<PAGE> 1
ENTERPRISE ACCUMULATION TRUST
GROWTH PORTFOLIO
MONTAG & CALDWELL, INC.
ATLANTA, GEORGIA
Investment Management
Montag & Caldwell manages approximately $25 billion for institutional
clients, and its normal investment minimum is $40 million.
Investment Objective
The objective of the Growth Portfolio is to seek appreciation of capital
primarily through investments in common stocks.
Investment Philosophy
The equity selection process is a low-risk, growth stock approach.
Valuation is the key selection criterion that makes its investment style
risk-averse. Montag & Caldwell also emphasizes growth characteristics because it
seeks not only companies with shares that are attractively priced but also those
that may experience strong earnings growth relative to other companies.
Performance Review for the Month Ended December 31, 1998
The Growth Portfolio commenced operations on December 1, 1998. The S&P 500
Index returned 5.76 percent for the month ended December 31, 1998 versus 5.40
percent for the Growth Portfolio. Due to the short history of the Portfolio,
Montag's strategy for 1998 was to make initial investments of the net assets of
the Portfolio. At December 31, 1998, the Portfolio was approximately 74 percent
invested. During the month of December, technology and consumer growth issues in
the Portfolio performed particularly well.
GROWTH OF A $10,000 INVESTMENT
[ENTERPRISE EQUITY PORTFOLIO PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
GROWTH PORTFOLIO S&P 500 INDEX* LIPPER GROWTH INDEX*
<S> <C> <C> <C>
12/1/98 10000 10000 10000
12/31/98 10540 10576 10836
</TABLE>
Enterprise performance numbers do not include variable
account expenses. Remember that historic performance does
not predict future performance. The investment returns and
principal value will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original
cost.
* The S&P 500 Index is an unmanaged index that includes 500
companies which tend to be leaders in important industries
within the U.S. economy. It includes reinvested dividends
and excludes transaction and holding charges. Lipper Inc. is
an independent reporting service that measures the
performance of most mutual funds. The performance results
reflect an unchanged index and are net of all expenses other
than sales charges and redemption fees. One cannot invest
directly in an index.
125
<PAGE> 2
Future Investment Strategy
Given Montag's outlook for sustained growth in the economy with low
inflation, Montag believes that it may be another positive year for investors.
Montag expects corporate profit growth to remain subdued and bond yields to
remain fairly steady in the year ahead, and for stock market returns to be more
moderate than in 1998. These returns may approximate 10 percent when measured by
such popular stock market averages as the S&P 500 Index and the Dow Jones
Industrials.
An economic setting of moderate corporate profit gains and steady bond
yields bodes well for the shares of growth companies that should produce
superior earnings growth. With the U.S. economy likely to slow and foreign
currencies strengthening against the dollar, Montag believes high-quality,
global consumer growth companies are particularly attractive investments. Given
the consistent demand for their products and favorable demographic trends,
health care companies may continue to do well. Selected technology holdings that
are benefiting from new product cycles and better worldwide industry conditions
may also be rewarding investments.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
126
<PAGE> 3
ENTERPRISE ACCUMULATION TRUST
GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 73.51% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES -- 2.16%
Interpublic Group of Companies
Inc. 400 $ 31,900
Manpower Inc. 400 10,075
----------
41,975
COMPUTER HARDWARE -- 11.30%
Cisco Systems Inc. (a) 400 37,125
Compaq Computer Corporation (a) 1,250 52,422
Hewlett Packard Company 950 64,897
Intel Corporation 550 65,209
----------
219,653
COMPUTER SERVICES -- 1.91%
Solectron Corporation (a) 400 37,175
COMPUTER SOFTWARE -- 4.01%
Electronic Arts (a) 400 22,450
Microsoft Corporation (a) 400 55,475
----------
77,925
CONSUMER PRODUCTS -- 7.05%
Gillette Company 1,500 72,469
Mattel Inc. 225 5,133
Procter & Gamble Company 650 59,353
----------
136,955
ELECTRICAL EQUIPMENT -- 2.36%
General Electric Company 450 45,928
ENTERTAINMENT & LEISURE -- 3.15%
Carnival Corporation 400 19,200
Walt Disney Company 1,400 42,000
----------
61,200
FOOD & BEVERAGES & TOBACCO -- 5.29%
Bestfoods 800 42,600
Coca-Cola Company 900 60,187
----------
102,787
HEALTH CARE -- 1.72%
Medtronic Inc. 450 33,413
HOTELS & RESTAURANTS -- 5.15%
Cracker Barrel Old Country Store 400 9,325
Marriott International Inc. (Class
A) 1,150 33,350
McDonald's Corporation 750 57,469
----------
100,144
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
MEDICAL INSTRUMENTS -- 2.76%
Boston Scientific Corporation (a) 2,000 $ 53,625
MISC. FINANCIAL SERVICES -- 2.63%
American Express Company 500 51,125
MULTI-LINE INSURANCE -- 2.48%
American International Group Inc. 500 48,312
PHARMACEUTICALS -- 13.89%
Bristol Myers Squibb Company 400 53,525
Johnson & Johnson 800 67,100
Lilly (Eli) & Company 450 39,994
Merck & Company Inc. 400 59,075
Pfizer Inc. 400 50,175
----------
269,869
RETAIL -- 5.18%
Costco Companies Inc. (a) 450 32,484
Gap Inc. 450 25,313
Home Depot Inc. 700 42,831
----------
100,628
TELECOMMUNICATIONS -- 2.47%
Tellabs Inc. (a) 700 47,994
----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $1,380,534) 1,428,708
- ----------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $1,380,534) $1,428,708
OTHER ASSETS LESS LIABILITIES -- 26.49% 514,747
----------
NET ASSETS 100% $1,943,455
======================================================================
</TABLE>
(a) Non-income producing security.
See accompanying notes to financial statements.
127
<PAGE> 4
ENTERPRISE ACCUMULATION TRUST
GROWTH AND INCOME PORTFOLIO
RETIREMENT SYSTEM INVESTORS INC.
NEW YORK, NEW YORK
Investment Management
Retirement System Investors Inc. ("RSI") manages approximately $597 million
for all of its clients.
Investment Objective
The objective of the Growth and Income Portfolio is a total return in
excess of the total return of the Lipper Growth and Income Mutual Funds Index
measured over a period of three to five years, by investing primarily in a
broadly diversified group of large-capitalization stocks.
Investment Philosophy
RSI uses a fundamental analysis approach, including both qualitative and
quantitative factors, applied to a universe of well-established companies. The
portfolio manager seeks to identify reasonable valuations among this group of
stocks. Forward earnings projections and relative valuation parameters are used
to determine price objectives and return potential.
Performance Review for the Month Ended December 31, 1998
The Growth and Income Portfolio commenced operations on December 1, 1998.
The S&P 500 Index returned 5.76 percent for the month ended December 31, 1998
versus 2.20 percent for the Growth and Income Portfolio. Due to the short
history of the Portfolio, RSI's strategy for 1998 was to make initial
investments of the net assets of the Portfolio. At December 31, 1998, the
Portfolio was approximately 65 percent invested.
GROWTH OF A $10,000 INVESTMENT
ENTERPRISE ACCUMULATION TRUST MANAGED PORTFOLIO GRAPH
<TABLE>
<CAPTION>
GROWTH AND INCOME LIPPER GROWTH &
PORTFOLIO S&P 500 INDEX* INCOME INDEX*
<S> <C> <C> <C>
12/1/98 10000 10000 10000
12/31/98 10220 10576 10340
</TABLE>
Enterprise performance numbers do not include variable
account expenses. Remember that historic performance does not
predict future performance. The investment returns and
principal value will fluctuate so that an investor's shares,
when redeemed may be worth more or less than their original
cost.
* The S&P 500 Index is an unmanaged index that includes 500
companies which tend to be leaders in important industries
within the U.S. economy. It includes reinvested dividends and
excludes transaction and holding charges. Lipper Inc. is an
independent reporting service that measures the performance
of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales
charges and redemption fees. One cannot invest directly in an
index.
128
<PAGE> 5
Future Investment Strategy
With the market at record valuation levels and an expected earnings
slowdown, RSI is placing more emphasis on controlling portfolio risk while
patiently seeking opportunities where its disciplines find them. Market breadth
will broaden during the year, which should benefit the Growth and Income
Portfolio, given its ample representation in value-type issues, which have
previously lagged the market.
RSI expects to maintain its relatively large concentration in broad
technology growth areas, but most new purchases will be in lower
price-to-earnings, value/growth type companies that have lagged the market and
now seem attractive on a risk/return basis.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
129
<PAGE> 6
ENTERPRISE ACCUMULATION TRUST
GROWTH AND INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 64.14% PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 3.62%
AlliedSignal Inc. 200 $ 8,862
Lockheed Martin Corporation 125 10,594
--------
19,456
BASIC INDUSTRIES -- 4.86%
Aluminum Company of America 350 26,097
BUILDING & CONSTRUCTION -- 7.98%
Southdown Inc. 725 42,911
COMPUTER HARDWARE -- 9.01%
Dallas Semiconductor Corporation 470 19,152
EMC Corporation (a) 40 3,400
IBM 140 25,865
--------
48,417
COMPUTER SERVICES -- 3.06%
Safeguard Scientifics Inc. 600 16,462
COMPUTER SOFTWARE -- 5.92%
BMC Software Inc. (a) 375 16,711
Learning Company Inc. 410 10,634
Sterling Commerce Inc. (a) 100 4,500
--------
31,845
CRUDE & PETROLEUM -- 5.36%
British Petroleum (ADR) 150 14,250
Texaco Inc. 275 14,541
--------
28,791
ELECTRICAL EQUIPMENT -- 2.70%
Emerson Electric Company 240 14,520
FOOD & BEVERAGES & TOBACCO -- 3.38%
Philip Morris Companies Inc. 340 18,190
MACHINERY -- 4.24%
Ingersoll Rand Company 300 14,081
Snap-On Inc. 250 8,703
--------
22,784
METALS & MINING -- 1.19%
Potash Corporation Saskatchewan
Inc. 100 6,388
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
MISC. FINANCIAL SERVICES -- 0.46%
Citigroup Inc. 50 $ 2,475
PHARMACEUTICALS -- 4.94%
Bristol-Myers Squibb Company 85 11,374
Johnson & Johnson 40 3,355
Merck & Company Inc. 80 11,815
--------
26,544
RETAIL -- 2.41%
Tiffany & Company 250 12,969
SAVINGS AND LOAN -- 2.49%
Washington Mutual Inc. 350 13,366
TELECOMMUNICATIONS -- 2.52%
Northern Telecom Ltd. 270 13,534
--------
TOTAL COMMON STOCKS
(IDENTIFIED COST $333,743) 344,749
- ---------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK -- 1.08%
- ---------------------------------------------------------------------
MISC. FINANCIAL SERVICES -- 1.08%
Kmart Financing, 7.75% 100 5,794
--------
TOTAL CONVERTIBLE PREFERRED STOCK
(IDENTIFIED COST $5,431) 5,794
- ---------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $339,174) $350,543
OTHER ASSETS LESS LIABILITIES -- 34.78 % 186,945
--------
NET ASSETS 100% $537,488
=====================================================================
</TABLE>
(a) Non-income producing security.
(ADR) American Depository Receipt.
See accompanying notes to financial statements.
130
<PAGE> 7
ENTERPRISE ACCUMULATION TRUST
EQUITY PORTFOLIO
OPCAP ADVISORS, INC.
NEW YORK, NEW YORK
Investment Management
OpCap Advisors, a wholly owned subsidiary of Oppenheimer Capital, has been
portfolio manager to this portfolio since inception. Oppenheimer Capital manages
approximately $62 billion for institutional clients, and its normal investment
minimum is $20 million.
Investment Objective
The objective of the Equity Portfolio is long-term capital appreciation
primarily from investments in securities of companies that are believed by the
portfolio manager to be undervalued in the marketplace in relation to factors
such as the companies' assets or earnings.
Investment Philosophy
OpCap Advisors' investment process uses a fundamental, bottom-up process of
value investing. The security selection process focuses on well-positioned
companies that generate high returns on assets and free cash flow, have strong
barriers to competition, have managements oriented to shareholder interests, and
sell at reasonable valuation levels. A complete qualitative review of the
business relative to its peers and its history is the key to the process. OpCap
seeks securities whose undervaluation is great enough to provide significant
upside reward with modest downside risk.
1998 Performance Review
The stock market continued its remarkable advance in 1998, with the S&P 500
Index providing a total return of 28.6 percent, inclusive of reinvested
dividends. This marked the fourth consecutive year in which the index has
delivered a total return of more than 20 percent. The market has benefited
throughout this period from an unusually favorable U.S. economic environment of
moderate growth with declining interest rates and extremely low inflation.
Beneath the surface, however, there were many crosscurrents in 1998. The
year's sharp increase for the S&P 500 Index was driven primarily by a limited
group of super-large company stocks. Many other stocks were left behind. For
instance, the Russell 2000 Index, a benchmark of small company stocks, actually
declined 2.6 percent in 1998. The strong relative performance of large versus
small stocks reflected the preference of many investors for highly liquid large
issues -- especially those with predictable earnings -- at a time when the
international economic outlook was uncertain and widespread concern existed that
the rate of economic growth in the U.S. might finally be slowing.
In addition, there was a wide disparity between the performance of growth
stocks (those projected to have high
future earnings growth rates) and value stocks (those considered to be
undervalued in relation to their inherent worth). The
S&P 500/BARRA Growth Index rose 42.2 percent in 1998 while the S&P 500/BARRA
Value Index increased only 14.7 percent.
Performance gaps of this type, favoring either growth or value, are common.
Nonetheless, the 1998 differential was one of the largest in history. Many
quality stocks that were inexpensive languished or even fell in price, while
some highly valued growth stocks became even more expensive. For instance, the
10 greatest contributors to the S&P 500 Index in 1998 advanced an average of
82.4 percent, reaching an average multiple of 46.7 times trailing earnings.
Value investors had a difficult year. OpCap underperformed the market for
several reasons. For one, it owns the stocks of a diverse group of large and
mid-sized companies, and mid-cap stocks did not perform nearly as well as did
the S&P 500 Index, which is dominated by larger companies. In addition, the
performance of the market in 1998 was driven primarily by large "growth" stocks,
reflecting a preference of many investors for owning highly liquid
issues -- especially those with predictable earnings -- in an uncertain global
economic environment. Year-to-date performance differentials between value and
growth styles of investing are common, and OpCap is confident the pendulum will
swing back to value investing in time.
In addition, with its risk-averse investment philosophy, OpCap sometimes
trails the market averages in periods of sharply rising prices. The portfolio
manager focuses on long-term investments in quality companies rather than on
attempting to predict near-term market trends.
131
<PAGE> 8
The average price-to-earnings ratio of the stocks owned by the portfolio
was 18.6 at the end of December, compared with a price-to-earnings ratio of 26.7
for the S&P 500 Index, indicating the relative value of the portfolio's
holdings. In contrast to their low relative valuations, the stocks owned by the
portfolio are expected to generate returns on equity that are well above the
average returns of the S&P 500 Index stocks. This combination of low relative
stock market prices and superior business characteristics helps control risk and
creates opportunity for investment profit.
GROWTH OF A $10,000 INVESTMENT
[ENTERPRISE EQUITY PORTFOLIO PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
EQUITY PORTFOLIO S&P 500 INDEX* LIPPER GROWTH INDEX*
<S> <C> <C> <C>
12/31/88 10000 10000 10000
12/31/89 12267 13169 12747
12/31/90 11995 12759 12057
12/31/91 15739 16647 16437
12/31/92 18557 17916 17692
12/31/93 20013 19722 19811
12/31/94 20787 19982 19499
12/31/95 28778 27491 25867
12/31/96 36037 33803 30402
12/31/97 45318 45080 38924
12/31/98 49805 57959 48924
</TABLE>
Enterprise performance numbers do not include variable account
expenses. Remember that historic performance does not predict
future performance. The investment returns and principal value
will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
* The S&P 500 Index is an unmanaged index that includes 500
companies that tend to be leaders in important industries
within the U.S. economy. It includes reinvested dividends and
excludes any transaction or holding charges. Lipper Inc. is an
independent reporting service that measures the performance of
most mutual funds. The performance results reflect an
unchanged index and are net of all expenses other than sales
charges and redemption fees. One cannot invest directly in an
index.
Future Investment Strategy
As for the prospects of the U.S. economy in 1999, the outlook is more
challenging than is usually the case. OpCap expects capital spending and rates
of inventory growth to slow and corporate profits to be mixed, with the
potential for downside surprises as deflationary pressures and rapid changes
derail profits at some companies. Clearly, these are negatives for the stock
market.
On the other hand, the Federal Reserve Board has been cutting interest
rates and adding money to the economy at an explosive rate, helping drive the
stock market's strong performance in the fourth quarter of 1998. Given its
concern about the health of international financial markets, the Fed is likely
to persist in rapid monetary growth. Monetary stimulus and lower interest rates
could therefore continue to benefit financial markets, housing and personal
consumption in the coming year.
In terms of the economic problems being experienced internationally,
renewed economic growth in Japan is a key part of the solution. Japanese banks
still must rid their books of enough bad loans to be considered healthy and to
contribute actively to financing economic growth. Even with government fiscal
stimulus programs, it is likely that the Japanese economy will decline slightly
this year. Europe is in much better shape, although its economic growth may slow
in 1999 as exports and capital spending are negatively affected by external
events. Severe economic problems still exist in the developing world, especially
in Latin America.
OpCap continues to see many long-term positives, including powerful trends
such as an information revolution that is transforming the way every business
works, continued growth in demand for stocks from the Baby Boomers saving for
retirement, a federal budget surplus and no inflation. Nonetheless, OpCap is
concerned about the high valuation levels of many stocks.
