Dietz Director April 29, 1997
- ------------------------------------------
Arthur T. Dietz
/s/ Arthur Howell Director April 29, 1997
- ------------------------------------------
Arthur Howell
/s/ William A. Mitchell, Jr. Director April 29, 1997
- ------------------------------------------
William A. Mitchell, Jr.
/s/ Lonnie H. Pope Director April 29, 1997
- ------------------------------------------
Lonnie H. Pope
/s/ Michael I. Roth Director April 29, 1997
- ------------------------------------------
Michael I. Roth
</TABLE>
<PAGE> 49
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. PAGE
- ----------- ----
<C> <S> <C>
10 Opinion of Counsel
11 Consent of Independent Accountants
</TABLE>
<PAGE> 1
April 29, 1997
Securities and Exchange Commission
450 Fifth Street
Washington, D.C. 20549
Re: Enterprise Accumulation Trust
Registration Statement No. 33-21534
Dear Sir or Madam:
I am counsel to Enterprise Accumulation Trust, (the "Fund"), and in so
acting, have reviewed Post-Effective Amendment No. 12 (the "Post-Effective
Amendment") to the Fund's Registration Statement on Form N-1A, Registration File
No. 33-21534. 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 trust duly incorporated and validly existing in good
standings under the laws of the State of Massachusetts;
(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,
/s/ Catherine R. McClellan
Catherine R. McClellan
Senior Vice President and Chief
Counsel
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 11 to the
registration statement under the Securities Act of 1933 (file number 33-21534)
of our report dated February 20, 1997 on our audit of the financial statements
and financial highlights of The Enterprise Group of Funds, Inc. appearing in the
Registrant's 1996 Annual Report. We also consent to the reference to our Firm
under the caption "Independent Accountants."
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
April 28, 1997
