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File Number 33-21534
Amendment to the Prospectus
By Supplement or Sticker
Pursuant to Rule 497(e)
This information reflects changes to the Prospectus Sections, "Investment
Objectives and Policies of the Funds" and "Management of the Fund/Portfolio
Managers".
SUPPLEMENT TO THE ENTERPRISE ACCUMULATION TRUST PROSPECTUS DATED
November 1, 1998
These paragraphs supersede the paragraphs for Enterprise International Growth
Portfolio:
The Board of Trustees named Vontobel USA Inc. ("Vontobel") Portfolio Manager
effective April 1, 1999. Vontobel was formed in 1984, and is a wholly-owned
subsidiary of Vontobel Holding Ltd., a Swiss bank holding company and an
affiliate of Bank J. Vontobel & Co. Ltd. of Zurich, Switzerland. Vontobel's
address is 450 Park Avenue, New York, New York 10022. Fabrizio Pierallini,
Senior Vice President/Managing Director of International Investments, is
responsible for the day-to-day management of the Fund. He has more than 17
years' investment industry experience. He joined Vontobel in 1994 in his
present position and previously served as Portfolio Manager for Swiss Bank
Corporation.
It is a fundamental policy of the Portfolio that it will invest at least 80% of
its total assets (except when maintaining a temporary defensive position) in
equity securities of companies domiciled outside the United States. That
portion of the Portfolio not invested in equity securities is, in normal
circumstances, invested in U.S. and foreign government securities, high-grade
commercial paper, certificates of deposit, foreign currency,
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bankers acceptances, cash and cash equivalents, time deposits, repurchase
agreements and similar money market instruments, both foreign and domestic. The
Portfolio may invest in convertible debt securities of foreign issuers which
are convertible into equity securities at such time as a market for equity
securities is established in the country involved.
The International Growth Portfolio will invest primarily in equity securities,
which may achieve capital appreciation by selecting companies with superior
potential based on a series of macro and micro analyses. The International
Growth Portfolio may select its investments from companies which are listed on
a securities exchange or from companies whose securities have an established
over-the-counter market, and may make limited investments in "thinly traded"
securities.
The International Growth Portfolio will have at least 65% of its assets
invested in European and Pacific Basin equity securities. The International
Growth Portfolio intends to broadly diversify investments among countries and
normally to have represented in the portfolio business activities of not less
than three different countries. The selection of the securities in which the
International Growth Portfolio will invest will not be limited to companies of
any particular size, and will be based only upon the expected contribution such
security will make to its investment objective.
Using an approach that involves top-down country allocation combined with
bottom-up stock selection, the Portfolio Manager will seek to identify
countries
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where economic and political factors are likely to provide above-average
returns, and companies in such countries that are best positioned in their
respective industries and are attractively valued. In this regard the Portfolio
Manager will allocate the assets of the International Growth Portfolio
principally between the European and Pacific regions. The International Growth
Portfolio will invest most of its assets in equity securities of countries
which are generally considered to have developed markets, such as the United
Kingdom, Germany, France, the Netherlands, Switzerland, Norway, Spain, Japan,
Hong Kong, Australia, and Singapore.
The Portfolio Manager's approach is governed by its belief that the principal
factors affecting an equity market's return are, on a country allocation basis,
the proportion of liquidity in the economy, and, on a stock selection basis,
consistent profit growth, a strong balance sheet and high returns on employed
capital and, in addition, that the effect of currency fluctuations on portfolio
returns can be reduced through a systematic hedging strategy.
For its country allocation, the Portfolio Manager analyzes approximately 35
international growth markets, which include the 20 markets currently comprised
in Morgan Stanley Capital International's Europe, Australia, and Far East Index
("EAFE"). The Portfolio Manager also gives consideration to such factors as
market liquidity, accessibility to foreign investors, regulatory protection of
shareholders, accounting and disclosure standards, and transferability of funds
and foreign exchange controls, if any.
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Each factor is assigned a numerical value based on a scale determined by the
historic ranges. Based on the arithmetical sum of all such values, an
attractiveness ranking for each country in the Portfolio Manager's universe is
produced on a quarterly basis. The use of three different sets of variables in
combination results in a higher degree of predictability of the valuation
model's output. Generally, the factors are equally weighted. In a few instances
a double weight is assigned if the predictive power of a particular factor has
historically been very high, like yield curve analysis, which is relevant in
all markets.
The valuation model's total return expectations provide a relative ranking in
descending order of attractiveness of all countries in the Portfolio Manager's
universe. It is not the Portfolio Manager's approach to make country "bets" by,
for example, significantly overweighting those countries showing the highest
expected return based on the output of the Portfolio Manager's valuation model.
Rather, the Portfolio Manager normalizes the distribution of country weights
through the use of a proprietary risk-variance matrix that establishes for
each market a minimum/maximum weight relative to the benchmark (EAFE). Since
the Portfolio Manager's country allocation valuation model cannot take into
account exogenous events impacting country stock market returns such as
political events, social unrest and currency turmoil, this matrix serves for
risk control purposes.
Before a decision is made to increase or lower a country weight based on the
quantitative output of the valuation
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model, the Portfolio Manager reviews the country's fundamental economic data
that are not part of the country screening process as well as its political
situation. This systematic qualitative analysis focuses on such macroeconomic
data as GDP growth, external trade balances, current account and balance of
payments, external debt position and debt service ratios, foreign reserve
position, ability to finance deficits in external accounts, fiscal and
exchange rate policies, private and public savings rates, as well as
inflationary trends.
The Portfolio Manager believes this approach to be more useful than a rigid
discipline that ties the magnitude and timing of shifts in country weights
directly to changes in the expected returns for each country produced by the
Portfolio Manager's valuation model since the Portfolio Manager does not employ
portfolio optimization techniques.
The Portfolio Manager's stock selection process begins by screening a universe
of approximately 3000 stocks in a market capitalization range from
approximately $500 million to approximately $100 billion. The Portfolio
Manager's screens are designed to be representative of each market and
generally cover a broad cross-section of companies which together account for
about 70% of total market capitalization. The Portfolio Manager's approach is
to look at companies whose growth factors can be measured and compared. The
Portfolio Manager's data series focus on low price to sales ratios, consistent
earnings growth, consistent operating margins, high returns on equity relative
to price to cash flow, and healthy debt
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ratios. The Portfolio Manager defines cash flow as recurrent net profit plus
depreciation. Furthermore, the Portfolio Manager analyzes the share price in
relation to earnings before interest, taxes, depreciation and amortization, and
looks at the underlying trend of cash and retained earnings. The screens,
comprising multiple valuation ratios, are used to ensure rigor and consistency
in the Portfolio Manager's bottom-up research.
The Portfolio Manager supplements the above quantitative screening process by
an analysis of certain qualitative criteria, one of the most important of which
is to identify strong, stable and reliable management that maintains a
company's market position through consistent unit volume growth and gains in
market share rather than a reliance on price increases, exercises tight
financial control and fosters a culture of market responsiveness.
Based on the Portfolio Manager's ranking of approximately 3000 stocks in about
35 different international equity markets, the Portfolio Manager usually
selects names which appear in the top third of the quantitative screens for
each country. Based on the screening factors, these stocks typically show low
historical deviations of annual earnings, high returns on equity and low debt
levels. Position size at purchase ranges from about 0.7% to 1% of total
portfolio assets.
Within this range position size varies in proportion to the market
capitalization of the company within a given country's stock market. The
Portfolio Manager normally allows positions to reach a
