UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
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: December 31, 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 $10.8 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 long-term capital appreciation.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 34.48%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 28.69%. In contrast, the Portfolio underperformed its peer group, the Lipper Multi-Cap Growth Funds Index, which returned 35.38%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The S&P 500 Index is an unmanaged broad-based index that includes the common stock of 500 companies that tend to be important leaders in important industries within the U.S. economy. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Multi-Cap Growth Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Multi-Cap Growth Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index.
How would you describe the investment environment during the period?
The 2003 new year brought 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 part of the year. 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
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Enterprise Multi-Cap Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
trump economic fundamentals. With the outbreak of war in March, markets reversed course and recouped some of the losses experienced. Preferring war to uncertainty, investors pushed most indices higher during the end of the first 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 sustained the positive momentum, with most equity indices moving 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. Stocks of all market capitalizations and styles surged higher 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 overall upbeat earnings outlooks. With a larger-than-expected jump in the index of leading economic indicators as well as a 0.25% rate cute on June 25, investors pushed stocks slightly higher during the final month of the quarter.
Equity prices continued to rise throughout the third quarter of 2003, with small cap growth stocks leading the advance. Encouraged again by upbeat earnings news, investors pushed most indices higher into August. Buyers dominated the market, as personal income and personal spending experienced significant growth. Unfortunately, the positive momentum created during the first two months of the quarter failed to continue into September. Despite an improved outlook for the semiconductor industry, bearish news in the labor markets and OPEC’s surprise decision to cut oil output dragged stocks down during the final month of the quarter. While the Fed decided against any rate cuts during the quarter, it indicated a commitment to maintaining low interest rates for the foreseeable future.
The fourth quarter brought with it the continued advance of most equity indices. Fueled in part by rising consumer confidence, a bullish outlook from the Fed and the fastest GDP growth in 20 years, markets trended higher into November. Despite a falling dollar, stocks continued to rise on larger-than-expected growth in the manufacturing sector, bullish forecasts in the tech sector and solid housing data. The upward trend did not falter in December, as positive economic and geopolitical news captured most of the headlines. Strong consumer spending and the largest productivity gains in 20 years helped to propel most equity indices significantly higher during the final month of the year. The capture of Saddam Hussein on December 13 further enthused investors. Small and mid cap stocks performed especially well. As equity markets head into the new year, low interest rates, minimal inflation and solid economic fundamentals appear to be eclipsing fear and uncertainty.
What strategies affected Portfolio performance during the period?
During the year, the Portfolio benefited from solid security selection in the health care sector along with an over-weighting in the strong information technology sector. At the stock level, performance benefited most positively from positions in eBay Inc., Yahoo Inc., Broadcom Corp., National Semiconductor Corp. and Cisco Systems Inc. Conversely, the Portfolio was most negatively impacted by holdings in Biogen Inc., Advanced Fibre Communications Inc., Brocade Communications Systems Inc. and Alliant Techsystems Inc.
What changes were made to the Portfolio over the period?
Throughout the year, the number of Portfolio holdings increased to 59 stocks, while the cash position increased to 1.7% of net assets. Significant additions included Coach Inc., Intel Corp., Monster Worldwide Inc., Pacific Sunwear of California Inc. and Texas Instruments Inc. Significant eliminations included Best Buy Company Inc., Juniper Networks Inc. and Johnson & Johnson 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
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 95.29% | |||||
Advertising — 0.75% | |||||
Monster Worldwide Inc. (a) | 23,200 | $ | 509,472 | ||
Banking — 2.97% | |||||
Bank of New York Company Inc. | 32,600 | 1,079,712 | |||
U.S. Bancorp | 31,600 | 941,048 | |||
2,020,760 | |||||
Biotechnology — 5.98% | |||||
Amgen Inc. (a) | 16,700 | 1,032,060 | |||
Genentech Inc. (a) | 26,800 | 2,507,676 | |||
Invitrogen Corporation (a) | 7,600 | 532,000 | |||
4,071,736 | |||||
Business Services — 1.29% | |||||
Medco Health Solutions Inc. (a) | 25,900 | 880,341 | |||
Computer Hardware — 2.33% | |||||
Cisco Systems Inc. (a) | 65,300 | 1,586,137 | |||
Computer Services — 8.11% | |||||
Brocade Communications Systems Inc. (a) | 182,900 | 1,057,162 | |||
Cognizant Technology Solutions (Class A) (a) | 14,900 | 680,036 | |||
United Online Inc. (a) (o) | 51,900 | 871,401 | |||
Yahoo! Inc. (a) | 64,500 | 2,913,465 | |||
5,522,064 | |||||
Computer Software — 8.22% | |||||
Activision Inc. (a) | 45,200 | 822,640 | |||
Novell Inc. (a) | 72,200 | 759,544 | |||
Oracle Corporation (a) | 56,900 | 751,080 | |||
PeopleSoft Inc. (a) | 97,600 | 2,225,280 | |||
Veritas Software Corporation (a) | 27,800 | 1,033,048 | |||
5,591,592 | |||||
Education — 0.81% | |||||
Apollo Group Inc. (Class A) (a) | 8,150 | 554,200 | |||
Electrical Equipment — 1.62% | |||||
Intersil Corporation (Class A) (a) | 44,400 | 1,103,340 | |||
Entertainment & Leisure — 1.99% | |||||
Walt Disney Company | 58,100 | 1,355,473 | |||
Fiber Optics — 3.49% | |||||
CIENA Corporation (a) | 164,300 | 1,090,952 | |||
Corning Inc. (a) | 123,200 | 1,284,976 | |||
2,375,928 | |||||
Finance — 2.69% | |||||
Capital One Financial Corporation | 18,800 | 1,152,252 | |||
MGIC Investment Corporation | 11,900 | 677,586 | |||
1,829,838 |
Number of Shares | Value | ||||
Gaming — 1.09% | |||||
International Game Technology | 20,700 | $ | 738,990 | ||
Media — 2.31% | |||||
Time Warner Inc. (a) | 87,300 | 1,570,527 | |||
Medical Instruments — 5.94% | |||||
Boston Scientific Corporation (a) | 59,800 | 2,198,248 | |||
Guidant Corporation | 12,000 | 722,400 | |||
Varian Medical Systems Inc. (a) | 5,500 | 380,050 | |||
Zimmer Holdings Inc. (a) | 10,500 | 739,200 | |||
4,039,898 | |||||
Medical Services — 3.13% | |||||
Health Management Associates Inc. (Class A) | 31,400 | 753,600 | |||
Quest Diagnostics Inc. (a) | 18,800 | 1,374,468 | |||
2,128,068 | |||||
Misc. Financial Services — 3.85% | |||||
Citigroup Inc. | 36,500 | 1,771,710 | |||
Morgan Stanley Dean Witter & Company | 14,700 | 850,689 | |||
2,622,399 | |||||
Oil Services — 1.14% | |||||
Halliburton Company | 29,800 | 774,800 | |||
Pharmaceuticals — 5.46% | |||||
Allergan Inc. | 4,600 | 353,326 | |||
Millennium Pharmaceuticals Inc. (a) | 59,000 | 1,101,530 | |||
Pfizer Inc. | 63,980 | 2,260,413 | |||
3,715,269 | |||||
Retail — 12.50% | |||||
Bed Bath & Beyond Inc. (a) | 25,600 | 1,109,760 | |||
Coach Inc. (a) | 19,500 | 736,125 | |||
eBay Inc. (a) | 46,800 | 3,022,812 | |||
Gap Inc. | 54,500 | 1,264,945 | |||
Home Depot Inc. | 54,600 | 1,937,754 | |||
Pacific Sunwear of California (a) | 20,700 | 437,184 | |||
8,508,580 | |||||
Semiconductors — 14.34% | |||||
Applied Materials Inc. (a) | 63,000 | 1,414,350 | |||
Broadcom Corporation (Class A) (a) | 62,300 | 2,123,807 | |||
Intel Corporation | 34,600 | 1,114,120 | |||
Kulicke & Soffa Industries Inc. (a) | 78,000 | 1,121,640 | |||
Micron Technology Inc. (a) | 72,500 | 976,575 | |||
National Semiconductor Corporation (a) | 28,100 | 1,107,421 | |||
Novellus Systems Inc. (a) | 16,600 | 698,030 | |||
Texas Instruments Inc. | 40,900 | 1,201,642 | |||
9,757,585 |
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Enterprise Multi-Cap Growth Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Telecommunications — 3.64% | |||||
Advanced Fibre Communications (a) | 71,600 | $ | 1,442,740 | ||
Comverse Technology Inc. (a) | 58,600 | 1,030,774 | |||
2,473,514 | |||||
Wireless Communications — 1.64% | |||||
Nextel Communications Inc. (Class A) (a) | 27,900 | 782,874 | |||
Spectrasite Inc. (a) | 9,500 | 330,125 | |||
1,112,999 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $55,509,790) | 64,843,510 | ||||
Foreign Stocks — 2.67% | |||||
Pharmaceuticals — 2.40% | |||||
QLT Inc. (a) (o) | 33,200 | 625,820 | |||
Teva Pharmaceutical Industries | 17,800 | 1,009,438 | |||
1,635,258 | |||||
Travel/Entertainment/Leisure — 0.27% | |||||
Royal Caribbean Cruises Ltd. (o) | 5,300 | 184,387 | |||
Total Foreign Stocks | |||||
(Identified cost $1,354,490) | 1,819,645 | ||||
Number of Units or Amount | Value | |||||
Other Investment — 1.53% | ||||||
Securities Lending Quality Trust (s) | 1,043,635 | $ | 1,043,635 | |||
Total Other Investment | ||||||
(Identified cost $1,043,635) | 1,043,635 | |||||
Repurchase Agreement — 1.72% | ||||||
State Street Bank & Trust | $ | 1,170,000 | 1,170,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $1,170,000) | 1,170,000 | |||||
Total Investments | ||||||
(Identified cost $59,077,915) | $ | 68,876,790 | ||||
Other Assets Less Liabilities — (1.21)% | (824,277) | |||||
Net Assets — 100% | $ | 68,052,513 | ||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at December 31, 2003. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
(ADR) | American Depository Receipt. |
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $999,001 (Note 5) | $ | 68,876,790 | ||
Cash | 125 | |||
Investment income receivable | 23,982 | |||
Receivable for fund shares sold | 26,650 | |||
Receivable for investments sold | 442,086 | |||
Other assets | 2,964 | |||
Total assets | 69,372,597 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 131,695 | |||
Payable for investments purchased | 112,042 | |||
Payable upon return of securities loaned (Note 5) | 1,043,635 | |||
Shareholder servicing fees payable | 16,974 | |||
Accrued expenses and other liabilities | 15,738 | |||
Total liabilities | 1,320,084 | |||
Net assets | $ | 68,052,513 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 152,703,169 | ||
Undistributed (accumulated) net investment income (loss) | — | |||
Undistributed (accumulated) net realized gain (loss) | (94,449,531 | ) | ||
Unrealized appreciation (depreciation) | 9,798,875 | |||
Net assets | $ | 68,052,513 | ||
Shares outstanding | 9,186,285 | |||
Net asset value per share | $7.41 | |||
Investments at cost | $ | 59,077,915 | ||
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends (net of foreign taxes withheld of $2,588) | $ | 337,129 | ||
Interest | 33,106 | |||
Securities lending income | 1,958 | |||
Total investment income | 372,193 | |||
Expenses: | ||||
Investment advisory fees | 601,964 | |||
Shareholder servicing fees | 127,977 | |||
Custodian and fund accounting fees | 27,420 | |||
Audit and legal fees | 14,107 | |||
Reports to shareholders | 4,593 | |||
Trustees’ fees | 2,092 | |||
Other expenses | 2,652 | |||
Total expenses | 780,805 | |||
Expenses reduced by expense offset arrangements | (565 | ) | ||
Total expenses, net of expense offset arrangements | 780,240 | |||
Net investment income (loss) | (408,047 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 5,810,118 | |||
Net change in unrealized gain (loss) on investments | 12,032,737 | |||
Net realized and unrealized gain (loss) | 17,842,855 | |||
Net increase (decrease) in net assets resulting from operations | $ | 17,434,808 | ||
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (408,047 | ) | $ | (512,199 | ) | ||
Net realized gain (loss) | 5,810,118 | (25,682,390 | ) | |||||
Net change in unrealized gain (loss) | 12,032,737 | (6,602,211 | ) | |||||
Increase (decrease) in net assets resulting from operations | 17,434,808 | (32,796,800 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 8,386,660 | 6,856,018 | ||||||
Shares redeemed | (10,355,196 | ) | (21,429,908 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (1,968,536 | ) | (14,573,890 | ) | ||||
Total increase (decrease) in net assets | 15,466,272 | (47,370,690 | ) | |||||
Net assets: | ||||||||
Beginning of period | 52,586,241 | 99,956,931 | ||||||
End of period | $ | 68,052,513 | $ | 52,586,241 | ||||
Capital share activity: | ||||||||
Shares issued | 1,265,403 | 938,879 | ||||||
Shares redeemed | (1,625,577 | ) | (3,245,394 | ) | ||||
Net increase (decrease) | (360,174 | ) | (2,306,515 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | — | $ | — | ||||
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the Years Ended December 31, | For the Period through 12/31/1999 | |||||||||||||||||||
2003 | 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 | (0.04 | ) | (0.05 | ) | (0.02 | ) | (0.02 | ) | (0.01 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments | 1.94 | (2.87 | ) | (1.70 | ) | (4.45 | ) | 9.64 | ||||||||||||
Total from investment operations | 1.90 | (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 | $ | 7.41 | $ | 5.51 | $ | 8.43 | $ | 10.15 | $ | 14.63 | ||||||||||
Total return | 34.48 | % | (34.64 | )% | (16.95 | )% | (30.59 | )% | 192.60 | %B | ||||||||||
Net assets end of period (in thousands) | $ | 68,053 | $ | 52,586 | $ | 99,957 | $ | 128,714 | $ | 47,960 | ||||||||||
Ratio of expenses to average net assets | 1.30 | % | 1.13 | % | 1.10 | % | 1.10 | % | 1.40 | %A | ||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 1.30 | % | 1.13 | % | 1.10 | % | 1.10 | % | 1.52 | %A | ||||||||||
Ratio of net investment income (loss) to average net assets | (0.68 | )% | (0.68 | )% | (0.23 | )% | (0.13 | )% | (0.21 | )A | ||||||||||
Portfolio turnover | 164 | % | 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
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Multi-Cap Growth Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Multi-Cap Growth Portfolio in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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, U.S. Government or Agency 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.
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Notes to Financial Statements — (Continued)
December 31, 2003
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio based on average net assets. The Portfolio may direct certain security trades to brokers who may pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. This amount is reported in the Statement of Operations.
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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 1.00%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $127,977 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.40%.
For the year ended December 31, 2003, the Portfolio paid brokerage commissions of $172,566 to affiliates of the adviser and subadviser.
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $94,574,385 | $96,369,960 |
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% 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
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Notes to Financial Statements — (Continued)
December 31, 2003
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for losses deferred due to wash sales.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||||||
$ | 59,077,915 | $ | 10,775,224 | $ | 976,349 | $ | 9,798,875 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Long-Term Gain | Capital Loss Carryforward | Expiration | ||||
— | — | $ | 94,449,530 | 2008-2010 |
8. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
11
Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
Multi-Cap Growth Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Multi-Cap Growth Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period July 15, 1999 (commencement of operations) through December 31, 1999, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
12
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EAT, EGF and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
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 $1.9 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 capital appreciation.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 23.08%. The Portfolio underperformed its benchmark, the Russell 2000 Index, which returned 47.25%. The Portfolio underperformed its peer group, the Lipper Small-Cap Growth Funds Index, which returned 44.77%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The Russell 2000 Index is an unmanaged index of the stocks of 2000 small and mid-cap companies. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Small-Cap Growth Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Small-Cap Growth Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index. The performance period for the Russell 2000 Index and the Lipper Small-Cap Growth Funds Index is 11/30/98 to 12/31/03.
How would you describe the investment environment during the period?
2003 began with a less than auspicious start. The economy remained sluggish, as weak industrial demand and growing consumer recalcitrance negatively affected corporate earnings. Added to these structural issues, the administration’s preparation for its intended foray into Iraq continued to dampen investor’s spirits. Given these circumstances, the Fed
ENTERPRISE Accumulation Trust
1
Enterprise Small Company Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
continued to advocate a loose monetary policy, though its effect was not felt by the market during the early days of 2003. Its low rate policy pushed rates down to a level not seen in forty years.
The start of the Iraqi War in March ignited the equities markets, as uncertainty over the administration’s intentions was removed. Investors, after three years of eschewing risk, loaded up on the most volatile and speculative names, causing the risk premium to shrink from its high levels. The small-cap asset class outperformed all other asset classes in 2003 as the growth names in the class reasserted their dominance. However, as the market began to realize that the process of securing Iraq would be a much lengthier, equities began to sell down from their year-to-date highs. The war’s $87 billion price tag was one additional negative data point to present itself in the third quarter. Economic news continued to be mixed as job creation numbers continued to be weak, even as better GDP growth numbers began to trickle into the markets outlook.
The market continued its winning ways through year-end, stopping only for several bouts of profit taking in November and December. The market rotated into less speculative holdings in the fourth quarter, as managers strove to take home profits for the first time in three years.
What strategies affected Portfolio performance during the period?
The market’s attraction to more speculative and higher valuation securities during the last year has been at odds with the Portfolio’s focus on strong, well-established firms. Beginning in early March the most speculative companies within the market have handily beaten the performance of higher quality small-caps. Witter’s strategy of low-turnover, higher quality stocks was challenged by this speculative, trading-oriented environment.
What changes were made to the Portfolio over the period?
Paul Philips, the Portfolio manager, retired in late August. Beginning in September, a new small cap growth team began making changes to the investments in the Portfolio. The new team added several additional steps to the investment process. These changes included increasing the number of holdings to increase the Portfolio’s diversification and performing quantitative analysis of prospective investment candidates.
The Portfolio made new investments in the technology, healthcare, and consumer sectors. Additions to the portfolio included technology names such as Neoware Systems, Inc., Integrated Silicon Solutions and MEMC Electronic Materials, Inc. Healthcare additions included Nabi Biopharmaceuticals, Angiotech Pharmaceuticals and Gen-Probe, Inc. New names within the consumer sector included K-Swiss, Ruby Tuesday and Sports Authority, Inc. The new team also reduced positions that had not performed as well as expected.
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
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Enterprise Small Company Growth Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 91.24% | |||||
Apparel & Textiles — 1.84% | |||||
K-Swiss Inc. (Class A) (o) | 64,200 | $ | 1,544,652 | ||
Banking — 1.47% | |||||
Hudson United Bancorp (o) | 33,300 | 1,230,435 | |||
Business Services — 1.49% | |||||
MAXIMUS Inc. (a) (o) | 31,900 | 1,248,247 | |||
Computer Hardware — 4.04% | |||||
Dot Hill Systems | 68,900 | 1,043,835 | |||
Integrated Silicon Solution | 95,600 | 1,498,052 | |||
Simpletech Inc. (a) | 141,200 | 848,612 | |||
3,390,499 | |||||
Computer Services — 6.04% | |||||
Cray Inc. (a) (o) | 231,180 | 2,295,617 | |||
Integral Systems Inc. (a) (o) | 62,100 | 1,336,392 | |||
NetScreen Technologies | 50,100 | 1,239,975 | |||
Tier Technologies Inc. (a) | 23,500 | 191,995 | |||
5,063,979 | |||||
Computer Software — 8.37% | |||||
Avid Technology Inc. (a) (o) | 18,100 | 868,800 | |||
Digital River Inc. (a) (o) | 35,600 | 786,760 | |||
Kintera Inc. (a) (o) | 89,700 | 1,112,280 | |||
Macromedia Inc. (a) (o) | 73,600 | 1,313,024 | |||
MSC.Software Corporation (a) (o) | 89,900 | 849,555 | |||
Neoware Systems Inc. (a) (o) | 86,600 | 1,186,420 | |||
Qad Inc. (a) | 73,900 | 906,014 | |||
7,022,853 | |||||
Consumer Products — 2.24% | |||||
Yankee Candle Company Inc. (a) | 68,600 | 1,874,838 | |||
Electrical Equipment — 4.40% | |||||
C&D Technologies Inc. | 69,400 | 1,330,398 | |||
Varian Inc. (a) (o) | 21,600 | 901,368 | |||
Woodhead Industries Inc. | 86,600 | 1,463,540 | |||
3,695,306 | |||||
Electronics — 6.98% | |||||
Ceradyne Inc. (a) (o) | 67,000 | 2,282,020 | |||
Cymer Inc. (a) (o) | 47,000 | 2,170,930 | |||
Veeco Instruments Inc. (a) (o) | 49,700 | 1,401,540 | |||
5,854,490 | |||||
Entertainment & Leisure — 0.91% | |||||
Lions Gate Entertainment Corporation (a) (o) | 170,900 | 765,632 | |||
Finance — 0.82% | |||||
E-LOAN Inc. (a) (o) | 230,000 | 685,400 |
Number of Shares | Value | ||||
Food, Beverages & Tobacco — 1.35% | |||||
Coolbrands International Inc. (a) | 87,600 | $ | 1,134,420 | ||
Hotels & Restaurants — 5.50% | |||||
Ruby Tuesday Inc. (o) | 67,400 | 1,920,226 | |||
The Cheesecake Factory Inc. (a) (o) | 61,200 | 2,694,636 | |||
4,614,862 | |||||
Manufacturing — 1.69% | |||||
Gen-Probe Inc. (a) (o) | 14,200 | 517,874 | |||
Wilson Greatbatch Technologies | 21,300 | 900,351 | |||
1,418,225 | |||||
Media — 1.49% | |||||
Sonic Solutions (a) (o) | 81,600 | 1,248,480 | |||
Medical Instruments — 8.40% | |||||
Candela Corporation (a) (o) | 52,700 | 958,086 | |||
Cytyc Corporation (a) (o) | 87,800 | 1,208,128 | |||
INAMED Corporation (a) (o) | 7,350 | 353,241 | |||
Kensey Nash Corporation (a) (o) | 64,600 | 1,501,950 | |||
Varian Medical Systems Inc. (a) (o) | 23,900 | 1,651,490 | |||
Zoll Medical Corporation (a) (o) | 38,700 | 1,373,076 | |||
7,045,971 | |||||
Medical Services — 1.33% | |||||
Centene Corporation (a) (o) | 13,000 | 364,130 | |||
Vital Images Inc. (a) (o) | 42,200 | 752,848 | |||
1,116,978 | |||||
Oil Services — 9.97% | |||||
Cimarex Energy Company (a) (o) | 105,200 | 2,807,788 | |||
Smith International Inc. (a) (o) | 44,200 | 1,835,184 | |||
Ultra Petroleum Corporation (a) | 151,000 | 3,717,620 | |||
8,360,592 | |||||
Pharmaceuticals — 4.58% | |||||
Angiotech Pharmaceuticals | 38,000 | 1,748,000 | |||
Bio Imaging Technologies | 29,900 | 186,277 | |||
Nabi Biopharmaceuticals (a) (o) | 63,500 | 807,085 | |||
Nexmed Inc. (a) | 276,800 | 1,104,432 | |||
3,845,794 | |||||
Retail — 6.78% | |||||
Christopher & Banks Corporation (o) | 66,750 | 1,303,628 | |||
Sports Authority Inc. (a) | 48,800 | 1,873,920 | |||
Too Inc. (a) (o) | 95,500 | 1,612,040 | |||
Tractor Supply Company (a) | 23,200 | 902,248 | |||
5,691,836 |
ENTERPRISE Accumulation Trust
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Enterprise Small Company Growth Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
| Value | ||||
Semiconductors — 8.74% | |||||
Intermagnetics General | 100,200 | $ | 2,220,432 | ||
Mattson Technology Inc. (a) (o) | 73,600 | 899,392 | |||
MEMC Electronic Materials | 137,800 | 1,325,636 | |||
MKS Instruments Inc. (a) (o) | 72,357 | 2,098,353 | |||
Mykrolis Corporation (a) (o) | 49,000 | 787,920 | |||
7,331,733 | |||||
Technology — 2.65% | |||||
Flir Systems Inc. (a) (o) | 61,000 | 2,226,500 | |||
Transportation — 0.16% | |||||
Vitran Corporation Inc. (a) | 9,400 | 133,010 | |||
Total Domestic Common Stocks | |||||
(Identified cost $66,857,586) | 76,544,732 | ||||
Foreign Stocks — 2.20% | |||||
Semiconductors — 2.20% | |||||
ASML Holding (a) (o) | 91,900 | 1,842,595 | |||
Total Foreign Stocks | |||||
(Identified cost $1,674,408) | 1,842,595 | ||||
Number of Units or Principal Amount | Value | |||||
Other Investment — 26.23% | ||||||
Securities Lending Quality | 22,005,687 | $ | 22,005,687 | |||
Total Other Investment | ||||||
(Identified cost $22,005,687) | 22,005,687 | |||||
Repurchase Agreement — 6.78% | ||||||
State Street Bank & Trust Repurchase Agreement, | $ | 5,692,000 | $ | 5,692,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $5,692,000) | 5,692,000 | |||||
Total Investments | ||||||
(Identified cost $96,229,681) | $ | 106,085,014 | ||||
Other Assets Less Liabilities — (26.45)% | (22,188,422) | |||||
Net Assets — 100% | $ | 83,896,592 | ||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at December 31, 2003. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Small Company Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $20,962,697 (Note 5) | $ | 106,085,014 | ||
Cash | 921 | |||
Investment income receivable | 9,020 | |||
Receivable for fund shares sold | 39,623 | |||
Other assets | 3,843 | |||
Total assets | 106,138,421 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 196,791 | |||
Payable upon return of securities loaned (Note 5) | 22,005,687 | |||
Shareholder servicing fees payable | 21,129 | |||
Accrued expenses and other liabilities | 18,222 | |||
Total liabilities | 22,241,829 | |||
Net assets | $ | 83,896,592 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 92,086,300 | ||
Undistributed (accumulated) net investment income (loss) | — | |||
Undistributed (accumulated) net realized gain (loss) | (18,045,041 | ) | ||
Unrealized appreciation (depreciation) | 9,855,333 | |||
Net assets | $ | 83,896,592 | ||
Shares outstanding | 11,399,009 | |||
Net asset value per share | $7.36 | |||
Investments at cost | $ | 96,229,681 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Small Company Growth Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment Income: | ||||
Dividends | $ | 84,628 | ||
Interest | 43,792 | |||
Securities lending income | 56,374 | |||
Total investment income | 184,794 | |||
Expenses: | ||||
Investment advisory fees | 715,600 | |||
Shareholder servicing fees | 152,981 | |||
Custodian and fund accounting fees | 21,457 | |||
Audit and legal fees | 19,067 | |||
Reports to shareholders | 9,078 | |||
Trustees’ fees | 2,741 | |||
Other expenses | 3,426 | |||
Total expenses | 924,350 | |||
Net investment income (loss) | (739,556 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (10,208,991 | ) | ||
Net change in unrealized gain (loss) on investments | 26,244,280 | |||
Net realized and unrealized gain (loss) | 16,035,289 | |||
Net increase (decrease) in net assets resulting from operations | $ | 15,295,733 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Small Company Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (739,556 | ) | $ | (589,201 | ) | ||
Net realized gain (loss) | (10,208,991 | ) | (3,542,977 | ) | ||||
Net change in unrealized gain (loss) | 26,244,280 | (17,724,488 | ) | |||||
Increase (decrease) in net assets resulting from operations | 15,295,733 | (21,856,666 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 15,994,308 | 21,691,709 | ||||||
Shares redeemed | (13,596,652 | ) | (16,222,694 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 2,397,656 | 5,469,015 | ||||||
Total increase (decrease) in net assets | 17,693,389 | (16,387,651 | ) | |||||
Net assets: | ||||||||
Beginning of period | 66,203,203 | 82,590,854 | ||||||
End of period | $ | 83,896,592 | $ | 66,203,203 | ||||
Capital share activity: | ||||||||
Shares issued | 2,528,730 | 3,077,064 | ||||||
Shares redeemed | (2,207,919 | ) | (2,497,212 | ) | ||||
Net increase (decrease) | 320,811 | 579,852 | ||||||
Undistributed (accumulated) net investment income (loss) | $ | — | $ | — | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Small Company Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the Years Ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 5.98 | $ | 7.87 | $ | 8.60 | $ | 8.50 | $ | 5.46 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | (0.07 | ) | (0.05 | ) | (0.05 | ) | (0.03 | ) | (0.05 | ) | ||||||||||
Net realized and unrealized gain (loss) on investments | 1.45 | (1.84 | ) | (0.38 | ) | 0.20 | 3.09 | |||||||||||||
Total from investment operations | 1.38 | (1.89 | ) | (0.43 | ) | 0.17 | 3.04 | |||||||||||||
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 | $ | 7.36 | $ | 5.98 | $ | 7.87 | $ | 8.60 | $ | 8.50 | ||||||||||
Total return | 23.08 | % | (24.02 | )% | (3.80 | )% | 1.90 | % | 55.68 | % | ||||||||||
Net assets end of period (in thousands) | $ | 83,897 | $ | 66,203 | $ | 82,591 | $ | 82,061 | $ | 23,429 | ||||||||||
Ratio of expenses to average net assets | 1.29 | % | 1.12 | % | 1.10 | % | 1.11 | % | 1.40 | % | ||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.29 | % | 1.12 | % | 1.10 | % | 1.11 | % | 1.55 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | (1.03 | )% | (0.79 | )% | (0.62 | )% | (0.32 | )% | (0.81 | )% | ||||||||||
Portfolio turnover | 85 | % | 37 | % | 40 | % | 47 | % | 37 | % |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Small Company Growth Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Small Company Growth Portfolio in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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, U.S. Government or Agency 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
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 1.00%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $152,981 for these services. ECM has voluntarily agreed to limit the Portfolios’ expense ratio to 1.30%, effective May 1, 2003. Prior to this the expenses were limited to 1.40%.
