UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-05543
Enterprise Accumulation Trust
3343 Peachtree Road
Atlanta, GA 30326
(Address of Principal Executive Offices)
Enterprise Capital Management, Inc.
3343 Peachtree Road
Atlanta, GA 30326
(Name and Address of Agent for Service)
Registrant’s telephone number including area code: (800) 432-4320
Date of fiscal year end: December 31
Date of reporting period: June 30, 2003
Item 1. Reports to Stockholders.
The following is a copy of the report transmitted to stockholders pursuant to Rule 30e-1 under the Act (17 CFR 270.30e-1):
Enterprise Multi-Cap Growth Portfolio
SUBADVISER’S COMMENTS
Fred Alger Management, Inc.
New York, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Fred Alger Management, Inc. (“Alger”) is subadviser to the Enterprise Multi-Cap Growth Portfolio. Alger has approximately $9.8 billion in assets under management and its normal investment minimum is $10 million.
Investment Objective
The objective of the Enterprise Multi-Cap Growth Portfolio is to seek long-term capital appreciation.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 20.51%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 11.77%. The Portfolio outperformed its peer group, the Lipper Multi-Cap Growth Funds Index, which returned 15.63%.
How would you describe the investment environment during the period?
The 2003 New Year brought with it an end to the positive momentum experienced throughout the fourth quarter of 2002. With the U.S. trade deficit reaching record highs, industrial production on the decline and waning consumer sentiment, equity markets trended downward during the first month of the year. The negative momentum continued into February. Despite solid growth in the manufacturing sector and a substantial drop in unemployment, investors continued to sell, as fear about a potential war with Iraq began to trump economic fundamentals. Fortunately, with the outbreak of war in March, markets reversed course and recouped some of the losses experienced in January and February. Preferring war to the pre-combat uncertainty, investors pushed most indices higher during the final month of the quarter. Mid-and large-cap growth stocks led the upturn. Despite substantial market volatility throughout the period, the Fed decided against any further rate cuts during the first quarter of 2003.
The second quarter of 2003 sustained the positive momentum experienced at the end of the first quarter, with most equity indices moving substantially higher during the three-month period. Reassured by the swift and decisive allied victory in Iraq and better-than expected first quarter profits, investors found good reason to get back into the market in April. Stocks of all market capitalizations and styles surged higher during the first month of the quarter. The positive trend continued into May. Despite terrorist attacks in Saudi Arabia and Morocco, as well as large trade deficits, investors chose to focus on rising consumer confidence and upbeat earnings outlooks from tech giants like Computer Associates, IBM and Intuit, Inc. Most equity indices moved higher in May, with small-cap growth stocks leading the way. Markets continued to stay out of the red in June. With a larger-than-expected jump in the index of leading economic indicators as well as a 0.25% rate cut on June 25, investors pushed stocks slightly higher during the final month of the quarter.
What strategies affected Portfolio performance during the period?
During the first six months of the year, the Portfolio benefited from security selection in the consumer discretionary and healthcare sectors along with an over-weighting in the strong information technology sector. At the stock level, performance benefited from positions in eBay, Inc., Amgen Inc., Intersil Corp., Yahoo! Inc. and Best Buy Company Inc. Conversely, the Portfolio was negatively impacted by positions in Biogen, Inc., Alliant Techsystems, Inc., Affiliated Computer Services Inc., Anthem Inc. and Hotels.com.
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Enterprise Multi-Cap Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
Throughout the first half of the year, the number of Portfolio holdings remained steady, while the cash position increased to approximately 5% of net assets. Significant additions included AOL Time Warner Inc., Dell Computer Corp., General Electric Co., Nike Inc. and Yahoo! Inc. Significant eliminations included Anthem Inc., Bed Bath & Beyond Inc. and Dollar Tree Stores Inc.
Investments in small-capitalization and mid-capitalization stocks are generally riskier than large-capitalization stocks due to greater earnings and price fluctuations.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
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Enterprise Multi-Cap Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 92.77% | |||||
Banking — 3.47% | |||||
Bank of New York Company Inc. | 31,600 | $ | 908,500 | ||
Mellon Financial Corporation | 43,900 | 1,218,225 | |||
2,126,725 | |||||
Biotechnology — 7.52% | |||||
Amgen Inc. (a) | 23,900 | 1,587,916 | |||
Genentech Inc. (a) | 16,600 | 1,197,192 | |||
Genzyme Corporation (a) | 23,500 | 982,300 | |||
Gilead Sciences Inc. (a) | 15,150 | 842,037 | |||
4,609,445 | |||||
Broadcasting — 2.27% | |||||
Liberty Media Corporation | 70,000 | 809,200 | |||
Viacom Inc. (Class B) (a) | 13,300 | 580,678 | |||
1,389,878 | |||||
Cable — 1.85% | |||||
Comcast Corporation (Class A) (a) | 37,500 | 1,131,750 | |||
Computer Hardware — 5.97% | |||||
Cisco Systems Inc. (a) | 93,000 | 1,552,170 | |||
Dell Computer Corporation (a) | 26,000 | 830,960 | |||
EMC Corporation (a) | 121,600 | 1,273,152 | |||
3,656,282 | |||||
Computer Services — 3.63% | |||||
Juniper Networks Inc. (a) (o) | 60,800 | 752,096 | |||
Network Appliance Inc. (a) | 35,200 | 570,592 | |||
Yahoo! Inc. (a) | 27,500 | 900,900 | |||
2,223,588 | |||||
Computer Software — 10.16% | |||||
Microsoft Corporation | 111,600 | 2,858,076 | |||
Oracle Corporation (a) | 173,100 | 2,080,662 | |||
PeopleSoft Inc. (a) | 37,600 | 661,384 | |||
Veritas Software Corporation (a) | 21,700 | 622,139 | |||
6,222,261 | |||||
Consumer Products — 1.57% | |||||
Nike, Inc. (Class B) | 18,000 | 962,820 | |||
Consumer Services — 1.08% | |||||
Apollo Group Inc. (Class A) (a) | 10,750 | 663,920 | |||
Electrical Equipment — 4.29% | |||||
General Electric Company | 60,300 | 1,729,404 | |||
Intersil Corporation (Class A) (a) | 33,800 | 899,418 | |||
2,628,822 | |||||
Electronics — 0.49% | |||||
KLA-Tencor Corporation (a) | 6,500 | 302,185 |
Number of Shares | Value | ||||
Media — 2.16% | |||||
AOL Time Warner Inc. (a) | 82,200 | $ | 1,322,598 | ||
Medical Instruments — 3.39% | |||||
Boston Scientific Corporation (a) | 20,500 | 1,252,550 | |||
Guidant Corporation | 18,600 | 825,654 | |||
2,078,204 | |||||
Misc. Financial Services — 5.48% | |||||
Citigroup Inc. | 44,500 | 1,904,600 | |||
Countrywide Credit Industries Inc. | 7,900 | 549,603 | |||
Merrill Lynch & Company Inc. | 19,400 | 905,592 | |||
3,359,795 | |||||
Multi-Line Insurance — 1.54% | |||||
American International Group Inc. | 17,100 | 943,578 | |||
Oil Services — 3.44% | |||||
Halliburton Company | 42,700 | 982,100 | |||
Smith International Inc. (a) | 18,800 | 690,712 | |||
Transocean Sedco Forex Inc. | 19,800 | 435,006 | |||
2,107,818 | |||||
Pharmaceuticals — 16.38% | |||||
Abbott Laboratories | 27,300 | 1,194,648 | |||
Allergan Inc. | 16,900 | 1,302,990 | |||
Barr Laboratories Inc. (a) | 24,175 | 1,583,462 | |||
ImClone Systems Inc. (a) (o) | 8,600 | 271,932 | |||
Merck & Company Inc. | 28,600 | 1,731,730 | |||
Mylan Laboratories Inc. | 22,300 | 775,371 | |||
Pfizer Inc. | 66,280 | 2,263,462 | |||
Wyeth | 20,050 | 913,278 | |||
10,036,873 | |||||
Retail — 12.96% | |||||
Abercrombie and Fitch Company | 36,700 | 1,042,647 | |||
Best Buy Company Inc. (a) | 28,600 | 1,256,112 | |||
eBay Inc. (a) | 14,150 | 1,474,147 | |||
Gap Inc. | 108,600 | 2,037,336 | |||
Home Depot Inc. | 22,600 | 748,512 | |||
Wal-Mart Stores Inc. | 25,750 | 1,382,002 | |||
7,940,756 | |||||
Semiconductors — 3.13% | |||||
Broadcom Corporation (Class A) (a) | 38,100 | 949,071 | |||
Micron Technology Inc. (a) | 59,700 | 694,311 | |||
National Semiconductor | 13,900 | 274,108 | |||
1,917,490 | |||||
Telecommunications — 0.98% | |||||
Comverse Technology Inc. (a) | 19,600 | 294,588 | |||
General Motors Corporation | 23,900 | 306,159 | |||
600,747 |
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Enterprise Multi-Cap Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares or Principal Amount | Value | |||||
Wireless Communications — 1.01% | ||||||
Nextel Communications Inc. | 34,200 | $ | 618,336 | |||
Total Domestic Common Stocks | ||||||
(Identified cost $49,058,766) | 56,843,871 | |||||
Foreign Stocks — 2.39% | ||||||
Medical Services — 0.74% | ||||||
Alcon Inc. (o) | 9,900 | 452,430 | ||||
Pharmaceuticals — 1.65% | ||||||
Teva Pharmaceutical Industries Ltd. (ADR) (o) | 17,800 | 1,013,354 | ||||
Total Foreign Stocks | ||||||
(Identified cost $983,830) | 1,465,784 | |||||
Short-Term Agency Obligations — 2.45% | ||||||
Freddie Mac Discount Note, | $ | 1,000,000 | 999,280 | |||
Fannie Mae Discount Note | 500,000 | 499,869 | ||||
Total Short-Term Agency Obligations | ||||||
(Identified cost $1,499,149) | 1,499,149 | |||||
Principal Amount | Value | |||||
Repurchase Agreement — 3.69% | ||||||
State Street Bank & Trust Repurchase Agreement, 0.70% due 07/01/03 Proceeds $2,261,044 Collateral: U.S. Treasury Note $2,290,000, | $ | 2,261,000 | $ | 2,261,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $2,261,000) | 2,261,000 | |||||
Total Investments | ||||||
(Identified cost $53,802,745) | $ | 62,069,804 | ||||
Other Assets Less Liabilities — (1.30)% | (798,996) | |||||
Net Assets — 100% | $ | 61,270,808 | ||||
(a) | Non-income producing security. |
(e) | The rate shown is the effective yield. |
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
(ADR) | American Depository Receipt. |
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 62,069,804 | ||
Investment purchased in connection with securities lending, at value (Note 5) | 1,914,732 | |||
Investment income receivable | 33,122 | |||
Receivable for fund shares sold | 27,351 | |||
Receivable for investments sold | 143,929 | |||
Cash | 890 | |||
Other assets | 1,266 | |||
Total assets | 64,191,094 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 153,902 | |||
Payable for investments purchased | 818,354 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 1,914,732 | |||
Shareholder serving fees payable | 15,161 | |||
Accrued expenses and other liabilities | 18,137 | |||
Total liabilities | 2,920,286 | |||
Net Assets | $ | 61,270,808 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 153,426,745 | ||
Undistributed (accumulated) net investment income (loss) | (150,882 | ) | ||
Undistributed (accumulated) net realized gain (loss) | (100,272,114 | ) | ||
Unrealized appreciation (depreciation) | 8,267,059 | |||
Net Assets | $ | 61,270,808 | ||
Shares outstanding | 9,226,846 | |||
Net asset value per share | $6.64 | |||
Investments at cost | $ | 53,802,745 | ||
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 160,283 | (1) | |
Interest | 15,225 | |||
Securities lending income | 1,353 | |||
Total investment income | 176,861 | |||
Expenses: | ||||
Investment advisory fees | 272,962 | |||
Custodian and fund accounting fees | 13,985 | |||
Trustees’ fees | 1,124 | |||
Audit and legal fees | 8,385 | |||
Shareholder servicing fees | 29,808 | |||
Other expenses | 1,565 | |||
Total expenses | 327,829 | |||
Expenses reduced by expense offset arrangements | (86 | ) | ||
Total expenses, net of expense offset arrangements | 327,743 | |||
Net investment income (loss) | (150,882 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (12,465 | ) | ||
Net change in unrealized gain (loss) on investments | 10,500,921 | |||
Net realized and unrealized gain (loss) | 10,488,456 | |||
Net increase (decrease) in net assets resulting from operations | $ | 10,337,574 | ||
(1) | Net of foreign taxes withheld of $1,718. |
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (150,882 | ) | $ | (512,199 | ) | ||
Net realized gain (loss) | (12,465 | ) | (25,682,390 | ) | ||||
Net change in unrealized gain (loss) | 10,500,921 | (6,602,211 | ) | |||||
Increase (decrease) in net assets resulting from operations | 10,337,574 | (32,796,800 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 3,499,273 | 6,856,018 | ||||||
Reinvestment of distributions | — | — | ||||||
Shares redeemed | (5,152,280 | ) | (21,429,908 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (1,653,007 | ) | (14,573,890 | ) | ||||
Total increase (decrease) in net assets | 8,684,567 | (47,370,690 | ) | |||||
Net assets: | ||||||||
Beginning of period | 52,586,241 | 99,956,931 | ||||||
End of period | $ | 61,270,808 | $ | 52,586,241 | ||||
Capital share activity: | ||||||||
Shares issued | 569,636 | 938,879 | ||||||
Shares issued in reinvestment of distributions | — | — | ||||||
Shares redeemed | (889,249 | ) | (3,245,394 | ) | ||||
Net increase (decrease) | (319,613 | ) | (2,306,515 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | (150,882 | ) | $ | — | |||
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) | For the years ended December 31, | For the Period 7/15/99 through 12/31/1999 | ||||||||||||||||||
2002 | 2001 | 2000 | ||||||||||||||||||
Net asset value, beginning of period | $ | 5.51 | $ | 8.43 | $ | 10.15 | $ | 14.63 | $ | 5.00 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | (0.02 | ) | (0.05 | ) | (0.02 | ) | (0.02 | ) | (0.01 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments | 1.15 | (2.87 | ) | (1.70 | ) | (4.45 | ) | 9.64 | ||||||||||||
Total from investment operations | 1.13 | (2.92 | ) | (1.72 | ) | (4.47 | ) | 9.63 | ||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | — | — | — | — | — | |||||||||||||||
Distributions from capital gains | — | — | — | (0.01 | ) | — | ||||||||||||||
Total distributions | — | — | — | (0.01 | ) | — | ||||||||||||||
Net asset value, end of period | $ | 6.64 | $ | 5.51 | $ | 8.43 | $ | 10.15 | $ | 14.63 | ||||||||||
Total return | 20.51 | %B | (34.64 | )% | (16.95 | )% | (30.59 | )% | 192.60 | %B | ||||||||||
Net assets end of period (in thousands) | $ | 61,271 | $ | 52,586 | $ | 99,957 | $ | 128,714 | $ | 47,960 | ||||||||||
Ratio of expenses to average net assets | 1.20 | %A | 1.13 | % | 1.10 | % | 1.10 | % | 1.40 | %A | ||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.20 | %A | 1.13 | % | 1.10 | % | 1.10 | % | 1.52 | %A | ||||||||||
Ratio of net investment income (loss) to average net assets | (0.55 | )%A | (0.68 | )% | (0.23 | )% | (0.13 | )% | (0.21 | )A | ||||||||||
Portfolio turnover | 71 | % | 192 | % | 107 | % | 128 | % | 21 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
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Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Multi-Cap Growth Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium
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Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and
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Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 1.00%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $29,818 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.40%.
For the six months ended June 30, 2003, the Portfolio paid brokerage commissions of $73,748 to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
— | — | $36,984,002 | $39,778,219 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of | Units of Prime | Current Value of | ||
$1,851,550 | 1,941,732 | $1,941,732 |
6. Directed Brokerage
The Portfolio may direct certain security trades to brokers who pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. Under these arrangements, the Portfolio had expenses reduced by $86 during the six months ended June 30, 2003.
7. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
8. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | |||
$53,802,745 | $8,580,500 | $(313,441) | $8,267,059 |
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12
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
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13
Enterprise Accumulation Trust
MULTI-CAP GROWTH PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
14
Enterprise Small Company Growth Portfolio
SUBADVISER’S COMMENTS
William D. Witter, Inc.
New York, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
William D. Witter, Inc. (“Witter”), which has approximately $1.6 billion in assets under management, is subadviser to the Enterprise Small Company Growth Portfolio. Witter’s normal investment minimum is $1 million.
Investment Objective
The objective of the Enterprise Small Company Growth Portfolio is to seek capital appreciation.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 7.19%. The Portfolio underperformed its benchmark, the Russell 2000 Index, which returned 17.88%. The Portfolio underperformed its peer group, the Lipper Small-Cap Growth Funds Index, which returned 18.75%.
How would you describe the investment environment during the period?
During the first two months of the period, the investment environment was cautious. The prospect of a war with Iraq was the greatest concern. The lack of a significant pick-up in economic activity and the continuing reluctance of corporations to invest in inventories, new employees or capital spending, also affected investor confidence. Manifestations of the caution included short positions estimated to be twice as large as normal in the equity market, the lowest interest rates in more than 40 years and a weakening in the U.S. dollar.
Beginning March 11, the stock market started to rise. The success of U.S. military action led investors to think more positively. The absence of significant signs of economic improvement was of less importance. From that point throughout the balance of the period, momentum investing took over. The Internet software/service, biotechnology and telecommunication sectors were among the leaders.
What strategies affected Portfolio performance during the period?
Witter’s strategy of being fully invested in equities during the period positively impacted the Portfolio. The focus on “growth at a reasonable price” detracted from the performance during the period. The lack of substantial participation in biotechnology, Internet software/service and the telecommunications equipment restrained the Portfolio’s performance. In general, these types of companies did not fit into the “growth at a reasonable price” strategy.
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Enterprise Small Company Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
During the period, a major part of purchases were in the technology, healthcare and natural gas groups. Additions to existing technology holdings included Cray Inc., Genesis Microchip, Inc., MKS Instruments, Inc., MSC Software Corporation and Photronics, Inc. New healthcare positions included Healthcare Services Group and Kensey Nash Corp. Other new names included two retailers, Christopher & Banks Corp. and Tractor Supply Company, both of which are going through 16-20% growth phases.
Sales of securities included a reduction in Candela Corporation, which experienced strong appreciation in a short period of time. The largest amount of sales included the elimination of holdings in which growth had not developed as Witter had anticipated. Advanced Marketing Services, Inc., AstroPower, Inc., Flow International Corporation and Navigant International were included in this group.
There are specific risks associated with investments in small company stocks. Limited volume and frequency of trading may result in greater price deviations, and smaller capitalization companies may experience higher growth rates and higher failure rates than large companies.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
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2
Enterprise Small Company Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 94.55% | |||||
Airlines — 2.19% | |||||
SkyWest Inc. | 80,700 | $ | 1,538,142 | ||
Biotechnology — 2.09% | |||||
Pharmaceutical Product Development Inc. (a) (o) | 51,000 | 1,465,230 | |||
Business Services — 5.56% | |||||
Charles River Associates Inc. (a) | 80,700 | 2,281,389 | |||
MAXIMUS Inc. (a) (o) | 58,900 | 1,627,407 | |||
3,908,796 | |||||
Computer Hardware — 1.73% | |||||
Drexler Technology | 78,500 | 1,216,750 | |||
Computer Services — 9.38% | |||||
CACI International Inc. (a) | 74,300 | 2,548,490 | |||
Cray Inc. (a) (o) | 231,180 | 1,826,322 | |||
Integral Systems Inc. (a) (o) | 62,100 | 1,234,548 | |||
MapInfo Corporation (a) (o) | 83,350 | 594,285 | |||
Tier Technologies Inc. (a) (o) | 50,000 | 387,500 | |||
6,591,145 | |||||
Computer Software — 1.76% | |||||
MSC.Software Corporation (a) (o) | 89,900 | 605,926 | |||
PLATO Learning Inc. (a) | 110,066 | 632,880 | |||
1,238,806 | |||||
Electrical Equipment — 8.46% | |||||
C & D Technologies | 69,400 | 996,584 | |||
Electro Scientific Industries | 77,700 | 1,177,932 | |||
Varian Inc. (a) (o) | 77,500 | 2,686,925 | |||
Woodhead Industries (o) | 86,600 | 1,084,232 | |||
5,945,673 | |||||
Electronics — 6.03% | |||||
Ceradyne Inc. (a) | 32,000 | 599,360 | |||
Planar Systems Inc. (a) (o) | 114,000 | 2,229,840 | |||
Veeco Instruments Inc. (a) (o) | 82,700 | 1,408,381 | |||
4,237,581 | |||||
Hotels & Restaurants — 3.13% | |||||
The Cheesecake Factory Inc. (a) | 61,200 | 2,196,468 | |||
Medical Instruments — 17.86% | |||||
Candela Corporation (a) | 161,400 | 1,859,328 | |||
Cytyc Corporation (a) | 172,100 | 1,810,492 | |||
ICU Medical Inc. (a) (o) | 70,750 | 2,203,862 | |||
Kensey Nash Corporation (a) (o) | 99,500 | 2,587,000 | |||
Varian Medical Systems Inc. (a) (o) | 23,900 | 1,375,923 | |||
Zoll Medical Corporation (a) (o) | 80,700 | 2,708,292 | |||
12,544,897 |
Number of Shares or Principal Amount | Value | |||||
Medical Services — 6.05% | ||||||
Healthcare Services Group Inc. (a) | 72,500 | $ | 1,024,425 | |||
Impath Inc. (a) (o) | 83,000 | 1,173,620 | ||||
U.S. Physical Therapy Inc. (a) (o) | 95,600 | 1,221,768 | ||||
Vital Images Inc. (a) (o) | 45,000 | 827,100 | ||||
4,246,913 | ||||||
Oil Services — 10.29% | ||||||
Cimarex Energy Company (a) | 105,200 | 2,498,500 | ||||
Devon Energy Corporation (o) | 25,800 | 1,377,720 | ||||
Smith International Inc. (a) (o) | 44,200 | 1,623,908 | ||||
Ultra Petroleum Corporation (a) | 134,000 | 1,729,940 | ||||
7,230,068 | ||||||
Real Estate — 1.75% | ||||||
Meritage Corporation (a) (o) | 25,000 | 1,231,500 | ||||
Retail — 5.33% | ||||||
Christopher & Banks Corporation (a) | 44,500 | 1,646,055 | ||||
Tractor Supply Company (a) (o) | 44,000 | 2,101,000 | ||||
3,747,055 | ||||||
Semiconductors — 7.75% | ||||||
Genesis Microchip Inc. (a) (o) | 85,000 | 1,150,900 | ||||
Intermagnetics General Corporation (a) (o) | 100,200 | 1,987,968 | ||||
MKS Instruments Inc. (a) (o) | 44,357 | 801,531 | ||||
Photronics Inc. (a) (o) | 86,400 | 1,507,680 | ||||
5,448,079 | ||||||
Technology — 5.19% | ||||||
Flir Systems Inc. (a) (o) | 121,000 | 3,648,150 | ||||
Total Domestic Common Stocks | ||||||
(Identified cost $71,025,956) | 66,435,253 | |||||
Commercial Paper — 5.70% | ||||||
Mortgage Interest Networking 1.31% due 07/01/03 | $ | 4,005,000 | 4,005,000 | |||
Total Commercial Paper | ||||||
(Identified cost $4,005,000) | 4,005,000 | |||||
Total Investments | ||||||
(Identified cost $75,030,956) | $ | 70,440,253 | ||||
Other Assets Less Liabilities — (0.25)% | (177,852) | |||||
Net Assets — 100% | $ | 70,262,401 | ||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
See notes to financial statements.
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Enterprise Small Company Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 70,440,253 | ||
Investment purchased in connection with securities lending, at value (Note 5) | 17,108,260 | |||
Investment income receivable | 4,926 | |||
Receivable for fund shares sold | 2,255 | |||
Receivable for investments sold | 241,461 | |||
Cash | 959 | |||
Other assets | 1,601 | |||
Total assets | 87,799,715 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 200,516 | |||
Payable for investments purchased | 193,285 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 17,108,260 | |||
Shareholder servicing fees payable | 17,197 | |||
Accrued expenses and other liabilities | 18,056 | |||
Total liabilities | 17,537,314 | |||
Net Assets | $ | 70,262,401 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 89,784,072 | ||
Undistributed (accumulated) net investment income (loss) | (309,860 | ) | ||
Undistributed (accumulated) net realized gain (loss) | (14,621,108 | ) | ||
Unrealized appreciation (depreciation) | (4,590,703 | ) | ||
Net Assets | $ | 70,262,401 | ||
Shares outstanding | 10,966,119 | |||
Net asset value per share | $6.41 | |||
Investments at cost | $ | 75,030,956 | ||
See notes to financial statements.
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Enterprise Small Company Growth Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 40,677 | ||
Interest | 20,498 | |||
Securities lending income | 12,839 | |||
Total investment income | 74,014 | |||
Expenses: | ||||
Investment advisory fees | 319,539 | |||
Custodian and fund accounting fees | 10,882 | |||
Reports to shareholders | 3,525 | |||
Trustees’ fees | 1,381 | |||
Audit and legal fees | 12,458 | |||
Shareholder servicing fees | 33,974 | |||
Other expenses | 2,115 | |||
Total expenses | 383,874 | |||
Net investment income (loss) | (309,860 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (6,785,058 | ) | ||
Net change in unrealized gain (loss) on investments | 11,798,244 | |||
Net realized and unrealized gain (loss) | 5,013,186 | |||
Net increase (decrease) in net assets resulting from operations | $ | 4,703,326 | ||
See notes to financial statements.
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Enterprise Small Company Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (309,860 | ) | $ | (589,201 | ) | ||
Net realized gain (loss) | (6,785,058 | ) | (3,542,977 | ) | ||||
Net change in unrealized gain (loss) | 11,798,244 | (17,724,488 | ) | |||||
Increase (decrease) in net assets resulting from operations | 4,703,326 | (21,856,666 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 8,575,928 | 21,691,709 | ||||||
Reinvestment of distributions | — | — | ||||||
Shares redeemed | (9,220,056 | ) | (16,222,694 | ) | ||||
Total increase (decrease) in net assets resulting from capital | (644,128 | ) | 5,469,015 | |||||
Total increase (decrease) in net assets | 4,059,198 | (16,387,651 | ) | |||||
Net assets: | ||||||||
Beginning of period | 66,203,203 | 82,590,854 | ||||||
End of period | $ | 70,262,401 | $ | 66,203,203 | ||||
Capital share activity: | ||||||||
Shares issued | 1,471,342 | 3,077,064 | ||||||
Shares issued in reinvestment of distributions | — | — | ||||||
Shares redeemed | (1,583,421 | ) | (2,497,212 | ) | ||||
Net increase (decrease) | 112,079 | 579,852 | ||||||
Undistributed (accumulated) net investment income (loss) | $ | (309,860 | ) | $ | — | |||
See notes to financial statements.
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6
Enterprise Small Company Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the years ended December 31, | For the Period 12/01/98 through 12/31/1998 | ||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 5.98 | $ | 7.87 | $ | 8.60 | $ | 8.50 | $ | 5.46 | $ | 5.00 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (0.03 | )C | (0.05 | )C | (0.05 | )C | (0.03 | )C | (0.05 | )C | 0.00 | E | ||||||||||||
Net realized and unrealized gain (loss) on investments | 0.46 | (1.84 | ) | (0.38 | ) | 0.20 | D | 3.09 | 0.46 | |||||||||||||||
Total from investment operations | 0.43 | (1.89 | ) | (0.43 | ) | 0.17 | 3.04 | 0.46 | ||||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | — | — | — | — | — | ||||||||||||||||||
Distributions from capital gains | — | — | (0.30 | ) | (0.07 | ) | — | — | ||||||||||||||||
Total distributions | — | — | (0.30 | ) | (0.07 | ) | — | — | ||||||||||||||||
Net asset value, end of period | $ | 6.41 | $ | 5.98 | $ | 7.87 | $ | 8.60 | $ | 8.50 | $ | 5.46 | ||||||||||||
Total return | 7.19 | %B | (24.02 | )% | (3.80 | )% | 1.90 | % | 55.68 | % | 9.20 | %B | ||||||||||||
Net assets end of period (in thousands) | $ | 70,262 | $ | 66,203 | $ | 82,591 | $ | 82,061 | $ | 23,429 | $ | 469 | ||||||||||||
Ratio of expenses to average net assets | 1.20 | %A | 1.12 | % | 1.10 | % | 1.11 | % | 1.40 | % | 1.40 | %A | ||||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.20 | %A | 1.12 | % | 1.10 | % | 1.11 | % | 1.55 | % | 60.67 | %A | ||||||||||||
Ratio of net investment income (loss) to average net assets | (0.97 | )%A | (0.79 | )% | (0.62 | )% | (0.32 | )% | (0.81 | )% | (1.26 | )%A | ||||||||||||
Portfolio turnover | 26 | % | 37 | % | 40 | % | 47 | % | 37 | % | 4 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Per share income from investment operations may vary from anticipated results depending on the timing of capital share purchases and redemptions. |
E | Less than $0.01 per share. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Small Company Growth Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 1.00%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $33,975 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%, effective May 1, 2003. Prior to this date the expenses were limited to an annual ratio of 1.40%.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 16,178,134 | $ | 17,815,672 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of Securities on Loan At June 30, 2003 | Units of Prime Portolio Owned | Current Value of Collateral Held At June 30, 2003 | ||||
$ | 16,512,198 | 17,108,260 | $ | 17,108,260 |
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Loss | |||
$75,030,956 | $7,716,656 | ($12,307,359) | ($4,590,703) |
ENTERPRISE Accumulation Trust
11
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 28 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
12
Enterprise Accumulation Trust
SMALL COMPANY GROWTH PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
13
Enterprise Small Company Value Portfolio
SUBADVISER’S COMMENTS
Gabelli Asset Management Company
Rye, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Gabelli Asset Management Company (“Gabelli”), which manages approximately $21.0 billion for institutional clients and whose normal investment minimum is $1 million, is subadviser to the Enterprise Small Company Value Portfolio.
Investment Objective
The objective of the Enterprise Small Company Value Portfolio is to seek maximum capital appreciation.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 10.90%. The Portfolio underperformed its benchmark, the Russell 2000 Index, which returned 17.88%. The Portfolio underperformed its peer group, the Lipper Small-Cap Value Funds Index, which returned 15.73%.
How would you describe the investment environment during the period?
Within the first half of 2003, the market shrugged off concerns of war, the corporate “crisis of confidence,” the possibility of future terrorist attacks on the U.S. and high oil prices. By the second quarter, the stock market soared, experiencing low inflation and interest rates, low labor costs, strong car sales, vibrant house refinancing, new corporate governance regulation, increased corporate earnings and a new tax bill, which Gabelli believed provided a powerful stimulus to the economy. Gabelli believes the stock market did what it was supposed to do: anticipate a stronger economy and better corporate earnings well ahead of the fact.
What strategies affected Portfolio performance during the period?
Technology was one of the best performing sectors in the small cap universe. Gabelli’s traditional under-weighting in technology, which has served shareholders well in recent years, restrained relative performance.
Gabelli had made several investments for the Portfolio over the years in electric, gas and water utilities and saw several catalysts in these companies: the stocks were cheap, the downfall of Enron created great opportunities and a repeal of utilities regulation encouraged mergers. The new 15% tax rate on qualifying dividends has helped these stocks.
For several years, Gabelli continued to buy media stocks for the Portfolio with the expectation that the FCC would have a less stringent regulatory stance. On June 2, the FCC relaxed many significant restrictions on broadcast and newspaper conglomerates, allowing them to expand into new markets and extend their reach in cities where they already had a presence.
What changes were made to the Portfolio over the period?
Gabelli did not make major changes to the Portfolio over the past six months. At the margin, Gabelli added to several names such as Flowers Foods Inc., the leading bakery company; Hercules Inc., which could be sold; Boston Beer Company Inc., which continues to buy back its stock; and Gaylord Entertainment Company, which is selling off certain assets. Gabelli sold their holdings in Nortek Holdings Inc. and Allen Telecom, Inc., which were taken over. Allen’s products were specifically used to strengthen wireless signal reception. Their customers include equipment
ENTERPRISE Accumulation Trust
1
Enterprise Small Company Value Portfolio
SUBADVISER’S COMMENTS — (Continued)
maker Lucent Technologies Inc., Nortel Networks Corporation and Motorola Inc. and service providers such as AT&T Wireless Services Inc. and Verizon Wireless Inc. They agreed to be purchased by Andrew Corp. for about $500 million in stock.