The challenge for investors in the coming year will be to chart a course
that captures favorable returns while guarding against the economic and market
uncertainty that exists at this time. Through its disciplined value philosophy,
OpCap seeks to do just that by owning businesses that generate high levels of
cash and use that cash to create value for shareholders through all economic
environments.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
132
<PAGE> 9
ENTERPRISE ACCUMULATION TRUST
EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 86.30% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
ADVERTISING -- 1.77%
Omnicom Group Inc. 190,000 $ 11,020,000
AEROSPACE -- 4.19%
AlliedSignal Inc. 396,840 17,584,972
Lockheed Martin Corporation 100,000 8,475,000
------------
26,059,972
AUTOMOTIVE -- 1.93%
LucasVarity (ADR) 357,000 11,959,500
BANKING -- 2.97%
BankBoston Corporation 224,000 8,722,000
Wells Fargo & Company 243,620 9,729,574
------------
18,451,574
CHEMICALS -- 1.20%
Du Pont (E.I.) De Nemours &
Company 140,000 7,428,750
CONGLOMERATES -- 8.04%
Berkshire Hathaway (Class B) (a) 7,035 16,415,000
Minnesota Mining & Manufacturing
Company 205,000 14,580,625
Textron Inc. 250,000 18,984,375
------------
49,980,000
CONSUMER PRODUCTS -- 1.02%
International Flavours &
Fragrances Inc. 100,000 4,418,750
Mattel Inc. 84,875 1,936,211
------------
6,354,961
CRUDE & PETROLEUM -- 0.99%
Anadarko Petroleum Corporation 200,000 6,175,000
DRUGS & MEDICAL PRODUCTS -- 1.73%
Becton, Dickinson & Company 252,316 10,770,739
ELECTRICAL EQUIPMENT -- 1.53%
Avnet Inc. 157,000 9,498,500
ELECTRONICS -- 2.83%
Conexant Systems Inc. (a) 28,000 471,800
Rockwell International
Corporation 426,000 17,133,188
------------
17,604,988
ENTERTAINMENT & LEISURE -- 1.59%
Carnival Corporation 206,000 9,888,000
FOOD & BEVERAGES & TOBACCO -- 4.99%
Diageo (ADR) 196,384 9,082,760
Philip Morris Companies Inc. 410,000 21,935,000
------------
31,017,760
HEALTH CARE -- 1.95%
Tenet Healthcare Corporation (a) 460,700 12,093,375
HOTELS & RESTAURANTS -- 3.03%
McDonald's Corporation 246,000 18,849,750
INSURANCE -- 16.54%
ACE Ltd. 828,000 28,514,250
AFLAC Inc. 270,256 11,891,264
Everest Reinsurance Holdings 480,000 18,690,000
EXEL Ltd. (Class A) 484,573 36,342,975
Renaissance Holdings Ltd. 200,000 7,325,000
------------
102,763,489
MACHINERY -- 4.50%
Caterpillar Inc. 241,000 11,086,000
Dover Corporation 460,000 16,847,500
------------
27,933,500
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
MANUFACTURING -- 5.06%
Avery Dennison Corporation 360,000 $ 16,222,500
General Dynamics Corporation 260,000 15,242,500
------------
31,465,000
MISC. FINANCIAL SERVICES -- 9.59%
Citigroup Inc. 264,360 13,085,820
Conseco Inc. 536,152 16,386,145
Countrywide Credit Industries
Inc. 286,088 14,358,042
Freddie Mac 244,180 15,734,349
------------
59,564,356
MULTI-LINE INSURANCE -- 0.90%
American International Group
Inc. 57,627 5,568,209
PAPER & FOREST PRODUCTS -- 0.88%
Champion International
Corporation 135,000 5,467,500
PRINTING & PUBLISHING -- 0.85%
Donnelley R.R. & Sons Company 120,000 5,257,500
RETAIL -- 2.28%
May Department Stores Company 234,712 14,170,737
TELECOMMUNICATIONS -- 3.20%
Motorola Inc. 120,000 7,327,500
Sprint Corporation 131,000 11,020,375
Sprint PCS (a) 65,500 1,514,687
------------
19,862,562
TRANSPORTATION -- 2.74%
AMR Corporation (a) 191,000 11,340,625
Canadian Pacific Ltd. 300,000 5,662,500
------------
17,003,125
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $402,833,805) 536,208,847
- ----------------------------------------------------------------------
COMMERCIAL PAPER -- 10.26%
- ----------------------------------------------------------------------
<S> <C> <C>
American Express Credit
Corporation, 4.90% due
02/01/99 $12,565,000 $ 12,511,983
Deere (John) Capital Corporation
5.22% due 01/20/99 16,336,000 16,290,994
Ford Motor Credit Company
5.17% due 01/11/99 15,000,000 14,978,458
General Electric Capital
Corporation 5.28% due 01/11/99 20,000,000 19,970,667
------------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $63,752,102) 63,752,102
- ----------------------------------------------------------------------
REPURCHASE AGREEMENT -- 3.46%
- ----------------------------------------------------------------------
State Street Bank & Trust
Repurchase Agreement, 4.25%
due 01/04/99
Collateral: U.S. Treasury Note
$20,545,000 5.75% due 08/15/03
Value $21,906,106 21,475,000 21,475,000
------------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $21,475,000) 21,475,000
- ----------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $488,060,907) $621,435,949
OTHER ASSETS LESS LIABILITIES -- (0.02)% (98,293)
------------
NET ASSETS 100% $621,337,656
======================================================================
</TABLE>
(a) Non-income producing security.
(ADR) American Depository Receipt.
See accompanying notes to financial statements.
133
<PAGE> 10
ENTERPRISE ACCUMULATION TRUST
EQUITY INCOME PORTFOLIO
1740 ADVISERS
NEW YORK, NEW YORK
Investment Management
1740 Advisers manages more than $1.9 billion for institutional clients and
its normal investment minimum is $20 million.
Investment Objective
The objective of the Equity Income Portfolio is to seek a combination of
growth and income to achieve an above-average and consistent total return,
primarily from investments in dividend-paying common stocks.
Investment Philosophy
Above-average returns can be achieved by buying undervalued, out-of-favor
stocks and selling them after the market has recognized and corrected their
undervaluation. Dividend yield relative to the S&P 500 Index is the measure of
the value used in this strategy. It provides a disciplined approach to buy and
sell decisions, enhances stability in the portfolio, and lessens overall market
risk.
Performance Review for the Month Ended December 31, 1998
The Equity Income Portfolio commenced operations on December 1, 1998. The
S&P Barra/Value Index returned 3.51 percent for the month ended December 31,
1998 versus 1.80 percent for the Equity Income Portfolio. Due to the short
history of the Portfolio, 1740 Advisers' strategy for 1998 was to make initial
investments of the net assets of the Portfolio. At December 31, 1998, the
Portfolio was approximately 80 percent invested.
GROWTH OF A $10,000 INVESTMENT
ENTERPRISE ACCUMULATION TRUST EQUITY INCOME PORTFOLIO PERFORMANCE GRAPH
<TABLE>
<CAPTION>
EQUITY INCOME S&P BARRA/VALUE LIPPER GROWTH EQUITY
PORTFOLIO INDEX* INCOME INDEX*
<S> <C> <C> <C>
12/1/98 10000 10000 10000
12/31/98 10180 10351 10256
</TABLE>
Enterprise performance numbers do not include variable
account expenses. Remember that historic performance does not
predict future performance. The investment returns and
principal value will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original
cost.
* The S & P Barra/Value Index is an unmanaged index that
includes reinvested dividends and excludes transaction and
holding charges. Lipper Inc. is an independent reporting
service that measures the performance of most mutual funds.
The performance results reflect an unmanaged index and are
net of all expenses other than sales charges and redemption
fees. One cannot invest directly in an index.
134
<PAGE> 11
Future Investment Strategy
The question for stock market valuation in 1999 will be whether the market
losses from lower earnings are offset by what it gains from lower rates. As of
now the answer seems to be positive. As long as rates stay low, and earnings are
stable, the flow of money into equity portfolios should continue. Valuations are
high, parts of the world are still fragile and, after four very strong years,
the market is entitled to a breather.
With the expectation for slower economic growth, low inflation and lack of
pricing power and uncertain earnings, selectivity becomes important. In this
environment companies that can achieve unit growth and who do not need price
increases to succeed should be favored. This means an emphasis on health
care -- pharmaceuticals, hospital supplies and telecommunications -- primarily
telephones. Selected industrial names such as General Electric, Xerox and Pitney
Bowes should also do well. Financials -- banks and insurance -- should benefit
from lower interest rates.
At the other end of the spectrum from the stable growers are the
economy-sensitive or cyclical stocks. The economic backdrop seems all wrong for
them, but that is already well known and is reflected in their very depressed
prices. If Southeast Asia stabilizes and shows any signs of improvement, the
energy, basic materials and capital good stocks which were hurt the most by the
economic crisis should benefit. The portfolio is slowly increasing exposure to
international oil, paper, forest products and chemical stocks. It may be early,
but usually these groups move in anticipation of a change in the world outlook.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
135
<PAGE> 12
ENTERPRISE ACCUMULATION TRUST
EQUITY INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 79.63% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 3.91%
Northrop Grumman Corporation 100 $ 7,312
United Technologies Corporation 100 10,875
-----------
18,187
AUTOMOTIVE -- 1.26%
Ford Motor Company 100 5,869
BANKING -- 9.07%
Bank of New York Company Inc. 100 4,025
BankAmerica Corporation 100 6,012
BankBoston Corporation 100 3,894
Chase Manhattan Corporation 100 6,806
First Union Corporation 100 6,081
Fleet Financial Group Inc. 100 4,469
Mellon Bank Corporation 100 6,875
Wells Fargo & Company 100 3,994
-----------
42,156
CAPITAL GOODS & SERVICES -- 1.03%
Cooper Industries Inc. 100 4,769
CHEMICALS -- 1.14%
Du Pont (E. I.) De Nemours &
Company 100 5,306
COMPUTER HARDWARE -- 2.54%
Xerox Corporation 100 11,800
CONSUMER DURABLES -- 0.88%
Dana Corporation 100 4,088
CONSUMER NON-DURABLES -- 0.95%
Avon Products Inc. 100 4,425
CRUDE & PETROLEUM -- 7.84%
Amoco Corporation 100 6,037
British Petroleum (ADR) 100 9,500
Chevron Corporation 100 8,294
Exxon Corporation 100 7,312
Texaco Inc. 100 5,288
-----------
36,431
ELECTRICAL EQUIPMENT -- 3.50%
Emerson Electric Company 100 6,050
General Electric Company 100 10,206
-----------
16,256
ENERGY -- 5.11%
Consolidated Natural Gas Company 100 5,400
Duke Energy Company 100 6,406
Enron Corporation 100 5,706
Williams Companies Inc. 200 6,238
-----------
23,750
FOOD & BEVERAGES & TOBACCO -- 1.15%
Philip Morris Companies Inc. 100 5,350
INSURANCE -- 1.66%
Cigna Corporation 100 7,731
MACHINERY -- 2.41%
Caterpillar Inc. 100 4,600
Pitney Bowes Inc. 100 6,606
-----------
11,206
MANUFACTURING -- 1.52%
Eaton Corporation 100 7,069
MISC. FINANCIAL SERVICES -- 1.06%
Citigroup Inc. 100 4,950
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----------
<S> <C> <C>
MULTI-LINE INSURANCE -- 1.76%
Lincoln National Corporation 100 $ 8,181
PAPER & FOREST PRODUCTS -- 3.11%
Bowater Inc. 100 4,144
Georgia Pacific Corporation 100 5,857
International Paper Company 100 4,481
-----------
14,482
PHARMACEUTICALS -- 8.19%
American Home Products
Corporation 100 5,631
Baxter International Inc. 100 6,431
Bristol-Myers Squibb Company 100 13,381
Pharmacia & Upjohn Inc. 100 5,663
Smithkline Beecham (ADR) 100 6,950
-----------
38,056
RAW MATERIALS -- 1.74%
Rohm & Haas Company 100 3,013
Weyerhaeuser Company 100 5,081
-----------
8,094
REAL ESTATE -- 4.20%
Boston Properties Inc. 200 6,100
Crescent Real Estate Equities 200 4,600
Equity Office Properties Trust 200 4,800
Equity Residential Properties
Trust 100 4,044
-----------
19,544
SAVINGS AND LOAN -- 2.41%
Federal National Mortgage
Association 100 7,400
Washington Mutual Inc. 100 3,819
-----------
11,219
TECHNOLOGY -- 0.93%
Thomas & Betts Corporation 100 4,331
TELECOMMUNICATIONS -- 10.62%
Ameritech Corporation 100 6,338
AT & T Corporation 100 7,525
Bell Atlantic Corporation 100 5,300
BellSouth Corporation 200 9,975
SBC Communications Inc. 100 5,363
Sprint Corporation 100 8,412
U S West Inc. 100 6,462
-----------
49,375
UTILITIES -- 1.64%
CMS Energy Corporation 100 4,844
Edison International 100 2,787
-----------
7,631
-----------
TOTAL COMMON STOCKS
(IDENTIFIED COST $363,884) 370,256
- ----------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $363,884) $ 370,256
OTHER ASSETS LESS LIABILITIES -- 20.37% 94,698
-----------
NET ASSETS 100% $ 464,954
======================================================================
</TABLE>
(ADR) American Depository Receipt.
See accompanying notes to financial statements.
136
<PAGE> 13
ENTERPRISE ACCUMULATION TRUST
CAPITAL APPRECIATION PORTFOLIO
PROVIDENT INVESTMENT COUNSEL, INC.
PASADENA, CALIFORNIA
Investment Management
Provident Investment Counsel manages approximately $20 billion for
institutional clients, and its usual investment minimum is $5 million.
Investment Objective
The objective of the Capital Appreciation Portfolio is to seek maximum
capital appreciation, primarily through investment in common stock of companies
that demonstrate accelerating earnings momentum and consistently strong
financial characteristics.
Investment Philosophy
Provident's investment philosophy is based on the belief that, over time,
the reason the price of a company's stock increases is because its earnings are
increasing. The investment strategy seeks to create a portfolio of companies
that, in aggregate, is growing its earnings at a faster and more consistent rate
than is the overall market.
Performance Review for the Month Ended December 31, 1998
The Capital Appreciation Portfolio commenced operations on December 1,
1998. The S&P Barra/Growth Index returned 7.61 percent for the month ended
December 31, 1998 versus 11.40 percent for the Capital Appreciation Portfolio.
Due to the short history of the Portfolio, Provident's strategy for 1998 was to
make initial investments of the net assets of the Portfolio. At December 31,
1998, the Portfolio was approximately 61 percent invested.
The Capital Appreciation Portfolio can attribute its superior first month
performance to several factors that Provident thinks will continue to provide
good relative returns. First, the portfolio manager emphasized the retail sector
given its strong outlook on consumer spending. Next, the Portfolio benefited
from technology services stocks. While 1998 may have been an exceptionally
volatile year for technology names, especially given their exposure to foreign
markets, the software side posted phenomenal gains, mostly in the fourth
quarter. The Portfolio contained names such as America Online, Fiserv and Lycos.
Finally, the dramatic underweighting in the consumer non-durable sectors helped
portfolio performance. Much of this sector was overly exposed to multinational
markets, and the Portfolio has purchased only two of these stocks: Infinity
Broadcasting and Outdoor Systems.
137
<PAGE> 14
GROWTH OF A $10,000 INVESTMENT
ENTERPRISE ACCUMULATION TRUST CAPITAL APPRECIATION PORTFOLIO PERFORMANCE GRAPH
<TABLE>
<CAPTION>
CAPITAL APPRECIATION S&P BARRA/GROWTH LIPPER CAPITAL
PORTFOLIO INDEX* APPRECIATION INDEX*
<S> <C> <C> <C>
12/1/98 10000 10000 10000
12/31/98 11140 10761 10918
</TABLE>
Enterprise performance numbers do not include variable
account expenses. Remember that historic performance does
not predict future performance. The investment returns and
principal value will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original
cost.
* The S&P 500 Index is an unmanaged index that includes 500
companies that tend to be leaders in important industries
within the U.S. economy. It includes reinvested dividends
and excludes transaction and holding charges. Lipper Inc. is
an independent reporting service that measures the
performance of most mutual funds. The performance results
reflect an unmanaged index and are net of all expenses other
than sales charges and redemption fees. One cannot invest
directly in an index.
Future Investment Strategy
Given the low inflation environment in the U.S. with stronger wage growth
and record low savings rates, the portfolio will continue to emphasize retail
into 1999. Emphasis will be on only the highest-quality, "best in class"
technology names with superior fundamentals, market shares, proprietary products
and solid management. The Capital Appreciation Portfolio will continue to seek
companies with quality of operations and earnings in both the large and
mid-capitalization markets.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
138
<PAGE> 15
ENTERPRISE ACCUMULATION TRUST
CAPITAL APPRECIATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 60.53% PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
ADVERTISING -- 0.59%
Outdoor Systems Inc. (a) 100 $ 3,000
BANKING -- 2.74%
FIRSTAR Corporation 150 13,987
BROADCASTING -- 0.80%
Infinity Broadcasting Corporation
(Class A) (a) 150 4,106
BUSINESS SERVICES -- 2.37%
Concord EFS Inc. (a) 100 4,237
CSG Systems International Inc. (a) 100 7,900
--------
12,137
COMPUTER HARDWARE -- 1.97%
Lexmark International Group Inc.
(Class A) (a) 100 10,050
COMPUTER SERVICES -- 8.40%
America Online Inc. (a) 100 16,000
Cadence Design Systems Inc. (a) 100 2,975
Fiserv Inc. (a) 200 10,287
Lycos Inc. (a) 100 5,556
Synopsys Inc. (a) 150 8,138
--------
42,956
ELECTRONICS -- 1.69%
SCI Systems Inc. (a) 150 8,663
FINANCE -- 3.12%
Associates First Capital
Corporation (Class A) 200 8,475
MBNA Corporation 300 7,481
--------
15,956
HEALTH CARE -- 3.44%
Henry Schein Inc. (a) 100 4,475
Omnicare Inc. 250 8,688
Total Renal Care Holdings Inc. (a) 150 4,434
--------
17,597
HOTELS & RESTAURANTS -- 1.69%
Brinker International Inc. (a) 300 8,663
MANUFACTURING -- 2.21%
Tyco International Ltd. 150 11,316
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
MEDICAL SERVICES -- 3.78%
Health Management Associates Inc.
(Class A) (a) 400 $ 8,650
Quintiles Transnational Corporation
(a) 200 10,675
--------
19,325
PHARMACEUTICALS -- 6.66%
Elan (ADR) (a) 150 10,434
Pfizer Inc. 100 12,544
Schering Plough Corporation 200 11,050
--------
34,028
RETAIL -- 17.96%
Bed Bath & Beyond Inc. (a) 300 10,237
Costco Companies Inc. (a) 150 10,828
CVS Corporation 200 11,000
Dollar Tree Stores Inc. (a) 200 8,738
Family Dollar Stores Inc. 400 8,800
Kohl's Corporation (a) 200 12,287
Linens 'n Things Inc. (a) 100 3,963
Office Depot Inc. (a) 100 3,694
Safeway Inc. (a) 150 9,141
Staples Inc. (a) 300 13,106
--------
91,794
TECHNOLOGY -- 1.71%
Waters Corporation (a) 100 8,725
TELECOMMUNICATIONS -- 1.40%
MCI Worldcom Inc. (a) 100 7,175
--------
TOTAL COMMON STOCKS
(IDENTIFIED COST $271,310) 309,478
- ---------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $271,310) $309,478
OTHER ASSETS LESS LIABILITIES -- 39.47% 201,778
--------
NET ASSETS 100% $511,256
=====================================================================
</TABLE>
(a) Non-income producing security.
(ADR) American Depository Receipt.
See accompanying notes to financial statements.
139
<PAGE> 16
ENTERPRISE ACCUMULATION TRUST
SMALL COMPANY GROWTH PORTFOLIO
WILLIAM D. WITTER, INC.
NEW YORK, NEW YORK
Investment Management
William D. Witter, Inc. manages approximately $905 million in assets under
management and has a normal investment minimum for a separate account of $1
million.
Investment Objective
The objective of the Small Company Growth Portfolio is to seek capital
appreciation by investing primarily in common stocks of small-capitalization
companies believed by the portfolio manager to have an outlook for strong
earnings growth and potential for significant capital appreciation.
Investment Philosophy
William D. Witter will seek out stocks of small companies that are expected
to have above-average growth in earnings, which are reasonably valued. The
manager uses a disciplined approach in evaluating growth companies. It relates
the expected growth rate in earnings to the price-to-earnings ratio of the
stock. Generally, the manager will not buy a stock if the price-to-earnings
ratio exceeds the growth rate. By using this valuation parameter, the manager
believes it moderates some of the inherent volatility in the small
capitalization sector of the market. Securities will be sold when the manager
believes the stock price exceeds the valuation criteria or when the stock
appreciates to the point where it is substantially overweighted in the portfolio
or when the company no longer meets expectations. The manager's goal is to hold
a stock for a minimum of one year but this may not always be feasible and there
may be times when short-term gains or losses will be realized.
1998 Performance Review for the Month Ended December 31, 1998
The Small Company Growth Portfolio commenced operations on December 1,
1998. The Russell 2000 Index returned 6.19 percent for the month ended December
31, 1998 versus 9.20 percent for the Small Company Growth Portfolio. Due to the
short history of the Portfolio, William D. Witter's strategy for 1998 was to
make initial investments of the net assets of the Portfolio. At December 31,
1998, the Portfolio was approximately 79 percent invested.
William D. Witter's investment approach is growth at a reasonable price.