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $57,591,010 | $58,298,580 |
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% 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
10
Notes to Financial Statements — (Continued)
December 31, 2003
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
At December 31, 2003, the Portfolio held the following security as collateral for securities out on loan:
Principal | Value | |||||
U.S. Treasury Bond 8.125% due 08/31/21 | $ | 72,763 | $ | 101,531 |
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for net operating losses and capital loss carryforwards utilized.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||||||
$ | 96,229,681 | $ | 14,868,625 | $ | 5,013,292 | $ | 9,855,333 |
The tax character of distributable earnings/(accumulated losses) at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Gain | Capital Loss Carryforward | Expiration | ||||
— | — | $ | 18,045,041 | 2009-2011 |
8. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
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11
Report of Independent Auditors
To the Board of Trustees of Enterprise Accumulation Trust and Shareholders of Small Company Growth Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Small Company Growth Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
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TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EAT, EGF and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM, EAT and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, MSF and 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. | MSF - MONY Series Fund, 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 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
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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 $26.0 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 maximum capital appreciation.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 37.43%. The Portfolio underperformed its benchmark, the Russell 2000 Index, which returned 47.25%. The Portfolio underperformed its peer group, the Lipper Small-Cap Value Funds Index, which returned 47.53%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The Russell 2000 Index is an unmanaged index of the stocks of 2000 small and mid-cap companies. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Small-Cap Value Funds Index is an unmanaged index of the 30 largest funds, based on year-end net asset value, in the Lipper Small-Cap Value Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index.
ENTERPRISE Accumulation Trust
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Enterprise Small Company Value Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
At the beginning of 2003, the outlook for the economy and stock market appeared bleak. War with Iraq seemed inevitable and the economy stalled. From mid-January through mid-March, stocks gave back nearly all their fourth quarter 2002 gains. Although Fed Chairman Alan Greenspan was convinced uncertainty regarding Iraq was the only obstacle to a more vigorous economic recovery, skeptics abounded.
The swift victory in Iraq restored consumer confidence and the “something for everyone” Bush tax-cuts gave consumers more money to spend. While consumer spending re-ignited the economy, business investment and capital spending also started contributing to growth. Second quarter GDP growth came in at a healthy 3.3% and in the third quarter, exploded to 8.2%. Second and third quarter corporate earnings exceeded consensus expectations. Equity investors, who had been starved for good news, gobbled up stocks and the leading market indices closed 2003 with solid gains.
What strategies affected Portfolio performance during the period?
For the year, the Portfolio’s overweight position in industrials helped, and its overweight position in media companies hurt. The Portfolio did not participate in the rally in technology, but was helped by the announcement of the takeover of SPS Technologies by Precision Castparts Corporation in the third quarter, which had a ripple effect on several industrial holdings in the Portfolio, and by the takeovers of Nortek and Allen Telecom (now listed as Andrew Corp.).
Several small-cap names delivered eye-popping performance. Rural Cellular was the best performer for the year. Other top performers were Baldwin Technology Company, Inc., UnitedGlobalCom, Inc. and Weider Nutrition International, Inc.
What changes were made to the Portfolio over the period?
During the year, the Portfolio purchased shares of Packaging Dynamics Corporation, a manufacturer of flexible packaging products, Priority Healthcare Corporation, a distributor of specialty pharmaceuticals, Sinclair Broadcasting Group, Inc., Flowers Foods, Inc., Hercules, Inc., Boston Beer, Inc. and Gaylord Entertainment Company. Gabelli sold a portion of their holdings in Telephone & Data Systems and its publicly traded wireless business United States Cellular Corporation, and Gaylord Entertainment Company. Nortek and Allen Telecom were also sold when they were taken over.
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
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Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 94.64% | |||||
Advertising — 0.02% | |||||
Interep National Radio Sales Inc. (a) | 50,000 | $ | 68,000 | ||
Aerospace — 6.16% | |||||
AAR Corporation (a) | 30,000 | 448,500 | |||
Ametek Inc. | 88,000 | 4,246,880 | |||
Curtiss-Wright Corporation | 84,600 | 3,807,846 | |||
Curtiss-Wright Corporation | 22,000 | 987,800 | |||
GenCorp Inc. (o) | 313,000 | 3,371,010 | |||
Kaman Corporation (Class A) (o) | 170,000 | 2,164,100 | |||
Lockheed Martin Corporation | 30,000 | 1,542,000 | |||
Moog Inc. (Class A) (a) | 47,800 | 2,361,320 | |||
Sequa Corporation (Class A) (a) | 69,000 | 3,381,000 | |||
Sequa Corporation (Class B) | 43,000 | 2,145,700 | |||
24,456,156 | |||||
Apparel & Textiles — 0.48% | |||||
Hartmarx Corporation (a) | 240,000 | 1,000,800 | |||
Levcor International Inc. (a) | 51,347 | 205,388 | |||
Wolverine World Wide Inc. | 35,000 | 713,300 | |||
1,919,488 | |||||
Automotive — 9.04% | |||||
A. O. Smith Corporation | 20,000 | 701,000 | |||
A. O. Smith Corporation (Class A) | 12,000 | 396,000 | |||
Aaron Rents Inc. (Class A) | 1,500 | 27,735 | |||
ArvinMeritor Inc. | 30,000 | 723,600 | |||
BorgWarner Inc. | 75,000 | 6,380,250 | |||
Clarcor Inc. | 195,000 | 8,599,500 | |||
Earl Scheib Inc. (a) (f) | 240,000 | 588,000 | |||
Exide Technologies (a) (o) | 50,000 | 1,250 | |||
Federal-Mogul Corporation (a) (o) | 60,000 | 13,500 | |||
Midas Inc. (a) (o) | 205,000 | 2,931,500 | |||
Modine Manufacturing Company | 230,000 | 6,205,400 | |||
Navistar International Corporation (a) | 50,000 | 2,394,500 | |||
Raytech Corporation (a) | 20,000 | 66,400 | |||
Standard Motor Products Inc. (o) | 220,000 | 2,673,000 | |||
Superior Industries International Inc. | 51,000 | 2,219,520 | |||
Tenneco Automotive Inc. (a) | 200,000 | 1,338,000 | |||
United Auto Group Inc. (a) (o) | 20,000 | 626,000 | |||
35,885,155 | |||||
Banking — 0.75% | |||||
Sterling Bancorp | 105,000 | 2,992,500 | |||
Biotechnology — 0.23% | |||||
Invitrogen Corporation (a) | 13,000 | 910,000 | |||
Broadcasting — 4.85% | |||||
Acme Communications Inc. (a) | 51,000 | 448,290 | |||
Beasley Broadcast Group Inc. | 87,500 | 1,437,625 |
Number of Shares | Value | ||||
Cumulus Media Inc. (Class A) (a) | 10,005 | $ | 220,110 | ||
Fisher Communications Inc. (a) (o) | 60,000 | 3,060,000 | |||
Granite Broadcasting Corporation (a) | 200,000 | 330,000 | |||
Gray Television Inc. | 250,000 | 3,780,000 | |||
Gray Television Inc. (Class A) | 10,000 | 151,700 | |||
Liberty Media Corporation (Class A) (a) | 156,000 | 1,854,840 | |||
Nexstar Broadcasting Group Inc. (Class A) (a) | 1,000 | 13,710 | |||
Paxson Communications Corporation (a) | 350,000 | 1,347,500 | |||
Salem Communications Corporation (Class A) (a) | 125,000 | 3,390,000 | |||
UnitedGlobalCom Inc. (Class A) (a) | 140,000 | 1,187,200 | |||
World Wrestling Federation Entertainment Inc. | 12,000 | 157,200 | |||
Young Broadcasting Inc. (Class A) (a) | 94,000 | 1,883,760 | |||
19,261,935 | |||||
Building & Construction — 2.52% | |||||
Core Materials Corporation (a) | 154,500 | 451,140 | |||
Fleetwood Enterprises Inc. (a) (o) | 40,000 | 410,400 | |||
Hughes Supply Inc. | 1,000 | 49,620 | |||
Huttig Building Products Inc. (a) | 45,444 | 136,332 | |||
Monaco Coach Corporation (a) | 35,000 | 833,000 | |||
Rollins Inc. | 360,700 | 8,133,785 | |||
10,014,277 | |||||
Business Services — 0.54% | |||||
Edgewater Technology Inc. (a) (o) | 215,200 | 1,045,872 | |||
Nashua Corporation (a) | 73,000 | 620,500 | |||
National Processing Inc. (a) (o) | 20,000 | 471,000 | |||
2,137,372 | |||||
Cable — 1.26% | |||||
Cablevision Systems Corporation (Class A) (a) | 185,000 | 4,327,150 | |||
Lamson & Sessions Company (a) | 115,000 | 663,550 | |||
4,990,700 | |||||
Chemicals — 2.99% | |||||
Church & Dwight Company Inc. | 50,000 | 1,980,000 | |||
Cytec Industries Inc. (a) | 5,000 | 191,950 | |||
Ethyl Corporation (a) | 18,000 | 393,660 | |||
Ferro Corporation | 100,000 | 2,721,000 | |||
Great Lakes Chemical Corporation | 137,000 | 3,725,030 | |||
Hercules Inc. (a) | 95,000 | 1,159,000 | |||
MacDermid Inc. | 15,000 | 513,600 | |||
Omnova Solutions Inc. (a) | 250,000 | 1,200,000 | |||
11,884,240 |
ENTERPRISE Accumulation Trust
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Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Computer Services — 0.23% | |||||
Startek Inc. (o) | 6,000 | $ | 244,740 | ||
Tyler Technologies Inc. (a) | 25,000 | 240,750 | |||
Xanser Corporation (a) | 175,000 | 414,750 | |||
900,240 | |||||
Computer Software — 0.02% | |||||
OpenTV Corporation | 19,000 | 63,650 | |||
Conglomerates — 0.09% | |||||
Harbor Global Company Ltd. (a) | 40,000 | 364,000 | |||
Consumer Durables — 0.15% | |||||
Noel Group Liquidating Trust Units (a) (d) (g) (m) | 135,000 | — | |||
Oneida Ltd. (o) | 100,000 | 589,000 | |||
589,000 | |||||
Consumer Products — 0.92% | |||||
Elizabeth Arden Inc. (a) (o) | 40,000 | 796,800 | |||
New England Business Service Inc. | 25,000 | 737,500 | |||
Revlon Inc. (Class A) (a) (o) | 67,005 | 150,091 | |||
Scotts Company (a) | 3,000 | 177,480 | |||
Sola International Inc. (a) | 36,000 | 676,800 | |||
The Dial Corporation | 20,000 | 569,400 | |||
WD-40 Company | 15,000 | 530,400 | |||
3,638,471 | |||||
Consumer Services — 0.87% | |||||
Roto Rooter Inc. | 75,000 | 3,457,500 | |||
Drugs & Medical Products — 0.40% | |||||
Owens & Minor Inc. | 20,000 | 438,200 | |||
Thermo Electron Corporation (a) | 45,000 | 1,134,000 | |||
1,572,200 | |||||
Electrical Equipment — 4.52% | |||||
Ampco-Pittsburgh Corporation | 130,000 | 1,777,100 | |||
Baldor Electric Company | 95,000 | 2,170,750 | |||
C&D Technologies Inc. | 5,000 | 95,850 | |||
Donaldson Company Inc. | 20,000 | 1,183,200 | |||
National Presto Industries Inc. | 10,400 | 375,960 | |||
SL Industries Inc. (a) | 84,000 | 673,680 | |||
Thomas & Betts Corporation (a) | 180,000 | 4,120,200 | |||
Thomas Industries Inc. | 218,000 | 7,555,880 | |||
17,952,620 | |||||
Electronics — 0.50% | |||||
CTS Corporation (o) | 80,000 | 920,000 | |||
Park Electrochemical Corporation | 40,000 | 1,059,600 | |||
1,979,600 | |||||
Energy — 0.75% | |||||
AES Corporation (a) | 30,000 | 283,200 | |||
Aquila Inc. | 150,000 | 508,500 |
Number of Shares | Value | ||||
El Paso Electric Company (a) (o) | 160,000 | $ | 2,136,000 | ||
SEMCO Energy Inc. | 10,000 | 49,000 | |||
2,976,700 | |||||
Entertainment & Leisure — 4.27% | |||||
Churchill Downs Inc. | 57,000 | 2,063,457 | |||
Dover Downs Gaming & Entertainment Inc. (o) | 75,000 | 709,500 | |||
Dover Motorsports Inc. | 120,000 | 420,000 | |||
E.W. Scripps Company (Class A) | 20,000 | 1,882,800 | |||
Gaylord Entertainment | 235,000 | 7,014,750 | |||
K2 Inc. (a) (o) | 35,000 | 532,350 | |||
Magna Entertainment Corporation (Class A) (a) (o) | 80,000 | 405,600 | |||
Metro Goldwyn Mayer Inc. (a) | 25,000 | 427,250 | |||
Sinclair Broadcast Group Inc. (a) (o) | 150,000 | 2,238,000 | |||
Six Flags Inc. (a) (o) | 150,000 | 1,128,000 | |||
Thor Industries Inc. (o) | 2,000 | 112,440 | |||
16,934,147 | |||||
Finance — 0.95% | |||||
BKF Capital Group Inc. (a) | 44,000 | 1,085,920 | |||
Interactive Data Corporation (a) | 140,000 | 2,318,400 | |||
SWS Group Inc. | 20,000 | 356,000 | |||
3,760,320 | |||||
Food, Beverages & Tobacco — 6.14% | |||||
Boston Beer Inc. (Class A) (a) (o) | 34,000 | 616,760 | |||
Corn Products International Inc. | 80,000 | 2,756,000 | |||
Del Monte Foods Company (a) | 61,000 | 634,400 | |||
Flowers Foods Inc. | 185,000 | 4,773,000 | |||
Hain Celestial Group Inc. (a) | 12,000 | 278,520 | |||
Ingles Markets Inc. (Class A) (o) | 140,000 | 1,437,800 | |||
John B. Sanfilippo & Son Inc. (a) (o) | 2,000 | 102,080 | |||
PepsiAmericas Inc. | 148,000 | 2,533,760 | |||
Ralcorp Holdings Inc. (a) | 70,000 | 2,195,200 | |||
Robert Mondavi Corporation | 45,000 | 1,747,800 | |||
Sensient Technologies Corporation | 120,000 | 2,372,400 | |||
Tootsie Roll Industries Inc. | 107,120 | 3,856,320 | |||
Weis Markets Inc. | 29,000 | 1,052,700 | |||
24,356,740 | |||||
Gaming — 0.24% | |||||
Lakes Entertainment Inc. (a) (o) | 60,000 | 969,000 | |||
Health Care — 0.02% | |||||
Viasys Healthcare Inc. (a) | 3,500 | 72,100 | |||
Hotels & Restaurants — 2.49% | |||||
Aztar Corporation (a) (o) | 185,000 | 4,162,500 | |||
Boca Resorts Inc. (a) | 145,000 | 2,169,200 | |||
Extended Stay America Inc. | 6,000 | 86,880 |
ENTERPRISE Accumulation Trust
4
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Louisiana Quinta Corporation (a) | 130,000 | $ | 833,300 | ||
Park Place Entertainment | 30,000 | 324,900 | |||
The Steak n Shake Company (a) (o) | 50,000 | 892,500 | |||
Triarc Companies Inc. (Class A) (o) | 40,000 | 472,800 | |||
Triarc Companies Inc. (Class B) (o) | 70,000 | 754,600 | |||
Trump Hotels & Casino Resorts | 75,000 | 162,000 | |||
Wyndham International Inc. (a) | 30,000 | 20,100 | |||
9,878,780 | |||||
Insurance — 2.99% | |||||
Argonaut Group Inc. | 110,000 | 1,709,400 | |||
Danielson Holding | 75,000 | 218,250 | |||
Liberty Corporation | 142,000 | 6,416,980 | |||
Midland Company | 150,000 | 3,543,000 | |||
11,887,630 | |||||
Life Insurance — 0.01% | |||||
The Phoenix Companies Inc. (o) | 3,500 | 42,140 | |||
Machinery — 4.47% | |||||
AGCO Corporation (a) | 15,000 | 302,100 | |||
Baldwin Technology Company Inc. (Class A) (a) | 214,500 | 493,350 | |||
Fairchild Corporation (Class A) (a) | 220,000 | 1,108,800 | |||
Flowserve Corporation (a) | 77,000 | 1,607,760 | |||
Franklin Electric Company Inc. | 37,000 | 2,238,130 | |||
IDEX Corporation | 71,000 | 2,952,890 | |||
Katy Industries Inc. (a) | 160,000 | 913,600 | |||
Paxar Corporation (a) (o) | 121,100 | 1,622,740 | |||
Standex International Corporation | 55,000 | 1,540,000 | |||
Tennant Company | 36,000 | 1,558,800 | |||
The Gorman-Rupp Company | 20,000 | 528,000 | |||
Watts Industries Inc. (Class A) | 130,000 | 2,886,000 | |||
17,752,170 | |||||
Manufacturing — 11.48% | |||||
Acuity Brands Inc. | 50,000 | 1,290,000 | |||
Aviall Inc. (a) | 120,000 | 1,861,200 | |||
Barnes Group Inc. | 48,000 | 1,550,880 | |||
Belden Inc. | 95,000 | 2,003,550 | |||
Crane Company | 100,000 | 3,074,000 | |||
Cuno Inc. (a) | 62,000 | 2,791,860 | |||
Energizer Holdings Inc. (a) | 73,000 | 2,741,880 | |||
Esco Technologies Inc. (a) | 1,500 | 65,475 | |||
Fedders Corporation (a) (Rts.) | 665,000 | 39,900 | |||
Fedders Corporation | 665,000 | 4,788,000 | |||
Gentek Inc. (a) (d) | 15,000 | — | |||
Gerber Scientific Inc. (a) (o) | 30,000 | 238,800 | |||
GP Strategies Corporation (a) | 12,000 | 96,000 | |||
Graco Inc. | 92,000 | 3,689,200 | |||
Graftech International Ltd. (a) | 95,000 | 1,282,500 | |||
Industrial Distribution Group | 75,000 | 417,000 | |||
MagneTek Inc. (a) (o) | 70,000 | 461,300 |
Number of Shares | Value | ||||
Material Sciences Corporation (a) (o) | 200,000 | $ | 2,022,000 | ||
Mathews International Corporation (o) | 10,000 | 295,900 | |||
Myers Industries Inc. | 149,500 | 1,811,940 | |||
Oil-Dri Corporation of America (f) | 251,100 | 3,995,001 | |||
Park Ohio Holdings | 190,000 | 1,406,000 | |||
Precision Castparts Corporation | 127,000 | 5,767,068 | |||
Roper Industries Inc. | 44,000 | 2,167,440 | |||
Strattec Security Corporation (a) | 28,000 | 1,705,480 | |||
45,562,374 | |||||
Media — 2.36% | |||||
Gemstar-TV Guide International Inc. (a) | 100,000 | 505,000 | |||
Media General Inc. (Class A) | 136,000 | 8,853,600 | |||
9,358,600 | |||||
Medical Instruments — 0.93% | |||||
Exactech Inc. (a) (o) | 10,700 | 157,825 | |||
ICU Medical Inc. (a) (o) | 2,000 | 68,560 | |||
INAMED Corporation (a) | 10,500 | 504,630 | |||
Interpore International (a) (o) | 6,000 | 78,000 | |||
Sybron Dental Specialties (a) | 100,000 | 2,810,000 | |||
Young Innovations (o) | 1,500 | 54,000 | |||
3,673,015 | |||||
Medical Services — 0.53% | |||||
CIRCOR International Inc. (o) | 60,000 | 1,446,000 | |||
Inverness Medical Innovations | 31,000 | 675,180 | |||
2,121,180 | |||||
Metals & Mining — 0.03% | |||||
WHX Corporation (a) (o) | 44,000 | 117,480 | |||
Multi-Line Insurance — 0.43% | |||||
Alleghany Corporation (a) | 7,640 | 1,699,900 | |||
Neutraceuticals — 0.39% | |||||
Weider Nutrition International | 350,000 | 1,557,500 | |||
Oil Services — 0.09% | |||||
RPC Inc. (o) | 25,000 | 274,750 | |||
W-H Energy Services Inc. (a) (o) | 5,000 | 81,000 | |||
355,750 | |||||
Paper Products — 1.37% | |||||
Boise Cascade Corporation | 46,084 | 1,514,311 | |||
Greif Brothers Corporation | 90,000 | 3,195,900 | |||
Schweitzer Mauduit International Inc. | 25,000 | 744,500 | |||
5,454,711 | |||||
Pharmaceuticals — 0.00% | |||||
Twinlab Corporation (a) | 160,000 | 3,200 |
ENTERPRISE Accumulation Trust
5
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Printing & Publishing — 6.22% | |||||
A.H. Belo Corporation (Class A) | 105,000 | $ | 2,975,700 | ||
Journal Register Company (a) | 100,000 | 2,070,000 | |||
Lee Enterprises Inc. | 62,000 | 2,706,300 | |||
McClatchy Company (Class A) | 97,000 | 6,673,600 | |||
Meredith Corporation | 55,000 | 2,684,550 | |||
Penton Media Inc. (a) (o) | 70,000 | 95,200 | |||
Pulitzer Inc. | 85,000 | 4,590,000 | |||
Thomas Nelson Inc. | 60,000 | 1,159,800 | |||
Topps Company Inc. | 170,000 | 1,744,200 | |||
24,699,350 | |||||
Property-Casualty Insurance — 0.10% | |||||
CNA Surety Corporation | 40,400 | 384,204 | |||
Publishing — 0.26% | |||||
PRIMEDIA Inc. (a) (o) | 360,000 | 1,018,800 | |||
Real Estate — 0.40% | |||||
Griffin Land & Nurseries Inc. (a) | 112,000 | 1,591,632 | |||
Retail — 2.32% | |||||
Big 5 Sporting Goods | 5,000 | 104,750 | |||
Blockbuster Inc. (Class A) (o) | 3,000 | 53,850 | |||
Burlington Coat Factory Warehouse Corporation (o) | 93,000 | 1,967,880 | |||
Neiman Marcus Group | 140,000 | 7,000,000 | |||
School Specialty Inc. (a) (o) | 2,000 | 68,020 | |||
9,194,500 | |||||
Telecommunications — 2.60% | |||||
Andrew Corporation (a) (o) | 60,000 | 690,600 | |||
Atlantic Tele-Network Inc. | 10,000 | 280,500 | |||
ATX Communications Inc. (a) | 30,000 | 6,600 | |||
Cincinnati Bell Inc. (a) | 245,000 | 1,237,250 | |||
Citizens Communications | 220,000 | 2,732,400 | |||
Commonwealth Telephone Enterprises Inc. (a) (o) | 73,378 | 2,770,020 | |||
Communications Systems Inc. (a) | 78,500 | 628,785 | |||
D&E Communications Inc. (o) | 49,000 | 710,990 | |||
Nextel Partners Inc. (a) (o) | 50,000 | 672,500 | |||
Plantronics Inc. (a) | 5,000 | 163,250 | |||
Rural Celluar Corporation (a) (o) | 55,000 | 437,250 | |||
10,330,145 | |||||
Transportation — 1.35% | |||||
GATX Corporation | 165,000 | 4,616,700 | |||
Oshkosh Truck Corporation | 6,000 | 306,180 | |||
TransPro Inc. (a) (o) | 105,000 | 439,950 | |||
5,362,830 | |||||
Travel/Entertainment/Leisure — 0.03% | |||||
Bowlin Travel Centers Inc. (a) | 70,000 | 140,000 |
Number of Shares | Value | ||||
Utilities — 2.08% | |||||
AGL Resources Inc. | 19,000 | $ | 552,900 | ||
Allegheny Energy Inc. (o) | 30,000 | 382,800 | |||
CH Energy Group Inc. (o) | 46,000 | 2,157,400 | |||
Duquesne Light Holdings Inc. (o) | 130,000 | 2,384,200 | |||
ONEOK Inc. | 40,000 | 883,200 | |||
Weststar Energy Inc. (o) | 93,000 | 1,883,250 | |||
8,243,750 | |||||
Waste Management — 1.17% | |||||
Allied Waste Industries Inc. (a) (o) | 150,000 | 2,082,000 | |||
Republic Services Inc. | 100,000 | 2,563,000 | |||
4,645,000 | |||||
Wireless Communications — 1.63% | |||||
Centennial Communications Corporation (a) | 60,000 | 315,600 | |||
Dobson Communications Corporation (a) (o) | 5,000 | 32,850 | |||
Nextel Communications Inc. | 30,000 | 841,800 | |||
Price Communications | 160,000 | 2,196,800 | |||
United States Cellular | 30,000 | 1,065,000 | |||
Western Wireless Corporation | 110,000 | 2,019,600 | |||
6,471,650 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $287,747,533) | 375,652,402 | ||||
Foreign Stocks — 2.03% | |||||
Aerospace — 0.04% | |||||
Embraer Empresa Brasileira de Aeronautica (ADR) (o) | 4,000 | 140,120 | |||
Business Services — 0.06% | |||||
MDC Partners Inc. (Class A) (a) | 20,000 | 227,200 | |||
Cable — 0.10% | |||||
Rogers Communications Inc. | 25,000 | 412,500 | |||
Hotels & Restaurants — 0.34% | |||||
Kerzner International Ltd. (a) | 35,000 | 1,363,600 | |||
Manufacturing — 0.04% | |||||
Denison International (ADR) (a) | 6,500 | 155,350 | |||
Medical Instruments — 0.06% | |||||
Orthofix International (o) | 5,000 | 244,900 | |||
Metals & Mining — 0.26% | |||||
Barrick Gold Corporation | 35,000 | 794,850 | |||
Kinross Gold Corporation | 28,167 | 225,054 | |||
1,019,904 |
ENTERPRISE Accumulation Trust
6
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares, Units or Principal Amount | Value | |||||
Telecommunications — 0.54% | ||||||
Vimpel-Communications | 29,000 | $ | 2,131,500 | |||
Wireless Communications — 0.59% | ||||||
Rogers Wireless Communications (Class B) (a) (o) | 110,000 | 2,354,000 | ||||
Total Foreign Stocks | ||||||
(Identified cost $4,728,540) | 8,049,074 | |||||
Discount Notes — 1.26% | ||||||
U.S. Treasury Bill | $ | 5,000,000 | 4,989,967 | |||
Total Discount Notes | ||||||
(Identified cost $4,989,967) | 4,989,967 | |||||
Other Investments — 10.80% | ||||||
Securities Lending Quality | 42,874,004 | 42,874,004 | ||||
Total Other Investments | ||||||
(Identified cost $42,874,004) | 42,874,004 | |||||
Repurchase Agreement — 2.12% | ||||||
State Street Bank & Trust Repurchase Agreement, 0.70% due 01/02/04 | $ | 8,418,000 | 8,418,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $8,418,000) | 8,418,000 | |||||
Value | ||||||
Total Investments | ||||||
(Identified cost $348,758,044) | $ | 439,983,447 | ||||
Other Assets Less Liabilities — (10.85)% | (43,069,302 | ) | ||||
Net Assets — 100% | $ | 396,914,145 | ||||
(a) | Non-income producing security. |
(d) | Security is fair valued at December 31, 2003. |
(e) | The rate shown is current the effective yield. |
(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 at December 31, 2003 was $4,583,001. |
(g) | Restricted securities held at December 31, 2003 were as follows: |
Description | Date of Acquisition | Number of Units | Unit Cost | Fair Value per Unit | Cost | Value | Percent of Net Assets | |||||||||||
Noel Group Liquidating Trust Units | 10/08/98 | 135,000 | $ | 0.81 | $ | 0.00 | 109,688 | $ | 0 | 0.00 | % |
(m) | Illiquid security. |
(o) | Security, or portion thereof, out on loan at December 31, 2003. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
(ADR) | American Depository Receipt. |
(Rts) | The Portfolio is entitled to purchase one new share of Fedders Corporation Cumulative Preferred Stock (Class A) for every 20 rights held and $23.70 per share through January 16, 2004. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Small Company Value Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $41,212,342 (Note 5) | $ | 439,983,447 | ||
Cash | 289 | |||
Investment income receivable | 308,240 | |||
Receivable for fund shares sold | 9,486 | |||
Receivable for investments sold | 54,183 | |||
Other assets | 17,677 | |||
Total assets | 440,373,322 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 400,497 | |||
Payable upon return of securities loaned (Note 5) | 42,874,004 | |||
Shareholder servicing fees payable | 98,982 | |||
Accrued expenses and other liabilities | 85,694 | |||
Total liabilities | 43,459,177 | |||
Net assets | $ | 396,914,145 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 309,455,467 | ||
Undistributed (accumulated) net investment income (loss) | 166,808 | |||
Undistributed (accumulated) net realized gain (loss) | (3,933,540 | ) | ||
Unrealized appreciation (depreciation) | 91,225,410 | |||
Net assets | $ | 396,914,145 | ||
Shares outstanding | 16,843,687 | |||
Net asset value per share | $23.56 | |||
Investments at cost | $ | 348,758,044 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Enterprise Small Company Value Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends (net of foreign taxes withheld of $771) | $ | 3,526,160 | (1) | |
Interest | 44,669 | |||
Securities lending income | 49,568 | |||
Total investment income | 3,620,397 | |||
Expenses: | ||||
Investment advisory fees | 2,637,120 | |||
Shareholder servicing fees | 700,981 | |||
Audit and legal fees | 89,961 | |||
Custodian and fund accounting fees | 88,372 | |||
Reports to shareholders | 27,354 | |||
Trustees’ fees | 12,661 | |||
Other expenses | 16,627 | |||
Total expenses | 3,573,076 | |||
Net investment income (loss) | 47,321 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 4,633,996 | |||
Net change in unrealized gain (loss) on investments | 103,903,308 | |||
Net realized and unrealized gain (loss) | 108,537,304 | |||
Net increase (decrease) in net assets resulting from operations | $ | 108,584,625 | ||
(1) | Includes $93,690 of income from an affiliated company. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Enterprise Small Company Value Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 47,321 | $ | 481,803 | ||||
Net realized gain (loss) | 4,633,996 | (4,562,741 | ) | |||||
Net change in unrealized gain (loss) | 103,903,308 | (30,907,526 | ) | |||||
Increase (decrease) in net assets resulting from operations | 108,584,625 | (34,988,464 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (347,947 | ) | (1,249,304 | ) | ||||
Net realized gains | — | (9,439,515 | ) | |||||
Total distributions to shareholders | (347,947 | ) | (10,688,819 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 31,257,317 | 62,749,371 | ||||||
Reinvestment of distributions | 347,947 | 10,688,819 | ||||||
Shares redeemed | (49,372,332 | ) | (80,797,628 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (17,767,068 | ) | (7,359,438 | ) | ||||
Total increase (decrease) in net assets | 90,469,610 | (53,036,721 | ) | |||||
Net assets: | ||||||||
Beginning of period | 306,444,535 | 359,481,256 | ||||||
End of period | $ | 396,914,145 | $ | 306,444,535 | ||||
Capital share activity: | ||||||||
Shares issued | 1,616,741 | 3,205,054 | ||||||
Shares issued in reinvestment of distributions | 16,506 | 648,200 | ||||||
Shares redeemed | (2,651,871 | ) | (4,340,724 | ) | ||||
Net increase (decrease) | (1,018,624 | ) | (487,470 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | 166,808 | $ | 455,523 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Enterprise Small Company Value Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the years ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 17.16 | $ | 19.59 | $ | 26.19 | $ | 31.45 | $ | 27.36 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | 0.00 | D | 0.03 | 0.08 | 0.07 | 0.04 | ||||||||||||||
Net realized and unrealized gain (loss) on investments | 6.42 | (1.87 | ) | 0.21 | 0.71 | 6.27 | ||||||||||||||
Total from investment operations | 6.42 | (1.84 | ) | 0.29 | 0.78 | 6.31 | ||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | (0.07 | ) | (0.07 | ) | (0.05 | ) | (0.16 | ) | ||||||||||
Distributions from capital gains | — | (0.52 | ) | (6.82 | ) | (5.99 | ) | (2.06 | ) | |||||||||||
Total distributions | (0.02 | ) | (0.59 | ) | (6.89 | ) | (6.04 | ) | (2.22 | ) | ||||||||||
Net asset value, end of period | $ | 23.56 | $ | 17.16 | $ | 19.59 | $ | 26.19 | $ | 31.45 | ||||||||||
Total return | 37.43 | % | (9.25 | )% | 5.25 | % | 2.52 | % | 24.02 | % | ||||||||||
Net assets end of period (in thousands) | $ | 396,914 | $ | 306,445 | $ | 359,481 | $ | 351,270 | $ | 455,563 | ||||||||||
Ratio of expenses to average net assets | 1.08 | % | 0.92 | % | 0.90 | % | 0.89 | % | 0.84 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | 0.01 | % | 0.14 | % | 0.35 | % | 0.23 | % | 0.12 | % | ||||||||||
Portfolio turnover | 8 | % | 10 | % | 29 | % | 41 | % | 23 | % |
C | Based on average shares outstanding. |
D | Less than $0.01 per share. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements
December 31, 2003
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 in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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 may not be able to sell at the price used by the Portfolio. 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
ENTERPRISE Accumulation Trust
12
Notes to Financial Statements — (Continued)
December 31, 2003
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 are denoted as such in the Portfolio of Investments.