There are specific risks associated with investments in small company stocks. Limited volume and frequency of trading may result in greater price deviations, and smaller capitalization companies may experience higher growth rates and higher failure rates than large companies.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
2
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 97.45% | |||||
Advertising — 0.04% | |||||
Interep National Radio Sales Inc. (a) | 45,000 | $ | 125,550 | ||
Aerospace — 7.65% | |||||
AAR Corporation (o) | 36,000 | 254,160 | |||
Ametek Inc. | 90,000 | 3,298,500 | |||
Curtiss-Wright Corporation (Class A) | 58,000 | 3,665,600 | |||
Curtiss-Wright Corporation (Class B) | 11,000 | 685,300 | |||
GenCorp Inc. (o) | 313,000 | 2,782,570 | |||
Kaman Corporation (Class A) | 170,000 | 1,987,300 | |||
Lockheed Martin Corporation | 34,000 | 1,617,380 | |||
Moog Inc. (Class A) (a) | 60,000 | 2,085,000 | |||
Sequa Corporation (Class A) (a) | 69,000 | 2,366,700 | |||
Sequa Corporation (Class B) | 44,000 | 1,819,840 | |||
SPS Technologies Inc. (a) | 153,000 | 4,137,120 | |||
24,699,470 | |||||
Apparel & Textiles — 0.47% | |||||
Hartmarx Corporation (a) | 240,000 | 717,600 | |||
Levcor International Inc. (a) | 51,347 | 120,666 | |||
Wolverine World Wide Inc. | 35,000 | 674,100 | |||
1,512,366 | |||||
Automotive — 9.50% | |||||
A. O. Smith Corporation | 20,000 | 563,000 | |||
A. O. Smith Corporation (Class A) | 12,000 | 318,000 | |||
Aaron Rents Inc. (Class A) | 1,000 | 24,300 | |||
ArvinMeritor Inc. | 40,000 | 807,200 | |||
AutoNation Inc. (a) | 38,000 | 597,360 | |||
BorgWarner Inc. | 76,000 | 4,894,400 | |||
Clarcor Inc. | 195,000 | 7,517,250 | |||
Earl Scheib Inc. (a) (f) | 225,000 | 612,000 | |||
Exide Technologies (a) (o) | 50,000 | 14,500 | |||
Federal-Mogul Corporation (a) (o) | 60,000 | 19,800 | |||
Midas Inc. (a) (o) | 220,000 | 2,666,400 | |||
Modine Manufacturing Company | 245,000 | 4,745,650 | |||
Navistar International Corporation (a) | 60,000 | 1,957,800 | |||
Raytech Corporation (a) (o) | 20,000 | 85,000 | |||
Standard Motor Products Inc. (o) | 220,000 | 2,442,000 | |||
Superior Industries International Inc. (o) | 51,000 | 2,126,700 | |||
Tenneco Automotive Inc. (a) (o) | 200,000 | 720,000 | |||
United Auto Group Inc. (a) (o) | 25,000 | 544,500 | |||
30,655,860 | |||||
Banking — 0.75% | |||||
Sterling Bancorp | 86,460 | 2,411,369 | |||
Biotechnology — 0.15% | |||||
Invitrogen Corporation (a) | 13,000 | 498,810 |
Number of Shares | Value | ||||
Broadcasting — 5.12% | |||||
Beasley Broadcast Group Inc. (Class A) (a) | 72,000 | $ | 984,960 | ||
Cumulus Media Inc. (Class A) (a) | 10,000 | 189,300 | |||
Fisher Communications Inc. (a) | 51,400 | 2,513,974 | |||
Granite Broadcasting Corporation (a) | 185,000 | 566,100 | |||
Gray Television Inc. (o) | 260,000 | 3,223,000 | |||
Liberty Media Corporation (Class A) (a) | 156,000 | 1,803,360 | |||
Paxson Communications Corporation (a) | 325,000 | 1,946,750 | |||
Salem Communications Corporation (Class A) (a) | 125,000 | 2,501,375 | |||
UnitedGlobalCom Inc. (a) (o) | 140,000 | 723,800 | |||
World Wrestling Federation Entertainment Inc. | 12,000 | 123,480 | |||
Young Broadcasting Inc. (Class A) (a) | 92,000 | 1,943,960 | |||
16,520,059 | |||||
Building & Construction — 2.55% | |||||
Core Materials Corporation (a) | 135,000 | 263,250 | |||
Hughes Supply Inc. | 1,000 | 34,700 | |||
Huttig Building Products Inc. (a) | 45,444 | 123,153 | |||
Monaco Coach Corporation (a) (o) | 5,000 | 76,650 | |||
Rollins Inc. (o) | 410,500 | 7,737,925 | |||
8,235,678 | |||||
Business Services — 0.61% | |||||
Edgewater Technology Inc. (a) (o) | 210,000 | 1,008,000 | |||
Nashua Corporation (a) | 73,000 | 649,700 | |||
National Processing Inc. (a) | 20,000 | 321,600 | |||
1,979,300 | |||||
Cable — 1.35% | |||||
Cablevision Systems Corporation (Class A) (a) | 185,000 | 3,840,600 | |||
Lamson & Sessions Company (a) | 110,000 | 530,200 | |||
4,370,800 | |||||
Chemicals — 2.93% | |||||
Church & Dwight Company Inc. | 50,000 | 1,636,500 | |||
Cytec Industries Inc. (a) | 5,000 | 169,000 | |||
Ethyl Corporation (a) | 18,000 | 179,100 | |||
Ferro Corporation | 100,000 | 2,253,000 | |||
Great Lakes Chemical Corporation | 140,000 | 2,856,000 | |||
Hercules Inc. (a) | 100,000 | 990,000 | |||
MacDermid Inc. | 15,000 | 394,500 | |||
Omnova Solutions Inc. (a) | 245,000 | 989,800 | |||
9,467,900 | |||||
Computer Hardware — 0.00% | |||||
Cerion Technologies Inc. (a) (d) (m) | 90,000 | — |
ENTERPRISE Accumulation Trust
3
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares | Value | ||||
Computer Services — 0.20% | |||||
Startek Inc. (a) | 6,000 | $ | 157,800 | ||
Tyler Technologies Inc. (a) | 25,000 | 106,250 | |||
Xanser Corp (a) (o) | 175,000 | 376,250 | |||
640,300 | |||||
Computer Software — 0.01% | |||||
OpenTV Corporation (Class A) (a) (o) | 19,000 | 26,030 | |||
Conglomerates — 0.09% | |||||
Harbor Global Company Ltd. (a) | 40,000 | 300,000 | |||
Consumer Durables — 0.22% | |||||
Noel Group Liquidating Trust Units (a) (d) (g) (m) | 135,000 | 37,800 | |||
Noel Group Units (a) (d) (g) (m) | 135,000 | — | |||
Oneida Ltd. (o) | 100,000 | 675,000 | |||
712,800 | |||||
Consumer Products — 0.92% | |||||
Elizabeth Arden Inc. (a) (o) | 49,500 | 651,915 | |||
New England Business Service Inc. | 21,000 | 630,000 | |||
Revlon Inc. (Class A) (a) (o) | 67,005 | 201,015 | |||
Scotts Company (a) | 3,000 | 148,500 | |||
Sola International Inc. (a) | 36,000 | 626,400 | |||
The Dial Corporation | 15,000 | 291,750 | |||
WD-40 Company (o) | 15,000 | 428,250 | |||
2,977,830 | |||||
Consumer Services — 0.88% | |||||
Bull Run Corporation (a) | 14,000 | 46,060 | |||
Roto Rooter Inc. | 73,000 | 2,784,220 | |||
2,830,280 | |||||
Drugs & Medical Products — 0.46% | |||||
Owens & Minor Inc. (o) | 20,000 | 447,000 | |||
Thermo Electron Corporation (a) | 50,000 | 1,051,000 | |||
1,498,000 | |||||
Education — 0.09% | |||||
Whitman Education Group Inc. (a) (o) | 18,000 | 276,300 | |||
Electrical Equipment — 4.89% | |||||
Ampco-Pittsburgh Corporation | 130,000 | 1,742,000 | |||
Baldor Electric Company (o) | 95,000 | 1,957,000 | |||
C & D Technologies | 4,000 | 57,440 | |||
Donaldson Company Inc. | 20,000 | 889,000 | |||
DQE Inc. (o) | 130,000 | 1,959,100 | |||
National Presto Industries Inc. (a) | 10,000 | 316,000 | |||
Oak Technology Inc. | 12,400 | 77,004 | |||
SL Industries Inc. (a) | 82,000 | 537,100 | |||
Thomas & Betts Corporation (a) | 160,000 | 2,312,000 | |||
Thomas Industries Inc. | 220,000 | 5,951,000 | |||
15,797,644 |
Number of Shares | Value | ||||
Electronics — 0.53% | |||||
CTS Corporation (o) | 80,000 | $ | 836,000 | ||
Park Electrochemical Corporation | 44,000 | 877,800 | |||
1,713,800 | |||||
Energy — 0.85% | |||||
Aquila Inc. (o) | 50,000 | 129,000 | |||
El Paso Electric Company (a) | 160,000 | 1,972,800 | |||
ONEOK Inc. | 30,000 | 588,900 | |||
SEMCO Energy Inc. (o) | 10,000 | 58,200 | |||
2,748,900 | |||||
Entertainment & Leisure — 4.59% | |||||
Acme Communications Inc. (a) | 50,000 | 380,000 | |||
Churchill Downs Inc. (o) | 52,000 | 1,992,120 | |||
Dover Downs Gaming & Entertainment Inc. | 66,000 | 610,500 | |||
Dover Motorsports Inc. | 113,000 | 463,300 | |||
E.W. Scripps Company (Class A) | 19,000 | 1,685,680 | |||
Gaylord Entertainment Company (a) | 300,000 | 5,871,000 | |||
K2 Inc. (a) | 37,000 | 453,250 | |||
Magna Entertainment Corporation (Class A) (a) (o) | 80,000 | 400,000 | |||
Metro Goldwyn Mayer Inc. (a) | 25,000 | 310,500 | |||
Sinclair Broadcast Group Inc. (a) (o) | 150,000 | 1,741,500 | |||
Six Flags Inc. (a) (o) | 120,000 | 813,600 | |||
Thor Industries Inc. (o) | 2,000 | 81,640 | |||
14,803,090 | |||||
Finance — 1.06% | |||||
BKF Capital Group Inc. (a) (o) | 44,000 | 960,520 | |||
Interactive Data Corporation (a) | 140,000 | 2,366,000 | |||
SWS Group Inc. (o) | 5,000 | 100,750 | |||
3,427,270 | |||||
Food, Beverages & Tobacco — 6.80% | |||||
Boston Beer Inc. (Class A) (a) (o) | 34,000 | 489,600 | |||
Corn Products International Inc. | 80,000 | 2,402,400 | |||
Del Monte Foods Company (a) | 32,000 | 282,880 | |||
Flowers Foods Inc. | 228,000 | 4,505,280 | |||
Hain Celestial Group Inc. (a) | 12,000 | 191,880 | |||
Ingles Markets Inc. (Class A) (o) | 140,000 | 1,414,000 | |||
John B. Sanfilippo & Son Inc. (a) | 14,000 | 226,100 | |||
PepsiAmericas Inc. | 148,000 | 1,858,880 | |||
Ralcorp Holdings Inc. (a) | 70,000 | 1,747,200 | |||
Robert Mondavi Corporation | 46,000 | 1,164,260 | |||
Sensient Technologies Corporation (o) | 100,000 | 2,299,000 | |||
Suprema Specialties Inc. (a) (d) (m) | 1,500 | — | |||
Tootsie Roll Industries Inc. (o) | 107,120 | 3,266,089 | |||
Triarc Companies Inc. (Class A) (a) (o) | 40,000 | 1,199,600 | |||
Weis Markets Inc. | 29,000 | 899,580 | |||
21,946,749 | |||||
Gaming — 0.15% | |||||
Lakes Entertainment Inc. (a) (o) | 62,000 | 495,318 | |||
Health Care — 0.02% | |||||
Viasys Healthcare Inc. (a) | 3,500 | 72,450 |
ENTERPRISE Accumulation Trust
4
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares | Value | ||||
Hotels & Restaurants — 2.04% | |||||
Aztar Corporation (a) | 190,000 | $ | 3,060,900 | ||
Boca Resorts Inc. (a) (o) | 135,000 | 1,755,000 | |||
Extended Stay America Inc. (a) | 6,000 | 80,940 | |||
Louisiana Quinta Corporation (a) | 80,000 | 344,800 | |||
Park Place Entertainment Corporation (a) | 30,000 | 272,700 | |||
RFS Hotel Investors Inc. | 15,000 | 184,800 | |||
The Steak n Shake Company (a) | 47,000 | 716,750 | |||
Trump Hotels & Casino Resorts Inc. (a) | 75,000 | 146,250 | |||
Wyndham International Inc. (a) | 30,000 | 13,200 | |||
6,575,340 | |||||
Insurance — 3.42% | |||||
Argonaut Group Inc. | 114,000 | 1,405,620 | |||
Danielson Holding Corporation (a) | 84,000 | 134,400 | |||
Liberty Corporation | 142,000 | 6,035,000 | |||
Midland Company | 156,500 | 3,475,865 | |||
11,050,885 | |||||
Machinery — 4.58% | |||||
Baldwin Technology Company Inc. | 200,000 | 128,000 | |||
Fairchild Corporation (Class A) (a) | 220,000 | 886,600 | |||
Flowserve Corporation (a) | 82,000 | 1,612,940 | |||
Franklin Electric Company Inc. | 37,000 | 2,059,050 | |||
Gorman Rupp Company | 20,000 | 480,000 | |||
IDEX Corporation | 75,000 | 2,718,000 | |||
Katy Industries Inc. (a) | 160,000 | 780,800 | |||
Paxar Corporation (a) | 121,100 | 1,332,100 | |||
Standex International Corporation | 55,000 | 1,155,000 | |||
Tennant Company | 36,000 | 1,323,000 | |||
Watts Industries Inc. (Class A) | 130,000 | 2,320,500 | |||
14,795,990 | |||||
Manufacturing — 9.42% | |||||
Acuity Brands Inc. | 55,600 | 1,010,252 | |||
Aviall Inc. (a) (o) | 120,000 | 1,364,400 | |||
Barnes Group Inc. | 70,000 | 1,523,200 | |||
Belden Inc. | 100,000 | 1,589,000 | |||
Crane Company | 110,000 | 2,489,300 | |||
Cuno Inc. (a) | 63,000 | 2,275,560 | |||
Energizer Holdings Inc. (a) | 75,000 | 2,355,000 | |||
Esco Technologies Inc. (a) | 1,500 | 66,000 | |||
Fedders Corporation | 665,000 | 2,041,550 | |||
Gentek Inc. (a) | 15,000 | 270 | |||
Gerber Scientific Inc. (a) | 30,000 | 199,800 | |||
GP Strategies Corporation (a) | 12,000 | 72,960 | |||
Graco Inc. | 93,000 | 2,976,000 | |||
Graftech International Ltd. (a) (o) | 105,000 | 572,250 | |||
Industrial Distribution Group Inc. (a) | 75,000 | 219,000 | |||
MagneTek Inc. (a) | 70,000 | 177,800 | |||
Material Sciences Corporation (a) | 205,000 | 1,988,500 | |||
Myers Industries Inc. | 150,000 | 1,425,000 | |||
Oil-Drilling Corporation of America (f) | 252,000 | 3,024,000 | |||
Park Ohio Holdings Corporation (a) (o) | 170,000 | 839,800 | |||
Precision Castparts Corporation | 35,000 | 1,088,500 | |||
Roper Industries Inc. | 44,000 | 1,636,800 | |||
Strattec Security Corporation (a) | 28,000 | 1,489,600 | |||
30,424,542 |
Number of Shares | Value | ||||
Media — 2.77% | |||||
Gemstar-TV Guide International | 100,000 | $ | 509,000 | ||
Media General Inc. (Class A) | 139,000 | 7,950,800 | |||
Pegasus Communications Corporation (Class A) (a) (o) | 16,000 | 473,280 | |||
8,933,080 | |||||
Medical Instruments — 0.85% | |||||
Henry Schein Inc. (a) | 3,000 | 157,020 | |||
Interpore International (a) (o) | 5,000 | 63,650 | |||
Sybron Dental Specialties (a) | 107,000 | 2,525,200 | |||
Young Innovations (a) | 400 | 11,400 | |||
2,757,270 | |||||
Medical Services — 0.55% | |||||
CIRCOR International Inc. | 62,000 | 1,105,460 | |||
Inverness Medical Innovations | 34,400 | 663,920 | |||
PracticeWorks Inc. (o) | 1,000 | 19,300 | |||
1,788,680 | |||||
Metals & Mining — 0.03% | |||||
WHX Corporation (a) (o) | 44,000 | 92,400 | |||
Multi-Line Insurance — 0.43% | |||||
Alleghany Corporation (a) | 7,340 | 1,401,940 | |||
Neutraceuticals — 0.24% | |||||
Weider Nutrition International | 340,000 | 768,400 | |||
Oil Services — 0.12% | |||||
RPC Inc. (o) | 25,000 | 275,000 | |||
W-H Energy Services Inc. (a) | 5,000 | 97,400 | |||
372,400 | |||||
Paper Products — 0.90% | |||||
Greif Brothers Corporation | 100,000 | 2,300,000 | |||
Schweitzer Mauduit International Inc. | 25,000 | 603,500 | |||
2,903,500 | |||||
Pharmaceuticals — 0.01% | |||||
Twinlab Corporation (a) | 190,000 | 43,700 | |||
Printing & Publishing — 6.53% | |||||
A.H. Belo Corporation (Class A) | 110,000 | 2,459,600 | |||
Journal Register Company (a) | 110,000 | 1,989,900 | |||
Lee Enterprises Inc. | 65,000 | 2,439,450 | |||
McClatchy Company (Class A) | 97,000 | 5,589,140 | |||
Meredith Corporation | 55,000 | 2,420,000 | |||
Penton Media Inc. (a) | 50,000 | 29,500 | |||
Pulitzer Inc. | 80,000 | 3,953,600 | |||
Thomas Nelson Inc. (a) | 60,000 | 750,000 | |||
Topps Company Inc. (a) | 170,000 | 1,460,300 | |||
21,091,490 |
ENTERPRISE Accumulation Trust
5
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares | Value | ||||
Publishing — 0.33% | |||||
PRIMEDIA Inc. (a) (o) | 350,000 | $ | 1,067,500 | ||
Real Estate — 0.88% | |||||
Catellus Development | 60,000 | 1,320,000 | |||
Griffin Land & Nurseries Inc. (a) (o) | 112,000 | 1,512,000 | |||
2,832,000 | |||||
Retail — 2.78% | |||||
Blockbuster Inc. (Class A) (o) | 3,000 | 50,550 | |||
Burlington Coat Factory Warehouse Corporation | 93,000 | 1,664,700 | |||
Lillian Vernon Corporation (a) (o) | 328,500 | 2,371,770 | |||
Neiman Marcus Group (Class B) (a) | 140,000 | 4,830,000 | |||
Phar-Mor Inc. (a) (d) (m) | 20,000 | — | |||
School Specialty Inc. (a) (o) | 2,000 | 56,920 | |||
8,973,940 | |||||
Telecommunications — 2.62% | |||||
Atlantic Tele-Network Inc. | 14,000 | 312,060 | |||
ATX Communications Inc. (a) | 30,000 | 10,800 | |||
Cincinnati Bell Inc. (a) | 250,000 | 1,675,000 | |||
Citizens Communications | 140,000 | 1,804,600 | |||
Commonwealth Telephone Enterprises Inc. (Class B) (a) (o) | 62,733 | 2,760,252 | |||
Communications Systems Inc. (a) | 78,500 | 612,300 | |||
D&E Communications Inc. (o) | 49,000 | 561,050 | |||
Liberty Satellite & Technology (o) | 10,000 | 26,000 | |||
Nextel Partners Inc. (Class A) (a) (o) | 50,000 | 365,000 | |||
Plantronics Inc. (a) (o) | 5,000 | 108,350 | |||
Rural Celluar Corporation | 55,000 | 231,000 | |||
8,466,412 | |||||
Transportation — 1.05% | |||||
GATX Corporation (o) | 168,000 | 2,746,800 | |||
Oshkosh Truck Corporation | 3,000 | 177,960 | |||
TransPro Inc. (a) | 105,000 | 470,400 | |||
3,395,160 | |||||
Travel/Entertainment/Leisure — 0.04% | |||||
Bowlin Travel Centers Inc. (a) | 70,000 | 122,500 | |||
Utilities — 1.40% | |||||
AES Corporation (a) | 30,000 | 190,500 | |||
AGL Resources Inc. | 19,000 | 483,360 | |||
Allegheny Energy Inc. (o) | 30,000 | 253,500 | |||
CH Energy Group Inc. (o) | 46,000 | 2,070,000 | |||
Weststar Energy Inc. (o) | 93,000 | 1,509,390 | |||
4,506,750 | |||||
Waste Management — 1.19% | |||||
Allied Waste Industries Inc. (a) (o) | 155,000 | 1,557,750 | |||
Republic Services Inc. (a) | 100,000 | 2,267,000 | |||
3,824,750 |
Number of Shares | Value | ||||
Wireless Communications — 2.39% | |||||
Allen Telecom Inc. (a) (o) | 75,000 | $ | 1,239,000 | ||
Centennial Communications | 40,000 | 160,000 | |||
Dobson Communications | 5,000 | 27,250 | |||
Loral Space & Communications | 10,000 | 30,500 | |||
Nextel Communications Inc. | 80,000 | 1,446,400 | |||
Price Communications | 160,000 | 2,065,600 | |||
United States Cellular Corporation (a) | 35,000 | 890,750 | |||
Western Wireless Corporation | 160,000 | 1,844,800 | |||
7,704,300 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $299,442,943) | 314,636,852 | ||||
Foreign Stocks — 2.01% | |||||
Aerospace — 0.01% | |||||
Embraer Empresa Brasileira de Aeronautica (ADR) | 2,000 | 38,200 | |||
Business Services — 0.05% | |||||
MDC Corporation (Class A) (a) (o) | 20,000 | 153,980 | |||
Cable — 0.12% | |||||
Rogers Communications Inc. (Class B) | 25,000 | 401,250 | |||
Hotels & Restaurants — 0.38% | |||||
Kerzner International Ltd. (a) | 38,000 | 1,223,980 | |||
Manufacturing — 0.03% | |||||
Denison International | 5,200 | 100,100 | |||
Medical Instruments — 0.03% | |||||
Orthofix International (o) | 3,000 | 98,220 | |||
Metals & Mining — 0.25% | |||||
Barrick Gold Corporation (a) | 35,000 | 626,500 | |||
Kinross Gold Corporation | 28,167 | 190,127 | |||
816,627 | |||||
Telecommunications — 0.43% | |||||
GST Telecommunications Inc. (a)(d) (m) | 120,000 | — | |||
Vimpel-Communications | 30,000 | 1,393,200 | |||
1,393,200 | |||||
Wireless Communications — 0.71% | |||||
Rogers Wireless Communications (Class B) (a) | 135,000 | 2,281,500 | |||
Total Foreign Stocks | |||||
(Identified cost $6,443,958) | 6,507,057 | ||||
ENTERPRISE Accumulation Trust
6
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Repurchase Agreement — 0.97% | ||||||
State Street Bank & Trust | $ | 3,134,000 | $ | 3,134,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $3,134,000) | 3,134,000 | |||||
Total Investments | ||||||
(Identified cost $309,020,901) | $ | 324,277,909 | ||||
Other Assets Less Liabilities — (0.43)% | (1,403,625) | |||||
Net Assets — 100% | $ | 322,874,284 | ||||
(a) | Non-income producing security. |
(d) | Security is fair valued at June 30, 2003. |
(f) | Considered an affiliated company as the Portfolio owns more than 5% of the outstanding voting securities of such company. The total market value of investments in these affiliated companies as of June 30, 2003 was $3,636,000. |
(g) | Restricted securities as of June 30, 2003 were as follows: |
Description | Date of Acquisition | Number of Units | Unit Cost | Fair Value per Unit | Aggregate | Percent of Net Assets | ||||||||||||
Cost | Value | |||||||||||||||||
Noel Group Units | 04/13/99 | 135,000 | $ | 0.49 | $ | — | $ | 65,800 | — | 0.00% | ||||||||
Noel Group Liquidating Trust Units | 10/08/98 | 135,000 | $ | 0.81 | $ | 0.28 | $ | 109,688 | $ | 37,800 | 0.01% |
(m) | Illiquid security |
(o) | Security, or portion thereof, out on loan at June 30, 2003 |
(ADR) | American Depository Receipt |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Small Company Value Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 324,277,909 | ||
Investment purchased in connection with securities lending, at value (Note 5) | 35,187,885 | |||
Investment income receivable | 248,992 | |||
Receivable for fund shares sold | 3,649 | |||
Cash | 226 | |||
Other assets | 7,964 | |||
Total assets | 359,726,625 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 1,521,942 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 35,187,885 | |||
Shareholder servicing fees payable | 80,280 | |||
Accrued expenses and other liabilities | 62,234 | |||
Total liabilities | 36,852,341 | |||
Net Assets | $ | 322,874,284 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 312,259,370 | ||
Undistributed (accumulated) net investment income (loss) | 788,215 | |||
Undistributed (accumulated) net realized gain (loss) | (5,430,309 | ) | ||
Unrealized appreciation (depreciation) | 15,257,008 | |||
Net Assets | $ | 322,874,284 | ||
Shares outstanding | 16,971,053 | |||
Net asset value per share | $19.03 | |||
Investments at cost | $ | 309,020,901 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Enterprise Small Company Value Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment Income: | ||||
Dividends | $ | 1,742,565 | (1)(2) | |
Interest | 19,305 | |||
Securities lending income | 26,032 | |||
Total investment income | 1,787,902 | |||
Expenses: | ||||
Investment advisory fees | 1,195,561 | |||
Custodian and fund accounting fees | 44,683 | |||
Reports to shareholders | 1,781 | |||
Trustees’ fees | 7,086 | |||
Audit and legal fees | 38,941 | |||
Shareholder servicing fees | 159,900 | |||
Other expenses | 7,258 | |||
Total expenses | 1,455,210 | |||
Net investment income (loss) | 332,692 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 3,137,227 | |||
Net change in unrealized gain (loss) on investments | 27,934,906 | |||
Net realized and unrealized gain (loss) | 31,072,133 | |||
Net increase (decrease) in net assets resulting from operations | $ | 31,404,825 | ||
(1) | Net of foreign taxes withheld of $49. |
(2) | Includes income of $45,900 earned from an affiliated company. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Enterprise Small Company Value Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 332,692 | $ | 481,803 | ||||
Net realized gain (loss) | 3,137,227 | (4,562,741 | ) | |||||
Net change in unrealized gain (loss) | 27,934,906 | (30,907,526 | ) | |||||
Increase (decrease) in net assets resulting from operations | 31,404,825 | (34,988,464 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (1,249,304 | ) | |||||
Net realized gains | — | (9,439,515 | ) | |||||
Total distributions to shareholders | — | (10,688,819 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 14,295,104 | 62,749,371 | ||||||
Reinvestment of distributions | — | 10,688,819 | ||||||
Shares redeemed | (29,270,180 | ) | (80,797,628 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (14,975,076 | ) | (7,359,438 | ) | ||||
Total increase (decrease) in net assets | 16,429,749 | (53,036,721 | ) | |||||
Net assets: | ||||||||
Beginning of period | 306,444,535 | 359,481,256 | ||||||
End of period | $ | 322,874,284 | $ | 306,444,535 | ||||
Capital share activity: | ||||||||
Shares issued | 813,689 | 3,205,054 | ||||||
Shares issued in reinvestment of distributions | — | 648,200 | ||||||
Shares redeemed | (1,704,947 | ) | (4,340,724 | ) | ||||
Net increase (decrease) | (891,258 | ) | (487,470 | ) | ||||
Undistributed net investment income (loss) | $ | 788,215 | $ | 455,523 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Enterprise Small Company Value Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended | For the years ended December 31, | |||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 17.16 | $ | 19.59 | $ | 26.19 | $ | 31.45 | $ | 27.36 | $ | 26.70 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.02 | C | 0.03 | C | 0.08 | C | 0.07 | C | 0.04 | C | 0.16 | |||||||||||||
Net realized and unrealized gain (loss) on investments | 1.85 | (1.87 | ) | 0.21 | 0.71 | 6.27 | 2.33 | |||||||||||||||||
Total from investment operations | 1.87 | (1.84 | ) | 0.29 | 0.78 | 6.31 | 2.49 | |||||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | (0.07 | ) | (0.07 | ) | (0.05 | ) | (0.16 | ) | (0.08 | ) | |||||||||||||
Distributions from capital gains | — | (0.52 | ) | (6.82 | ) | (5.99 | ) | (2.06 | ) | (1.75 | ) | |||||||||||||
Total distributions | — | (0.59 | ) | (6.89 | ) | (6.04 | ) | (2.22 | ) | (1.83 | ) | |||||||||||||
Net asset value, end of period | $ | 19.03 | $ | 17.16 | $ | 19.59 | $ | 26.19 | $ | 31.45 | $ | 27.36 | ||||||||||||
Total return | 10.90 | %B | (9.25 | )% | 5.25 | % | 2.52 | % | 24.02 | % | 9.61 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 322,874 | $ | 306,445 | $ | 359,481 | $ | 351,270 | $ | 455,563 | $ | 406,801 | ||||||||||||
Ratio of expenses to average net assets | 0.97 | %A | 0.92 | % | 0.90 | % | 0.89 | % | 0.84 | % | 0.85 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 0.22 | %A | 0.14 | % | 0.35 | % | 0.23 | % | 0.12 | % | 0.56 | % | ||||||||||||
Portfolio turnover | 2 | % | 10 | % | 29 | % | 41 | % | 23 | % | 37 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Small Company Value Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium
ENTERPRISE Accumulation Trust
12
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are is reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date, and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from
ENTERPRISE Accumulation Trust
13
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.80% for the first $400 million, 0.75% for the next $400 million, and 0.70% for average daily net assets over $800 million. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $159,921 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%.
For the six months ended June 30, 2003, the Portfolio paid brokerage commissions of $54,928 to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
— | — | $7,495,940 | $22,244,098 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of Securities on Loan At June 30, 2003 | Units of Prime Portfolio Owned | Current Value of Collateral Held At June 30, 2003 | ||||
$ | 34,120,323 | 35,187,885 | $ | 35,187,885 |
ENTERPRISE Accumulation Trust
14
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | |||
$309,020,901 | $68,658,697 | ($53,401,689) | $15,257,008 |
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TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
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Enterprise Accumulation Trust
SMALL COMPANY VALUE PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
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Enterprise Capital Appreciation Portfolio
SUBADVISER’S COMMENTS
Marsico Capital Management, LLC
Denver, Colorado
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Marsico Capital Management, LLC (“Marsico”), which manages approximately $21.7 billion for institutional clients and whose usual investment minimum is $100 million, is subadviser to the Enterprise Capital Appreciation Portfolio.
Investment Objective
The objective of the Enterprise Capital Appreciation Portfolio is to seek maximum capital appreciation.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 14.59%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 11.77%. The Portfolio outperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 11.76%.
How would you describe the investment environment during the period?
Marsico believes the period captured two prevailing, and quite discrete, schools of thought regarding equity prices. The first three months of the year were characterized by a substantial amount of pessimism, fueled in large part by geopolitical-related concerns. The ensuing three months were an about-face; stock market gains were widespread, substantial and geopolitical concerns seemed to subside and some degree of confidence was restored in the equity markets. Volatility throughout the period, accordingly, was relatively high.
What strategies affected Portfolio performance during the period?
Positive factors impacting the Portfolio’s performance included pharmaceuticals and biotechnology positions such as Genentech Inc., Amgen Inc.; consumer durable positions, particularly homebuilding-related investments; select retailing positions, such as Tiffany & Co. and eBay Inc.; and telecommunications services position Nextel Communications Inc. An under-weighting in insurance companies and energy-related companies, as compared to the S&P 500 Index also positively impacted performance.
Factors that negatively affected the Portfolio’s performance included capital goods positions, particularly those in the aerospace/defense industry such as Lockheed-Martin Corporation and General Dynamics Corporation; technology hardware and equipment positions like Hewlett-Packard Company, QUALCOMM Inc. and Nokia Inc. and healthcare equipment/services positions such as HCA.
What changes were made to the Portfolio over the period?
In aggregate, the Portfolio’s positions were adjusted to reflect somewhat of a tilt towards economically sensitive companies that, in Marsico’s opinion, may have been early beneficiaries of an economic recovery. These included companies such as General Electric Company, Citigroup Inc. and Intel Corporation. The Portfolio continued to have a substantial investment in consumer-related companies. Retailing positions were encompassed under that theme, along with an increased allocation to industries such as media. Positions were sold in the aerospace/defense industry. Pharmaceutical and biotechnology investments rose, primarily due to a major price gain experienced by Genentech. As of June 30, 2003, the Portfolio’s primary economic sector allocations were consumer discretionary, healthcare, financials, information technology and industrials.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
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Enterprise Capital Appreciation Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 94.04% | |||||
Airlines — 0.18% | |||||
JetBlue Airways Corporation (a) (o) | 2,004 | $ | 84,749 | ||
Biotechnology — 9.23% | |||||
Amgen Inc. (a) | 28,566 | 1,897,925 | |||
Genentech Inc. (a) | 34,604 | 2,495,641 | |||
4,393,566 | |||||
Broadcasting — 4.87% | |||||
Clear Channel Communications Inc. (a) | 21,138 | 896,040 | |||
Viacom Inc. (Class B) (a) | 32,530 | 1,420,260 | |||
2,316,300 | |||||
Building & Construction — 3.04% | |||||
Jacobs Engineering Group Inc. (a) | 2,578 | 108,663 | |||
Lennar Corporation (Class A) (o) | 17,080 | 1,221,220 | |||
Lennar Corporation (Class B) | 1,708 | 117,339 | |||
1,447,222 | |||||
Cable — 0.82% | |||||
EchoStar Communications Corporation (Class A) (a) | 11,218 | 388,367 | |||
Computer Hardware — 5.77% | |||||
Cisco Systems Inc. (a) | 104,561 | 1,745,123 | |||
Dell Computer Corporation (a) | 31,242 | 998,494 | |||
2,743,617 | |||||
Computer Software — 4.00% | |||||
Electronic Arts Inc. (a) | 15,463 | 1,144,108 | |||
Oracle Corporation (a) | 63,360 | 761,587 | |||
1,905,695 | |||||
Consumer Durables — 0.43% | |||||
Harley-Davidson Inc. | 5,130 | 204,482 | |||
Consumer Products — 3.08% | |||||
Procter & Gamble Company | 16,441 | 1,466,208 | |||
Electrical Equipment — 4.24% | |||||
General Electric Company | 70,346 | 2,017,523 | |||
Entertainment & Leisure — 1.57% | |||||
Walt Disney Company | 37,884 | 748,209 | |||
Finance — 8.91% | |||||
Goldman Sachs Group Inc. | 9,981 | 835,909 | |||
Lehman Brothers Holdings Inc. | 7,835 | 520,871 | |||
SLM Corporation | 73,608 | 2,883,225 | |||
4,240,005 | |||||
Food, Beverages & Tobacco — 1.12% | |||||
Anheuser-Busch Companies Inc. | 10,405 | 531,175 |
Number of Shares | Value | ||||
Health Care — 5.12% | |||||
UnitedHealth Group Inc. | 48,454 | $ | 2,434,814 | ||
Hotels & Restaurants — 3.88% | |||||
Four Season Hotels Inc. (o) | 31,874 | 1,378,869 | |||
McDonald’s Corporation | 2,475 | 54,599 | |||
Starbucks Corporation (a) | 16,860 | 413,407 | |||
1,846,875 | |||||
Medical Instruments — 2.72% | |||||
Boston Scientific Corporation (a) | 3,052 | 186,477 | |||
Zimmer Holdings Inc. (a) | 24,597 | 1,108,095 | |||
1,294,572 | |||||
Medical Services — 2.77% | |||||
Quest Diagnostics Inc. (a) | 20,642 | 1,316,960 | |||
Misc. Financial Services — 7.13% | |||||
Citigroup Inc. | 54,301 | 2,324,083 | |||
Fannie Mae | 15,862 | 1,069,733 | |||
3,393,816 | |||||
Oil Services — 0.75% | |||||
Devon Energy Corporation | 6,676 | 356,498 | |||
Pharmaceuticals — 3.89% | |||||
Caremark Rx Inc. (a) | 16,301 | 418,610 | |||
Eli Lilly & Company | 19,912 | 1,373,330 | |||
IDEC Pharmaceuticals Corporation (a) | 1,804 | 61,336 | |||
1,853,276 | |||||
Real Estate — 1.56% | |||||
M.D.C. Holdings Inc. | 15,383 | 742,691 | |||
Retail — 12.24% | |||||
Amazon.com Inc. (a) | 21,998 | 802,707 | |||
Bed Bath & Beyond Inc. (a) | 11,284 | 437,932 | |||
Best Buy Company Inc. (a) | 12,583 | 552,645 | |||
eBay Inc. (a) | 3,839 | 399,947 | |||
Lowe’s Companies Inc. | 21,460 | 921,707 | |||
Tiffany & Company | 53,267 | 1,740,766 | |||
Wal-Mart Stores Inc. | 18,097 | 971,266 | |||
5,826,970 | |||||
Semiconductors — 1.89% | |||||
Intel Corporation | 43,353 | 901,049 | |||
Transportation — 3.19% | |||||
FedEx Corporation | 24,510 | 1,520,355 | |||
Wireless Communications — 1.64% | |||||
Nextel Communications Inc. (Class A) (a) | 43,100 | 779,248 | |||
Total Domestic Common Stocks | |||||
(Identified cost $37,579,697) | 44,754,242 | ||||
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Enterprise Capital Appreciation Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares or Principal Amount | Value | ||||||
Foreign Stocks — 3.60% | |||||||
Automotive — 0.99% | |||||||
Bayerische Motoren Werke (a) | 12,253 | $ | 471,329 | ||||
Transportation — 2.02% | |||||||
Ryanair Holdings (ADR) (a) (o) | 21,412 | 961,399 | |||||
Wireless Communications — 0.59% | |||||||
Nokia Corporation (Class A) (ADR) | 16,998 | 279,277 | |||||
Total Foreign Stocks | |||||||
(Identified cost $1,374,746) | 1,712,005 | ||||||
Short-Term Government Securities — 3.99% | |||||||
Federal Home Loan Bank Discount Note, 0.70% due 07/01/03 | $ | 1,900,000 | 1,900,000 | ||||
Total Short-Term Government Securities | |||||||
(Identified cost $1,900,000) | 1,900,000 | ||||||
Total Investments | |||||||
(Identified cost $40,854,443) | $ | 48,366,247 | |||||
Other Assets Less Liabilities — (1.63)% | (776,053 | ) | |||||
Net Assets — 100% | $ | 47,590,194 | |||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
(ADR) | American Depository Receipt. |
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 48,366,247 | ||
Foreign currency at value (cost — $8,541) | 8,266 | |||
Investment purchased in connection with securities lending, at value (Note 5) | 3,754,028 | |||
Investment income receivable | 23,769 | |||
Receivable for fund shares sold | 6,423 | |||
Receivable for investments sold | 306,165 | |||
Cash | 76,439 | |||
Other assets | 3,663 | |||
Total assets | 52,545,000 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 155,673 | |||
Payable for investments purchased | 1,017,538 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 3,754,028 | |||
Shareholder servicing fees payable | 11,883 | |||
Accrued expenses and other liabilities | 15,684 | |||
Total liabilities | 4,954,806 | |||
Net Assets | $ | 47,590,194 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 68,779,745 | ||
Undistributed (accumulated) net investment income (loss) | (34,419 | ) | ||
Undistributed (accumulated) net realized gain (loss) | (28,669,035 | ) | ||
Unrealized appreciation (depreciation) | 7,513,903 | |||
Net Assets | $ | 47,590,194 | ||
Shares outstanding | 8,780,945 | |||
Net asset value per share | $5.42 | |||
Investments at cost | $ | 40,854,443 | ||
See notes to financial statements
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Enterprise Capital Appreciation Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 162,308 | (1) | |
Interest | 3,333 | |||
Securities lending income | 1,252 | |||
Total investment income | 166,893 | |||
Expenses: | ||||
Investment advisory fees | 163,061 | |||
Custodian and fund accounting fees | 13,330 | |||
Reports to shareholders | 888 | |||
Trustees’ fees | 1,003 | |||
Audit and legal fees | 5,731 | |||
Shareholder servicing fees | 23,256 | |||
Other expenses | 1,063 | |||
Total expenses | 208,332 | |||
Expenses reduced by expense offset arrangements | (7,020 | ) | ||
Total expenses, net of expense offset arrangements | 201,312 | |||
Net investment income (loss) | (34,419 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (1,088,763 | ) | ||
Net realized gain (loss) on foreign currency transactions | (14,807 | ) | ||
Net change in unrealized gain (loss) on investments | 7,187,978 | |||
Net change in unrealized gain (loss) on foreign currency transactions | (275 | ) | ||
Net realized and unrealized gain (loss) | 6,084,133 | |||
Net increase (decrease) in net assets resulting from operations | $ | 6,049,714 | ||
(1) | Net of foreign taxes withheld of $5,178. |
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (34,419 | ) | $ | (78,910 | ) | ||
Net realized gain (loss) | (1,103,570 | ) | (5,851,923 | ) | ||||
Net change in unrealized gain (loss) | 7,187,703 | (3,616,410 | ) | |||||
Increase (decrease) in net assets resulting from operations | 6,049,714 | (9,547,243 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 2,099,264 | 6,546,468 | ||||||
Reinvestment of distributions | — | — | ||||||
Shares redeemed | (4,172,555 | ) | (10,927,371 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (2,073,291 | ) | (4,380,903 | ) | ||||
Total increase (decrease) in net assets | 3,976,423 | (13,928,146 | ) | |||||
Net assets: | ||||||||
Beginning of period | 43,613,771 | 57,541,917 | ||||||
End of period | $ | 47,590,194 | $ | 43,613,771 | ||||
Capital share activity: | ||||||||
Shares issued | 417,795 | 1,168,694 | ||||||
Shares issued in reinvestment of distributions | — | — | ||||||
Shares redeemed | (864,856 | ) | (2,045,954 | ) | ||||
Net increase (decrease) | (447,061 | ) | (877,260 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | (34,419 | ) | $ | — | |||
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended | For the years ended December 31, | For the 12/01/98 12/31/1998 | ||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 4.73 | $ | 5.69 | $ | 7.09 | $ | 8.65 | $ | 5.57 | $ | 5.00 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.00 | C,D | (0.01 | )C | 0.00 | C,D | 0.05 | C | (0.03 | )C | 0.00 | D | ||||||||||||
Net realized and unrealized gain (loss) on investments | 0.69 | (0.95 | ) | (1.36 | ) | (1.20 | ) | 3.11 | 0.57 | |||||||||||||||
Total from investment operations | 0.69 | (0.96 | ) | (1.36 | ) | (1.15 | ) | 3.08 | 0.57 | |||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | — | (0.04 | ) | — | — | — | |||||||||||||||||
Distributions from capital gains | — | — | — | (0.41 | ) | — | — | |||||||||||||||||
Total distributions | — | — | (0.04 | ) | (0.41 | ) | — | — | ||||||||||||||||
Net asset value, end of period | $ | 5.42 | $ | 4.73 | $ | 5.69 | $ | 7.09 | $ | 8.65 | $ | 5.57 | ||||||||||||
Total return | 14.59 | %B | (16.87 | )% | (19.11 | )% | (13.82 | )% | 55.30 | % | 11.40 | %B | ||||||||||||
Net assets end of period (in thousands) | $ | 47,590 | $ | 43,614 | $ | 57,542 | $ | 72,982 | $ | 33,129 | $ | 511 | ||||||||||||
Ratio of expenses to average net assets | 0.93 | %A | 0.87 | % | 0.86 | % | 0.86 | % | 1.16 | % | 1.30 | %A | ||||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 0.96 | %A | 0.88 | % | 0.87 | % | 0.86 | % | 1.16 | % | 1.30 | %A | ||||||||||||
Ratio of net investment income (loss) to average net assets | (0.16 | )%A | (0.15 | )% | (0.04 | )% | 0.62 | % | (0.41 | )% | (0.95 | )%A | ||||||||||||
Portfolio turnover | 42 | % | 109 | % | 115 | % | 123 | % | 247 | % | 1 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Less than $0.01 per share |
See notes to financial statements.
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Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Capital Appreciation Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, which is wholly-owned by The MONY Group Inc. and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.85%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $23,263 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 18,142,882 | $ | 21,273,270 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of Securities on Loan At June 30, 2003 | Units of Prime Portfolio owned | Current Value of Collateral Held At June 30, 2003 | ||||
$ | 3,646,044 | 3,754,028 | $ | 3,754,028 |
6. Directed Brokerage
The Portfolio may direct certain security trades to brokers who pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. Under these arrangements, the Portfolio had expenses reduced by $7,020 during the six months ended June 30, 2003.
ENTERPRISE Accumulation Trust
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Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
7. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
8. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | ||||||||
$ | 40,854,443 | $ | 8,184,112 | ($ | 672,308 | ) | $ | 7,511,804 |
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TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
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Enterprise Accumulation Trust
CAPITAL APPRECIATION PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
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Enterprise Deep Value Portfolio
SUBADVISER’S COMMENTS
Wellington Management Company, LLP
Boston, Massachusetts
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Wellington Management Company, LLP (“Wellington”), which manages approximately $337 billion for institutional clients and whose usual investment minimum for this investment objective is $20 million, is subadviser to the Enterprise Deep Value Portfolio.
Investment Objective
The objective of the Enterprise Deep Value Portfolio is to seek total return through capital appreciation with income as a secondary consideration.
First Half 2003 Performance Review
How did the Portfolio perform for the period from May 1- June 30, 2003?
The Portfolio commenced operations on May 1, 2003. For the two-month period, the Portfolio returned 7.80%. The Portfolio outperformed its benchmark, the Russell 1000 Value Index, which returned 7.79%. The Portfolio outperformed its peer group, the Lipper Large-Cap Value Funds Index, which returned 7.37%.
How would you describe the investment environment during the period?
The equity market rally that began in March continued throughout the second quarter. Hints of an economic rebound bolstered confidence that the worst was behind us. Risk premia declined and time horizons expanded, consequently many of the worst performing stocks of 2002 rebounded significantly. In this environment, the Russell 1000 Value Index return of 17.3% outperformed the Russell 1000 Growth Index return of 14.3% by roughly 3% as the consumer discretionary, financials, utilities and telecommunication services sectors led the rally.
What strategies affected Portfolio performance during the period?
For the two-month period, the Portfolio benefited from strong stock selection in the consumer discretionary sector. A strong performer in this sector was fast food chain McDonald’s Corporation. McDonald’s is currently in a turnaround mode with the launch of new products in the U.S. market, for example, salads and the focus on improving customer service. Further, in Europe, the company is building sales momentum with the scare of mad cow disease now behind it. The performance of this stock has also been buoyed by the weak U.S. dollar as nearly 50% of the company’s operating income is derived from international markets.
The Portfolio’s performance was negatively impacted by the information technology sector. Among the Portfolio’s holdings, Nokia was the weakest performer. Nokia has suffered due to weaker than normal unit sales and the weakness of the U.S. dollar.
What changes were made to the Portfolio over the period?
The two-month period since the launch of the Portfolio in May was spent getting fully invested. As of June 30, 2003, the Portfolio’s largest overweight relative to the Russell 1000 Value Index was in the telecommunication services sector, while the largest relative underweight was in the consumer discretionary sector.