The portfolio manager, therefore, utilizes both cyclical and secular growth
securities. For instance, an investment was made in the semi-conductor company
Cymer, Inc., which has dynamic, long-term growth prospects but is subject to
industry-specific, cyclical influences. Simultaneously, an investment was made
in National Computer Systems, a provider of testing and computer services to
educational institutions, which has a very consistent record of sales and
earnings increases.
During December, a positive contribution to the results was made by Ryanair
Holdings, a Dublin-based discount airline which should benefit significantly
from the opportunities to compete with formerly state-owned high-cost carriers.
The computer software companies collectively appreciated 55 percent during the
month.
140
<PAGE> 17
GROWTH OF A $10,000 INVESTMENT
ENTERPRISE ACCUMULATION SMALL COMPANY GROWTH PERFORMANCE GRAPH
<TABLE>
<CAPTION>
SMALL COMPANY LIPPER SMALL CAP
GROWTH PORTFOLIO RUSSELL 2000 INDEX* INDEX*
<S> <C> <C> <C>
12/1/98 10000 10000 10000
12/31/98 10920 10619 10757
</TABLE>
Enterprise performance numbers do not include variable
account expenses. Remember that historic performance does not
predict future performance. The investors returns and
principal value will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original
cost.
* The Russell 2000 Index is an unmanaged index that includes
reinvested dividends and excludes transaction and holding
charges. Lipper Inc. is an independent reporting service that
measures the performance of most mutual bonds. The
performance results reflect an unmanaged index and are net of
all expenses other than sales charges and redemption fees.
One cannot invest directly in an index.
Future Investment Strategy
A continuation of 2.5 percent to 3 percent economic growth rate is
anticipated. While new obstacles such as the current crisis in Brazil are
undoubtedly going to appear, the combination of the capital investments and
restructuring decisions of the late 1980s and of the 1990s has created a
positive environment.
Several of the keys to the recent and, Witter believes, future growth are
the productivity improvements associated with new technologies for use in
industry, commerce and telecommunications. Consequently, Witter shall continue
to look for investment opportunities in the technology sector.
Due to higher valuation levels, positions in some of the software holdings
may be reduced. The semi-conductor equipment sector appears to have strong
fundamentals beginning in the year 2000. Additions may be made to the Portfolio
in this area. Some commercial service providers such as Charles River Associates
have substantial opportunities for both exceptional revenue and earnings growth.
This sector as well as health care are ones that Witter expects to expand. While
it appears early, oil service issues are being reviewed as future portfolio
additions.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
141
<PAGE> 18
ENTERPRISE ACCUMULATION TRUST
SMALL COMPANY GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 79.16% PRINCIPAL AMOUNT VALUE
- ---------------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 1.45%
AAR Corporation 150 $ 3,581
Tristar Aerospace Company (a) 460 3,220
--------
6,801
BUSINESS SERVICES -- 8.20%
Charles River Associates Inc. (a) 600 13,125
Labor Ready Inc. (a) 440 8,663
Maximus Inc. (a) 450 16,650
--------
38,438
COMPUTER HARDWARE -- 2.64%
National Computer Systems Inc. 335 12,395
COMPUTER SERVICES -- 3.69%
Cymer Inc. (a) 880 12,870
Kronos Inc. (a) 100 4,431
--------
17,301
COMPUTER SOFTWARE -- 8.88%
Legato Systems Inc. (a) 130 8,572
Pervasive Software Inc. (a) 1,065 20,501
Verity Inc. (a) 475 12,588
--------
41,661
CONSTRUCTION -- 0.30%
Stolt Comex Seaway (ADR) (a) 250 1,406
DRUGS & MEDICAL PRODUCTS -- 1.37%
Geltex Pharmaceuticals Inc. (a) 285 6,448
ELECTRICAL EQUIPMENT -- 2.52%
C & D Technologies 430 11,825
ELECTRONICS -- 8.38%
Barringer Technologies Inc. (a) 1,440 12,420
Lernout & Hauspie Speech Products
(a) 400 13,050
Veeco Instruments Inc. (a) 260 13,812
--------
39,282
FINANCE -- 5.53%
Doral Financial Corporation 350 7,744
Hambrecht & Quist Group (a) 540 12,251
Raymond James Financial Inc. 280 5,915
--------
25,910
MANUFACTURING -- 6.70%
Astropower Inc. (a) 840 8,085
Candela Corporation (a) 170 956
Mueller Industries Inc. (a) 240 4,875
Trinity Industries Inc. 155 5,968
Varlen Corporation 500 11,531
--------
31,415
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
MEDICAL INSTRUMENTS -- 2.08%
Theragenics Corporation (a) 580 $ 9,751
MEDICAL SERVICES -- 3.17%
Maxxim Medical Inc. (a) 500 14,875
OIL SERVICES -- 0.67%
Atwood Oceanics Inc. (a) 185 3,145
PHARMACEUTICALS -- 0.82%
Jones Pharma Inc. 105 3,833
RETAIL -- 1.23%
Rush Enterprises Inc. (a) 525 5,775
TECHNOLOGY -- 8.81%
Applied Science & Technology Inc.
(a) 1,220 12,505
Catalytica Inc. (a) 830 14,940
Flir Systems Inc. (a) 460 10,695
Mecon Inc. (a) 300 3,150
--------
41,290
TRANSPORTATION -- 12.72%
Alaska Air Group Inc. (a) 370 16,372
Amtran Inc. (a) 225 6,103
Atlas Air Inc. (a) 310 15,171
Ryanair Holdings (ADR) (a) 285 10,759
Sea Containers Ltd. (Class A) 375 11,227
--------
59,632
--------
TOTAL COMMON STOCKS
(IDENTIFIED COST $337,932) 371,183
- ---------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $337,932) $371,183
OTHER ASSETS LESS LIABILITIES -- 20.84% 97,701
--------
NET ASSETS 100% $468,884
=====================================================================
</TABLE>
(a) Non-income producing security.
(ADR) American Depository Receipt.
See accompanying notes to financial statements.
142
<PAGE> 19
ENTERPRISE ACCUMULATION TRUST
SMALL COMPANY VALUE PORTFOLIO
GABELLI ASSET MANAGEMENT COMPANY
RYE, NEW YORK
Investment Management
Gabelli Asset Management Company, which manages more than $7.2 billion for
institutional clients and whose normal investment minimum is $500,000, became
manager of the portfolio on June 1, 1996.
Investment Objective
The objective of the Small Company Value Portfolio is to seek maximum
capital appreciation, primarily through investment in the equity securities of
companies that have a market capitalization of no more than $1 billion.
Investment Philosophy
Gabelli Asset Management Company's focus is on free cash flow, which it
believes to be the best barometer of a business' value. Rising free cash flow
often foreshadows net earnings improvement. Gabelli also looks at long-term
earnings trends, and analyzes on and off balance sheet assets and liabilities.
Gabelli wants to know everything and anything that will add or detract from its
private market value estimates. Finally, Gabelli looks for a
catalyst -- something happening in the company's industry or indigenous to the
company itself that will reveal value.
1998 Performance Review
Small company stocks had a lackluster year, especially when compared to the
larger market indices. The last quarter of the year reversed the sharp
correction seen in the third quarter. The best performers in this portfolio were
media and communications companies. Price Communications, the cellular telephone
company, rose 372 percent. Cable company Century Communications rose 225
percent. Its affiliate telephone company, Centennial Cellular, was acquired and
resulted in a $200 million gain for Century. Data Broadcasting increased 218
percent for the year. The company plans an initial public offering of
MarketWatch, its business news and data web site.
The largest portfolio holding, Cablevision, rose 109 percent. Cablevision
is one of the leading telecommunications and entertainment companies. Its
businesses include cable in the core media markets of New York, Boston and
Cleveland. It owns Madison Square Garden Properties, including the New York
Knicks and Rangers.
Portfolio challenges were industrial companies that derive a portion of
their revenues from outside the U.S. These stocks were negatively impacted by
the sluggishness of the Southeast Asian economy. Companies such as
Aeroquip-Vickers, Flowserve, and Daniel Industries were poor performers, as were
issues such as Pioneer Group, Watts Industries and TVX Gold.
143
<PAGE> 20
GROWTH OF A $10,000 INVESTMENT
[ENTERPRISE ACCUMULATION TRUST GRAPH]
<TABLE>
<CAPTION>
SMALL COMPANY VALUE LIPPER SMALL CAP
PORTFOLIO RUSSELL 2000 INDEX* INDEX
<S> <C> <C> <C>
12/31/88 10000 10000 10000
12/31/89 11835 11624 12106
12/31/90 10680 9356 10438
12/31/91 15819 13665 15504
12/31/92 19219 16180 17238
12/31/93 22969 19238 20155
12/31/94 22973 18888 20058
12/31/95 25794 24260 26400
12/31/96 28686 28261 30193
12/31/97 41400 34582 34727
12/31/98 45379 33697 34432
</TABLE>
Enterprise performance numbers do not include variable account
expenses. Remember that historic performance does not predict
future performance. The investment returns and principal value
will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
* The Russell 2000 Index is an unmanaged index. It includes
reinvested dividends and excludes any transaction or holding
charges. The Russell 2000 Index replaces the Russell 1000
Value Index as the broad-based comparison to the Small Company
Value Portfolio as it more appropriately reflects the
securities market in which the Portfolio invests. Lipper Inc.
is an independent reporting service that measures the
performance of most mutual funds. The performance results
reflect an unmanaged index and are net of all expenses other
than sales charges and redemption fees. One cannot invest
directly in an index.
During 1998, an investment in the above hypothetical
shareholder account increased $3,908 compared to a decrease of
$885 and an increase of $6,719 in the Russell 2000 Index and
Russell 1000 Value Index, respectively.
Future Investment Strategy
Gabelli believes the four legs supporting the stock market stool are low
inflation, low interest rates, a powerful flow of funds and strong corporate
profit growth. While the first three remain very positive, there are doubts
about the fourth. Weak Asian markets and the ongoing international currency
crisis could lead to problems in the Latin American currencies. Serious economic
problems for the United States' Latin American trading partners would have a far
greater impact on the American economy and corporate profits than did economic
disruption in Southeast Asia.
While the U.S. economy is starting to slow, it is still advancing at a
respectable pace. If Latin America remains stable and the American consumer
continues to spend, the U.S. economy may continue to expand, albeit at a slower
pace than in recent years.
Gabelli will continue find many true business bargains in the small-cap
sector. These bargains present the opportunity for financially robust companies
to continue to snap up other companies in their own and related industries due
to necessity. For example, a telecommunications company that does not offer a
full range of services (long distance and local telephone Internet access and
transmission and home entertainment services) will likely have a very bleak
future. This bodes well for the portfolio during the coming year.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
144
<PAGE> 21
ENTERPRISE ACCUMULATION TRUST
SMALL COMPANY VALUE PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 97.32% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
ADVERTISING -- 1.59%
BOWLIN Outdoor Advertising &
Travel Center Inc. (a) 50,000 $ 256,250
The Ackerley Group Inc. 340,000 6,205,000
------------
6,461,250
AEROSPACE -- 9.11%
AAR Corporation 8,500 202,938
Aeroquip Vickers Inc. 150,000 4,490,625
Ametek Inc. 70,000 1,561,875
Coltec Industries Inc. (a) 170,000 3,315,000
Curtiss-Wright Corporation 88,000 3,355,000
Gencorp Inc. 210,000 5,236,875
Kaman Corporation (Class A) 105,000 1,686,562
Moog Inc. (Class A) (a) 40,000 1,565,000
Sequa Corporation (Class A) (a) 70,000 4,191,250
Sequa Corporation (Class B) (a) 40,500 2,976,750
SPS Technologies Inc. (a) 150,000 8,493,750
------------
37,075,625
AGGREGATE -- 0.38%
Calmat Company 50,000 1,543,750
APPAREL & TEXTILES -- 0.30%
Carlyle Industries Inc. (a) 200,259 225,291
Hartmarx Corporation (a) 180,000 1,012,500
------------
1,237,791
AUTOMOTIVE -- 8.50%
A.O. Smith Corporation 10,000 245,625
Borg-Warner Automotive Inc. 8,000 446,500
Clarcor Inc. 230,000 4,600,000
Federal Mogul Corporation 27,000 1,606,500
Lund International Holdings Inc.
(a) 22,000 187,000
Modine Manufacturing Company 248,000 8,990,000
Navistar International
Corporation Inc. (a) 90,000 2,565,000
Scheib Earl Inc. (a) 225,000 1,237,500
Standard Motor Products Inc. 231,500 5,613,875
Superior Industries
International Inc. 65,000 1,807,812
Tyler Corporation (a) 175,000 1,071,875
Wynns International Inc. 280,000 6,195,000
------------
34,566,687
BROADCASTING -- 8.71%
Chris-Craft Industries Inc. (a) 160,000 7,710,000
Echostar Communications
Corporation (Class A) (a) 10,000 483,750
Fisher Companies Inc. 23,000 1,575,500
Gray Communications Systems Inc. 86,000 1,574,875
Gray Communications Systems Inc.
(Class B) 165,000 2,258,437
Paxson Communications
Corporation (a) 220,000 2,021,250
United Television Inc. 55,000 6,325,000
USA Networks Inc. (a) 407,000 13,481,875
------------
35,430,687
BUSINESS SERVICES -- 0.07%
Nashua Corporation (a) 22,000 292,875
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
CABLE -- 7.84%
AFC Cable Systems Inc. (a) 26,000 $ 874,250
Cablevision Systems Corporation
(Class A) (a) 400,000 20,075,000
Century Communications
Corporation (Class A) (a) 128,000 4,060,000
Rogers Communications Inc.
(Class B) (a) 380,000 3,372,500
TCI Satellite Entertainment Inc.
(Class A) (a) 150,000 215,625
United International Holdings
Inc. (Class A) (a) 72,000 1,386,000
United Video Satellite Group
(Class A) (a) 80,000 1,890,000
------------
31,873,375
CHEMICALS -- 2.15%
Church & Dwight Company Inc. 82,000 2,946,875
Lawter International Inc. 275,000 3,196,875
Sybron Chemicals Inc. (a) 193,000 2,605,500
------------
8,749,250
COMPUTER HARDWARE -- 0.01%
Cerion Technologies Inc. (a) 90,000 39,375
COMPUTER SERVICES -- 0.17%
Checkfree Holdings Corporation
(a) 30,000 701,250
CONSUMER DURABLES -- 0.67%
Hussmann International Inc. 100,000 1,937,500
Noel Group (a) 135,000 151,875
Oneida Ltd. 43,000 636,938
------------
2,726,313
CONSUMER PRODUCTS -- 0.29%
American Safety Razor Company
(a) 30,000 360,000
ARC International Corporation
(a) 30,000 46,875
Mikasa Inc. 62,000 790,500
------------
1,197,375
CONSUMER SERVICES -- 0.95%
Berlitz International Inc. (a) 58,000 1,682,000
ITT Educational Services Inc.
(a) 55,000 1,870,000
N2K Inc. (a) 23,000 300,438
------------
3,852,438
ELECTRICAL EQUIPMENT -- 1.69%
Ampco-Pittsburgh Corporation 130,000 1,413,750
Oak Technology Inc. (a) 150,000 525,000
Thomas Industries Inc. 220,000 4,317,500
UCAR International Inc. (a) 35,000 623,437
------------
6,879,687
ELECTRONICS -- 0.65%
CTS Corporation 55,000 2,392,500
Power-One Inc. (a) 7,000 49,000
Watkins Johnson Co. 10,000 203,750
------------
2,645,250
ENERGY -- 0.18%
Kaneb Services Inc. (a) 180,000 731,250
</TABLE>
145
<PAGE> 22
ENTERPRISE ACCUMULATION TRUST
SMALL COMPANY VALUE PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
ENTERTAINMENT & LEISURE -- 5.29%
Ascent Entertainment Group Inc.
(a) 142,000 $ 1,047,250
Bull Run Corporation (a) 130,000 438,750
Churchill Downs Inc. 35,000 1,150,625
Florida Panthers Holdings Inc.
(a) 95,000 884,687
Gaylord Entertainment Company 261,501 7,877,718
GC Companies Inc. (a) 180,000 7,492,500
Grand Casinos Inc. (a) 80,000 645,000
Jackpot Enterprises Inc. (a) 212,000 2,000,750
------------
21,537,280
FINANCE -- 0.79%
Advest Group Inc. 8,000 148,000
Pioneer Group Inc. 150,000 2,962,500
Southwest Securities Group Inc. 5,000 100,625
------------
3,211,125
FOOD & BEVERAGES &
TOBACCO -- 5.78%
Brunos Inc. (a) 85,000 65,078
Buenos Aires Embotelladora (ADR)
(a) (d) 40,227 --
Celestial Seasonings Inc. (a) 227,000 6,313,437
Chock Full o' Nuts Corporation
(a) 295,000 1,843,750
General Cigar Holdings Inc.
(Class A) (a) 205,000 1,780,938
General Cigar Holdings Inc.
(Class B) (a) 190,000 1,650,625
Ingles Markets Inc. (Class A) 80,000 875,000
Pepsi Cola Puerto Rico Bottling
Company (a) 155,000 804,063
Ralcorp Holdings Inc. (a) 75,000 1,368,750
Tootsie Roll Industries Inc. 95,000 3,716,875
Whitman Corporation 200,000 5,075,000
------------
23,493,516
HOTELS & RESTAURANTS -- 1.12%
Advantica Restaurant Group Inc.
(a) 54,000 334,125
Aztar Corporation (a) 510,000 2,581,875
Extended Stay America Inc. (a) 50,000 525,000
Trump Hotels & Casino Resorts
Inc. (a) 300,000 1,125,000
------------
4,566,000
INSURANCE -- 3.20%
Argonaut Group Inc. 95,000 2,327,500
Danielson Holding Corporation
(a) 25,000 89,062
Liberty Corporation 130,000 6,402,500
Midland Company 174,000 4,197,750
------------
13,016,812
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
MACHINERY -- 4.97%
Baldwin Technology Company Inc.
(Class A) (a) 165,000 $ 928,125
Banner Aerospace Inc. (a) 78,000 736,125
Commercial Intertech Corporation 25,000 323,438
Daniel Industries Inc. 50,000 606,250
Fairchild Corporation (Class A)
(a) 110,000 1,732,500
Flowserve Corporation 132,000 2,186,250
Franklin Electric Company Inc. 18,500 1,248,750
Idex Corporation 85,000 2,082,500
Katy Industries Inc. 160,000 2,810,000
Kollmorgen Corporation 140,000 2,135,000
Nortek Inc. (a) 100,000 2,762,500
Paxar Corporation (a) 185,000 1,653,437
Standex International
Corporation 18,000 472,500
Tennant Company 7,000 280,875
Watts Industries Inc. (Class A) 15,000 249,375
------------
20,207,625
MANUFACTURING -- 3.46%
Barnes Group Inc. 27,000 793,125
Belden Inc. 25,000 529,687
Bway Corporation (a) 3,000 45,188
Crane Company 85,000 2,565,937
Cuno Inc. (a) 75,000 1,218,750
Fedders Corporation (Class A) 385,000 2,021,250
Fedders USA Inc. 100,000 581,250
Graco Inc. 25,000 737,500
Industrial Distribution Group
Inc. (a) 35,000 266,875
Material Sciences Corporation
(a) 70,000 595,000
Oil Dri Corporation of America 120,000 1,800,000
Park Ohio Holdings Corporation
(a) 111,400 1,684,925
Rawlings Sporting Goods Company
Inc. (a) 22,000 248,875
Strattec Security Corporation
(a) 33,000 990,000
------------
14,078,362
METALS & MINING -- 0.61%
Prime Resources Group Inc. 40,000 276,020
TVX Gold Inc. (a) 470,000 851,875
WHX Corporation (a) 135,000 1,358,438
------------
2,486,333
MISC. FINANCIAL SERVICES -- 0.77%
Data Broadcasting Corporation
(a) 175,000 3,128,125
NEUTRACEUTICALS -- 0.28%
Irwin Naturals/4Health Inc. (a) 40,000 190,000
Weider Nutrition International
Inc. 150,000 956,250
------------
1,146,250
OIL SERVICES -- 0.12%
BJ Services Company (a) 30,000 468,750
PAPER PRODUCTS -- 0.45%
Greif Brothers Corporation
(Class A) 63,000 1,838,813
PHARMACEUTICALS -- 2.76%
Agribrands International Inc.