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.
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 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 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 year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $700,981 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%.
For the year ended December 31, 2003, the Portfolio paid brokerage commissions of $119,220 to affiliates of the adviser and subadviser.
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $25,624,196 | $55,239,316 |
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
ENTERPRISE Accumulation Trust
13
Notes to Financial Statements — (Continued)
December 31, 2003
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank and Trust.
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. There were no loans outstanding at any time during the year ended December 31, 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. At times, these differences are primarily due to differing treatments for capital loss carryforwards utilized, net operating losses, losses deferred due to wash sales and investments in certain types of partnerships.
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.
At December 31, 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 | |||
$352,418,560 | $112,527,045 | $24,962,159 | $87,564,886 |
The tax character of distributions paid was as follows:
Ordinary | Long-Term | Total | ||||
2003 | $ 347,947 | — | $ 347,947 | |||
2002 | 3,923,859 | $6,764,960 | 10,688,819 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed | Undistributed Gain | Capital Loss | Expiration | |||
— | — | $106,218 | 2010 |
8. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
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Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
Small Company Value Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Small Company Value Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
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Tax Reporting Information (Unaudited)
The portfolio had 100% of its 2003 ordinary income distributions qualify for the corporate dividends received deduction (“DRD”) but none qualify as qualifying dividend income (“QDI”).
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16
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROFBIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1919) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EGF, EAT and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EAT, EGF and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EAT, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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.
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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 $30.5 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 maximum capital appreciation.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 32.98%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 28.69%. The Portfolio outperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 26.96%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The S&P 500 Index is an unmanaged broad-based index that includes the common stock of 500 companies that tend to be important leaders in important industries within the U.S. economy. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Large-Cap Growth Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Large-Cap Growth Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index. The performance period for the S&P 500 Index and the Lipper Large-Cap Growth Funds Index is 11/30/98 to 12/31/03.
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Enterprise Capital Appreciation Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
After a three-year period of negative equity returns, it seems appropriate to pause briefly and salute the results achieved by stocks during 2003. As reported by the New York Times (January 2, 2004) it “was the year that almost every stock went up…” U.S. large capitalization companies, as measured by the performance of the S&P 500 Index, rose by about 12% in the fourth quarter, and by nearly 29% for the full year. The Times also noted that of the 499 stocks in the index that traded for the entire year (periodically Standard & Poor’s Corporation, which maintains the S&P 500 Index, will change the Index’s membership), 92% had a positive return. Every economic sector in the S&P 500 Index had a positive return, something that last occurred in 1997. That was a testament to the breadth of the strength that prevailed in U.S. equity markets last year.
What strategies affected Portfolio performance during the period?
Positive factors impacting performance during 2003 included health care investments, particularly those in the equipment and services industry, such as UnitedHealth Group, Inc., Zimmer Holdings, Inc., Boston Scientific Corporation and Quest Diagnostics, Inc. Consumer durables, particularly those in the homebuilding industry such as Lennar Corporation, MDC Holdings, Inc. benefited performance. In addition, select holdings in the financials sector, including Citigroup, Inc., Merrill Lynch & Co., Inc. and Fannie Mae and select information technology positions, including Intel Corporation, Cisco Systems, Inc. and Qualcomm, Inc. added to performance.
Factors that negatively impacted performance included certain holdings in the financials sector, including SLM Corporation and Countrywide Financial, airline company JetBlue Airways, Echostar Communications, a media company, consumer Staples company Wal-Mart Stores and an over-weighted posture in the industrials sector and an under-weighted posture in the materials sector.
What changes were made to the Portfolio over the period?
During calendar year 2003, positions were increased in sectors such as technology, industrials and health care. The increase in technology-related companies encompassed semiconductors, software and services and hardware and equipment companies. Holdings in the industrials sector were increased primarily in two areas: capital goods and transportation. Health care-related investments were expanded primarily through investments initiated in the pharmaceutical/biotechnology industry. Positions in sectors such as consumer discretionary (e.g., media and retailing) were reduced somewhat during the year.
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 Capital Appreciation Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 95.36% | |||||
Aerospace — 1.28% | |||||
Lockheed Martin Corporation | 13,650 | $ | 701,611 | ||
Biotechnology — 7.46% | |||||
Amgen Inc. (a) | 17,626 | 1,089,287 | |||
Genentech Inc. (a) | 31,908 | 2,985,631 | |||
4,074,918 | |||||
Building & Construction — 2.42% | |||||
Lennar Corporation (Class A) | 12,134 | 1,164,864 | |||
Lennar Corporation (Class B) | 1,708 | 156,111 | |||
1,320,975 | |||||
Computer Hardware — 6.17% | |||||
Cisco Systems Inc. (a) | 98,869 | 2,401,528 | |||
EMC Corporation (a) | 75,178 | 971,300 | |||
3,372,828 | |||||
Computer Services — 2.87% | |||||
Dell Inc. (a) | 46,242 | 1,570,378 | |||
Computer Software — 2.71% | |||||
Electronic Arts Inc. (a) | 30,926 | 1,477,644 | |||
Consumer Durables — 0.45% | |||||
Harley-Davidson Inc. | 5,130 | 243,829 | |||
Consumer Products — 3.15% | |||||
Nike, Inc. (Class B) | 4,505 | 308,412 | |||
Procter & Gamble Company | 14,163 | 1,414,601 | |||
1,723,013 | |||||
Electrical Equipment — 2.17% | |||||
General Electric Company | 38,176 | 1,182,693 | |||
Entertainment & Leisure — 0.47% | |||||
Walt Disney Company | 10,982 | 256,210 | |||
Finance — 4.84% | |||||
SLM Corporation | 70,171 | 2,644,043 | |||
Food, Beverages & Tobacco — 1.00% | |||||
Anheuser-Busch Companies Inc. | 10,405 | 548,135 | |||
Health Care — 5.04% | |||||
UnitedHealth Group Inc. | 47,294 | 2,751,565 | |||
Hotels & Restaurants — 4.00% | |||||
Four Season Hotels Inc. (o) | 31,874 | 1,630,355 | |||
Starbucks Corporation (a) | 16,860 | 557,392 | |||
2,187,747 | |||||
Machinery — 4.11% | |||||
Caterpillar Inc. | 27,059 | 2,246,438 | |||
Medical Instruments — 6.57% | |||||
Boston Scientific Corporation (a) | 50,512 | 1,856,821 | |||
Zimmer Holdings Inc. (a) | 24,597 | 1,731,629 | |||
3,588,450 |
Number of Shares | Value | ||||
Medical Services — 1.32% | |||||
Quest Diagnostics Inc. (a) | 9,875 | $ | 721,961 | ||
Misc. Financial Services — 11.73% | |||||
Citigroup Inc. | 55,716 | 2,704,455 | |||
Countrywide Financial Corporation | 8,044 | 610,137 | |||
Fannie Mae | 15,862 | 1,190,602 | |||
Merrill Lynch & Company Inc. | 32,480 | 1,904,952 | |||
6,410,146 | |||||
Pharmaceuticals — 4.11% | |||||
Caremark Rx Inc. (a) | 53,897 | 1,365,211 | |||
Eli Lilly & Company | 12,499 | 879,055 | |||
2,244,266 | |||||
Real Estate — 1.52% | |||||
M.D.C. Holdings Inc. | 12,858 | 829,341 | |||
Retail — 6.58% | |||||
Lowe’s Companies Inc. | 21,460 | 1,188,669 | |||
Tiffany & Company | 53,267 | 2,407,669 | |||
3,596,338 | |||||
Semiconductors — 7.50% | |||||
Intel Corporation | 104,076 | 3,351,247 | |||
Maxim Integrated Products Inc. | 15,030 | 748,494 | |||
4,099,741 | |||||
Telecommunications — 2.58% | |||||
QUALCOMM Inc. | 26,126 | 1,408,975 | |||
Transportation — 3.13% | |||||
FedEx Corporation | 25,358 | 1,711,665 | |||
Wireless Communications — 2.18% | |||||
Nextel Communications Inc. (Class A) (a) | 42,443 | 1,190,951 | |||
Total Domestic Common Stocks | |||||
(Identified cost $39,011,772) | 52,103,861 | ||||
Foreign Stocks — 3.32% | |||||
Automotive — 1.12% | |||||
Bayerische Motoren Werke (a) | 13,253 | 612,243 | |||
Manufacturing — 0.22% | |||||
Tyco International Ltd. | 4,500 | 119,250 | |||
Transportation — 1.98% | |||||
Ryanair Holdings (ADR) (a) (o) | 21,412 | 1,084,304 | |||
Total Foreign Stocks | |||||
(Identified cost $1,240,599) | 1,815,797 | ||||
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Enterprise Capital Appreciation Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Units or Principal Amount | Value | |||||
Other Investments — 2.41% | ||||||
Securities Lending Quality Trust (s) | 1,316,937 | $ | 1,316,937 | |||
Total Other Investments | ||||||
(Identified cost $1,316,937) | 1,316,937 | |||||
Repurchase Agreement — 1.44% | ||||||
State Street Bank & Trust | $ | 785,000 | 785,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $785,000) | 785,000 | |||||
Total Investments | ||||||
(Identified cost $42,354,308) | $ | 56,021,595 | ||||
Other Assets Less Liabilities — (2.53)% | (1,384,460) | |||||
Net Assets — 100% | $ | 54,637,135 | ||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at December 31, 2003. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
(ADR) | American Depository Receipt. |
See notes to financial statements.
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4
Enterprise Capital Appreciation Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $1,289,202 (Note 5) | $ | 56,021,595 | ||
Foreign currency at value (cost — $10,956) | 11,783 | |||
Cash | 592 | |||
Investment income receivable | 22,854 | |||
Other assets | 2,955 | |||
Total assets | 56,059,779 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 70,666 | |||
Payable upon return of securities loaned (Note 5) | 1,316,937 | |||
Shareholder servicing fees payable | 13,688 | |||
Unrealized depreciation on forward currency contracts | 8,777 | |||
Accrued expenses and other liabilities | 12,576 | |||
Total liabilities | 1,422,644 | |||
Net assets | $ | 54,637,135 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 68,099,557 | ||
Undistributed (accumulated) net investment income (loss) | — | |||
Undistributed (accumulated) net realized gain (loss) | (27,121,992 | ) | ||
Unrealized appreciation (depreciation) | 13,659,570 | |||
Net assets | $ | 54,637,135 | ||
Shares outstanding | 8,690,488 | |||
Net asset value per share | $6.29 | |||
Investments at cost | $ | 42,354,308 | ||
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends (net of foreign taxes withheld of $5,379) | $ | 350,658 | ||
Interest | 5,824 | |||
Securities lending income | 4,257 | |||
Total investment income | 360,739 | |||
Expenses: | ||||
Investment advisory fees | 357,970 | |||
Shareholder servicing fees | 101,298 | |||
Custodian and fund accounting fees | 20,047 | |||
Audit and legal fees | 12,443 | |||
Reports to shareholders | 4,550 | |||
Trustees’ fees | 1,808 | |||
Other expenses | 2,278 | |||
Total expenses | 500,394 | |||
Expenses reduced by expense offset arrangements | (17,856 | ) | ||
Total expenses, net of expense offset arrangements | 482,538 | |||
Net investment income (loss) | (121,799 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (146,694 | ) | ||
Net realized gain (loss) on foreign currency transactions | 558,948 | |||
Net change in unrealized gain (loss) on investments | 13,332,543 | |||
Net change in unrealized gain (loss) on foreign currency | 827 | |||
Net realized and unrealized gain (loss) | 13,745,624 | |||
Net increase (decrease) in net assets resulting from operations | $ | 13,623,825 | ||
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (121,799 | ) | $ | (78,910 | ) | ||
Net realized gain (loss) | 412,254 | (5,851,923 | ) | |||||
Net change in unrealized gain (loss) | 13,333,370 | (3,616,410 | ) | |||||
Increase (decrease) in net assets resulting from operations | 13,623,825 | (9,547,243 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 4,814,225 | 6,546,468 | ||||||
Shares redeemed | (7,414,686 | ) | (10,927,371 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (2,600,461 | ) | (4,380,903 | ) | ||||
Total increase (decrease) in net assets | 11,023,364 | (13,928,146 | ) | |||||
Net assets: | ||||||||
Beginning of period | 43,613,771 | 57,541,917 | ||||||
End of period | $ | 54,637,135 | $ | 43,613,771 | ||||
Capital share activity: | ||||||||
Shares issued | 875,125 | 1,168,694 | ||||||
Shares redeemed | (1,412,643 | ) | (2,045,954 | ) | ||||
Net increase (decrease) | (537,518 | ) | (877,260 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | — | $ | — | ||||
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the Years Ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 4.73 | $ | 5.69 | $ | 7.09 | $ | 8.65 | $ | 5.57 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | (0.01 | ) | (0.01 | ) | 0.00 | D | 0.05 | (0.03 | ) | |||||||||||
Net realized and unrealized gain (loss) on investments | 1.57 | (0.95 | ) | (1.36 | ) | (1.20 | ) | 3.11 | ||||||||||||
Total from investment operations | 1.56 | (0.96 | ) | (1.36 | ) | (1.15 | ) | 3.08 | ||||||||||||
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 | $ | 6.29 | $ | 4.73 | $ | 5.69 | $ | 7.09 | $ | 8.65 | ||||||||||
Total return | 32.98 | % | (16.87 | )% | (19.11 | )% | (13.82 | )% | 55.30 | % | ||||||||||
Net assets end of period (in thousands) | $ | 54,637 | $ | 43,614 | $ | 57,542 | $ | 72,982 | $ | 33,129 | ||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 1.05 | % | 0.88 | % | 0.87 | % | 0.86 | % | 1.16 | % | ||||||||||
Ratio of expenses to average net assets | 1.01 | % | 0.87 | % | 0.86 | % | 0.86 | % | 1.16 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | (0.26 | )% | (0.15 | )% | (0.04 | )% | 0.62 | % | (0.41 | )% | ||||||||||
Portfolio turnover | 75 | % | 109 | % | 115 | % | 123 | % | 247 | % |
C | Based on average shares outstanding. |
D | Less than $0.01 per share |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Capital Appreciation Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Capital Appreciation Portfolio in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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.
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, U.S. Government or Agency 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
9
Notes to Financial Statements — (Continued)
December 31, 2003
Illiquid Securities — At times, the Portfolio may hold, up to its SEC or prospectus defined limitations, illiquid securities that it may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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.
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 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 to each Portfolio based on average net assets. The Portfolio may direct certain security trades to brokers who may pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. This amount is reported in the Statement of Operations.
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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 0.75%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $101,298 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%.
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
December 31, 2003
4. Investment Transactions
Outstanding forward foreign currency contracts at December 31, 2003 were as follows:
Settlement Date | Net Unrealized (Depreciation) | |||||||||||
Receive | Deliver | |||||||||||
03/17/04 | USD | 298,915 | EURO | 241,753 | $ | (4,340 | ) | |||||
03/17/04 | USD | 269,677 | EURO | 218,521 | (4,437 | ) | ||||||
$ | (8,777 | ) | ||||||||||
For the year ended December 31, 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 | |||
— | — | $35,767,368 | $39,122,980 |
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for foreign currency transactions, capital loss carryforwards utilized, net operating losses, losses deferred due to wash sales and distributions from real estate investment trusts.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements — (Continued)
December 31, 2003
At December 31, 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 | |||||||
$ | 42,597,221 | $ | 13,672,117 | $ | 247,743 | $ | 13,424,374 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary | Undistributed Gain | Capital Loss Carryforward | Expiration | ||||
— | — | $ | 26,887,856 | 2008-2010 |
8. Subsequent Event
On January 15, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
12
Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
Capital Appreciation Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Capital Appreciation Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
13
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EAT, EGF and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EAT, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
14
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.
ENTERPRISE Accumulation Trust
15
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 $394 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 total return through capital appreciation with income as a secondary consideration.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
The Portfolio commenced operations on May 1, 2003. For the period ended December 31, 2003, the Portfolio returned 23.27%. The Portfolio underperformed its benchmark, the Russell 1000 Value Index, which returned 25.62%. The Portfolio underperformed its peer group, the Lipper Large-Cap Value Funds Index, which returned 24.09%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The Russell 1000 Value Index is an unmanaged index of the stocks included in the Russell 2000 Index with lower price-to-book ratios and lower forecasted growth values. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Large-Cap Value Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Large-Cap Value Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index. The performance period for the Russell 1000 Value Index and the Lipper Large-Cap Value Funds Index is 4/30/03 to 12/31/03.
ENTERPRISE Accumulation Trust
1
Enterprise Deep Value Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
Anxiety and stalling U.S. and global economies drove the market lower during the first three months of 2003. However, when it became apparent that the Iraqi war might be shorter than some of the forecasts, the market rallied toward the end of March. This rally continued through the next three months. As the geopolitical tensions abated, first quarter earnings came in better than expected and investors anticipated a turn in the economy. After a strong second quarter, the U.S. equity markets treaded water during the third quarter, as investor enthusiasm cooled in the face of weaker than expected job growth and a weaker U.S. dollar. The 2003 rebound in the U.S. equity market was punctuated by a strong fourth quarter, with investors focusing on a strengthening economy, better earnings and a Fed that was committed to keeping interest rates low. Coupled with this rebounding stock market, however, was the increasing reward that was attributed to risk during 2003. The overarching theme of the rebounding stock market during the latter half of the year was the out-performance of more speculative stocks over companies with strong balance sheets and dependable earnings.
What strategies affected Portfolio performance during the period?
During the year, relative performance was positively impacted by stock selection in the health care, industrials and information technology sectors. Within health care, strong performing holdings included Pfizer, Inc. and Beckman Coulter, Inc. In the industrials sector, the Portfolio benefited from their leverage to global growth, the cyclical upturn in the sector and commodity price inflation. Strong holdings in this sector for the period were Rockwell Automation, Inc., Caterpillar, Inc. and Tyco International Ltd. The strong semiconductor cycle positively impacted many of the Portfolio’s holdings in the information technology sector. Beneficiaries of these secular trends were Texas Instruments, Teradyne, Inc. and Applied Materials, Inc.
Relative performance was negatively impacted by weak stock selection in the financials and energy sectors. Weak performers in financials included Bank of America Corporation, Marsh & McLennan Companies, Inc. and Washington Mutual, Inc. In the case of Bank of America, the late fall announcement of its intention to acquire FleetBoston weighed on the stock. While initial investor reaction was negative due to execution risk, the Bank of America stock now sells at a discount valuation compared to the group, despite its strong overall position. Marsh & McLennan came under pressure due to an allegation of impropriety at its subsidiary Putnam Investments. Finally, growing concerns about the effect of rising interest rates on the continued strength of the mortgage business at Washington Mutual adversely affected performance for the period. Within the energy sector, GlobalSantaFe Corporation was the primary performance detractor. The stock suffered due to profit shortfalls emanating from higher costs, the Iraqi war and reduced demand for oilrigs.
What changes were made to the Portfolio over the period?
Wellington increased the Portfolio’s sector weights in the information technology and industrials sectors, while decreasing the sector weights in telecommunication services and financials. Names added to the Portfolio in these categories included Nokia Corporation, CSX, PPL Corporation, ChevronTexaco Corporation and Dominion Resources, Inc. During the final quarter of 2003, Wellington intensified its cyclical bet in the Portfolio, as economic news came in better than expected. The Portfolio added to positions in basic materials, like Alcoa, Inc. and Dupont (E.I.) de Nemours Company, and increased its position in auto manufacturer General Motors Corporation. The Portfolio built positions in long-cycle names like IBM Corporation, Morgan Stanley, and Baxter International. These purchases were funded by the sale of positions that had achieved their price targets, like Texas Instruments and Ashland. The Portfolio also trimmed some technology names that approached their price targets, like Teradyne, Inc. and Applied Materials, Inc. In anticipation of rising concerns over the mortgage business in 2004, the Portfolio also trimmed its position in Washington Mutual. Finally, the Portfolio trimmed shares of telecommunications company SBC Communications, Inc. and eliminated AT&T Corporation.
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.