Investments in small-capitalization and mid-capitalization stocks are generally riskier than large-capitalization stocks due to greater earnings and price fluctuations.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
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Enterprise Deep Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 94.47% | |||||
Automotive — 0.76% | |||||
AutoNation Inc. (a) | 600 | $ | 9,432 | ||
Banking — 11.99% | |||||
Bank of America Corporation | 600 | 47,418 | |||
Bank One Corporation | 300 | 11,154 | |||
Comerica Inc. | 200 | 9,300 | |||
National City Corporation | 1,400 | 45,794 | |||
Wells Fargo & Company | 700 | 35,280 | |||
148,946 | |||||
Cable — 1.86% | |||||
Comcast Corporation (Class A) (a) | 800 | 23,064 | |||
Chemicals — 3.00% | |||||
Ashland Inc. | 400 | 12,272 | |||
Du Pont (E. I.) de Nemours & Company | 600 | 24,984 | |||
37,256 | |||||
Computer Hardware — 1.89% | |||||
Hewlett-Packard Company | 1,100 | 23,430 | |||
Consumer Products — 1.70% | |||||
Kimberly-Clark Corporation | 200 | 10,428 | |||
Nike, Inc. (Class B) | 200 | 10,698 | |||
21,126 | |||||
Crude & Petroleum — 6.95% | |||||
ChevronTexaco Corporation | 400 | 28,880 | |||
ExxonMobil Corporation | 1,600 | 57,456 | |||
86,336 | |||||
Electrical Equipment — 0.82% | |||||
Emerson Electric Company | 200 | 10,220 | |||
Electronics — 0.38% | |||||
Rockwell Automation Inc. | 200 | 4,768 | |||
Energy — 2.98% | |||||
Exelon Corporation | 400 | 23,924 | |||
Progress Energy Inc. | 300 | 13,170 | |||
37,094 | |||||
Finance — 1.35% | |||||
Goldman Sachs Group Inc. | 200 | 16,750 | |||
Food, Beverages & Tobacco — 3.09% | |||||
Kellogg Company | 600 | 20,622 | |||
PepsiCo Inc. | 400 | 17,800 | |||
38,422 | |||||
Health Care — 1.15% | |||||
C.R. Bard Inc. | 200 | 14,262 | |||
Hotels & Restaurants — 1.60% | |||||
McDonald’s Corporation | 900 | 19,854 |
Number of Shares | Value | ||||
Insurance — 2.65% | |||||
ACE Ltd. | 400 | $ | 13,716 | ||
Cigna Corporation | 300 | 14,082 | |||
Marsh & McLennan Companies Inc. | 100 | 5,107 | |||
32,905 | |||||
Machinery — 1.79% | |||||
Caterpillar Inc. | 400 | 22,264 | |||
Media — 1.55% | |||||
AOL Time Warner Inc. (a) | 1,200 | 19,308 | |||
Medical Instruments — 1.31% | |||||
Beckman Coulter Inc. | 400 | 16,256 | |||
Metals & Mining — 2.00% | |||||
Alcoa Inc. | 400 | 10,200 | |||
Nucor Corporation | 300 | 14,655 | |||
24,855 | |||||
Misc. Financial Services — 6.79% | |||||
Citigroup Inc. | 1,400 | 59,920 | |||
Fannie Mae | 300 | 20,232 | |||
Morgan Stanley Dean Witter & Company | 100 | 4,275 | |||
84,427 | |||||
Multi-Line Insurance — 1.22% | |||||
Hartford Financial Services Group Inc. | 300 | 15,108 | |||
Oil Services — 1.88% | |||||
GlobalSantaFe Corporation | 1,000 | 23,340 | |||
Paper & Forest Products — 1.74% | |||||
Weyerhaeuser Company | 400 | 21,600 | |||
Pharmaceuticals — 3.02% | |||||
Pfizer Inc. | 1,100 | 37,565 | |||
Property-Casualty Insurance — 3.02% | |||||
Chubb Corporation | 200 | 12,000 | |||
St. Paul Companies Inc. | 700 | 25,557 | |||
37,557 | |||||
Real Estate — 0.39% | |||||
Archstone Smith Trust | 200 | 4,800 | |||
Retail — 2.53% | |||||
CVS Corporation | 600 | 16,818 | |||
Dollar General Corporation | 800 | 14,608 | |||
31,426 | |||||
Savings and Loan — 3.99% | |||||
Washington Mutual Inc. | 1,200 | 49,560 | |||
Semiconductors — 4.65% | |||||
Applied Materials Inc. (a) | 1,000 | 15,860 | |||
Intel Corporation | 1,100 | 22,862 | |||
Teradyne Inc. (a) | 1,100 | 19,041 | |||
57,763 |
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Enterprise Deep Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares | Value | ||||
Telecommunications — 9.36% | |||||
AT&T Corporation | 700 | $ | 13,475 | ||
BellSouth Corporation | 1,000 | 26,630 | |||
SBC Communications Inc. | 1,900 | 48,545 | |||
Verizon Communications Inc. | 700 | 27,615 | |||
116,265 | |||||
Transportation — 1.97% | |||||
CSX Corporation | 300 | 9,027 | |||
Southwest Airlines Company | 900 | 15,480 | |||
24,507 | |||||
Utilities — 3.08% | |||||
Dominion Resources Inc. | 300 | 19,281 | |||
National Fuel Gas Company | 300 | 7,815 | |||
PPL Corporation | 100 | 4,300 | |||
SCANA Corporation | 200 | 6,856 | |||
38,252 | |||||
Waste Management — 2.01% | |||||
Republic Services Inc. (a) | 1,100 | 24,937 | |||
Total Domestic Common Stocks | |||||
(Identified cost $1,103,797) | 1,173,655 | ||||
Number of Shares | Value | ||||
Foreign Stocks — 5.02% | |||||
Manufacturing — 1.38% | |||||
Tyco International Ltd. | 900 | $ | 17,082 | ||
Oil Services — 1.92% | |||||
Shell Transport & Trading Company (ADR) | 600 | 23,910 | |||
Wireless Communications — 1.72% | |||||
Nokia Corporation (Class A) (ADR) | 1,300 | 21,359 | |||
Total Foreign Stocks | |||||
(Identified cost $59,576) | 62,351 | ||||
Total Investments | |||||
(Identified cost $1,163,373) | $ | 1,236,006 | |||
Other Assets Less Liabilities — 0.51% | 6,329 | ||||
Net Assets — 100% | $ | 1,242,335 | |||
(a) | Non-income producing security. |
(ADR) | American Depository Receipt. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Deep Value Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | |||
Investments at value | $ | 1,236,006 | |
Investment income receivable | 1,257 | ||
Receivable for fund shares sold | 4,869 | ||
Due from investment adviser | 1,170 | ||
Cash | 2,167 | ||
Total assets | 1,245,469 | ||
Liabilities: | |||
Payable for fund shares redeemed | 25 | ||
Shareholder servicing fees payable | 10 | ||
Accrued expenses and other liabilities | 3,099 | ||
Total liabilities | 3,134 | ||
Net Assets | $ | 1,242,335 | |
Analysis of Net Assets: | |||
Paid-in capital | $ | 1,164,397 | |
Undistributed (accumulated) net investment income (loss) | 1,589 | ||
Undistributed (accumulated) net realized gain (loss) | 3,716 | ||
Unrealized appreciation (depreciation) | 72,633 | ||
Net Assets | $ | 1,242,335 | |
Shares outstanding | 115,255 | ||
Net asset value per share | $10.78 | ||
Investments at cost | $ | 1,163,373 | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Deep Value Portfolio
STATEMENT OF OPERATIONS
(Unaudited) For the Period | ||||
Investment income: | ||||
Dividends | $ | 3,488 | ||
Interest | 50 | |||
Total investment income | 3,538 | |||
Expenses: | ||||
Investment advisory fees | 1,392 | |||
Custodian and fund accounting fees | 1,952 | |||
Trustees’ fees | 153 | |||
Audit and legal fees | 690 | |||
Shareholder servicing fees | 16 | |||
Other expenses | 308 | |||
Total expenses | 4,511 | |||
Expense reimbursement | (2,562 | ) | ||
Total expenses, net of reimbursement | 1,949 | |||
Net investment income (loss) | 1,589 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 3,716 | |||
Net change in unrealized gain (loss) on investments | 72,633 | |||
Net realized and unrealized gain (loss) | 76,349 | |||
Net increase (decrease) in net assets resulting from operations | $ | 77,938 | ||
(1) | Commencement of operations. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Deep Value Portfolio
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
For the Period May 1, 2003 through June 30, 2003 | ||||
From operations: | ||||
Net investment income (loss) | $ | 1,589 | ||
Net realized gain (loss) | 3,716 | |||
Net change in unrealized gain (loss) | 72,633 | |||
Increase (decrease) in net assets resulting from operations | 77,938 | |||
Distributions to shareholders from: | ||||
Net investment income | — | |||
Net realized gains | — | |||
Total distributions to shareholders | — | |||
From capital share transactions: | ||||
Shares sold | 1,164,422 | |||
Reinvestment of distributions | — | |||
Shares redeemed | (25 | ) | ||
Total increase (decrease) in net assets resulting from capital share transactions | 1,164,397 | |||
Total increase (decrease) in net assets | 1,242,335 | |||
Net assets: | ||||
Beginning of period | — | |||
End of period | $ | 1,242,335 | ||
Capital share activity: | ||||
Shares issued | 115,257 | |||
Shares issued in reinvestment of distributions | — | |||
Shares redeemed | (2 | ) | ||
Net increase (decrease) | 115,255 | |||
Undistributed net investment income (loss) | $ | 1,589 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Deep Value Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) For the Period May 1, 2003 to June 30, 2003 | ||||
Net asset value, beginning of period | $ | 10.00 | ||
Income from investment operations: | ||||
Net investment income (loss)C | 0.01 | |||
Net realized and unrealized gain (loss) on investments | 0.77 | |||
Total from investment operations | 0.78 | |||
Less dividends and distributions: | ||||
Dividends from net investment income | — | |||
Distributions from capital gains | — | |||
Total distributions | — | |||
Net asset value, end of period | $ | 10.78 | ||
Total return | 7.80 | %B | ||
Net assets end of period (in thousands) | $ | 1,242 | ||
Ratio of expenses to average net assets | 1.05 | %A | ||
Ratio of expenses to average net assets (excluding reimbursement) | 2.43 | %A | ||
Ratio of net investment income (loss) to average net assets | 0.86 | %A | ||
Portfolio turnover rate | 4 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Deep Value Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.75%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the period ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $29 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.05%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $1,078,000 in the Portfolio at June 30, 2003.
For the period ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the period ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 1,203,840 | $ | 44,182 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. There was no securities lending activity for the period ended June 30, 2003.
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the period ended June 30, 2003.
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10
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | ||||||||
$ | 1,163,373 | $ | 78,617 | $ | (5,984 | ) | $ | 72,633 |
ENTERPRISE Accumulation Trust
11
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
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Enterprise Accumulation Trust
DEEP VALUE PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
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Enterprise Equity Portfolio
SUBADVISER’S COMMENTS
TCW Investment Management Company
Los Angeles, California
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
TCW Investment Management Company (“TCW”), a wholly owned subsidiary of TCW Group, Inc., is subadviser to the Enterprise Equity Portfolio. TCW manages approximately $84.2 billion for institutional clients and its normal investment minimum for this investment objective is $100 million.
Investment Objective
The objective of the Enterprise Equity Portfolio is long-term capital appreciation.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 27.21%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 11.77%. The Portfolio outperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 11.76%.
How would you describe the investment environment during the period?
In the face of widespread negative sentiment, the markets have rallied nicely over the past six months. Corporate earnings have provided positive surprises throughout the period. As the first half of the year progressed, investors were treated to more good news in the form of lower energy prices resulting from a quick resolution of the Iraq war, a further reduction in the Fed Funds Rate to 1% and the passage of a substantial fiscal stimulus package. This market has taken many by surprise, as economic indicators, while improving, appear mixed. After the trauma of the past “bear” market many investors remain on the sidelines. High-quality growth companies have been the best performers, as investors have come to realize how well positioned these businesses are in an improving economy.
What strategies affected Portfolio performance during the period?
As always, TCW has emphasized leading companies that possess sustainable competitive advantages and sell their products into growing addressable markets. This has led TCW to technology companies, which are seeing improved cyclical demand, well established bio-tech companies with potentially attractive new products, profitable electronic commerce businesses and a number of other attractive investments.
What changes were made to the Portfolio over the period?
During the six-month period, Harley-Davidson, Inc., Viacom Inc., Walgreen Company and Yahoo! Inc. were added to the Portfolio. Harley-Davidson, Inc. has developed a remarkably strong brand that has enabled them to maintain among the highest levels of profitability for an industrial company. Viacom has an impressive set of top tier media properties. Through these and a wide array of media distribution assets, they have a leading market share in most entertainment segments. Both Harley-Davidson, Inc. and Viacom Inc. benefit from a continued long-term trend of growth in spending for leisure and tourism. TCW believes that Walgreen Company is the best run retail pharmacy chain in the U.S. and will continue to consistently gain share from weaker competitors in the $150 billion U.S. drug market. Yahoo! Inc. is the best-known web-based media company in the world, which is well positioned for substantial long-term growth.
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Enterprise Equity Portfolio
SUBADVISER’S COMMENTS — (Continued)
During the same period, TCW sold the Portfolio’s positions in Biogen Inc., Juniper Networks Inc., Paychex Inc. and Pfizer Inc. Biogen Inc. was sold as TCW realized the company might lose its product advantage in the multiple sclerosis and arthritis product categories. Juniper Networks Inc. possesses a distinct advantage in some of their high-end network equipment products. Presently, their customer base is experiencing difficulties and it is not clear when business conditions will improve. In light of this, TCW has sold the Portfolio’s positions in Juniper in case a lack of cash flow prevents Juniper from maintaining their product advantage. Paychex Inc. was sold as a result of a belief that the growth rate of the payroll processing industry may be maturing and the company may face pricing pressure from new competitors. Pfizer Inc. was sold on the belief that their organic growth rate has slowed and more of their earnings growth will be derived from cost cutting related acquisitions.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
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Enterprise Equity Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 99.95% | |||||
Automotive — 0.84% | |||||
Harley-Davidson Inc. | 50,500 | $ | 2,012,930 | ||
Biotechnology — 15.00% | |||||
Amgen Inc. (a) | 182,200 | 12,105,368 | |||
Genentech Inc. (a) | 230,380 | 16,615,006 | |||
MedImmune Inc. (a) | 195,300 | 7,103,061 | |||
35,823,435 | |||||
Broadcasting — 1.84% | |||||
Viacom Inc. (Class B) (a) | 100,700 | 4,396,562 | |||
Computer Hardware — 6.83% | |||||
Cisco Systems Inc. (a) | 337,000 | 5,624,530 | |||
Dell Computer Corporation (a) | 334,600 | 10,693,816 | |||
16,318,346 | |||||
Computer Services — 14.37% | |||||
Network Appliance Inc. (a) (o) | 911,300 | 14,772,173 | |||
Pixar Inc. (a) (o) | 143,000 | 8,700,120 | |||
Yahoo! Inc. (a) | 331,700 | 10,866,492 | |||
34,338,785 | |||||
Computer Software — 4.94% | |||||
Microsoft Corporation | 256,900 | 6,579,209 | |||
Siebel Systems Inc. (a) | 547,500 | 5,223,150 | |||
11,802,359 | |||||
Electrical Equipment — 2.03% | |||||
General Electric Company | 168,800 | 4,841,184 | |||
Insurance — 13.30% | |||||
AFLAC Inc. | 235,100 | 7,229,325 | |||
Progressive Corporation | 335,885 | 24,553,193 | |||
31,782,518 | |||||
Misc. Financial Services — 2.20% | |||||
Charles Schwab Corporation | 521,250 | 5,259,412 | |||
Multi-Line Insurance — 1.67% | |||||
American International Group Inc. | 72,150 | 3,981,237 | |||
Pharmaceuticals — 3.77% | |||||
Eli Lilly & Company | 130,500 | 9,000,585 |
Number of Shares or Principal Amount | Value | |||||
Retail — 14.63% | ||||||
Amazon.com Inc. (a) | 364,230 | $ | 13,290,753 | |||
eBay Inc. (a) | 104,300 | 10,865,974 | ||||
Wal-Mart Stores Inc. | 123,800 | 6,644,346 | ||||
Walgreen Company | 138,200 | 4,159,820 | ||||
34,960,893 | ||||||
Semiconductors — 13.62% | ||||||
Applied Materials Inc. (a) | 512,160 | 8,122,858 | ||||
Intel Corporation | 375,100 | 7,796,078 | ||||
Maxim Integrated Products Inc. | 299,600 | 10,243,324 | ||||
Xilinx Inc. (a) | 251,800 | 6,373,058 | ||||
32,535,318 | ||||||
Telecommunications — 1.91% | ||||||
QUALCOMM Inc. (a) | 127,700 | 4,565,275 | ||||
Transportation — 3.00% | ||||||
Southwest Airlines Company | 416,450 | 7,162,940 | ||||
Total Domestic Common Stocks | ||||||
(Identified cost $276,166,661) | 238,781,779 | |||||
Repurchase Agreement — 0.57% | ||||||
State Street Bank & Trust | $ | 1,357,000 | 1,357,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $1,357,000) | 1,357,000 | |||||
Total Investments | ||||||
(Identified cost $277,523,661) | $ | 240,138,779 | ||||
Other Assets Less Liabilities — (0.52)% | (1,243,441) | |||||
Net Assets — 100% | $ | 238,895,338 | ||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Equity Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 240,138,779 | ||
Investment purchased in connection with securities lending, at value (Note 5) | 23,580,700 | |||
Investment income receivable | 44,996 | |||
Receivable for fund shares sold | 401 | |||
Cash | 472 | |||
Other assets | 4,638 | |||
Total assets | 263,769,986 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 1,187,341 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 23,580,700 | |||
Shareholder servicing fees payable | 59,350 | |||
Accrued expenses and other liabilities | 47,257 | |||
Total liabilities | 24,874,648 | |||
Net Assets | $ | 238,895,338 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 386,465,250 | ||
Undistributed (accumulated) net investment income (loss) | (578,530 | ) | ||
Undistributed (accumulated) net realized gain (loss) | (109,606,500 | ) | ||
Unrealized appreciation (depreciation) | (37,384,882 | ) | ||
Net Assets | $ | 238,895,338 | ||
Shares outstanding | 15,338,755 | |||
Net asset value per share | $15.57 | |||
Investments at cost | $ | 277,523,661 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Equity Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 388,030 | ||
Interest | 32,737 | |||
Securities lending income | 10,232 | |||
Total investment income | 430,999 | |||
Expenses: | ||||
Investment advisory fees | 844,897 | |||
Custodian and fund accounting fees | 30,756 | |||
Reports to shareholders | 174 | |||
Trustees’ fees | 3,415 | |||
Audit and legal fees | 23,462 | |||
Shareholder servicing fees | 116,822 | |||
Other expenses | 7,038 | |||
Total expenses | 1,026,564 | |||
Expenses reduced by expense offset arrangements | (17,035 | ) | ||
Total expenses, net of expense offset arrangements | 1,009,529 | |||
Net investment income (loss) | (578,530 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (19,890,250 | ) | ||
Net change in unrealized gain (loss) on investments | 72,115,834 | |||
Net realized and unrealized gain (loss) | 52,225,584 | |||
Net increase (decrease) in net assets resulting from operations | $ | 51,647,054 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Equity Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (578,530 | ) | $ | (1,528,915 | ) | ||
Net realized gain (loss) | (19,890,250 | ) | (62,598,017 | ) | ||||
Net change in unrealized gain (loss) | 72,115,834 | (34,182,575 | ) | |||||
Increase (decrease) in net assets resulting from operations | 51,647,054 | (98,309,507 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 11,114,504 | 29,106,977 | ||||||
Reinvestment of distributions | — | — | ||||||
Shares redeemed | (23,453,071 | ) | (78,530,627 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (12,338,567 | ) | (49,423,650 | ) | ||||
Total increase (decrease) in net assets | 39,308,487 | (147,733,157 | ) | |||||
Net assets: | ||||||||
Beginning of period | 199,586,851 | 347,320,008 | ||||||
End of period | $ | 238,895,338 | $ | 199,586,851 | ||||
Capital share activity: | ||||||||
Shares issued | 788,409 | 1,883,773 | ||||||
Shares issued in reinvestment of distributions | — | — | ||||||
Shares redeemed | (1,753,137 | ) | (5,615,529 | ) | ||||
Net increase (decrease) | (964,728 | ) | (3,731,756 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | (578,530 | ) | $ | — | |||
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Equity Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the years ended December 31, | |||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 12.24 | $ | 17.34 | $ | 27.92 | $ | 38.62 | $ | 36.82 | $ | 35.09 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | (0.04 | )C | (0.08 | )C | (0.14 | )C | (0.21 | )C | 0.23 | C | 0.46 | |||||||||||||
Net realized and unrealized gain (loss) on investments | 3.37 | (5.02 | ) | (6.42 | ) | 0.27 | D | 4.86 | 3.00 | |||||||||||||||
Total from investment operations | 3.33 | (5.10 | ) | (6.56 | ) | 0.06 | 5.09 | 3.46 | ||||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | — | — | (0.29 | ) | (0.52 | ) | (0.37 | ) | |||||||||||||||
Distributions from capital gains | — | — | (4.02 | ) | (10.47 | ) | (2.77 | ) | (1.36 | ) | ||||||||||||||
Total distributions | — | — | (4.02 | ) | (10.76 | ) | (3.29 | ) | (1.73 | ) | ||||||||||||||
Net asset value, end of period | $ | 15.57 | $ | 12.24 | $ | 17.34 | $ | 27.92 | $ | 38.62 | $ | 36.82 | ||||||||||||
Total return | 27.21 | %B | (29.41 | )% | (18.81 | )% | (5.18 | )% | 15.61 | % | 9.90 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 238,895 | $ | 199,587 | $ | 347,320 | $ | 487,915 | $ | 587,324 | $ | 621,338 | ||||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 0.96 | %A | 0.90 | % | 0.88 | % | 0.87 | % | 0.82 | % | 0.83 | % | ||||||||||||
Ratio of expenses to average net assets | 0.96 | %A | 0.89 | % | 0.88 | % | 0.87 | % | 0.82 | % | 0.83 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | (0.55 | )%A | (0.58 | )% | (0.65 | )% | (0.55 | )% | 0.63 | % | 1.42 | % | ||||||||||||
Portfolio turnover rate | 14 | % | 15 | % | 21 | % | 44 | % | 155 | % | 30 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Per share income from investment operations may vary from anticipated results depending on the timing of capital share purchases and redemptions. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Equity Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Foreign Currency Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.80% for the first $400 million, 0.75% for the next $400 million, and 0.70% for average daily net assets over $800 million. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $116,849 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.15%.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
— | — | $30,345,374 | $41,150,015 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity as of June 30, 2003:
Current Value of | Units of Prime | Current Value of | ||
$23,316,644 | 23,580,700 | $23,580,700 |
6. Directed Brokerage
The Portfolio may direct certain security trades to brokers who pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. Under these arrangements, the Portfolio had expenses reduced by $17,035 during the six months ended June 30, 2003.
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10
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
7. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
8. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Loss | |||||||||
$ | 277,523,661 | $ | 40,622,225 | ($ | 78,007,107 | ) | ($ | 37,384,882 | ) |
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TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
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Enterprise Accumulation Trust
EQUITY PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
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Enterprise Equity Income Portfolio
SUBADVISER’S COMMENTS
Boston Advisors, Inc.
New York, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Boston Advisors, Inc. (“Boston Advisors”) is subadviser to the Enterprise Equity Income Portfolio. Boston Advisors is a member of The MONY Group Inc. (NYSE: MNY) and manages approximately $3.9 billion for institutional clients. Its normal investment minimum is $5 million.
Investment Objective
The objective of the Enterprise Equity Income Portfolio is to seek a combination of growth and income to achieve an above-average and consistent total return.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 7.35%. The Portfolio underperformed its benchmark, the S&P 500/Barra Value Index, which returned 12.29%. The Portfolio underperformed its peer group, the Lipper Equity Income Funds Index, which returned 9.49%.
How would you describe the investment environment during the period?
The investment environment at the beginning of the year was as challenging as any. Despite an improving economy, investor preoccupation with terrorism, war with Iraq and corporate governance issues prevented stocks from making any headway. Indeed, most stock indices had registered declines by the end of the first quarter. The environment improved dramatically during the latter part of the period largely due to an unwinding of investor anxiety. As a result, stock price gains were significant.
What strategies affected Portfolio performance during the period?
Higher than average cash levels provided ballast early in the period when markets were weak and also mitigated the Portfolio’s over-weight position in industrial stocks. The industrial sector over-weight proved too early and possibly too aggressive a posture for the Portfolio, given the relatively modest pace of the economic improvement experienced this year.
What changes were made to the Portfolio over the period?
The Portfolio’s weighting in pharmaceutical and industrial stocks was reduced while its exposure to financial and utility stocks was increased. Boston Advisors also modestly increased the Portfolio’s exposure to basic material and technology stocks.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
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Enterprise Equity Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 88.79% | |||||
Aerospace — 0.82% | |||||
Raytheon Company | 10,000 | $ | 328,400 | ||
Automotive — 4.37% | |||||
Cummins Inc. (o) | 7,100 | 254,819 | |||
Ford Motor Company | 37,700 | 414,323 | |||
General Motors Corporation (o) | 8,000 | 288,000 | |||
Genuine Parts Company | 10,000 | 320,100 | |||
Johnson Controls Inc. | 5,500 | 470,800 | |||
1,748,042 | |||||
Banking — 7.59% | |||||
Bank of America Corporation | 7,000 | 553,210 | |||
Bank One Corporation | 10,000 | 371,800 | |||
J. P. Morgan Chase & Company | 15,200 | 519,536 | |||
KeyCorp | 15,000 | 379,050 | |||
SouthTrust Corporation | 13,500 | 367,200 | |||
U.S. Bancorp | 18,000 | 441,000 | |||
Wells Fargo & Company | 8,000 | 403,200 | |||
3,034,996 | |||||
Chemicals — 2.95% | |||||
Cabot Corporation | 12,600 | 361,620 | |||
Dow Chemical Company | 16,000 | 495,360 | |||
RPM International Inc. | 23,600 | 324,500 | |||
1,181,480 | |||||
Computer Hardware — 0.96% | |||||
Hewlett-Packard Company | 18,000 | 383,400 | |||
Computer Services — 0.71% | |||||
Electronic Data Systems Corporation | 13,200 | 283,140 | |||
Consumer Products — 3.20% | |||||
Gillette Company | 16,000 | 509,760 | |||
Procter & Gamble Company | 1,500 | 133,770 | |||
Whirlpool Corporation | 10,000 | 637,000 | |||
1,280,530 | |||||
Crude & Petroleum — 1.53% | |||||
ExxonMobil Corporation | 17,000 | 610,470 | |||
Electrical Equipment — 1.79% | |||||
General Electric Company | 25,000 | 717,000 | |||
Electronics — 1.78% | |||||
PerkinElmer Inc. | 24,500 | 338,345 | |||
Rockwell Automation Inc. | 15,600 | 371,904 | |||
710,249 | |||||
Energy — 7.09% | |||||
Energen Corporation | 11,000 | 366,300 | |||
Entergy Corporation | 14,000 | 738,920 | |||
Equitable Resources Inc. | 10,000 | 407,400 | |||
Exelon Corporation | 9,000 | 538,290 | |||
Questar Corporation | 12,000 | 401,640 | |||
UGI Corporation | 12,000 | 380,400 | |||
2,832,950 |
Number of Shares | Value | ||||
Food, Beverages & Tobacco — 5.36% | |||||
Archer-Daniels-Midland Company | 29,400 | $ | 378,378 | ||
Coca-Cola Company | 12,000 | 556,920 | |||
General Mills Inc. | 10,700 | 507,287 | |||
J.M. Smucker Company (o) | 10,000 | 398,900 | |||
Sara Lee Corporation | 16,000 | 300,960 | |||
2,142,445 | |||||
Insurance — 1.66% | |||||
Marsh & McLennan Companies Inc. | 13,000 | 663,910 | |||
Machinery — 4.79% | |||||
Caterpillar Inc. | 10,500 | 584,430 | |||
Deere & Company | 14,000 | 639,800 | |||
Pitney Bowes Inc. | 18,000 | 691,380 | |||
1,915,610 | |||||
Manufacturing — 2.58% | |||||
3M Company | 1,900 | 245,062 | |||
Eaton Corporation | 10,000 | 786,100 | |||
1,031,162 | |||||
Metals & Mining — 1.36% | |||||
Alcoa Inc. | 8,000 | 204,000 | |||
Worthington Industries Inc. | 25,400 | 340,360 | |||
544,360 | |||||
Misc. Financial Services — 4.34% | |||||
Citigroup Inc. | 14,000 | 599,200 | |||
Fannie Mae | 8,000 | 539,520 | |||
Morgan Stanley Dean Witter & Company | 14,000 | 598,500 | |||
1,737,220 | |||||
Multi-Line Insurance — 1.86% | |||||
Lincoln National Corporation | 7,000 | 249,410 | |||
SAFECO Corporation | 14,000 | 493,920 | |||
743,330 | |||||
Oil Services — 6.90% | |||||
ConocoPhillips | 5,000 | 274,000 | |||
Kerr-McGee Corporation | 6,000 | 268,800 | |||
KeySpan Corporation | 15,000 | 531,750 | |||
Marathon Oil Corporation | 11,600 | 305,660 | |||
Occidental Petroleum Corporation | 18,000 | 603,900 | |||
Schlumberger Ltd. | 8,000 | 380,560 | |||
Sunoco Inc. | 10,400 | 392,496 | |||
2,757,166 | |||||
Paper & Forest Products — 3.08% | |||||
Georgia-Pacific Group | 17,000 | 322,150 | |||
MeadWestvaco Corporation | 15,000 | 370,500 | |||
Weyerhaeuser Company | 10,000 | 540,000 | |||
1,232,650 |
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Enterprise Equity Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number | Value | ||||
Paper Products — 0.89% | |||||
International Paper Company | 10,000 | $ | 357,300 | ||
Pharmaceuticals — 8.10% | |||||
Abbott Laboratories | 12,000 | 525,120 | |||
Bristol-Myers Squibb Company | 16,000 | 434,400 | |||
Eli Lilly & Company | 4,350 | 300,020 | |||
Merck & Company Inc. | 14,000 | 847,700 | |||
Pfizer Inc. | 17,100 | 583,965 | |||
Wyeth | 12,000 | 546,600 | |||
3,237,805 | |||||
Printing & Publishing — 1.71% | |||||
McGraw-Hill Companies Inc. | 11,000 | 682,000 | |||
Property-Casualty Insurance — 3.54% | |||||
Allstate Corporation | 16,000 | 570,400 | |||
Chubb Corporation | 8,000 | 480,000 | |||
St. Paul Companies Inc. | 10,000 | 365,100 | |||
1,415,500 | |||||
Real Estate — 0.78% | |||||
Equity Residential Properties Trust | 12,000 | 311,400 | |||
Savings and Loan — 0.83% | |||||
Washington Mutual Inc. | 8,000 | 330,400 | |||
Technology — 1.01% | |||||
Monsanto Company | 18,600 | 402,504 | |||
Telecommunications — 2.71% | |||||
BellSouth Corporation | 20,000 | 532,600 | |||
Verizon Communications Inc. | 14,000 | 552,300 | |||
1,084,900 | |||||
Utilities — 4.50% | |||||
Dominion Resources Inc. | 11,000 | 706,970 | |||
FPL Group Inc. | 6,000 | 401,100 | |||
Weststar Energy Inc. | 24,500 | 397,635 | |||
WGL Holdings Inc. | 11,000 | 293,700 | |||
1,799,405 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $35,922,373) | 35,499,724 | ||||
Number of Shares or Principal Amount | Value | |||||
Foreign Stocks — 0.86% | ||||||
Crude & Petroleum — 0.86% | ||||||
BP (ADR) | 8,200 | $ | 344,564 | |||
Total Foreign Stocks | ||||||
(Identified cost $329,023) | 344,564 | |||||
Commercial Paper — 11.44% | ||||||
UBS Finance Inc. 1.31% due 07/01/03 | $ | 4,572,000 | 4,572,000 | |||
Total Commercial Paper | ||||||
(Identified cost $4,572,000) | 4,572,000 | |||||
Total Investments | ||||||
(Identified cost $40,823,396) | $ | 40,416,288 | ||||
Other Assets Less Liabilities — (1.09)% | (436,066) | |||||
Net Assets — 100% | $ | 39,980,222 | ||||
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
(ADR) | American Depository Receipt. |
See notes to financial statements.
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Enterprise Equity Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||
Investments at value | $40,416,288 | |
Investment purchased in connection with securities lending, at value (Note 5) | 862,258 | |
Investment income receivable | 61,897 | |
Receivable for fund shares sold | 6,458 | |
Cash | 890 | |
Other assets | 983 | |
Total assets | 41,348,774 | |
Liabilities: | ||
Payable for fund shares redeemed | 153,786 | |
Payable for investments purchased | 332,131 | |
Payable due upon sale of investments in connection with securities lending (Note 5) | 862,258 | |
Shareholder servicing fees payable | 9,912 | |
Accrued expenses and other liabilities | 10,465 | |
Total liabilities | 1,368,552 | |
Net Assets | $39,980,222 | |
Analysis of Net Assets: | ||
Paid-in capital | $47,920,677 | |
Undistributed (accumulated) net investment income (loss) | 915,031 | |
Undistributed (accumulated) net realized gain (loss) | (8,448,378) | |
Unrealized appreciation (depreciation) | (407,108) | |
Net Assets | $39,980,222 | |
Shares outstanding | 8,834,968 | |
Net asset value per share | $4.53 | |
Investments at cost | $40,823,396 | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Equity Income Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 485,678 | (1) | |
Interest | 14,855 | |||
Securities lending income | 495 | |||
Total investment income | 501,028 | |||
Expenses: | ||||
Investment advisory fees | 138,010 | |||
Custodian and fund accounting fees | 10,022 | |||
Reports to shareholders | 667 | |||
Trustees’ fees | 886 | |||
Audit and legal fees | 5,611 | |||
Shareholder servicing fees | 19,575 | |||
Other expenses | 1,157 | |||
Total expenses | 175,928 | |||
Net investment income (loss) | 325,100 | |||
Realized and unrealized gain (loss) —net: | ||||
Net realized gain (loss) on investments | (2,482,059 | ) | ||
Net change in unrealized gain (loss) on investments | 4,743,006 | |||
Net realized and unrealized gain (loss) | 2,260,947 | |||
Net increase (decrease) in net assets resulting from operations | $ | 2,586,047 | ||
(1) | Net of foreign taxes withheld of $310. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Equity Income Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 325,100 | $ | 594,384 | ||||
Net realized gain (loss) | (2,482,059 | ) | (3,051,882 | ) | ||||
Net change in unrealized gain (loss) | 4,743,006 | (4,586,154 | ) | |||||
Increase (decrease) in net assets resulting from operations | 2,586,047 | (7,043,652 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (508,560 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (508,560 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 3,920,042 | 14,598,799 | ||||||
Reinvestment of distributions | — | 505,733 | ||||||
Shares redeemed | (4,241,425 | ) | (10,343,089 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (321,383 | ) | 4,761,443 | |||||
Total increase (decrease) in net assets | 2,264,664 | (2,790,769 | ) | |||||
Net assets: | ||||||||
Beginning of period | 37,715,558 | 40,506,327 | ||||||
End of period | $ | 39,980,222 | $ | 37,715,558 | ||||
Capital share activity: | ||||||||
Shares issued | 923,849 | 3,020,675 | ||||||
Shares issued in reinvestment of distributions | — | 125,181 | ||||||
Shares redeemed | (1,015,658 | ) | (2,290,761 | ) | ||||
Net increase (decrease) | (91,809 | ) | 855,095 | |||||
Undistributed net investment income (loss) | $ | 915,031 | $ | 589,931 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Equity Income Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the years ended December 31, | For the Period 12/01/98 through 12/31/1998 | ||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 4.22 | $ | 5.02 | $ | 5.69 | $ | 5.37 | $ | 5.09 | $ | 5.00 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.04 | C | 0.07C | 0.07C | 0.08C | 0.06C | — | |||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.27 | (0.81 | ) | (0.69 | ) | 0.26 | 0.23 | 0.09 | ||||||||||||||||
Total from investment operations | 0.31 | (0.74 | ) | (0.62 | ) | 0.34 | 0.29 | 0.09 | ||||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | (0.06 | ) | (0.05 | ) | (0.02 | ) | (0.01 | ) | — | ||||||||||||||
Distributions from capital gains | — | — | — | — | — | — | ||||||||||||||||||
Total distributions | — | (0.06 | ) | (0.05 | ) | (0.02 | ) | (0.01 | ) | — | ||||||||||||||
Net asset value, end of period | $ | 4.53 | $ | 4.22 | $ | 5.02 | $ | 5.69 | $ | 5.37 | $ | 5.09 | ||||||||||||
Total return | 7.35 | %B | (14.76 | )% | (10.75 | )% | 6.45 | % | 5.70 | % | 1.80 | %B | ||||||||||||
Net assets end of period (in thousands) | $ | 39,980 | $ | 37,716 | $ | 40,506 | $ | 32,829 | $ | 27,997 | $ | 465 | ||||||||||||
Ratio of expenses to average net assets | 0.96 | %A | 0.90 | % | 0.88 | % | 0.88 | % | 1.05 | % | 1.05 | %A | ||||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 0.96 | %A | 0.90 | % | 0.88 | % | 0.88 | % | 1.20 | % | 66.67 | %A | ||||||||||||
Ratio of net investment income (loss) to average net assets | 1.77 | %A | 1.44 | % | 1.43 | % | 1.43 | % | 1.21 | % | 0.54 | %A | ||||||||||||
Portfolio turnover | 36 | % | 35 | % | 36 | % | 37 | % | 18 | % | 0 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Equity Income Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.75%. A portion of the management fee received by ECM is paid to the subadviser. Boston Advisors, Inc., a wholly-owned subsidiary of The MONY Group Inc., is the subadviser for the Portfolio. For the six months ended June 30, 2003, ECM incurred subadvisory fees payable to Boston Advisors, Inc. of $55,204. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $19,528 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.05%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $226,500 in the Portfolio at June 30, 2003.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 12,397,471 | $ | 13,730,849 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of Securities on Loan At June 30, 2003 | Units of Prime Portfolio Owned | Current Value of Collateral Held At June 30, 2003 | ||||
$ | 838,085 | 862,257 | $ | 862,257 |
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Loss | |||||||||
$ | 40,823,396 | $ | 1,502,054 | $ | (1,909,162 | ) | $ | (407,108 | ) |
ENTERPRISE Accumulation Trust
11
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
12
Enterprise Accumulation Trust
EQUITY INCOME PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
13
Enterprise Growth Portfolio
SUBADVISER’S COMMENTS
Montag & Caldwell, Inc.
Atlanta, Georgia
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Montag & Caldwell, Inc. (“Montag & Caldwell”) is subadviser to the Enterprise Growth Portfolio. Montag & Caldwell manages approximately $27.9 billion for institutional clients, and its normal investment minimum is $40 million.
Investment Objective
The objective of the Enterprise Growth Portfolio is to seek capital appreciation.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 8.29%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 11.77%. The Portfolio underperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 11.76%.
How would you describe the investment environment during the period?
The modest economic recovery stalled during the first quarter as war broke out with Iraq, energy costs remained high, labor markets softened and consumer spending slowed. These economic and geopolitical trends contributed to a weak stock market environment during the first quarter of the year.
The stock market surged in the second quarter as investors reacted favorably to the swift resolution of major military action in Iraq and the federal fiscal and monetary stimulus applied to the domestic economy. With exuberance exceeding the fundamentals in many areas, the rebound was strongest in those sectors of the market that had been hit the hardest over the past three years, including utilities, telecom services and information technology. In addition, lower-quality stocks generally outperformed higher-quality issues, as evidenced by the 10.7% average quarterly gain for stocks rated “A” or “B” by Standard and Poor’s compared to a 30% gain for stocks rated “C” or “D.”
What strategies affected Portfolio performance during the period?
The Portfolio’s under-weighting in technology and the weak returns experienced by its consumer discretionary holdings were the primary factors in the Portfolio’s six month return being less than that of the market. Also, many higher-quality issues in the consumer staple and healthcare sectors lagged during the period. Issues that boosted relative returns included Walt Disney Company, Marriott International Inc. Costco Wholesale Corporation, Schlumberger Ltd., Amgen Inc., Masco Corporation and Caterpillar Inc.
What changes were made to the Portfolio over the period?
Montag did not add any new positions during the first quarter, but used market weakness to increase the Portfolio’s holdings in Walt Disney Company, Kohl’s Corporation, Microsoft Corporation, Newell Rubbermaid Inc. and Nokia Corporation. Montag trimmed the Portfolio’s positions in Citigroup, eBay and QUALCOMM.