(a) 15,000 450,000
Carter Wallace Inc. 260,000 5,102,500
Ivax Corporation (a) 405,000 5,037,187
Twinlab Corporation (a) 50,000 656,250
------------
11,245,937
</TABLE>
146
<PAGE> 23
ENTERPRISE ACCUMULATION TRUST
SMALL COMPANY VALUE PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
PRINTING & PUBLISHING -- 5.57%
Belo A.H. Corporation (Class A) 30,000 $ 598,125
Lee Enterprises Inc. 50,000 1,575,000
McClatchy Company (Class A) 90,000 3,183,750
Media General Inc. (Class A) 137,000 7,261,000
Meredith Corporation 40,000 1,515,000
Penton Media Inc. 20,000 405,000
Price Communications Corporation
(a) 300,000 3,881,250
Pulitzer Publishing Company 30,000 2,598,750
Thomas Nelson Inc. 10,000 135,000
Topps Company Inc. (a) 300,000 1,500,000
------------
22,652,875
REAL ESTATE -- 1.14%
Catellus Development Corporation
(a) 225,000 3,220,313
Griffin Land & Nurseries Inc.
(a) 110,000 1,402,500
------------
4,622,813
RETAIL -- 3.14%
Burlington Coat Factory
Warehouse Corporation 115,000 1,875,937
Coldwater Creek Inc. (a) 40,000 550,000
Lillian Vernon Corporation 325,000 5,362,500
Neiman Marcus Group Inc. (a) 180,000 4,488,750
Phar Mor Inc. (a) 65,000 495,625
------------
12,772,812
SECURITY & INVESTIGATION
SERVICES -- 2.54%
Borg-Warner Security Corporation
(a) 30,000 562,500
Pittway Corporation (Class A) 78,000 2,578,875
Rollins Inc. 353,500 6,186,250
Wackenhut Corporation (Class A) 40,000 1,017,500
------------
10,345,125
TELECOMMUNICATIONS -- 8.40%
Aerial Communications Inc. (a) 206,000 1,210,250
Aliant Communications Inc. 10,000 408,750
Associated Group Inc. (Class A)
(a) 76,000 3,268,000
Atlantic Tele-Network Inc. 15,000 135,938
Cellullar Communications of
Puerto Rico (a) 98,000 1,813,000
Centennial Cellular Corporation
(Class A) (a) 145,000 5,945,000
Commonwealth Telephone
Enterprises (Class B) (a) 54,833 1,727,239
Commonwealth Telephone
Enterprises Inc. 24,077 806,580
Communications Systems Inc. 22,000 259,875
COMSAT Corporation 175,000 6,300,000
CoreComm Ltd. (a) 108,000 1,701,000
GST Telecommunications Inc. (a) 230,000 1,509,375
RCN Corporation (a) 123,000 2,175,562
Rogers Cantel Mobile
Communications Inc. (Class B)
(a) 50,000 609,375
Telephone and Data Systems Inc. 140,000 6,291,250
------------
34,161,194
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
TRANSPORTATION -- 2.49%
GATX Corporation 211,000 $ 7,991,625
Hudson General Corporation 30,500 1,921,500
TransPro Inc. 40,000 195,000
------------
10,108,125
UTILITIES -- 0.95%
Citizens Utilities Company
(Class B) (a) 392,925 3,192,516
Eastern Enterprises 15,000 656,250
------------
3,848,766
WASTE MANAGEMENT -- 0.14%
Envirosource Inc. (a) 113,628 582,344
WIRELESS COMMUNICATIONS -- 0.09%
Teligent Inc. (Class A) (a) 12,500 359,375
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $327,467,791) 395,882,585
- ----------------------------------------------------------------------
U.S. TREASURY BILLS -- 1.38%
- ----------------------------------------------------------------------
U.S. Treasury Bill 4.35%
due 02/04/99 $3,098,000 3,085,273
U.S. Treasury Bill 4.54%
due 01/21/99 2,537,000 2,530,601
------------
TOTAL U.S. TREASURY BILLS
(IDENTIFIED COST $5,615,874) 5,615,874
- ----------------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.43%
- ----------------------------------------------------------------------
State Street Bank & Trust
Repurchase Agreement, 4.25%
due 01/04/99
Collateral: U.S. Treasury Note $5,580,000 5.75%,
due 08/15/03
Value $5,949,675 5,830,000 5,830,000
------------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $5,830,000) 5,830,000
- ----------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $338,913,665) $407,328,459
OTHER ASSETS LESS LIABILITIES -- (0.13)% (527,340)
------------
NET ASSETS 100% $406,801,119
======================================================================
</TABLE>
(a) Non-income producing security.
(d) Security is fair valued. Also includes 1,971,123 of rights valued at $0,
expiring on 1/5/99.
(ADR) American Depository Receipt.
See accompanying notes to financial statements.
147
<PAGE> 24
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO
BRINSON PARTNERS, INC.
CHICAGO, ILLINOIS
Investment Management
Brinson Partners, Inc., is a global investment management firm with offices
in Chicago, London and Tokyo. Brinson Partners manages approximately $163
billion for institutional clients, and its normal investment minimum is $25
million.
Investment Objective
The objective of the International Growth Portfolio is to seek capital
appreciation, primarily through a diversified portfolio of non-U.S. equity
securities.
Investment Philosophy
Brinson Partners believes that discrepancies exist between prices and
fundamental values, both across and within the international equity markets. It
takes advantage of these discrepancies by using a disciplined approach to
measure fundamental value from the perspective of the long-term investor. This
international equity strategy reflects the manager's decisions about the
relative attractiveness of the asset class, the individual equity markets,
currencies, the industries across and within those markets, other common risk
factors within those markets, and individual international companies.
1998 Performance Review
Returns for non-U.S. markets were enhanced by foreign currency strength.
The notable exceptions were the Canadian dollar, as well as the Australian and
New Zealand dollars, all of which weakened relative to the U.S. dollar. The
Japanese yen strengthened sharply at the start of the fourth quarter, to end the
year in positive territory relative to the U.S. dollar.
With upturns in the markets through the fourth quarter, the majority of
individual European markets ended the year with double-digit returns (in
dollar-hedged terms): Finland (110.75 percent) and Belgium (59.07 percent)
posted the strongest returns. Norway (-26.89 percent) and New Zealand (-16.22
percent) were the weakest performers, as were the Asian markets of Singapore
(-7.43 percent), Hong Kong (-6.28 percent) and Japan (-3.84 percent).
For the year, currency allocation and market allocation detracted from
performance. The portfolio's overweight to the weak Australian and New Zealand
dollar currencies, as well as the underweight of the yen, hurt performance.
Security selection, particularly Japan stock selection, was a positive
contributor to performance for the year. Strategic cash held in the portfolio
detracted from performance in the first half of the year, otherwise market
allocation decisions overall provided favorable results.
148
<PAGE> 25
GROWTH OF A $10,000 INVESTMENT
ENTERPRISE ACCUMULATION TRUST INTERNATIONAL GROWTH PORTFOLIO PERFORMANCE GRAPH
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH LIPPER INTERNATIONAL
PORTFOLIO EAFE INDEX* INDEX*
<S> <C> <C> <C>
11/30/94 10000 10000 10000
12/31/94 10041 10063 9867
12/31/95 11510 11191 10855
12/31/96 12967 11868 12422
12/31/97 13648 12079 13322
12/31/98 15672 14495 15009
</TABLE>
Enterprise performance numbers do not include variable
account expenses. Remember that historic performance does not
predict future performance. The investment returns and
principal value will fluctuate so that an investor's shares,
when redeemed, may be worth more or less than their original
cost.
* The EAFE Index is an unmanaged index that includes
reinvested dividends and excludes transaction or holding
charges. Lipper Inc. is an independent reporting service
that measures the performance of most mutual funds. The
performance results reflect an unmanaged index and are net
of all expenses other than sales charges and redemption
fees. One cannot invest directly in an index.
Future Investment Strategy
Monetary union, privatization/restructuring/merger activity and increased
capital flows have boosted European equity markets. Despite their excellent
performance, European corporations are still early into their restructuring,
with the potential for improving profitability ahead. Europe is the portfolio's
largest overweight. Most Pacific markets continued to suffer consequences of the
1997 currency crisis. This situation has been aggravated in Japan by flawed
macroeconomic policies, a largely insolvent financial sector and an unprofitable
domestic corporate sector. The portfolio remains very underweight compared to
Japan, Hong Kong and Singapore. In comparison, Australia and New Zealand have
been unduly impacted by their geographic proximity to Asia and are attractively
priced. The portfolio maintains overweight in these markets.
Currency strategies within the portfolio at the end of the year remained
similar to that of the market allocations. The only notable hedging strategies
were the six percent underweight of the Japanese yen and a four percent
underweight of the British pound sterling. The Hong Kong dollar was also
underweight, such that there were no currency exposures to Hong Kong. Offsetting
these positions were overweights in the Australian dollar and to a lesser
degree, the New Zealand dollar.
As with all international growth portfolios, the International Growth
Portfolio carries additional risks associated with possibly less stable foreign
securities and currencies, lack of uniform accounting standards and political
instability.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
149
<PAGE> 26
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
COMMON STOCKS, RIGHTS AND NUMBER OF SHARES OR
WARRANTS -- 96.43% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
AUSTRALIA -- 5.03%
Amcor Ltd. 22,800 $ 97,423
Brambles Industries Ltd. 14,000 341,013
Broken Hill Proprietary Company
Ltd. 55,000 405,077
CSR Ltd. 76,000 185,820
David Jones Ltd. 100,000 110,301
Lend Lease Corporation Ltd. 18,810 253,582
National Australia Bank Ltd. 42,900 646,694
News Corporation 58,354 385,475
Orica Ltd. 17,300 90,004
Pacific Dunlop Ltd. 67,300 108,874
Qantas Airways Ltd. 78,612 160,413
QBE Insurance Group Ltd. 39,559 163,627
Rio Tinto Ltd. 13,963 165,607
Santos Ltd. 53,100 142,520
Telstra Corporation Ltd. 143,400 670,471
Westpac Bank Corporation Ltd. 72,100 482,463
WMC Ltd. 43,000 129,640
Woolworths Ltd. 23,500 80,009
-----------
4,619,013
BELGIUM -- 2.87%
Electrabel 2,330 1,017,732
Fortis 3,328 1,198,542
Fortis (Wts)(a) 128 7
KBC Bancassurance Holdings 5,340 420,156
KBC Bancassurance Holdings
(Wts)(a) 130 8
-----------
2,636,445
CANADA -- 1.86%
Agrium Inc. 7,600 67,125
Alcan Aluminum Ltd. 4,300 116,748
Bank Montreal 2,600 104,953
Canadian National Railway Company 2,600 135,656
Canadian Pacific Ltd. 7,800 146,712
Extendicare Inc. 6,000 34,151
Hudson's Bay Company 6,300 79,755
Imasco Ltd. 4,200 89,853
Imperial Oil Ltd. 7,700 123,673
Magna International Inc. 1,100 68,656
Newbridge Networks Corporation 3,100 94,511
NOVA Chemicals Corporation 5,242 68,590
Potash Corporation Saskatchewan
Inc. 1,000 64,442
Royal Bank Canada 3,100 155,253
Seagram Ltd. 1,500 57,164
Shaw Communications Inc. (Class
B) 5,700 138,351
Transcanada Pipelines Ltd. 7,812 114,740
Westcoast Energy Inc. 2,300 45,895
-----------
1,706,228
DENMARK -- 0.58%
Tele Danmark (Class B) 3,920 529,089
FINLAND -- 2.57%
Merita (Class A) 60,900 384,581
Nokia (Class A) 12,200 1,483,428
UPM-Kymmene 17,550 488,743
-----------
2,356,752
FRANCE -- 9.92%
Air Liquide 3,131 574,007
Alcatel Alsthom 4,476 547,591
AXA 4,060 588,195
AXA (Wts)(a) 2,120 1,005
Banque Nationale de Paris 5,430 446,948
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----------
<S> <C> <C>
Compagnie de Saint Gobain 2,122 $ 299,456
Compagnie Financiere de Paribas 3,060 265,828
Danone 1,200 343,409
Dexia France 2,089 321,701
Elf Aquitaine 2,970 343,162
France Telecom 5,900 468,539
Lagardere S.C.A 13,580 576,865
Michelin (CGDE) (Class B) 5,645 225,659
Pinault-Printemps-Redoute 1,450 276,981
Rhone-Poulenc 8,486 436,518
SEITA 11,550 723,037
Societe Generale 2,275 368,248
Suez Lyonnaise Des Eaux 3,144 645,558
Thomson CSF 10,120 434,412
Total (Class B) 4,297 435,003
Vivendi 3,029 785,557
-----------
9,107,679
GERMANY -- 11.03%
Allianz 3,865 1,416,966
Bayer 36,150 1,508,600
DaimlerChrysler (a) 11,088 1,094,429
Deutsche Bank 7,100 417,710
Deutsche Telekom 20,400 670,779
Dresdner Bank 9,650 405,316
Hoechst 11,290 468,102
Mannesmann 8,300 951,218
SAP 800 345,614
Siemens 17,650 1,138,471
Veba 20,600 1,232,341
Volkswagen 6,000 478,819
-----------
10,128,365
IRELAND -- 0.12%
Smurfit (Jefferson) Group 60,000 107,659
ITALY -- 4.20%
Assicurazioni Generali 19,694 821,849
ENI 154,000 1,005,897
ENI (ADR) 1,400 94,850
La Rinascente 52,000 534,482
Montedison 313,580 416,286
Sao Paolo Imi 25,480 449,978
Telecom Italia 2 17
Telecom Italia - RNC 11 69
TIM 72,000 531,253
-----------
3,854,681
JAPAN -- 13.92%
Acom Company 2,000 128,439
Amada Company 26,000 125,803
Bridgestone Corporation 6,000 136,134
Canon Inc. 21,000 448,607
Citizen Watch Company (a) 24,000 144,361
Dai Nippon Printing Company Ltd. 24,000 382,556
Daiichi Pharmaceutical Company
Ltd. 22,000 371,499
Daikin Industries Ltd. 27,000 267,492
Daiwa House Industry Company Ltd. 13,000 138,337
Denso Corporation 22,000 406,723
Fanuc Ltd. (a) 10,800 369,713
Fuji Photo Film Company 5,000 185,759
Fujitsu Ltd. 16,000 213,003
Honda Motor Company Ltd. 12,000 393,808
Hoya Corporation 6,000 291,906
Ito-Yokado Company Ltd. 10,000 698,806
Kaneka Corporation 26,000 194,799
Kao Corporation 9,000 203,008
Kirin Brewery Company Ltd. 28,000 356,656
Kokuyo Company Ltd. 8,000 107,634
</TABLE>
150
<PAGE> 27
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----------
<S> <C> <C>
Kuraray Company Ltd. 32,000 $ 352,977
Marui Company Ltd. 14,000 269,350
Matsushita Electric Industrial
Company Ltd. 31,000 548,156
NGK Insulators Ltd. 42,000 541,300
Nintendo Company Ltd. 3,100 300,265
Nippon Meat Packer Inc. 17,000 273,684
Omron Corporation 8,000 109,544
Sankyo Company Ltd. 19,000 415,126
Secom Company Ltd. 6,000 496,771
Sega Enterprises Ltd. 3,000 66,475
Sekisui House Ltd. 24,000 253,693
Shin-Etsu Chemical Company Ltd. 5,000 120,301
Sony Corporation 5,700 414,958
Sumitomo Chemical Company Ltd. 30,000 116,762
Sumitomo Electric Industries 21,000 236,099
Takeda Chemical Industries 16,000 615,657
TDK Corporation 5,000 456,878
Tokio Marine & Fire Insurance
Company Ltd. 24,000 286,599
Toray Industries Inc. 66,000 344,449
Toshiba Corporation 61,000 363,140
Toyota Motor Corporation 18,000 488,810
Yamato Transport Company Ltd. 10,000 139,761
-----------
12,775,798
MALAYSIA -- 0.04%
Malayan Banking Berhad 9,000 18,237
Nestle (Malaysia) Berhad 5,000 20,000
-----------
38,237
NETHERLANDS -- 7.11%
ABN Amro Holdings 18,951 398,448
Elsevier 36,800 515,165
Heineken 12,850 772,901
ING Group 21,799 1,328,571
KPN 24,519 1,226,798
Royal Dutch Petroleum Company 33,000 1,642,359
Unilever 7,480 639,027
-----------
6,523,269
NEW ZEALAND -- 1.95%
Auckland International Airport
Ltd. (a) 52,900 73,766
Brierley Investments Ltd. 428,400 96,933
Carter Holt Harvey Ltd. 157,900 141,249
Fletcher Challenge Building
Division 51,950 80,096
Fletcher Challenge Energy
Division 63,650 120,575
Fletcher Challenge Paper Division 122,000 81,530
Lion Nathan Ltd. 70,200 178,418
Telecom Corporation of New
Zealand Ltd. 217,500 944,209
Telecom Corporation of New
Zealand Ltd. (ADR) 2,000 71,375
-----------
1,788,151
NORWAY -- 0.30%
Norsk Hydro 3,600 121,761
Norske Skogindustrier 5,100 149,003
-----------
270,764
SINGAPORE -- 0.71%
Singapore Press Holdings Ltd. 35,938 391,814
United Overseas Bank Ltd. 41,000 263,234
-----------
655,048
SPAIN -- 1.84%
Banco Popular Espanol 6,258 471,155
Empresa Nacionale Electricidade 33,405 883,780
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----------
<S> <C> <C>
Telefonica 7,266 $ 322,604
Telefonica (Rts) 7,266 6,442
-----------
1,683,981
SWEDEN -- 3.88%
Astra (Class A) 24,750 504,151
Electrolux (Series B) 37,060 636,307
Ericsson LM (Class B) 22,430 532,812
Investor (Class B) 8,710 392,362
Nordbanken Holding 43,520 278,535
Skandia Forsakrings 40,560 619,023
Svenska Handelsbanken (Class A) 4,200 176,792
Swedish Match 116,950 424,629
-----------
3,564,611
SWITZERLAND -- 7.16%
Credit Suisse Group 594 92,968
Julius Baer Holdings Ltd. (Class
B) 79 262,528
Nestle 718 1,562,801
Novartis 1,039 2,042,149
Roche Holdings 99 1,207,862
Schweizerische Ruckversicherungs-
Gesellschaft 253 659,528
Swisscom (a) 1,783 746,324
-----------
6,574,160
UNITED KINGDOM -- 21.35%
Allied Zurich(a) 57,100 858,065
Barclays 30,000 650,440
Billiton 25,000 49,842
BOC Group 32,000 458,814
Booker 49,000 50,881
Boots Company 35,000 598,355
British American Tobacco (a) 27,100 238,628
British Petroleum Company 74,299 1,106,029
British Steel 289,000 438,133
Cable & Wireless 20,000 244,559
Charter 54,357 298,020
Coats Viyella 230,900 103,577
Diageo 37,942 420,772
Fairview Holdings (a) 31,750 46,947
FKI 217,500 484,217
Garban 2,400 9,131
General Electric Company 82,900 750,631
Glaxo Wellcome 40,700 1,401,070
Greenalls Group 39,000 207,667
Hanson 71,650 570,200
Hillsdown Holdings 63,500 79,125
House of Fraser 101,000 88,935
Lloyds TSB Group 111,264 1,584,204
Marks & Spencer 127,000 873,534
Mirror Group 107,000 267,100
National Westminster Bank 24,700 478,078
Nycomed Amersham 48,000 330,952
Peninsular and Oriental Steam
Navigation Company 23,500 277,986
Prudential Corporation 84,000 1,281,380
Reed International 46,000 365,310
Rio Tinto 37,100 431,467
RJB Mining 81,000 104,968
Royal & Sun Alliance Insurance
Group 31,738 258,376
Sainsbury J. 23,000 186,094
Scottish and Southern Energy 72,400 816,139
Smithkline Beecham 62,000 859,275
Terranova Foods (a) 31,750 58,025
TESCO 219,000 636,734
Thames Water 25,583 493,043
</TABLE>
151
<PAGE> 28
ENTERPRISE ACCUMULATION TRUST
INTERNATIONAL GROWTH PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----------
<S> <C> <C>
Thames Water (Class B)(a) 29,000 $ 35,172
United News & Media 24,000 208,540
Vodafone Group 19,570 317,984
Williams 33,461 191,238
Yorkshire Water 43,000 392,922
-----------
19,602,559
-----------
TOTAL COMMON STOCKS, RIGHTS AND WARRANTS
(IDENTIFIED COST $78,005,029) 88,522,489
- ----------------------------------------------------------------------
PREFERRED ORDINARY STOCK -- 0.18%
- ----------------------------------------------------------------------
AUSTRALIA -- 0.18%
News Corporation 26,987 164,214
-----------
TOTAL PREFERRED ORDINARY STOCK
(IDENTIFIED COST $116,399) 164,214
- ----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMERCIAL PAPER -- 2.32% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
Parker-Hannifin Corporation
5.05% due 01/04/99 $ 2,126,000 $ 2,125,105
-----------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $2,125,105) 2,125,105
- ----------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $80,246,533) $90,811,808
OTHER ASSETS LESS LIABILITIES -- 1.07% 982,408
-----------
NET ASSETS 100% $91,794,216
======================================================================
</TABLE>
(a) Non-income producing security.