ENTERPRISE Accumulation Trust
2
Enterprise Deep Value Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 89.00% | |||||
Automotive — 1.53% | |||||
AutoNation Inc. (a) | 500 | $ | 9,185 | ||
General Motors Corporation | 1,080 | 57,672 | |||
66,857 | |||||
Banking — 8.57% | |||||
Bank of America Corporation | 1,800 | 144,774 | |||
Bank One Corporation | 950 | 43,311 | |||
National City Corporation | 3,140 | 106,572 | |||
Wells Fargo & Company | 1,350 | 79,501 | |||
374,158 | |||||
Cable — 2.08% | |||||
Comcast Corporation (Class A) (a) | 2,910 | 91,025 | |||
Chemicals — 2.15% | |||||
Du Pont (E. I.) de Nemours & Company | 2,050 | 94,074 | |||
Computer Hardware — 5.21% | |||||
Hewlett-Packard Company | 4,570 | 104,973 | |||
International Business Machines Corporation | 1,320 | 122,337 | |||
227,310 | |||||
Consumer Products — 1.92% | |||||
Kimberly-Clark Corporation | 720 | 42,545 | |||
Nike, Inc. (Class B) | 600 | 41,076 | |||
83,621 | |||||
Crude Oil & Petroleum — 6.85% | |||||
ChevronTexaco Corporation | 950 | 82,070 | |||
Exxon Mobil Corporation | 5,290 | 216,890 | |||
298,960 | |||||
Electrical Equipment — 0.93% | |||||
Emerson Electric Company | 630 | 40,793 | |||
Electronics — 0.91% | |||||
Rockwell Automation Inc. | 1,110 | 39,516 | |||
Energy — 2.03% | |||||
Exelon Corporation | 920 | 61,051 | |||
Progress Energy Inc. | 610 | 27,609 | |||
88,660 | |||||
Finance — 0.95% | |||||
Goldman Sachs Group Inc. | 420 | 41,467 | |||
Food, Beverages & Tobacco — 3.41% | |||||
Coca-Cola Enterprises Inc. | 1,320 | 28,869 | |||
Kellogg Company | 1,990 | 75,779 | |||
PepsiCo Inc. | 950 | 44,289 | |||
148,937 |
Number of Shares | Value | ||||
Hotels & Restaurants — 1.95% | |||||
McDonald’s Corporation | 3,420 | $ | 84,919 | ||
Insurance — 0.19% | |||||
Marsh & McLennan Companies Inc. | 170 | 8,141 | |||
Machinery — 2.38% | |||||
Caterpillar Inc. | 1,250 | 103,775 | |||
Manufacturing — 0.96% | |||||
Illinois Tool Works Inc. | 500 | 41,955 | |||
Media — 2.48% | |||||
Time Warner Inc. (a) | 6,010 | 108,120 | |||
Medical Instruments — 1.52% | |||||
Beckman Coulter Inc. | 630 | 32,023 | |||
C.R. Bard Inc. | 420 | 34,125 | |||
66,148 | |||||
Medical Services — 1.43% | |||||
Baxter International Inc. | 2,050 | 62,566 | |||
Metals & Mining — 3.28% | |||||
Alcoa Inc. | 3,770 | 143,260 | |||
Misc. Financial Services — 7.57% | |||||
Citigroup Inc. | 4,260 | 206,781 | |||
Fannie Mae | 630 | 47,288 | |||
Morgan Stanley Dean Witter & Company | 1,320 | 76,388 | |||
330,457 | |||||
Multi-Line Insurance — 0.89% | |||||
Hartford Financial Services Group Inc. | 660 | 38,960 | |||
Oil Services — 2.08% | |||||
ConocoPhillips | 400 | 26,228 | |||
GlobalSantaFe Corporation | 2,600 | 64,558 | |||
90,786 | |||||
Paper & Forest Products — 2.27% | |||||
Weyerhaeuser Company | 1,550 | 99,200 | |||
Pharmaceuticals — 3.94% | |||||
Pfizer Inc. | 4,870 | 172,057 | |||
Property-Casualty Insurance — 2.99% | |||||
Chubb Corporation | 420 | 28,602 | |||
St. Paul Companies Inc. | 2,570 | 101,900 | |||
130,502 | |||||
Real Estate — 0.08% | |||||
Archstone Smith Trust | 130 | 3,637 | |||
Retail — 3.29% | |||||
CVS Corporation | 1,990 | 71,879 | |||
Dollar General Corporation | 3,410 | 71,576 | |||
143,455 |
ENTERPRISE Accumulation Trust
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Enterprise Deep Value Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Savings and Loan — 1.43% | |||||
Washington Mutual Inc. | 1,560 | $ | 62,587 | ||
Semiconductors — 3.70% | |||||
Applied Materials Inc. (a) | 3,520 | 79,024 | |||
Teradyne Inc. (a) | 3,250 | 82,712 | |||
161,736 | |||||
Telecommunications — 3.59% | |||||
BellSouth Corporation | 1,610 | 45,563 | |||
SBC Communications Inc. | 2,030 | 52,922 | |||
Verizon Communications Inc. | 1,660 | 58,233 | |||
156,718 | |||||
Transportation — 1.89% | |||||
CSX Corporation | 1,230 | 44,206 | |||
Southwest Airlines Company | 2,360 | 38,091 | |||
82,297 | |||||
Utilities — 1.88% | |||||
Dominion Resources Inc. | 660 | 42,128 | |||
National Fuel Gas Company | 640 | 15,642 | |||
PPL Corporation | 230 | 10,062 | |||
SCANA Corporation | 420 | 14,385 | |||
82,217 | |||||
Waste Management — 2.67% | |||||
Republic Services Inc. | 4,550 | 116,616 | |||
Total Domestic Common Stocks | |||||
(Identified cost $3,500,841) | 3,885,487 | ||||
Number of Shares | Value | ||||
Foreign Stocks — 7.88% | |||||
Insurance — 0.42% | |||||
ACE Ltd. | 440 | $ | 18,225 | ||
Manufacturing — 2.76% | |||||
Tyco International Ltd. | 4,550 | 120,575 | |||
Oil Services — 2.84% | |||||
Shell Transport & Trading Company (ADR) | 2,750 | 123,832 | |||
Wireless Communications — 1.86% | |||||
Nokia Corporation (Class A) (ADR) | 4,790 | 81,430 | |||
Total Foreign Stocks | |||||
(Identified cost $295,446) | 344,062 | ||||
Total Investments | |||||
(Identified cost $3,796,287) | $ | 4,229,549 | |||
Other Assets Less Liabilities — 3.12% | 136,222 | ||||
Net Assets — 100% | $ | 4,365,771 | |||
(a) | Non-income producing security. |
(ADR) | American Depository Receipt. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Deep Value Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | |||
Investments at value | $ | 4,229,549 | |
Cash | 77,845 | ||
Investment income receivable | 4,446 | ||
Receivable for fund shares sold | 37,085 | ||
Receivable for investments sold | 15,120 | ||
Due from investment adviser | 5,258 | ||
Other assets | 100 | ||
Total assets | 4,369,403 | ||
Liabilities: | |||
Payable for fund shares redeemed | 843 | ||
Shareholder servicing fees payable | 386 | ||
Distributions payable | 129 | ||
Accrued expenses and other liabilities | 2,274 | ||
Total liabilities | 3,632 | ||
Net assets | $ | 4,365,771 | |
Analysis of net assets: | |||
Paid-in capital | $ | 3,901,229 | |
Undistributed (accumulated) net investment income (loss) | — | ||
Undistributed (accumulated) net realized gain (loss) | 31,280 | ||
Unrealized appreciation (depreciation) | 433,262 | ||
Net assets | $ | 4,365,771 | |
Shares outstanding | 357,986 | ||
Net asset value per share | $12.20 | ||
Investments at cost | $ | 3,796,287 | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Deep Value Portfolio
STATEMENT OF OPERATIONS
For the Period May 1, 2003(1) to December 31, 2003 | ||||
Investment income: | ||||
Dividends (net of foreign taxes withheld of $43) | $ | 31,650 | ||
Interest | 323 | |||
Total investment income | 31,973 | |||
Expenses: | ||||
Custodian and fund accounting fees | 10,698 | |||
Investment advisory fees | 10,500 | |||
Shareholder servicing fees | 1,204 | |||
Audit and legal fees | 843 | |||
Reports to shareholders | 173 | |||
Trustees’ fees | 76 | |||
Other expenses | 228 | |||
Total expenses | 23,722 | |||
Expense reimbursement | (9,021 | ) | ||
Total expenses, net of reimbursement | 14,701 | |||
Net investment income (loss) | 17,272 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 57,104 | |||
Net change in unrealized gain (loss) on investments | 433,262 | |||
Net realized and unrealized gain (loss) | 490,366 | |||
Net increase (decrease) in net assets resulting from operations | $ | 507,638 | ||
(1) | Commencement of operations. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Deep Value Portfolio
STATEMENT OF CHANGES IN NET ASSETS
For the Period May 1, 2003 through December 31, 2003 | ||||
From operations: | ||||
Net investment income (loss) | $ | 17,272 | ||
Net realized gain (loss) | 57,104 | |||
Net change in unrealized gain (loss) | 433,262 | |||
Increase (decrease) in net assets resulting from operations | 507,638 | |||
Distributions to shareholders from: | ||||
Net investment income | (17,982 | ) | ||
Net realized gains | (25,114 | ) | ||
Total distributions to shareholders | (43,096 | ) | ||
From capital share transactions: | ||||
Shares sold | 5,088,555 | |||
Reinvestment of distributions | 14,066 | |||
Shares redeemed | (1,201,392 | ) | ||
Total increase (decrease) in net assets resulting from capital share transactions | 3,901,229 | |||
Total increase (decrease) in net assets | 4,365,771 | |||
Net assets: | ||||
Beginning of period | — | |||
End of period | $ | 4,365,771 | ||
Capital share activity: | ||||
Shares issued | 463,649 | |||
Shares issued in reinvestment of distributions | 1,179 | |||
Shares redeemed | (106,842 | ) | ||
Net increase (decrease) | 357,986 | |||
Undistributed (accumulated) net investment income (loss) | $ | — | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Deep Value Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTTHEPERIODISASFOLLOWS:
For the Period May 1, 2003 through December 31, 2003 | ||||
Net asset value, beginning of period | $ | 10.00 | ||
Income from investment operations: | ||||
Net investment income (loss)C | 0.07 | |||
Net realized and unrealized gain (loss) on investments | 2.25 | |||
Total from investment operations | 2.32 | |||
Less dividends and distributions: | ||||
Dividends from net investment income | (0.05 | ) | ||
Distributions from capital gains | (0.07 | ) | ||
Total distributions | (0.12 | ) | ||
Net asset value, end of period | $ | 12.20 | ||
Total return | 23.27 | %B | ||
Net assets end of period (in thousands) | $ | 4,366 | ||
Ratio of expenses to average net assets | 1.05 | %A | ||
Ratio of expenses to average net assets (excluding reimbursement) | 1.69 | %A | ||
Ratio of net investment income (loss) to average net assets | 1.23 | %A | ||
Portfolio turnover rate | 23 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Deep Value Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Deep Value Portfolio in the preparation of its financial statements:
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.
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, U.S. Government or Agency 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
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 0.75%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the period ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $1,204 for these services. ECM has contractually agreed to limit the Portfolio’s expense ratio to 1.05% through April 30, 2004.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $2,854,630 in the Portfolio at December 31, 2003.
4. Investment Transactions
For the period ended December 31, 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 | |||
— | — | $4,278,101 | $538,918 |
5. Borrowings
The Trust and another series of mutual funds 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 December 31, 2003.
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Notes to Financial Statements — (Continued)
December 31, 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. At times, these differences are primarily due to differing treatments for losses deferred due to wash sales.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||
$3,800,690 | $438,162 | $9,303 | $428,859 |
The tax character of distributions paid in 2003 was as follows:
Ordinary | Long-Term | Total | ||
$43,096 | — | $43,096 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Gain | Undistributed Long-Term Gain | Capital Loss Carryforward | ||
$35,683 | — | — |
7. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
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Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
Deep Value Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Deep Value Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the period May 1, 2003 (commencement of operations) through December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
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Tax Reporting Information (Unaudited)
The portfolio had 42% of its 2003 ordinary income distributions qualify for the corporate dividends received deduction (“DRD”) and 42% of the ordinary income distributions qualify as qualifying dividend income (“QDI”).
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TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EAT, EGF and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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 $89.6 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.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 52.94%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 28.69%. The Portfolio outperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 26.96%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The S&P 500 Index is an unmanaged broad-based index that includes the common stock of 500 companies that tend to be important leaders in important industries within the U.S. economy. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Large-Cap Growth Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Large-Cap Growth Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index.
ENTERPRISE Accumulation Trust
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Enterprise Equity Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
The 2003 market typified the classic bear market recovery. The rally was is in line with the typical recovery after a protracted bear market. Economically sensitive and even speculative stocks performed best as the war with Iraq came to a quick conclusion and the economy improved. Moreover, small-cap issues did better than large-cap issues. The advance of the stock market roughly equaled the year over year improvement in profits for the S&P 500. Therefore this advance was accomplished with very little valuation multiple expansion.
What strategies affected Portfolio performance during the period?
Throughout the year, TCW continued to emphasize leading businesses, which possessed either product or process advantages. Early in the year there was broad-based skepticism about the sustainability of the economic recovery and the risk of going to war with Iraq. In the face of this, the Portfolio maintained selective exposure to top tier technology and retail stocks. These were out of favor early but provided very strong performance as the war came to a conclusion and economic growth accelerated. Additionally, the recognition that three dominant electronic commerce companies, namely Amazon, eBay, Inc. and Yahoo!, Inc., were on the threshold of rapid improvements in profitability resulted in these three names being among the Portfolio’s best overall performers for the year.
The Portfolio was balanced with leading health care, financial, industrial and consumer holdings. A number of these, too, were significant performers. TCW’s largest position, Progressive Corporation continued to advance as the company enjoyed superior profitability and growth in the auto insurance space. Genentech, Inc. had a strong year while many bio-tech companies lagged the market on a relative basis. Much of their gain resulted from favorable FDA approvals and the expanded potential of their cancer drug, Avastin.
What changes were made to the Portfolio over the period?
Each of the additives capitalizes on a trend where an aging America seeks experiences and is willing to pay up for a premium product. Sales were not related to a single theme, but rather an acknowledgement that the growth opportunity for companies such as Biogen, Juniper Networks, Paychex, Pfizer and Siebel Systems was improved. TCW also added stocks such as Harley Davidson, Starbucks, Viacom, Walgreen and Yahoo!.
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 Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number | Value | ||||
Domestic Common Stocks — 99.44% | |||||
Biotechnology — 12.27% | |||||
Amgen Inc. (a) | 182,200 | $ | 11,259,960 | ||
Genentech Inc. (a) | 183,580 | 17,177,581 | |||
MedImmune Inc. (a) | 247,300 | 6,281,420 | |||
34,718,961 | |||||
Broadcasting — 1.58% | |||||
Viacom Inc. (Class B) | 100,700 | 4,469,066 | |||
Computer Hardware — 6.42% | |||||
Cisco Systems Inc. (a) | 337,000 | 8,185,730 | |||
Dell Inc. (a) | 293,900 | 9,980,844 | |||
18,166,574 | |||||
Computer Services — 14.04% | |||||
Network Appliance Inc. (a) (o) | 722,785 | 14,838,776 | |||
Pixar Inc. (a) (o) | 143,000 | 9,908,470 | |||
Yahoo! Inc. (a) | 331,700 | 14,982,889 | |||
39,730,135 | |||||
Computer Software — 1.80% | |||||
Microsoft Corporation | 185,300 | 5,103,162 | |||
Consumer Durables — 1.86% | |||||
Harley-Davidson Inc. | 110,500 | 5,252,065 | |||
Electrical Equipment — 1.85% | |||||
General Electric Company | 168,800 | 5,229,424 | |||
Hotels & Restaurants — 2.17% | |||||
Starbucks Corporation (a) | 186,000 | 6,149,160 | |||
Insurance — 12.44% | |||||
AFLAC Inc. (o) | 196,600 | 7,112,988 | |||
Progressive Corporation | 335,885 | 28,076,627 | |||
35,189,615 | |||||
Misc. Financial Services — 3.61% | |||||
Charles Schwab Corporation | 863,330 | 10,221,827 | |||
Multi-Line Insurance — 1.69% | |||||
American International Group Inc. | 72,150 | 4,782,102 | |||
Pharmaceuticals — 3.24% | |||||
Eli Lilly & Company | 130,500 | 9,178,065 | |||
Retail — 15.44% | |||||
Amazon.com Inc. (a) | 364,230 | 19,173,067 | |||
eBay Inc. (a) | 208,600 | 13,473,474 | |||
Wal-Mart Stores Inc. | 113,100 | 5,999,955 | |||
Walgreen Company | 138,200 | 5,027,716 | |||
43,674,212 |
Number of Shares, Units or Principal Amount | Value | |||||
Semiconductors — 16.74% | ||||||
Applied Materials Inc. (a) | 512,160 | $ | 11,497,992 | |||
Intel Corporation | 333,200 | 10,729,040 | ||||
Maxim Integrated Products Inc. (o) | 309,100 | 15,393,180 | ||||
Xilinx Inc. (a) | 251,800 | 9,754,732 | ||||
47,374,944 | ||||||
Telecommunications — 1.91% | ||||||
QUALCOMM Inc. | 100,300 | 5,409,179 | ||||
Transportation — 2.38% | ||||||
Southwest Airlines Company | 416,450 | 6,721,503 | ||||
Total Domestic Common Stocks | ||||||
(Identified cost $246,965,735) | 281,369,994 | |||||
Other Investments — 1.51% | ||||||
Securities Lending Quality Trust (s) | 4,268,340 | 4,268,340 | ||||
Total Other Investments | ||||||
(Identified cost $4,268,340) | 4,268,340 | |||||
Repurchase Agreement — 0.69% | ||||||
State Street Bank & Trust Repurchase Agreement, | $ | 1,942,000 | 1,942,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $1,942,000) | 1,942,000 | |||||
Total Investments | ||||||
(Identified cost $253,176,075) | $ | 287,580,334 | ||||
Other Assets Less Liabilities — (1.64)% | (4,635,155) | |||||
Net Assets — 100% | $ | 282,945,179 | ||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at December 31, 2003. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Equity Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $4,178,855 (Note 5) | $ | 287,580,334 | ||
Cash | 205 | |||
Investment income receivable | 53,523 | |||
Receivable for fund shares sold | 18,039 | |||
Other assets | 12,474 | |||
Total assets | 287,664,575 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 321,034 | |||
Payable upon return of securities loaned (Note 5) | 4,268,340 | |||
Shareholder servicing fees payable | 70,565 | |||
Accrued expenses and other liabilities | 59,457 | |||
Total liabilities | 4,719,396 | |||
Net assets | $ | 282,945,179 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 380,914,219 | ||
Undistributed (accumulated) net investment income (loss) | — | |||
Undistributed (accumulated) net realized gain (loss) | (132,373,299 | ) | ||
Unrealized appreciation (depreciation) | 34,404,259 | |||
Net assets | $ | 282,945,179 | ||
Shares outstanding | 15,118,017 | |||
Net asset value per share | $18.72 | |||
Investments at cost | $ | 253,176,075 | ||
See notes to financial statements.
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Enterprise Equity Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends | $ | 786,992 | ||
Interest | 46,142 | |||
Securities lending income | 17,646 | |||
Total investment income | 850,780 | |||
Expenses: | ||||
Investment advisory fees | 1,918,476 | |||
Shareholder servicing fees | 519,838 | |||
Audit and legal fees | 64,428 | |||
Custodian and fund accounting fees | 50,346 | |||
Reports to shareholders | 19,015 | |||
Trustees’ fees | 8,984 | |||
Other expenses | 11,808 | |||
Total expenses | 2,592,895 | |||
Expenses reduced by expense offset arrangements | (51,704 | ) | ||
Total expenses, net of expense offset arrangements | 2,541,191 | |||
Net investment income (loss) | (1,690,411 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (42,657,049 | ) | ||
Net change in unrealized gain (loss) on investments | 143,904,975 | |||
Net realized and unrealized gain (loss) | 101,247,926 | |||
Net increase (decrease) in net assets resulting from operations | $ | 99,557,515 | ||
See notes to financial statements.
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Enterprise Equity Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (1,690,411 | ) | $ | (1,528,915 | ) | ||
Net realized gain (loss) | (42,657,049 | ) | (62,598,017 | ) | ||||
Net change in unrealized gain (loss) | 143,904,975 | (34,182,575 | ) | |||||
Increase (decrease) in net assets resulting from operations | 99,557,515 | (98,309,507 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 21,220,780 | 29,106,977 | ||||||
Shares redeemed | (37,419,967 | ) | (78,530,627 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (16,199,187 | ) | (49,423,650 | ) | ||||
Total increase (decrease) in net assets | 83,358,328 | (147,733,157 | ) | |||||
Net assets: | ||||||||
Beginning of period | 199,586,851 | 347,320,008 | ||||||
End of period | $ | 282,945,179 | $ | 199,586,851 | ||||
Capital share activity: | ||||||||
Shares issued | 1,367,710 | 1,883,773 | ||||||
Shares redeemed | (2,553,176 | ) | (5,615,529 | ) | ||||
Net increase (decrease) | (1,185,466 | ) | (3,731,756 | ) | ||||
Undistributed (accumulated) net investment income (loss) | — | — | ||||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Equity Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the Years Ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 12.24 | $ | 17.34 | $ | 27.92 | $ | 38.62 | $ | 36.82 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | (0.11 | ) | (0.08 | ) | (0.14 | ) | (0.21 | ) | 0.23 | |||||||||||
Net realized and unrealized gain (loss) on investments | 6.59 | (5.02 | ) | (6.42 | ) | 0.27 | 4.86 | |||||||||||||
Total from investment operations | 6.48 | (5.10 | ) | (6.56 | ) | 0.06 | 5.09 | |||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | — | — | — | (0.29 | ) | (0.52 | ) | |||||||||||||
Distributions from capital gains | — | — | (4.02 | ) | (10.47 | ) | (2.77 | ) | ||||||||||||
Total distributions | — | — | (4.02 | ) | (10.76 | ) | (3.29 | ) | ||||||||||||
Net asset value, end of period | $ | 18.72 | $ | 12.24 | $ | 17.34 | $ | 27.92 | $ | 38.62 | ||||||||||
Total return | 52.94 | % | (29.41 | )% | (18.81 | )% | (5.18 | )% | 15.61 | % | ||||||||||
Net assets end of period (in thousands) | $ | 282,945 | $ | 199,587 | $ | 347,320 | $ | 487,915 | $ | 587,324 | ||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 1.08 | % | 0.90 | % | 0.88 | % | 0.87 | % | 0.82 | % | ||||||||||
Ratio of expenses to average net assets | 1.06 | % | 0.89 | % | 0.88 | % | 0.87 | % | 0.82 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | (0.70 | )% | (0.58 | )% | (0.65 | )% | (0.55 | )% | 0.63 | % | ||||||||||
Portfolio turnover rate | 19 | % | 15 | % | 21 | % | 44 | % | 155 | % |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Equity Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Equity Portfolio in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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, U.S. Government or Agency 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
ENTERPRISE Accumulation Trust
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Notes to Financial Statements — (Continued)
December 31, 2003
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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio based on average net assets. The Portfolio may direct certain security trades to brokers who may pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. This amount is reported in the Statement of Operations.
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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 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 year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $519,838 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.15%.
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $44,745,970 | $61,984,738 |
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% 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
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for capital loss carryforwards utilized and net operating losses.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||||||
$ | 253,176,075 | $ | 65,049,694 | $ | 30,645,435 | $ | 34,404,259 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Long-Term Gain | Capital Loss Carryforward | Expiration | ||||
— | — | $ | 132,373,300 | 2009-2011 |
8. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable-Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
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Report of Independent Auditors
To the Board of Trustees of Enterprise Accumulation Trust and Shareholders of Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Equity Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
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TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EGF, EAT and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF, EAT, and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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.
Boston, Massachusetts
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 $4.1 billion for institutional clients. Its normal investment minimum is $5 million.
Investment Objective
The objective of the Enterprise Equity Income Portfolio is a combination of growth and income to achieve an above-average and consistent total return.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 26.65%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 28.69%. In contrast, the Portfolio outperformed its peer group, the Lipper Equity Income Funds Index, which returned 25.83%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
* The S&P Index is an unmanaged broad-based index that includes the common stocks of 500 companies that tend to be leaders in important industries within the U.S. economy. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The S&P 500 Index replaces the S&P 500/Barra Value Index as the broad based index as it more appropriately reflects the Portfolio’s broad-based market. During 2003, an investment in the above hypothetical account for the Portfolio increased $2,322 or 26.65% compared to an increase of $2,750 or 31.79% in the S&P 500/Barra Value Index and an increase of $2,291 or 28.69% in the S&P 500 Index. The Lipper Equity Income Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Equity Income Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index. The performance period for the S&P 500 Index and the Lipper Equity Income Funds Index is 11/30/98 to 12/31/03.
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Enterprise Equity Income Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
The investment environment during the year was dynamic. Investors, scarred by negative market returns during the previous three years, were fairly pessimistic to start in 2003. This was especially true during the first quarter as stock prices declined because of worries over hostilities with Iraq and concerns about the economy. During the second quarter, however, stocks began recovering as war fears receded and evidence mounted that business conditions and profits were improving. However, investor doubts as to the sustainability of the expansion lingered well into the second half of the year, despite some of the best economic growth since the early 1980s. With this robust growth came stronger than expected corporate profits, which along with very low interest rates, enabled stocks to turn in one of their best performances in years. In sum, stock returns in 2003 proved far better than expected and were driven by strong profit growth and low interest rates, generally the by-products of stimulative fiscal and monetary policy.
A major change in the investment environment for investors was the passage of the Tax Reform Act last year. Specifically, the Act reduced tax rates on most dividends to 15%, equalizing the tax on these dividends and capital gains. Corporations responded quickly by initiating or increasing dividends. By Boston Advisors’ count, 228 companies in the S&P 500 Index raised their dividends a collective 266 times in 2003.
What strategies affected Portfolio performance during the period?
Boston Advisors’ strategy of investing only in companies with dividend yields higher than that of the S&P 500 Index and selling them when their dividend yield drops below that of the index was the most significant factor affecting performance during the year. As mentioned previously, shares of companies with below market yields dramatically outperformed those of companies with above market yields. For example, non-dividend paying stocks in the S&P 500 Index increased nearly 57% during 2003, nearly twice the return of the index.
What changes were made to the Portfolio over the period?
During the year, Boston Advisors reduced the Portfolio’s weighting in pharmaceutical and consumer staple stocks. Both are defensive sectors and lagged their more economically sensitive counterparts as the recovery gained momentum. Also during the year, Boston Advisors increased the Portfolio’s exposure to the consumer discretionary, auto and auto parts, and basic materials sectors. Against the backdrop of an improving economy, companies in these sectors are experiencing positive operating leverage as a result of having significantly reduced their breakeven levels through cost cutting and efficiency gains. Finally, the Portfolio’s exposure to utilities and financial stocks was increased due to inexpensive valuations and relatively high dividends.