ENTERPRISE Accumulation Trust
1
Enterprise Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
There were several changes during the second quarter. In the energy area, the Portfolio sold GlobalSanteFe Corporation and redeployed the funds in Baker Hughes, where Montag & Caldwell sees better diversification within the oil services area. In the technology area, the Portfolio added First Data Corporation, a transaction processing company; and Oracle Corporation, which provides enterprise software to major corporations. A position was initiated in Omnicom Group, a leading marketing and corporate communications firm. Montag & Caldwell also began a buy program in Genentech Inc., a biotechnology company with a very promising new product pipeline. Montag & Caldwell sold eBay Inc. as it exceeded its price objective. Existing positions that were added included Gannett Company, Nokia Corporation, QUALCOMM and UPS. Montag trimmed their positions in Amgen Inc., Costco Wholesale Corporation, Electronic Arts Inc., Kohl’s Corporation, Microsoft Corporation, Pfizer Corporation and TransOcean Inc.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
2
Enterprise Growth Portfolio
PORTFOLIO OF INVESTMENTS
June 30, 2003 (Unaudited)
Number of Shares | Value | ||||
Domestic Common Stocks — 93.19% | |||||
Advertising — 1.53% | |||||
Omnicom Group Inc. | 52,100 | $ | 3,735,570 | ||
Biotechnology — 4.96% | |||||
Amgen Inc. (a) | 150,752 | 10,015,963 | |||
Genentech Inc. (a) | 28,700 | 2,069,844 | |||
12,085,807 | |||||
Building & Construction — 3.25% | |||||
Masco Corporation | 331,964 | 7,917,341 | |||
Computer Services — 1.49% | |||||
First Data Corporation | 87,700 | 3,634,288 | |||
Computer Software — 4.49% | |||||
Electronic Arts Inc. (a) | 74,406 | 5,505,300 | |||
Microsoft Corporation | 101,700 | 2,604,537 | |||
Oracle Corporation (a) | 235,300 | 2,828,306 | |||
10,938,143 | |||||
Consumer Products — 15.71% | |||||
Colgate-Palmolive Company | 210,673 | 12,208,500 | |||
Gillette Company | 292,930 | 9,332,750 | |||
Newell Rubbermaid Inc. | 214,600 | 6,008,800 | |||
Procter & Gamble Company | 120,284 | 10,726,927 | |||
38,276,977 | |||||
Consumer Services — 2.53% | |||||
United Parcel Service Inc. | 96,900 | 6,172,530 | |||
Entertainment & Leisure — 3.21% | |||||
Walt Disney Company | 396,160 | 7,824,160 | |||
Food, Beverages & Tobacco — 6.91% | |||||
Coca-Cola Company | 215,300 | 9,992,073 | |||
PepsiCo Inc. | 154,045 | 6,855,003 | |||
16,847,076 | |||||
Hotels & Restaurants — 2.60% | |||||
Marriott International Inc. | 164,789 | 6,331,193 | |||
Insurance — 2.79% | |||||
Marsh & McLennan Companies Inc. | 133,328 | 6,809,061 | |||
Machinery — 1.21% | |||||
Caterpillar Inc. | 52,931 | 2,946,139 | |||
Manufacturing — 3.59% | |||||
3M Company | 67,800 | 8,744,844 | |||
Media — 3.49% | |||||
Gannett Company Inc. | 110,600 | 8,495,186 |
Number of Shares or Principal Amount | Value | |||||
Medical Instruments — 4.91% | ||||||
Medtronic Inc. | 249,460 | $ | 11,966,596 | |||
Misc. Financial Services — 1.93% | ||||||
Citigroup Inc. | 110,000 | 4,708,000 | ||||
Multi-Line Insurance — 3.64% | ||||||
American International Group Inc. | 160,777 | 8,871,675 | ||||
Oil Services — 6.60% | ||||||
Baker Hughes Inc. | 82,000 | 2,752,740 | ||||
Schlumberger Ltd. | 225,174 | 10,711,527 | ||||
Transocean Sedco Forex Inc. (a) | 118,900 | 2,612,233 | ||||
16,076,500 | ||||||
Pharmaceuticals — 12.49% | ||||||
Eli Lilly & Company | 102,000 | 7,034,940 | ||||
Johnson & Johnson | 203,200 | 10,505,440 | ||||
Pfizer Inc. | 377,290 | 12,884,454 | ||||
30,424,834 | ||||||
Retail — 2.40% | ||||||
Costco Wholesale Corporation (a) | 65,428 | 2,394,665 | ||||
Kohl’s Corporation (a) | 67,100 | 3,447,598 | ||||
5,842,263 | ||||||
Telecommunications — 3.46% | ||||||
QUALCOMM Inc. | 235,500 | 8,419,125 | ||||
Total Domestic Common Stocks | ||||||
(Identified cost $217,123,731) | 227,067,308 | |||||
Foreign Stocks — 3.32% | ||||||
Wireless Communications — 3.32% | ||||||
Nokia Corporation (Class A) (ADR) | 492,300 | 8,088,489 | ||||
Total Foreign Stocks | ||||||
(Identified cost $8,226,011) | 8,088,489 | |||||
Commercial Paper — 0.78% | ||||||
General Electric Capital Corporation 1.24% due 07/15/03 | $ | 1,000,000 | 999,518 | |||
General Electric Capital Corporation 1.20% due 07/30/03 | 900,000 | 899,130 | ||||
1,898,648 | ||||||
Total Commercial Paper | ||||||
(Identified cost $1,898,648) | 1,898,648 | |||||
ENTERPRISE Accumulation Trust
3
Enterprise Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Repurchase Agreement — 3.02% | ||||||
State Street Bank & Trust | $ | 7,361,000 | $ | 7,361,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $7,361,000) | 7,361,000 | |||||
Total Investments | ||||||
(Identified cost $234,609,390) | $ | 244,415,445 | ||||
Other Assets Less Liabilities — (0.31)% | (748,685) | |||||
Net Assets — 100% | $ | 243,666,760 | ||||
(a) | Non-income producing security. |
(ADR) | American Depository Receipt. |
ENTERPRISE Accumulation Trust
4
Enterprise Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 244,415,445 | ||
Investment income receivable | 133,628 | |||
Receivable for fund shares sold | 13,815 | |||
Cash | 301 | |||
Other assets | 6,037 | |||
Total assets | 244,569,226 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 803,185 | |||
Shareholder servicing fees payable | 60,816 | |||
Accrued expenses and other liabilities | 38,465 | |||
Total liabilities | 902,466 | |||
Net Assets | $ | 243,666,760 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 332,959,548 | ||
Undistributed (accumulated) net investment income (loss) | 1,552,141 | |||
Undistributed (accumulated) net realized gain (loss) | (100,650,984 | ) | ||
Unrealized appreciation (depreciation) | 9,806,055 | |||
Net Assets | $ | 243,666,760 | ||
Shares outstanding | 56,555,645 | |||
Net asset value per share | $4.31 | |||
Investments at cost | $ | 234,609,390 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Growth Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 1,491,528 | (1) | |
Interest | 43,731 | |||
Securities lending income | 13,246 | |||
Total investment income | 1,548,505 | |||
Expenses: | ||||
Investment advisory fees | 832,393 | |||
Custodian and fund accounting fees | 27,721 | |||
Reports to shareholders | 2,208 | |||
Trustees’ fees | 2,223 | |||
Audit and legal fees | 26,138 | |||
Shareholder servicing fees | 121,212 | |||
Other expenses | 5,501 | |||
Total expenses | 1,017,396 | |||
Net investment income (loss) | 531,109 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (3,938,852 | ) | ||
Net change in unrealized gain (loss) on investments | 22,068,190 | |||
Net realized and unrealized gain (loss) | 18,129,338 | |||
Net increase (decrease) in net assets resulting from operations | $ | 18,660,447 | ||
(1) | Net of foreign taxes withheld of $20,308. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 531,109 | $ | 1,021,083 | ||||
Net realized gain (loss) | (3,938,852 | ) | (40,972,525 | ) | ||||
Net change in unrealized gain (loss) | 22,068,190 | (26,628,400 | ) | |||||
Increase (decrease) in net assets resulting from operations | 18,660,447 | (66,579,842 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (944,092 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (944,092 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 18,066,351 | 45,061,705 | ||||||
Shares exchanged due to merger | 16,158,177 | |||||||
Reinvestment of distributions | — | 943,206 | ||||||
Shares redeemed | (17,828,306 | ) | (50,150,263 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 16,396,222 | (4,145,352 | ) | |||||
Total increase (decrease) in net assets | 35,056,669 | (71,669,286 | ) | |||||
Net assets: | ||||||||
Beginning of period | 208,610,091 | 280,279,377 | ||||||
End of period | $ | 243,666,760 | $ | 208,610,091 | ||||
Capital share activity: | ||||||||
Shares issued | 4,287,758 | 9,733,913 | ||||||
Shares issued due to merger | 4,364,109 | — | ||||||
Shares issued in reinvestment of distributions | — | 244,988 | ||||||
Shares redeemed | (4,449,680 | ) | (11,375,918 | ) | ||||
Net increase (decrease) | 4,202,187 | (1,397,017 | ) | |||||
Undistributed net investment income (loss) | $ | 1,552,141 | $ | 1,021,032 | ||||
ENTERPRISE Accumulation Trust
7
Enterprise Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the years ended December 31, | For the Period 12/01/98 through 12/31/1998 | ||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 3.98 | $ | 5.21 | $ | 5.99 | $ | 6.56 | $ | 5.27 | $ | 5.00 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.01 | C | 0.02C | 0.02C | 0.03C | 0.02C | 0.00 | D | ||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.32 | (1.23 | ) | (0.78 | ) | (0.54 | ) | 1.27 | 0.27 | |||||||||||||||
Total from investment operations | 0.33 | (1.21 | ) | (0.76 | ) | (0.51 | ) | 1.29 | 0.27 | |||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | (0.02 | ) | (0.02 | ) | (0.01 | ) | — | — | |||||||||||||||
Distributions from capital gains | — | — | — | (0.05 | ) | — | — | |||||||||||||||||
Total distributions | — | (0.02 | ) | (0.02 | ) | (0.06 | ) | — | — | |||||||||||||||
Net asset value, end of period | $ | 4.31 | $ | 3.98 | $ | 5.21 | $ | 5.99 | $ | 6.56 | $ | 5.27 | ||||||||||||
Total return | 8.29 | %B | (23.26 | )% | (12.56 | )% | (7.79 | )% | 24.48 | % | 5.40 | %B | ||||||||||||
Net assets end of period (in thousands) | $ | 243,667 | $ | 208,610 | $ | 280,279 | $ | 319,207 | $ | 230,720 | $ | 1,943 | ||||||||||||
Ratio of expenses to average net assets | 0.92 | %A | 0.86 | % | 0.84 | % | 0.83 | % | 0.84 | % | 1.15 | %A | ||||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 0.92 | %A | 0.86 | % | 0.84 | % | 0.83 | % | 0.84 | % | 25.33 | %A | ||||||||||||
Ratio of net investment income (loss) to average net assets | 0.48 | %A | 0.42 | % | 0.34 | % | 0.45 | % | 0.29 | % | (0.25 | )%A | ||||||||||||
Portfolio turnover rate | 13 | % | 42 | % | 52 | % | 56 | % | 30 | % | 1 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Less than $0.01 per share |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
Effective February 28, 2003 the Growth Portfolio acquired all of the net assets of the Balanced Portfolio in a tax-free exchange of shares wherein the shareholders of the Balanced Portfolio received for each share owned approximately 1.05 shares of the Growth Portfolio. The aggregate net assets and unrealized appreciation/(depreciation) of the portfolios immediately before and after the merger were as follows:
Net Assets | Unrealized Appreciation/(Depreciation) | |||||||||||||
Portfolio | Before Merger | After Merger | Before Merger | After Merger | ||||||||||
Growth | $ | 199,034,794 | $ | 215,792,972 | $ | (17,240,287 | ) | $ | (18,141,555 | ) | ||||
Balanced | 16,758,178 | (901,268 | ) |
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Growth Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.75%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $121,167 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.15%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $215,500 in the Portfolio at June 30, 2003.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 29,945,353 | $ | 28,072,158 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. There was no securities lending activity at June 30, 2003.
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | ||||||||
$ | 234,609,390 | $ | 17,694,340 | $ | (7,888,285 | ) | $ | 9,806,055 |
Shareholder Proxy Voting Information (Unaudited)
On February 28, 2003, shareholders of the Balanced Portfolio voted on and approved their agreement and Plan of Reorganization into the Growth Portfolio as follows:
No. of Shares | ||
Affirmative | 3,810,949.276 | |
Against | 162,471.704 | |
Abstain | 291,923.598 | |
Total | 4,265,344.578 | |
ENTERPRISE Accumulation Trust
12
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
13
Enterprise Accumulation Trust
GROWTH PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
14
Enterprise Growth and Income Portfolio
SUBADVISER’S COMMENTS
UBS Global Asset Management (Americas) Inc.
New York, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
UBS Global Asset Management (Americas) Inc. (“UBS”) is subadviser to the Enterprise Growth and Income Portfolio. UBS manages approximately $32.1 billion for all of its clients and its normal investment minimum is $25 million.
Investment Objective
The objective of the Enterprise Growth and Income Portfolio is total return through capital appreciation with income as a secondary consideration.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 10.38%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 11.77%. In contrast, the Portfolio outperformed its peer group, the Lipper Large-Cap Core Funds Index, which returned 10.15%.
How would you describe the investment environment during the period?
The investment environment was volatile, and heavily influenced by geopolitical issues revolving around the war in Iraq, which began in the closing weeks of the first quarter. From a fundamental perspective, economic data was suggestive of a gradually recovering economy, with the fits and starts that are typical of early stages of such recoveries. However, with the uncertainties created by these data and by the war, many companies took the opportunity of their year-end earnings reports to lower their official guidance for 2003. As the quarter wore on, and the war loomed, many executives reported that business slowed markedly, as customers deferred decisions pending further clarity on its outcome. A much anticipated war rally did materialize in the days leading up to the commencement of military action, and through the first euphoric reports of easy progress, which put the major indices into the black for a brief time. However, as the war news became mixed, investors took profits, and the quarter closed on a down note.
The market recovered in the second quarter after a very volatile and worrisome period for U.S. investors. Fortunately, UBS was able to position the Portfolio to take advantage of the return to fundamentals in the market. There continue to be pockets of overvaluation in the market and UBS will position the Portfolio accordingly. The economic recovery has been mild, but so was the recession. The media and sell side have over-dramatized the depth of the recession. UBS believes that as companies become profitable and cash flow improves, capital spending will follow even though some companies will be burdened by pension funding requirements. UBS believes there is still plenty of opportunity for active management.
During the first four months of the year under Retirement System Investors Inc., the Portfolio took advantage of temporary dislocations in price created by the volatile market to selectively exit certain positions and add to others. Portfolio holdings in BP and Tyco International Ltd. were reduced and Raytheon Company was eliminated, all as part of strategies to reduce weaker competitors in selected markets. All three subsequently underperformed the market. Conversely, the Portfolio took advantage of temporary drops in Forest Laboratories, Inc., Walt Disney Company and Kohl’s Corporation to initiate positions.
UBS became subadviser on May 1, 2003. As a result of the transition to UBS, the portfolio turnover was 102%. Strong performers in May and June included United Technologies Corporation, Masco Corporation and Costco Wholesale Corporation. Masco’s stock price appreciated as concerns of a housing bubble began to subside and the market began to reward the company for their expansion in the installation services segment. Sector allocation was strong as the Portfolio benefited from exposure to medical services, construction and electric utilities sectors. UBS’s cautious stance towards media was rewarded, as this area underperformed.
ENTERPRISE Accumulation Trust
1
Enterprise Growth and Income Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
The Portfolio was restructured by UBS upon becoming subadviser. From a sector standpoint, UBS has identified opportunities in banks, utilities and drug stocks. From a factor standpoint, the period presented no strong underlying themes, as most of the opportunities the market presented were more stock specific in nature.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
2
Enterprise Growth and Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 97.21% | |||||
Advertising — 3.01% | |||||
Interpublic Group of Companies Inc. | 47,200 | $ | 631,536 | ||
Omnicom Group Inc. | 39,000 | 2,796,300 | |||
3,427,836 | |||||
Aerospace — 1.92% | |||||
United Technologies Corporation | 30,800 | 2,181,564 | |||
Airlines — 0.95% | |||||
Continental Airlines Inc. | 25,800 | 386,226 | |||
Delta Air Lines Inc. (o) | 47,200 | 692,896 | |||
1,079,122 | |||||
Automotive — 0.78% | |||||
Johnson Controls Inc. | 10,400 | 890,240 | |||
Banking — 9.18% | |||||
FleetBoston Financial Corporation | 46,400 | 1,378,544 | |||
J. P. Morgan Chase & Company | 86,200 | 2,946,316 | |||
Mellon Financial Corporation | 44,500 | 1,234,875 | |||
PNC Financial Services Group | 23,500 | 1,147,035 | |||
Wells Fargo & Company | 74,300 | 3,744,720 | |||
10,451,490 | |||||
Biotechnology — 0.52% | |||||
Genzyme Corporation (a) | 14,200 | 593,560 | |||
Broadcasting — 1.77% | |||||
Viacom Inc. (Class B) (a) | 46,100 | 2,012,726 | |||
Building & Construction — 3.47% | |||||
Martin Marietta Materials Inc. | 40,000 | 1,344,400 | |||
Masco Corporation | 109,400 | 2,609,190 | |||
3,953,590 | |||||
Business Services — 0.60% | |||||
Viad Corporation | 30,600 | 685,134 | |||
Chemicals — 1.89% | |||||
Dow Chemical Company | 36,400 | 1,126,944 | |||
Eastman Chemical Company | 19,400 | 614,398 | |||
IMC Global Inc. | 61,600 | 413,336 | |||
2,154,678 | |||||
Computer Hardware — 1.44% | |||||
Hewlett-Packard Company | 76,800 | 1,635,840 | |||
Computer Services — 1.69% | |||||
Computer Sciences Corporation (a) | 12,500 | 476,500 | |||
First Data Corporation | 34,800 | 1,442,112 | |||
1,918,612 |
Number of Shares | Value | ||||
Computer Software — 2.98% | |||||
Microsoft Corporation | 132,500 | $ | 3,393,325 | ||
Consumer Products — 2.91% | |||||
Kimberly-Clark Corporation | 32,300 | 1,684,122 | |||
Newell Rubbermaid Inc. | 58,100 | 1,626,800 | |||
3,310,922 | |||||
Crude & Petroleum — 1.24% | |||||
Exxon Mobil Corporation | 39,300 | 1,411,263 | |||
Energy — 3.88% | |||||
Entergy Corporation | 20,800 | 1,097,824 | |||
Exelon Corporation | 38,400 | 2,296,704 | |||
Progress Energy Inc. | 23,200 | 1,018,480 | |||
4,413,008 | |||||
Health Care — 4.58% | |||||
Anthem Inc. (a) | 24,100 | 1,859,315 | |||
UnitedHealth Group Inc. | 66,800 | 3,356,700 | |||
5,216,015 | |||||
Manufacturing — 6.70% | |||||
American Standard Companies Inc. (a) | 27,800 | 2,055,254 | |||
Illinois Tool Works Inc. | 38,300 | 2,522,055 | |||
Ingersoll-Rand Company Ltd. | 39,200 | 1,854,944 | |||
Pentair Inc. | 30,500 | 1,191,330 | |||
7,623,583 | |||||
Medical Instruments — 0.44% | |||||
Biomet Inc. | 17,600 | 504,416 | |||
Medical Services — 0.66% | |||||
Baxter International Inc. | 29,000 | 754,000 | |||
Misc. Financial Services — 7.66% | |||||
Citigroup Inc. | 102,800 | 4,399,840 | |||
Freddie Mac | 46,100 | 2,340,497 | |||
Morgan Stanley Dean Witter & Company | 46,400 | 1,983,600 | |||
8,723,937 | |||||
Multi-Line Insurance — 2.43% | |||||
American International Group Inc. | 30,200 | 1,666,436 | |||
Hartford Financial Services Group Inc. | 21,800 | 1,097,848 | |||
2,764,284 | |||||
Oil Services — 1.88% | |||||
ConocoPhillips | 30,600 | 1,676,880 | |||
Kerr-McGee Corporation | 10,400 | 465,920 | |||
2,142,800 | |||||
Paper & Forest Products — 0.65% | |||||
MeadWestvaco Corporation | 29,800 | 736,060 |
ENTERPRISE Accumulation Trust
3
Enterprise Growth and Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares | Value | ||||
Pharmaceuticals — 12.06% | |||||
Allergan Inc. | 38,400 | $ | 2,960,640 | ||
Bristol-Myers Squibb Company | 75,700 | 2,055,255 | |||
Cephalon Inc. (a) (o) | 25,200 | 1,037,232 | |||
Johnson & Johnson | 72,000 | 3,722,400 | |||
Sicor Inc. (a) | 86,795 | 1,765,410 | |||
Wyeth | 48,100 | 2,190,955 | |||
13,731,892 | |||||
Printing & Publishing — 0.76% | |||||
McGraw-Hill Companies Inc. | 14,000 | 868,000 | |||
Retail — 2.93% | |||||
Costco Wholesale Corporation (a) | 44,500 | 1,628,700 | |||
Radioshack Corporation | 34,400 | 905,064 | |||
TJX Companies Inc. | 42,300 | 796,932 | |||
3,330,696 | |||||
Savings and Loan — 2.68% | |||||
Greenpoint Financial Corporation | 59,800 | 3,046,212 | |||
Semiconductors — 0.62% | |||||
Texas Instruments Inc. | 40,300 | 709,280 | |||
Technology — 0.96% | |||||
Linear Technology Corporation | 34,000 | 1,095,140 | |||
Telecommunications — 1.06% | |||||
SBC Communications Inc. | 47,200 | 1,205,960 | |||
Transportation — 2.92% | |||||
Burlington Northern Santa Fe Corporation | 116,900 | 3,324,636 | |||
Utilities — 4.91% | |||||
CMS Energy Corporation (o) | 54,000 | 437,400 | |||
Consolidated Edison Inc. | 25,000 | 1,082,000 | |||
Dominion Resources Inc. | 13,500 | 867,645 | |||
FirstEnergy Corporation | 54,700 | 2,103,215 | |||
Sempra Energy | 38,600 | 1,101,258 | |||
5,591,518 | |||||
Wireless Communications — 5.08% | |||||
Motorola Inc. | 113,700 | 1,072,191 | |||
Nextel Communications Inc. | 260,700 | 4,713,456 | |||
5,785,647 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $108,417,931) | 110,666,986 | ||||
Number of Shares or Principal Amount | Value | ||||||
Foreign Stocks — 1.20% | |||||||
Travel/Entertainment/Leisure — 1.20% | |||||||
Royal Caribbean Cruises Ltd. | 58,900 | $ | 1,364,124 | ||||
Total Foreign Stocks | |||||||
(Identified cost $1,078,385) | 1,364,124 | ||||||
Repurchase Agreement — 1.65% | |||||||
State Street Bank & Trust Repurchase Agreement, | $ | 1,876,000 | 1,876,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $1,876,000) | 1,876,000 | ||||||
Total Investments | |||||||
(Identified cost $111,372,316) | $ | 113,907,110 | |||||
Other Assets Less Liabilities — (0.06)% | (70,698 | ) | |||||
Net Assets — 100% | $ | 113,836,412 | |||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Growth and Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 113,907,110 | ||
Investment purchased in connection with securities lending, at value (Note 5) | 2,241,800 | |||
Investment income receivable | 113,463 | |||
Receivable for fund shares sold | 1,336 | |||
Receivable for investments sold | 315,870 | |||
Cash | 978 | |||
Other assets | 2,435 | |||
Total assets | 116,582,992 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 453,830 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 2,241,800 | |||
Shareholder servicing fees payable | 28,408 | |||
Accrued expenses and other liabilities | 22,542 | |||
Total liabilities | 2,746,580 | |||
Net Assets | $ | 113,836,412 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 166,612,520 | ||
Undistributed (accumulated) net investment income (loss) | 1,644,268 | |||
Undistributed (accumulated) net realized gain (loss) | (56,955,170 | ) | ||
Unrealized appreciation (depreciation) | 2,534,794 | |||
Net Assets | $ | 113,836,412 | ||
Shares outstanding | 26,099,520 | |||
Net asset value per share | $4.36 | |||
Investments at cost | $ | 111,372,316 | ||
See notes to financial statements
ENTERPRISE Accumulation Trust
5
Enterprise Growth and Income Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 978,707 | (1) | |
Interest | 13,455 | |||
Securities lending income | 121 | |||
Total investment income | 992,283 | |||
Expenses: | ||||
Investment advisory fees | 401,747 | |||
Custodian and fund accounting fees | 19,800 | |||
Trustees’ fees | 2,396 | |||
Audit and legal fees | 13,102 | |||
Shareholder servicing fees | 56,235 | |||
Other expenses | 183 | |||
Total expenses | 493,463 | |||
Net investment income (loss) | 498,820 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (19,216,801 | ) | ||
Net change in unrealized gain (loss) on investments | 29,342,597 | |||
Net realized and unrealized gain (loss) | 10,125,796 | |||
Net increase (decrease) in net assets resulting from operations | $ | 10,624,616 | ||
(1) | Net of foreign taxes withheld of $5,348. |
See notes to financial statements
ENTERPRISE Accumulation Trust
6
Enterprise Growth and Income Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 498,820 | $ | 1,145,458 | ||||
Net realized gain (loss) | (19,216,801 | ) | (36,304,934 | ) | ||||
Net change in unrealized gain (loss) | 29,342,597 | (9,884,249 | ) | |||||
Increase (decrease) in net assets resulting from operations | 10,624,616 | (45,043,725 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (1,575,030 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (1,575,030 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 4,147,734 | 21,100,991 | ||||||
Reinvestment of distributions | — | 1,572,359 | ||||||
Shares redeemed | (12,364,898 | ) | (37,157,047 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (8,217,164 | ) | (14,483,697 | ) | ||||
Total increase (decrease) in net assets | 2,407,452 | (61,102,452 | ) | |||||
Net assets: | ||||||||
Beginning of period | 111,428,960 | 172,531,412 | ||||||
End of period | $ | 113,836,412 | $ | 111,428,960 | ||||
Capital share activity: | ||||||||
Shares issued | 1,023,838 | 4,364,770 | ||||||
Shares issued in reinvestment of distributions | — | 419,296 | ||||||
Shares redeemed | (3,141,668 | ) | (8,430,251 | ) | ||||
Net increase (decrease) | (2,117,830 | ) | (3,646,185 | ) | ||||
Undistributed net investment income (loss) | $ | 1,644,268 | $ | 1,145,448 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Growth and Income Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the years ended December 31, | For the Period 12/01/98 through 12/31/1998 | ||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 3.95 | $ | 5.41 | $ | 6.20 | $ | 6.16 | $ | 5.11 | $ | 5.00 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.02 | C | 0.04 | C | 0.05 | C | 0.07 | C | 0.07 | C | 0.00 | D | ||||||||||||
Net realized and unrealized gain (loss) on investments | 0.39 | (1.45 | ) | (0.79 | ) | (0.01 | ) | 0.98 | 0.11 | |||||||||||||||
Total from investment operations | 0.41 | (1.41 | ) | (0.74 | ) | 0.06 | 1.05 | 0.11 | ||||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | (0.05 | ) | (0.05 | ) | (0.02 | ) | — | — | |||||||||||||||
Distributions from capital gains | — | — | — | (0.00 | )D | (0.00 | )D | — | ||||||||||||||||
Total distributions | — | (0.05 | ) | (0.05 | ) | (0.02 | ) | — | — | |||||||||||||||
Net asset value, end of period | $ | 4.36 | $ | 3.95 | $ | 5.41 | $ | 6.20 | $ | 6.16 | $ | 5.11 | ||||||||||||
Total return | 10.38 | %B | (25.95 | )% | (11.87 | )% | 0.91 | % | 20.55 | % | 2.20 | %B | ||||||||||||
Net assets end of period (in thousands) | $ | 113,836 | $ | 111,429 | $ | 172,531 | $ | 171,353 | $ | 89,887 | $ | 537 | ||||||||||||
Ratio of expenses to average net assets | 0.92 | %A | 0.86 | % | 0.85 | % | 0.85 | % | 0.94 | % | 1.05 | %A | ||||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 0.92 | %A | 0.86 | % | 0.85 | % | 0.85 | % | 0.94 | % | 60.68 | %A | ||||||||||||
Ratio of net investment income (loss) to average net assets | 0.93 | %A | 0.81 | % | 0.92 | % | 1.09 | % | 1.22 | % | (0.45 | )%A | ||||||||||||
Portfolio turnover rate | 102 | % | 19 | % | 2 | % | 6 | % | 1 | % | 9 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Less than $0.01 per share. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Growth and Income Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.75%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $56,198 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.05%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $218,000 in the Portfolio at June 30, 2003.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 107,414,739 | $ | 113,946,138 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of Securities on Loan At June 30, 2003 | Units of Prime Portfolio Owned | Current Value of Collateral Held At June 30, 2003 | ||||
$ | 2,164,756 | 2,241,800 | $ | 2,241,800 |
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Gain | ||||||||
$ | 111,372,316 | $ | 7,827,479 | $ | (5,292,685 | ) | $ | 2,534,794 |
ENTERPRISE Accumulation Trust
12
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — | |||||
Footnotes: |
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
13
Enterprise Accumulation Trust
GROWTH AND INCOME PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
14
Enterprise International Growth Portfolio
SUBADVISER’S COMMENTS
SSgA Funds Management, Inc.
Boston, Massachusetts
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
SSgA Funds Management, Inc. (“SSgA”) is subadviser to the Enterprise International Growth Portfolio. SSgA manages approximately $77.8 billion and its normal investment minimum is $10 million.
Investment Objective
The objective of the Enterprise International Growth Portfolio is to seek capital appreciation.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 6.07%. The Portfolio underperformed its benchmark, the MSCI EAFE Index, which returned 9.47%. The Portfolio underperformed its peer group, the Lipper International Funds Index, which returned 9.18%.
How would you describe the investment environment during the period?
The first half continued the extraordinary volatility seen last year in international developed markets. With markets in near-panic mode prior to the declaration of overt hostilities in Iraq in mid-March, market levels have since moved up impressively after an apparently swift resolution to the crisis and aggressive easing by the world’s central banks.
What strategies affected Portfolio performance during the period?
First, SSgA’s over-weight to financials in the early part of the year hurt performance, only to contribute strongly in the second quarter when some of the more highly leveraged insurance companies that own money managers, rebounded. Stocks like Amvescap, AXA and ING Group ended strongly. Conversely, SSgA sold out of Lloyds TSB Group and Mitsubishi-Tokyo Financial Group, Inc., which had lagged.
Some of the positions within the consumer area did not perform well. Despite having previously reduced the over-weight to Sony Corporation, the announcement that the company was to take restructuring charges hurt the Portfolio’s performance. The sale of WPP Group proved preemptive, as did that of Celltech Group in the healthcare area and Suez within utilities.
On the other hand, a continuing over-weight in the energy sector to companies exposed to the natural gas price paid off well: EnCana Corporation was a top performing stock over the period. In the latter part of the half, some of the more depressed technology names that SSgA had retained and accumulated at the lowest levels in the Portfolio – Flextronics International Ltd. and ASML Holding, for example – recovered sharply.
What changes were made to the Portfolio over the period?
SSgA moved the Portfolio from an over-weight to an under-weight position in financials, selling out of Lloyds TSB Group and Mitsubishi Tokyo Financial Group, Inc., while adding to Halifax Bank of Scotland, HSBC Holding and ING Group. Within the consumer sector, the Portfolio sold out of WPP Group and Philips Electronics, reduced weight in Sony Corporation and initiated a new position in Sharp Corporation. The Portfolio also sold out of Honda Motor Company and bought into LVMH-Moet Hennessy Louis Vuitton, a luxury goods stock. In the tech and telecoms sectors, the Portfolio added to Nokia and initiated positions in SAP and Telefonica. The Portfolio sold out of BAE SYSTEMS, moving into Komatsu Ltd. on the industrials side.
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Enterprise International Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
Generally speaking, SSgA has been increasing its exposure to Japan wherever possible, as SSgA believes this market offers some attractive opportunities at current levels
As with all international funds, the Portfolio carries additional risks associated with possibly less stable foreign securities, currencies, lack of uniform accounting standards and political instability.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
Industry classifications for the Portfolio as a percentage of total market value at June 30, 2003 are as follows (unaudited):
Industry | ||
Advertising | 0.02% | |
Aerospace & Defense | 0.07% | |
Automobiles | 0.02% | |
Banks | 18.50% | |
Construction Materials | 4.27% | |
Consumer Products | 2.06% | |
Electronic Equipment & Instruments | 14.82% | |
Energy Equipment & Services | 2.23% | |
Food & Drug Retailing | 6.76% |
Industry | ||
Information Technology | 2.14% | |
Insurance | 7.16% | |
Media | 0.03% | |
Metals & Mining | 5.75% | |
Oil & Gas | 7.73% | |
Pharmaceuticals | 11.63% | |
Printing & Publishing | 1.95% | |
Semiconductor Equipment & Products | 0.19% | |
Telecommunication Service | 14.67% | |
Total | 100.00% | |
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Enterprise International Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Common Stocks — 99.93% | |||||
Argentina — 0.03% | |||||
BBVA Banco Frances (ADR) (a) | 800 | $ | 4,912 | ||
Telecom Argentina Stet-France Telecom (o) | 1,000 | 6,500 | |||
11,412 | |||||
Australia — 0.01% | |||||
Woolworths Ltd. | 800 | 6,723 | |||
Brazil — 0.04% | |||||
Petroleo Brasileiro (ADR) (o) | 1,000 | 19,760 | |||
Canada — 6.55% | |||||
EnCana Corporation | 47,000 | 1,803,390 | |||
Precision Drilling Corporation (a) (o) | 31,100 | 1,171,067 | |||
Telus Corporation | 600 | 10,629 | |||
WestJet Airlines Ltd. (a) | 1,025 | 12,136 | |||
2,997,222 | |||||
Chile — 0.01% | |||||
Compania DE Telecomunicaciones Chile (ADR) (a) | 400 | 4,720 | |||
Finland — 4.61% | |||||
Nokia (a) | 127,660 | 2,102,038 | |||
Stora Enso | 700 | 7,821 | |||
2,109,859 | |||||
France — 15.07% | |||||
Alcatel (a) (o) | 1,000 | 9,014 | |||
AXA | 98,050 | 1,521,036 | |||
BNP Paribas | 25,565 | 1,298,960 | |||
France Telecom (o) | 300 | 7,358 | |||
JC Decaux (a) | 600 | 7,510 | |||
LVMH-Moet Hennessy Louis Vuitton | 19,103 | 947,374 | |||
Sanofi-Synthelabo (o) | 24,623 | 1,441,942 | |||
TotalFinaElf | 10,960 | 1,656,163 | |||
Vivendi Universal (a) | 200 | 3,640 | |||
6,892,997 | |||||
Germany — 4.36% | |||||
E.ON | 20,000 | 1,028,144 | |||
SAP (o) | 8,100 | 955,195 | |||
Volkswagen | 200 | 8,453 | |||
1,991,792 | |||||
India — 0.07% | |||||
Satyam Computer Services (o) | 3,200 | 31,776 | |||
Ireland — 2.96% | |||||
Bank of Ireland | 500 | 6,057 | |||
CRH | 85,089 | 1,333,653 | |||
Ryanair Holdings (ADR) (a) (o) | 300 | 13,470 | |||
1,353,180 |
Number of Shares | Value | ||||
Italy — 0.02% | |||||
ENI (o) | 300 | $ | 4,537 | ||
Telecom Italia (o) | 1,029 | 5,636 | |||
10,173 | |||||
Japan — 14.51% | |||||
Advantest | 20,500 | 909,174 | |||
Canon Inc. | 28,000 | 1,286,149 | |||
Dai Nippon Printng Company Ltd. | 1,000 | 10,587 | |||
Komatsu Ltd. | 166,000 | 636,572 | |||
NTT DoCoMo Inc. | 769 | 1,666,792 | |||
Sharp Corporation | 97,000 | 1,246,109 | |||
Shiseido Company Ltd. | 1,000 | 9,729 | |||
Sony Corporation (ADR) (o) | 200 | 5,600 | |||
Sony Corporation | 30,700 | 865,041 | |||
6,635,753 | |||||
Korea — 0.20% | |||||
Kookmin Bank (a) | 620 | 18,686 | |||
Kookmin Bank (ADR) (o) | 350 | 10,588 | |||
LG Electronics Inc. | 570 | 23,764 | |||
Samsung Electronic (GDR) (144A) | 300 | 44,625 | |||
Sappi Ltd (ADR) (o) | 200 | 2,470 | |||
100,133 | |||||
Luxembourg — 0.02% | |||||
Arcelor (o) | 900 | 10,479 | |||
Mexico — 0.13% | |||||
Grupo Financiero BBVA Bancomer | 35,800 | 30,159 | |||
Telefonos DE Mexico (ADR) (o) | 900 | 28,278 | |||
58,437 | |||||
Netherlands — 4.95% | |||||
ASML Holdings (a) | 115,911 | 1,100,695 | |||
ING Groep | 66,568 | 1,156,488 | |||
Unilever | 100 | 5,364 | |||
2,262,547 | |||||
Russia — 0.18% | |||||
Gazprom (ADR) | 700 | 13,160 | |||
GMK Norilsk Nickel (ADR) | 300 | 10,260 | |||
Lukoil Holdings (ADR) | 500 | 39,550 | |||
Yukos (ADR) (o) | 375 | 20,869 | |||
83,839 | |||||
Singapore — 3.04% | |||||
Flextronics International Ltd. (a) (o) | 133,800 | 1,390,182 | |||
Spain — 2.38% | |||||
Telefonica (a) | 93,600 | 1,086,585 | |||
Switzerland — 14.29% | |||||
Alcon Inc. (o) | 300 | 13,710 | |||
Nestle | 4,486 | 925,751 | |||
Novartis | 51,942 | 2,055,590 | |||
Swiss Reinsurance (o) | 24,599 | 1,363,079 | |||
UBS (o) | 39,127 | 2,176,772 | |||
6,534,902 |
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Enterprise International Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares | Value | ||||
Thailand — 0.00% | |||||
Quality Houses Public Company Ltd. | 20 | $ | 4 | ||
United Kingdom — 26.39% | |||||
Amvescap | 202,085 | 1,399,144 | |||
British Sky Broadcasting (a) | 700 | 7,786 | |||
Centrica | 1,200 | 3,493 | |||
Diageo (a) | 117,345 | 1,257,538 | |||
Exel | 1,000 | 10,302 | |||
GlaxoSmithKline | 91,400 | 1,851,505 | |||
HBOS | 116,686 | 1,516,226 | |||
HSBC Holdings | 74,186 | 879,807 | |||
HSBC Holdings (Hong Kong Registered) | 1,600 | 19,030 | |||
Imperial Tobacco Group | 400 | 7,175 | |||
Man Group | 500 | 9,905 | |||
Reed International | 107,000 | 893,680 | |||
Rio Tinto | 76,100 | 1,436,950 | |||
Royal Bank of Scotland Group | 404 | 11,376 | |||
Shell Transportation & Trading Company | 700 | 4,638 | |||
Tesco | 250,650 | 910,247 | |||
Vodafone Group | 934,573 | 1,834,357 | |||
Vodafone Group (ADR) (o) | 700 | 13,755 | |||
12,066,914 | |||||
United States — 0.09% | |||||
Apache Corporation | 210 | 13,663 | |||
Barr Laboratories Inc. (a) | 50 | 3,275 | |||
Softbank | 900 | 5,265 | |||
SPDR Trust Series 1 (o) | 200 | 19,526 | |||
41,729 | |||||
Total Common Stocks | |||||
(Identified cost $44,895,879) | 45,701,118 | ||||
Preferred Stocks — 0.14% | |||||
Brazil — 0.04% | |||||
Companhia Vale do Rio Doce (Class A) | 700 | 19,204 | |||
Korea — 0.10% | |||||
Samsung Electronics Company Ltd. | 310 | 44,249 | |||
Total Preferred Stocks | |||||
(Identified cost $61,057) | 63,453 | ||||
Number of Shares or Contracts | Value | ||||
Mutual Funds — 0.04% | |||||
United States — 0.04% | |||||
Ishares MSCI EAFE Index Fund | 100 | $ | 10,831 | ||
Ishares United Kingdom Index Fund | 700 | 9,191 | |||
Total Mutual Funds | |||||
(Identified cost $18,004) | 20,022 | ||||
Warrants — 0.00% | |||||
Thailand — 0.00% | |||||
Quality Houses Public Company Ltd. (e) | 4 | — | |||
Total Warrants | |||||
(Identified cost $0) | — | ||||
Foreign Currency Option Purchased — 0.00% | |||||
United States — 0.00% | |||||
Hong Kong Dollar, Strike Price 7.82, Expiration Date 10/07/03 | 50,000 | 31 | |||
Total Foreign Currency Option Purchased | |||||
(Identified cost $285) | 31 | ||||
Total Investments | |||||
(Identified cost $44,975,225) | $ | 45,784,624 | |||
Other Assets Less Liabilities — (0.11)% | (52,144) | ||||
Net Assets — 100% | $ | 45,732,480 | |||
(a) | Non-income producing security. |
(e) | The warrants entitle the Portfolio to purchase quarterly 1 share of Quality Houses Public Company Ltd. for every 1 warrant held and 5 THB until October 19, 2006. |
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
(ADR) | American Depository Receipt. |
(GDR) | Global Depository Receipt. |
See notes to financial statements
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Enterprise International Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 45,784,624 | ||
Foreign currency at value (cost — $40,626) | 40,555 | |||
Investment purchased in connection with securities lending, at value (Note 5) | 4,783,806 | |||
Investment income receivable | 93,919 | |||
Receivable for fund shares sold | 3,901 | |||
Receivable for investments sold | 45,307 | |||
Other assets | 10,949 | |||
Total assets | 50,763,061 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 152,542 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 4,783,806 | |||
Shareholder servicing fees payable | 11,755 | |||
Accrued expenses and other liabilities | 82,478 | |||
Total liabilities | 5,030,581 | |||
Net Assets | $ | 45,732,480 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 74,644,028 | ||
Undistributed (accumulated) net investment income (loss) | 680,279 | |||
Undistributed (accumulated) net realized gain (loss) | (30,410,954 | ) | ||
Unrealized appreciation (depreciation) | 819,127 | |||
Net Assets | $ | 45,732,480 | ||
Shares outstanding | 12,477,465 | |||
Net asset value per share | $3.67 | |||
Investments at cost | $ | 44,975,225 | ||
See notes to financial statements
ENTERPRISE Accumulation Trust
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Enterprise International Growth Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 678,193 | (1) | |
Interest | 13 | |||
Securities lending income | 11,472 | |||
Total investment income | 689,678 | |||
Expenses: | ||||
Investment advisory fees | 184,004 | |||
Custodian and fund accounting fees | 24,470 | |||
Trustees’ fees | 1,019 | |||
Audit and legal fees | 5,768 | |||
Shareholder servicing fees | 23,059 | |||
Other expenses | 810 | |||
Total expenses | 239,130 | |||
Expenses reduced by expense offset arrangements | (640 | ) | ||
Total expenses, net of expense offset arrangements | 238,490 | |||
Net investment income (loss) | 451,188 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (6,959,144 | ) | ||
Net realized gain (loss) on foreign currency transactions | 9,701 | |||
Net change in unrealized gain (loss) on investments | 9,171,515 | |||
Net change in unrealized gain (loss) on foreign currency transactions | (392 | ) | ||
Net change in unrealized gain (loss) on options transactions | (254 | ) | ||
Net realized and unrealized gain (loss) | 2,221,426 | |||
Net increase (decrease) in net assets resulting from operations | $ | 2,672,614 | ||
(1) | Net of foreign taxes withheld of $83,171. |
See notes to financial statements
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Enterprise International Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 451,188 | $ | 660,627 | ||||
Net realized gain (loss) | (6,949,443 | ) | (7,404,125 | ) | ||||
Net change in unrealized gain (loss) | 9,170,869 | (4,673,357 | ) | |||||
Increase (decrease) in net assets resulting from operations | 2,672,614 | (11,416,855 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (340,574 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (340,574 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 10,247,765 | 22,640,621 | ||||||
Shares exchanged due to merger | 1,998,365 | — | ||||||
Reinvestment of distributions | — | 340,574 | ||||||
Shares redeemed | (13,338,574 | ) | (29,813,401 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (1,092,444 | ) | (6,832,206 | ) | ||||
Total increase (decrease) in net assets | 1,580,170 | (18,589,635 | ) | |||||
Net assets: | ||||||||
Beginning of period | 44,152,310 | 62,741,945 | ||||||
End of period | $ | 45,732,480 | $ | 44,152,310 | ||||
Capital share activity: | ||||||||
Shares issued | 2,982,441 | 5,968,408 | ||||||
Shares issued due to merger | 622,543 | — | ||||||
Shares issued in reinvestment of distributions | — | 105,115 | ||||||
Shares redeemed | (3,895,772 | ) | (7,791,983 | ) | ||||
Net increase (decrease) | (290,788 | ) | (1,718,460 | ) | ||||
Undistributed net investment income (loss) | $ | 680,279 | $ | 229,091 | ||||
See notes to financial statements
ENTERPRISE Accumulation Trust
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Enterprise International Growth Portfolio
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the years ended December 31, | |||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 3.46 | $ | 4.33 | $ | 6.94 | $ | 9.29 | $ | 6.74 | $ | 6.18 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.04 | C | 0.05 | C | 0.02 | C | (0.01 | )C | 0.03 | C | 0.06 | |||||||||||||
Net realized and unrealized gain (loss) on investments | 0.17 | (0.89 | ) | (2.02 | ) | (1.57 | ) | 2.74 | 0.84 | |||||||||||||||
Total from investment operations | 0.21 | (0.84 | ) | (2.00 | ) | (1.58 | ) | 2.77 | 0.90 | |||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | (0.03 | ) | (0.04 | ) | (0.02 | ) | (0.12 | ) | (0.07 | ) | |||||||||||||
Distributions from capital gains | — | — | (0.57 | ) | (0.75 | ) | (0.10 | ) | (0.27 | ) | ||||||||||||||
Total distributions | — | (0.03 | ) | (0.61 | ) | (0.77 | ) | (0.22 | ) | (0.34 | ) | |||||||||||||
Net asset value, end of period | $ | 3.67 | $ | 3.46 | $ | 4.33 | $ | 6.94 | $ | 9.29 | $ | 6.74 | ||||||||||||
Total return | 6.07 | %B | (19.46 | )% | (27.80 | )% | (17.21 | )% | 42.12 | % | 14.83 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 45,732 | $ | 44,152 | $ | 62,742 | $ | 100,550 | $ | 134,255 | $ | 91,794 | ||||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 1.11 | %A | 1.06 | % | 1.09 | % | 1.04 | % | 1.01 | % | 1.22 | % | ||||||||||||
Ratio of expenses to average net assets | 1.10 | %A | 1.06 | % | 1.09 | % | 1.04 | % | 1.01 | % | 1.22 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 2.08 | %A | 1.22 | % | 0.30 | % | (0.06 | )% | 0.41 | % | 1.04 | % | ||||||||||||
Portfolio turnover | 28 | % | 176 | % | 95 | % | 73 | % | 129 | % | 55 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
Effective February 28, 2003 the International Growth Portfolio acquired all of the net assets of the Worldwide Growth and Emerging Countries Portfolios in tax-free exchanges of shares wherein the shareholders of the Worldwide Growth and Emerging Countries Portfolios received for each share owned approximately 1.97 and 2.42 shares, respectively of the International Growth Portfolio. The aggregate net assets and unrealized appreciation/(depreciation) of the funds immediately before and after the mergers were as follows:
Net Assets | Unrealized Appreciation/(Depreciation) | |||||||||||||
Portfolio | Before Merger | After Merger | Before Merger | After Merger | ||||||||||
International Growth | $ | 40,211,216 | $ | 42,209,580 | $ | (11,305,050 | ) | $ | (11,398,851 | ) | ||||
Worldwide Growth | 821,424 | (58,381 | ) | |||||||||||
Emerging Countries | 1,176,940 | (35,420 | ) |
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the International Growth Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
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10
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.85%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $22,978 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.55%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $222,086 in the Portfolio at June 30, 2003.