(Rts) Rights.
(Wts) Warrants.
ADR American Depository Receipt.
See accompanying notes to financial statements.
152
<PAGE> 29
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO
CAYWOOD-SCHOLL CAPITAL MANAGEMENT
SAN DIEGO, CALIFORNIA
Investment Management
Caywood-Scholl manages approximately $973 million for institutional
clients, and its normal investment minimum is $1 million.
Investment Objective
The objective of the 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.
Investment Philosophy
Caywood-Scholl's investment philosophy of seeking relative value and
avoiding risk is credit research-driven. The discipline of credit research
facilitates the informed use of a variety of lower-rated securities in
aggressive fixed income investing.
1998 Performance Review
The predominant theme in 1998 was volatility. After advancing more than
four percent during the first quarter, the high-yield market was derailed by
both global and domestic events; including spreading "Asian contagion," a
Russian default, the Long Term Capital Management bailout, deflating
commodities, and the impeachment process of the U.S. President. Whereas risk had
been in vogue with most investors for much of the 1990s, risk was abruptly out
of fashion. As a result, the high-yield market underperformed the Treasury
market.
Despite the lackluster performance it should be noted that the high-yield
market had a record year in terms of new issuance and mutual fund inflows. The
market has grown to more than $550 billion. The scope of institutional investors
involved in the market has increased, as has the number of market makers.
GROWTH OF A $10,000 INVESTMENT
ENTERPRISE ACCUMULATION TRUST HIGH-YIELD BOND PERFORMANCE PORTFOLIO GRAPH
<TABLE>
<CAPTION>
HIGH-YIELD BOND LIPPER HIGH-YIELD
PORTFOLIO LEHMAN BB INDEX* INDEX*
<S> <C> <C> <C>
11/30/94 10000 10000 10000
12/31/94 10111 10079 10025
12/31/95 11788 12280 11767
12/31/96 13314 13376 13296
12/31/97 15095 15066 15047
12/31/98 15638 15839 15035
</TABLE>
Enterprise performance numbers do not include variable
account expenses. Remember that historic performance does not
predict future. The investment returns and principal value
will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
* The Lehman BB Index is an unmanaged index that includes
reinvested interest and excludes transaction and holding
charges. Lipper Inc. is an independent reporting service that
measures the performance of most mutual funds. The
performance results reflect an unmanaged index and are net of
all expenses other than sales charges and redemption fees.
One cannot invest directly in an index.
153
<PAGE> 30
Future Investment Strategy
Looking ahead to 1999, Caywood-Scholl believes that the valuation in the
high-yield market is still very attractive. With most economists predicting
domestic growth in the neighborhood of two percent, the portfolio manager does
not expect a meaningful increase in credit risk. The domestic bank sector is
healthy and should remain supportive to leveraged companies. A robust stock
market is always a positive for high-yield issuers, giving them an alternative
source of capital. Lastly, given the growth of the market and the general
improvement of the quality of issuers, it is easy to have a positive outlook on
the market.
The views expressed in this report reflect those of the portfolio manager
only through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
154
<PAGE> 31
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
CORPORATE BONDS, CONVERTIBLE
SECURITIES, COMMON & NUMBER OF SHARES OR
PREFERRED STOCKS -- 87.96% PRINCIPAL AMOUNT VALUE
- --------------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 1.27%
BE Aerospace Inc.
9.50% due 11/01/08 $ 250,000 $ 264,375
BE Aerospace Inc. (Series B)
8.00% due 03/01/08 400,000 392,000
Coltec Industries Inc.
7.50% due 04/15/08 600,000 633,750
------------
1,290,125
AUTOMOTIVE -- 0.87%
Sonic Automotive Inc. (Series
B) 11.00% due 08/01/08 600,000 581,250
United Auto Group Inc. (Series
B),
11.00% due 07/15/07 350,000 307,125
------------
888,375
BANKING -- 1.88%
Bay View Capital Corporation
9.125% due 08/15/07 650,000 627,250
DVI Inc.
9.875% due 02/01/04 200,000 192,000
Imperial Credit Industries
Inc. (Series B),
9.875% due 01/15/07 550,000 426,250
Western Financial Savings Bank
Orange California,
8.50% due 07/01/03 750,000 664,687
------------
1,910,187
BROADCASTING -- 5.13%
Allbritton Communications
Company (Series B),
8.875% due 02/01/08 700,000 708,750
Chancellor Media Corporation
9.00% due 10/01/08 750,000 795,000
Chancellor Media Corporation
(Series B),
8.125% due 12/15/07 500,000 496,250
Fox Family Worldwide Inc.
9.25% due 11/01/07 600,000 592,500
Fox Family Worldwide Inc.
0% due 11/01/07 (c) 750,000 477,187
Fox/Liberty Networks LLC
0% due 08/15/07 (c) 1,600,000 1,080,000
Rogers Communications Inc.
8.875% due 07/15/07 500,000 515,000
Rogers Communications Inc.
9.125% due 01/15/06 200,000 208,000
Sinclair Broadcast Group Inc.
8.75% due 12/15/07 350,000 352,625
------------
5,225,312
BUILDING & CONSTRUCTION -- 4.47%
American Standard Inc.
7.375% due 02/01/08 1,600,000 1,618,000
Building Materials Corporation
America (Series B),
7.75% due 07/15/05 400,000 395,000
Building Materials Corporation
America (Series B),
8.00% due 10/15/07 400,000 383,000
International Comfort Products
(Series B),
8.625% due 05/15/08 500,000 500,000
Nortek Inc.
8.875% due 08/01/08 400,000 406,000
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
Nortek Inc. (Series B)
9.125% due 09/01/07 $ 700,000 $ 719,250
Republic Group Inc.
9.50% due 07/15/08 550,000 536,250
------------
4,557,500
BUSINESS SERVICES -- 1.26%
CEX Holdings Inc.
9.625% due 06/01/08 600,000 547,500
United Rentals Inc.
8.80% due 08/15/08 750,000 733,125
------------
1,280,625
CABLE -- 3.25%
Adelphia Communications
Corporation (Series B),
9.25% due 10/01/02 100,000 105,875
Adelphia Communications
Corporation (Series B),
10.50% due 07/15/04 850,000 928,625
Century Communications
Corporation,
9.50% due 03/01/05 400,000 445,000
Century Communications
Corporation (Series B),
Zero Coupon due 01/15/08 850,000 432,438
CSC Holdings Inc.
7.875% due 12/15/07 350,000 369,201
Lenfest Communications Inc.
7.625% due 02/15/08 300,000 311,625
Mediacom LLC/Mediacom Capital
Corporation (Series B),
8.50% due 04/15/08 550,000 561,687
TCI Satellite Entertainment
Inc.
0% due 02/15/07 (c) 800,000 159,000
------------
3,313,451
CHEMICALS -- 1.18%
Huntsman Corporation 9.50% due
07/01/07 300,000 300,000
Huntsman Polymers Corporation
11.75% due 12/01/04 250,000 272,500
PCI Chemicals Canada Inc.
9.25% due 10/15/07 350,000 282,188
Pioneer Americas Acquisition
Corporation (Series B),
9.25% due 06/15/07 450,000 349,875
------------
1,204,563
COMMUNICATIONS -- 6.01%
Globalstar LP/Capital
11.375% due 02/15/04 950,000 710,125
Globalstar LP/Capital
10.75% due 11/01/04 150,000 107,625
Globalstar LP/Capital
11.50% due 06/01/05 $ 250,000 186,875
Globalstar Telecommunications
(Wts)(a) 450 10,150
Iridium Capital Corporation
(Series A)
13.00% due 07/15/05 $ 550,000 504,625
Iridium Capital Corporation
(Series B),
14.00% due 07/15/05 $ 800,000 763,000
Iridium World Communications
(Wts)(a) 450 56,250
</TABLE>
155
<PAGE> 32
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
Level 3 Communications Inc.
0% due 12/01/08 (c) $ 700,000 $ 408,625
Level 3 Communications Inc.
9.125% due 05/01/08 $1,000,000 992,500
Loral Space & Communication
Ltd. (Wts)(a) 600 4,994
Loral Space & Communication
Ltd.
0% due 01/15/07 (c) $1,100,000 705,375
Qwest Communications
International Inc.,
7.25% due 11/01/08 500,000 511,250
Qwest Communications
International Inc.,
7.50% due 11/01/08 750,000 782,812
Qwest Communications
International Inc. (Series
B),
0% due 02/01/08 (c) 500,000 375,625
------------
6,119,831
CONSUMER PRODUCTS -- 3.45%
Boyds Collection Ltd.
9.00% due 05/15/08 300,000 306,375
Chattem Inc. (Series B)
8.875% due 04/01/08 1,000,000 1,025,000
Corning Consumer Products
Company (Series B),
9.625% due 05/01/08 500,000 358,750
French Fragrances Inc. (Series
B),
10.375% due 05/15/07 350,000 348,688
Revlon Consumer Products
Corporation,
8.625% due 02/01/08 350,000 321,125
Samsonite Corporation
10.75% due 06/15/08 550,000 466,125
Sealy Mattress Company (Series
B),
0% due 12/15/07 (c) 1,150,000 688,562
------------
3,514,625
CONTAINERS/PACKAGING -- 4.84%
Buckeye Cellulose Corporation
8.50% due 12/15/05 550,000 569,250
Huntsman Packaging Corporation
9.125% due 10/01/07 600,000 595,500
Owens Illinois Inc.
7.35% due 05/15/08 1,600,000 1,639,296
Owens Illinois Inc.
8.10% due 05/15/07 550,000 589,220
Printpack Inc. (Series B)
9.875% due 08/15/04 500,000 511,250
Printpack Inc. (Series B)
10.625% due 08/15/06 250,000 244,375
Stone Container Corporation
10.75% due 10/01/02 200,000 207,750
United States Can Corporation
(Series B)
10.125% due 10/15/06 550,000 578,188
------------
4,934,829
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
CRUDE & PETROLEUM -- 0.96%
Clark Refining & Marketing
Inc.
8.875% due 11/15/07 $ 250,000 $ 231,563
Trizec Hahn Corporation
(Series B),
10.875% due 12/01/05 800,000 750,000
------------
981,563
ELECTRONICS -- 0.46%
Axiohm Transaction Solutions
9.75% due 10/01/07 500,000 465,000
ENERGY -- 0.95%
Cogentrix Energy Inc.
8.75% due 10/15/08 150,000 161,250
Nuevo Energy Company (Series
B)
8.875% due 06/01/08 300,000 284,250
Ocean Energy Inc. (Series B)
8.375% due 07/01/08 550,000 521,125
------------
966,625
ENTERTAINMENT & LEISURE -- 0.19%
AMF Bowling Inc.
Zero Coupon due 05/12/18 1,550,000 197,625
FOOD & BEVERAGES & TOBACCO -- 2.15%
NBTY Inc. (Series B)
8.625% due 09/15/07 800,000 785,000
Purina Mills Inc.
9.00% due 03/15/10 450,000 462,375
RJR Nabisco Inc.
8.75% due 07/15/07 150,000 163,245
Seagram Joseph E. & Sons Inc.
6.80% due 12/15/08 500,000 499,795
Twin Laboratories Inc.
10.25% due 05/15/06 260,000 277,550
------------
2,187,965
GAMING -- 1.96%
Circus Circus Enterprises Inc.
9.25% due 12/01/05 750,000 765,937
Empress Entertainment Inc.
8.125% due 07/01/06 550,000 551,375
Mirage Resorts Inc.
6.75% due 08/01/07 200,000 193,308
Trump Atlantic City Associates
11.25% due 05/01/06 550,000 482,625
------------
1,993,245
HEALTH CARE -- 5.75%
Columbia HCA Healthcare
Corporation,
7.00% due 07/01/07 500,000 475,735
Dade International Inc.
(Series B), 11.125% due
05/01/06 350,000 388,062
Fisher Scientific
International Inc.,
9.00% due 02/01/08 $1,200,000 1,197,000
Fresenius Medical Care Capital
Trust (Preferred Security) 250 263,125
Hudson Respiratory Care Inc.
9.125% due 04/15/08 $ 350,000 286,125
Magellan Health Services Inc.
9.00% due 02/15/08 400,000 357,000
Maxxim Medical Inc.
10.50% due 08/01/06 650,000 698,750
</TABLE>
156
<PAGE> 33
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
Pharmerica Inc.
8.375% due 04/01/08 $ 400,000 $ 359,000
PHP Healthcare Corporation
6.50% due 12/15/02 (b) 550,000 5,500
Quest Diagnostics Inc.
10.75% due 12/15/06 600,000 663,750
Tenet Healthcare Corporation
6.00% due 12/01/05 700,000 633,500
Tenet Healthcare Corporation
8.125% due 12/01/08 300,000 310,038
Vencor Operating Inc.
9.875% due 05/01/05 250,000 216,875
------------
5,854,460
HOTELS & RESTAURANTS -- 3.64%
AFC Enterprises Inc.
10.25% due 05/15/07 550,000 573,375
Apple South Inc.
9.75% due 06/01/06 150,000 142,500
Felcor Suites LP
7.625% due 10/01/07 250,000 229,535
Foodmaker Corporation (Series
B) 9.75% due 11/01/03 250,000 262,629
Foodmaker Inc.
8.375% due 04/15/08 700,000 702,625
Hammon John Q. Hotels
8.875% due 02/15/04 250,000 228,125
HMH Properties Inc. (Series A)
7.875% due 08/01/05 1,000,000 983,750
Perkins Family Restaurant
(Series B), 10.125% due
12/15/07 550,000 586,437
------------
3,708,976
MACHINERY -- 0.76%
Columbus McKinnon Corporation
8.50% due 04/01/08 500,000 471,250
Navistar International
Corporation (Series B) 8.00%
due 02/01/08 300,000 304,875
------------
776,125
MEDICAL SERVICES -- 0.68%
Rural/Metro Corporation
7.875% due 03/15/08 750,000 688,125
METALS & MINING -- 2.00%
AK Steel Corporation
9.125% due 12/15/06 450,000 469,125
Kaiser Aluminum & Chemical
Corporation (Series D),
10.875% due 10/15/06 250,000 251,875
Metals USA Inc.
8.625% due 02/15/08 250,000 226,563
Oregon Steel Mills Inc.
11.00% due 06/15/03 250,000 257,812
WCI Steel Inc. (Series B)
10.00% due 12/01/04 700,000 696,500
WHX Corporation
10.50% due 04/15/05 150,000 137,625
------------
2,039,500
PAPER & FOREST PRODUCTS -- 0.37%
SD Warren Company (Series B)
12.00% due 12/15/04 350,000 381,500
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
PHARMACEUTICALS -- 1.10%
Biovail Corporation
International New
10.875% due 11/15/05 $1,100,000 $ 1,116,500
PRINTING & PUBLISHING -- 0.96%
Nebraska Book Company Inc.
8.75% due 02/15/08 650,000 618,313
Von Hoffmann Press Inc.
10.875% due 05/15/07 350,000 359,625
------------
977,938
REAL ESTATE -- 0.55%
Crown Castle International
Corporation
0% due 11/15/07 (c) 800,000 555,000
RETAIL -- 7.11%
Charming Shoppes Inc.
7.50% due 07/15/06 350,000 319,375
Cole National Group Inc.
8.625% due 08/15/07 850,000 839,375
Jitney Jungle Stores America
Inc.,
10.375% due 09/15/07 500,000 515,000
Meyer Fred Inc.
7.45% due 03/01/08 1,650,000 1,782,115
Michaels Stores Inc.
6.75% due 01/15/03 (c) 550,000 479,875
Nine West Group Inc.
5.50% due 07/15/03 150,000 117,375
Randalls Food Markets Inc.
(Series B), 9.375% due
07/01/07 800,000 858,000
Saks Inc.
7.50% due 12/01/10 400,000 403,634
Saks Inc.
8.25% due 11/15/08 1,800,000 1,927,026
------------
7,241,775
TELECOMMUNICATIONS -- 15.83%
21st Century Telecom Group
Inc.,
0% due 02/15/08 (c) 850,000 357,000
CCPR Services Inc.
10.00% due 02/01/07 650,000 625,625
Comcast Cellular Holdings Inc.
(Series B), 9.50% due
05/01/07 1,550,000 1,650,750
E. Spire Communications Inc.,
0% due 11/01/05 (c) $ 800,000 604,248
E. Spire Communications Inc.
(Wts)(a) 300 7,203
Firstworld Communications
Inc.,
0% due 04/15/08 (c) $ 300,000 89,625
Firstworld Communications Inc.
(Wts) (a) 300 --
Flag Ltd.
8.25% due 01/30/08 $ 400,000 394,000
ICG Holdings Inc.
0% due 05/01/06 (c) 900,000 666,000
ICG Services Inc.
0% due 02/15/08 (c) 250,000 133,438
ICO Global Communication
15.00% due 08/01/05 250,000 187,500
Intermedia Communications Inc.
8.50% due 01/15/08 400,000 383,000
Intermedia Communications Inc.
0% due 07/15/07 (c) 250,000 174,688
</TABLE>
157
<PAGE> 34
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
McLeodUSA Inc.
0% due 03/01/07 (c) $ 650,000 $ 496,437
Metromedia Fiber Network Inc.
10.00% due 11/15/08 350,000 361,813
Metronet Communications
Corporation,
12.00% due 08/15/07 100,000 111,250
Metronet Communications
Corporation,
0% due 11/01/07 (c) $1,250,000 766,562
Metronet Communications
Corporation (Wts)(a) 100 5,315
Nextel Communications Inc.