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
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 85.44% | |||||
Aerospace — 1.06% | |||||
Goodrich Corporation | 17,200 | $ | 510,668 | ||
Automotive — 5.61% | |||||
Autoliv Inc. | 17,600 | 662,640 | |||
Cummins Inc. (o) | 5,100 | 249,594 | |||
Ford Motor Company | 37,700 | 603,200 | |||
General Motors Corporation (o) | 13,000 | 694,200 | |||
Johnson Controls Inc. | 4,200 | 487,704 | |||
2,697,338 | |||||
Banking — 9.16% | |||||
Bank One Corporation | 10,000 | 455,900 | |||
First Tennessee National Corporation | 9,000 | 396,900 | |||
Independence Community Bank Corporation | 11,000 | 395,670 | |||
J. P. Morgan Chase & Company | 20,500 | 752,965 | |||
Popular Inc. | 12,850 | 577,479 | |||
SouthTrust Corporation | 6,900 | 225,837 | |||
U.S. Bancorp | 28,600 | 851,708 | |||
Wells Fargo & Company | 4,000 | 235,560 | |||
Zions Bancorporation | 8,400 | 515,172 | |||
4,407,191 | |||||
Building & Construction — 1.67% | |||||
Vulcan Materials Company | 16,900 | 803,933 | |||
Chemicals — 2.33% | |||||
Monsanto Company | 25,400 | 731,012 | |||
RPM International Inc. | 23,600 | 388,456 | |||
1,119,468 | |||||
Computer Services — 1.42% | |||||
Electronic Data Systems Corporation | 27,900 | 684,666 | |||
Consumer Products — 2.33% | |||||
Briggs & Stratton Corporation | 10,400 | 700,960 | |||
Colgate-Palmolive Company | 4,200 | 210,210 | |||
Procter & Gamble Company | 2,100 | 209,748 | |||
1,120,918 | |||||
Crude Oil & Petroleum — 0.77% | |||||
ChevronTexaco Corporation | 4,300 | 371,477 | |||
Electrical Equipment — 0.90% | |||||
General Electric Company | 13,900 | 430,622 | |||
Electronics — 2.61% | |||||
PerkinElmer Inc. | 41,000 | 699,870 | |||
Rockwell Automation Inc. | 15,600 | 555,360 | |||
1,255,230 |
Number of Shares | Value | ||||
Energy — 5.13% | |||||
Energen Corporation | 17,200 | $ | 705,716 | ||
Entergy Corporation | 11,700 | 668,421 | |||
Exelon Corporation | 6,700 | 444,612 | |||
TXU Corporation | 27,400 | 649,928 | |||
2,468,677 | |||||
Entertainment & Leisure — 1.07% | |||||
Harrah’s Entertainment Inc. | 10,300 | 512,631 | |||
Food, Beverages & Tobacco — 3.05% | |||||
Archer-Daniels-Midland Company | 18,000 | 273,960 | |||
J.M. Smucker Company | 10,650 | 482,338 | |||
SUPERVALU Inc. | 24,800 | 709,032 | |||
1,465,330 | |||||
Gaming — 2.02% | |||||
GTECH Holdings Corporation | 13,900 | 687,911 | |||
Station Casinos Inc. | 9,300 | 284,859 | |||
972,770 | |||||
Hotels & Restaurants — 3.68% | |||||
Mandalay Resort Group | 15,100 | 675,272 | |||
McDonald’s Corporation | 19,300 | 479,219 | |||
Starwood Hotels & Resorts Worldwide Inc. | 17,100 | 615,087 | |||
1,769,578 | |||||
Insurance — 1.41% | |||||
Cigna Corporation | 11,800 | 678,500 | |||
Machinery — 0.50% | |||||
Caterpillar Inc. | 2,900 | 240,758 | |||
Manufacturing — 2.65% | |||||
Carlisle Companies Inc. | 7,600 | 462,536 | |||
Eaton Corporation | 7,500 | 809,850 | |||
1,272,386 | |||||
Metals & Mining — 1.98% | |||||
Alcoa Inc. | 25,100 | 953,800 | |||
Misc. Financial Services — 3.03% | |||||
Citigroup Inc. | 15,400 | 747,516 | |||
Morgan Stanley Dean Witter & Company | 12,300 | 711,801 | |||
1,459,317 | |||||
Multi-Line Insurance — 3.40% | |||||
Lincoln National Corporation | 17,900 | 722,623 | |||
Old Republic International Corporation | 18,300 | 464,088 | |||
Sun Life Financial Inc. | 18,000 | 450,360 | |||
1,637,071 |
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Enterprise Equity Income Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Oil Services — 6.55% | |||||
ConocoPhillips | 11,900 | $ | 780,283 | ||
Marathon Oil Corporation | 23,800 | 787,542 | |||
Occidental Petroleum Corporation | 18,000 | 760,320 | |||
Sunoco Inc. | 16,100 | 823,515 | |||
3,151,660 | |||||
Paper & Forest Products — 2.29% | |||||
Georgia-Pacific Group | 24,600 | 754,482 | |||
MeadWestvaco Corporation | 11,600 | 345,100 | |||
1,099,582 | |||||
Paper Products — 1.41% | |||||
Boise Cascade Corporation | 20,600 | 676,916 | |||
Pharmaceuticals — 3.53% | |||||
Bristol-Myers Squibb Company | 16,000 | 457,600 | |||
Merck & Company Inc. | 9,100 | 420,420 | |||
Pfizer Inc. | 15,300 | 540,549 | |||
Wyeth | 6,600 | 280,170 | |||
1,698,739 | |||||
Property-Casualty Insurance — 2.44% | |||||
Allstate Corporation | 16,000 | 688,320 | |||
St. Paul Companies Inc. | 12,200 | 483,730 | |||
1,172,050 | |||||
Real Estate — 0.93% | |||||
General Growth Properties Inc. | 16,100 | 446,775 | |||
Retail — 4.51% | |||||
J. C. Penney Company, Inc. | 18,000 | 473,040 | |||
Limited Brands | 38,400 | 692,352 | |||
May Department Stores Company | 23,900 | 694,773 | |||
Sears Roebuck & Company | 6,800 | 309,332 | |||
2,169,497 | |||||
Savings and Loan — 1.33% | |||||
Washington Mutual Inc. | 15,900 | 637,908 | |||
Telecommunications — 1.15% | |||||
Sprint Corporation | 33,700 | 553,354 | |||
Transportation — 2.16% | |||||
GATX Corporation | 19,100 | 534,418 | |||
Teekay Shipping Corporation | 8,800 | 501,864 | |||
1,036,282 | |||||
Utilities — 3.36% | |||||
Alliant Energy Corporation | 18,400 | 458,160 | |||
ONEOK Inc. | 21,800 | 481,344 | |||
Weststar Energy Inc. | 33,400 | 676,350 | |||
1,615,854 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $35,255,939) | 41,090,946 | ||||
Number of Shares or Units | Value | ||||
Foreign Stocks — 11.00% | |||||
Crude Oil & Petroleum — 1.07% | |||||
BP (ADR) | 10,400 | $ | 513,240 | ||
Entertainment & Leisure — 0.77% | |||||
Callaway Golf Company | 21,900 | 369,015 | |||
Food, Beverages & Tobacco — 0.97% | |||||
Cadbury Schweppes | 15,600 | 466,284 | |||
Insurance — 1.55% | |||||
ACE Ltd. | 18,000 | 745,560 | |||
Oil Services — 1.57% | |||||
Petroleo Brasileiro (ADR) | 25,800 | 754,392 | |||
Pharmaceuticals — 0.49% | |||||
GlaxoSmithKline (ADR) | 5,100 | 237,762 | |||
Publishing — 1.14% | |||||
Reuters Group (ADR) | 21,600 | 548,208 | |||
Telecommunications — 1.34% | |||||
Cable & Wireless (ADR) | 91,900 | 644,219 | |||
Travel/Entertainment/Leisure — 1.08% | |||||
Royal Caribbean Cruises Ltd. (o) | 14,900 | 518,371 | |||
Wireless Communications — 1.02% | |||||
Nokia Corporation (Class A) (ADR) | 29,000 | 493,000 | |||
Total Foreign Stocks | |||||
(Identified cost $4,655,634) | 5,290,051 | ||||
Other Investments — 2.06% | |||||
Securities Lending Quality Trust (s) | 991,241 | 991,241 | |||
Total Other Investments | |||||
(Identified cost $991,241) | 991,241 | ||||
ENTERPRISE Accumulation Trust
4
Enterprise Equity Income Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Repurchase Agreement — 3.66% | ||||||
State Street Bank & Trust | $ | 1,762,000 | $ | 1,762,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $1,762,000) | 1,762,000 | |||||
Total Investments | ||||||
(Identified cost $42,664,814) | $ | 49,134,238 | ||||
Other Assets Less Liabilities — (2.16)% | (1,040,606) | |||||
Net Assets — 100% | $ | 48,093,632 | ||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at December 31, 2003. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
(ADR) | American Depository Receipt. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Equity Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $969,111 (Note 5) | $ | 49,134,238 | ||
Cash | 565 | |||
Investment income receivable | 112,667 | |||
Receivable for fund shares sold | 55,193 | |||
Receivable for investments sold | 234,439 | |||
Due from investment adviser | 3,136 | |||
Other assets | 2,165 | |||
Total assets | 49,542,403 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 120,513 | |||
Payable for investments purchased | 310,562 | |||
Payable upon return of securities loaned (Note 5) | 991,241 | |||
Shareholder servicing fees payable | 11,848 | |||
Accrued expenses and other liabilities | 14,607 | |||
Total liabilities | 1,448,771 | |||
Net assets | $ | 48,093,632 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 49,310,689 | ||
Undistributed (accumulated) net investment income (loss) | 663,089 | |||
Undistributed (accumulated) net realized gain (loss) | (8,349,594 | ) | ||
Unrealized appreciation (depreciation) | 6,469,448 | |||
Net assets | $ | 48,093,632 | ||
Shares outstanding | 9,127,476 | |||
Net asset value per share | $5.27 | |||
Investments at cost | $ | 42,664,814 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Equity Income Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends (net of foreign taxes withheld of $5,106) | $ | 1,073,362 | ||
Interest | 22,989 | |||
Securities lending income | 1,251 | |||
Total investment income | 1,097,602 | |||
Expenses: | ||||
Investment advisory fees | 299,291 | |||
Shareholder servicing fees | 83,794 | |||
Custodian and fund accounting fees | 21,458 | |||
Audit and legal fees | 10,473 | |||
Reports to shareholders | 3,713 | |||
Trustees’ fees | 1,554 | |||
Other expenses | 1,861 | |||
Total expenses | 422,144 | |||
Expense reimbursement | (3,137 | ) | ||
Total expenses, net of reimbursement | 419,007 | |||
Net investment income (loss) | 678,595 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (2,399,294 | ) | ||
Net change in unrealized gain (loss) on investments | 11,619,562 | |||
Net realized and unrealized gain (loss) | 9,220,268 | |||
Net increase (decrease) in net assets resulting from operations | $ | 9,898,863 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Equity Income Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 678,595 | $ | 594,384 | ||||
Net realized gain (loss) | (2,399,294 | ) | (3,051,882 | ) | ||||
Net change in unrealized gain (loss) | 11,619,562 | (4,586,154 | ) | |||||
Increase (decrease) in net assets resulting from operations | 9,898,863 | (7,043,652 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (589,422 | ) | (508,560 | ) | ||||
Total distributions to shareholders | (589,422 | ) | (508,560 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 9,009,380 | 14,598,799 | ||||||
Reinvestment of distributions | 586,108 | 505,733 | ||||||
Shares redeemed | (8,526,855 | ) | (10,343,089 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 1,068,633 | 4,761,443 | ||||||
Total increase (decrease) in net assets | 10,378,074 | (2,790,769 | ) | |||||
Net assets: | ||||||||
Beginning of period | 37,715,558 | 40,506,327 | ||||||
End of period | $ | 48,093,632 | $ | 37,715,558 | ||||
Capital share activity: | ||||||||
Shares issued | 1,989,756 | 3,020,675 | ||||||
Shares issued in reinvestment of distributions | 124,970 | 125,181 | ||||||
Shares redeemed | (1,914,027 | ) | (2,290,761 | ) | ||||
Net increase (decrease) | 200,699 | 855,095 | ||||||
Undistributed (accumulated) net investment income (loss) | $ | 663,089 | $ | 589,931 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Equity Income Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the years ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 4.22 | $ | 5.02 | $ | 5.69 | $ | 5.37 | $ | 5.09 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | 0.08 | 0.07 | 0.07 | 0.08 | 0.06 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.04 | (0.81 | ) | (0.69 | ) | 0.26 | 0.23 | |||||||||||||
Total from investment operations | 1.12 | (0.74 | ) | (0.62 | ) | 0.34 | 0.29 | |||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.07 | ) | (0.06 | ) | (0.05 | ) | (0.02 | ) | (0.01 | ) | ||||||||||
Distributions from capital gains | — | — | — | — | — | |||||||||||||||
Total distributions | (0.07 | ) | (0.06 | ) | (0.05 | ) | (0.02 | ) | (0.01 | ) | ||||||||||
Net asset value, end of period | $ | 5.27 | $ | 4.22 | $ | 5.02 | $ | 5.69 | $ | 5.37 | ||||||||||
Total return | 26.65 | % | (14.76 | )% | (10.75 | )% | 6.45 | % | 5.70 | % | ||||||||||
Net assets end of period (in thousands) | $ | 48,094 | $ | 37,716 | $ | 40,506 | $ | 32,829 | $ | 27,997 | ||||||||||
Ratio of expenses to average net assets | 1.05 | % | 0.90 | % | 0.88 | % | 0.88 | % | 1.05 | % | ||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.06 | % | 0.90 | % | 0.88 | % | 0.88 | % | 1.20 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | 1.70 | % | 1.44 | % | 1.43 | % | 1.43 | % | 1.21 | % | ||||||||||
Portfolio turnover | 103 | % | 35 | % | 36 | % | 37 | % | 18 | % |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Equity Income Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Equity Income Portfolio in the preparation of its financial statements.
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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, U.S. Government or Agency securities whose market value (including interest) is at least equal to the repurchase price. In the event of default
ENTERPRISE Accumulation Trust
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Notes to Financial Statements — (Continued)
December 31, 2003
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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 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 year ended December 31, 2003, ECM incurred subadvisory fees payable to Boston Advisors, Inc. of $119,716, with a related payable balance of $11,848 as of December 31, 2003. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $83,794 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.05%.
4. Investment Transactions
For the year ended December 31, 2003, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government / Agency | Other Investment Securities | |||||
Purchases | Sales | Purchases | Sales | |||
— | — | $40,943,366 | $38,699,332 |
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.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements — (Continued)
December 31, 2003
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for capital loss carryforwards utilized, losses deferred due to wash sales and distributions received from real estate investment trusts.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||
$42,842,694 | $6,517,175 | $225,631 | $6,291,544 |
The tax character of distributions paid was as follows:
Ordinary | Long-Term | Total | ||||
2003 | $589,422 | — | $589,422 | |||
2002 | 508,560 | — | 508,560 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Long-Term Gain | Capital Loss Carryforward | Expiration | |||
$663,089 | — | $8,171,714 | 2007-2011 |
8. Subsequent Event
On January 15, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. Shareholders.
ENTERPRISE Accumulation Trust
12
Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
Equity Income Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Equity Income Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
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Tax Reporting Information (Unaudited)
The portfolio had 100% of its 2003 ordinary income distributions qualify for the corporate dividends received deduction (“DRD”) but none qualify as qualifying dividend income (“QDI”).
ENTERPRISE Accumulation Trust
14
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1990) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF, EAT and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
15
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
16
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 $30.9 billion for institutional clients and its normal investment minimum is $40 million.
Investment Objective
The objective of the Enterprise Growth Portfolio is capital appreciation.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 17.05%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 28.69%. The Portfolio underperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 26.96%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The S&P 500 Index is an unmanaged broad-based index that includes the common stock of 500 companies that tend to be important leaders in important industries within the U.S. economy. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Large-Cap Growth Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Large-Cap Growth Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index. The performance period for the S&P 500 Index and the Lipper Large-Cap Growth Funds Index is 11/30/98 to 12/31/03.
ENTERPRISE Accumulation Trust
1
Enterprise Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
After three difficult years for the S&P 500, the equity markets posted very strong returns in 2003. While the Portfolio participated, many of its stocks that helped outperform previously proved to be a drag on performance in 2003. During the year, substantial monetary and fiscal stimulus, combined with a relatively quick end to the war in Iraq, convinced investors that a double dip recession could be avoided. As confidence in an economic recovery increased, investors sold companies with consistent earnings growth and high returns on equity to buy more leveraged companies with less predictable earnings. This rotation manifested itself in the market as strength in smaller capitalization, lower quality, and higher beta stocks. This trend with the Portfolio, which started in March and continued its uninterrupted run into the fourth quarter, contributed to underperformance for the quarter. However, the month of December saw a reversal in this trend, outperforming both the growth and broad market indices.
What strategies affected Portfolio performance during the period?
A portion of the Portfolio’s divergence from the S&P 500 Index can be ascribed to an underweight position in technology stocks. In hindsight, Montag & Caldwell missed the bottom in these stocks. They also believed they knew that a cyclical recovery in earnings was imminent; however, the long-term growth rates for many of these companies were and remain in question. Due to this uncertainty, Montag & Caldwell felt compelled to require an attractive valuation to compensate for this inherent risk. While the long-term growth prospects for certain technology stocks remain in question, Montag & Caldwell continues to find opportunities within the sector. For example, in December the Portfolio took advantage of price volatility to add Intel and Cisco Systems, Inc. Both of these companies benefit from oligopolistic market positions and related pricing power. Additionally, the Portfolio benefited significantly from the performance of eBay, Inc., Electronic Arts, Inc. and Qualcomm, companies that are experiencing both record sales and earnings.
The Portfolio’s industrial sector did better than the market during the year, but many high quality issues in the consumer staple and healthcare sectors lagged during the year. In addition, the Portfolio’s greater than market representation in consumer staples and healthcare and less than market representation in technology and financials detracted from the Portfolio’s relative return. Also, the Portfolio’s consumer discretionary holdings trailed that market sector during the year.
What changes were made to the Portfolio over the period?
During 2003, the Portfolio reduced its exposure to the energy sector by selling GlobalSantaFe Corporation and Transocean. After more than two years of high commodity prices, low inventories, a declining supply of natural gas, and limited capacity in oil, drilling activity has not responded like Montag & Caldwell anticipated. The Portfolio’s weighting in industrials was increased by adding General Electric Company. Montag & Caldwell added to consumer discretionary holdings with Omnicom, Bed Bath & Beyond, and Lowes Corporation, believing that these companies may continue to do well in an improving economy. The Portfolio sold Costco and Newell Rubbermaid and re-established a position in eBay, Inc. In health care, the Portfolio added Genentech, Inc. The Portfolio’s weighting in technology increased as Cisco Systems, Inc., Intel Corporation, Oracle Corporation and Paychex, Inc. may benefit from the ongoing recovery in enterprise spending.
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
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 98.47% | |||||
Advertising — 2.32% | |||||
Omnicom Group Inc. | 70,400 | $ | 6,148,032 | ||
Biotechnology — 5.24% | |||||
Amgen Inc. (a) | 150,752 | 9,316,474 | |||
Genentech Inc. (a) | 49,200 | 4,603,644 | |||
13,920,118 | |||||
Building & Construction — 1.79% | |||||
Masco Corporation | 173,864 | 4,765,612 | |||
Business Services — 1.79% | |||||
Paychex Inc. | 127,600 | 4,746,720 | |||
Computer Hardware — 1.05% | |||||
Cisco Systems Inc. (a) | 115,200 | 2,798,208 | |||
Computer Software — 6.79% | |||||
Electronic Arts Inc. (a) | 145,512 | 6,952,563 | |||
Oracle Corporation (a) | 838,400 | 11,066,880 | |||
18,019,443 | |||||
Consumer Products — 10.99% | |||||
Colgate-Palmolive Company | 127,673 | 6,390,033 | |||
Gillette Company | 292,930 | 10,759,319 | |||
Procter & Gamble Company | 120,284 | 12,013,966 | |||
29,163,318 | |||||
Consumer Services — 4.28% | |||||
United Parcel Service Inc. | 152,500 | 11,368,875 | |||
Electrical Equipment — 1.03% | |||||
General Electric Company | 88,000 | 2,726,240 | |||
Entertainment & Leisure — 2.16% | |||||
Walt Disney Company | 246,260 | 5,745,246 | |||
Food, Beverages & Tobacco — 7.73% | |||||
Coca-Cola Company | 215,300 | 10,926,475 | |||
PepsiCo Inc. | 205,545 | 9,582,508 | |||
20,508,983 | |||||
Hotels & Restaurants — 2.11% | |||||
Marriott International Inc. (Class A) | 121,089 | 5,594,312 | |||
Insurance — 2.41% | |||||
Marsh & McLennan Companies Inc. | 133,328 | 6,385,078 | |||
Machinery — 2.25% | |||||
Caterpillar Inc. | 71,831 | 5,963,410 | |||
Manufacturing — 3.38% | |||||
3M Company | 105,600 | 8,979,168 | |||
Media — 3.71% | |||||
Gannett Company Inc. | 110,600 | 9,861,096 |
Number of Shares or Principal Amount | Value | |||||
Medical Instruments — 4.29% | ||||||
Medtronic Inc. | 234,260 | $ | 11,387,379 | |||
Misc. Financial Services — 3.07% | ||||||
Citigroup Inc. | 167,900 | 8,149,866 | ||||
Multi-Line Insurance — 4.01% | ||||||
American International Group Inc. | 160,777 | 10,656,299 | ||||
Oil Services — 4.22% | ||||||
Schlumberger Ltd. | 204,974 | 11,216,177 | ||||
Pharmaceuticals — 10.67% | ||||||
Eli Lilly & Company | 102,000 | 7,173,660 | ||||
Johnson & Johnson | 151,500 | 7,826,490 | ||||
Pfizer Inc. | 377,290 | 13,329,656 | ||||
28,329,806 | ||||||
Retail — 7.38% | ||||||
Bed Bath & Beyond Inc. (a) | 109,100 | 4,729,485 | ||||
eBay Inc. (a) | 58,800 | 3,797,892 | ||||
Kohl’s Corporation (a) | 192,400 | 8,646,456 | ||||
Lowe’s Companies Inc. | 43,600 | 2,415,004 | ||||
19,588,837 | ||||||
Semiconductors — 1.04% | ||||||
Intel Corporation | 85,900 | 2,765,980 | ||||
Telecommunications — 4.76% | ||||||
QUALCOMM Inc. | 234,200 | 12,630,406 | ||||
Total Domestic Common Stocks | ||||||
(Identified cost $227,794,420) | 261,418,609 | |||||
Repurchase Agreement — 1.61% | ||||||
State Street Bank & Trust Repurchase Agreement, | $ | 4,269,000 | 4,269,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $4,269,000) | 4,269,000 | |||||
Total Investments | ||||||
(Identified cost $232,063,420) | $ | 265,687,609 | ||||
Other Assets Less Liabilities — 0.08% | (216,688) | |||||
Net Assets — 100% | $ | 265,470,921 | ||||
(a) | Non-income producing security. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
3
Enterprise Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value | $ | 265,687,609 | ||
Cash | 223 | |||
Investment income receivable | 287,970 | |||
Receivable for fund shares sold | 15,345 | |||
Other assets | 12,587 | |||
Total assets | 266,003,734 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 409,967 | |||
Shareholder servicing fees payable | 66,007 | |||
Accrued expenses and other liabilities | 56,839 | |||
Total liabilities | 532,813 | |||
Net assets | $ | 265,470,921 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 338,901,031 | ||
Undistributed (accumulated) net investment income (loss) | 808,846 | |||
Undistributed (accumulated) net realized gain (loss) | (107,863,145 | ) | ||
Unrealized appreciation (depreciation) | 33,624,189 | |||
Net assets | $ | 265,470,921 | ||
Shares outstanding | 57,212,800 | |||
Net asset value per share | $4.64 | |||
Investments at cost | $ | 232,063,420 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Growth Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends (net of foreign taxes withheld of $20,308) | $ | 3,137,047 | ||
Interest | 99,939 | |||
Securities lending income | 10,004 | |||
Total investment income | 3,246,990 | |||
Expenses: | ||||
Investment advisory fees | 1,781,493 | |||
Shareholder servicing fees | 500,642 | |||
Audit and legal fees | 61,907 | |||
Custodian and fund accounting fees | 53,364 | |||
Reports to shareholders | 20,284 | |||
Trustees’ fees | 8,971 | |||
Other expenses | 11,466 | |||
Total expenses | 2,438,127 | |||
Net investment income (loss) | 808,863 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (8,059,516 | ) | ||
Net change in unrealized gain (loss) on investments | 45,886,324 | |||
Net realized and unrealized gain (loss) | 37,826,808 | |||
Net increase (decrease) in net assets resulting from operations | $ | 38,635,671 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Growth Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 808,863 | $ | 1,021,083 | ||||
Net realized gain (loss) | (8,059,516 | ) | (40,972,525 | ) | ||||
Net change in unrealized gain (loss) | 45,886,324 | (26,628,400 | ) | |||||
Increase (decrease) in net assets resulting from operations | 38,635,671 | (66,579,842 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (1,021,049 | ) | (944,092 | ) | ||||
Total distributions to shareholders | (1,021,049 | ) | (944,092 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 33,810,875 | 45,061,705 | ||||||
Shares exchanged due to merger | 16,758,178 | — | ||||||
Reinvestment of distributions | 1,020,154 | 943,206 | ||||||
Shares redeemed | (32,342,999 | ) | (50,150,263 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 19,246,208 | (4,145,352 | ) | |||||
Total increase (decrease) in net assets | 56,860,830 | (71,669,286 | ) | |||||
Net assets: | ||||||||
Beginning of period | 208,610,091 | 280,279,377 | ||||||
End of period | $ | 265,470,921 | $ | 208,610,091 | ||||
Capital share activity: | ||||||||
Shares issued | 8,007,031 | 9,733,913 | ||||||
Shares issued due to merger | 4,364,109 | — | ||||||
Shares issued in reinvestment of distributions | 230,804 | 244,988 | ||||||
Shares redeemed | (7,742,602 | ) | (11,375,918 | ) | ||||
Net increase (decrease) | 4,859,342 | (1,397,017 | ) | |||||
Undistributed (accumulated) net investment income (loss) | $ | 808,846 | $ | 1,021,032 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the years ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 3.98 | $ | 5.21 | $ | 5.99 | $ | 6.56 | $ | 5.27 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | 0.01 | 0.02 | 0.02 | 0.03 | 0.02 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.67 | (1.23 | ) | (0.78 | ) | (0.54 | ) | 1.27 | ||||||||||||
Total from investment operations | 0.68 | (1.21 | ) | (0.76 | ) | (0.51 | ) | 1.29 | ||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | (0.02 | ) | (0.02 | ) | (0.01 | ) | — | |||||||||||
Distributions from capital gains | — | — | — | (0.05 | ) | — | ||||||||||||||
Total distributions | (0.02 | ) | (0.02 | ) | (0.02 | ) | (0.06 | ) | — | |||||||||||
Net asset value, end of period | $ | 4.64 | $ | 3.98 | $ | 5.21 | $ | 5.99 | $ | 6.56 | ||||||||||
Total return | 17.05 | % | (23.26 | )% | (12.56 | )% | (7.79 | )% | 24.48 | % | ||||||||||
Net assets end of period (in thousands) | $ | 265,471 | $ | 208,610 | $ | 280,279 | $ | 319,207 | $ | 230,720 | ||||||||||
Ratio of expenses to average net assets | 1.03 | % | 0.86 | % | 0.84 | % | 0.83 | % | 0.84 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | 0.34 | % | 0.42 | % | 0.34 | % | 0.45 | % | 0.29 | % | ||||||||||
Portfolio turnover rate | 40 | % | 42 | % | 52 | % | 56 | % | 30 | % |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Growth Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
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 in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
December 31, 2003
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, U.S. Government or Agency 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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 0.75%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $500,642 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 $232,000 in the Portfolio at December 31, 2003.
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $98,052,697 | $89,614,393 |
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for capital loss carryforwards utilized and losses deferred due to wash sales.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | Tax | Net Unrealized | |||
$232,344,157 | $37,274,694 | $3,931,242 | $33,343,452 |
The tax character of distributions paid was as follows:
Ordinary | Long-Term | Total | ||||
2003 | $1,021,049 | — | $1,021,049 | |||
2002 | 944,092 | — | 944,092 |
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
December 31, 2003
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary | Undistributed Long- | Capital Loss | Expiration | |||
$808,846 | — | $107,582,408 | 2007-2011 |
Included in the capital loss carryforward is $2,999,625 acquired in connection with the merger that occurred in 2003 (Note 1). Utilization of the losses may be limited in accordance with Federal Tax regulations.
8. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
11
Report of Independent Auditors
To the Board of Trustees of Enterprise Accumulation Trust and Shareholders of
Growth Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Growth Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in he period then ended, in conformity with accounting principles generally accepted in the United states of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003, by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
12
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 |
Tax Reporting Information (Unaudited)
The portfolio had 100% of its 2003 ordinary income distributions qualify for the corporate dividends received deduction (“DRD”) but none qualify as qualifying dividend income (“QDI”).
ENTERPRISE Accumulation Trust
13
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EGF, EAT and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EAT, EGF and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EAT, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
14
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
15
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 $37 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.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 27.56%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 28.69%. In contrast, the Portfolio outperformed its peer group, the Lipper Large-Cap Core Funds Index, which returned 24.80%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The S&P 500 Index is an unmanaged broad-based index that includes the common stock of 500 companies that tend to be important leaders in important industries within the U.S. economy. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Large-Cap Core Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Large-Cap Core Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index. The performance period for the S&P 500 Index and the Lipper Large-Cap Core Funds Index is 11/30/98 to 12/31/03.
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Enterprise Growth and Income Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
After three long years, investors were rewarded in 2003 with a sharply rising stock market. Throughout the first quarter, investors were still coming to grips with accounting scandals, terror alerts, and the conflict in Iraq. But after hitting bottom in mid-March, stocks began to climb. Several factors converged to bring investors back to the market. The federal government and its agencies stimulated the economy with all the tools at their disposal, instituting aggressive tax cuts, increasing spending, and reducing short-term interest rates to their lowest levels in 45 years. The economy responded, reviving investor confidence.
By the second quarter, a full-stage rally was underway. Virtually every corner of the equity market saw price improvement, but the biggest winners were among the low-cost, low quality stocks. In fact, many of the best performing sectors were the recent years’ weakest performers, including the information technology, telecommunications services, and industrial sectors. The market continued to grow in the third quarter, although not at the same pace. Investors who were concerned that the run was over, however, were reassured in the fourth quarter when speculative stocks again spurred impressive gains.
Large-cap stocks trailed small-caps in this environment, with the Russell 1000 Index returning 29.89% for the year versus 47.25% for the Russell 2000 Index. Investors were drawn to the depressed prices and the potential for immediate profits in a still uncertain environment.
What strategies affected Portfolio performance during the period?
UBS focused on intrinsic value, seeking to identify companies selling for less than their true, or intrinsic, value. Strict adherence to this approach prevented UBS from investing in some of the top performing stocks of the year. UBS believed that many of these high-risk securities did not have long-term investment merit and were not appropriate for the Portfolio.
At the beginning of the year UBS believed large-cap stocks in general offered more value than their over-priced small-cap counterparts. In addition, large-cap earnings prospects were solid, owing to several years of aggressive cost cutting efforts, the expanding economy, and a higher sensitivity to the positive effects of a weak dollar. Despite this promising environment, the high quality sectors and securities could not keep up with the speculative undercurrent. Nonetheless, the Portfolio’s holdings contributed to its solid absolute performance over the year.
The Portfolio’s relative performance was hindered during the year by an underweight to computer hardware, specifically in the semiconductors market. Semiconductors were among the top performing sectors in 2003. UBS limited exposure to this sector, however, as their research indicated that current prices exceeded the growth rates that UBS believed these companies could reasonably achieve.
What changes were made to the Portfolio over the period?
In terms of sectors, the Portfolio maintained an overweight in select pharmaceuticals with established drug pipelines. Drug failures at a few pharmaceuticals had acted as a contagion, dragging down the stock prices of many companies in the sector. However, UBS found a number of fundamentally solid companies that they believed were selling at attractive valuations.
In the finance area, UBS uncovered what they saw as attractive opportunities in the bank sector. Many of the largest national banks are beginning to see the benefits of previous consolidations, including Portfolio holdings JP Morgan Chase and Citigroup. These banks have also seen some benefits from the Fed’s low interest rate stance. As the prevailing interest rate fell, banks saw an increase in loan demand, particularly from the consumer market.
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 Growth and Income Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 95.67% | |||||
Advertising — 2.59% | |||||
Interpublic Group of Companies Inc. (a) | 28,400 | $ | 443,040 | ||
Omnicom Group Inc. | 32,800 | 2,864,424 | |||
3,307,464 | |||||
Aerospace — 1.92% | |||||
Boeing Company | 37,700 | 1,588,678 | |||
United Technologies Corporation | 9,100 | 862,407 | |||
2,451,085 | |||||
Airlines — 0.44% | |||||
Delta Air Lines Inc. (o) | 47,200 | 557,432 | |||
Automotive — 0.91% | |||||
Johnson Controls Inc. | 10,000 | 1,161,200 | |||
Banking — 8.92% | |||||
FleetBoston Financial Corporation | 14,800 | 646,020 | |||
J. P. Morgan Chase & Company | 83,100 | 3,052,263 | |||
Mellon Financial Corporation | 70,700 | 2,270,177 | |||
PNC Financial Services Group | 22,500 | 1,231,425 | |||
Wells Fargo & Company | 71,400 | 4,204,746 | |||
11,404,631 | |||||
Biotechnology — 1.25% | |||||
Genzyme Corporation (a) | 32,300 | 1,593,682 | |||
Broadcasting — 1.40% | |||||
Viacom Inc. (Class B) | 22,300 | 989,674 | |||
Westwood One Inc. (a) | 23,500 | 803,935 | |||
1,793,609 | |||||
Building & Construction — 3.70% | |||||
Martin Marietta Materials Inc. | 40,000 | 1,878,800 | |||
Masco Corporation | 104,300 | 2,858,863 | |||
4,737,663 | |||||
Business Services — 0.57% | |||||
Viad Corporation | 29,000 | 725,000 | |||
Chemicals — 0.56% | |||||
Eastman Chemical Company | 18,200 | 719,446 | |||
Computer Hardware — 0.58% | |||||
Hewlett-Packard Company | 32,200 | 739,634 | |||
Computer Services — 1.70% | |||||
Dell Inc. (a) | 23,500 | 798,060 | |||
First Data Corporation | 33,400 | 1,372,406 | |||
2,170,466 | |||||
Computer Software — 3.08% | |||||
Microsoft Corporation | 142,900 | 3,935,466 | |||
Number of Shares | Value | ||||
Consumer Products — 1.63% | |||||
Kimberly-Clark Corporation | 28,100 | $ | 1,660,429 | ||
Newell Rubbermaid Inc. | 18,900 | 430,353 | |||
2,090,782 | |||||
Crude Oil & Petroleum — 2.94% | |||||
Anadarko Petroleum Corporation | 10,300 | 525,403 | |||
Exxon Mobil Corporation | 79,000 | 3,239,000 | |||
3,764,403 | |||||
Energy — 2.91% | |||||
Exelon Corporation | 37,500 | 2,488,500 | |||
Progress Energy Inc. | 14,800 | 669,848 | |||
TXU Corporation | 23,900 | 566,908 | |||
3,725,256 | |||||
Health Care — 3.99% | |||||
Anthem Inc. (a) | 24,100 | 1,807,500 | |||
UnitedHealth Group Inc. | 56,700 | 3,298,806 | |||
5,106,306 | |||||
Insurance — 0.54% | |||||
AFLAC Inc. | 19,000 | 687,420 | |||
Machinery — 0.02% | |||||
Mettler-Toledo International Inc. (a) | 700 | 29,547 | |||
Manufacturing — 6.16% | |||||
American Standard Companies Inc. (a) | 13,100 | 1,319,170 | |||
Illinois Tool Works Inc. | 34,000 | 2,852,940 | |||
Ingersoll-Rand Company Ltd. | 34,900 | 2,369,012 | |||
Pentair Inc. | 29,400 | 1,343,580 | |||
7,884,702 | |||||
Media — 2.17% | |||||
Gannett Company Inc. | 11,600 | 1,034,256 | |||
Time Warner Inc. (a) | 96,600 | 1,737,834 | |||
2,772,090 | |||||
Medical Instruments — 0.50% | |||||
Biomet Inc. | 17,600 | 640,816 | |||
Medical Services — 2.09% | |||||
Baxter International Inc. | 27,500 | 839,300 | |||
Cardinal Health Inc. | 18,800 | 1,149,808 | |||
Quest Diagnostics Inc. | 9,400 | 687,234 | |||
2,676,342 | |||||
Misc. Financial Services — 8.89% | |||||
Citigroup Inc. | 105,900 | 5,140,386 | |||
Freddie Mac | 52,400 | 3,055,968 | |||
Morgan Stanley Dean Witter & Company | 54,900 | 3,177,063 | |||
11,373,417 |
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Enterprise Growth and Income Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number | Value | ||||
Multi-Line Insurance — 2.50% | |||||
American International Group Inc. | 29,600 | $ | 1,961,888 | ||
Hartford Financial Services Group Inc. | 20,900 | 1,233,727 | |||
3,195,615 | |||||
Oil Services — 1.87% | |||||
ConocoPhillips | 29,200 | 1,914,644 | |||
Kerr-McGee Corporation | 10,400 | 483,496 | |||
2,398,140 | |||||
Paper & Forest Products — 0.65% | |||||
MeadWestvaco Corporation | 27,800 | 827,050 | |||
Pharmaceuticals — 12.28% | |||||
Allergan Inc. | 38,400 | 2,949,504 | |||
Bristol-Myers Squibb Company | 92,200 | 2,636,920 | |||
Cephalon Inc. (a) (o) | 24,300 | 1,176,363 | |||
Johnson & Johnson | 26,300 | 1,358,658 | |||
Mylan Laboratories Inc. | 104,100 | 2,629,566 | |||
Sicor Inc. (a) | 48,995 | 1,332,664 | |||
Wyeth | 85,300 | 3,620,985 | |||
15,704,660 | |||||
Printing & Publishing — 1.04% | |||||
McGraw-Hill Companies Inc. | 19,100 | 1,335,472 | |||
Retail — 3.23% | |||||
Costco Wholesale Corporation (a) | 56,600 | 2,104,388 | |||
Kohl’s Corporation (a) | 25,100 | 1,127,994 | |||
TJX Companies Inc. | 40,500 | 893,025 | |||
4,125,407 | |||||
Savings and Loan — 1.71% | |||||
Greenpoint Financial Corporation | 61,900 | 2,186,308 | |||
Technology — 1.38% | |||||
Linear Technology Corporation | 41,900 | 1,762,733 | |||
Telecommunications — 0.93% | |||||
SBC Communications Inc. | 45,600 | 1,188,792 | |||
Transportation — 2.84% | |||||
Burlington Northern Santa Fe Corporation | 112,200 | 3,629,670 | |||
Utilities — 3.26% | |||||
American Electric Power Inc. | 9,200 | 280,692 | |||
CMS Energy Corporation | 48,700 | 414,924 | |||
Dominion Resources Inc. | 12,800 | 817,024 | |||
FirstEnergy Corporation | 46,700 | 1,643,840 | |||
Sempra Energy | 33,800 | 1,016,028 | |||
4,172,508 |
Number of Shares, Units | Value | ||||||
Wireless Communications — 4.52% | |||||||
Nextel Communications Inc. (Class A) (a) | 205,800 | $ | 5,774,748 | ||||
Total Domestic Common Stocks | |||||||
(Identified cost $105,557,286) | 122,348,962 | ||||||
Foreign Stocks — 1.32% | |||||||
Insurance — 0.64% | |||||||
XL Capital Ltd. (Class A) | 10,500 | 814,275 | |||||
Multi-Line Insurance — 0.68% | |||||||
Willis Group Holdings Ltd. | 25,700 | 875,599 | |||||
Total Foreign Stocks | |||||||
(Identified cost $1,565,867) | 1,689,874 | ||||||
Other Investments — 0.51% | |||||||
Securities Lending Quality Trust (s) | 655,569 | 655,569 | |||||
Total Other Investments | |||||||
(Identified cost $655,569) | 655,569 | ||||||
Repurchase Agreement — 3.03% | |||||||
State Street Bank & Trust Repurchase Agreement, | $ | 3,877,000 | 3,877,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $3,877,000) | 3,877,000 | ||||||
Total Investments | |||||||
(Identified cost $111,655,722) | $ | 128,571,405 | |||||
Other Assets Less Liabilities — (0.53)% | (677,537 | ) | |||||
Net Assets — 100% | $ | 127,893,868 | |||||
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at December 31, 2003. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
See notes to financial statements.
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Enterprise Growth and Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $633,097 (Note 5) | $ | 128,571,405 | ||
Cash | 690 | |||
Investment income receivable | 149,831 | |||
Receivable for fund shares sold | 46,567 | |||
Receivable for investments sold | 327,821 | |||
Other assets | 5,404 | |||
Total assets | 129,101,718 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 251,318 | |||
Payable for investments purchased | 240,715 | |||
Payable upon return of securities loaned (Note 5) | 655,569 | |||
Shareholder servicing fees payable | 31,695 | |||
Accrued expenses and other liabilities | 28,553 | |||
Total liabilities | 1,207,850 | |||
Net assets | $ | 127,893,868 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 164,544,086 | ||
Undistributed (accumulated) net investment income (loss) | 946,674 | |||
Undistributed (accumulated) net realized gain (loss) | (54,512,575 | ) | ||
Unrealized appreciation (depreciation) | 16,915,683 | |||
Net assets | $ | 127,893,868 | ||
Shares outstanding | 25,650,151 | |||
Net asset value per share | $4.99 | |||
Investments at cost | $ | 111,655,722 | ||
See notes to financial statements.
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Enterprise Growth and Income Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends (net of foreign taxes withheld of $5,348) | $ | 2,094,812 | ||
Interest | 21,440 | |||
Securities lending income | 899 | |||
Total investment income | 2,117,151 | |||
Expenses: | ||||
Investment advisory fees | 849,230 | |||
Shareholder servicing fees | 234,952 | |||
Custodian and fund accounting fees | 41,706 | |||
Audit and legal fees | 28,427 | |||
Reports to shareholders | 6,200 | |||
Trustees’ fees | 4,049 | |||
Other expenses | 5,915 | |||
Total expenses | 1,170,479 | |||
Net investment income (loss) | 946,672 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (16,774,206 | ) | ||
Net change in unrealized gain (loss) on investments | 43,723,486 | |||
Net realized and unrealized gain (loss) | 26,949,280 | |||
Net increase (decrease) in net assets resulting from operations | $ | 27,895,952 | ||
See notes to financial statements.
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Enterprise Growth and Income Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 946,672 | $ | 1,145,458 | ||||
Net realized gain (loss) | (16,774,206 | ) | (36,304,934 | ) | ||||
Net change in unrealized gain (loss) | 43,723,486 | (9,884,249 | ) | |||||
Increase (decrease) in net assets resulting from operations | 27,895,952 | (45,043,725 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (1,145,446 | ) | (1,575,030 | ) | ||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | (1,145,446 | ) | (1,575,030 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 8,956,733 | 21,100,991 | ||||||
Reinvestment of distributions | 1,143,225 | 1,572,359 | ||||||
Shares redeemed | (20,385,556 | ) | (37,157,047 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (10,285,598 | ) | (14,483,697 | ) | ||||
Total increase (decrease) in net assets | 16,464,908 | (61,102,452 | ) | |||||
Net assets: | ||||||||
Beginning of period | 111,428,960 | 172,531,412 | ||||||
End of period | $ | 127,893,868 | $ | 111,428,960 | ||||
Capital share activity: | ||||||||
Shares issued | 2,071,578 | 4,364,770 | ||||||
Shares issued in reinvestment of distributions | 250,159 | 419,296 | ||||||
Shares redeemed | (4,888,936 | ) | (8,430,251 | ) | ||||
Net increase (decrease) | (2,567,199 | ) | (3,646,185 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | 946,674 | $ | 1,145,448 | ||||
See notes to financial statements.
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Enterprise Growth and Income Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the Years Ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 3.95 | $ | 5.41 | $ | 6.20 | $ | 6.16 | $ | 5.11 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | 0.04 | 0.04 | 0.05 | 0.07 | 0.07 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.04 | (1.45 | ) | (0.79 | ) | (0.01 | ) | 0.98 | ||||||||||||
Total from investment operations | 1.08 | (1.41 | ) | (0.74 | ) | 0.06 | 1.05 | |||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.04 | ) | (0.05 | ) | (0.05 | ) | (0.02 | ) | — | |||||||||||
Distributions from capital gains | — | — | — | (0.00 | )D | (0.00 | )D | |||||||||||||
Total distributions | (0.04 | ) | (0.05 | ) | (0.05 | ) | (0.02 | ) | — | |||||||||||
Net asset value, end of period | $ | 4.99 | $ | 3.95 | $ | 5.41 | $ | 6.20 | $ | 6.16 | ||||||||||
Total return | 27.56 | % | (25.95 | )% | (11.87 | )% | 0.91 | % | 20.55 | % | ||||||||||
Net assets end of period (in thousands) | $ | 127,894 | $ | 111,429 | $ | 172,531 | $ | 171,353 | $ | 89,887 | ||||||||||
Ratio of expenses to average net assets | 1.03 | % | 0.86 | % | 0.85 | % | 0.85 | % | 0.94 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | 0.84 | % | 0.81 | % | 0.92 | % | 1.09 | % | 1.22 | % | ||||||||||
Portfolio turnover rate | 119 | % | 19 | % | 2 | % | 6 | % | 1 | % |
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
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Growth and Income Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Growth and Income Portfolio in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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, U.S. Government or Agency securities whose market value (including interest) is at least
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 0.75%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $234,952 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.05%.
For the year ended December 31, 2003, the Portfolio paid brokerage commissions of $3,295 to affiliates of the adviser or subadviser.
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $131,455,369 | $142,802,525 |
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% 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
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
December 31, 2003
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for capital loss carryforwards utilized and losses deferred due to wash sales.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||||||
$ | 111,802,488 | $ | 18,680,762 | $ | 1,911,845 | $ | 16,768,917 |
The tax character of distributions paid was as follows:
Ordinary Income | Long-Term Gain | Total Distributions | ||||||
2003 | $ | 1,145,446 | — | $ | 1,145,446 | |||
2002 | 1,575,030 | — | 1,575,030 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Gain | Capital Loss Carryforward | Expiration | ||||
946,674 | — | $ | 54,365,809 | 2008-2011 |
8. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
11
Report of Independent Auditors
To the Board of Trustees of Enterprise Accumulation Trust and Shareholders of Growth and Income Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Growth and Income Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
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Tax Reporting Information (Unaudited)
The portfolio had 100% of its 2003 ordinary income distributions qualify for the corporate dividends received deduction (“DRD”) but none qualify as qualifying dividend income (“QDI”).
ENTERPRISE Accumulation Trust
13
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF, EAT and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
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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
15
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 $76 billion and its normal investment minimum is $10 million.
Investment Objective
The objective of the Enterprise International Growth Portfolio is capital appreciation.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 30.94%. The Portfolio underperformed its benchmark, the MSCI EAFE Index, which returned 38.59%. The Portfolio underperformed its peer group, the Lipper International Funds Index, which returned 36.00%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The Morgan Stanley Capital International Europe, Australasia, and Far East Index (MSCI EAFE) is an unmanaged index comprised of the stocks of approximately 1,005 companies traded on 21 stock exchanges from around the world, excluding the USA, Canada, and Latin America. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper International Funds Index is an unmanaged index of the 30 largest funds, based on year-end net asset value, in the Lipper International Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index.
ENTERPRISE Accumulation Trust
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Enterprise International Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
The environment remained extremely challenging over 2003 as a whole, particularly for this style, as SSgA invests the Portfolio exclusively in large-cap, high quality stocks. 2003 was a year in which the lower quality companies that had previously been in danger of bankruptcy were reprieved by the massive easing in monetary policy that took place in early in the year. As rate structures moved down, these companies were able to refinance their balance sheets and de-leverage themselves. The consequence was significant outperformance by these more speculative stocks, an area in which, given SSgA’s investment philosophy, the Portfolio was underexposed.
What strategies affected Portfolio performance during the period?
As mentioned above, SSgA’s investment style has been resolutely out of favor during most of 2003. Not only high quality stocks, but also those of relatively high valuation that depend heavily on future earnings growth, tended to be overlooked by investors. These constituted twin headwinds that were too strong to overcome without compromising the philosophy irrevocably.
Conversely, SSgA’s favorable view of the Asian markets helped performance, particularly in the latter half of the year. Sector allocation was also a net positive, with the Portfolio’s over-weighting of technology, particularly to the semiconductor industry, the biggest contributor. The Portfolio’s over-weight to stocks exposed to the rising natural gas price, such as EnCana and Precision Drilling also helped. On the negative side, some stock-specific difficulties dragged down SSgA’s relative performance, most notably Sony’s restatement of earnings. Within financials, there was wide dispersion of return from different companies and considerable intra-quarter volatility that did not act to the Portfolio’s benefit.
What changes were made to the Portfolio over the period?
During the first quarter, SSgA added to exposure in HSBC Holdings, HBOS and ING Group by selling less volatile stocks such as Honda and Suez. Early in the second quarter, SSgA added to the Portfolio’s tech holdings through purchases of SAP and Sharp Corporation and started moving into the industrials sector by building a position in Komatsu Ltd., as well as initiating in LVMH-Moet Hennessy Louis Vuitton, the luxury goods maker. Stock shifts within consumer cyclicals included reducing Reed Elsevier, Nestle and Tesco and removing Honda Motor and Sony, while adding to higher-beta tech stocks such as Taiwan Semiconductor Manufacturing Company Ltd. and NTT DoCoMo, Inc. In addition, SSgA took steps to increase the Portfolio’s exposure to Japanese stocks and during the fourth quarter reduced positions in Nokia, SAP, Flextronics and Telefonica in order to focus more on the health care and consumer sectors. Towards the end of the year, the Portfolio liquidated its position in Encana on the view that much of the rise in this commodity has already played out.
As with all international portfolios, 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.