For the six months ended June 30, 2003, the Portfolio paid brokerage commissions of $597 to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government /Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 13,531,711 | $ | 13,689,429 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
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Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of Securities on Loan At June 30, 2003 | Units of Prime | Current Value of Collateral Held At June 30, 2003 | ||||
$ | 4,498,276 | 4,783,806 | $ | 4,783,806 |
6. Directed Brokerage
The Portfolio may direct certain security trades to brokers who pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. Under these arrangements, the Portfolio had expenses reduced by $640 during the six months ended June 30, 2003.
7. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
8. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Gain | ||||||||
$ | 44,975,225 | $ | 3,738,006 | $ | (2,928,607 | ) | $ | 809,399 |
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Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Shareholder Proxy Voting Information (Unaudited)
On February 28, 2003, shareholders of the Worldwide Growth and Emerging Countries Portfolios voted on and approved their respective agreements and Plans of Reorganization into the International Growth Portfolio as follows:
Worldwide Growth:
No. of Shares | ||
Affirmative | 128,500.031 | |
Against | 1,544.642 | |
Abstain | 13,496.828 | |
Total | 143,541.501 | |
Emerging Countries:
No. of Shares | ||
Affirmative | 98,217.898 | |
Against | 23,438.156 | |
Abstain | 5,045.745 | |
Total | 126,701.799 | |
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TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
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Enterprise Accumulation Trust
INTERNATIONAL GROWTH PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
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Enterprise Global Socially Responsive Portfolio
SUBADVISER’S COMMENTS
Rockefeller & Co., Inc
New York, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Rockefeller & Co., Inc. (“Rockefeller”), which has approximately $3.3 billion in assets under management, is subadviser to the Enterprise Global Socially Responsive Portfolio. Rockefeller’s normal investment minimum is $10 million.
Investment Objective
The objective of the Global Socially Responsive Portfolio is total return.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 9.80%. The Portfolio underperformed its benchmark, the MSCI World Index, which returned 11.12%. In contrast, the Portfolio outperformed its peer group, the Lipper Global Funds Index, which returned 9.69%.
How would you describe the investment environment during the period?
The year began with fears of impending war keeping investors and businesses frozen and waiting for developments. Once the war began, the market bottomed in mid-March. Economic signals were mixed with productivity and inflation posting outstanding numbers, but, for the first time, consumer sentiment was negative. Capital spending was sluggish and some sectors of the economy, such as travel and tourism, came to a virtual standstill. During the next three months, the market experienced a sharp upswing as concerns faded about Iraq and the Middle East. Hope of a strong economic recovery was fueled by: low inflation and interest rates, consumer spending, lower oil prices, refinancing, and monetary and fiscal stimulus. But expectations may have been too high as the market retreated in the last days of trading and economic numbers came in weaker than anticipated.
What strategies affected Portfolio performance during the period?
In a continuation of a strategy that has been in place for several quarters, the Portfolio is broadly diversified with an under-weight in technology and over-weight in consumer discretionary and healthcare. Technology stocks performed particularly well in the markets, as exemplified by the Nasdaq having a strong showing. Rockefeller continues to be skeptical of a broad-based recovery in IT spending. The Portfolio’s under-weight in technology hurt performance even though some of the holdings did very well. Canon Inc. and Check Point Software Technologies Ltd. outperformed. Microsoft Corporation lagged, posting a negative return. Rockefeller believes that Microsoft Corporation, with cash on its balance sheet, is in a good position to reward investors in the future. The Portfolio’s healthcare and financial stocks put in a mixed showing. Several of their holdings including McKesson Corporation, Edwards LifeSciences Corporation, Eli Lilly and Co., Citigroup Inc., BNP Paribas and Sampo Leonia outperformed, but HCA Inc. and AFLAC Inc. underperformed. The largest drag in performance came from energy. Consumer discretionary posted the largest gains in the Portfolio with names like Samsung Corporation, Target Corporation and Philips Electronics. However, two stocks that the Portfolio recently purchased were the real stars: Tiffany and Co. and AOL Time Warner.
What changes were made to the Portfolio over the period?
During the period, Rockefeller made few changes to the Portfolio. The Portfolio sold Pearson, the UK publishing company, on concern of a cut back in U.S. school budgets. Pearson derives 60% of its revenues from elementary school
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Enterprise Global Socially Responsive Portfolio
SUBADVISER’S COMMENTS — (Continued)
books in the U.S. and, given the budget crises faced by state governments, Rockefeller became concerned that earnings pressure would be greater than anticipated. The Portfolio also sold Chubb Plc., the UK security company, after rumors of an imminent takeover by United Technology in the U.S. sent the stock higher. The Portfolio also purchased China Mobil Ltd. and Praxair Inc.
As with all global funds, the Portfolio carries additional risks associated with possibly less stable foreign securities, currencies, lack of uniform accounting standards and political instability.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
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Enterprise Global Socially Responsive Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Common Stocks — 91.66% | |||||
Bermuda — 1.60% | |||||
XL Capital Ltd. (Class A) | 300 | $ | 24,900 | ||
Canada — 1.81% | |||||
Alcan Inc. (a) | 190 | 5,945 | |||
National Bank of Canada | 810 | 22,110 | |||
28,055 | |||||
Denmark — 2.04% | |||||
Danske Bank | 1,630 | 31,735 | |||
France — 4.16% | |||||
BNP Paribas | 930 | 47,253 | |||
Schneider Electric | 370 | 17,394 | |||
64,647 | |||||
Hong Kong — 0.99% | |||||
China Mobile Ltd. | 6,500 | 15,336 | |||
Israel — 1.13% | |||||
Check Point Software Technologies Ltd. (a) | 900 | 17,595 | |||
Japan — 3.62% | |||||
Canon Inc (ADR) | 260 | 11,869 | |||
ITO EN Ltd. | 300 | 10,079 | |||
KAO Corporation | 1,000 | 18,632 | |||
NTT Corporation | 4 | 15,706 | |||
56,286 | |||||
Netherlands — 3.56% | |||||
Philips Electronics | 990 | 18,825 | |||
Royal Dutch Petroleum Company (ADR) | 450 | 20,979 | |||
STMicroelectronics | 740 | 15,515 | |||
55,319 | |||||
Spain — 1.54% | |||||
Telefonica (a) | 2,066 | 23,984 | |||
Sweden — 1.68% | |||||
Sandvik | 1,000 | 26,158 | |||
Switzerland — 1.43% | |||||
Novartis | 560 | 22,162 | |||
United Kingdom — 11.09% | |||||
BP Amoco | 8,010 | 55,756 | |||
Cadbury Schweppes | 4,930 | 29,234 | |||
GlaxoSmithKline | 1,490 | 30,183 | |||
Reckitt Benckiser | 1,660 | 30,575 | |||
Scottish Power | 4,400 | 26,528 | |||
172,276 | |||||
Number of Shares | Value | ||||
United States — 57.01% | |||||
AFLAC Inc. | 1,430 | $ | 43,972 | ||
Anadarko Petroleum Corporation | 810 | 36,021 | |||
AOL Time Warner Inc. (a) | 1,590 | 25,583 | |||
Bank of America Corporation | 600 | 47,418 | |||
Bank of Hawaii Corporation | 620 | 20,553 | |||
Cadence Design Systems Inc. (a) | 820 | 9,889 | |||
Citigroup Inc. | 1,480 | 63,344 | |||
Comcast Corporation (Class A) (a) | 810 | 23,352 | |||
Costco Wholesale Corporation (a) | 450 | 16,470 | |||
Diebold Inc. | 420 | 18,165 | |||
Edwards Lifesciences Corporation (a) | 490 | 15,749 | |||
Eli Lilly & Company | 780 | 53,797 | |||
HCA Inc. | 880 | 28,195 | |||
Ingersoll-Rand Company Ltd. | 510 | 24,133 | |||
International Business Machines Corporation | 200 | 16,500 | |||
Johnson & Johnson | 300 | 15,510 | |||
Lexmark International Group Inc. (a) | 290 | 20,523 | |||
McKesson Corporation | 900 | 32,166 | |||
Microsoft Corporation | 840 | 21,512 | |||
PepsiCo Inc. | 1,140 | 50,730 | |||
Pfizer Inc. | 1,780 | 60,787 | |||
Praxair Inc. | 390 | 23,439 | |||
Target Corporation | 1,080 | 40,867 | |||
Tiffany & Company | 560 | 18,301 | |||
UnionBanCal Corporation | 350 | 14,480 | |||
Wal-Mart Stores Inc. | 750 | 40,253 | |||
Walt Disney Company | 1,170 | 23,108 | |||
WellPoint Health Networks Inc. (a) | 660 | 55,638 | |||
Wells Fargo & Company | 500 | 25,200 | |||
885,655 | |||||
Total Common Stocks | |||||
(Identified cost $1,323,991) | 1,424,108 | ||||
Preferred Stocks — 2.67% | |||||
Korea — 2.67% | |||||
Hyundai Motor Company | 1,680 | 21,449 | |||
Samsung Electronics Company Ltd. | 140 | 19,983 | |||
41,432 | |||||
Total Preferred Stocks | |||||
(Identified cost $38,115) | 41,432 | ||||
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Enterprise Global Socially Responsive Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Repurchase Agreement — 7.14% | ||||||
State Street Bank & Trust | $ | 111,000 | $ | 111,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $111,000) | 111,000 | |||||
Total Investments | ||||||
(Identified cost $1,473,107) | $ | 1,576,540 | ||||
Other Assets Less Liabilities — (1.47)% | (22,877) | |||||
Net Assets — 100% | $ | 1,553,663 | ||||
(a) | Non-income producing security. |
(ADR) | American Depository Receipts |
Industry classifications for the Portfolio as a percentage of total market value at June 30, 2003 are as follows:
Industry | ||
Automotive | 1.47% | |
Banking | 14.24% | |
Business Services | 0.81% | |
Cable | 1.59% | |
Chemicals | 1.60% | |
Computer Hardware | 1.13% | |
Computer Software | 4.58% | |
Consumer Durables | 2.09% | |
Consumer Products | 1.27% | |
Crude & Petroleum | 3.89% | |
Electronics | 3.83% | |
Energy | 1.81% | |
Entertainment & Leisure | 1.58% | |
Food, Beverages & Tobacco | 6.14% | |
Health Care | 4.12% | |
Insurance | 4.70% | |
Media | 1.75% | |
Manufacturing | 3.43% | |
Medical Instruments | 1.07% | |
Medical Services & Products | 3.80% | |
Metals & Mining | 0.41% | |
Misc. Financial Services | 4.32% | |
Oil Services | 3.80% | |
Pharmaceuticals | 12.45% | |
Printing & Publishing | 1.40% | |
Retail | 7.91% | |
Semiconductors | 1.06% | |
Telecommunications | 3.75% | |
Total | 100.00% | |
See notes to financial statements.
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Enterprise Global Socially Responsive Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 1,576,540 | ||
Foreign currency at value (cost $59) | 60 | |||
Investment income receivable | 1,141 | |||
Receivable for fund shares sold | 3,416 | |||
Receivable for investments sold | 7,894 | |||
Cash | 223 | |||
Other assets | 89 | |||
Total assets | 1,589,363 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 402 | |||
Payable for investments purchased | 23,334 | |||
Shareholder servicing fees payable | 115 | |||
Accrued expenses and other liabilities | 11,849 | |||
Total liabilities | 35,700 | |||
Net Assets | $ | 1,553,663 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 1,589,295 | ||
Undistributed (accumulated) net investment income (loss) | 6,315 | |||
Undistributed (accumulated) net realized gain (loss) | (145,426 | ) | ||
Unrealized appreciation (depreciation) | 103,479 | |||
Net Assets | $ | 1,553,663 | ||
Shares outstanding | 165,139 | |||
Net asset value per share | $9.41 | |||
Investments at cost | $ | 1,473,107 | ||
See notes to financial statements.
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Enterprise Global Socially Responsive Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment Income: | ||||
Dividends | $ | 14,806 | (1) | |
Interest | 193 | |||
Total investment income | 14,999 | |||
Expenses: | ||||
Investment advisory fees | 6,012 | |||
Custodian and fund accounting fees | 5,625 | |||
Reports to shareholders | 86 | |||
Trustees’ fees | 2,488 | |||
Audit and legal fees | 212 | |||
Shareholder servicing fees | 256 | |||
Total expenses | 14,679 | |||
Expense reimbursement | (5,995 | ) | ||
Total expenses, net of reimbursement | 8,684 | |||
Net investment income (loss) | 6,315 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (15,954 | ) | ||
Net realized gain (loss) on foreign currency transactions | (158 | ) | ||
Net change in unrealized gain (loss) on investments | 146,429 | |||
Net realized and unrealized gain (loss) | 130,317 | |||
Net increase (decrease) in net assets resulting from operations | $ | 136,632 | ||
(1) | Net of foreign taxes withheld of $1,374. |
See notes to financial statements.
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Enterprise Global Socially Responsive Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | For the Period January 24, 2002 through December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 6,315 | $ | 4,298 | ||||
Net realized gain (loss) | (16,112 | ) | (129,133 | ) | ||||
Net change in unrealized gain (loss) | 146,429 | (42,950 | ) | |||||
Increase (decrease) in net assets resulting from operations | 136,632 | (167,785 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (4,510 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (4,510 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 299,293 | 1,463,509 | ||||||
Reinvestment of distributions | — | 1,324 | ||||||
Shares redeemed | (105,457 | ) | (69,343 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 193,836 | 1,395,490 | ||||||
Total increase (decrease) in net assets | 330,468 | 1,223,195 | ||||||
Net assets: | ||||||||
Beginning of period | 1,223,195 | — | ||||||
End of period | $ | 1,553,663 | $ | 1,223,195 | ||||
Capital share activity: | ||||||||
Shares issued | 34,389 | 150,287 | ||||||
Shares issued in reinvestment of distributions | — | 155 | ||||||
Shares redeemed | (11,987 | ) | (7,705 | ) | ||||
Net increase (decrease) | 22,402 | 142,737 | ||||||
Undistributed net investment income (loss) | $ | 6,315 | $ | — | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Global Socially Responsive Portfolio
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD IS AS FOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the Period 01/24/02 through 12/31/02 | |||||||
Net asset value, beginning of period | $ | 8.57 | $ | 10.00 | ||||
Income from investment operations: | ||||||||
Net investment income (loss)C | 0.01 | 0.04 | ||||||
Net realized and unrealized gain (loss) on investments | 0.83 | (1.44 | ) | |||||
Total from investment operations | 0.84 | (1.40 | ) | |||||
Less dividends and distributions: | ||||||||
Dividends from net investment income | — | (0.03 | ) | |||||
Distributions from capital gains | — | — | ||||||
Total distributions | — | (0.03 | ) | |||||
Net asset value, end of period | $ | 9.41 | $ | 8.57 | ||||
Total return | 9.80 | %B | (13.98 | )%B | ||||
Net assets end of period (in thousands) | $ | 1,554 | $ | 1,223 | ||||
Ratio of expenses to average net assets | 1.30 | %A | 1.30 | %A | ||||
Ratio of expenses to average net assets (excluding reimbursement) | 2.20 | %A | 2.84 | %A | ||||
Ratio of net investment income (loss) to average net assets | 0.95 | %A | 0.42 | %A | ||||
Portfolio turnover rate | 14 | % | 46 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Global Socially Responsive Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium
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Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of
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Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.90%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $291 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $941,000 in the Portfolio at June 30, 2003.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
— | — | $377,314 | $175,790 |
5. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
6. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | |||
$1,473,107 | $133,535 | ($30,102) | $103,433 |
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TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (83) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
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Enterprise Accumulation Trust
GLOBAL SOCIALLY RESPONSIVE PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
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Enterprise Mergers and Acquisitions Portfolio
SUBADVISER’S COMMENTS
Gabelli Asset Management Company
Rye, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Gabelli Asset Management Company (“Gabelli”), which manages approximately $21.0 billion for institutional clients and whose normal investment minimum is $1 million, is subadviser to the Enterprise Mergers and Acquisitions Portfolio.
Investment Objective
The objective of the Enterprise Mergers and Acquisitions Portfolio is to seek capital appreciation.
First Half 2003 Performance Review
How did the Portfolio perform for the period from May 1- June 30, 2003?
The Portfolio commenced operations on May 1, 2003. For the two-month period, the Portfolio returned 4.30%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 6.62%.
How would you describe the investment environment during the period?
The second calendar quarter got off to a fast start with the announcement of First Data’s agreement to buy rival payment processor Concord EFS for $6.9 billion. This was the largest U.S. deal announced to date this year. Following that, because of the war and SARS, activity slowed into the month of May. But the second quarter ended strong with several multi-billion dollar deals in late May and June. These opportunities are affording Gabelli better investment options in risk arbitrage. In the U.S., the value of second quarter deals came in at approximately $92 billion.
The stock market soared in the second quarter. The market registered its best quarterly performance since the end of 1988. Although technology stocks led the way, the rally was broad based and instilled confidence in many retail investors. Stocks rose as the news from the war improved and investors were encouraged that an economic recovery had begun.
What strategies affected Portfolio performance during the period?
Gabelli stuck to their knitting in the M&A portion of the Portfolio. The Portfolio will hold cash in the absence of conservative deals to invest in. Although the Portfolio put some cash to work as the stock market firmed, it maintained a large cash position through the period, a reflection of Gabelli’s safety first approach.
Gabelli’s strategy of holding a significant position in media and telecommunications stocks in the potential announced deals portion of the portfolio paid off nicely. The FCC relaxed many of the most significant restrictions on the ability of broadcast and newspaper conglomerates to both expand into new markets and to extend their reach in the cities where they already had a presence. This ruling was one of the most important industry catalysts, and many of the holdings in these industries had stellar returns.
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Enterprise Mergers and Acquisitions Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
Purchases in the two-month period included Clayton Homes Inc., Signal Technology Corp., PanAmerican Beverages Inc., RFS Hotel Investors Inc., and Quintiles Transnational Corp. Sales for the period included Concord EFS Inc., Dupont Canada Inc., and Probusiness Services Inc.
There are specific risks associated with investments in small company stocks. Limited volume and frequency of trading may result in greater price deviations, and smaller capitalization companies may experience higher growth rates and higher failure rates than large companies.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
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Enterprise Mergers and Acquisitions Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 52.18% | |||||
Aerospace — 4.33% | |||||
Verdian Corporation (a) | 1,000 | $ | 34,890 | ||
Banking — 0.99% | |||||
First Republic Bank | 300 | 7,980 | |||
Broadcasting — 1.31% | |||||
Young Broadcasting Inc. (Class A) (a) | 500 | 10,565 | |||
Cable — 2.58% | |||||
Cablevision Systems Corporation | 1,000 | 20,760 | |||
Chemicals — 1.23% | |||||
Hercules Inc. (a) | 1,000 | 9,900 | |||
Computer Services — 0.26% | |||||
StorageNetworks Inc. (a) | 1,500 | 2,085 | |||
Computer Software — 6.15% | |||||
J.D. Edwards & Company (a) | 1,000 | 14,330 | |||
PeopleSoft Inc. (a) | 2,000 | 35,180 | |||
49,510 | |||||
Electrical Equipment — 2.77% | |||||
DQE Inc. | 1,000 | 15,070 | |||
Thomas & Betts Corporation (a) | 500 | 7,225 | |||
22,295 | |||||
Energy — 1.12% | |||||
Fording Canadian Coal Trust (a) | 500 | 9,060 | |||
Entertainment & Leisure — 1.54% | |||||
Metro Goldwyn Mayer Inc. (a) | 1,000 | 12,420 | |||
Food, Beverages & Tobacco — 5.94% | |||||
Del Monte Foods Company (a) | 1,000 | 8,840 | |||
Horizon Organic Holding Corporation (a) | 1,000 | 23,750 | |||
Tootsie Roll Industries Inc. | 500 | 15,245 | |||
47,835 | |||||
Hotels & Restaurants — 3.06% | |||||
RFS Hotel Investors Inc. | 2,000 | 24,640 | |||
Medical Instruments — 2.64% | |||||
Interpore International (a) | 1,000 | 12,730 | |||
Young Innovations Inc. (a) | 300 | 8,550 | |||
21,280 | |||||
Medical Services — 3.92% | |||||
Cobalt Corporation (a) | 500 | 10,275 | |||
Quintiles Transnational Corporation (a) | 1,500 | 21,285 | |||
31,560 |
Number of Shares or Principal Amount | Value | |||||
Pharmaceuticals — 1.68% | ||||||
Bristol-Myers Squibb Company | 500 | $ | 13,575 | |||
Printing & Publishing — 2.68% | ||||||
Pulitzer Inc. | 300 | 14,826 | ||||
Readers Digest Association Inc. | 500 | 6,740 | ||||
21,566 | ||||||
Real Estate — 6.05% | ||||||
Chateau Communities Inc. | 1,000 | 29,590 | ||||
Taubman Centers Inc. | 1,000 | 19,160 | ||||
48,750 | ||||||
Utilities — 1.31% | ||||||
Southwest Gas Corporation | 500 | 10,590 | ||||
Wireless Communications — 2.62% | ||||||
AT&T Wireless Services Inc. (a) | 1,000 | 8,210 | ||||
Price Communications Corporation (a) | 1,000 | 12,910 | ||||
21,120 | ||||||
Total Domestic Common Stocks | ||||||
(Identified cost $403,418) | 420,381 | |||||
Foreign Stocks — 8.08% | ||||||
Apparel & Textiles — 4.87% | ||||||
Gucci Group (ADR) | 400 | 39,200 | ||||
Manufacturing — 1.54% | ||||||
Cooper Industries Ltd. (Class A) | 300 | 12,390 | ||||
Medical Instruments — 1.67% | ||||||
Centerpulse Ltd. (ADR) | 500 | 13,500 | ||||
Total Foreign Stocks | ||||||
(Identified cost $62,393) | 65,090 | |||||
U. S. Treasury Obligations — 28.40% | ||||||
U. S. Treasury Bills — 28.40% | ||||||
0.97% due 07/03/03 (e) | $ | 76,000 | 75,996 | |||
1.107% due 07/31/03 (e) | 50,000 | 49,954 | ||||
0.80% due 09/18/03 (e) | 103,000 | 102,819 | ||||
228,769 | ||||||
Total U. S. Treasury Obligations | ||||||
(Identified cost $228,769) | 228,769 | |||||
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Enterprise Mergers and Acquisitions Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Repurchase Agreement — 13.66% | ||||||
State Street Bank & Trust | $ | 110,000 | $ | 110,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $110,000) | 110,000 | |||||
Total Investments | ||||||
(Identified cost $804,580) | $ | 824,240 | ||||
Other Assets Less Liabilities — (2.32)% | (18,701) | |||||
Net Assets — 100% | $ | 805,539 | ||||
(a) | Non-income producing security. |
(e) | The rate shown is the effective yield. |
(ADR) | American Depository Receipt. |
See notes to financial statements.
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Enterprise Mergers and Acquisitions Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | |||
Investments at value | $ | 824,240 | |
Investment income receivable | 1,479 | ||
Receivable for fund shares sold | 5,016 | ||
Receivable for investments sold | 276 | ||
Due from investment adviser | 1,128 | ||
Cash | 240 | ||
Total assets | 832,379 | ||
Liabilities: | |||
Payable for fund shares redeemed | 12 | ||
Payable for investments purchased | 23,758 | ||
Shareholder servicing fees payable | 5 | ||
Accrued expenses and other liabilities | 3,065 | ||
Total liabilities | 26,840 | ||
Net Assets | $ | 805,539 | |
Analysis of Net Assets: | |||
Paid-in capital | $ | 782,179 | |
Undistributed (accumulated) net investment income (loss) | 498 | ||
Undistributed (accumulated) net realized gain (loss) | 3,202 | ||
Unrealized appreciation (depreciation) | 19,660 | ||
Net Assets | $ | 805,539 | |
Shares outstanding | 77,227 | ||
Net asset value per share | $10.43 | ||
Investments at cost | $ | 804,580 | |
See notes to financial statements.
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Enterprise Mergers and Acquisitions Portfolio
STATEMENT OF OPERATIONS
| (Unaudited) For the Period |
| ||
Investment Income: | ||||
Dividends | $ | 1,538 | (1) | |
Interest | 374 | |||
Total investment income | 1,912 | |||
Expenses: | ||||
Investment advisory fees | 878 | |||
Custodian and fund accounting fees | 1,952 | |||
Trustees’ fees | 229 | |||
Audit and legal fees | 688 | |||
Shareholder servicing fees | 10 | |||
Other expenses | 155 | |||
Total expenses | 3,912 | |||
Expense reimbursement | (2,498 | ) | ||
Total expenses, net of reimbursement | 1,414 | |||
Net investment income (loss) | 498 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 3,793 | |||
Net realized gain (loss) on foreign currency transactions | (591 | ) | ||
Net change in unrealized gain (loss) on investments | 19,660 | |||
Net realized and unrealized gain (loss) | 22,862 | |||
Net increase (decrease) in net assets resulting from operations | $ | 23,360 | ||
(1) | Net of foreign taxes withheld of $42. |
(2) | Commencement of operations. |
See notes to financial statements.
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Enterprise Mergers and Acquisitions Portfolio
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
For the Period May 1, 2003 through June 30, 2003 | ||||
From operations: | ||||
Net investment income (loss) | $ | 498 | ||
Net realized gain (loss) | 3,202 | |||
Net change in unrealized gain (loss) | 19,660 | |||
Increase (decrease) in net assets resulting from operations | 23,360 | |||
Distributions to shareholders from: | ||||
Net investment income | — | |||
Net realized gains | — | |||
Total distributions to shareholders | — | |||
From capital share transactions: | ||||
Shares sold | 782,232 | |||
Reinvestment of distributions | — | |||
Shares redeemed | (53 | ) | ||
Total increase (decrease) in net assets resulting from capital share transactions | 782,179 | |||
Total increase (decrease) in net assets | 805,539 | |||
Net assets: | ||||
Beginning of period | — | |||
End of period | $ | 805,539 | ||
Capital share activity: | ||||
Shares issued | 77,232 | |||
Shares issued in reinvestment of distributions | — | |||
Shares redeemed | (5 | ) | ||
Net increase (decrease) | 77,227 | |||
Undistributed net investment income (loss) | $ | 498 | ||
See notes to financial statements.
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Enterprise Mergers and Acquisitions Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) For the Period May 1, 2003 through June 30, 2003 | ||||
Net asset value, beginning of period | $ | 10.00 | ||
Income from investment operations: | ||||
Net investment income (loss)C | 0.01 | |||
Net realized and unrealized gain (loss) on investments | 0.42 | |||
Total from investment operations | 0.43 | |||
Less dividends and distributions: | ||||
Dividends from net investment income | — | |||
Distributions from capital gains | — | |||
Total distributions | — | |||
Net asset value, end of period | $ | 10.43 | ||
Total return | 4.30 | %B | ||
Net assets end of period (in thousands) | $ | 806 | ||
Ratio of expenses to average net assets | 1.45 | %A | ||
Ratio of expenses to average net assets (excluding reimbursement) | 4.01 | %A | ||
Ratio of net investment income (loss) to average net assets | 0.51 | %A | ||
Portfolio turnover rate | 32 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
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Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Mergers and Acquisitions Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.90%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the period ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $40 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.45%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $521,500 in the Portfolio at June 30, 2003.
For the period ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the period ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
— | — | $597,045 | $135,007 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. There was no securities lending activity at June 30, 2003.
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the period ended June 30, 2003.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences, if any due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | |||
$804,581 | $22,828 | ($3,168) | $19,660 |
ENTERPRISE Accumulation Trust
12
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
13
Enterprise Accumulation Trust
MERGERS AND ACQUISITIONS PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
14
Enterprise Managed Portfolio
SUBADVISER’S COMMENTS
Wellington Management Company, LLP
Boston, Massachusetts
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Wellington Management Company, LLP (“Wellington”), which manages approximately $337 billion for institutional clients and whose usual investment minimum for this investment objective is $25 million, is subadviser to the Enterprise Managed Portfolio.
Investment Objective
The objective of the Enterprise Managed Portfolio is to seek growth of capital over time.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 9.16%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 11.77%. The Portfolio underperformed its peer group, the Lipper Flexible Portfolio Funds Index, which returned 9.73%.
How would you describe the investment environment during the period?
Following strong returns from fourth quarter 2002, investors entered 2003 with hope of the first annual positive return for the broad equity market since 1999. The first quarter provided no such relief. A number of concerns kept many investors on the sidelines. Concerns ranged from the geopolitical, as the U.S. began war with Iraq, to the economy, where the recovery seemed muted at best; additionally, deteriorating fundamentals in many industries and poor weather added to the lack of conviction among investors. The second quarter saw broad and robust gains in the equity market, led by information technology stocks. With equities languishing at three-year lows and a lack of compelling alternative investments, market sentiment for equities turned positive. Additionally, many companies used the economic downturn to clean up their balance sheets, and reduced their workforces to the point where they should perform well when the economy does rebound. Frustrated by the seemingly slow pace of economic pick-up, the Federal Reserve cut the discount rate an additional 0.25% in June.
What strategies affected Portfolio performance during the period?
In the aggregate, Wellington’s asset allocation positioning contributed modestly to relative results during the period. Heading into 2003, Wellington maintained the Portfolio with an under-weight to equities, believing that there would be disappointing news on the economic front and a growing certainty of war. This under-weight positioning positively impacted performance during the first quarter. After a rally in early January, equity markets faded until the second week in March due to the rising likelihood of war, a steady stream of poor global economic news and persistent outflows from equity mutual funds. In February, Wellington eliminated the equity under-weight as general sentiment regarding the war and its likely outcome pointed to a possible equity rally. As March progressed, this equity rally materialized and was quite strong. Consequently, the Portfolio’s over-weight to equities positively benefited performance.
The Portfolio also benefited from strength in the consumer discretionary sector, where AOL Time Warner rose sharply on asset sales intended to strengthen its balance sheet and improve fundamentals. Another strong media related name was Omnicom. This stock continued to benefit from its strong competitive position in a modestly positive environment for advertising spending. In the retailing sub-sector of the consumer discretionary sector, Michael’s Stores stands out as a strong contributor to performance. The stock continues to perform well due to continued progress with its automated inventory system.
ENTERPRISE Accumulation Trust
1
Enterprise Managed Portfolio
SUBADVISER’S COMMENTS — (Continued)
Weak stock selection in the information technology sector negatively impacted performance for the period. Specifically, Texas Instruments Inc. and Microsoft Corporation were weak for the period. Despite the fact that the information technology sector led the market for the period, investors preferred more speculative names with greater leverage to an economic recovery.
What changes were made to the Portfolio over the period?
The Portfolio began the year with an under-weight to equities, which proved to be additive to performance during the equity market decline in January and February. The strong equity market rally that began in March saw the Portfolio with a neutral-to-slight over-weight to equities. As the period progressed, the Portfolio gradually built an over-weight equity position. The Portfolio ended the period with a slight over-weight to equities.
In the equity portion of the Portfolio, Wellington has begun to increase cyclical exposure. In particular, Wellington added several new positions in the technology and consumer discretionary sectors, such as Analog Devices, Applied Materials Inc., Target Corporation, Lamar Advertising Company and The Gap Inc. Wellington funded these purchases by reducing the over-weight to healthcare via sales of HCA Inc. and Baxter International Inc. and increasing the under-weight to financials via sales of Federated Investors and UnionBanCal Corporation.