0% due 09/15/07 (c) $1,300,000 836,875
Nextel Communications Inc.
0% due 10/31/07 (c) 900,000 545,375
Nextlink Communications Inc.
10.75% due 11/15/08 750,000 768,750
Nextlink Communications Inc.
0% due 04/15/08 (c) 1,200,000 685,500
Orange
8.00% due 08/01/08 $1,250,000 1,253,125
Pagemart Nationwide Inc. 875 8,750
Pathnet Inc.
12.25% due 04/15/08 $ 250,000 174,375
Pathnet Inc. (Wts.)(a) 250 --
RCN Corporation
0% due 10/15/07 (c) $ 900,000 525,375
RCN Corporation (Series B)
0% due 02/15/08 (c) 700,000 377,125
Rogers Cantel Inc.
8.80% due 10/01/07 850,000 855,312
Sprint Spectrum LP
0% due 08/15/06 (c) 2,000,000 1,817,500
Teligent Inc. (Series B)
0% due 03/01/08 (c) 200,000 97,750
Winstar Communications Inc.
10.00% due 03/15/08 600,000 514,500
Winstar Equipment Corporation
12.50% due 03/15/04 650,000 654,875
------------
16,129,641
TEXTILES -- 3.71%
Phillips Van Heusen
Corporation
9.50% due 05/01/08 900,000 901,125
Pillowtex Corporation (Series
B)
9.00% due 12/15/07 350,000 363,125
Polymer Group Inc. (Series B)
8.75% due 03/01/08 250,000 244,375
Polymer Group Inc. (Series B)
9.00% due 07/01/07 500,000 493,750
Westpoint Stevens Inc.
7.875% due 06/15/08 1,200,000 1,230,000
William Carter Company (Series
A),
10.375% due 12/01/06 500,000 545,625
------------
3,778,000
TRANSPORTATION -- 0.60%
Eletson Holdings Inc.
9.25% due 11/15/03 300,000 294,750
TBS Shipping International
Ltd.
10.00% due 05/01/05 550,000 317,625
------------
612,375
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
UTILITIES -- 3.23%
Calenergy Inc.
7.52% due 09/15/08 $1,200,000 $ 1,257,420
Calenergy Inc.
7.63% due 10/15/07 100,000 106,513
Ferrellgas Partners LP (Series
B),
9.375% due 06/15/06 300,000 300,750
Midland Funding Corporation
(Series C-94),
10.33% due 07/23/02 103,826 111,484
Niagara Mohawk Power
Corporation (Series G),
7.75% due 10/01/08 1,400,000 1,515,822
------------
3,291,989
WASTE MANAGEMENT -- 1.39%
Allied Waste North America
7.625% due 01/01/06 700,000 708,750
Allied Waste North America
7.875% due 01/01/09 700,000 709,625
------------
1,418,375
------------
TOTAL CORPORATE BONDS, CONVERTIBLE SECURITIES, COMMON & PREFERRED
STOCKS
(IDENTIFIED COST $92,476,611) 89,601,725
- --------------------------------------------------------------------
FOREIGN BONDS -- 6.02%
- --------------------------------------------------------------------
APPAREL & TEXTILES -- 0.21%
Reliance Industries Ltd.
8.25% due 01/15/27 250,000 209,465
BASIC INDUSTRIES -- 0.98%
Cemex 12.75% due 07/15/06 900,000 1,003,500
BROADCASTING -- 1.14%
Grupo Televisa
11.875% due 05/15/06 350,000 350,000
Grupo Televisa (Series A)
11.375% due 05/15/03 300,000 297,000
Satelites Mexicanos
10.125% due 11/01/04 650,000 518,375
------------
1,165,375
CABLE -- 0.36%
Kabelmedia Holding
0% due 08/01/06 (c) 450,000 369,000
CAPITAL GOODS &
SERVICES -- 0.36%
Cemex International Capital
Inc.
9.66% due 12/29/49 400,000 365,000
CONGLOMERATES -- 0.24%
Hutchison Whampoa Finance Ltd.
6.95% due 08/01/07 250,000 244,010
CONTAINERS/PACKAGING -- 0.40%
Viacap
11.375% due 05/15/07 450,000 405,000
ENERGY -- 0.22%
Petroleos Mexicanos 8.85% due
09/15/07 250,000 225,625
</TABLE>
158
<PAGE> 35
ENTERPRISE ACCUMULATION TRUST
HIGH-YIELD BOND PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
GOVERNMENT BOND -- 1.47%
Republic of Argentina Global
11.00% due 10/09/06 $ 500,000 $ 496,250
Republic of Turkey
10.00% due 09/19/07 200,000 181,678
Russian Federation
10.00% due 06/26/07 200,000 54,500
United Mexican States
8.625% due 03/12/08 550,000 514,250
United Mexican States
9.875% due 01/15/07 250,000 248,125
------------
1,494,803
PAPER & FOREST PRODUCTS -- 0.35%
Indah Kiat Finance Mauritius
Ltd.,
10.00% due 07/01/07 250,000 131,562
Indah Kiat International
Finance Co. (Series B),
11.875% due 06/15/02 100,000 70,911
Pindo Deli Finance Mauritius
Ltd.,
10.75% due 10/01/07 300,000 159,750
------------
362,223
TRANSPORTATION -- 0.29%
TFM
10.25% due 06/15/07 150,000 125,625
Transportacion Maritima
10.00% due 11/15/06 200,000 165,500
------------
291,125
------------
TOTAL FOREIGN BONDS
(IDENTIFIED COST $6,935,803) 6,135,126
- --------------------------------------------------------------------
U.S. TREASURY BONDS -- 0.28%
- --------------------------------------------------------------------
U.S. Treasury Bond
6.375% due 08/15/27 250,000 286,746
------------
TOTAL U.S. TREASURY BONDS
(IDENTIFIED COST $257,857) 286,746
- --------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
---------------- -----
<S> <C> <C>
U.S. TREASURY NOTES -- 1.78%
- --------------------------------------------------------------------
U.S. Treasury Note
4.50% due 09/30/00 $ 500,000 $ 499,145
U.S. Treasury Note
4.75% due 11/15/08 250,000 251,788
U.S. Treasury Note
5.50% due 02/15/08 1,000,000 1,059,590
------------
TOTAL U.S. TREASURY NOTES
(IDENTIFIED COST $1,743,989) 1,810,523
- --------------------------------------------------------------------
REPURCHASE AGREEMENT -- 2.15%
- --------------------------------------------------------------------
State Street Bank & Trust
Repurchase Agreement, 3.25%
due 01/04/99
Collateral: U.S. Treasury Note
$2,180,000 5.50% due
03/31/00 Value $2,229,050 2,185,000 2,185,000
------------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $2,185,000) 2,185,000
- --------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $103,599,260) $100,019,120
OTHER ASSETS LESS LIABILITIES -- 1.81% 1,845,834
------------
NET ASSETS 100% $101,864,954
====================================================================
</TABLE>
(a) Non-income producing security.
(b) In bankruptcy. Portfolio has ceased accrual of interest.
(c) Step bond - coupon increases periodically based upon a predetermined
schedule.
(Wts) Warrants.
See accompanying notes to financial statements.
159
<PAGE> 36
ENTERPRISE ACCUMULATION TRUST
MANAGED PORTFOLIO
OPCAP ADVISORS, INC.
NEW YORK, NEW YORK
Investment Management
OpCap Advisors, a wholly owned subsidiary of Oppenheimer Capital, became
portfolio manager to the Managed Portfolio on October 1, 1994. Oppenheimer
Capital manages approximately $62 billion for institutional clients, and its
normal investment minimum is $20 million.
Investment Objective
The objective of the Managed Portfolio is to seek growth of capital over
time through investment in a portfolio consisting of common stocks, bonds and
cash equivalents, the percentages of which will vary based on the manager's
assessment of relative investment values.
Investment Philosophy
OpCap's investment process seeks to take advantage of opportunities in all
market sectors by shifting the investment mix among stocks, bonds and money
market instruments. The focus of the investment process is to identify quality
companies that are undervalued in the market. The average annual return on
equity of these companies is in excess of the average return on equity of the
companies in the S&P 500 Index, while the average price-to-earnings ratio of
these companies is significantly below the price-to-earnings ratio for those
companies. This combination of high returns on equity and low security
valuations helps preserve capital in down markets and provides opportunity for
investment profit over time.
1998 Performance Review
1998 was not an especially good year for the portfolio. It trailed the S&P
500 Index because of two main factors: the minimal holdings of technology
issues, many of which had large gains in 1998, and the poor performance of
certain of the portfolio's investments, including Citigroup, Inc., and Boeing
Co. Other major holdings of the portfolio, including its three largest
holdings -- McDonald's Corp., Time Warner Inc. and Federal Home Loan Mortgage
Corp. (Freddie Mac) -- rose strongly.
While the portfolio's 1998 results did not live up to expectations, OpCap
remains dedicated to the continued delivery of excellent results over time.
OpCap focuses on individual companies and tries to understand where their
businesses are going over the next several years, not on where the stock market
is heading in the next six months. Simply stated, OpCap wants to invest in
superior businesses that are underpriced in the stock market. A superior
business is one that is extremely well-managed, earns high returns on capital,
has a dominant competitive position to protect those returns and uses the free
cash flow resulting from those returns to create shareholder value, such as
through astute acquisitions or share repurchases.
160
<PAGE> 37
GROWTH OF A $10,000 INVESTMENT
ENTERPRISE ACCUMULATION TRUST MANAGED PORTFOLIO PERFORMANCE GRAPH
<TABLE>
<CAPTION>
MANAGED PORTFOLIO S&P 500 INDEX* LIPPER FLEXIBLE INDEX
<S> <C> <C> <C>
12/31/88 10000 10000 10000
12/31/89 13253 13169 11724
12/31/90 12774 12759 11834
12/31/91 18648 16647 15023
12/31/92 22125 17916 15874
12/31/93 24423 19722 17895
12/31/94 25050 19982 17416
12/31/95 36797 27491 21526
12/31/96 45434 33803 24561
12/31/97 56565 45080 29042
12/31/98 61059 57959 33839
</TABLE>
Enterprise performance numbers do not include variable account
expenses. Remember that historic performance does not predict
future performance. The investment returns and principal value
will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
* The S&P 500 Index is an unmanaged index that includes 500
companies that tend to be leaders in important industries
within the U.S. economy. It includes reinvested dividends and
excludes any transactions or holding charges. Lipper Inc. is
an independent reporting service that measures the performance
of most mutual funds. The performance results reflect an
unmanaged index and are net of all expenses other than sales
charges and redemption fees. One cannot invest directly in an
index.
Future Investment Strategy
OpCap expects U.S. and international economic growth to slow in 1999, and
the portfolio is positioned to perform well in this environment. The portfolio
owns very few cyclical stocks that would be hurt by economic weakness. New
investments in the fourth quarter were AlliedSignal Inc., a diversified
technology and manufacturing company; News Corporation Ltd., a global media and
communications company; and US West Inc., which provides telecommunications
services in the western and midwestern United States. OpCap believes each should
deliver strong business results in 1999.
US West Inc. exemplifies the portfolio manager's philosophy of owning
quality companies with excellent prospects. It has been investing in new
technologies and businesses, and those investments should begin to pay off with
higher earnings. This includes the company's new wired-wireless service, the
first of its kind in the United States. The service allows customers to have a
single number for their wired and wireless phones.
The views expressed in this report reflect those of the portfolio manager only
through the end of the period of the report as stated on the cover. The
manager's views are subject to change at any time based on market and other
conditions.
161
<PAGE> 38
ENTERPRISE ACCUMULATION TRUST
MANAGED PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
COMMON STOCKS -- 82.76% PRINCIPAL AMOUNT VALUE
- ----------------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 3.30%
AlliedSignal Inc. 314,200 $ 13,922,988
Boeing Company 2,341,700 76,397,962
--------------
90,320,950
BANKING -- 9.13%
BankBoston Corporation 1,800,000 70,087,500
M & T Bank Corporation 116,000 60,196,750
Wells Fargo & Company 3,000,000 119,812,500
--------------
250,096,750
BROADCASTING -- 8.18%
News Corporation Ltd. (ADR) 2,400,000 59,250,000
Time Warner Inc. 2,654,800 164,763,525
--------------
224,013,525
CHEMICALS -- 7.15%
Dow Chemical Company 500,000 45,468,750
Du Pont (E. I.) De Nemours &
Company 1,900,000 100,818,750
Hercules Inc. 350,000 9,581,250
Monsanto Company 840,900 39,942,750
--------------
195,811,500
COMPUTER SOFTWARE -- 1.40%
Computer Associates
International Inc. 900,000 38,362,500
CONGLOMERATES -- 4.90%
Minnesota Mining &
Manufacturing Company 1,050,000 74,681,250
Tenneco Inc. 636,500 21,680,781
Textron Inc. 500,000 37,968,750
--------------
134,330,781
CONSUMER PRODUCTS -- 1.50%
Mattel Inc. 1,800,000 41,062,500
DRUGS & MEDICAL
PRODUCTS -- 0.59%
Becton, Dickinson & Company 375,000 16,007,813
ELECTRICAL EQUIPMENT -- 0.07%
Varian Associates Inc. 50,000 1,893,750
FOOD & BEVERAGES & TOBACCO -- 7.09%
Diageo (ADR) 2,351,000 108,733,750
Philip Morris Companies Inc. 1,600,000 85,600,000
--------------
194,333,750
HOTELS & RESTAURANTS -- 6.19%
McDonald's Corporation 2,213,600 169,617,100
INSURANCE -- 6.23%
ACE Ltd. 1,800,000 61,987,500
EXEL Ltd. (Class A) 1,450,000 108,750,000
--------------
170,737,500
MACHINERY -- 1.97%
Caterpillar Inc. 1,173,000 53,958,000
MANUFACTURING -- 2.99%
Avery Dennison Corporation 50,000 2,253,125
ITT Industries Inc. 2,000,000 79,500,000
--------------
81,753,125
MISC. FINANCIAL
SERVICES -- 10.16%
Citigroup Inc. 2,562,500 126,843,750
Freddie Mac 2,352,000 151,557,000
--------------
278,400,750
PAPER & FOREST PRODUCTS -- 1.92%
Champion International
Corporation 1,300,000 52,650,000
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
PRINTING & PUBLISHING -- 2.32%
Donnelley R.R. & Sons Company 1,400,000 $ 61,337,500
Reed International (ADR) 66,600 2,097,900
--------------
63,435,400
REAL ESTATE -- 0.80%
Security Capital Group Inc.
(Class A)(a) 33,156 21,882,718
TELECOMMUNICATIONS -- 5.02%
Sprint Corporation 875,000 73,609,375
Tele-Communications TCI
Ventures Group A(a) 178,300 4,201,194
U S West Inc. 924,400 59,739,350
--------------
137,549,919
TRANSPORTATION -- 1.85%
UAL Corporation(a) 850,000 50,734,375
--------------
TOTAL COMMON STOCKS
(IDENTIFIED COST $1,712,616,441) 2,266,952,706
- ----------------------------------------------------------------------
U.S. TREASURY BONDS -- 2.29%
- ----------------------------------------------------------------------
U.S. Treasury Bond 5.50% due
08/15/28 $50,000,000 52,375,000
U.S. Treasury Bond 6.25% due
08/15/23 9,300,000 10,403,910
--------------
TOTAL U.S. TREASURY BONDS
(IDENTIFIED COST $62,079,732 ) 62,778,910
- ----------------------------------------------------------------------
U.S. TREASURY NOTES -- 2.10%
- ----------------------------------------------------------------------
U.S. Treasury Note 5.625% due
05/15/08 50,000,000 53,357,500
U.S. Treasury Note 7.875% due
08/15/01 3,952,500 4,264,590
--------------
TOTAL U.S. TREASURY NOTES
(IDENTIFIED COST $57,390,758 ) 57,622,090
- ----------------------------------------------------------------------
COMMERCIAL PAPER -- 11.29%
- ----------------------------------------------------------------------
American Express Credit
Corporation, 4.90% due
02/01/99 50,000,000 49,789,028
Chevron Oil Finance Company
5.30% due 01/11/99 25,000,000 24,963,195
Deere (John) Capital
Corporation 5.28% due
01/06/99 50,000,000 49,963,333
Ford Motor Credit Company
5.17% due 01/11/99 50,000,000 49,928,194
General Electric Capital
Corporation, 5.31% due
01/20/99 30,000,000 29,915,925
Household Finance Corporation
5.25% due 01/25/99 50,000,000 49,825,000
IBM Credit Corporation 5.17%
due 01/19/99 25,000,000 24,935,375
Norwest Corporation
5.46% due 01/20/99 30,000,000 29,913,550
--------------
TOTAL COMMERCIAL PAPER
(IDENTIFIED COST $309,233,600) 309,233,600
- ----------------------------------------------------------------------
</TABLE>
162
<PAGE> 39
ENTERPRISE ACCUMULATION TRUST
MANAGED PORTFOLIO -- (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF SHARES OR
PRINCIPAL AMOUNT VALUE
------------------- -----
<S> <C> <C>
Repurchase Agreement -- 1.54%
- ----------------------------------------------------------------------
State Street Bank & Trust
Repurchase Agreement, 4.25%
due 01/04/99 Collateral:
U.S. Treasury Note
$41,745,000 5.38% due
01/31/00 Value $42,945,169 $42,100,000 $ 42,100,000
--------------
TOTAL REPURCHASE AGREEMENT
(IDENTIFIED COST $42,100,000) 42,100,000
- ----------------------------------------------------------------------
TOTAL INVESTMENTS
(IDENTIFIED COST $2,183,420,531) $2,738,687,306
OTHER ASSETS LESS LIABILITIES -- 0.02% 617,602
--------------
NET ASSETS 100% $2,739,304,908
======================================================================
</TABLE>
(a) Non-income producing security.
(ADR) American Depository Receipt.
See accompanying notes to financial statements.
163
<PAGE> 40
ENTERPRISE ACCUMULATION TRUST
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH AND
GROWTH INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
---------- --------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments, at value....................................... $1,428,708 $350,543 $621,435,949
Foreign currency at value (cost -- $1,066,771).............. -- -- --
Receivable for investments sold............................. -- -- 2,690,127
Receivable for fund shares sold............................. 181,185 30,227 1,274,663
Dividends receivable........................................ 443 154 549,261
Interest receivable......................................... -- -- 2,535
Due from investment adviser................................. 15,176 15,350 --
Forward currency contracts receivable, (net)................ -- -- --
Cash and other assets....................................... 779,759 196,943 10,646
---------- -------- ------------
Total assets...................................... 2,405,271 593,217 625,963,181
---------- -------- ------------
LIABILITIES:
Payable for investments purchased........................... 450,241 44,443 3,940,809
Payable for fund shares redeemed............................ 11 -- 150,725
Investment advisory fees payable............................ 471 193 399,598
Accrued expenses and other liabilities...................... 11,093 11,093 134,393
---------- -------- ------------
Total liabilities................................. 461,816 55,729 4,625,525
---------- -------- ------------
NET ASSETS................................... $1,943,455 $537,488 $621,337,656
========== ======== ============
NET ASSETS:
Paid-in capital............................................. $1,895,379 $525,897 $436,161,098
Accumulated undistributed net investment income (loss)...... -- -- 8,195,597
Accumulated undistributed net realized gain (loss) on
investments and futures................................... (98) 222 43,605,919
Net unrealized appreciation (depreciation) on investments
and translation of foreign currency denominated amounts... 48,174 11,369 133,375,042
---------- -------- ------------
NET ASSETS................................... $1,943,455 $537,488 $621,337,656
========== ======== ============
Fund shares outstanding..................................... 369,068 105,213 16,876,144
---------- -------- ------------
Net asset value per share................................... $5.27 $5.11 $36.82
========== ======== ============
INVESTMENTS AT COST......................................... $1,380,534 $339,174 $488,060,907
</TABLE>
See accompanying notes to financial statements.