ENTERPRISE Accumulation Trust
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Enterprise International Growth Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Foreign Common Stocks — 98.58% | |||||
Argentina — 0.01% | |||||
Telecom Argentina Stet-France Telecom (ADR) (o) | 1,000 | $ | 8,749 | ||
Australia — 0.01% | |||||
Woolworths Ltd. | 800 | 7,098 | |||
Canada — 0.06% | |||||
Telus Corporation | 600 | 12,033 | |||
WestJet Airlines Ltd. (a) | 1,025 | 22,538 | |||
34,571 | |||||
Chile — 0.01% | |||||
Compania DE Telecomunicaciones Chile (ADR) (a) (o) | 400 | 5,980 | |||
Finland — 3.52% | |||||
Nokia (a) | 113,110 | 1,949,356 | |||
Stora Enso | 700 | 9,398 | |||
1,958,754 | |||||
France — 17.90% | |||||
Alcatel (a) (o) | 1,000 | 12,834 | |||
AXA | 85,801 | 1,830,320 | |||
BNP Paribas | 27,202 | 1,706,979 | |||
France Telecom (o) | 300 | 8,545 | |||
JC Decaux (a) | 600 | 9,775 | |||
L’Oreal | 13,752 | 1,123,652 | |||
LVMH-Moet Hennessy Louis Vuitton | 19,103 | 1,385,575 | |||
Sanofi-Synthelabo | 24,623 | 1,847,856 | |||
TotalFinaElf | 10,960 | 2,030,770 | |||
Vivendi Universal (a) | 200 | 4,845 | |||
9,961,151 | |||||
Germany — 6.82% | |||||
E.ON | 18,100 | 1,177,220 | |||
SAP | 8,100 | 1,355,748 | |||
Volkswagen | 22,700 | 1,259,822 | |||
3,792,790 | |||||
India — 0.17% | |||||
Satyam Computer Services | 3,200 | 93,856 | |||
Ireland — 3.17% | |||||
Bank of Ireland | 500 | 6,801 | |||
CRH | 85,089 | 1,741,328 | |||
Ryanair Holdings (ADR) (a) (o) | 300 | 15,192 | |||
1,763,321 | |||||
Italy — 2.04% | |||||
ENI (o) | 300 | 5,642 | |||
Sanpaolo IMI | 86,250 | 1,121,069 | |||
Telecom Italia (a) | 3,396 | 6,894 | |||
1,133,605 |
Number of Shares | Value | ||||
Japan — 18.29% | |||||
Asahi Glass Company Ltd. (o) | 168,000 | $ | 1,376,344 | ||
Canon Inc. | 39,000 | 1,811,758 | |||
Dai Nippon Printng Company Ltd. | 1,000 | 14,011 | |||
Komatsu Ltd. | 288,000 | 1,823,209 | |||
Nomura Holdings Inc. | 79,000 | 1,342,224 | |||
NTT DoCoMo Inc. | 805 | 1,821,114 | |||
Sharp Corporation | 125,000 | 1,967,835 | |||
Shiseido Company Ltd. | 1,000 | 12,131 | |||
Sony Corporation (ADR) | 200 | 6,934 | |||
10,175,560 | |||||
Korea — 0.00% | |||||
Sappi Ltd. (ADR) (o) | 200 | 2,734 | |||
Luxembourg — 0.03% | |||||
Arcelor (o) | 900 | 15,635 | |||
Netherlands — 6.33% | |||||
ASML Holdings (a) | 99,763 | 1,971,400 | |||
ING Groep | 66,568 | 1,547,231 | |||
Unilever | 100 | 6,518 | |||
3,525,149 | |||||
Russia — 0.18% | |||||
Gazprom (ADR) | 700 | 18,130 | |||
JSC MMC Norilsk Nickel (ADR) (o) | 300 | 19,545 | |||
Lukoil Holdings (ADR) | 500 | 46,550 | |||
Yukos Corporation (ADR) (o) | 333 | 14,186 | |||
98,411 | |||||
Switzerland — 17.97% | |||||
Alcon Inc. | 300 | 18,162 | |||
Nestle | 3,933 | 979,762 | |||
Novartis | 46,339 | 2,097,658 | |||
Roche Holdings-Genusschein | 10,660 | 1,072,102 | |||
Swiss Reinsurance | 22,140 | 1,490,398 | |||
UBS | 39,127 | 2,671,765 | |||
Zurich Financial Services (a) | 11,641 | 1,670,508 | |||
10,000,355 | |||||
Thailand — 0.00% | |||||
Quality Houses Public | 20 | 3 | |||
Taiwan — 2.75% | |||||
Taiwan Semiconductor Manufacturing Company Ltd. (ADR) (a) | 149,284 | 1,528,668 | |||
United Kingdom — 19.32% | |||||
British Sky Broadcasting (a) | 119,708 | 1,500,900 | |||
Centrica | 1,200 | 4,516 | |||
Diageo (a) | 84,309 | 1,105,184 | |||
Exel | 1,000 | 13,171 | |||
GlaxoSmithKline | 71,550 | 1,633,402 | |||
HBOS | 116,686 | 1,505,673 | |||
HSBC Holdings | 105,136 | 1,646,339 | |||
Imperial Tobacco Group | 400 | 7,847 |
ENTERPRISE Accumulation Trust
3
Enterprise International Growth Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Man Group | 500 | $ | 13,029 | ||
Rio Tinto | 42,319 | 1,164,594 | |||
Royal Bank of Scotland Group | 404 | 11,860 | |||
Shell Transportation & | 700 | 5,187 | |||
Vodafone Group | 858,024 | 2,119,447 | |||
Vodafone Group (ADR) | 700 | 17,528 | |||
10,748,677 | |||||
Total Foreign Common Stocks | |||||
(Identified cost $43,949,767) | 54,855,067 | ||||
Warrants — 0.00% | |||||
Thailand — 0.00% | |||||
Quality Houses Public | 4 | — | |||
Total Warrants | |||||
(Identified cost $0) | — | ||||
Other Investments — 1.12% | |||||
Securities Lending Quality Trust (s) | 621,560 | 621,560 | |||
Total Other Investments | |||||
(Identified cost $621,560) | 621,560 | ||||
Total Investments | |||||
(Identified cost $44,571,327) | $ | 55,476,627 | |||
Other Assets Less Liabilities — 0.30% | 168,381 | ||||
Net Assets — 100% | $ | 55,645,008 | |||
(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 December 31, 2003 |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
(ADR) | American Depository Receipt. |
Industry classifications for the Portfolio as a percentage of total market value at December 31, 2003 are as follows (unaudited):
Industry | ||
Advertising | 0.02% | |
Aerospace & Defense | 0.08% | |
Automobiles | 2.31% | |
Banks | 21.17% | |
Construction Materials | 11.26% | |
Consumer Products | 2.54% | |
Electronic Equipment & Instruments | 6.92% | |
Energy Equipment & Services | 2.15% | |
Food & Drug Retailing | 5.93% | |
Information Technology | 2.57% | |
Insurance | 9.13% | |
Media | 2.76% | |
Oil & Gas | 0.03% | |
Pharmaceuticals | 12.20% | |
Printing & Publishing | 0.03% | |
Semiconductor Equipment & Products | 2.55% | |
Telecommunication Service | 18.35% | |
Total | 100.00% | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise International Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $594,286 (Note 5) | $ | 55,476,627 | ||
Foreign currency at value (cost — $130,067) | 133,641 | |||
Cash | 659,439 | |||
Investment income receivable | 81,504 | |||
Receivable for fund shares sold | 1,679 | |||
Receivable for investments sold | 20 | |||
Other assets | 6,931 | |||
Total assets | 56,359,841 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 59,444 | |||
Payable upon return of securities loaned (Note 5) | 621,560 | |||
Shareholder servicing fees payable | �� | 13,712 | ||
Accrued expenses and other liabilities | 20,117 | |||
Total liabilities | 714,833 | |||
Net assets | $ | 55,645,008 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 74,570,129 | ||
Undistributed (accumulated) net investment income (loss) | 379,430 | |||
Undistributed (accumulated) net realized gain (loss) | (30,217,868 | ) | ||
Unrealized appreciation (depreciation) | 10,913,317 | |||
Net assets | $ | 55,645,008 | ||
Shares outstanding | 12,331,820 | |||
Net asset value per share | $4.51 | |||
Investments at cost | $ | 44,571,327 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise International Growth Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends (net of foreign taxes withheld of $111,804) | $ | 903,267 | ||
Interest | 7,593 | |||
Securities lending income | 18,411 | |||
Total investment income | 929,271 | |||
Expenses: | ||||
Investment advisory fees | 398,487 | |||
Shareholder servicing fees | 98,430 | |||
Custodian and fund accounting fees | 18,404 | |||
Audit and legal fees | 12,279 | |||
Reports to shareholders | 3,447 | |||
Trustees’ fees | 1,730 | |||
Other expenses | 1,536 | |||
Total expenses | 534,313 | |||
Expenses reduced by expense offset arrangements | (1,865 | ) | ||
Total expenses, net of expense offset arrangements | 532,448 | |||
Net investment income (loss) | 396,823 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (8,964,100 | ) | ||
Net realized gain (loss) on foreign currency transactions | 2,737,596 | |||
Net realized gain (loss) on options transactions | (285 | ) | ||
Net change in unrealized gain (loss) on investments | 19,261,806 | |||
Net change in unrealized gain (loss) on foreign currency | 3,253 | |||
Net realized and unrealized gain (loss) | 13,038,270 | |||
Net increase (decrease) in net assets resulting from operations | $ | 13,435,093 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise International Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 396,823 | $ | 660,627 | ||||
Net realized gain (loss) | (6,226,789 | ) | (7,404,125 | ) | ||||
Net change in unrealized gain (loss) | 19,265,059 | (4,673,357 | ) | |||||
Increase (decrease) in net assets resulting from operations | 13,435,093 | (11,416,855 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (229,092 | ) | (340,574 | ) | ||||
Total distributions to shareholders | (229,092 | ) | (340,574 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 14,497,197 | 22,640,621 | ||||||
Shares exchanged due to merger | 1,998,364 | — | ||||||
Reinvestment of distributions | 227,975 | 340,574 | ||||||
Shares redeemed | (18,436,839 | ) | (29,813,401 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (1,713,303 | ) | (6,832,206 | ) | ||||
Total increase (decrease) in net assets | 11,492,698 | (18,589,635 | ) | |||||
Net assets: | ||||||||
Beginning of period | 44,152,310 | 62,741,945 | ||||||
End of period | $ | 55,645,008 | $ | 44,152,310 | ||||
Capital share activity: | ||||||||
Shares issued | 4,063,215 | 5,968,408 | ||||||
Shares issued due to merger | 622,543 | — | ||||||
Shares issued in reinvestment of distributions | 56,151 | 105,115 | ||||||
Shares redeemed | (5,178,342 | ) | (7,791,983 | ) | ||||
Net increase (decrease) | (436,433 | ) | (1,718,460 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | 379,430 | $ | 229,091 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise International Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the years ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 3.46 | $ | 4.33 | $ | 6.94 | $ | 9.29 | $ | 6.74 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | 0.03 | 0.05 | 0.02 | (0.01 | ) | 0.03 | ||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.04 | (0.89 | ) | (2.02 | ) | (1.57 | ) | 2.74 | ||||||||||||
Total from investment operations | 1.07 | (0.84 | ) | (2.00 | ) | (1.58 | ) | 2.77 | ||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.02 | ) | (0.03 | ) | (0.04 | ) | (0.02 | ) | (0.12 | ) | ||||||||||
Distributions from capital gains | — | — | (0.57 | ) | (0.75 | ) | (0.10 | ) | ||||||||||||
Total distributions | (0.02 | ) | (0.03 | ) | (0.61 | ) | (0.77 | ) | (0.22 | ) | ||||||||||
Net asset value, end of period | $ | 4.51 | $ | 3.46 | $ | 4.33 | $ | 6.94 | $ | 9.29 | ||||||||||
Total return | 30.94 | % | (19.46 | )% | (27.80 | )% | (17.21 | )% | 42.12 | % | ||||||||||
Net assets end of period (in thousands) | $ | 55,645 | $ | 44,152 | $ | 62,742 | $ | 100,550 | $ | 134,255 | ||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 1.14 | % | 1.06 | % | 1.09 | % | 1.04 | % | 1.01 | % | ||||||||||
Ratio of expenses to average net assets | 1.14 | % | 1.06 | % | 1.09 | % | 1.04 | % | 1.01 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | 0.85 | % | 1.22 | % | 0.30 | % | (0.06 | )% | 0.41 | % | ||||||||||
Portfolio turnover | 54 | % | 176 | % | 95 | % | 73 | % | 129 | % |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the International Growth Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
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 in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
values (or unit value) per share on each valuation day. 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, U.S. Government or Agency 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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 unrealized gains or losses are recorded. Realized gains or losses are recorded at the time the forward contract matures or by delivery of the currency. 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.
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 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 to each Portfolio based on average net assets. The Portfolio may direct certain security trades to brokers who may pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. This amount is reported in the Statement of Operations.
ENTERPRISE Accumulation Trust
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Notes to Financial Statements — (Continued)
December 31, 2003
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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 0.85%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $98,430 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 December 31, 2003.
For the year ended December 31, 2003, the Portfolio paid brokerage commissions of $2,073 to affiliates of the adviser and subadviser.
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $24,898,334 | $28,414,131 |
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 2003.
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11
Notes to Financial Statements — (Continued)
December 31, 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. At times, these differences are primarily due to differing treatments for foreign currency transactions, capital loss carryforwards utilized, losses deferred due to wash sales 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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||||||
$ | 44,726,323 | $ | 11,426,325 | $ | 672,270 | $ | 10,754,055 |
The tax character of distributions paid was as follows:
Ordinary Income | Long-Term Gain | Total Distributions | ||||||
2003 | $ | 229,092 | — | $ | 229,092 | |||
2002 | 340,574 | — | 340,574 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Long-Term Gain | Capital Loss Carryforward | Expiration | |||||
$ | 487,583 | — | $ | 30,170,740 | 2008-2011 |
Included in the capital loss carryforward is $517,614 acquired in connection with the respective mergers that occurred in 2003 (Note 1). Utilization of these losses may be limited in accordance with Federal Tax regulations.
8. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
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Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
International Growth Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of International Growth Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
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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, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF, EAT and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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.
ENTERPRISE Accumulation Trust
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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 $3.7 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.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 26.73%. The Portfolio underperformed its benchmark, the MSCI World Index, which returned 33.11%. The Portfolio underperformed its peer group, the Lipper Global Funds Index, which returned 31.96%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The Morgan Stanley Capital International World Index (MSCI World Index) is an unmanaged index comprised of more than 1,400 stocks listed on exchanges in the U.S., Europe, Canada, Australia, New Zealand, and the Far East. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Global Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Global Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index.
ENTERPRISE Accumulation Trust
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Enterprise Global Socially Responsive Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
2003 will be remembered as one of the most significant turnaround years for the global equity markets. Good news was abundant. Productivity increased at an impressive rate. Business capital expenditures resumed and the consumer remained a strong supporter of growth. Interest rates and major inflation measures remained stable. Asset class returns worldwide reflected what appears to be growing confidence in the sustainability of the economic improvement. Central banks around the world were able to maintain fairly loose monetary policy. In spite of scandals in the financial services industry, mutual fund flows were strong, and the year-end prognosticators in the press were generally bullish.
What strategies affected Portfolio performance during the period?
Rockefeller maintained a strategy of focusing on high quality stocks with particular emphasis on companies with strong balance sheets. The Portfolio benefited from its positions in industrials and its exposure to natural gas. Rockefeller remained skeptical of a broad based recovery in technology and of long-term structural changes in Japan. Thus, the Portfolio was underweighted in both areas. Lack of exposure to the German market, especially in the first half of the year, proved costly within the European region. This, in combination with an overweight in healthcare, depressed the Portfolio’s overall 2003 performance.
Consumer discretionary stocks held in the Portfolio performed particularly well, including Tiffany & Co., Hyundai Motor Co., and Samsung Electronics. Some of the weaker positions in terms of relative performance were Microsoft, Wal-Mart Stores and XL Capital Ltd.
What changes were made to the Portfolio over the period?
During the year Rockefeller increased Portfolio exposure to economically sensitive sectors such as industrials and materials; among the new positions established were Praxair, 3M, and Assa Abloy, a Swedish industrial with a strong position in locks and security systems. Sales were made in that sector when Diebold achieved the target price. Also broadened was the Portfolio’s energy exposure. After being heavily exposed to retailing, Rockefeller has reigned in the Portfolio’s positions, reflecting high valuations and mounting concern over the consumer’s ability to maintain spending in the face of fewer mortgage refinancings and higher energy prices.
Positions were reduced in retailers as the year progressed and they appreciated in price, including selling completely out of Costco Wholesale Corp. Rockefeller increased the Portfolio’s exposure to U.S. advertising revenues by selling Time Warner and purchasing Viacom. They have invested in stocks of companies that are exposed to printing, digital cameras, flat-panel TVs, color-screened wireless phones, but have stayed underweight the suppliers of networking equipment and software. Financials remain the largest sector by capitalization in the world. However, Portfolio holdings were scaled back related to banking exposure, with additions to insurance and other financial services, as commercial loan growth remains troubling despite improving economic growth.
As with all global portfolios, 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.
ENTERPRISE Accumulation Trust
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Enterprise Global Socially Responsive Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Common Stocks — 94.58% | |||||
Bermuda — 2.45% | |||||
XL Capital Ltd. (Class A) | 1,290 | $ | 100,040 | ||
Canada — 2.27% | |||||
Alcan Inc. | 480 | 22,536 | |||
National Bank of Canada | 2,110 | 70,350 | |||
92,886 | |||||
Denmark — 2.45% | |||||
Danske Bank | 4,290 | 100,305 | |||
France — 4.48% | |||||
BNP Paribas | 1,710 | 107,306 | |||
Schneider Electric | 1,160 | 75,679 | |||
182,985 | |||||
Hong Kong — 1.95% | |||||
China Mobile Ltd. | 26,000 | 79,706 | |||
Japan — 4.84% | |||||
Canon Inc. (ADR) | 1,300 | 61,932 | |||
KAO Corporation | 1,000 | 20,295 | |||
NTT Corporation | 24 | 115,515 | |||
197,742 | |||||
Netherlands — 3.84% | |||||
Philips Electronics | 2,240 | 65,185 | |||
Royal Dutch Petroleum Company (ADR) | 1,190 | 62,344 | |||
STMicroelectronics | 1,080 | 29,189 | |||
156,718 | |||||
Spain — 1.02% | |||||
Telefonica (a) | 2,846 | 41,643 | |||
Sweden — 4.71% | |||||
Assa Abloy (Class B) | 10,000 | 118,608 | |||
Sandvik | 2,140 | 73,623 | |||
192,231 | |||||
Switzerland — 0.97% | |||||
Novartis | 880 | 39,836 | |||
United Kingdom — 10.74% | |||||
BP Amoco | 20,130 | 162,635 | |||
Cadbury Schweppes | 5,760 | 42,145 | |||
GlaxoSmithKline | 3,990 | 91,087 | |||
Reckitt Benckiser | 3,720 | 83,862 | |||
Scottish Power | 8,890 | 59,021 | |||
438,750 | |||||
United States — 54.86% | |||||
3M Company | 390 | 33,162 | |||
AFLAC Inc. | 3,050 | 110,349 | |||
Anadarko Petroleum Corporation | 400 | 20,404 | |||
Apache Corporation | 280 | 22,708 |
Number of Shares | Value | ||||
Bank of America Corporation | 950 | $ | 76,408 | ||
Citigroup Inc. | 3,130 | 151,930 | |||
Comcast Corporation (Class A) (a) | 2,120 | 66,314 | |||
Devon Energy Corporation | 360 | 20,614 | |||
Edwards Lifesciences Corporation (a) | 1,260 | 37,901 | |||
Eli Lilly & Company | 1,540 | 108,308 | |||
Family Dollar Stores Inc. | 900 | 32,292 | |||
Fannie Mae | 1,380 | 103,583 | |||
HCA Inc. | 1,400 | 60,144 | |||
Illinois Tool Works Inc. | 240 | 20,138 | |||
Ingersoll-Rand Company Ltd. | 1,450 | 98,426 | |||
International Business Machines Corporation | 800 | 74,144 | |||
Lexmark International Group Inc. (a) | 920 | 72,349 | |||
McKesson Corporation | 2,520 | 81,043 | |||
Mellon Financial Corporation | 1,860 | 59,725 | |||
Microsoft Corporation | 1,870 | 51,500 | |||
Noble Energy Inc. | 470 | 20,882 | |||
PepsiCo Inc. | 2,680 | 124,942 | |||
Pfizer Inc. | 4,910 | 173,470 | |||
Praxair Inc. | 2,140 | 81,748 | |||
Target Corporation | 1,940 | 74,496 | |||
Tiffany & Company | 750 | 33,900 | |||
UnionBanCal Corporation | 1,010 | 58,115 | |||
Viacom Inc. (Class B) | 1,430 | 63,463 | |||
Wal-Mart Stores Inc. | 1,690 | 89,654 | |||
Walt Disney Company | 2,610 | 60,891 | |||
WellPoint Health Networks Inc. (a) | 1,630 | 158,094 | |||
2,241,097 | |||||
Total Common Stocks | |||||
(Identified cost $3,434,949) | 3,863,939 | ||||
Preferred Stocks — 3.32% | |||||
Korea — 3.32% | |||||
Hyundai Motor Company | 3,770 | 71,825 | |||
Samsung Electronics Company Ltd. | 310 | 63,873 | |||
135,698 | |||||
Total Preferred Stocks | |||||
(Identified cost $103,622) | 135,698 | ||||
Total Investments | |||||
(Identified cost $3,538,571) | $ | 3,999,637 | |||
Other Assets Less Liabilities — 2.10% | 85,623 | ||||
Net Assets — 100% | $ | 4,085,260 | |||
(a) | Non-income producing security. |
(ADR) | American Depository Receipt. |
ENTERPRISE Accumulation Trust
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Enterprise Global Socially Responsive Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Industry classifications for the Portfolio as a percentage of total market value at December 31, 2003 are as follows (unaudited):
Industry | ||
Automotive | 1.79% | |
Banking | 11.33% | |
Broadcasting | 1.58% | |
Business Services | 1.55% | |
Cable | 1.68% | |
Chemicals | 2.04% | |
Computer Hardware | 1.70% | |
Computer Software | 1.29% | |
Consumer Durables | 2.09% | |
Consumer Products | 3.56% | |
Crude Oil & Petroleum | 2.07% | |
Electronics | 5.14% | |
Energy | 1.45% | |
Entertainment & Leisure | 1.52% | |
Food & Beverages | 4.05% |
Industry | ||
Health Care | 3.53% | |
Insurance | 6.66% | |
Manufacturing | 5.63% | |
Medical Services & Products | 4.89% | |
Metals & Mining | 0.56% | |
Misc. Financial Services | 6.38% | |
Oil Services | 5.64% | |
Pharmaceuticals | 9.69% | |
Printing & Publishing | 1.80% | |
Retail | 5.72% | |
Semiconductors | 0.73% | |
Telecommunications | 5.93% | |
Total | 100.00% | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Global Socially Responsive Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value | $ | 3,999,637 | ||
Foreign currency at value (cost — $506) | 521 | |||
Cash | 72,101 | |||
Investment income receivable | 3,320 | |||
Receivable for fund shares sold | 11,043 | |||
Receivable for investments sold | 29 | |||
Due from investment adviser | 1,710 | |||
Other assets | 249 | |||
Total assets | 4,088,610 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 216 | |||
Shareholder servicing fees payable | 301 | |||
Accrued expenses and other liabilities | 2,833 | |||
Total liabilities | 3,350 | |||
Net assets | $ | 4,085,260 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 3,705,806 | ||
Undistributed (accumulated) net investment income (loss) | — | |||
Undistributed (accumulated) net realized gain (loss) | (81,715 | ) | ||
Unrealized appreciation (depreciation) | 461,169 | |||
Net assets | $ | 4,085,260 | ||
Shares outstanding | 377,278 | |||
Net asset value per share | $10.83 | |||
Investments at cost | $ | 3,538,571 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Global Socially Responsive Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends (net of foreign taxes withheld of $2,085) | $ | 31,506 | ||
Interest | 1,428 | |||
Total investment income | 32,934 | |||
Expenses: | ||||
Investment advisory fees | 17,299 | |||
Custodian and fund accounting fees | 12,671 | |||
Other expenses | 105 | |||
Total expenses | 30,075 | |||
Expense reimbursement | (5,088 | ) | ||
Total expenses, net of reimbursement | 24,987 | |||
Net investment income (loss) | 7,947 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 7,855 | |||
Net realized gain (loss) on foreign currency transactions | 38,626 | |||
Net change in unrealized gain (loss) on investments | 504,104 | |||
Net change in unrealized gain (loss) on foreign currency | 15 | |||
Net realized and unrealized gain (loss) | 550,600 | |||
Net increase (decrease) in net assets resulting from operations | $ | 558,547 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Global Socially Responsive Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 2003 | For the Period January 24, 2002 through December 31, 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 7,947 | $ | 4,298 | ||||
Net realized gain (loss) | 46,481 | (129,133 | ) | |||||
Net change in unrealized gain (loss) | 504,119 | (42,950 | ) | |||||
Increase (decrease) in net assets resulting from operations | 558,547 | (167,785 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (11,323 | ) | (4,510 | ) | ||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | (11,323 | ) | (4,510 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 3,648,505 | 1,463,509 | ||||||
Reinvestment of distributions | 3,378 | 1,324 | ||||||
Shares redeemed | (1,337,042 | ) | (69,343 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 2,314,841 | 1,395,490 | ||||||
Total increase (decrease) in net assets | 2,862,065 | 1,223,195 | ||||||
Net assets: | ||||||||
Beginning of period | 1,223,195 | — | ||||||
End of period | $ | 4,085,260 | $ | 1,223,195 | ||||
Capital share activity: | ||||||||
Shares issued | 369,613 | 150,287 | ||||||
Shares issued in reinvestment of distributions | 318 | 155 | ||||||
Shares redeemed | (135,390 | ) | (7,705 | ) | ||||
Net increase (decrease) | 234,541 | 142,737 | ||||||
Undistributed (accumulated) net investment income (loss) | $ | — | $ | — | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Global Socially Responsive Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
Year Ended December 31, 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 | 0.04 | 0.04 | ||||||
Net realized and unrealized gain (loss) on investments | 2.25 | (1.44 | ) | |||||
Total from investment operations | 2.29 | (1.40 | ) | |||||
Less dividends and distributions: | ||||||||
Dividends from net investment income | (0.03 | ) | (0.03 | ) | ||||
Distributions from capital gains | — | — | ||||||
Total distributions | (0.03 | ) | (0.03 | ) | ||||
Net asset value, end of period | $ | 10.83 | $ | 8.57 | ||||
Total return | 26.73 | % | (13.98 | )%B | ||||
Net assets end of period (in thousands) | $ | 4,085 | $ | 1,223 | ||||
Ratio of expenses to average net assets | 1.30 | % | 1.30 | %A | ||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.56 | % | 2.84 | %A | ||||
Ratio of net investment income (loss) to average net assets | 0.41 | % | 0.42 | %A | ||||
Portfolio turnover rate | 34 | % | 46 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Global Socially Responsive Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Global Socially Responsive Portfolio in the preparation of its financial statements:
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.
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, U.S. Government or Agency 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
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 unrealized gains or losses are recorded. Realized gains or losses are recorded at the time the forward contract matures or by delivery of the currency. 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.
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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 0.90%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $1,683 for these services. ECM has contractually agreed to limit the Portfolio’s expense ratio to 1.30% through April 30, 2004.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $2,837,248 in the Portfolio at December 31, 2003.
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
December 31, 2003
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $2,981,519 | $666,250 |
5. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for foreign currency transactions, capital loss carryforwards utilized and losses deferred due to wash sales.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||
$3,544,323 | $462,908 | $7,594 | $455,314 |
The tax character of distributions paid was as follows:
Ordinary | Long-Term Gain | Total | ||||
2003 | $11,323 | — | $11,323 | |||
2002 | 4,510 | — | 4,510 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed | Undistributed Long-Term Gain | Capital Loss | Expiration | |||
— | — | $75,963 | 2010 |
7. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
11
Report of Independent Auditors
To the Board of Trustees of Enterprise Accumulation Trust and Shareholders of Global Socially Responsive Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Globally Socially Responsive Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period January 24, 2002 (commencement of operations) through December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
12
Tax Reporting Information (Unaudited)
The portfolio had 100% of its 2003 ordinary income distributions qualify for the corporate dividends received deduction (“DRD”) and 100% of the ordinary income distributions qualify as qualifying dividend income (“QDI”).
ENTERPRISE Accumulation Trust
13
DIRECTORSAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR SELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EAT, EGF and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
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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.
ENTERPRISE Accumulation Trust
15
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 $26 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 capital appreciation.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
The Portfolio commenced operations on May 1, 2003. For the period ended December 31, 2003, the Portfolio returned 10.78%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 22.76%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The S&P 500 Index is an unmanaged broad-based index that includes the common stock of 500 companies that tend to be important leaders in important industries within the U.S. economy. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index. The performance period for the S&P 500 Index is 4/30/03 to 12/31/03.
ENTERPRISE Accumulation Trust
1
Enterprise Mergers and Acquisitions Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
Worldwide merger activity rebounded in 2003 following two consecutive down years. Total M&A volume worldwide for the year was approximately $1.3 trillion, versus approximately $1.2 trillion in 2002. While the increase may seem modest, it must be viewed in contrast to the significant annual drops in global M&A volume that occurred between 2000 and 2002. Cross border activity volume also rose for the year. This is partially attributed to the valuation of the Euro relative to the U.S. dollar, as the euro has risen sharply from its 2002 level.
U.S. deal activity also rose in 2003. However, the number of transactions remained roughly the same at approximately 5,900. The most active sector for deals was commercial banking, followed by insurance. Financials were boosted by Bank of America’s October announcement to acquire FleetBoston Financial. Not only was this the largest deal of the sector, but it accounted for more than one third of dollar volume within the industry.
What strategies affected Portfolio performance during the period?
The beginning of the year was dominated by geopolitical concerns. The weight of the impending war with Iraq, and the threat of problems with North Korea took their toll on U.S. equities. Coupled with the crisis of confidence, it is not surprising that deal activity was not the focus of business executives. Gabelli’s strategy, in an environment with very few deals announced, was to maintain a high cash position, rather than stretch for deals that did not meet their criteria. Toward the middle of the year, Gabelli witnessed the return of the hostile deal, which they viewed as very positive for deal flow. Hostile takeovers are often seen as a sign of an improving economy and a return of confidence in the corporate world. As deal volume increased, Gabelli was able to increase their investments for this portion of the Portfolio. In the potential deals section of the Portfolio, they registered solid returns. The Portfolio was fully invested in this portion, and thus took advantage of the powerful rally in stocks.
What changes were made to the Portfolio over the period?
Deals that were purchased and sold during the year included J.D. Edwards & Co., which was bought by PeopleSoft. The merged company is the second largest enterprise applications vendor in the world. ICN Pharmaceuticals completed its cash tender offer for shares of Ribapharm. Finally, the Portfolio’s position in SangStat Medical was unwound when that company was bought by Genzyme for $22.50 per share.