In the fixed-income portion of the Portfolio, Wellington continues to under-weight exposure to government securities and continues to over-weight the mortgage-backed and corporate sectors. This over-weight to the corporate sector, however, has been reduced as the corporate bond yield spread to Treasuries has narrowed while corporations improve their balance sheets.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
2
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 68.17% | |||||
Advertising — 1.04% | |||||
Catalina Marketing Corporation (a) | 59,800 | $ | 1,055,470 | ||
Lamar Advertising Company (a) | 64,100 | 2,256,961 | |||
Omnicom Group Inc. | 50,000 | 3,585,000 | |||
6,897,431 | |||||
Aerospace — 1.66% | |||||
General Dynamics Corporation | 39,600 | 2,871,000 | |||
Lockheed Martin Corporation | 111,700 | 5,313,569 | |||
United Technologies Corporation | 39,700 | 2,811,951 | |||
10,996,520 | |||||
Airlines — 0.17% | |||||
JetBlue Airways Corporation (a) (o) | 26,600 | 1,124,914 | |||
Apparel & Textiles — 0.53% | |||||
American Eagle Outfitters Inc. (a) | 45,700 | 838,138 | |||
Liz Claiborne Inc. | 47,600 | 1,677,900 | |||
Mohawk Industries Inc. (a) | 18,200 | 1,010,646 | |||
3,526,684 | |||||
Automotive — 0.28% | |||||
O’Reilly Automotive Inc. (a) (o) | 56,400 | 1,883,196 | |||
Banking — 3.48% | |||||
Bank of America Corporation | 91,900 | 7,262,857 | |||
Bank of Hawaii Corporation | 37,700 | 1,249,755 | |||
Bank One Corporation | 153,900 | 5,722,002 | |||
Banknorth Group Inc. | 69,500 | 1,773,640 | |||
Sovereign Bancorp Inc. | 89,300 | 1,397,545 | |||
Wachovia Corporation | 143,500 | 5,734,260 | |||
23,140,059 | |||||
Biotechnology — 0.01% | |||||
Genzyme Corporation (a) | 1,000 | 41,800 | |||
Broadcasting — 0.24% | |||||
Univision Communications Inc. | 50,600 | 1,538,240 | |||
Westwood One Inc. (a) | 800 | 27,144 | |||
1,565,384 | |||||
Building & Construction — 0.74% | |||||
D.R. Horton Inc. (o) | 62,400 | 1,753,440 | |||
Masco Corporation | 131,600 | 3,138,660 | |||
4,892,100 | |||||
Business Services — 0.63% | |||||
Aramark Corporation (Class B) (a) | 45,000 | 1,008,900 | |||
Automatic Data Processing Inc. | 49,700 | 1,682,842 | |||
ChoicePoint Inc. (a) | 44,000 | 1,518,880 | |||
4,210,622 |
Number of Shares | Value | ||||
Cable — 0.93% | |||||
Comcast Corporation (Class A) (a) | 212,800 | $ | 6,135,024 | ||
EchoStar Communications Corporation (Class A) (a) | 1,600 | 55,392 | |||
6,190,416 | |||||
Chemicals — 0.85% | |||||
Cabot Microelectronics | 38,600 | 1,948,142 | |||
Du Pont (E. I.) de Nemours & Company | 87,300 | 3,635,172 | |||
Praxair Inc. | 600 | 36,060 | |||
5,619,374 | |||||
Computer Hardware — 3.14% | |||||
CDW Corporation (a) | 12,200 | 558,760 | |||
Cisco Systems Inc. (a) | 426,700 | 7,121,623 | |||
Hewlett-Packard Company | 324,000 | 6,901,200 | |||
International Business Machines Corporation | 76,200 | 6,286,500 | |||
20,868,083 | |||||
Computer Services — 1.52% | |||||
Checkfree Corporation (a) (o) | 38,200 | 1,063,488 | |||
InterActiveCorp (a) | 88,400 | 3,497,988 | |||
Manhattan Associates Inc. (a) (o) | 24,800 | 644,056 | |||
Sungard Data Systems Inc. (a) | 188,300 | 4,878,853 | |||
Symantec Corporation (a) | 700 | 30,702 | |||
10,115,087 | |||||
Computer Software — 3.50% | |||||
Adobe Systems Inc. | 16,300 | 522,741 | |||
Cadence Design Systems Inc. (a) | 77,829 | 938,618 | |||
Intuit Inc. (a) | 59,300 | 2,640,629 | |||
Microsoft Corporation | 672,300 | 17,217,603 | |||
PeopleSoft Inc. (a) | 39,100 | 687,769 | |||
Siebel Systems Inc. (a) | 61,200 | 583,848 | |||
Verity Inc. (a) | 49,400 | 625,404 | |||
23,216,612 | |||||
Consumer Products — 1.54% | |||||
Gillette Company | 162,300 | 5,170,878 | |||
Procter & Gamble Company | 57,100 | 5,092,178 | |||
10,263,056 | |||||
Containers/Packaging — 0.39% | |||||
Pactiv Corporation (a) | 130,200 | 2,566,242 | |||
Crude & Petroleum — 2.49% | |||||
ChevronTexaco Corporation | 86,700 | 6,259,740 | |||
ExxonMobil Corporation | 286,700 | 10,295,397 | |||
16,555,137 | |||||
Electrical Equipment — 1.85% | |||||
General Electric Company | 429,000 | 12,303,720 |
ENTERPRISE Accumulation Trust
3
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares | Value | ||||
Electronics — 0.20% | |||||
Sanmina-SCI Corporation (a) | 207,300 | $ | 1,308,063 | ||
Energy — 1.26% | |||||
Chesapeake Energy Corporation (o) | 179,600 | 1,813,960 | |||
Cinergy Corporation | 43,000 | 1,581,970 | |||
Exelon Corporation | 66,800 | 3,995,308 | |||
Swift Energy Company (a) (o) | 90,300 | 993,300 | |||
8,384,538 | |||||
Finance — 1.05% | |||||
Capital One Financial Corporation | 1,300 | 63,934 | |||
E*TRADE Group Inc. (a) | 97,100 | 825,350 | |||
Legg Mason Inc. | 74,500 | 4,838,775 | |||
Providian Financial | 136,000 | 1,259,360 | |||
6,987,419 | |||||
Food, Beverages & Tobacco — 3.76% | |||||
Altria Group Inc. | 78,000 | 3,544,320 | |||
Coca-Cola Company | 148,600 | 6,896,526 | |||
Coca-Cola Enterprises Inc. | 153,000 | 2,776,950 | |||
Constellation Brands Inc. (a) | 70,100 | 2,201,140 | |||
General Mills Inc. | 85,200 | 4,039,332 | |||
PepsiCo Inc. | 124,400 | 5,535,800 | |||
24,994,068 | |||||
Gaming — 0.21% | |||||
International Game Technology (a) | 13,500 | 1,381,455 | |||
Health Care — 0.73% | |||||
Anthem Inc. (a) | 10,100 | 779,215 | |||
Oxford Health Plans Inc. (a) | 40,200 | 1,689,606 | |||
Triad Hospitals Inc. (a) | 95,200 | 2,362,864 | |||
4,831,685 | |||||
Hotels & Restaurants — 1.22% | |||||
Brinker International Inc. (a) | 109,800 | 3,954,996 | |||
Darden Restaurants Inc. | 40,700 | 772,486 | |||
McDonald’s Corporation | 150,500 | 3,320,030 | |||
Starbucks Corporation (a) | 1,640 | 40,213 | |||
8,087,725 | |||||
Insurance — 1.01% | |||||
Gallagher Arthur J & Company | 63,000 | 1,713,600 | |||
Marsh & McLennan Companies Inc. | 97,200 | 4,964,004 | |||
6,677,604 | |||||
Manufacturing — 1.10% | |||||
3M Company | 24,000 | 3,095,520 | |||
Danaher Corporation | 600 | 40,830 | |||
ITT Industries Inc. | 63,400 | 4,150,164 | |||
7,286,514 |
Number of Shares | Value | ||||
Media — 1.93% | |||||
AOL Time Warner Inc. (a) | 571,600 | $ | 9,197,044 | ||
Gannett Company Inc. | 47,400 | 3,640,794 | |||
12,837,838 | |||||
Medical Instruments — 1.32% | |||||
Diagnostic Products | 17,500 | 718,375 | |||
Edwards Lifesciences | 81,400 | 2,616,196 | |||
Guidant Corporation | 63,200 | 2,805,448 | |||
Henry Schein Inc. (a) | 20,500 | 1,072,970 | |||
Waters Corporation (a) | 51,548 | 1,501,593 | |||
Zimmer Holdings Inc. (a) | 950 | 42,798 | |||
8,757,380 | |||||
Medical Services — 1.60% | |||||
Cardinal Health Inc. | 74,400 | 4,783,920 | |||
IMS Health Inc. | 130,400 | 2,345,896 | |||
Laboratory Corporation of America Holdings (a) (o) | 36,200 | 1,091,430 | |||
Lincare Holdings Inc. (a) | 700 | 22,057 | |||
Quest Diagnostics Inc. (a) (o) | 36,000 | 2,296,800 | |||
WellPoint Health Networks Inc. (a) | 700 | 59,010 | |||
10,599,113 | |||||
Metals & Mining — 0.80% | |||||
Alcoa Inc. | 208,600 | 5,319,300 | |||
Misc. Financial Services — 4.08% | |||||
Ambac Financial Group Inc. | 26,300 | 1,742,375 | |||
Citigroup Inc. | 353,700 | 15,138,360 | |||
Countrywide Credit Industries Inc. | 39,200 | 2,727,144 | |||
Merrill Lynch & Company Inc. | 160,900 | 7,510,812 | |||
27,118,691 | |||||
Multi-Line Insurance — 1.58% | |||||
American International Group Inc. | 189,300 | 10,445,574 | |||
Brown & Brown Inc. | 1,600 | 52,000 | |||
10,497,574 | |||||
Oil Services — 1.35% | |||||
Apache Corporation | 630 | 40,988 | |||
EOG Resources Inc. | 83,800 | 3,506,192 | |||
GlobalSantaFe Corporation | 43,200 | 1,008,288 | |||
Halliburton Company | 2,000 | 46,000 | |||
Schlumberger Ltd. | 92,400 | 4,395,468 | |||
8,996,936 | |||||
Paper Products — 0.50% | |||||
International Paper Company | 93,100 | 3,326,463 |
ENTERPRISE Accumulation Trust
4
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares | Value | ||||
Pharmaceuticals — 8.10% | |||||
Abbott Laboratories | 186,700 | $ | 8,169,992 | ||
Albany Molecular Research Inc. (a) (o) | 132,500 | 2,000,750 | |||
Caremark Rx Inc. (a) | 48,100 | 1,235,208 | |||
Eli Lilly & Company | 108,500 | 7,483,245 | |||
IDEC Pharmaceuticals | 75,400 | 2,563,600 | |||
King Pharmaceuticals Inc. (a) | 118,700 | 1,752,012 | |||
Pfizer Inc. | 477,500 | 16,306,625 | |||
Schering-Plough Corporation | 205,500 | 3,822,300 | |||
Watson Pharmaceuticals Inc. (a) | 37,500 | 1,513,875 | |||
Wyeth | 195,900 | 8,923,245 | |||
53,770,852 | |||||
Property-Casualty Insurance — 0.97% | |||||
St. Paul Companies Inc. | 77,000 | 2,811,270 | |||
Travelers Property Casualty Corporation (Class B) | 232,000 | 3,658,640 | |||
6,469,910 | |||||
Retail — 3.77% | |||||
Bed Bath & Beyond Inc. (a) | 1,370 | 53,169 | |||
Chico’s FAS Inc. (a) (o) | 67,200 | 1,414,560 | |||
CVS Corporation | 67,900 | 1,903,237 | |||
Fastenal Company (o) | 900 | 30,546 | |||
Gap Inc. | 146,300 | 2,744,588 | |||
Home Depot Inc. | 190,700 | 6,315,984 | |||
Linens ‘n Things Inc. (a) (o) | 12,400 | 292,764 | |||
Michaels Stores Inc. (a) | 54,200 | 2,062,852 | |||
Pacific Sunwear of California (a) (o) | 45,600 | 1,098,504 | |||
Target Corporation | 42,500 | 1,608,200 | |||
Wal-Mart Stores Inc. | 140,200 | 7,524,534 | |||
25,048,938 | |||||
Semiconductors — 3.26% | |||||
Analog Devices Inc. (a) | 66,400 | 2,312,048 | |||
Applied Materials Inc. (a) | 243,000 | 3,853,980 | |||
Emulex Corporation (a) | 1,400 | 31,878 | |||
Fairchild Semiconductor International (Class A) (a) | 103,300 | 1,321,207 | |||
Integrated Circuit Systems Inc. (a) (o) | 35,400 | 1,112,622 | |||
Intel Corporation | 355,100 | 7,380,399 | |||
International Rectifier | 113,000 | 3,030,660 | |||
Lattice Semiconductor | 45,800 | 376,934 | |||
Novellus Systems Inc. (a) | 18,400 | 673,826 | |||
Texas Instruments Inc. | 85,300 | 1,501,280 | |||
Xilinx Inc. (a) | 1,300 | 32,903 | |||
21,627,737 | |||||
Telecommunications — 1.38% | |||||
Comverse Technology Inc. (a) | 50,400 | 757,512 | |||
SBC Communications Inc. | 280,500 | 7,166,775 | |||
Tekelec (a) | 108,100 | 1,221,530 | |||
9,145,817 |
Number of Shares or Principal Amount | Value | |||||
Transportation — 0.94% | ||||||
EGL Inc. (a) (o) | 114,000 | $ | 1,732,800 | |||
FedEx Corporation | 72,274 | 4,483,156 | ||||
6,215,956 | ||||||
Travel/Entertainment/Leisure — 0.14% | ||||||
Polaris Industries Inc. (o) | 14,700 | 902,580 | ||||
Utilities — 0.34% | ||||||
FPL Group Inc. | 34,000 | 2,272,900 | ||||
Waste Management — 0.58% | ||||||
Waste Management Inc. | 160,200 | 3,859,218 | ||||
Wireless Communications — 0.00% | ||||||
Nextel Communications Inc. | 1,800 | 32,544 | ||||
Total Domestic Common Stocks | ||||||
(Identified cost $457,536,689) | 452,715,255 | |||||
Foreign Stocks — 0.63% | ||||||
Technology — 0.63% | ||||||
Accenture LTD. (a) | 230,300 | 4,166,127 | ||||
Total Foreign Stocks | ||||||
(Identified cost $4,064,639) | 4,166,127 | |||||
Corporate Bonds and Notes — 8.62% | ||||||
Aerospace — 0.14% | ||||||
McDonnell Douglas Corporation 6.875% due 11/01/06 | $ | 425,000 | 473,308 | |||
United Technologies Corporation 7.125% due 11/15/10 | 400,000 | 482,587 | ||||
955,895 | ||||||
Airlines — 0.24% | ||||||
American Airlines Inc. | 450,000 | 429,589 | ||||
American Airlines Pass | 80,000 | 80,000 | ||||
Continental Airlines | 628,531 | 609,288 | ||||
Delta Air Lines Inc. | 450,000 | 456,344 | ||||
1,575,221 |
ENTERPRISE Accumulation Trust
5
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Banking — 0.33% | ||||||
First Massachusetts Bank | $ | 300,000 | $ | 360,410 | ||
First Union National Bank | 95,000 | 116,376 | ||||
First Union National Bank | 400,000 | 449,794 | ||||
NCNB Corporation | 250,000 | 370,548 | ||||
People’s Bank | 250,000 | 303,063 | ||||
Popular North America Inc. | 550,000 | 564,953 | ||||
2,165,144 | ||||||
Broadcasting — 0.09% | ||||||
Clear Channel Communications | 255,000 | 279,230 | ||||
Liberty Media Corporation | 300,000 | 349,478 | ||||
628,708 | ||||||
Building & Construction — 0.23% | ||||||
Centex Corporation | 500,000 | 549,154 | ||||
Lennar Corporation | 110,000 | 130,454 | ||||
Lennar Corporation | 120,000 | 131,337 | ||||
Masco Corporation | 225,000 | 249,869 | ||||
Pulte Homes Inc. | 425,000 | 471,483 | ||||
1,532,297 | ||||||
Cable — 0.24% | ||||||
Cox Communications Inc. | 320,000 | 382,123 | ||||
TCI Communications Inc. | 300,000 | 388,926 | ||||
TCI Communications Inc. | 250,000 | 275,602 | ||||
USA Networks Inc. | 500,000 | 545,096 | ||||
1,591,747 | ||||||
Chemicals — 0.19% | ||||||
Chevron Phillips Chemical | 425,000 | 494,748 | ||||
Dow Chemical Company | 350,000 | 380,758 | ||||
Monsanto Company | 300,000 | 357,701 | ||||
1,233,207 |
Principal Amount | Value | |||||
Computer Services — 0.03% | ||||||
Computer Sciences Corporation | $ | 175,000 | $ | 212,804 | ||
Electrical Equipment — 0.03% | ||||||
Oncor Electric Delivery Company | 200,000 | 228,309 | ||||
Energy — 1.02% | ||||||
Alabama Power Company | 375,000 | 402,345 | ||||
Alliant Energy Resources Inc. | 100,000 | 128,782 | ||||
American Electric Power Inc. | 575,000 | 630,287 | ||||
Calenergy Inc. | 185,000 | 220,792 | ||||
Carolina Power & Light Company | 150,000 | 168,901 | ||||
Consolidated Natural Gas Company | 350,000 | 379,448 | ||||
Florida Power Corporation | 300,000 | 320,942 | ||||
Keyspan Corporation | 210,000 | 233,450 | ||||
NSTAR | 425,000 | 521,548 | ||||
Old Dominion Electric Cooperative | 650,000 | 744,375 | ||||
Peco Energy Company | 165,000 | 172,749 | ||||
Pennsylvania Electric Company | 175,000 | 192,228 | ||||
PPL Energy Supply | 250,000 | 277,535 | ||||
PSEG Power 7.75% due 04/15/11 | 450,000 | 536,939 | ||||
SCANA Corporation | 200,000 | 227,018 | ||||
Schlumberger Technology Corporation | 675,000 | 783,696 | ||||
South Carolina Electric & Gas | 180,000 | 191,856 | ||||
Southern California Gas Company | 350,000 | 367,847 | ||||
Wisconsin Energy Corporation | 255,000 | 291,961 | ||||
6,792,699 | ||||||
Finance — 0.40% | ||||||
Erac USA Finance Company | 550,000 | 655,271 | ||||
Household Finance Corporation | 950,000 | 1,080,210 | ||||
Household Finance Corporation | 105,000 | 133,096 | ||||
Newcourt Credit Group Inc. | 750,000 | 803,421 | ||||
2,671,998 |
ENTERPRISE Accumulation Trust
6
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Food, Beverages & Tobacco — 0.35% | ||||||
Altria Group Inc. | $ | 150,000 | $ | 160,773 | ||
Archer Daniels Midland Company | 200,000 | 261,552 | ||||
Kraft Foods Inc. | 220,000 | 233,658 | ||||
Pepsi Bottling Group Inc. | 330,000 | 401,777 | ||||
Tyson Foods Inc. | 350,000 | 362,791 | ||||
Unilever Capital Corporation | 430,000 | 462,987 | ||||
Whitman Corporation | 425,000 | 467,348 | ||||
2,350,886 | ||||||
Gaming — 0.06% | ||||||
International Game Technology | 325,000 | 398,712 | ||||
Insurance — 0.36% | ||||||
Allstate Financial Global Funding 6.50% due 06/14/11 (144A) | 275,000 | 309,465 | ||||
Amerus Group Company | 350,000 | 357,420 | ||||
Equitable Life Assured Society | 500,000 | 557,511 | ||||
Liberty Mutual Insurance Company | 110,000 | 80,919 | ||||
Prudential Insurance Company America | 300,000 | 335,533 | ||||
Prudential Insurance Company America | 200,000 | 232,920 | ||||
RenaissanceRe Holdings Ltd. | 460,000 | 489,320 | ||||
2,363,088 | ||||||
Machinery — 0.06% | ||||||
Caterpillar Inc. | 350,000 | 413,760 | ||||
Media — 0.15% | ||||||
AOL Time Warner Inc. | 850,000 | 992,317 |
Principal Amount | Value | |||||
Medical Services — 0.06% | ||||||
Cardinal Health Inc. | $ | 200,000 | $ | 230,541 | ||
Cardinal Health Inc. | 150,000 | 180,584 | ||||
411,125 | ||||||
Metals & Mining — 0.08% | ||||||
Alcoa Inc. | 450,000 | 523,868 | ||||
Misc. Financial Services — 1.51% | ||||||
American Express Company | 110,000 | 121,406 | ||||
American Express Credit Corporation, | 750,000 | 819,293 | ||||
Canadian Oil Sands Ltd. | 300,000 | 337,897 | ||||
Citigroup Inc. | 1,100,000 | 1,332,778 | ||||
Ford Motor Credit Company | 130,000 | 139,579 | ||||
Ford Motor Credit Company | 1,350,000 | 1,387,899 | ||||
Frank Russell Company | 500,000 | 561,908 | ||||
General Electric Capital Corporation | 1,100,000 | 1,254,322 | ||||
General Motors Acceptance Corporation | 1,075,000 | 1,072,480 | ||||
Goldman Sachs Group Inc. | 575,000 | 678,470 | ||||
Hartford Financial Services | 200,000 | 243,849 | ||||
Merrill Lynch & Company Inc. | 900,000 | 1,011,743 | ||||
Morgan Stanley Group Inc. | 900,000 | 1,052,713 | ||||
10,014,337 | ||||||
Multi-Line Insurance — 0.33% | ||||||
American Financial Group Inc. | 215,000 | 218,214 | ||||
American General Corporation | 900,000 | 1,111,455 | ||||
John Hancock Global Funding | 700,000 | 863,639 | ||||
2,193,308 |
ENTERPRISE Accumulation Trust
7
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Oil Services — 1.06% | ||||||
Burlington Resources Financial Company, | $ | 450,000 | $ | 562,980 | ||
Canadian Natural Resources Ltd. | 475,000 | 535,822 | ||||
ChevronTexaco Capital Company | 450,000 | 467,649 | ||||
Conagra Inc. | 575,000 | 725,692 | ||||
Devon Funding Corporation | 600,000 | 703,820 | ||||
Duke Energy Field Services | 215,000 | 228,996 | ||||
Energen Corporation | 200,000 | 220,720 | ||||
Kinder Morgan Energy Partners | 400,000 | 465,134 | ||||
Kinder Morgan Inc. | 675,000 | 773,751 | ||||
Motiva Enterprises | 700,000 | 740,514 | ||||
Murphy Oil Corporation | 350,000 | 403,411 | ||||
Northern Border Partners | 220,000 | 268,225 | ||||
Tosco Corporation | 410,000 | 465,050 | ||||
Valero Energy Corporation | 400,000 | 453,434 | ||||
7,015,198 | ||||||
Paper Products — 0.18% | ||||||
International Paper Company | 375,000 | 433,734 | ||||
Mead Corporation | 175,000 | 206,226 | ||||
Temple Inland Inc. | 270,000 | 322,061 | ||||
Willamette Industries Inc. | 175,000 | 199,677 | ||||
1,161,698 | ||||||
Pharmaceuticals — 0.09% | ||||||
Bristol Myers Squibb Company | 200,000 | 215,265 | ||||
Wyeth | 300,000 | 351,962 | ||||
567,227 | ||||||
Property-Casualty Insurance — 0.36% | ||||||
Ace Capital Trust | 575,000 | 774,891 | ||||
Everest Reinsurance Holdings Inc. | 370,000 | 402,504 |
Principal Amount | Value | |||||
Fidelity National Financial Inc. | $ | 225,000 | $ | 261,279 | ||
Mercury General Corporation | 425,000 | 480,592 | ||||
W.R. Berkley Corporation | 195,000 | 207,389 | ||||
W.R. Berkley Corporation | 200,000 | 248,945 | ||||
2,375,600 | ||||||
Real Estate — 0.25% | ||||||
AMB Property | 350,000 | 401,029 | ||||
Duke Realty Limited Partnership | 300,000 | 320,220 | ||||
Health Care Property | 300,000 | 311,009 | ||||
Liberty Property Trust | 220,000 | 276,403 | ||||
Spieker Properties | 300,000 | 349,535 | ||||
1,658,196 | ||||||
Retail — 0.36% | ||||||
Kohl’s Corporation | 430,000 | 465,177 | ||||
Lowe’s Companies Inc. | 675,000 | 765,491 | ||||
Staples Inc. | 340,000 | 402,478 | ||||
Target Corporation | 390,000 | 437,011 | ||||
Wal-Mart Stores Inc. | 275,000 | 323,741 | ||||
2,393,898 | ||||||
Telecommunications — 0.37% | ||||||
Alltel Corporation | 450,000 | 546,209 | ||||
Ameritech Capital Funding Corporation, | 200,000 | 232,471 | ||||
AT & T Corporation | 325,000 | 371,511 | ||||
CenturyTel Inc. | 125,000 | 157,754 | ||||
SBC Communications Inc. | 300,000 | 338,205 | ||||
Verizon Global Funding Corporation | 660,000 | 805,005 | ||||
2,451,155 |
ENTERPRISE Accumulation Trust
8
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Wireless Communications — 0.05% | ||||||
AT&T Wireless Services Inc. | $ | 275,000 | $ | 339,918 | ||
Total Corporate Bonds and Notes | ||||||
(Identified cost $52,875,296) | 57,212,320 | |||||
Foreign Bonds — 0.87% | ||||||
Banking — 0.10% | ||||||
Bayerische Landesbank Girozentrale 5.65% due 02/01/09 | 200,000 | 224,377 | ||||
National Australia Bank Ltd. | 175,000 | 226,217 | ||||
Royal Bank of Scotland Group | 200,000 | 231,772 | ||||
682,366 | ||||||
Chemicals — 0.03% | ||||||
Potash Corporation Saskatchewan Inc. | 175,000 | 215,104 | ||||
Insurance — 0.10% | ||||||
XL Capital Finance Europe | 575,000 | 657,606 | ||||
Manufacturing — 0.06% | ||||||
Norsk Hydro | 300,000 | 366,463 | ||||
Misc. Financial Services — 0.05% | ||||||
Corporacion Nacional del Cobre, | 310,000 | 341,419 | ||||
Oil Services — 0.15% | ||||||
Pemex Project Funding Master Trust, 9.125% due 10/13/10 | 550,000 | 665,500 | ||||
Petroleos Mexicanos | 275,000 | 339,625 | ||||
1,005,125 | ||||||
Telecommunications — 0.30% | ||||||
British Telecommunications | 300,000 | 379,404 | ||||
Deutsche Telekom International | 250,000 | 307,095 | ||||
France Telecom | 550,000 | 692,211 | ||||
Singapore Telecommunications, | 520,000 | 635,025 | ||||
2,013,735 |
Principal Amount | Value | |||||
Wireless Communications — 0.08% | ||||||
Vodafone Airtouch | $ | 275,000 | $ | 338,369 | ||
Vodafone Airtouch | 125,000 | 161,028 | ||||
499,397 | ||||||
Total Foreign Bonds | ||||||
(Identified cost $5,237,610) | 5,781,215 | |||||
Asset-Backed Securities — 1.34% | ||||||
Automotive — 0.77% | ||||||
Capital Auto Receivables Asset Trust, Series 2002-1, Class A4 | 1,000,000 | 1,043,925 | ||||
Capital One Auto Financial Trust, Series 2002-B, Class A4A | 1,500,000 | 1,554,097 | ||||
Daimlerchrysler Auto Trust, Series 2002-B, Class A4 | 1,200,000 | 1,245,563 | ||||
Nissan Auto Receivables Trust, Series 2002 B, Class A4 | 1,200,000 | 1,266,418 | ||||
5,110,003 | ||||||
Finance — 0.19% | ||||||
Onyx Acceptance Owner Trust, Series 2001-D, Class A4 | 1,200,000 | 1,251,921 | ||||
Misc. Financial Services — 0.19% | ||||||
Citibank Credit Card Issuance Trust, Series 2001, Class A8, | 1,200,000 | 1,246,682 | ||||
Utilities — 0.19% | ||||||
Massachusetts Special Purpose Trust, Series 1999-1, Class A3 | 1,200,000 | 1,277,267 | ||||
Total Asset-Backed Securities | ||||||
(Identified cost $8,676,796) | 8,885,873 | |||||
ENTERPRISE Accumulation Trust
9
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Collateralized Mortgage Obligations — 1.63% | ||||||
Misc. Financial Services — 1.63% | ||||||
Asset Securitization Corporation, Series 1997-D4, Class AID | $ | 845,000 | $ | 983,546 | ||
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOPC, Class A2 6.48% | 650,000 | 758,498 | ||||
Chase Commercial Mortgage Securities Corporation, Series 1998-2, Class A2 | 820,000 | 943,846 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 1998-WF1, | 1,080,000 | 1,235,336 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2001-TOP1, | 425,000 | 500,051 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2001-TOP3, | 845,000 | 982,421 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2001-TOP5, | 1,150,000 | 1,337,670 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2002-HQ, | 245,000 | 287,826 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2002-TOP7, | 1,150,000 | 1,308,142 | ||||
Nomura Asset Securities Corporation, Series 1998-D6, Class A1B | 1,150,000 | 1,328,654 | ||||
UBS Commercial Mortgage Trust, Series 2002-C1, Class A4 | 1,020,000 | 1,190,781 | ||||
10,856,771 | ||||||
Total Collateralized Mortgage Obligations | ||||||
(Identified cost $10,288,336) | 10,856,771 | |||||
U. S. Treasury Obligations — 2.02% | ||||||
U. S. Treasury Bills — 0.06% | ||||||
1.20% due 08/07/03 (e) (s) | 420,000 | 419,538 | ||||
U. S. Treasury Bonds — 1.08% | ||||||
8.125% due 05/15/21 | 3,500,000 | 5,111,232 | ||||
5.60% due 08/15/25 (e) | 3,400,000 | 1,130,469 | ||||
6.00% due 02/15/26 | 750,000 | 896,514 | ||||
7,138,215 |
Principal Amount | Value | |||||
U. S. Treasury Notes — 0.88% | ||||||
3.50% due 01/15/11 (TIPS) | $ | 5,164,427 | $ | 5,865,658 | ||
Total U. S. Treasury Obligations | ||||||
(Identified cost $12,612,550) | 13,423,411 | |||||
U.S. Agency Obligations — 14.01% | ||||||
Fannie Mae — 3.00% | ||||||
7.00% due 02/01/07 | 33,727 | 35,641 | ||||
6.79% due 11/01/07 | 1,378,360 | 1,553,185 | ||||
6.525% due 06/01/09 | 658,818 | 762,215 | ||||
7.00% due 07/01/09 | 20,781 | 21,961 | ||||
6.625% due 09/15/09 | 900,000 | 1,079,834 | ||||
7.512% due 02/01/10 | 389,319 | 467,580 | ||||
6.97% due 10/01/10 | 1,215,404 | 1,448,151 | ||||
6.30% due 03/01/11 | 1,047,973 | 1,189,449 | ||||
6.03% due 05/01/11 | 1,370,629 | 1,580,460 | ||||
6.01% due 11/01/11 | 1,376,858 | 1,571,929 | ||||
6.115% due 02/01/12 | 1,183,955 | 1,359,585 | ||||
5.898% due 04/01/12 | 1,384,094 | 1,570,663 | ||||
7.00% due 11/01/12 | 19,065 | 20,289 | ||||
7.00% due 12/01/12 | 612,314 | 651,644 | ||||
7.00% due 03/01/15 | 616,795 | 656,210 | ||||
7.00% due 05/01/15 | 50,076 | 53,276 | ||||
7.00% due 06/01/15 | 384,191 | 408,742 | ||||
7.00% due 11/01/15 | 3,280 | 3,489 | ||||
7.00% due 04/01/17 | 908,258 | 966,109 | ||||
6.00% due 12/01/22 | 939,098 | 979,170 | ||||
6.00% due 01/01/23 | 1,521,238 | 1,586,151 | ||||
6.00% due 02/01/23 | 891,951 | 930,011 | ||||
5.50% due 06/01/33 | 999,901 | 1,035,249 | ||||
19,930,993 | ||||||
Federal Home Loan Banks — 2.15% | ||||||
4.125% due 01/14/05 | 8,700,000 | 9,074,709 | ||||
6.50% due 06/01/16 | 83,577 | 87,784 | ||||
6.50% due 07/01/16 | 3,432,141 | 3,604,922 | ||||
6.50% due 08/01/16 | 158,818 | 166,814 | ||||
6.50% due 09/01/16 | 660,954 | 694,228 | ||||
6.50% due 11/01/16 | 365,858 | 384,276 | ||||
6.50% due 03/01/17 | 74,092 | 77,818 | ||||
7.00% due 05/01/29 | 208,472 | 218,671 | ||||
14,309,222 | ||||||
Freddie Mac — 0.90% | ||||||
7.00% due 07/15/05 | 1,875,000 | 2,083,727 | ||||
5.125% due 07/15/12 | 1,000,000 | 1,103,246 | ||||
6.50% due 01/01/17 | 2,663,216 | 2,797,287 | ||||
5,984,260 |
ENTERPRISE Accumulation Trust
10
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Ginnie Mae — 7.96% | ||||||
6.50% due 04/15/28 | $ | 1,984,510 | $ | 2,086,919 | ||
6.50% due 05/15/28 | 811,940 | 853,839 | ||||
6.50% due 08/15/28 | 409,778 | 431,031 | ||||
7.00% due 09/15/28 | 2,525,537 | 2,671,431 | ||||
6.50% due 10/15/28 | 819,247 | 861,523 | ||||
6.50% due 11/15/28 | 3,483,987 | 3,681,025 | ||||
6.00% due 12/15/28 | 5,682,563 | 5,979,376 | ||||
7.00% due 03/15/29 | 79,660 | 84,198 | ||||
7.00% due 06/15/29 | 86,196 | 91,106 | ||||
7.00% due 08/15/29 | 92,141 | 97,389 | ||||
7.00% due 01/15/31 | 259,204 | 273,765 | ||||
7.00% due 04/15/31 | 81,927 | 86,530 | ||||
7.00% due 06/15/31 | 78,621 | 83,038 | ||||
7.00% due 08/15/31 | 1,933,460 | 2,042,082 | ||||
7.00% due 09/15/31 | 69,055 | 72,935 | ||||
6.00% due 11/15/31 | 432,971 | 454,079 | ||||
6.00% due 12/15/31 | 2,000,199 | 2,097,709 | ||||
6.00% due 01/15/32 | 2,000,199 | 2,097,686 | ||||
6.00% due 02/15/32 | 1,000,100 | 1,048,843 | ||||
6.00% due 04/15/32 | 323,895 | 339,681 | ||||
7.00% due 08/15/32 | 999,726 | 1,055,927 | ||||
6.00% due 09/15/32 | 1,091,816 | 1,145,922 | ||||
6.00% due 10/15/32 | 5,006,837 | 5,250,862 | ||||
5.00% due 12/15/32 (TBA) | 4,500,000 | 4,608,279 | ||||
6.00% due 12/15/32 | 967,199 | 1,014,339 | ||||
6.00% due 01/15/33 | 11,109,403 | 11,655,599 | ||||
6.00% due 03/15/33 | 826,283 | 866,564 | ||||
6.00% due 05/15/33 | 1,740,448 | 1,825,295 | ||||
52,856,972 | ||||||
Total Agency Obligations | ||||||
(Identified cost $91,921,144) | 93,081,447 | |||||
Foreign Government Obligations — 0.20% | ||||||
State of Israel | 335,000 | 326,262 | ||||
Trinidad & Tobago Republic | 250,000 | 320,000 | ||||
United Mexican States | 550,000 | 658,900 | ||||
1,305,162 | ||||||
Total Foreign Government Obligations | ||||||
(Identified cost $1,222,661) | 1,305,162 | |||||
Municipal Bond — 0.01% | ||||||
Utilities — 0.01% | ||||||
State of Illinois Taxable Pension, | 85,000 | 85,318 | ||||
Total Municipal Bond | ||||||
(Identified cost $84,891) | 85,318 | |||||
Principal Amount | Value | |||||
Repurchase Agreement — 2.97% | ||||||
State Street Bank & Trust | $ | 19,707,000 | $ | 19,707,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $19,707,000) | 19,707,000 | |||||
Total Investments | ||||||
(Identified cost $664,227,612) | $ | 667,219,899 | ||||
Other Assets Less Liabilities — (0.47)% | (3,133,835) | |||||
Net Assets — 100% | $ | 664,086,064 | ||||
(a) | Non-income producing security. |
(e) | The rate shown is the effective yield. |
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
(s) | Security segregated as collateral for open futures contracts. |
(144A) | The security may only be offered and sold to “qualified institutional buyers” under rule 144A of the Securities Act of 1933. |
(REG S) | Regulation S Security. Security is offered and sold outside the United States, therefore, it need not be registered with the SEC under rules 103 & 904 of the Securities Act of 1933. |
(TBA) | To Be Announced. Certain specific security details such as final par amount and maturity date have not yet been determined. |
(TIPS) | Treasury Inflation Protected Security. Principal amount of the security is periodically adjusted for inflation. |
Open futures contracts as of June 30, 2003 are as follows:
Description | Expiration Month | Number of Contracts | Unrealized Appreciation (Depreciation) | ||||
Short S&P 500 Index Futures | 9/3 | 28 | $ | 31,625 | |||
See notes to financial statements
ENTERPRISE Accumulation Trust
11
Enterprise Managed Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 667,219,899 | ||
Investment purchased in connection with securities lending, at value (Note 5) | 25,210,874 | |||
Investment income receivable | 2,306,222 | |||
Receivable for fund shares sold | 3,226 | |||
Receivable for investments sold | 7,677,903 | |||
Cash | 768 | |||
Other assets | 16,131 | |||
Total assets | 702,435,023 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 2,648,159 | |||
Payable for investments purchased | 10,222,806 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 25,210,874 | |||
Shareholder servicing fees payable | 166,466 | |||
Accrued expenses and other liabilities | 100,654 | |||
Total liabilities | 38,348,959 | |||
Net Assets | $ | 664,086,064 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 827,542,674 | ||
Undistributed (accumulated) net investment income (loss) | 12,007,807 | |||
Undistributed (accumulated) net realized gain (loss) | (178,488,329 | ) | ||
Unrealized appreciation (depreciation) | 3,023,912 | |||
Net Assets | $ | 664,086,064 | ||
Shares outstanding | 39,803,958 | |||
Net asset value per share | $16.68 | |||
Investments at cost | $ | 664,227,612 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
12
Enterprise Managed Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Dividends | $ | 3,125,629 | ||
Interest | 4,259,863 | |||
Securities lending income | 14,497 | |||
Total investment income | 7,399,989 | |||
Expenses: | ||||
Investment advisory fees | 2,507,015 | |||
Custodian and fund accounting fees | 88,293 | |||
Trustees’ fees | 13,951 | |||
Audit and legal fees | 78,428 | |||
Shareholder servicing fees | 332,836 | |||
Other expenses | 6,708 | |||
Total expenses | 3,027,231 | |||
Expenses reduced by expense offset arrangements | (66,754 | ) | ||
Total expenses, net of expense offset arrangements | 2,960,477 | |||
Net investment income (loss) | 4,439,512 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (13,282,488 | ) | ||
Net realized gain (loss) on futures transactions | 1,346,109 | |||
Net change in unrealized gain (loss) on investments | 63,933,718 | |||
Net change in unrealized gain (loss) on futures transactions | 31,625 | |||
Net realized and unrealized gain (loss) | 52,028,964 | |||
Net increase (decrease) in net assets resulting from operations | $ | 56,468,476 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
13
Enterprise Managed Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 4,439,512 | $ | 7,169,397 | ||||
Net realized gain (loss) | (11,936,379 | ) | (153,059,693 | ) | ||||
Net change in unrealized gain (loss) | 63,965,343 | (71,878,581 | ) | |||||
Increase (decrease) in net assets resulting from operations | 56,468,476 | (217,768,877 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (7,429,619 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (7,429,619 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 10,581,095 | 47,768,878 | ||||||
Shares exchanged due to merger | 2,815,931 | — | ||||||
Reinvestment of distributions | — | 7,429,619 | ||||||
Shares redeemed | (69,374,256 | ) | (241,388,079 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (55,977,230 | ) | (186,189,582 | ) | ||||
Total increase (decrease) in net assets | 491,246 | (411,388,078 | ) | |||||
Net assets: | ||||||||
Beginning of period | 663,594,818 | 1,074,982,896 | ||||||
End of period | $ | 664,086,064 | $ | 663,594,818 | ||||
Capital share activity: | ||||||||
Shares issued | 675,191 | 2,697,893 | ||||||
Shares issued due to merger | 188,735 | — | ||||||
Shares issued in reinvestment of distributions | — | 503,703 | ||||||
Shares redeemed | (4,480,771 | ) | (14,623,886 | ) | ||||
Net increase (decrease) | (3,616,845 | ) | (11,422,290 | ) | ||||
Undistributed net investment income (loss) | $ | 12,007,807 | $ | 7,568,295 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
14
Enterprise Managed Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the years ended December 31, | |||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 15.28 | $ | 19.60 | $ | 24.19 | $ | 36.30 | $ | 40.56 | $ | 40.78 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.11 | C | 0.14 | C | 0.13 | C | 0.45 | C | 0.50 | C | 0.71 | |||||||||||||
Net realized and unrealized gain (loss) on investments | 1.29 | (4.30 | ) | (3.10 | ) | (0.23 | ) | 2.65 | 2.53 | |||||||||||||||
Total from investment operations | 1.40 | (4.16 | ) | (2.97 | ) | 0.22 | 3.15 | 3.24 | ||||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | — | (0.16 | ) | (0.48 | ) | (0.75 | ) | (0.79 | ) | (0.43 | ) | |||||||||||||
Distributions from capital gains | — | — | (1.14 | ) | (11.58 | ) | (6.62 | ) | (3.03 | ) | ||||||||||||||
Total distributions | — | (0.16 | ) | (1.62 | ) | (12.33 | ) | (7.41 | ) | (3.46 | ) | |||||||||||||
Net asset value, end of period | $ | 16.68 | $ | 15.28 | $ | 19.60 | $ | 24.19 | $ | 36.30 | $ | 40.56 | ||||||||||||
Total return | 9.16 | %B | (21.20 | )% | (11.15 | )% | 1.46 | % | 9.22 | % | 7.95 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 664,086 | $ | 663,595 | $ | 1,074,983 | $ | 1,452,864 | $ | 2,292,467 | $ | 2,739,305 | ||||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 0.94 | %A | 0.88 | % | 0.85 | % | 0.82 | % | 0.76 | % | 0.76 | % | ||||||||||||
Ratio of expenses to average net assets | 0.92 | %A | 0.85 | % | 0.84 | % | 0.82 | % | 0.76 | % | 0.76 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 1.38 | %A | 0.85 | % | 0.60 | % | 1.44 | % | 1.23 | % | 1.66 | % | ||||||||||||
Portfolio turnover rate | 39 | % | 109 | % | 141 | % | 19 | % | 90 | % | 46 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
15
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
Effective February 28, 2003 the Managed Portfolio acquired all of the net assets of the Mid-Cap Growth Portfolio in a tax-free exchange of shares wherein the shareholders of the Mid-Cap Growth Portfolio received for each share owned approximately 0.35 shares of the Managed Portfolio. The aggregate net assets and unrealized appreciation/(depreciation) of the portfolios immediately before and after the merger were as follows:
Portfolio | Net Assets | Unrealized Appreciation/(Depreciation) | ||||||||||||
Before Merger | After Merger | Before Merger | After Merger | |||||||||||
Managed | $ | 630,395,453 | $ | 633,211,384 | $ | (74,192,412 | ) | $ | (74,223,583 | ) | ||||
Mid-Cap Growth | 2,815,931 | (31,171 | ) |
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Managed Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — The high-yield securities in which the 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 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. Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price.
ENTERPRISE Accumulation Trust
16
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Delayed Delivery Transactions — The Portfolio may purchase or sell securities on a when-issued or delayed delivery basis. These transactions involve a commitment by the Portfolio to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed delivery purchases are outstanding, the subadviser or the Portfolio will set aside or earmark internally until the settlement date, liquid assets in an amount sufficient to meet the purchase price. When purchasing a security on a delayed delivery basis, the Portfolio assumes the rights and risks of ownership, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. The Portfolio may dispose of or renegotiate a delayed delivery transaction after it is entered into, and may sell when-issued securities before they are delivered, which may result in a capital gain or loss. Forward sales commitments are accounted for by the Portfolio in the same manner as forward currency exchange contracts discussed above.
ENTERPRISE Accumulation Trust
17
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Inflation Indexed Bonds — The Portfolio may purchase inflation-indexed bonds which are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. Over the life of the bond, interest will be paid based on a principal value adjusted for inflation. Any increase in the principal value is considered interest income, even though the Portfolio will not receive the principal until sold or maturity.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.80% for the first $400 million, 0.75% for the next $400 million, and 0.70% for average daily net assets over $800 million. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $332,703 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.05%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $143,938 in the Portfolio at June 30, 2003.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
$81,304,278 | $75,907,918 | $169,345,089 | $206,897,270 |
ENTERPRISE Accumulation Trust
18
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of Securities on Loan | Units of Prime | Current Value of Collateral Held | ||||
$ | 24,409,648 | 25,210,874 | $ | 25,210,874 |
6. Directed Brokerage
The Portfolio may direct certain security trades to brokers who pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. Under these arrangements, the Portfolio had expenses reduced by $66,754 during the six months ended June 30, 2003.
7. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
8. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | |||
$664,227,612 | $39,598,077 | $(36,605,790) | $2,992,287 |
ENTERPRISE Accumulation Trust
19
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Shareholder Proxy Voting Information (Unaudited)
On February 28, 2003, shareholders of the Mid-Cap Growth Portfolio voted on and approved their agreement and Plan of Reorganization into the Managed Portfolio as follows:
No. of Shares | ||
Affirmative | 438,639.074 | |
Against | 17,886.310 | |
Abstain | 58,073.842 | |
Total | 514,599.226 | |
ENTERPRISE Accumulation Trust
20
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
21
Enterprise Accumulation Trust
MANAGED PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
22
Enterprise High-Yield Bond Portfolio
SUBADVISER’S COMMENTS
Caywood-Scholl Capital Management
San Diego, California
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Caywood-Scholl Capital Management (“Caywood-Scholl”) is subadviser to the Enterprise High-Yield Bond Portfolio. Caywood-Scholl manages approximately $1.8 billion for institutional clients, and its normal investment minimum is $3 million.
Investment Objective
The objective of High-Yield Bond Portfolio is to seek maximum current income.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 13.22%. The Portfolio outperformed its benchmark, the Lehman Brothers High-Yield BB Bond Index, which returned 12.41%. In contrast, the Portfolio underperformed its peer group, the Lipper High Yield Bond Funds Index, which returned 15.74%.
How would you describe the investment environment during the period?
Throughout the first half of the year, the bubble in the U.S. Treasury market fueled a tremendous rally for all fixed-income sectors. As U.S. Treasuries achieved the lowest yields seen in a generation, fixed-income investors were motivated to seek additional yield in the credit markets. As investors sought higher yield, the technical conditions for all corporate markets improved dramatically.
The high-yield technicals propelled the market with strong demand in the first half of the year. The first six months recorded approximately $22.7 billion in high-yield mutual fund inflows versus $8.4 billion in the first half of 2002. This is in addition to money that was added as a result of institutional high-yield searches where many firms are adding high-yield as a separate asset class (half of all pension placements in the first quarter went to high-yield). Supply has been strong as well, but not in line with demand. This year recorded the second largest first half on record with $74.7 billion versus a first half long-term average of $49.5 billion. Caywood-Scholl observed that a significant portion of the proceeds from new issues were used to retire higher cost debt, thus it did not represent true new supply to the market.
What strategies affected Portfolio performance during the period?