164
<PAGE> 41
<TABLE>
<CAPTION>
CAPITAL SMALL COMPANY SMALL COMPANY INTERNATIONAL HIGH-YIELD
EQUITY INCOME APPRECIATION GROWTH VALUE GROWTH BOND MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------- ------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$370,256 $309,478 $371,183 $407,328,459 $90,811,808 $100,019,120 $2,738,687,306
-- -- -- -- 1,073,739 -- --
-- -- 4,281 -- 20,512 -- 2,237,452
38,390 16,975 24,712 634,652 69,673 53,170 1,949,191
204 85 35 193,732 180,921 -- 2,027,500
-- -- -- 688 -- 2,004,943 1,745,968
15,357 15,293 15,324 -- -- -- --
-- -- -- -- 24,013 -- --
192,435 223,161 101,539 6,527 7,638 5,483 38,989
-------- -------- -------- ------------ ----------- ------------ --------------
616,642 564,992 517,074 408,164,058 92,188,304 102,082,716 2,746,686,406
-------- -------- -------- ------------ ----------- ------------ --------------
140,419 42,455 36,832 809,102 73,244 -- 4,029,575
-- 4 7 164,660 161,423 129,076 1,121,955
176 184 258 261,720 63,858 51,171 1,648,533
11,093 11,093 11,093 127,457 95,563 37,515 581,435
-------- -------- -------- ------------ ----------- ------------ --------------
151,688 53,736 48,190 1,362,939 394,088 217,762 7,381,498
-------- -------- -------- ------------ ----------- ------------ --------------
$464,954 $511,256 $468,884 $406,801,119 $91,794,216 $101,864,954 $2,739,304,908
======== ======== ======== ============ =========== ============ ==============
$458,455 $473,316 $436,486 $309,669,798 $79,987,666 $104,373,784 $1,750,711,005
127 -- -- 2,269,065 893,147 -- 46,304,556
-- (228) (853) 26,447,462 311,385 1,071,310 387,022,572
6,372 38,168 33,251 68,414,794 10,602,018 (3,580,140) 555,266,775
-------- -------- -------- ------------ ----------- ------------ --------------
$464,954 $511,256 $468,884 $406,801,119 $91,794,216 $101,864,954 $2,739,304,908
======== ======== ======== ============ =========== ============ ==============
91,297 91,747 85,863 14,868,174 13,620,192 18,966,191 67,529,015
-------- -------- -------- ------------ ----------- ------------ --------------
$5.09 $5.57 $5.46 $27.36 $6.74 $5.37 $40.56
======== ======== ======== ============ =========== ============ ==============
$363,884 $271,310 $337,932 $338,913,665 $80,246,533 $103,599,260 $2,183,420,531
</TABLE>
See accompanying notes to financial statements.
165
<PAGE> 42
ENTERPRISE ACCUMULATION TRUST
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH
GROWTH AND INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------- -----------
12/1/98- 12/1/98-
12/31/98 12/31/98
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............................................. $ 453 $ 154 $ 8,187,846*
Interest............................................... 110 -- 4,792,576
-------- -------- -----------
Total income...................................... 563 154 12,980,422
-------- -------- -----------
EXPENSES:
Investment advisory fees............................... 471 193 4,523,391
Custodian and fund accounting fees..................... 3,000 3,000 94,088
Reports and notices to shareholders.................... 100 100 102,352
Trustees' fees and expenses............................ 1,500 1,500 19,547
Audit and legal fees................................... 10,727 10,727 23,630
Miscellaneous.......................................... 100 100 21,720
-------- -------- -----------
Total expenses.................................... 15,898 15,620 4,784,728
Less: Expense reimbursement.......................... (15,176) (15,350) --
-------- -------- -----------
Total expenses, net of expense reimbursement......... 722 270 4,784,728
-------- -------- -----------
NET INVESTMENT INCOME (LOSS).................... (159) (116) 8,195,694
-------- -------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS -- NET:
Net realized gain (loss) on investments................ (98) 338 43,607,008
Net realized gain (loss) on foreign currency
transactions.......................................... -- -- --
-------- -------- -----------
Net realized gain (loss) on investments................ (98) 338 43,607,008
Net change in unrealized gain (loss) on investments and
translation of foreign currencies denominated
amounts............................................... 48,174 11,369 (4,143,581)
-------- -------- -----------
Net realized and unrealized gain (loss) on
investments.................................... 48,076 11,707 39,463,427
-------- -------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS..................................... $ 47,917 $ 11,591 $47,659,121
======== ======== ===========
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
* Net of foreign taxes withheld of $45,718, $232,521 and $58,025, respectively.
166
<PAGE> 43
<TABLE>
<CAPTION>
EQUITY CAPITAL SMALL COMPANY SMALL COMPANY INTERNATIONAL HIGH-YIELD
INCOME APPRECIATION GROWTH VALUE GROWTH BOND MANAGED
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ------------ ------------- ------------- ------------- ----------- -------------
12/1/98- 12/1/98- 12/1/98-
12/31/98 12/31/98 12/31/98
<S> <C> <C> <C> <C> <C> <C> <C>
$ 373 $ 85 $ 35 $ 4,494,858 $ 1,757,194* $ 22,500 $ 46,489,051*
-- -- -- 1,199,190 184,133 7,715,490 21,036,122
-------- ----------- -------- ----------- ----------- ----------- -------------
373 85 35 5,694,048 1,941,327 7,737,990 67,525,173
-------- ----------- -------- ----------- ----------- ----------- -------------
176 184 259 3,204,761 730,659 520,951 20,174,424
3,000 3,000 3,000 94,321 272,773 58,521 372,890
100 100 100 75,568 13,138 16,884 428,526
1,500 1,500 1,500 17,073 13,766 13,458 51,737
10,727 10,727 10,727 18,736 11,540 11,502 77,660
100 100 100 14,463 3,545 2,814 115,349
-------- ----------- -------- ----------- ----------- ----------- -------------
15,603 15,611 15,686 3,424,922 1,045,421 624,130 21,220,586
(15,357) (15,292) (15,324) -- -- -- --
-------- ----------- -------- ----------- ----------- ----------- -------------
246 319 362 3,424,922 1,045,421 624,130 21,220,586
-------- ----------- -------- ----------- ----------- ----------- -------------
127 (234) (327) 2,269,126 895,906 7,113,860 46,304,587
-------- ----------- -------- ----------- ----------- ----------- -------------
-- (227) (853) 25,594,861 4,537,009 1,083,292 393,346,265
-- -- -- -- (3,674,765) -- --
-------- ----------- -------- ----------- ----------- ----------- -------------
-- (227) (853) 25,594,861 862,244 1,083,292 393,346,265
6,372 38,168 33,251 1,607,587 8,976,597 (5,550,240) (253,453,784)
-------- ----------- -------- ----------- ----------- ----------- -------------
6,372 37,941 32,398 27,202,448 9,838,841 (4,466,948) 139,892,481
-------- ----------- -------- ----------- ----------- ----------- -------------
$ 6,499 $ 37,707 $ 32,071 $29,471,574 $10,734,747 $ 2,646,912 $ 186,197,068
======== =========== ======== =========== =========== =========== =============
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
167
<PAGE> 44
ENTERPRISE ACCUMULATION TRUST
STATEMENTS OF CHANGES IN NET ASSETS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH AND
GROWTH PORTFOLIO INCOME PORTFOLIO
----------------- -----------------
FOR THE PERIOD FOR THE PERIOD EQUITY PORTFOLIO
DECEMBER 1, 1998 DECEMBER 1, 1998 --------------------------------------
THROUGH THROUGH YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (159) $ (116) $ 8,195,694 $ 5,906,243
Net realized gain (loss) on
investments........................ (98) 338 43,607,008 21,596,989
Net realized loss on futures.......... -- -- -- --
Net change in unrealized gain (loss)
on investments..................... 48,174 11,369 (4,143,581) 66,581,351
---------- -------- ------------- ------------
Net increase in net assets
resulting from operations........ 47,917 11,591 47,659,121 94,084,583
---------- -------- ------------- ------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income................. -- -- (5,906,264) (4,530,879)
Net realized gains.................... -- -- (21,596,997) (12,619,248)
---------- -------- ------------- ------------
Total dividends and distributions
to shareholders............... -- -- (27,503,261) (17,150,127)
---------- -------- ------------- ------------
FUND SHARE TRANSACTIONS:
Net proceeds from sales............... 1,906,210 525,993 259,368,662 194,805,120
Reinvestment of dividends and
distributions...................... -- -- 27,503,261 17,150,127
Cost of shares redeemed............... (10,672) (96) (203,493,446) (85,993,316)
---------- -------- ------------- ------------
Net increase in net assets from
fund share transactions.......... 1,895,538 525,897 83,378,477 125,961,931
---------- -------- ------------- ------------
Total increase in net assets..... 1,943,455 537,488 103,534,337 202,896,387
NET ASSETS:
Beginning of year..................... -- -- 517,803,319 314,906,932
---------- -------- ------------- ------------
End of year........................... $1,943,455 $537,488 $ 621,337,656 $517,803,319
========== ======== ============= ============
SHARES ISSUED AND REDEEMED:
Issued................................ 371,167 105,232 7,038,795 6,024,088
Issued in reinvestment of dividends
and distributions.................. -- -- 749,816 488,747
Redeemed.............................. (2,099) (19) (5,670,766) (2,666,560)
---------- -------- ------------- ------------
Net increase....................... 369,068 105,213 2,117,845 3,846,275
========== ======== ============= ============
</TABLE>
See accompanying notes to financial statements.
168
<PAGE> 45
<TABLE>
<CAPTION>
EQUITY INCOME CAPITAL APPRECIATION SMALL COMPANY
PORTFOLIO PORTFOLIO GROWTH PORTFOLIO
----------------- -------------------- -----------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD SMALL COMPANY VALUE PORTFOLIO
DECEMBER 1, 1998 DECEMBER 1, 1998 DECEMBER 1, 1998 --------------------------------------
THROUGH THROUGH THROUGH YEAR ENDED YEAR ENDED
DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1998 DECEMBER 31, 1997
----------------- -------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
$ 127 $ (234) $ (327) $ 2,269,126 $ 564,870
-- (227) (853) 25,594,861 25,509,856
-- -- -- -- --
6,372 38,168 33,251 1,607,587 68,857,605
-------- -------- -------- ------------- ------------
6,499 37,707 32,071 29,471,574 94,932,331
-------- -------- -------- ------------- ------------
-- -- -- (1,050,835) (1,934,367)
-- -- -- (24,299,778) (29,120,607)
-------- -------- -------- ------------- ------------
-- -- -- (25,350,613) (31,054,974)
-------- -------- -------- ------------- ------------
458,517 473,649 436,953 176,919,909 125,153,914
-- -- -- 25,350,613 31,054,974
(62) (100) (140) (164,856,185) (47,524,243)
-------- -------- -------- ------------- ------------
458,455 473,549 436,813 37,414,337 108,684,645
-------- -------- -------- ------------- ------------
464,954 511,256 468,884 41,535,298 172,562,002
-- -- -- 365,265,821 192,703,819
-------- -------- -------- ------------- ------------
$464,954 $511,256 $468,884 $ 406,801,119 $365,265,821
======== ======== ======== ============= ============
91,309 91,765 85,890 6,367,246 4,898,620
-- -- -- 967,950 1,163,108
(12) (18) (27) (6,146,963) (1,911,458)
-------- -------- -------- ------------- ------------
91,297 91,747 85,863 1,188,233 4,150,270
======== ======== ======== ============= ============
</TABLE>
See accompanying notes to financial statements.
169
<PAGE> 46
ENTERPRISE ACCUMULATION TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO HIGH-YIELD BOND PORTFOLIO MANAGED 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,
1998 1997 1998 1997 1998 1997
-------------- -------------- ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss).............. $ 895,906 $ 952,492 $ 7,113,860 $ 4,219,431 $ 46,304,587 $ 26,677,682
Net realized gain
(loss) on
investments......... 862,244 3,093,961 1,083,292 1,426,942 393,346,265 183,271,808
Net realized loss on
futures............. -- -- -- (40,672) -- --
Net change in
unrealized gain
(loss) on
investments......... 8,976,597 (1,712,233) (5,550,240) 876,263 (253,453,784) 286,998,102
------------ ------------ ------------ ------------ -------------- --------------
Net increase in net
assets resulting
from operations... 10,734,747 2,334,220 2,646,912 6,481,964 186,197,068 496,947,592
------------ ------------ ------------ ------------ -------------- --------------
DIVIDENDS AND
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment
income.............. (956,997) (469,566) (7,113,860) (4,578,453) (26,677,507) (34,358,125)
Net realized gains..... (3,458,658) (1,839,878) (1,380,937) -- (189,572,424) (86,729,089)
------------ ------------ ------------ ------------ -------------- --------------
Total dividends
and
distributions
to
shareholders... (4,415,655) (2,309,444) (8,494,797) (4,578,453) (216,249,931) (121,087,214)
------------ ------------ ------------ ------------ -------------- --------------
FUND SHARE TRANSACTIONS:
Net proceeds from
sales............... 33,682,098 44,114,615 53,781,245 37,450,856 828,656,136 764,890,598
Reinvestment of
dividends and
distributions....... 4,415,655 2,309,444 8,494,797 4,578,453 216,249,931 121,087,214
Cost of shares
redeemed............ (30,770,132) (21,069,633) (22,927,376) (9,979,756) (948,480,342) (524,249,625)
------------ ------------ ------------ ------------ -------------- --------------
Net increase in net
assets from fund
share
transactions........ 7,327,621 25,354,426 39,348,666 32,049,553 96,425,725 361,728,187
------------ ------------ ------------ ------------ -------------- --------------
Total increase in
net assets..... 13,646,713 25,379,202 33,500,781 33,953,064 66,372,862 737,588,565
NET ASSETS:
Beginning of year...... 78,147,503 52,768,301 68,364,173 34,411,109 2,672,932,046 1,935,343,481
------------ ------------ ------------ ------------ -------------- --------------
End of year............ $ 91,794,216 $ 78,147,503 $101,864,954 $ 68,364,173 $2,739,304,908 $2,672,932,046
============ ============ ============ ============ ============== ==============
SHARES ISSUED AND
REDEEMED:
Issued................. 5,053,178 6,817,722 9,618,868 6,681,479 19,612,770 20,029,862
Issued in reinvestment
of dividends and
distributions....... 680,379 373,696 1,543,662 813,628 5,331,607 2,969,279
Redeemed............... (4,760,079) (3,259,958) (4,163,250) (1,778,183) (22,958,015) (13,856,866)
------------ ------------ ------------ ------------ -------------- --------------
Net increase........ 973,478 3,931,460 6,999,280 5,716,924 1,986,362 9,142,275
============ ============ ============ ============ ============== ==============
</TABLE>
See accompanying notes to financial statements.
170
<PAGE> 47
ENTERPRISE ACCUMULATION TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
GROWTH AND
GROWTH PORTFOLIO INCOME PORTFOLIO
----------------- -----------------
FOR THE PERIOD FOR THE PERIOD
12/01/98 THROUGH 12/01/98 THROUGH
12/31/98 12/31/98
----------------- -----------------
<S> <C> <C>
Net asset value, beginning of year.......................... $ 5.00 $ 5.00
------- -------
Income from investment operations:
Net investment income (loss).............................. -- --
Net realized and unrealized gain (loss) on investments.... 0.27 0.11
------- -------
Total from investment operations.................. 0.27 0.11
------- -------
Less dividends and distributions:
Dividends to shareholders from net investment income...... -- --
Distribution to shareholders from net capital gains....... -- --
------- -------
Total dividends and distributions................. -- --
------- -------
Net asset value, end of year................................ $ 5.27 $ 5.11
======= =======
Total return...................................... 5.40%(B) 2.20%(B)
------- -------
Net assets, end of year (000)............................... $ 1,943 $ 537
------- -------
Ratio of net operating expenses to average net assets....... 1.15%(A) 1.05%(A)
------- -------
Ratio of net operating expenses (excluding waivers) to
average net assets........................................ 25.33%(A) 60.68%(A)
------- -------
Ratio of net investment income (loss) to average net
assets.................................................... (0.25)%(A) (0.45)%(A)
------- -------
Ratio of net investment income (loss) (excluding waivers) to
average net assets........................................ (24.43)%(A) (60.08)%(A)
------- -------
Portfolio turnover.......................................... 1% 9%
------- -------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(A) Annualized.
(B) Not annualized.
171
<PAGE> 48
ENTERPRISE ACCUMULATION TRUST
EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year......................... $ 35.09 $ 28.86 $ 23.35 $ 18.14 $ 17.95
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss)............................. 0.46 0.30 0.37 0.33 0.28
Net realized and unrealized gain (loss) on investments... 3.00 7.13 5.52 6.38 0.41
-------- -------- -------- -------- --------
Total from investment operations................. 3.46 7.43 5.89 6.71 0.69
-------- -------- -------- -------- --------
Less dividends and distributions:
Dividends to shareholders from net investment income..... (0.37) (0.32) (0.09) (0.49) (0.18)
Distribution to shareholders from net capital gains...... (1.36) (0.88) (0.29) (1.01) (0.32)
-------- -------- -------- -------- --------
Total dividends and distributions................ (1.73) (1.20) (0.38) (1.50) (0.50)
-------- -------- -------- -------- --------
Net asset value, end of year............................... $ 36.82 $ 35.09 $ 28.86 $ 23.35 $ 18.14
======== ======== ======== ======== ========
Total return..................................... 9.90% 25.76% 25.22% 38.44% 3.87%
-------- -------- -------- -------- --------
Net assets, end of year (000).............................. $621,338 $517,803 $314,907 $167,963 $ 88,583
-------- -------- -------- -------- --------
Ratio of net operating expenses to average net assets...... 0.83% 0.84% 0.81% 0.69% 0.67%
-------- -------- -------- -------- --------
Ratio of net operating expenses (excluding waivers) to
average net assets....................................... 0.83% 0.84% 0.81% 0.72% 0.69%
-------- -------- -------- -------- --------
Ratio of net investment income (loss) to average net
assets................................................... 1.42% 1.42% 1.94% 1.94% 1.81%
-------- -------- -------- -------- --------
Ratio of net investment income (loss) (excluding waivers)
to average net assets.................................... 1.42% 1.42% 1.94% 1.91% 1.79%
-------- -------- -------- -------- --------
Portfolio turnover......................................... 30% 17% 30% 29% 38%
-------- -------- -------- -------- --------
</TABLE>
See accompanying notes to financial statements.
172
<PAGE> 49
ENTERPRISE ACCUMULATION TRUST
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
CAPITAL SMALL COMPANY
EQUITY INCOME APPRECIATION GROWTH PORTFOLIO
---------------- ---------------- ----------------
FOR THE PERIOD FOR THE PERIOD FOR THE PERIOD
12/01/98 THROUGH 12/01/98 THROUGH 12/01/98 THROUGH
12/31/98 12/31/98 12/31/98
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of year.................. $ 5.00 $ 5.00 $ 5.00
Income from investment operations:
Net investment income (loss)...................... -- -- --
Net realized and unrealized gain (loss) on
investments.................................... 0.09 0.57 0.46
------- ------- -------
Total from investment operations.......... 0.09 0.57 0.46
------- ------- -------
Less dividends and distributions:
Dividends to shareholders from net investment
income......................................... -- -- --
Distribution to shareholders from net capital
gains.......................................... -- -- --
------- ------- -------
Total dividends and distributions......... -- -- --
------- ------- -------
Net asset value, end of year........................ $ 5.09 $ 5.57 $ 5.46
======= ======= =======
Total return.............................. 1.80%(B) 11.40%(B) 9.20%(B)
------- ------- -------
Net assets, end of year (000)....................... $ 465 $ 511 $ 469
------- ------- -------
Ratio of net operating expenses to average net
assets............................................ 1.05%(A) 1.30%(A) 1.40%(A)
------- ------- -------
Ratio of net operating expenses (excluding waivers)
to average net assets............................. 66.67%(A) 63.71%(A) 60.67%(A)
------- ------- -------
Ratio of net investment income (loss) to average net
assets............................................ 0.54%(A) (0.95)%(A) (1.26)%(A)
------- ------- -------
Ratio of net investment income (loss) (excluding
waivers) to average net assets.................... (65.07)%(A) (63.36)%(A) (60.54)%(A)
------- ------- -------
Portfolio turnover.................................. 0% 1% 4%
------- ------- -------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(A) Annualized.