Caywood-Scholl continues to emphasize investments in the BB and B sectors of the high-yield market, which is consistent with its investment philosophy of investing in higher quality, high-yield credits. Returns for high-yield investors throughout the first half of 2003 were very strong. However, it was the lower quality high-yield names that performed the best, followed by Bs at 16.29% and double Bs at 12.27%, according to the Merrill Lynch High-Yield Index. The Portfolio’s underperformance was due to its under-weighting of the lower quality high-yield names. Merrill Lynch’s weighting to the lower tiered bonds was significant with 13.7% at year-end and 15.3% at the end of the second quarter versus approximately 3.6% and 2.7% respectively for the Portfolio.
What changes were made to the Portfolio over the period?
Consistent with Caywood-Scholl’s investment philosophy, the Portfolio remained fully invested in the higher quality, high-yield bonds. Throughout the first half of the year, the Portfolio increased its exposure to electric power, printing/publishing, and telecom and decreased its exposure to hotels, gaming, and steel.
There are specific risks associated with the types of bonds held in the Portfolio, which include defaults by the issuer, market valuation, and interest rate sensitivity.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
1
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Principal Amount | Value | |||||
Domestic Corporate Bonds — 88.80% | ||||||
Aerospace — 0.26% | ||||||
Esterline Technologies Corporation 7.75%, due 06/15/13 (144A) | $ | 225,000 | $ | 230,625 | ||
Apparel & Textiles — 0.79% | ||||||
Fruit of the Loom Inc. | 300,000 | — | ||||
Levi Strauss & Company | 50,000 | 40,375 | ||||
Levi Strauss & Company | 500,000 | 428,750 | ||||
Levi Strauss & Company | 275,000 | 228,938 | ||||
698,063 | ||||||
Automotive — 3.66% | ||||||
Autonation Inc. | 500,000 | 555,000 | ||||
Avis Group Holdings Inc. | 650,000 | 728,000 | ||||
Navistar International Corporation 9.375%, due 06/01/06 | 350,000 | 380,625 | ||||
Sonic Automotive Inc. | 350,000 | 371,000 | ||||
TRW Automotive Acquisition | 250,000 | 272,500 | ||||
TRW Automotive Acquisition Corporation | 450,000 | 488,250 | ||||
United Rentals North America Inc. 10.75%, due 04/15/08 (144A) | 400,000 | 437,000 | ||||
3,232,375 | ||||||
Banking — 1.09% | ||||||
Western Financial Bank | 250,000 | 260,000 | ||||
Western Financial Bank | 650,000 | 702,000 | ||||
962,000 | ||||||
Broadcasting — 1.22% | ||||||
Echostar DBS Corporation | 650,000 | 693,063 | ||||
Sinclair Broadcast Group Inc. | 350,000 | 384,125 | ||||
1,077,188 | ||||||
Building & Construction — 2.56% | ||||||
Building Materials Corporation America | 300,000 | 294,000 | ||||
Integrated Electrical Services | 700,000 | 710,500 | ||||
Nortek Inc. | 400,000 | 417,500 | ||||
Nortek Inc. (Series B) | 300,000 | 313,500 | ||||
Texas Industries Inc. | 500,000 | 522,500 | ||||
2,258,000 |
Principal Amount | Value | |||||
Business Services — 1.81% | ||||||
Xerox Corporation | $ | 200,000 | $ | 199,750 | ||
Xerox Corporation | 125,000 | 125,156 | ||||
Xerox Corporation | 1,325,000 | 1,272,000 | ||||
1,596,906 | ||||||
Cable — 3.00% | ||||||
Adelphia Communications Corporation | 50,000 | 30,250 | ||||
Adelphia Communications Corporation | 400,000 | 256,000 | ||||
Charter Communication Holdings 8.625%, due 04/01/09 (o) | 550,000 | 396,000 | ||||
Charter Communications Holdings 10.00%, due 04/01/09 (o) | 650,000 | 497,250 | ||||
CSC Holdings Inc. | 900,000 | 909,000 | ||||
DIRECTV Holdings | 500,000 | 557,500 | ||||
2,646,000 | ||||||
Chemicals — 2.05% | ||||||
FMC Corporation | 450,000 | 506,250 | ||||
Huntsman International | 100,000 | 104,000 | ||||
PCI Chemicals Canada Company 10.00%, due 12/31/08 | 198,502 | 172,200 | ||||
Pioneer Americas Inc. | 62,908 | 53,472 | ||||
Polyone Corporation | 500,000 | 487,500 | ||||
Scotts Company | 450,000 | 481,500 | ||||
1,804,922 | ||||||
Consumer Products — 3.86% | ||||||
Central Garden & Pet Company | 350,000 | 372,750 | ||||
Chattem Inc. (Series B) | 477,000 | 492,502 | ||||
Elizabeth Arden Inc. | 700,000 | 780,500 | ||||
French Fragrances Inc. (Series B) 10.375%, due 05/15/07 | 225,000 | 231,188 | ||||
French Fragrances Inc. (Series D) 10.375%, due 05/15/07 | 200,000 | 199,500 | ||||
Moore North America Finance Inc. 7.875%, due 01/15/11 (144A) | 275,000 | 286,687 | ||||
Sealy Mattress Company | 75,000 | 74,625 | ||||
Sealy Mattress Company (Series B) 10.875%, due 12/15/07 (c) (o) | 950,000 | 969,000 | ||||
3,406,752 |
ENTERPRISE Accumulation Trust
2
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Containers/Packaging — 1.36% | ||||||
Owens Brockway Glass Container 8.75%, due 11/15/12 | $ | 150,000 | $ | 162,750 | ||
Owens Illinois Inc. | 550,000 | 563,750 | ||||
Owens Illinois Inc. | 475,000 | 475,000 | ||||
1,201,500 | ||||||
Crude & Petroleum — 0.24% | ||||||
ANR Pipeline Company | 100,000 | 109,250 | ||||
Peabody Energy Corporation | 100,000 | 104,750 | ||||
214,000 | ||||||
Electrical Equipment — 0.55% | ||||||
BRL Universal Equipment | 450,000 | 488,250 | ||||
Electronics — 0.67% | ||||||
Flextronics International Ltd. | 250,000 | 240,625 | ||||
Thomas & Betts Corporation | 350,000 | 350,000 | ||||
590,625 | ||||||
Energy — 5.80% | ||||||
Calpine Canada Energy Finance | 1,000,000 | 780,000 | ||||
CMS Energy Corporation | 150,000 | 156,938 | ||||
CMS Energy Corporation | 550,000 | 543,812 | ||||
Cogentrix Energy Inc. | 350,000 | 301,000 | ||||
El Paso Corporation | 1,025,000 | 932,750 | ||||
Illinois Power Company | 950,000 | 1,085,375 | ||||
MSW Energy Holdings | 350,000 | 359,625 | ||||
PG & E Corporation | 250,000 | 250,000 | ||||
Reliant Resources Inc. | 150,000 | 152,625 | ||||
Reliant Resources Inc. | 300,000 | 303,375 |
Principal Amount | Value | |||||
Teco Energy Inc. | $ | 250,000 | $ | 255,000 | ||
5,120,500 | ||||||
Finance — 0.87% | ||||||
Thornburg Mortgage Inc. | 750,000 | 765,000 | ||||
Food, Beverages & Tobacco — 4.72% | ||||||
Canandaigua Brands Inc. | 200,000 | 210,000 | ||||
Delhaize America Inc. | 125,000 | 131,250 | ||||
Delhaize America Inc. | 100,000 | 109,500 | ||||
Dole Food Inc. | 400,000 | 423,000 | ||||
Ingles Markets Inc. | 625,000 | 628,906 | ||||
NBTY Inc. (Series B) | 550,000 | 566,500 | ||||
Smithfield Foods Inc. | 450,000 | 462,375 | ||||
Stater Brothers Holdings Inc. | 850,000 | 894,625 | ||||
Winn-Dixie Stores Inc. | 700,000 | 742,000 | ||||
4,168,156 | ||||||
Gaming — 0.31% | ||||||
Mohegan Tribal Gaming Authority | 250,000 | 269,375 | ||||
Health Care — 2.53% | ||||||
Advanced Medical Optics Inc. | 750,000 | 813,750 | ||||
Beverly Enterprises Inc. | 575,000 | 552,000 | ||||
HCA Inc. | 200,000 | 213,134 | ||||
Healthsouth Corporation | 650,000 | 510,250 | ||||
Healthsouth Corporation | 50,000 | 38,750 | ||||
Vicar Operating Inc. | 100,000 | 109,500 | ||||
2,237,384 |
ENTERPRISE Accumulation Trust
3
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Hotels & Restaurants — 10.11% | ||||||
Boyd Gaming Corporation | $ | 575,000 | $ | 610,219 | ||
Circus Circus Enterprises Inc. | 350,000 | 366,406 | ||||
Felcor Lodging | 475,000 | 478,563 | ||||
Foodmaker Inc. | 620,000 | 641,700 | ||||
Hilton Hotels Corporation | 975,000 | 1,048,125 | ||||
HMH Properties Inc. | 150,000 | 152,250 | ||||
Host Marriott | 800,000 | 860,000 | ||||
John Q. Hammons Hotels | 250,000 | 262,500 | ||||
Meristar Hospitality Operating | 400,000 | 392,000 | ||||
MGM Mirage Inc. | 600,000 | 705,000 | ||||
Mirage Resorts Inc. | 200,000 | 213,000 | ||||
Park Place Entertainment Corporation | 850,000 | 913,750 | ||||
Park Place Entertainment Corporation | 475,000 | 521,312 | ||||
Starwood Hotels Resorts | 900,000 | 985,500 | ||||
Station Casinos Inc. | 200,000 | 210,000 | ||||
Station Casinos Inc. | 250,000 | 275,000 | ||||
Yum Brands Inc. | 250,000 | 285,000 | ||||
8,920,325 | ||||||
Machinery — 2.89% | ||||||
Briggs & Stratton Corporation | 500,000 | 577,500 | ||||
Flowserve Corporation | 625,000 | 728,125 | ||||
Navistar International Corporation (Series B) 8.00%, due 02/01/08 (o) | 150,000 | 150,000 | ||||
Teekay Shipping Corporation | 1,000,000 | 1,096,250 | ||||
2,551,875 | ||||||
Manufacturing — 0.42% | ||||||
SPX Corporation | 100,000 | 102,000 | ||||
SPX Corporation | 200,000 | 216,500 | ||||
United States Steel Corporation | 50,000 | 52,500 | ||||
371,000 |
Principal Amount | Value | |||||
Media — 1.34% | ||||||
AOL Time Warner Inc. | $ | 250,000 | $ | 265,407 | ||
AOL Time Warner Inc. | 50,000 | 57,081 | ||||
Corus Entertainment Inc. | 800,000 | 860,000 | ||||
1,182,488 | ||||||
Medical Instruments — 1.25% | ||||||
Apogent Technologies Inc. | 225,000 | 232,313 | ||||
Fisher Scientific International Inc. | 100,000 | 104,500 | ||||
Fisher Scientific International Inc. | 350,000 | 374,500 | ||||
Medex Inc. | 375,000 | 389,062 | ||||
1,100,375 | ||||||
Medical Services — 2.32% | ||||||
AmerisourceBergen Corporation | 150,000 | 165,000 | ||||
NDCHealth Corporation | 375,000 | 402,188 | ||||
Tenet Healthcare Corporation | 500,000 | 482,500 | ||||
Triad Hospitals Holdings Inc. | 150,000 | 165,375 | ||||
Warner Chilcott Inc. | 750,000 | 832,500 | ||||
2,047,563 | ||||||
Metals & Mining — 2.61% | ||||||
Alaska Steel Corporation | 100,000 | 85,000 | ||||
Alaska Steel Corporation | 200,000 | 166,000 | ||||
Dresser Inc. | 650,000 | 669,500 | ||||
Steel Dynamics Inc. | 450,000 | 471,375 | ||||
Williams Companies Inc. | 175,000 | 182,875 | ||||
Williams Companies Inc. | 750,000 | 731,250 | ||||
2,306,000 | ||||||
Misc. Financial Services — 0.33% | ||||||
Ucar Finance Inc. | 300,000 | 294,000 |
ENTERPRISE Accumulation Trust
4
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Oil Services — 5.35% | ||||||
Chesapeake Energy Corporation | $ | 700,000 | $ | 757,750 | ||
Ferrellgas Partner | 200,000 | 217,000 | ||||
Grant Prideco Inc. | 450,000 | 497,250 | ||||
Hanover Equipment Test | 650,000 | 682,500 | ||||
Key Energy Services Inc. | 250,000 | 271,250 | ||||
Nuevo Energy Company | 427,000 | 447,816 | ||||
Pioneer Natural Resources Company 9.625%, due 04/01/10 | 1,075,000 | 1,332,863 | ||||
Southern Natural Gas Company | 375,000 | 408,750 | ||||
Westport Resources Corporation | 100,000 | 109,500 | ||||
4,724,679 | ||||||
Paper & Forest Products — 1.81% | ||||||
Bowater Inc. | 300,000 | 284,642 | ||||
Buckeye Cellulose Corporation | 250,000 | 248,750 | ||||
Georgia Pacific Corporation | 550,000 | 565,125 | ||||
Georgia Pacific Corporation | 450,000 | 495,563 | ||||
1,594,080 | ||||||
Pharmaceuticals — 1.21% | ||||||
AdvancePCS | 500,000 | 537,500 | ||||
Biovail Corporation | 500,000 | 530,000 | ||||
1,067,500 | ||||||
Printing & Publishing — 2.31% | ||||||
CBD Media / CBD Finance Inc. | 100,000 | 103,000 | ||||
Dex Media East | 500,000 | 591,250 | ||||
Houghton Mifflin Company | 400,000 | 422,000 | ||||
Houghton Mifflin Company | 50,000 | 54,250 | ||||
Nebraska Book Company Inc. | 450,000 | 451,125 | ||||
Primedia Inc. | 400,000 | 421,000 | ||||
2,042,625 |
Principal Amount | Value | |||||
Retail — 7.74% | ||||||
Amerigas Partners / Amerigas Eagle Finance Corporation | $ | 450,000 | $ | 490,500 | ||
Buhrmann U.S. Inc. | 325,000 | 349,375 | ||||
Cole National Group Inc. | 900,000 | 873,000 | ||||
Gap Inc. | 550,000 | 668,250 | ||||
Michaels Stores Inc. | 1,000,000 | 1,120,000 | ||||
Penney (JC) Company Inc. | 700,000 | 682,500 | ||||
Penney (JC) Company Inc. | 750,000 | 735,000 | ||||
Penney (JC) Corporation Inc. | 600,000 | 628,500 | ||||
Petco Aonimal Supplies Inc. | 550,000 | 627,000 | ||||
Saks Inc. | 350,000 | 370,125 | ||||
Sears Roebuck Acceptance Corporation | 250,000 | 289,838 | ||||
6,834,088 | ||||||
Semiconductors — 0.54% | ||||||
Amkor Technology Inc. | 500,000 | 475,000 | ||||
Telecommunications — 5.89% | ||||||
Block Communications Inc. | 200,000 | 218,000 | ||||
Crown Castle International Corporation | 550,000 | 578,875 | ||||
Intermedia Communications Inc. (Series B) | 100,000 | 74,000 | ||||
Intermedia Communications Inc. (Series B) | 150,000 | 111,000 | ||||
Nextel Communications | 825,000 | 851,813 | ||||
Panamsat Corporation | 650,000 | 703,625 | ||||
Pathnet Inc. | 250,000 | 625 | ||||
Qwest Capital Funding Inc. | 150,000 | 123,000 | ||||
Qwest Corporation | 450,000 | 502,875 | ||||
Qwest Services Corporation | 1,032,000 | 1,166,160 | ||||
Sprint Capital Corporation | 200,000 | 239,463 | ||||
Telecorp PCS Inc. | 422,000 | 509,565 | ||||
Worldcom Inc. | 400,000 | 118,000 | ||||
5,197,001 |
ENTERPRISE Accumulation Trust
5
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares or Principal Amount | Value | |||||
Textiles — 1.74% | ||||||
Interface Inc. | $ | 550,000 | $ | 528,000 | ||
Phillips Van Heusen Corporation | 800,000 | 828,000 | ||||
Phillips Van Heusen Corporation 8.125%, due 05/01/13 (144A) | 175,000 | 179,594 | ||||
1,535,594 | ||||||
Travel/Entertainment/Leisure — 0.50% | ||||||
Royal Caribbean Cruises Ltd. | 425,000 | 442,000 | ||||
Utilities — 0.94% | ||||||
AES Corporation | 425,000 | 429,250 | ||||
AES Corporation | 200,000 | 195,500 | ||||
AES Corporation | 200,000 | 208,000 | ||||
832,750 | ||||||
Waste Management — 1.19% | ||||||
Allied Waste North America Inc. | 500,000 | 518,125 | ||||
Allied Waste North America Inc. | 500,000 | 531,250 | ||||
1,049,375 | ||||||
Wireless Communications — 0.96% | ||||||
AT&T Wireless | 50,000 | 60,243 | ||||
Voicestream Wireless Corporation | 500,000 | 584,375 | ||||
Voicestream Wireless Corporation | 171,918 | 199,854 | ||||
844,472 | ||||||
Total Domestic Corporate Bonds | ||||||
(Identified cost $75,265,337) | 78,380,411 | |||||
Convertible Corporate Bonds — 1.14% | ||||||
Wireless Communications — 1.14% | ||||||
Nextel Communications | 1,075,000 | 1,010,500 | ||||
Total Convertible Corporate Bonds | ||||||
(Identified cost $749,331) | 1,010,500 | |||||
Domestic Stocks and Warrants — 0.90% | ||||||
Chemicals — 0.05% | ||||||
Pioneer Companies Inc. (a) (Common Stock) | 12,835 | 46,848 |
Number of Shares or Principal Amount | Value | |||||
Communications — 0.00% | ||||||
Globalstar Telecommunications | 450 | $ | — | |||
Loral Space & Communications (Wts) (a) | 600 | 81 | ||||
Loral Space & | 5,235 | — | ||||
81 | ||||||
Computer Software — 0.00% | ||||||
Verado Holdings Inc. (Wts) (a) | 300 | 107 | ||||
Electronics — 0.00% | ||||||
Axiohm Transaction Solutions (Private Placement) (a) (d) | 4,056 | — | ||||
Health Care — 0.61% | ||||||
Dade Behring Holdings Inc. | 23,333 | 535,959 | ||||
Medical Instruments — 0.06% | ||||||
Charles River Labs Inc. (Wts) (a) | 250 | 51,357 | ||||
Telecommunications — 0.18% | ||||||
E. Spire Communications Inc. | 300 | — | ||||
Flag Telecom Group (Common | 1,606 | 55,407 | ||||
Pathnet Inc. (Wts) (a) (d) (144A) | 250 | — | ||||
Wiltel Communications Group (Common Stock) (a) (o) | 5,815 | 85,713 | ||||
XO Communications Inc. | 1,873 | 4,869 | ||||
XO Communications Inc. | 1,405 | 2,247 | ||||
XO Communications Inc. | 1,405 | 772 | ||||
XO Communications Inc. (Common Stock) | 935 | 6,779 | ||||
155,787 | ||||||
Wireless Communications — 0.00% | ||||||
Leap Wireless International Inc. | 4,500 | — | ||||
Total Domestic Stocks and Warrants | ||||||
(Identified cost $3,296,856) | 790,139 | |||||
Foreign Bonds — 5.88% | ||||||
Broadcasting — 1.94% | ||||||
Grupo Televisa | $ | 1,050,000 | 1,193,062 | |||
Rogers Communications Inc. | 500,000 | 515,000 | ||||
1,708,062 |
ENTERPRISE Accumulation Trust
6
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Number of Shares or Principal Amount | Value | |||||
Energy — 0.63% | ||||||
YPF Sociedad Anonima | $ | 500,000 | $ | 557,500 | ||
Finance — 0.44% | ||||||
PDVSA Finance Ltd. | 400,000 | 392,000 | ||||
Manufacturing — 0.81% | ||||||
Tyco International Group | 675,000 | 712,125 | ||||
Oil Services — 0.42% | ||||||
Petroleos Mexicano | 300,000 | 366,750 | ||||
Telecommunications — 1.57% | ||||||
Rogers Cantel Inc. | 900,000 | 919,125 | ||||
Telewest Communications | 250,000 | 90,625 | ||||
Telewest Communications | 1,100,000 | 343,750 | ||||
Telewest Communications | 100,000 | 36,250 | ||||
1,389,750 | ||||||
Transportation — 0.07% | ||||||
TBS Shipping International Ltd. (d) (m) 10.00%, due 02/08/08 | 211,375 | 61,299 | ||||
Total Foreign Bonds | ||||||
(Identified cost $6,020,355) | 5,187,486 | |||||
Foreign Stocks and Warrants — 0.00% | ||||||
Transportation — 0.00% | ||||||
TBS Shipping International | 5,000 | — | ||||
TBS Shipping International Ltd. (Preferred Stock) (a) (d) (m) | 5,738 | — | ||||
TBS Shipping International | 13,333 | — | ||||
Total Foreign Stocks and Warrants | ||||||
(Identified cost $0) | — | |||||
Principal Amount | Value | |||||
Repurchase Agreement — 1.94% | ||||||
State Street Bank & Trust | $ | 1,716,000 | $ | 1,716,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $1,716,000) | 1,716,000 | |||||
Total Investments | ||||||
(Identified cost $87,047,879) | $ | 87,084,536 | ||||
Other Assets Less Liabilities — 1.34% | 1,179,776 | |||||
Net Assets — 100% | $ | 88,264,312 | ||||
(a) | Non-income producing security. |
(b) | Security is in bankruptcy and/or is in default of interest payment. Fund has ceased accrual of interest. |
(c) | Zero Coupon or Step Bond — The interest rate on a step bond represents the rate of interest that will commence its accrual on a predetermined date. The rate shown for zero coupon bonds is the current effective yield. |
(d) | Security is fair valued at June 30, 2003. |
(m) | Illiquid security. |
(o) | Security, or portion thereof, out on loan at June 30, 2003. |
(v) | Variable interest rate security; Interest rate is as of June 30, 2003. |
(Wts) | Warrants — Warrants entitle the Fund to purchase a predetermined number of shares of stock and are non-income producing. The purchase price and number of shares are subject to adjustment under certain conditions until the expiration date. |
(144A) | The security may only be offered and sold to “qualified institutional buyers” under Rule 144A of the Securities Act of 1933. |
ENTERPRISE Accumulation Trust
7
Enterprise High-Yield Bond Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | ||||
Investments at value | $ | 87,084,536 | ||
Investment purchased in connection with securities lending, at value (Note 5) | 19,812,492 | |||
Investment income receivable | 1,783,290 | |||
Receivable for fund shares sold | 3,426 | |||
Receivable for investments sold | 534,764 | |||
Cash | 840 | |||
Other assets | 1,797 | |||
Total assets | 109,221,145 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 279,966 | |||
Payable for investments purchased | 809,337 | |||
Payable due upon sale of investments in connection with securities lending (Note 5) | 19,812,492 | |||
Shareholders servicing fees payable | 10,810 | |||
Accrued expenses and other liabilities | 44,228 | |||
Total liabilities | 20,956,833 | |||
Net Assets | $ | 88,264,312 | ||
Analysis of Net Assets: | ||||
Paid-in capital | $ | 114,822,066 | ||
Undistributed (accumulated) net investment income (loss) | 902,210 | |||
Undistributed (accumulated) net realized gain (loss) | (27,496,621 | ) | ||
Unrealized appreciation (depreciation) | 36,657 | |||
Net Assets | $ | 88,264,312 | ||
Shares outstanding | 19,822,248 | |||
Net asset value per share | $4.45 | |||
Investments at cost | $ | 87,047,879 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Enterprise High-Yield Bond Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Interest | $ | 3,466,558 | ||
Securities lending income | 27,911 | |||
Total investment income | 3,494,469 | |||
Expenses: | ||||
Investment advisory fees | 243,228 | |||
Custodian and fund accounting fees | 23,637 | |||
Trustees’ fees | 1,850 | |||
Audit and legal fees | 9,616 | |||
Shareholder servicing fees | 21,692 | |||
Other expenses | 11,217 | |||
Total expenses | 311,240 | |||
Net investment income (loss) | 3,183,229 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (2,575,749 | ) | ||
Net change in unrealized gain (loss) on investments | 9,616,660 | |||
Net realized and unrealized gain (loss) | 7,040,911 | |||
Net increase (decrease) in net assets resulting from operations | $ | 10,224,140 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Enterprise High-Yield Bond Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | Year Ended December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 3,183,229 | $ | 8,359,552 | ||||
Net realized gain (loss) | (2,575,749 | ) | (11,078,830 | ) | ||||
Net change in unrealized gain (loss) | 9,616,660 | 1,510,531 | ||||||
Increase (decrease) in net assets resulting from operations | 10,224,140 | (1,208,747 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (2,207,538 | ) | (8,359,552 | ) | ||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | (2,207,538 | ) | (8,359,552 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 7,845,863 | 17,051,159 | ||||||
Reinvestment of distributions | 2,207,538 | 8,359,552 | ||||||
Shares redeemed | (6,935,325 | ) | (46,398,634 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 3,118,076 | (20,987,923 | ) | |||||
Total increase (decrease) in net assets | 11,134,678 | (30,556,222 | ) | |||||
Net assets: | ||||||||
Beginning of period | 77,129,634 | 107,685,856 | ||||||
End of period | $ | 88,264,312 | $ | 77,129,634 | ||||
Capital share activity: | ||||||||
Shares issued | 1,850,299 | 4,037,282 | ||||||
Shares issued in reinvestment of distributions | 529,961 | 2,031,996 | ||||||
Shares redeemed | (1,646,217 | ) | (11,766,449 | ) | ||||
Net increase (decrease) | 734,043 | (5,697,171 | ) | |||||
Undistributed (accumulated) net investment income (loss) | $ | 902,210 | $ | (73,481 | ) | |||
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Enterprise High-Yield Bond Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the years ended December 31, | |||||||||||||||||||||||
2002 | 2001 | 2000 | 1999 | 1998 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 4.04 | $ | 4.34 | $ | 4.48 | $ | 5.06 | $ | 5.37 | $ | 5.71 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss) | 0.16 | C | 0.36 | C | 0.40 | C | 0.46 | C | 0.46 | C | 0.46 | |||||||||||||
Net realized and unrealized gain (loss) on investments | 0.37 | (0.30 | ) | (0.14 | ) | (0.58 | ) | (0.26 | ) | (0.26 | ) | |||||||||||||
Total from investment operations | 0.53 | 0.06 | 0.26 | (0.12 | ) | 0.20 | 0.20 | |||||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||||||
Dividends from net investment income | (0.12 | ) | (0.36 | ) | (0.40 | ) | (0.46 | ) | (0.46 | ) | (0.46 | ) | ||||||||||||
Distributions from capital gains | — | — | — | — | (0.05 | ) | (0.08 | ) | ||||||||||||||||
Total distributions | (0.12 | ) | (0.36 | ) | (0.40 | ) | (0.46 | ) | (0.51 | ) | (0.54 | ) | ||||||||||||
Net asset value, end of period | $ | 4.45 | $ | 4.04 | $ | 4.34 | $ | 4.48 | $ | 5.06 | $ | 5.37 | ||||||||||||
Total return | 13.22 | %B | 1.51 | % | 5.90 | % | (2.52 | )% | 3.86 | % | 3.60 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 88,264 | $ | 77,130 | $ | 107,686 | $ | 88,336 | $ | 109,816 | $ | 101,865 | ||||||||||||
Ratio of expenses to average net assets | 0.77 | %A | 0.79 | % | 0.77 | % | 0.75 | % | 0.69 | % | 0.72 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 7.85 | %A | 8.61 | % | 8.92 | % | 9.57 | % | 8.76 | % | 8.19 | % | ||||||||||||
Portfolio turnover | 28 | % | 81 | % | 73 | % | 54 | % | 97 | % | 109 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the High-Yield Bond Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — The high-yield securities in which the 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 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. Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
ENTERPRISE Accumulation Trust
12
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
ENTERPRISE Accumulation Trust
13
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.60%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $21,710 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 0.85%.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
— | — | $26,334,493 | $21,600,808 |
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following summarizes the securities lending activity for the Portfolio as of June 30, 2003:
Current Value of | Units of Prime | Current Value of | ||
$19,422,372 | 19,812,492 | $19,812,492 |
ENTERPRISE Accumulation Trust
14
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | |||
$87,047,879 | $5,925,116 | $(5,888,459) | $36,657 |
ENTERPRISE Accumulation Trust
15
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
16
Enterprise Accumulation Trust
HIGH-YIELD BOND PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
17
Enterprise Short Duration Bond Portfolio
SUBADVISER’S COMMENTS
MONY Capital Management, Inc.
New York, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
MONY Capital Management, Inc. (“MONY Capital”) is subadviser to the Enterprise Short Duration Bond Portfolio. MONY Capital manages approximately $13 billion for institutional clients, and its normal investment minimum is $10 million.
Investment Objective
The objective of the Enterprise Short Duration Bond Portfolio is to seek current income with reduced volatility of principal.
First Half 2003 Performance Review
How did the Portfolio perform for the period from May 1- June 30, 2003?
The Portfolio commenced operations on May 1, 2003. For the two-month period, the Portfolio returned 0.80%. The Portfolio outperformed its benchmark, the Lehman Brothers 1-3 Year Government/Credit Index, which returned 0.79%. In contrast, the Portfolio underperformed its peer group, the Lipper Short-Intermediate Investment Grade Debt Funds Index, which returned 1.61%.
How would you describe the investment environment during the period?
Shorter duration interest rates declined broadly over the period, culminating with a 0.25% easing by the Federal Reserve near the end of the second quarter. Non-government securities slightly outperformed on improving corporate financial health.
What strategies affected Portfolio performance during the period?
A key anchor of MONY Capital’s strategy is to be able to move across the various short duration sectors to find the best values for the Portfolio. For the two-month period, the Portfolio was invested in a diverse group of higher quality asset-backed, mortgage-backed, and corporate instruments, where MONY Capital feels good values remain. As always, MONY Capital’s primary concern is quality.
What changes were made to the Portfolio over the period?
The Portfolio is early in its history, and is investing initial subscriptions to establish the characteristics of the Portfolio.
There are specific risks associated with the types of bonds held in the Portfolio, which include defaults by the issuer, market valuation, and interest rate sensitivity.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
1
Enterprise Short Duration Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Principal Amount | Value | |||||
Domestic Corporate Bonds — 15.91% | ||||||
Finance — 11.56% | ||||||
CIT Group Holdings Inc. | $ | 200,000 | $ | 216,665 | ||
Ford Motor Credit Company | 200,000 | 212,534 | ||||
General Motors Acceptance Corporation | 225,000 | 238,869 | ||||
668,068 | ||||||
Retail — 4.35% | ||||||
Sears Roebuck Acceptance Corporation | 250,000 | 251,100 | ||||
Total Domestic Corporate Bonds | ||||||
(Identified cost $908,178) | 919,168 | |||||
Asset-Backed Securities — 63.61% | ||||||
Finance — 29.20% | ||||||
Atherton Franchise Loan Funding 6.72%, due 08/15/10 (144A) | 182,078 | 182,749 | ||||
Bayview Commercial Asset Trust 5.564%, due 07/25/03 (Class B) (144A) | 250,000 | 250,050 | ||||
Bayview Financial Property Trust 3.00%, due 07/28/03 (Class M) (144A) | 750,000 | 753,193 | ||||
Capital One Multi-Asset Trust | 250,000 | 250,588 | ||||
Circuit City Credit Card Master Trust 5.18%, due 07/15/03 (144A) | 250,000 | 250,100 | ||||
1,686,680 | ||||||
Media — 4.34% | ||||||
Walt Disney Company | 225,000 | 250,558 | ||||
Medical Instruments — 2.87% | ||||||
DVI Receivables XIX (a) | 166,109 | 165,954 | ||||
Misc. Financial Services — 27.20% | ||||||
Ameriquest Mortgage Securities Inc. 1.795%, due 07/25/03 | 400,000 | 400,891 | ||||
Amresco Residential Securities | 217,506 | 229,984 |
Principal Amount | Value | |||||
Citibank Credit Card Issuance Trust 2.259%, due 09/15/03 | $ | 250,000 | $ | 250,297 | ||
Hedged Mutual Fund Fee Trust | 250,000 | 250,063 | ||||
Hedged Mutual Fund Fee Trust | 238,361 | 238,539 | ||||
Lehman Manufactured Housing | 200,616 | 201,342 | ||||
1,571,116 | ||||||
Total Asset-Backed Securities | ||||||
(Identified cost $3,659,975) | 3,674,308 | |||||
Agency Obligations — 16.30% | ||||||
Fannie Mae — 16.30% | 922,545 | 941,809 | ||||
Total Agency Obligations | ||||||
(Identified cost $945,693) | 941,809 | |||||
Repurchase Agreement — 3.36% | ||||||
State Street Bank & Trust | 194,000 | 194,000 | ||||
Total Repurchase Agreement | ||||||
(Identified cost $194,000) | 194,000 | |||||
Total Investments | ||||||
(Identified cost $5,707,846) | $ | 5,729,285 | ||||
Other Assets Less Liabilities — 0.82% | 47,577 | |||||
Net Assets — 100% | $ | 5,776,862 | ||||
(a) | Illiquid security. |
(144A) | The security may only be offered and sold to “qualified institutional buyers” under Rule 144A of the Securities Act of 1933. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
2
Enterprise Short Duration Bond Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | |||
Investments at value | $ | 5,729,285 | |
Investment income receivable | 28,852 | ||
Receivable for fund shares sold | 22,174 | ||
Due from investment adviser | 1,419 | ||
Cash | 133 | ||
Total assets | 5,781,863 | ||
Liabilities: | |||
Payable for fund shares redeemed | 20 | ||
Shareholder servicing fees payable | 46 | ||
Accrued expenses and other liabilities | 4,935 | ||
Total liabilities | 5,001 | ||
Net Assets | $ | 5,776,862 | |
Analysis of Net Assets: | |||
Paid-in capital | $ | 5,732,238 | |
Undistributed (accumulated) net investment income (loss) | 23,185 | ||
Undistributed (accumulated) net realized gain (loss) | — | ||
Unrealized appreciation (depreciation) | 21,439 | ||
Net Assets | $ | 5,776,862 | |
Shares outstanding | 572,897 | ||
Net asset value per share | $10.08 | ||
Investments at cost | $ | 5,707,846 | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
3
Enterprise Short Duration Bond Portfolio
STATEMENT OF OPERATIONS
(Unaudited) For the Period May 1, 2003(1) to June 30, 2003 | ||||
Investment Income: | ||||
Interest | $ | 29,062 | ||
Total investment income | 29,062 | |||
Expenses: | ||||
Investment advisory fees | 4,069 | |||
Custodian and fund accounting fees | 3,321 | |||
Trustees’ fees | 231 | |||
Audit and legal fees | 1,087 | |||
Shareholder servicing fees | 82 | |||
Other expenses | 309 | |||
Total expenses | 9,099 | |||
Expense reimbursement | (3,222 | ) | ||
Total expenses, net of reimbursement | 5,877 | |||
Net investment income (loss) | 23,185 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | — | |||
Net change in unrealized gain (loss) on investments | 21,439 | |||
Net realized and unrealized gain (loss) | 21,439 | |||
Net increase (decrease) in net assets resulting from operations | $ | 44,624 | ||
(1) | Commencement of operations. |
See notes to financial statements
ENTERPRISE Accumulation Trust
4
Enterprise Short Duration Bond Portfolio
STATEMENT OF CHANGES IN NET ASSETS (Unaudited)
For the Period May 1, 2003 through June 30, 2003 | ||||
From operations: | ||||
Net investment income (loss) | $ | 23,185 | ||
Net realized gain (loss) | — | |||
Net change in unrealized gain (loss) | 21,439 | |||
Increase (decrease) in net assets resulting from operations | 44,624 | |||
Distributions to shareholders from: | ||||
Net investment income | — | |||
Net realized gains | — | |||
Total distributions to shareholders | — | |||
From capital share transactions: | ||||
Shares sold | 5,733,519 | |||
Reinvestment of distributions | — | |||
Shares redeemed | (1,281 | ) | ||
Total increase (decrease) in net assets resulting from capital share transactions | 5,732,238 | |||
Total increase (decrease) in net assets | 5,776,862 | |||
Net assets: | ||||
Beginning of period | — | |||
End of period | $ | 5,776,862 | ||
Capital share activity: | ||||
Shares issued | 573,025 | |||
Shares issued in reinvestment of distributions | — | |||
Shares redeemed | (128 | ) | ||
Net increase (decrease) | 572,897 | |||
Undistributed net investment income | $ | 23,185 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Short Duration Bond Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) For the Period May 1, 2003 through June 30, 2003 | ||||
Net asset value, beginning of period | $ | 10.00 | ||
Income from investment operations: | ||||
Net investment income (loss)C | 0.04 | |||
Net realized and unrealized gain (loss) on investments | 0.04 | |||
Total from investment operations | 0.08 | |||
Less dividends and distributions: | ||||
Dividends from net investment income | — | |||
Distributions from capital gains | — | |||
Total distributions | — | |||
Net asset value, end of period | $ | 10.08 | ||
Total return | 0.80 | %B | ||
Net assets end of period (in thousands) | $ | 5,777 | ||
Ratio of expenses to average net assets | 0.65 | %A | ||
Ratio of expenses to average net assets (excluding reimbursement) | 1.01 | %A | ||
Ratio of net investment income (loss) to average net assets | 2.56 | %A | ||
Portfolio turnover | 0 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Short Duration Bond Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — The high-yield securities in which the 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 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. Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability. Certain securities held by the Portfolio are valued on the basis of a price provided by a single market maker. The prices provided by the principal market makers may differ from the value that would be realized if the securities were sold. At June 30, 2003, the total value of these securities represented approximately 13% of the net assets of the Portfolio.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed. As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. The Portfolio will enter into forward contracts only for hedging purposes. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Inflation Indexed Bonds — The Portfolio may purchase inflation-indexed bonds which are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. Over the life of the bond, interest will be paid based on a principal value adjusted for inflation. Any increase in the principal value is considered interest income, even though the Portfolio will not receive the principal until sold or maturity.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.45%. A portion of the management fee received by ECM is paid to the subadviser. MONY Capital Management, Inc., a wholly-owned subsidiary of The MONY Group Inc., is the subadviser for the Portfolio. For the period ended June 30, 2003, ECM incurred subadvisory fees payable to MONY Capital Management, Inc., of $890. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the period ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $105 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 0.65%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $5,040,000 in the Portfolio at June 30, 2003.
For the period ended June 30, 2003, the Portfolio paid no brokerage commissions affiliates of the adviser or subadviser.
4. Investment Transactions
For the period ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
$949,242 | — | $4,600,461 | — |
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. There was no securities lending activity at June 30, 2003.
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the period ended June 30, 2003.
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Unrealized Gain | |||
$5,707,846 | $25,713 | ($4,274) | $21,439 |
ENTERPRISE Accumulation Trust
10
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
11
Enterprise Accumulation Trust
SHORT DURATION BOND PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
12
Enterprise Total Return Portfolio
SUBADVISER’S COMMENTS
Pacific Investment Management Company, LLC
Newport Beach, California
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Pacific Investment Management Company (“PIMCO”) is the subadviser to the Enterprise Total Return Portfolio. The firm has approximately $323.4 billion in assets under management, and its normal investment minimum is $75 million.
Investment Objective
The objective of the Enterprise Total Return Portfolio is total return.
First Half 2003 Performance Review
How did the Portfolio perform for the six months ended June 30, 2003?
For the six-month period, the Portfolio returned 4.83%. The Portfolio underperformed its benchmark, the Lehman Brothers Universal Index, which returned 4.95%. The Portfolio underperformed its peer group, the Lipper BBB Rated Funds Index, which returned 7.48%.
How would you describe the investment environment during the period?
Most financial assets gained as anxiety about the war in Iraq faded. Assets that generally benefit from economic growth, such as stocks, corporate bonds and emerging market debt, fared the best for the period as investors in these securities anticipated a recovery in the second half of 2003.
Reflationary forces that were expected to fuel a rebound included federal tax cuts and a weak dollar, as well as low borrowing rates that eased the burden of relatively high personal and corporate indebtedness. Low mortgage rates kept the refinancing boom in the second quarter and put money in consumers’ pockets. By the end of the period, corporate bond yields were so low that well-known companies like General Electric and Wal-Mart could borrow for five years at less than 3%.
Treasury bonds lagged their riskier counterparts but still enjoyed a rally of their own. Already low yields fell to levels not seen in 45 years, confounding investors convinced that these bonds were overvalued.
The broad bond market, represented by the Lehman Brothers Universal Bond Index, gained 4.94% during the period. Treasury yields fell amid concerns over the conflict in Iraq and other deflationary economic forces such as a weak labor market. The benchmark 10-year Treasury yield finished at 3.52%.
What strategies affected Portfolio performance during the period?
During the period, interest rate strategies, which included a neutral duration position and an emphasis on the short and long maturity portion of the yield curve, were largely neutral for returns.
Sector strategies also affected performance. A structural allocation to mortgages enhanced Portfolio yield and was positive for performance due to security selection, a corporate under-weight was negative as the sector outperformed Treasuries. Security selection, which focused on telecom and energy pipeline bonds, helped returns. These issuers benefited from strengthening balance sheets and investor demand for yield. An under-weight to high-yield as well as security selection within this sector hurt returns. Airline and healthcare issues dragged down returns as these sectors experienced significant price declines in the first quarter. These issues modestly rebounded in the second quarter but failed to recover fully. European holdings were a modest drag on performance as these issues failed to rally to the degree of their U.S. counterparts. Emerging market bonds, especially in Brazil, added to returns, sustaining their recovery that began in the fourth quarter of 2002.
ENTERPRISE Accumulation Trust
1
Enterprise Total Return Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
Over the six-month period, the Portfolio maintained relatively stable interest rate strategies with a modest shift from the short and longer maturity portion of the yield curve to more intermediate issues.
In terms of sectors, PIMCO harvested gains by reducing its exposure to emerging market and high-yield debt. In terms of developed non-dollar exposure, PIMCO shifted it from an even maturity exposure to an emphasis on shorter maturity non-dollar assets, especially in Europe where growth remains weak and the likelihood of additional short-term easing remains relatively high.
There are specific risks associated with some of the securities held in this fund. High-yield bonds are subject to defaults by the issuer, market valuation and interest rate sensitivity; investments in foreign securities are subject to currency fluctuations, foreign taxation, differences in accounting standards and political or economic instability; and investments in derivatives could subject the fund to loss of principal. In addition, this fund is expected to have a higher-than-average turnover rate, which could generate more taxable short-term gains and negatively affect performance.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
2
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2003
Principal Amount | Value | |||||
Corporate Bonds and Notes — 16.49% | ||||||
Airlines — 0.61% | ||||||
Continental Airlines Inc. | $ | 110,000 | $ | 109,219 | ||
Delta Air Lines Inc. | 110,000 | 111,551 | ||||
United Airlines Inc. | 50,000 | 41,986 | ||||
United Airlines Inc. | 49,079 | 41,937 | ||||
304,693 | ||||||
Automotive — 0.69% | ||||||
Daimlerchrysler North America, | 50,000 | 49,773 | ||||
General Motors Corporation | 150,000 | 149,327 | ||||
General Motors Corporation | 150,000 | 147,714 | ||||
346,814 | ||||||
Cable — 1.52% | ||||||
Clear Channel Communications | 250,000 | 252,505 | ||||
Continental Cablevision Inc. | 200,000 | 201,442 | ||||
Continental Cablevision Inc. | 50,000 | 57,537 | ||||
Cox Communications Inc. | 250,000 | 250,167 | ||||
761,651 | ||||||
Electrical Equipment — 0.23% | ||||||
Oncor Electric Delivery Company | 50,000 | 57,077 | ||||
Oncor Electric Delivery Company 6.375% due 01/15/15 (144A) | 50,000 | 56,721 | ||||
113,798 | ||||||
Energy — 1.47% | ||||||
AEP Texas Central Company | 200,000 | 218,884 | ||||
El Paso Energy Corporation | 25,000 | 21,063 | ||||
El Paso Natural Gas Company | 50,000 | 53,000 | ||||
Florida Power Corporation | 130,000 | 135,504 | ||||
Progress Energy Inc. | 200,000 | 206,329 | ||||
PSEG Power | 62,000 | 71,181 | ||||
Sonat Inc. | 35,000 | 31,850 | ||||
737,811 |
Principal Amount | Value | |||||
Entertainment & Leisure — 0.68% | ||||||
Station Casinos Inc. | $ | 75,000 | $ | 81,000 | ||
Walt Disney Company | 200,000 | 203,551 | ||||
Walt Disney Company | 50,000 | 58,174 | ||||
342,725 | ||||||
Finance — 0.27% | ||||||
Credit Suisse First Boston | 125,000 | 133,484 | ||||
Forest Products — 0.18% | ||||||
Weyerhaeuser Company | 90,000 | 90,006 | ||||
Health Care — 0.60% | ||||||
Columbia / HCA Healthcare | 300,000 | 302,411 | ||||
Hotels & Restaurants — 0.71% | ||||||
Hilton Hotels Corporation | 100,000 | 101,500 | ||||
Park Place Entertainment Corporation | 200,000 | 200,750 | ||||
Starwood Hotels Resorts | 50,000 | 54,750 | ||||
357,000 | ||||||
Insurance — 0.19% | ||||||
Travelers Property Casualty Corporation | 60,000 | 62,477 | ||||
Travelers Property Casualty Corporation | 30,000 | 32,788 | ||||
95,265 | ||||||
Media — 0.73% | ||||||
AOL Time Warner Inc. | 125,000 | 143,711 | ||||
AOL Time Warner Inc. | 100,000 | 114,161 | ||||
AOL Time Warner Inc. | 50,000 | 58,372 | ||||
Turner Broadcasting System Inc. | 50,000 | 51,147 | ||||
367,391 | ||||||
Misc. Financial Services — 3.22% | ||||||
Bear Stearns Companies Inc. | 60,000 | 73,566 | ||||
CIT Group Inc. | 203,000 | 205,015 |
ENTERPRISE Accumulation Trust
3
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
CIT Group Inc. | $ | 150,000 | $ | 178,853 | ||
Ford Motor Credit Company | 100,000 | 102,807 | ||||
General Motors Acceptance Corporation | 250,000 | 249,414 | ||||
General Motors Acceptance Corporation | 100,000 | 100,192 | ||||
General Motors Acceptance Corporation | 100,000 | 99,886 | ||||
Household Finance Corporation | 50,000 | 50,433 | ||||
Restructured Asset Certificates | 200,000 | 198,067 | ||||
Sprint Capital Corporation | 150,000 | 150,570 | ||||
Sprint Capital Corporation | 200,000 | 200,647 | ||||
1,609,450 | ||||||
Oil Services — 0.78% | ||||||
Amerada Hess Corporation | 150,000 | 173,039 | ||||
CMS Panhandle Holding Company | 50,000 | 55,250 | ||||
Tennessee Gas Pipeline Company | 150,000 | 163,125 | ||||
391,414 | ||||||
Retail — 0.83% | ||||||
Kroger Company | 150,000 | 165,703 | ||||
Safeway Inc. | 250,000 | 250,874 | ||||
416,577 | ||||||
Telecommunications — 1.44% | ||||||
AT&T Corporation | 250,000 | 283,472 | ||||
Sprint Capital Corporation | 50,000 | 59,866 | ||||
Verizon Global Funding Corporation, | 65,000 | 73,170 | ||||
Verizon Maryland Inc. | 250,000 | 283,459 | ||||
Worldcom Inc. | 75,000 | 22,125 | ||||
722,092 |
Principal Amount | Value | |||||
Transportation — 0.27% | ||||||
Norfolk Southern Corporation | $ | 30,000 | $ | 35,039 | ||
Norfolk Southern Corporation | 100,000 | 100,482 | ||||
135,521 | ||||||
Utilities — 0.64% | ||||||
National Rural Utilities | 200,000 | 201,227 | ||||
Niagara Mohawk Power Corporation | 100,000 | 119,807 | ||||
321,034 | ||||||
Waste Management — 0.70% | ||||||
USA Waste Services Inc. | 95,000 | 100,750 | ||||
Waste Management Inc. | 120,000 | 136,445 | ||||
WMX Technologies Inc. | 100,000 | 114,367 | ||||
351,562 | ||||||
Wireless Communications — 0.73% | ||||||
AT&T Wireless | 160,000 | 192,777 | ||||
Cingular Wireless | 60,000 | 69,130 | ||||
Rogers Cantel | 50,000 | 52,125 | ||||
Verizon Wireless Capital | 50,000 | 49,984 | ||||
364,016 | ||||||
Total Corporate Bonds and Notes | ||||||
(Identified cost $7,849,000) | 8,264,715 | |||||
Foreign Bonds — 2.52% | ||||||
Broadcasting — 0.14% | ||||||
British Sky Broadcasting Group | 60,000 | 71,100 | ||||
Cable — 0.06% | ||||||
Rogers Cablesystems Ltd. | 30,000 | 32,550 | ||||
Manufacturing — 0.14% | ||||||
Tyco International Group | 65,000 | 68,575 | ||||
Misc. Financial Services — 0.31% | ||||||
HSBC Capital Funding | 100,000 | 157,061 | ||||
Oil Services — 0.48% | ||||||
Pemex Project Funding Master Trust | 150,000 | 181,500 |
ENTERPRISE Accumulation Trust
4
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Pemex Project Funding Master Trust, | $ | 50,000 | $ | 57,125 | ||
238,625 | ||||||
Telecommunications — 1.39% | ||||||
British Telecom | 300,000 | 300,971 | ||||
Deutsche Telekom International | 65,000 | 72,483 | ||||
Deutsche Telekom International | 100,000 | 122,838 | ||||
France Telecom | 145,000 | 200,642 | ||||
696,934 | ||||||
Total Foreign Bonds | ||||||
( Identified cost $1,150,138 ) | 1,264,845 | |||||
Asset-Backed Securities — 0.24% | ||||||
Misc. Financial Services — 0.24% | ||||||
Bear Stearns Home Loan Owner Trust, Series 2001-A, | 4,574 | 4,574 | ||||
Merrill Lynch Mortgage Inc., | 44,144 | 44,197 | ||||
Structured Asset Securities Corporation, Series 2002-BC4, Class A | 71,553 | 71,498 | ||||
Total Asset-Backed Securities | ||||||
( Identified cost $120,252 ) | 120,269 | |||||
Mortgage-Backed Securities — 3.81% | ||||||
Banking — 0.55% | ||||||
Countrywide Home Loans Inc. | 108,041 | 109,694 | ||||
Countrywide Home Loans Inc. | 124,123 | 125,897 | ||||
Wells Fargo Mortgage Backed Securities, Series 2002-E, | 38,243 | 38,787 | ||||
274,378 |
Principal Amount | Value | |||||
Finance — 0.82% | ||||||
Credit Suisse First Boston Mortgage, | $ | 125,796 | $ | 126,207 | ||
Credit Suisse First Boston Mortgage, | 53,781 | 53,513 | ||||
Credit Suisse First Boston Mortgage, | 231,457 | 230,734 | ||||
410,454 | ||||||
Misc. Financial Services — 1.65% | ||||||
Bear Stearns Arm Trust | 29,377 | 30,128 | ||||
Bear Stearns Arm Trust, Series 2002-2, Class IIIA | 14,581 | 15,099 | ||||
C Bass Trust, Series 2002-CB1, Class A2A | 59,076 | 59,135 | ||||
First Horizon Asset Securities, Series 2000-H, Class 1A | 12,773 | 12,899 | ||||
GSR Mortgage Loan Trust, Series 2002-11F, Class A-5 | 68,482 | 69,367 | ||||
PNC Mortgage Securities Corporation, | 8,960 | 8,945 | ||||
Sequoia Mortgage Trust, Series 10, Class 2A1 | 285,650 | 286,558 | ||||
Structured Asset Securities Corporation, | 68,391 | 67,174 | ||||
Structured Asset Securities Corporation, Series 2001-19, Class 1A1 | 2,866 | 2,873 | ||||
Structured Asset Securities Corporation, | 31,944 | 31,903 | ||||
Vanderbilt Acquisition Loan Trust, | 56,759 | 57,320 | ||||
Washington Mutual Mortgage Loan Trust, Series 2000-3, Class A | 162,079 | 163,135 |
ENTERPRISE Accumulation Trust
5
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Washington Mutual Mortgage Securities Corporation, | $ | 23,350 | $ | 23,564 | ||
828,100 | ||||||
Freddie Mac — 0.79% | ||||||
Freddie Mac, Series 2411, Class FJ | 60,738 | 60,498 | ||||
Freddie Mac, Series 2434, Class TA | 110,198 | 111,278 | ||||
Freddie Mac, Series 2504, Class DX | 51,138 | 51,507 | ||||
Freddie Mac, Series 2535, Class DT | 167,956 | 173,428 | ||||
396,711 | ||||||
Total Mortgage-Backed Securities | ||||||
( Identified cost $1,912,201 ) | 1,909,643 | |||||
U. S. Treasury Obligations — 15.09% | ||||||
U. S. Treasury Bonds — 1.08% | ||||||
7.875% due 02/15/21 | 300,000 | 428,297 | ||||
8.75% due 05/15/20 (P/O) | 250,000 | 111,745 | ||||
540,042 | ||||||
U. S. Treasury Notes — 14.01% | ||||||
6.50% due 02/15/10 | 1,680,000 | 2,038,115 | ||||
5.75% due 08/15/10 | 1,200,000 | 1,404,610 | ||||
7.50% due 11/15/16 | 670,000 | 909,499 | ||||
3.50% due 01/15/11 (TIPS) | 105,612 | 119,952 | ||||
3.375% due 01/15/12 (TIPS) | 2,256,714 | 2,553,260 | ||||
7,025,436 | ||||||
Total U. S. Treasury Obligations | ||||||
( Identified cost $7,519,995 ) | 7,565,478 | |||||
Agency Obligations — 37.75% | ||||||
Fannie Mae — 28.11% | ||||||
5.39% due 04/01/33 | 62,234 | 63,863 | ||||
5.50% due 12/01/32 (TBA) | 700,000 | 723,407 | ||||
5.00% due 12/31/32 (TBA) | 12,800,000 | 13,283,567 | ||||
REMIC | 18,518 | 18,617 | ||||
14,089,454 | ||||||
Freddie Mac — 2.27% | ||||||
4.365% due 11/01/23 | 103,884 | 107,279 | ||||
6.00% due 11/15/27 | 50,000 | 50,614 | ||||
6.00% due 04/15/28 | 200,000 | 202,694 | ||||
6.50% due 04/15/29 | 131,010 | 141,360 | ||||
4.50% due 08/15/31 | 48,902 | 49,332 | ||||
6.50% due 08/01/32 | 565,810 | 588,791 | ||||
1,140,070 |
Principal Amount | Value | |||||
Ginnie Mae — 7.37% | ||||||
5.50% due 12/15/32 (TBA) | $ | 3,550,000 | $ | 3,694,500 | ||
Total Agency Obligations | ||||||
( Identified cost $18,895,341 ) | 18,924,024 | |||||
Foreign Government Obligations — 3.39% | ||||||
Brazil Federative Republic | 59,294 | 52,327 | ||||
Brazil Federative Republic | 25,000 | 26,187 | ||||
Brazil Federative Republic | 150,000 | 149,250 | ||||
Brazil Federative Republic | 123,141 | 107,441 | ||||
Brazil Federative Republic | 50,000 | 38,900 | ||||
Chile Republic | 140,000 | 162,904 | ||||
Germany Federal Republic | € | 80,000 | 102,213 | |||
Republic of Panama | $ | 30,000 | 33,150 | |||
Republic of Panama | 20,000 | 23,200 | ||||
Republic of Panama | 305,000 | 340,075 | ||||
Republic of Peru | 250,000 | 266,500 | ||||
South Africa Republic | €150,000 | 165,951 | ||||
United Mexican States | $ | 25,000 | 29,950 | |||
United Mexican States | 175,000 | 201,513 | ||||
Total Foreign Government Obligations | ||||||
(Identified cost $1,508,029) | 1,699,561 | |||||
Municipal Bonds — 0.89% | ||||||
Food, Beverages & Tobacco — 0.17% | ||||||
Tobacco Settlement Financing Corporation of New Jersey, | 95,000 | 86,249 | ||||
Utilities — 0.72% | ||||||
Cook County Illinois (FGIC Insured), | 150,000 | 156,159 | ||||
Illinois State Taxable Pension | 50,000 | 49,168 | ||||
San Antonio Texas Water Revenue (FSA Insured), | 150,000 | 155,349 | ||||
360,676 | ||||||
Total Municipal Bonds | ||||||
(Identified cost $445,784) | 446,925 | |||||
ENTERPRISE Accumulation Trust
6
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Principal Amount | Value | |||||
Short-Term Investments — 54.19% | ||||||
Commercial Paper — 22.72% | ||||||
ANZ Delaware Inc. | $ | 800,000 | $ | 799,973 | ||
Barclays United States Fund | 1,400,000 | 1,398,011 | ||||
CBA Delaware Finance Inc. | 500,000 | 499,849 | ||||
CBA Delaware Finance Inc. | 300,000 | 299,774 | ||||
Danske Corporation | 300,000 | 299,938 | ||||
General Electric Capital Corporation, 1.05% due 08/11/03 | 700,000 | 699,163 | ||||
General Electric Capital Corporation, 1.20% due 08/21/03 | 400,000 | 399,320 | ||||
HBOS Treasury Services | 100,000 | 99,853 | ||||
HBOS Treasury Services | 500,000 | 498,924 | ||||
HBOS Treasury Services | 300,000 | 299,378 | ||||
HBOS Treasury Services | 300,000 | 299,348 | ||||
Lloyds Bank TSB | 2,000,000 | 1,998,079 | ||||
Royal Bank Of Scotland | 400,000 | 399,797 | ||||
Royal Bank Of Scotland | 700,000 | 699,139 | ||||
Shell Finance | 1,000,000 | 999,720 | ||||
Shell Finance | 500,000 | 499,340 | ||||
Westpactrust Securities | 300,000 | 299,720 | ||||
Westpactrust Securities | 900,000 | 898,290 | ||||
11,387,616 | ||||||
Discount Notes — 31.47% | ||||||
Fannie Mae — 10.75% | ||||||
1.09% due 07/31/03 (e) | 800,000 | 799,207 | ||||
0.99% due 09/24/03 (e) | 3,000,000 | 2,993,696 | ||||
1.09% due 09/30/03 (e) | 1,600,000 | 1,595,409 | ||||
5,388,312 | ||||||
Federal Home Loan Banks — 7.17% | ||||||
1.13% due 07/09/03 (e) | 600,000 | 599,853 | ||||
1.16% due 08/01/03 (e) | 1,900,000 | 1,898,086 | ||||
1.15% due 10/29/03 (e) | 1,100,000 | 1,095,784 | ||||
3,593,723 |
Contracts, Notional or Principal Amount | Value | |||||
Freddie Mac — 13.14% | ||||||
1.19% due 07/17/03 (e) | $ | 1,600,000 | $ | 1,599,150 | ||
0.96% due 08/21/03 (e) | 2,900,000 | 2,895,357 | ||||
0.94% due 08/28/03 (e) | 800,000 | 798,518 | ||||
1.13% due 10/29/03 (e) | 1,300,000 | 1,295,082 | ||||
6,588,107 | ||||||
U. S. Treasury Bills — 0.41% | ||||||
0.79% due 08/07/03 (e) (s) | 155,000 | 154,824 | ||||
0.76% due 08/14/03 (e) (s) | 50,000 | 49,938 | ||||
204,762 | ||||||
Total Short-Term Investments | ||||||
(Identified cost $27,162,520) | 27,162,520 | |||||
Repurchase Agreement — 0.68% | ||||||
State Street Bank & Trust Repurchase Agreement, | 343,000 | 343,000 | ||||
Total Repurchase Agreement | ||||||
(Identified cost $343,000) | 343,000 | |||||
Put Options Purchased — 0.07% | ||||||
Swap Option Strike Price .76, Expires 05/31/05 | 200,000,000 | 35,346 | ||||
Total Put Options Purchased | ||||||
(Identified cost $11,553) | 35,346 | |||||
Total Investments | ||||||
(Identified cost $66,917,813) | 67,736,326 | |||||
Call Options Written — (0.14)% | ||||||
Japan Government Bond Futures, Strike Price 145, | 2 | (333) | ||||
Swap Option 3 Month LIBOR, Strike Price 3, | 1,500,000 | (20,319) | ||||
Swap Option 3 Month LIBOR, Strike Price 4, | 600,000 | (18,684) | ||||
Swap Option 3 Month LIBOR, Strike Price 3.25, | 1,600,000 | (31,242) | ||||
Total Call Options Written | ||||||
(Premiums received $51,061) | (70,578) | |||||
ENTERPRISE Accumulation Trust
7
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2003
Notional Amount | Value | |||||
Put Options Written — (0.01)% | ||||||
Swap Option 3 Month LIBOR, Strike Price 7, | $ | 600,000 | $ | (3,130) | ||
Total Put Options Written | ||||||
(Premiums received $7,950) | (3,130) | |||||
Other Assets Less Liabilities — (34.97)% | (17,531,282) | |||||
Net Assets — 100% | $ | 50,131,336 | ||||
(b) | Security is in bankruptcy and/or is in default of interest payment. Portfolio has ceased accrual of interest. |
(c) | Company has filed for bankruptcy protection but is currently not in default of any interest payments. |
(e) | The rate shown is the effective yield. |
(k) | Illiquid security. |
(s) | Security segregated as collateral for open futures contracts. |
(t) | Represents a Brady Bond. Brady Bonds are securities which have been issued to refinance commercial bank loans and other debt. The risk associated with these instruments is the amount of any uncollateralized principle or interest payments since there is a high default rate of commercial bank loans by countries issuing these securities. |
(u) | Remarketable Security. With remarketable securities the remarking dealer or lead manager may opt to either redeem or remarket the security during a specified period of time. |
(v) | Valuable rate security, interest rate is as of June 30, 2003. |
(P/O) | Principal-only stripped security. The rate shown is the current effective yield. |
(TBA) | To Be Announced. Certain specific security details such as final par amount and maturity date have not yet been determined. |
(144A) | The security may only be offered and sold to “qualified institutional buyers” under rule 144A of the Securities Act of 1933. |
(FGIC) | Financial Guaranty Insurance Corporation. |
(FSA) | Financial Security Assurance. |
(LIBOR) | London Interbank Offering Rate. |
(REMIC) | Real Estate Mortgage Investment Conduit. |
(TIPS) | Treasury Inflation Protected Security. Principal amount of the security is periodically adjusted for inflation. |
Interest rate swap agreements outstanding at June 30, 2003:
Description | Expiration Month | Notional Amount (000) | Unrealized Appreciation/ (Depreciation) | |||||
Receive fixed rate of 4.00% and pay variable rate payments on the six month LIBOR-BBA floating rate (Counterparty: Morgan Stanley) | 03/04 | 5,400 | $ | 14,317 | ||||
Receive variable rate payments on the three month LIBOR-BBA floating rate and pay fixed rate of 4.00% (Counterparty: JP Morgan) | 12/03 | 1,400 | 20,123 | |||||
Receive fixed rate of 4.00% and pay variable rate payments on the three month LIBOR-BBA floating rate (Counterparty: Merrill Lynch) | 12/03 | 800 | (5,146 | ) | ||||
$ | 29,294 | |||||||
A U.S. Treasury Bill with an aggregate market value of $204,762 has been segregated at the custodian to cover margin requirements for the following open futures positions as of June 30, 2003:
Description | Expiration Month | Number of Contracts | Unrealized Appreciation (Depreciation) | |||||
Long Germany Federative Republic 5-Year Bonds | 09/03 | 7 | $ | (7,465 | ) | |||
Long Germany Federative Republic 10-Year Bonds | 09/03 | 11 | (19,276 | ) | ||||
Long Eurodollar | 06/05 | 10 | 7,000 | |||||
Long U.S. Treasury 5-Year Notes | 09/03 | 3 | (1,266 | ) | ||||
Long U.S. Treasury 10-Year Notes | 09/03 | 23 | (16,641 | ) | ||||
Long U.S. Treasury Bonds | 09/03 | 22 | (33,953 | ) | ||||
$ | (71,601 | ) | ||||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Enterprise Total Return Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2003 (Unaudited)
Assets: | |||
Investments at value | $ | 67,736,326 | |
Foreign currency at value (cost — $53,901) | 53,570 | ||
Investment income receivable | 319,198 | ||
Receivable for variation margin on open futures | 39,516 | ||
Receivable for fund shares sold | 1,355 | ||
Receivable for investments sold | 15,153,357 | ||
Due from investment adviser | 5,745 | ||
Cash | 31,807 | ||
Other assets | 39,995 | ||
Total assets | 83,380,869 | ||
Liabilities: | |||
Payable for fund shares redeemed | 44,074 | ||
Options written, at market value (premiums received $59,011) | 73,708 | ||
Payable for investments purchased | 33,115,449 | ||
Shareholder servicing fees payable | 5,322 | ||
Accrued expenses and other liabilities | 10,980 | ||
Total liabilities | 33,249,533 | ||
Net Assets | $ | 50,131,336 | |
Analysis of Net Assets: | |||
Paid-in capital | $ | 47,933,785 | |
Undistributed (accumulated) net investment income (loss) | 145,952 | ||
Undistributed (accumulated) net realized gain (loss) | 1,288,808 | ||
Unrealized appreciation (depreciation) | 762,791 | ||
Net Assets | $ | 50,131,336 | |
Shares outstanding | 4,740,245 | ||
Net asset value per share | $10.58 | ||
Investments at cost | $ | 66,917,813 | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Enterprise Total Return Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2003 (Unaudited)
Investment income: | ||||
Interest | $ | 635,860 | ||
Total investment income | 635,860 | |||
Expenses: | ||||
Investment advisory fees | 112,021 | |||
Custodian and fund accounting fees | 21,579 | |||
Reports to shareholders | 5,535 | |||
Trustees’ fees | 658 | |||
Audit and legal fees | 4,557 | |||
Shareholder servicing fees | 10,810 | |||
Other expenses | 1,166 | |||
Total expenses | 156,326 | |||
Expense reimbursement | (23,937 | ) | ||
Total expenses, net of reimbursement | 132,389 | |||
Net investment income (loss) | 503,471 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 605,062 | |||
Net realized gain (loss) on foreign currency transactions | 7,053 | |||
Net realized gain (loss) on swap transactions | 30,711 | |||
Net realized gain (loss) on futures transactions | 550,401 | |||
Net realized gain (loss) on options transactions | 22,131 | |||
Net change in unrealized gain (loss) on investments | 487,010 | |||
Net change in unrealized gain (loss) on foreign currency | (7,062 | ) | ||
Net change in unrealized gain (loss) on swap transactions | 29,294 | |||
Net change in unrealized gain (loss) on futures transactions | (284,129 | ) | ||
Net change in unrealized gain (loss) on options transactions | (9,626 | ) | ||
Net realized and unrealized gain (loss) | 1,430,845 | |||
Net increase (decrease) in net assets resulting from operations | $ | 1,934,316 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Enterprise Total Return Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2003 | For the Period January 24, 2002 through December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 503,471 | $ | 470,087 | ||||
Net realized gain (loss) | 1,215,358 | 574,651 | ||||||
Net change in unrealized gain (loss) | 215,487 | 547,304 | ||||||
Increase (decrease) in net assets resulting from operations | 1,934,316 | 1,592,042 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | (357,519 | ) | (490,385 | ) | ||||
Net realized gains | — | (480,903 | ) | |||||
Total distributions to shareholders | (357,519 | ) | (971,288 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 19,698,413 | 35,548,535 | ||||||
Reinvestment of distributions | 307,907 | 720,161 | ||||||
Shares redeemed | (2,751,510 | ) | (5,589,721 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 17,254,810 | 30,678,975 | ||||||
Total increase (decrease) in net assets | 18,831,607 | 31,299,729 | ||||||
Net assets: | ||||||||
Beginning of period | 31,299,729 | — | ||||||
End of period | $ | 50,131,336 | $ | 31,299,729 | ||||
Capital share activity: | ||||||||
Shares issued | 1,904,095 | 3,552,733 | ||||||
Shares issued in reinvestment of distributions | 29,830 | 71,049 | ||||||
Shares redeemed | (264,950 | ) | (552,512 | ) | ||||
Net increase (decrease) | 1,668,975 | 3,071,270 | ||||||
Undistributed net investment income | $ | 145,952 | $ | — | ||||
ENTERPRISE Accumulation Trust
11
Enterprise Total Return Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2003 | For the Period 01/24/02 through 12/31/02 | |||||||
Net asset value, beginning of period | $ | 10.19 | $ | 10.00 | ||||
Income from investment operations: | ||||||||
Net investment income (loss)C | 0.13 | 0.34 | ||||||
Net realized and unrealized gain (loss) on investments | 0.36 | 0.35 | ||||||
Total from investment operations | 0.49 | 0.69 | ||||||
Less dividends and distributions: | ||||||||
Dividends from net investment income | (0.10 | ) | (0.34 | ) | ||||
Distributions from capital gains | — | (0.16 | ) | |||||
Total distributions | (0.10 | ) | (0.50 | ) | ||||
Net asset value, end of period | $ | 10.58 | $ | 10.19 | ||||
Total return | 4.83 | %B | 7.09 | %B | ||||
Net assets end of period (in thousands) | $ | 50,131 | $ | 31,300 | ||||
Ratio of expenses to average net assets | 0.65 | %A | 0.65 | %A | ||||
Ratio of expenses to average net assets (excluding reimbursement) | 0.77 | %A | 0.96 | %A | ||||
Ratio of net investment income (loss) to average net assets | 2.47 | %A | 3.46 | %A | ||||
Portfolio turnover rate | 271 | % | 493 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
12
Notes to Financial Statements
June 30, 2003 (Unaudited)
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 $0.01 par value for the portfolios contained therein.
The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Total Return Portfolio (the “Portfolio”) in the preparation of its financial statements.
Valuation of Investments — 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 official closing price (typically the last reported sale price) on the exchange on which the security is primarily traded. In certain instances a fair value will be assigned when Enterprise Capital Management, Inc. (“ECM”) believes that a significant event has occurred after the close of an exchange or market, but before the net asset value calculation. If there are no current day sales, the securities are valued at their last quoted bid price. Other securities traded over-the-counter and not part of the National Market System are valued at their 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 with 61 days or more to maturity at time of purchase are valued at market value through the 61st day prior to maturity, based on quotations received from market makers or other appropriate sources; thereafter, any unrealized appreciation or depreciation existing on the 61st day is amortized to par on a straight-line basis over the remaining number of days to maturity. Short-term securities with 60 days or less to maturity at time of purchase 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 Risks — The high-yield securities in which the 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 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. Any foreign denominated assets held by the Portfolio may involve risks not typically associated with domestic transactions including but not limited to, unanticipated movements in exchange rates, the degree of government supervision and regulation of security markets and the possibility of political or economic instability.
Repurchase Agreements — The Portfolio may acquire securities subject to repurchase agreements. Under a typical repurchase agreement, the 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, it is the Portfolio’s policy to receive, as collateral, securities whose market value (including interest) is at least equal to the repurchase price. In the event of default on the obligation to repurchase, the Portfolio has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the counterparty, realization or retention of the collateral or proceeds may be subject to legal proceedings.
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it not be able to sell at its current fair value price. Although it is expected that the fair value currently represents the current realizable value on disposition of such securities, there is no guarantee that the Portfolio will be able to do so. In addition, the Portfolio may incur certain costs related to the disposition of such securities. Any securities that have been deemed to be illiquid have been denoted as such in the Portfolio of Investments.
ENTERPRISE Accumulation Trust
13
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
Written Options — If the Portfolio writes an option, an amount equal to any premium received by the Portfolio is recorded as a liability and is subsequently adjusted to the current market value of the option written. Premiums received from writing options that expire unexercised are treated as realized gains. The difference between the premium and the amount paid on effecting a closing purchase transaction, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase transaction, as a realized loss. If a call option is exercised, the premium is added to the proceeds from the sale of the underlying security (or financial instrument) in determining whether the Portfolio has realized a gain or loss. If a put option is exercised, the Portfolio purchases the security (or financial instrument), the cost of the security is reduced by the premium originally received, and no gain or loss is recognized. The Portfolio as writer of an option bears the market risk of an unfavorable change in the price of the security underlying the written option.
When a portfolio writes a swap option, an amount equal to the premium received by the fund is recorded as a liability and is subsequently adjusted to the current market value of the swap option written. If a call swap option is exercised, the portfolio becomes obligated to pay a fixed interest rate (noted as the strike price) and receive a variable interest rate on a notional amount. If a put swap option is exercised, the fund becomes obligated to pay a variable interest rate and receive a fixed interest rate (noted as the strike price) on a notional amount. Premiums received from writing swap options that expire or are exercised are treated as realized gains upon the expiration or exercise of such swap options. The risk associated with writing put and call swap options is that the Portfolio will be obligated to be party to a swap agreement if a swap option is exercised.
Futures Contracts — A futures contract is an agreement between two parties to buy and sell a financial instrument at a set price on a future date. Generally, upon entering into such a contract, the Portfolio is required to pledge to the broker an amount of cash or securities equal to the minimum “initial margin” requirements of the exchange. Pursuant to the contract, the Portfolio agrees to receive from or pay to the broker an amount of cash equal to the daily fluctuation in the value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Portfolio as unrealized appreciation or depreciation. When the contract is closed the Portfolio records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and value at the time it was closed.
As part of its investment program, the Portfolio may enter into futures contracts (up to its prospectus defined limitations) to hedge against anticipated future price and interest rate changes. The Total Return Portfolio may also enter into futures contracts for other than hedging purposes. 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 amount in excess of the initial margin deposit.
Foreign Currency Translation — Securities, other assets and liabilities of the Portfolio, if any, whose values are 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 pricing vendor on the valuation date. Dividend and interest income and certain expenses denominated in foreign currencies are translated to U.S. dollars based on the exchange rates in effect on the date the income is earned and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. All commitments are marked to market daily at the applicable translation rates and any resulting realized gains or losses are recorded. Realized gains or losses are recorded at the time the forward contract matures or by delivery of the currency. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Delayed Delivery Transactions — The Portfolio may purchase or sell securities on a when-issued or delayed delivery basis. These transactions involve a commitment by the Portfolio to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed delivery
ENTERPRISE Accumulation Trust
14
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
purchases are outstanding, the subadviser or the Portfolio will set aside or earmark internally until the settlement date, liquid assets in an amount sufficient to meet the purchase price. When purchasing a security on a delayed delivery basis, the Portfolio assumes the rights and risks of ownership, including the risk of price and yield fluctuations, and takes such fluctuations into account when determining its net asset value. The Portfolio may dispose of or renegotiate a delayed delivery transaction after it is entered into, and may sell when-issued securities before they are delivered, which may result in a capital gain or loss. Forward sales commitments are accounted for by the Portfolio in the same manner as forward currency exchange contracts discussed above.
Swap Agreements — A swap agreement is a two-party contract under which an agreement is made to exchange returns from predetermined investments or returns to be exchanged or “swapped” between the parties are calculated based on a “notional amount”, which, each business day, is valued to determine each party’s obligation under the contract. Fluctuations in market values are reflected as unrealized gains or losses during the term of the contract.
Risks could arise from entering into swap agreements from the potential inability of counterparties to meet the terms of their contracts, and from the potential inability to enter into a closing transaction. It is possible that developments in the swaps market could affect a fund’s ability to terminate existing swap agreements or to realize amounts to be received under such agreements.
Inflation Indexed Bonds — The Portfolio may purchase inflation-indexed bonds which are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. Over the life of the bond, interest will be paid based on a principal value adjusted for inflation. Any increase in the principal value is considered interest income, even though the Portfolio will not receive the principal until sold or maturity.
Short Sales — If the Portfolio engages in a short sale, an amount equal to the proceeds received by the Portfolio are reflected as an asset and an equivalent liability. The amount of the liability is subsequently marked to market daily to reflect the market value of the short sale. The Portfolio maintains a segregated account of securities as collateral for the liability related to the short sale.
Security Transactions and Investment Income — Security transactions are accounted for on the trade date. Realized gains and losses from security transactions are determined on the basis of identified cost and realized gains and losses from currency transactions are determined on the basis of average cost. Dividend income is recognized on the ex-dividend date, and interest income is recognized on the accrual basis. Corporate actions, including dividends on foreign securities are recorded on the ex-dividend date. Premiums and discounts on securities, if any, are amortized daily for both financial and tax purposes, using the effective interest method.
Expenses — The Portfolio bears expenses incurred specifically on its behalf, such as advisory and custodian fees, as well as a portion of the common expenses of the Trust, which are generally allocated based on average net assets.
Federal Income Taxes — No provision for Federal income or excise taxes is required because the Portfolio intends to continue to qualify as a regulated investment company under Subchapter M of Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
Use of Estimates in Preparation of Financial Statements — Preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increase and decreases of net assets from operations during the reporting period. Actual results could differ from those estimates. In the normal course of business, the Portfolio may enter into contracts that provide general indemnifications. The maximum exposure under these arrangements is dependent on future claims that may be made against the Portfolio and, therefore, cannot be estimated; however, based on experience, the risk of any loss from such claims is considered remote.
Dividends and Distributions — Dividends and distributions to shareholders from net investment income and net realized capital gains, if any, are declared and paid at least annually. Dividends and distributions are recorded on the ex-dividend date.
ENTERPRISE Accumulation Trust
15
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at the following annual rate: 0.55%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2003, the Portfolio paid MONY Life Insurance Company $10,985 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 0.65%.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $5,290,000 in the Portfolio at June 30, 2003.
For the six months ended June 30, 2003, the Portfolio paid no brokerage commissions to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||||
Purchases | Sales | Purchases | Sales | |||||||
$ | 46,258,735 | $ | 67,610,517 | $ | 18,154,400 | $ | 13,853,594 |
Transactions in options written for the six months ended June 30, 2003, were as follows:
Number of Contracts/Notional Amounts | Premiums Received | ||||||
Outstanding put and call options written at December 31, 2002 | 7,100,043 | $ | 95,495 | ||||
Call options written | 20 | 14,008 | |||||
Call swap options written | 1,600,000 | 24,576 | |||||
Call options expired | (18 | ) | (10,339 | ) | |||
Call swap options closed | (3,000,000 | ) | (27,880 | ) | |||
Put options written | 18 | 5,433 | |||||
Put options expired | (61 | ) | (29,333 | ) | |||
Put swap options expired | (1,400,000 | ) | (12,950 | ) | |||
Outstanding put and call options written at June 30, 2003 | 4,300,002 | $ | 59,010 | ||||
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the State Street Navigator Securities Lending Prime Portfolio, a money market fund registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. There was no securities lending activity at June 30, 2003.
ENTERPRISE Accumulation Trust
16
Notes to Financial Statements — (Continued)
June 30, 2003 (Unaudited)
6. Borrowings
The Trust, and another mutual fund advised by ECM are parties to a $40 million redemption line of credit with State Street Bank and Trust Co. whereby each portfolio may borrow up to its prospectus defined limitation. The Trust pays an allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2003.
7. Federal Income Tax Information
Income and capital gain distributions are determined in accordance with Federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences may be due to differing treatments for futures and options transactions, foreign currency transactions, paydowns, net operating losses, losses deferred due to wash sale and investments in passive foreign investment companies.
Permanent book and tax basis differences, if any, relating to shareholder distributions will result in reclassifications to paid in capital. These reclassifications have no effect on net assets or net asset values per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
Tax Basis Unrealized Gain (Loss) on Investments and Distributions
At June 30, 2003, the cost of securities for Federal income tax purposes, the aggregate gross unrealized gain for all securities for which there was an excess of value over tax cost and the aggregate gross unrealized loss for all securities for which there was an excess of tax cost over value were as follows:
Tax Cost | Tax Unrealized Gain | Tax Unrealized Loss | Net Gain (Loss) | ||||||||
$ | 66,917,813 | $ | 928,884 | $ | (134,164 | ) | $ | 794,720 |
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17
TRUSTEESAND OFFICERS
NAME, AGE,AND ADDRESS | POSITIONS HELD | LENGTH OF SERVICE (YEARS) | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz (79) Atlanta, GA | Trustee and Audit Committee Member | 9 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire (84) Atlanta, GA | Trustee and Audit Committee Chairman | 9 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. (63) Atlanta, GA | Trustee | 9 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope (69) Macon, GA | Trustee and Audit Committee Member | 9 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn (54) Atlanta, GA | Chairman, President & Chief Executive Officer, Trustee | 9 | Chairman, President & CEO, ECM, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth (57) New York, NY | Trustee | 9 | Chairman and CEO, The MONY Group Inc. | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios The MONY Group Inc., Pitney Bowes, Inc., Interpublic Group of Companies, Inc. | |||||
Samuel J. Foti (51) New York, NY | Trustee | 9 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff (39) Atlanta, GA | Vice President and Chief Financial Officer | 8 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF and ECM | — | — | |||||
Herbert M. Williamson (51) Atlanta, GA | Treasurer and Assistant Secretary | 9 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan (47) Atlanta, GA | Secretary | 9 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
The Enterprise Accumulation Trust Statement of Additional Information (SAI) includes additional information about the Trustees and is available, without charge, upon request by calling 1-800-432-4320.
ENTERPRISE Accumulation Trust
18
Enterprise Accumulation Trust
TOTAL RETURN PORTFOLIO
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 Auditors
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
19
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Items 5-6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not applicable.
Item 8. [Reserved]
Item 9. Controls and Procedures.
(a) The registrant’s president/chief executive officer and vp/chief financial officer have evaluated the registrant’s disclosure controls and procedures within 90 days of this filing and have concluded that the registrant’s disclosure controls and procedures were effective, as of that date, in ensuring that information required to be disclosed by the registrant in this Form N-CSR was recorded, processed, summarized, and reported timely.
(b) The registrant’s president/chief executive officer and vp/chief financial officer are aware of no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal half-year that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 10. Exhibits.
(a | ) | (1) | Not required at this time. | ||
(a | ) | (2) | Separate certifications by the registrant’s president/chief executive officer and vp/chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2)(a) under the Investment Company Act of 1940, are attached. | ||
(b | ) | A certification by the registrant’s president/chief executive officer and vp/chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and required by Rule 30a-2(b) under the Investment Company Act of 1940 is attached. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Enterprise Accumulation Trust
| ||
By: | /s/ Victor Ugolyn | |
Name: Victor Ugolyn | ||
Title: President/Chief Executive Officer | ||
Date: August 20, 2003 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Victor Ugolyn | |||||||
Name: Victor Ugolyn | ||||||||
Title: President/Chief Executive Officer | ||||||||
Date: August 20, 2003 |
By: | /s/ Phillip G. Goff | |||||||
Name: Phillip G. Goff | ||||||||
Title: VP/Chief Financial Officer | ||||||||
Date: August 20, 2003 |