(B) Not annualized.
173
<PAGE> 50
ENTERPRISE ACCUMULATION TRUST
SMALL COMPANY VALUE PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..................... $ 26.70 $ 20.22 $ 18.48 $ 17.56 $ 18.62
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income (loss)(C)...................... 0.16 0.05 0.25 0.32 0.19
Net realized and unrealized gain (loss) on
investments....................................... 2.33 8.91 1.82 1.75 (0.16)
-------- -------- -------- -------- --------
Total from investment operations............. 2.49 8.96 2.07 2.07 0.03
-------- -------- -------- -------- --------
Less dividends and distributions:
Dividends to shareholders from net investment
income............................................ (0.08) (0.15) (0.12) (0.40) (0.10)
Distribution to shareholders from net capital
gains............................................. (1.75) (2.33) (0.21) (0.75) (0.99)
-------- -------- -------- -------- --------
Total dividends and distributions............ (1.83) (2.48) (0.33) (1.15) (1.09)
-------- -------- -------- -------- --------
Net asset value, end of year........................... $ 27.36 $ 26.70 $ 20.22 $ 18.48 $ 17.56
======== ======== ======== ======== ========
Total return................................. 9.61% 44.32% 11.21% 12.28% 0.02%
-------- -------- -------- -------- --------
Net assets, end of year (000).......................... $406,801 $365,266 $192,704 $166,061 $144,880
-------- -------- -------- -------- --------
Ratio of net operating expenses to average net
assets............................................... 0.85% 0.86% 0.84% 0.69% 0.66%
-------- -------- -------- -------- --------
Ratio of net operating expenses (excluding waivers) to
average net assets................................... 0.85% 0.86% 0.84% 0.72% 0.67%
-------- -------- -------- -------- --------
Ratio of net investment income (loss) to average net
assets............................................... 0.56% 0.21% 1.35% 1.86% 1.30%
-------- -------- -------- -------- --------
Ratio of net investment income (loss) (excluding
waivers) to average net assets....................... 0.56% 0.21% 1.35% 1.83% 1.29%
-------- -------- -------- -------- --------
Portfolio turnover..................................... 37% 58% 137% 70% 58%
-------- -------- -------- -------- --------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(C) For 1997, this calculation was based on average monthly shares outstanding.
174
<PAGE> 51
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-
1998 1997 1996 1995 DECEMBER 31, 1994
------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......... $ 6.18 $ 6.05 $ 5.39 $ 4.96 $ 5.00
------- ------- ------- ------- ------
Income from investment operations:
Net investment income (loss)........... 0.06 0.06 0.05 0.04 --
Net realized and unrealized gain (loss)
on investments....................... 0.84 0.26 0.63 0.67 (0.04)
------- ------- ------- ------- ------
Total from investment
operations...................... 0.90 0.32 0.68 0.71 (0.04)
------- ------- ------- ------- ------
Less dividends and distributions:
Dividends to shareholders from net
investment income.................... (0.07) (0.04) -- (0.04) --
Distribution to shareholders from net
capital gains........................ (0.27) (0.15) (0.02) (0.24) --
------- ------- ------- ------- ------
Total dividends and
distributions................... (0.34) (0.19) (0.02) (0.28) --
------- ------- ------- ------- ------
Net asset value, end of year................ $ 6.74 $ 6.18 $ 6.05 $ 5.39 $ 4.96
======= ======= ======= ======= ======
Total return...................... 14.83% 5.26% 12.65% 14.64% (0.80)%(B)
------- ------- ------- ------- ------
Net assets, end of year (000)............... $91,794 $78,148 $52,768 $18,598 $3,247
------- ------- ------- ------- ------
Ratio of net operating expenses to average
net assets................................ 1.22% 1.19% 1.38% 1.55% 1.55%(A)
------- ------- ------- ------- ------
Ratio of net operating expenses (excluding
waivers) to average net assets............ 1.22% 1.19% 1.38% 2.21% 8.85%(A)
------- ------- ------- ------- ------
Ratio of net investment income (loss) to
average net assets........................ 1.04% 1.34% 1.32% 1.17% 0.80%(A)
------- ------- ------- ------- ------
Ratio of net investment income (loss)
(excluding waivers) to average net
assets.................................... 1.04% 1.34% 1.32% 0.51% (6.34)%(A)
------- ------- ------- ------- ------
Portfolio turnover.......................... 55% 28% 21% 27% 0%
------- ------- ------- ------- ------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(A) Annualized.
(B) Not annualized.
175
<PAGE> 52
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-
1998 1997 1996 1995 DECEMBER 31, 1994
-------- ------- ------- ------- ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............. $ 5.71 $ 5.51 $ 5.31 $ 4.98 $ 5.00
-------- ------- ------- ------- ------
Income from investment operations:
Net investment income (loss).............. 0.46 0.51 0.45 0.45 0.04
Net realized and unrealized gain (loss) on
investments............................. (0.26) 0.20 0.21 0.35 (0.01)
-------- ------- ------- ------- ------
Total from investment operations..... 0.20 0.71 0.66 0.80 0.03
-------- ------- ------- ------- ------
Less dividends and distributions:
Dividends to shareholders from net
investment income....................... (0.46) (0.51) (0.45) (0.45) (0.05)
Distribution to shareholders from net
capital gains........................... (0.08) -- (0.01) (0.02) --
-------- ------- ------- ------- ------
Total dividends and distributions.... (0.54) (0.51) (0.46) (0.47) (0.05)
-------- ------- ------- ------- ------
Net asset value, end of year................... $ 5.37 $ 5.71 $ 5.51 $ 5.31 $ 4.98
======== ======= ======= ======= ======
Total return......................... 3.60% 13.38% 12.93% 16.59% 0.50%(B)
-------- ------- ------- ------- ------
Net assets, end of year (000).................. $101,865 $68,364 $34,411 $15,223 $1,421
-------- ------- ------- ------- ------
Ratio of net operating expenses to average net
assets....................................... 0.72% 0.77% 0.85% 0.85% 0.85%(A)
-------- ------- ------- ------- ------
Ratio of net operating expenses (excluding
waivers) to average net assets............... 0.72% 0.77% 0.94% 1.59% 7.80%(A)
-------- ------- ------- ------- ------
Ratio of net investment income (loss) to
average net assets........................... 8.19% 8.47% 8.57% 8.51% 7.84%(A)
-------- ------- ------- ------- ------
Ratio of net investment income (loss)
(excluding waivers) to average net assets.... 8.19% 8.47% 8.48% 7.77% 0.80%(A)
-------- ------- ------- ------- ------
Portfolio turnover............................. 109% 175% 175% 115% 0%
-------- ------- ------- ------- ------
</TABLE>
See accompanying notes to financial statements.
- --------------------------------------------------------------------------------
(A) Annualized.
(B) Not annualized.
176
<PAGE> 53
ENTERPRISE ACCUMULATION TRUST
MANAGED PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year............... $ 40.78 $ 34.31 $ 28.06 $ 20.82 $ 21.35
---------- ---------- ---------- ---------- --------
Income from investment operations:
Net investment income (loss)................... 0.71 0.35 0.59 0.40 0.40
Net realized and unrealized gain (loss) on
investments................................. 2.53 8.06 5.99 8.97 0.15
---------- ---------- ---------- ---------- --------
Total from investment operations....... 3.24 8.41 6.58 9.37 0.55
---------- ---------- ---------- ---------- --------
Less dividends and distributions:
Dividends to shareholders from net investment
income...................................... (0.43) (0.55) (0.06) (0.75) (0.46)
Distribution to shareholders from net capital
gains....................................... (3.03) (1.39) (0.27) (1.38) (0.62)
---------- ---------- ---------- ---------- --------
Total dividends and distributions...... (3.46) (1.94) (0.33) (2.13) (1.08)
---------- ---------- ---------- ---------- --------
Net asset value, end of year..................... $ 40.56 $ 40.78 $ 34.31 $ 28.06 $ 20.82
========== ========== ========== ========== ========
Total return........................... 7.95% 24.50% 23.47% 46.89% 2.57%
---------- ---------- ---------- ---------- --------
Net assets, end of year (000).................... $2,739,305 $2,672,932 $1,935,343 $1,264,718 $689,252
---------- ---------- ---------- ---------- --------
Ratio of net operating expenses to average net
assets......................................... 0.76% 0.76% 0.74% 0.67% 0.64%
---------- ---------- ---------- ---------- --------
Ratio of net operating expenses (excluding
waivers) to average net assets................. 0.76% 0.76% 0.74% 0.67% 0.64%
---------- ---------- ---------- ---------- --------
Ratio of net investment income (loss) to average
net assets..................................... 1.66% 1.14% 2.16% 1.80% 2.23%
---------- ---------- ---------- ---------- --------
Ratio of net investment income (loss) (excluding
waivers) to average net assets................. 1.66% 1.14% 2.16% 1.80% 2.23%
---------- ---------- ---------- ---------- --------
Portfolio turnover............................... 46% 32% 29% 31% 33%
---------- ---------- ---------- ---------- --------
</TABLE>
See accompanying notes to financial statements.
177
<PAGE> 54
ENTERPRISE ACCUMULATION TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ORGANIZATION
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 shares of beneficial interest at $.01
par value for the following portfolios: Growth Portfolio, Growth and Income
Portfolio, Equity Portfolio, Equity Income Portfolio, Capital Appreciation
Portfolio, Small Company Growth Portfolio, Small Company Value Portfolio,
International Growth Portfolio, High-Yield Bond Portfolio and Managed Portfolio.
Prior to May 1, 1998 the Small Company Value Portfolio was known as the Small
Cap Portfolio.
The Trust serves as an investment vehicle for MONYMaster and MONY Custom
Master, flexible payment variable annuity policy, and MONY Equity Master and
MONY Custom Equity Master, flexible premium variable universal life insurance
policies, issued by MONY Life of America ("MLOA") and MONY Life Insurance
Company, a wholly-owned subsidiary of MLOA. The Trust also serves as an
investment vehicle for a corporate-sponsored variable universal life product
issued by MONY America. 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 -- Growth Portfolio, Growth and Income Portfolio,
Equity Portfolio, Equity Income Portfolio, Capital Appreciation Portfolio, Small
Company Growth Portfolio, Small Company Value Portfolio, International Growth
Portfolio, High-Yield Bond Portfolio and Managed Portfolio: 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 Portfolio receives, as collateral,
securities whose market value (including interest) 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.
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. There were no open futures contracts held in any of the Portfolios at
December 31, 1998.
178
<PAGE> 55
ENTERPRISE ACCUMULATION TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
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. Receivables and
payables for 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 International Growth Portfolio does not isolate that portion of its realized
and unrealized gains on investments from changes in foreign exchange rates from
fluctuations arising from changes in the market prices of the investments.
Security Transactions and Other Income -- Security transactions are
accounted for on the trade date. Realized gains and losses from investment
transactions are determined on the basis of identical cost and realized gains
and losses from currency transactions are determined on the basis of average
cost. Dividend income received and distributions to shareholders are recognized
on the ex-dividend date, and interest income is recognized on the accrual basis.
Discounts or premiums on debt securities purchased are accreted or amortized to
interest income over the 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 -- No provision for Federal income or excise taxes is
required because the trust intends to continue to qualify as a regulated
investment company and distribute all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements -- Preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that may affect the
reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Dividends and Distributions -- Growth Portfolio, Growth and Income
Portfolio, Equity Portfolio, Equity Income Portfolio, Capital Appreciation
Portfolio, Small Company Growth Portfolio, Small Company Value Portfolio,
International Growth Portfolio and Managed Portfolio: 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. TRANSACTIONS WITH AFFILIATES
The investment advisory fee is payable monthly to Enterprise Capital
Management, Inc. ("Enterprise Capital"), a wholly-owned subsidiary of MONY Life
Insurance Company, 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 Company Value, and Managed Portfolios, .80% for the first $400
million, .75% for the next $400 million, and .70% for net assets over $800
million, 1.00% for the Small Company Growth Portfolio, 0.85% for the
International Growth Portfolio, 0.75% for each of the Growth, Capital
Appreciation, Growth and Income, and Equity Income Portfolios and 0.60% for the
High-Yield Bond Portfolio.
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: Growth -- 1.15%, Growth and Income -- 1.05%, Equity -- 1.15%, Equity
Income -- 1.05%, Capital Appreciation -- 1.30%, Small Company Growth -- 1.40%,
Small Company Value -- 1.30%, International Growth -- 1.55%, High-Yield
Bond -- .85% and Managed -- 1.30%.
Enterprise Capital is a wholly-owned subsidiary of MONY Life Insurance
Company, which is wholly-owned by The MONY Group Inc. The MONY Group Inc. and
its subsidiaries and affiliates had the following investments in the Trust as of
December 31, 1998: Growth -- $263,500, Growth and Income -- $255,500, Capital
Appreciation -- $278,500, Small Company Growth -- $273,000, and Equity
Income -- $254,500.
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 respective
Portfolio Manager. 1740 Advisers, Inc., a wholly-owned subsidiary of MONY Life
Insurance Company, is the Fund Manager for the Equity Income Fund. For the year
ended December 31, 1998, ECM incurred subadvisory fees payable to 1740 Advisers,
Inc. related to the Equity Income Fund of $70, with a related payable balance of
$70 as of December 31, 1998.
179
<PAGE> 56
ENTERPRISE ACCUMULATION TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
4. FINANCIAL INSTRUMENTS
As part of its investment program, the International Growth Portfolio
utilizes forward currency exchange contracts to manage exposure to currency
fluctuations and hedge against adverse changes in connection with purchases and
sales of securities. The Portfolio enters into forward contracts only for
hedging purposes. At December 31, 1998, 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, 1998
are as follows:
<TABLE>
<CAPTION>
PURCHASES NET UNREALIZED
SETTLEMENT ----------------------------------- APPRECIATION/
DATE RECEIVE DELIVER (DEPRECIATION)
---------- ---------------- --------------- --------------
<S> <C> <C> <C>
6/18/99 AUD 5,100,000 USD 3,170,925 $(40,979)
6/18/99 CAD 2,300,000 USD 1,497,396 8,463
6/18/99 CHF 700,000 USD 525,131 (7,322)
6/18/99 ESP 165,000,000 USD 1,184,600 (13,462)
6/18/99 ITL 880,000,000 USD 537,766 (991)
6/18/99 PTE 102,000,000 USD 607,577 (4,639)
6/18/99 SEK 23,900,000 USD 2,995,400 (31,937)
--------
$(90,867)
</TABLE>
<TABLE>
<CAPTION>
SALES
-----------------------------------
RECEIVE DELIVER
---------------- ---------------
<S> <C> <C> <C>
6/18/99 USD 1,007,557 BEL 34,000,000 15,989
6/18/99 USD 1,361,254 FIM 6,800,000 16,055
6/18/99 USD 575,571 FRF 3,200,000 (1,684)
6/18/99 USD 4,705,120 GBP 2,800,000 68,729
6/18/99 USD 1,680,035 NLG 3,100,000 15,791
--------
114,880
--------
$ 24,013
========
</TABLE>
As part of its investment program, the High-Yield Bond Portfolio enters
into futures contracts to hedge against anticipated future price and interest
rate changes. Risks of entering into futures contracts include: (1) the risk
that the price of the futures contracts may not move in the same direction as
the price of the securities in the various markets; (2) the risk that there will
be no liquid secondary market when the Portfolio attempts to enter into a
closing position; (3) the risk that the Portfolio will lose an amount in excess
of the initial margin deposit; and (4) the fact that the success or failure of
these transactions for the Portfolio depends on the ability of the Portfolio
Manager to predict movements in stock, bond, and currency prices and interest
rates. There were no open futures contracts at December 31, 1998 in the
High-Yield Bond Portfolio.
5. PURCHASES AND SALES OF SECURITIES
For the year ended December 31, 1998, 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>
Growth........................................... -- -- $ 1,385,809 $ 5,177
Growth and Income................................ -- -- 366,310 27,474
Equity........................................... -- -- 216,213,803 144,861,199
Equity Income.................................... -- -- 363,884 --
Capital Appreciation............................. -- -- 273,937 2,399
Small Company Growth............................. -- -- 352,518 13,733
Small Company Value.............................. -- -- 170,146,494 141,300,517
International Growth............................. -- -- 50,955,176 45,957,009
High-Yield Bond.................................. $ 10,300,938 $11,741,875 117,449,514 79,211,214
Managed.......................................... 106,871,094 8,370,000 1,015,037,967 1,194,590,442
</TABLE>
180
<PAGE> 57
ENTERPRISE ACCUMULATION TRUST
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1998
6. UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS AND DISTRIBUTIONS
At December 31, 1998, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investments for Federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED NET UNREALIZED
PORTFOLIO TAX COST GAIN LOSS GAIN (LOSS)
--------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Growth......................................... $ 1,380,632 $ 57,094 $ (9,018) $ 48,076
Growth and Income.............................. 339,217 15,218 (3,892) 11,326
Equity......................................... 488,061,496 154,440,993 (21,066,540) 133,374,453
Equity Income.................................. 363,884 10,853 (4,481) 6,372
Capital Appreciation........................... 271,310 39,347 (1,179) 38,168
Small Company Growth........................... 337,932 40,435 (7,184) 33,251
Small Company Value............................ 341,793,410 94,492,733 (28,957,684) 65,535,049
International Growth........................... 81,091,924 15,162,855 (5,442,971) 9,719,884
High-Yield Bond................................ 103,639,411 1,854,711 (5,475,002) (3,620,291)
Managed........................................ 2,185,269,489 643,688,121 (90,270,304) 553,417,817
</TABLE>
Federal Tax Information (Unaudited):
The capital gains dividend distribution paid to shareholders, taken in
additional shares, is as follows:
<TABLE>
<CAPTION>
CAPITAL GAINS
-------------
<S> <C>
Growth...................................................... --
Growth and Income........................................... --
Equity...................................................... $ 19,683,565
Equity Income............................................... --
Capital Appreciation........................................ --
Small Company Growth........................................ --
Small Company Value......................................... 11,175,584
International Growth........................................ 1,253,093
High-Yield Bond............................................. 441,141
Managed..................................................... 159,036,909
</TABLE>
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments for
futures and options transactions, 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.
181
<PAGE> 58
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of
Enterprise Accumulation Trust:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets, and the financial highlights, present
fairly, in all material respects, the financial position of the Growth, Growth
and Income, Equity, Equity Income, Capital Appreciation, Small Company Growth,
Small Company Value, International Growth, High-Yield Bond and Managed
Portfolios of Enterprise Accumulation Trust (collectively the "Trust") at
December 31, 1998, the results of their operations for the year (or period) then
ended, the changes in their net assets for each of the two years (or periods) in
the period then ended, and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PRICEWATERHOUSECOOPERS LLP
Atlanta, Georgia
February 17, 1999
182
<PAGE> 59
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
PricewaterhouseCoopers LLP
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.
183