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 Mergers and Acquisitions Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 36.16% | |||||
Aerospace — 1.97% | |||||
Titan Corporation (a) | 3,000 | $ | 65,430 | ||
Banking — 5.52% | |||||
Abington Bancorp Inc. | 500 | 19,295 | |||
Allegiant Bancorp Inc. | 1,000 | 28,050 | |||
California Independent Bancorp | 500 | 19,250 | |||
CoVest Bancshares Inc. | 500 | 13,700 | |||
First Essex Bancorp Inc. | 500 | 29,070 | |||
First Republic Bank | 300 | 10,740 | |||
Resource Bankshares Corporation | 500 | 15,765 | |||
Staten Island Bancorp Inc. | 1,000 | 22,500 | |||
United National Bancorp | 702 | 25,083 | |||
183,453 | |||||
Broadcasting — 1.03% | |||||
Acme Communications Inc. (a) | 1,000 | 8,790 | |||
Fisher Communications Inc. (a) | 300 | 15,300 | |||
Young Broadcasting Inc. (Class A) (a) | 500 | 10,020 | |||
34,110 | |||||
Business Services — 0.45% | |||||
Concord EFS Inc. (a) | 1,000 | 14,840 | |||
Cable — 1.76% | |||||
Cablevision Systems Corporation | 2,500 | 58,475 | |||
Chemicals — 0.37% | |||||
Hercules Inc. (a) | 1,000 | 12,200 | |||
Computer Services — 0.00% | |||||
StorageNetworks Inc. (a) (d) | 1,500 | — | |||
Computer Software — 0.47% | |||||
SoundView Technology Group Inc. (a) | 1,000 | 15,490 | |||
Consumer Durables — 1.10% | |||||
Dana Corporation | 2,000 | 36,700 | |||
Consumer Products — 3.42% | |||||
The Dial Corporation | 4,000 | 113,880 | |||
Electrical Equipment — 0.34% | |||||
Thomas & Betts Corporation (a) | 500 | 11,445 | |||
Energy — 1.48% | |||||
Unisource Energy Corporation | 2,000 | 49,320 | |||
Entertainment & Leisure — 0.51% | |||||
Metro Goldwyn Mayer Inc. (a) | 1,000 | 17,090 | |||
Food, Beverages & Tobacco — 3.50% | |||||
Del Monte Foods Company (a) | 1,000 | 10,400 | |||
Dreyer’s Grand Ice Cream Holdings | 500 | 38,875 | |||
Flowers Foods Inc. | 500 | 12,900 |
Number of Shares | Value | ||||
Horizon Organic Holding | 1,000 | $ | 23,950 | ||
Sylvan Inc. (a) | 1,000 | 12,100 | |||
Tootsie Roll Industries Inc. | 500 | 18,000 | |||
116,225 | |||||
Medical Instruments — 2.17% | |||||
I-STAT Corporation (a) | 2,000 | 30,600 | |||
Igen International (a) | 300 | 17,673 | |||
Interpore International (a) | 1,000 | 13,000 | |||
Young Innovations | 300 | 10,800 | |||
72,073 | |||||
Misc. Financial Services — 0.66% | |||||
The South Financial Group Inc. | 790 | 22,009 | |||
Paper Products — 0.00% | |||||
Boise Cascade Corporation | 1 | 9 | |||
Pharmaceuticals — 2.51% | |||||
Bristol-Myers Squibb Company | 500 | 14,300 | |||
Esperion Therapeutics Inc. (a) | 2,000 | 69,220 | |||
83,520 | |||||
Printing & Publishing — 0.71% | |||||
Pulitzer Inc. | 300 | 16,200 | |||
Readers Digest Association Inc. | 500 | 7,330 | |||
23,530 | |||||
Real Estate — 1.71% | |||||
American Home Mortgage Investment Corporation | 515 | 11,598 | |||
ElderTrust | 1,000 | 12,530 | |||
Newhall Land & Farming Company California | 300 | 12,114 | |||
Taubman Centers Inc. | 1,000 | 20,600 | |||
56,842 | |||||
Retail — 0.25% | |||||
Duane Reade Inc. (a) | 500 | 8,460 | |||
Savings and Loan — 4.69% | |||||
Alliance Bancorp New England Inc. | 500 | 19,755 | |||
Connecticut Bancshares Inc. | 500 | 25,770 | |||
Klamath First Bancorp Inc. | 500 | 13,270 | |||
MAF Bancorp Inc. | 395 | 16,550 | |||
New York Community Bancorp Inc. | 375 | 14,269 | |||
Pittsburgh Financial Corporation (d) | 1,000 | 19,870 | |||
Progress Financial Corporation | 200 | 6,168 | |||
Skibo Financial Corp | 1,000 | 16,800 | |||
Troy Financial Corporation | 670 | 23,450 | |||
155,902 | |||||
Utilities — 0.89% | |||||
Duquesne Light Holdings Inc. | 1,000 | 18,340 | |||
Southwest Gas Corporation | 500 | 11,225 | |||
29,565 |
ENTERPRISE Accumulation Trust
3
Enterprise Mergers and Acquisitions Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares or Principal Amount | Value | |||||
Wireless Communications — 0.65% | ||||||
AT&T Wireless Services Inc. (a) | 1,000 | $ | 7,990 | |||
Price Communications | 1,000 | 13,730 | ||||
21,720 | ||||||
Total Domestic Common Stocks | ||||||
(Identified cost $1,110,132) | 1,202,288 | |||||
Foreign Stocks — 3.98% | ||||||
Apparel & Textiles — 1.29% | ||||||
Gucci Group (ADR) | 500 | 42,775 | ||||
Banking — 2.03% | ||||||
Bank of Bermuda Ltd. | 1,500 | 67,425 | ||||
Manufacturing — 0.66% | ||||||
Cooper Industries Ltd. | 300 | 17,379 | ||||
Denison International (ADR) (a) | 200 | 4,780 | ||||
22,159 | ||||||
Metals & Mining — 0.00% | ||||||
Alcan Inc. | 1 | 2 | ||||
Total Foreign Stocks | ||||||
(Identified cost $125,563) | 132,361 | |||||
Short-Term U. S. Government Obligations — 57.40% | ||||||
U. S. Treasury Bills — 57.40% | ||||||
0.90% due 01/02/04 (e) | $ | 840,000 | 839,979 | |||
0.84% due 01/22/04 (e) | 100,000 | 99,951 | ||||
0.915% due 02/05/04 (e) | 150,000 | 149,867 | ||||
0.92% due 02/19/04 (e) | 420,000 | 419,474 | ||||
0.86% due 03/25/04 (e) | 400,000 | 399,197 | ||||
1,908,468 |
Principal Amount | Value | |||||
Total Short-Term U. S. Government Obligations | ||||||
(Identified cost $1,908,468) | $ | 1,908,468 | ||||
Repurchase Agreement — 4.18% | ||||||
State Street Bank & Trust | $ | 139,000 | 139,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $139,000) | 139,000 | |||||
Total Investments | ||||||
(Identified cost $3,283,163) | $ | 3,382,117 | ||||
Other Assets Less Liabilities — (1.72)% | (57,346) | |||||
Net Assets — 100% | $ | 3,324,771 | ||||
(a) | Non-income producing security. |
(e) | The rate shown is the current effective yield. |
(d) | Security is fair valued at December 31, 2003. |
(ADR) | American Depository Receipt. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Mergers and Acquisitions Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | |||
Investments at value | $ | 3,382,117 | |
Cash | 866 | ||
Investment income receivable | 1,397 | ||
Due from investment adviser | 1,528 | ||
Other assets | 72 | ||
Total assets | 3,385,980 | ||
Liabilities: | |||
Payable for fund shares redeemed | 59,067 | ||
Shareholder servicing fees payable | 606 | ||
Accrued expenses and other liabilities | 1,536 | ||
Total liabilities | 61,209 | ||
Net assets | $ | 3,324,771 | |
Analysis of net assets: | |||
Paid-in capital | $ | 3,187,462 | |
Undistributed (accumulated) net investment income (loss) | — | ||
Undistributed (accumulated) net realized gain (loss) | 38,355 | ||
Unrealized appreciation (depreciation) | 98,954 | ||
Net assets | $ | 3,324,771 | |
Shares outstanding | 301,504 | ||
Net asset value per share | $11.03 | ||
Investments at cost | $ | 3,283,163 | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Mergers and Acquisitions Portfolio
STATEMENT OF OPERATIONS
For the Period May 1, 2003(1) to December 31, 2003 | ||||
Investment income: | ||||
Dividends (net of foreign taxes withheld of $129) | $ | 7,704 | ||
Interest | 5,872 | |||
Total investment income | 13,576 | |||
Expenses: | ||||
Investment advisory fees | 10,536 | |||
Custodian and fund accounting fees | 5,466 | |||
Shareholder servicing fees | 2,415 | |||
Audit and legal fees | 651 | |||
Reports to shareholders | 146 | |||
Trustees’ fees | 58 | |||
Other expenses | 197 | |||
Total expenses | 19,469 | |||
Expense reimbursement | (2,495 | ) | ||
Total expenses, net of reimbursement | 16,974 | |||
Net investment income (loss) | (3,398 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 55,365 | |||
Net realized gain (loss) on foreign currency transactions | (251 | ) | ||
Net change in unrealized gain (loss) on investments | 98,954 | |||
Net realized and unrealized gain (loss) | 154,068 | |||
Net increase (decrease) in net assets resulting from operations | $ | 150,670 | ||
(1) | Commencement of operations. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Mergers and Acquisitions Portfolio
STATEMENT OF CHANGES IN NET ASSETS
For the Period May 1, 2003 through | ||||
From operations: | ||||
Net investment income (loss) | $ | (3,398 | ) | |
Net realized gain (loss) | 55,114 | |||
Net change in unrealized gain (loss) | 98,954 | |||
Increase (decrease) in net assets resulting from operations | 150,670 | |||
Distributions to shareholders from: | ||||
Net investment income | — | |||
Net realized gains | (13,361 | ) | ||
Total distributions to shareholders | (13,361 | ) | ||
From capital share transactions: | ||||
Shares sold | 3,984,246 | |||
Reinvestment of distributions | 13,361 | |||
Shares redeemed | (810,145 | ) | ||
Total increase (decrease) in net assets resulting from capital share transactions | 3,187,462 | |||
Total increase (decrease) in net assets | 3,324,771 | |||
Net assets: | ||||
Beginning of period | — | |||
End of period | $ | 3,324,771 | ||
Capital share activity: | ||||
Shares issued | 374,496 | |||
Shares issued in reinvestment of distributions | 1,216 | |||
Shares redeemed | (74,208 | ) | ||
Net increase (decrease) | 301,504 | |||
Undistributed (accumulated) net investment income (loss) | $ | — | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Mergers and Acquisitions Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the Period May 1, 2003 through December 31, 2003 | ||||
Net asset value, beginning of period | $ | 10.00 | ||
Income from investment operations: | ||||
Net investment income (loss)C | (0.02 | ) | ||
Net realized and unrealized gain (loss) on investments | 1.10 | |||
Total from investment operations | 1.08 | |||
Less dividends and distributions: | ||||
Dividends from net investment income | — | |||
Distributions from capital gains | (0.05 | ) | ||
Total distributions | (0.05 | ) | ||
Net asset value, end of period | $ | 11.03 | ||
Total return | 10.78 | %B | ||
Net assets end of period (in thousands) | $ | 3,325 | ||
Ratio of expenses to average net assets | 1.45 | %A | ||
Ratio of expenses to average net assets (excluding reimbursement) | 1.66 | %A | ||
Ratio of net investment income (loss) to average net assets | (0.29 | )%A | ||
Portfolio turnover rate | 87 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Mergers and Acquisitions Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Mergers and Acquisitions Portfolio in the preparation of its financial statements:
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.
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, U.S Government or Agency 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
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of: 0.90%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the period ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $2,415 for these services. ECM has contractually agreed to limit the Portfolio’s expense ratio to 1.45% through April 30, 2004.
4. Investment Transactions
For the period ended December 31, 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 | |||
— | — | $1,951,623 | $759,856 |
5. Borrowings
The Trust and another series of mutual funds 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 December 31, 2003.
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
December 31, 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. At times, these differences are primarily due to differing treatments for foreign currency transactions and net operating losses.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||
$3,283,163 | $99,925 | $971 | $98,954 |
The tax character of distributions paid in 2003 was as follows:
Ordinary Income | Long-Term Gain | Total Distributions | ||
$13,361 | — | $13,361 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Long-Term Gain | Capital Loss | ||
$38,355 | — | — |
7. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
11
Report of Independent Auditors
To the Board of Trustees of Enterprise Accumulation Trust and Shareholders of Mergers and Acquisitions Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Mergers and Acquisitions Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the period May 1, 2003 (commencement of operations) through December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
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Trustees and Officers
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF, EAT and ECM, Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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 $394 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 growth of capital over time.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 20.91%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 28.69%. The Portfolio underperformed its peer group, the Lipper Flexible Portfolio Funds Index, which returned 23.03%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The S&P 500 Index is an unmanaged broad-based index that includes the common stock of 500 companies that tend to be important leaders in important industries within the U.S. economy. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper Flexible Portfolio Funds Index is an unmanaged index of the 30 largest funds, based on year-end net asset value, in the Lipper Flexible Portfolio Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index.
ENTERPRISE Accumulation Trust
1
Enterprise Managed Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
Following three consecutive years of negative returns, U.S. equities rebounded in 2003. The year began slowly, as equities fell 3.1% in the first quarter, against a backdrop of tension with Iraq and North Korea, and disappointing economic data. However, equities surged 32.9% over the final three quarters of the year, as geopolitical tensions eased following the end of major military action in Iraq and unprecedented monetary and fiscal stimulus helped to fuel an economic recovery.
What strategies affected Portfolio performance during the period?
For the year, asset allocation positioning added value, with the majority of the added value being generated in the fourth quarter. The Portfolio entered the fourth quarter overweight equities and underweight bonds and maintained this positioning throughout the quarter. Wellington’s pro-cyclical stance was additive to relative performance, as equities outperformed bonds by a wide margin during the quarter.
For the year, the Portfolio benefited from strong stock selection in the health care and energy sectors. The Portfolio had been consistently overweight the health care sector and, in particular, a large overweight among pharmaceutical names. Strong contributors in the pharmaceutical industry included Pfizer, Inc., Wyeth, and Abbott Laboratories. A particularly strong contributor in the health care equipment industry was Guidant Corporation, a manufacturer of implantable defibrillators (ICD) to regulate heart rhythm that reported better than expected results on the back of strong ICD growth and a growing drug eluting stent business.
Within the energy sector, the Portfolio’s holdings in oil and gas names like ExxonMobil, ChevronTexaco Corporation and Chesapeake Energy Corporation were strong contributors to performance. Robust commodity prices have been a significant positive for these companies as OPEC continues to manage supply effectively to maintain $25-$30 per barrel pricing for oil.
On the negative side, weak stock selection in the industrials and information technology sectors negatively impacted performance. In the industrials sector, weak performers include defense contractors Northrop Grumman and Precision Castparts Corporation and airfreight and logistics operator CNF. Despite weak stock selection in the information technology sector, the Portfolio benefited from its overweight allocation to the sector due to the strong performance, of the sector for the year. Specific names that negatively impacted performance were Auto Data Processing and Cadence Design Systems, Inc.
What changes were made to the Portfolio over the period?
Heading into 2003, Wellington maintained an underweight to equities, believing that there would be disappointing news on the economic front and a growing certainty of war with Iraq. In February, Wellington eliminated the equity underweight as general sentiment regarding the war and its likely outcome pointed to a possible equity rally. However, in light of the uncertainties, they retained a low level of active risk throughout March.
During the second quarter, Wellington gradually built an overweight position in stocks on the belief that support for equities would be provided by ample liquidity, tax rebates, low borrowing rates, a weaker U.S. dollar, falling oil prices, diminishing corporate write-offs, a rebound in risk-taking, and a lack of competition from bonds. Wellington increased the equity overweight during the third quarter and maintained a generally pro-cyclical stance through the end of the year. The overweight to equities and underweight to bonds was additive to relative performance during the fourth quarter, as signs of a continued global economic expansion continued to emerge and equities outperformed bonds.
In the equity portion of the Portfolio, Wellington maintained a generally pro-cyclical stance. In particular, Wellington increased the Portfolio’s sector weight in the information technology and consumer discretionary sectors. Within technology, Wellington took advantage of the upturn in fundamentals and the improving cyclical case for semiconductors to add to positions. Names added include Analog Devices, Inc., Texas Instruments, Inc., and Applied Materials, Inc. In the consumer discretionary sector, the Portfolio benefited from an overweight in media related
ENTERPRISE Accumulation Trust
2
Enterprise Managed Portfolio
SUBADVISER’S COMMENTS — (Continued)
names, as these companies raised earnings guidance due to increasing visibility about advertising spending. Wellington funded purchases by reducing the Portfolio’s overweight to health care via sales of HCA, Schering-Plough and Baxter International and increasing the underweight to financials via sales of Banknorth Group and UnionBanCal.
In the fixed-income portion of the Portfolio, Wellington maintained an underweight exposure to government securities. Despite the vulnerability to high prepayment rates, Wellington maintained an overweight to the mortgage-backed sector due to favorable valuations and support from yield-seeking investors. Near year end, Wellington slightly decreased the weighting in the mortgage-backed sector versus the Lehman Brothers Aggregate Index, particularly in those segments of the sector that are most vulnerable to extension risk from rising interest rates. Over the course of the year, however, the Portfolio maintained an overweight to the investment grade corporate sector as credit quality generally benefits from stronger economic growth in a low-inflation environment.
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
3
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Number of Shares | Value | ||||
Domestic Common Stocks — 71.23% | |||||
Advertising — 1.06% | |||||
Lamar Advertising Company (a) | 86,000 | $ | 3,209,520 | ||
Omnicom Group Inc. | 47,300 | 4,130,709 | |||
7,340,229 | |||||
Aerospace — 2.16% | |||||
General Dynamics Corporation | 48,100 | 4,347,759 | |||
Lockheed Martin Corporation | 98,400 | 5,057,760 | |||
United Technologies Corporation | 59,200 | 5,610,384 | |||
15,015,903 | |||||
Airlines — 0.05% | |||||
JetBlue Airways Corporation (a) (o) | 12,500 | 331,500 | |||
Apparel & Textiles — 0.59% | |||||
American Eagle Outfitters Inc. (a) | 29,200 | 478,880 | |||
Columbia Sportswear | 30,800 | 1,678,600 | |||
Liz Claiborne Inc. | 53,900 | 1,911,294 | |||
4,068,774 | |||||
Automotive — 0.60% | |||||
Lear Corporation | 27,700 | 1,698,841 | |||
O’Reilly Automotive Inc. (a) | 63,800 | 2,447,368 | |||
4,146,209 | |||||
Banking — 3.09% | |||||
Bank of America Corporation | 93,500 | 7,520,205 | |||
Bank of Hawaii Corporation | 26,000 | 1,097,200 | |||
Bank One Corporation | 158,300 | 7,216,897 | |||
Wachovia Corporation | 120,700 | 5,623,413 | |||
21,457,715 | |||||
Biotechnology — 0.15% | |||||
Genzyme Corporation (a) | 20,300 | 1,001,602 | |||
Building & Construction — 0.73% | |||||
D.R. Horton Inc. | 56,000 | 2,422,560 | |||
Masco Corporation | 95,100 | 2,606,691 | |||
5,029,251 | |||||
Business Services — 0.94% | |||||
Aramark Corporation (Class B) | 54,200 | 1,486,164 | |||
ChoicePoint Inc. (a) | 85,100 | 3,241,459 | |||
Medco Health Solutions Inc. (a) | 53,500 | 1,818,465 | |||
6,546,088 | |||||
Cable — 1.41% | |||||
Comcast Corporation (Class A) (a) | 200,400 | 6,268,512 | |||
EchoStar Communications Corporation (Class A) (a) | 103,600 | 3,522,400 | |||
9,790,912 |
Number of Shares | Value | ||||
Chemicals — 0.63% | |||||
Cabot Microelectronics | 12,600 | $ | 617,400 | ||
Du Pont (E. I.) de Nemours & Company | 82,200 | 3,772,158 | |||
4,389,558 | |||||
Computer Hardware — 3.07% | |||||
CDW Corporation | 19,100 | 1,103,216 | |||
Cisco Systems Inc. (a) | 269,200 | 6,538,868 | |||
Hewlett-Packard Company | 305,200 | 7,010,444 | |||
International Business Machines Corporation | 71,800 | 6,654,424 | |||
21,306,952 | |||||
Computer Services — 2.05% | |||||
Brocade Communications Systems | 154,300 | 891,854 | |||
Checkfree Corporation (a) (o) | 26,300 | 727,195 | |||
Dell Inc. (a) | 64,300 | 2,183,628 | |||
First Data Corporation | 92,200 | 3,788,498 | |||
Ingram Micro Inc. (a) | 66,100 | 1,050,990 | |||
Manhattan Associates Inc. (a) | 20,500 | 566,620 | |||
SunGard Data Systems Inc. (a) | 149,700 | 4,148,187 | |||
Western Digital Corporation (a) | 75,700 | 892,503 | |||
14,249,475 | |||||
Computer Software — 2.91% | |||||
Cadence Design Systems Inc. (a) | 58,829 | 1,057,745 | |||
Dendrite International Inc. (a) (o) | 47,400 | 742,758 | |||
Microsoft Corporation | 633,200 | 17,438,328 | |||
Siebel Systems Inc. (a) | 70,200 | 973,674 | |||
20,212,505 | |||||
Consumer Products — 1.33% | |||||
Gillette Company | 127,500 | 4,683,075 | |||
Procter & Gamble Company | 45,500 | 4,544,540 | |||
9,227,615 | |||||
Consumer Services — 0.15% | |||||
ITT Educational Services Inc. (a) | 22,600 | 1,061,522 | |||
Containers/Packaging — 1.00% | |||||
Pactiv Corporation (a) | 291,200 | 6,959,680 | |||
Crude Oil & Petroleum — 2.39% | |||||
ChevronTexaco Corporation | 71,500 | 6,176,885 | |||
Exxon Mobil Corporation | 253,200 | 10,381,200 | |||
16,558,085 | |||||
Drugs & Medical Products — 0.23% | |||||
Cooper Companies Inc. (o) | 34,100 | 1,607,133 | |||
Education — 0.08% | |||||
Apollo Group Inc. (Class A) (a) | 8,400 | 579,012 |
ENTERPRISE Accumulation Trust
4
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Electrical Equipment — 1.85% | |||||
General Electric Company | 413,900 | $ | 12,822,622 | ||
Electronics — 0.19% | |||||
Sanmina-SCI Corporation (a) | 103,400 | 1,303,874 | |||
Energy — 1.82% | |||||
American Power Conversion Corporation | 181,600 | 4,440,120 | |||
Black Hills Corporation | 45,600 | 1,360,248 | |||
Chesapeake Energy Corporation (o) | 200,900 | 2,728,222 | |||
Exelon Corporation | 43,300 | 2,873,388 | |||
Swift Energy Company (a) (o) | 74,500 | 1,255,325 | |||
12,657,303 | |||||
Fiber Optics — 0.33% | |||||
Corning Inc. (a) | 218,200 | 2,275,826 | |||
Finance — 1.33% | |||||
E*TRADE Group Inc. (a) | 136,000 | 1,720,400 | |||
Federated Investors Inc. | 66,600 | 1,955,376 | |||
Goldman Sachs Group Inc. | 22,800 | 2,251,044 | |||
Legg Mason Inc. | 42,700 | 3,295,586 | |||
9,222,406 | |||||
Food, Beverages & Tobacco — 3.49% | |||||
Altria Group Inc. | 100,100 | 5,447,442 | |||
Coca-Cola Company | 137,300 | 6,967,975 | |||
Coca-Cola Enterprises Inc. | 182,700 | 3,995,649 | |||
Constellation Brands Inc. (Class A) (a) | 50,900 | 1,676,137 | |||
Hain Celestial Group Inc. (a) (o) | 69,200 | 1,606,132 | |||
Krispy Kreme Doughnuts Inc. (a) (o) | 20,600 | 753,960 | |||
PepsiCo Inc. | 81,200 | 3,785,544 | |||
24,232,839 | |||||
Gaming — 0.22% | |||||
International Game Technology | 41,800 | 1,492,260 | |||
Health Care — 1.20% | |||||
Anthem Inc. (a) | 35,300 | 2,647,500 | |||
Health Net Inc. (a) | 49,700 | 1,625,190 | |||
Oxford Health Plans Inc. | 37,400 | 1,626,900 | |||
Triad Hospitals Inc. (a) | 71,900 | 2,392,113 | |||
8,291,703 | |||||
Insurance — 1.03% | |||||
Arthur J. Gallagher & Company | 100,600 | 3,268,494 | |||
Marsh & McLennan Companies Inc. | 81,000 | 3,879,090 | |||
7,147,584 | |||||
Manufacturing — 0.64% | |||||
3M Company | 49,700 | 4,225,991 | |||
Precision Castparts Corporation | 5,200 | 236,132 | |||
4,462,123 | |||||
Media — 1.91% | |||||
Gannett Company Inc. | 40,300 | 3,593,148 | |||
Time Warner Inc. (a) | 538,400 | 9,685,816 | |||
13,278,964 |
Number of Shares | Value | ||||
Medical Instruments — 1.65% | |||||
Diagnostic Products Corporation (o) | 55,600 | $ | 2,552,596 | ||
Edwards Lifesciences Corporation (a) (o) | 79,100 | 2,379,328 | |||
Fisher Scientific International Inc. (a) | 61,200 | 2,531,844 | |||
Guidant Corporation | 21,400 | 1,288,280 | |||
Waters Corporation (a) | 81,848 | 2,714,080 | |||
11,466,128 | |||||
Medical Services — 0.94% | |||||
Cardinal Health Inc. | 63,900 | 3,908,124 | |||
IMS Health Inc. | 99,000 | 2,461,140 | |||
Laboratory Corporation of America Holdings (a) | 4,500 | 166,275 | |||
6,535,539 | |||||
Metals & Mining — 0.99% | |||||
Alcoa Inc. | 180,800 | 6,870,400 | |||
Misc. Financial Services — 4.84% | |||||
Ambac Financial Group Inc. | 28,300 | 1,963,737 | |||
American Express Company | 51,600 | 2,488,668 | |||
Citigroup Inc. | 353,700 | 17,168,598 | |||
Countrywide Financial Corporation | 40,500 | 3,071,925 | |||
Merrill Lynch & Company Inc. | 151,500 | 8,885,475 | |||
33,578,403 | |||||
Multi-Line Insurance — 1.70% | |||||
American International Group Inc. | 178,300 | 11,817,724 | |||
Oil Services — 1.72% | |||||
Apache Corporation | 53,500 | 4,338,850 | |||
El Paso Corporation | 255,700 | 2,094,183 | |||
Schlumberger Ltd. | 100,800 | 5,515,776 | |||
11,948,809 | |||||
Paper Products — 0.59% | |||||
International Paper Company | 95,500 | 4,117,005 | |||
Pharmaceuticals — 6.59% | |||||
Abbott Laboratories | 175,800 | 8,192,280 | |||
Albany Molecular Research Inc. (a) (o) | 122,600 | 1,841,452 | |||
Caremark Rx Inc. (a) | 37,100 | 939,743 | |||
Eli Lilly & Company | 93,400 | 6,568,822 | |||
King Pharmaceuticals Inc. (a) | 100,000 | 1,526,000 | |||
Millennium Pharmaceuticals Inc. (a) | 170,000 | 3,173,900 | |||
Pfizer Inc. | 449,700 | 15,887,901 | |||
Watson Pharmaceuticals Inc. (a) | 5,100 | 234,600 | |||
Wyeth | 173,300 | 7,356,585 | |||
45,721,283 | |||||
Property-Casualty Insurance — 0.54% | |||||
Travelers Property Casualty Corporation (Class B) | 218,500 | 3,707,945 | |||
Retail — 5.33% | |||||
Chico’s FAS Inc. (a) | 53,400 | 1,973,130 | |||
Coach Inc. (a) | 23,100 | 872,025 | |||
Federated Department Stores Inc. (a) | 45,900 | 2,163,267 | |||
Gap Inc. | 203,700 | 4,727,877 | |||
Lowe’s Companies Inc. | 129,000 | 7,145,310 |
ENTERPRISE Accumulation Trust
5
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares | Value | ||||
Michaels Stores Inc. (a) | 144,300 | $ | 6,378,060 | ||
Pacific Sunwear of California (a) | 102,750 | 2,170,080 | |||
Petsmart Inc. | 74,200 | 1,765,960 | |||
Target Corporation | 72,200 | 2,772,480 | |||
Wal-Mart Stores Inc. | 132,000 | 7,002,600 | |||
36,970,789 | |||||
Semiconductors — 3.47% | |||||
Analog Devices Inc. (a) | 54,100 | 2,469,665 | |||
Applied Materials Inc. (a) | 123,900 | 2,781,555 | |||
Fairchild Semiconductor International (Class A) (a) | 63,800 | 1,593,086 | |||
Integrated Circuit Systems Inc. (a) | 12,400 | 353,276 | |||
Intel Corporation | 269,000 | 8,661,800 | |||
International Rectifier Corporation (a) | 74,200 | 3,666,222 | |||
Novellus Systems Inc. (a) | 28,100 | 1,181,605 | |||
Texas Instruments Inc. | 114,200 | 3,355,196 | |||
24,062,405 | |||||
Telecommunications — 1.72% | |||||
Andrew Corporation (a) (o) | 70,700 | 813,757 | |||
Comverse Technology Inc. (a) | 46,300 | 814,417 | |||
Polycom Inc. (a) | 160,100 | 3,125,152 | |||
SBC Communications Inc. | 209,400 | 5,459,058 | |||
Tekelec (a) | 110,000 | 1,710,500 | |||
11,922,884 | |||||
Transportation — 1.98% | |||||
CSX Corporation | 111,000 | 3,989,340 | |||
EGL Inc. (a) (o) | 70,000 | 1,229,200 | |||
FedEx Corporation | 63,374 | 4,277,745 | |||
Norfolk Southern Corporation | 178,300 | 4,216,795 | |||
13,713,080 | |||||
Waste Management — 0.19% | |||||
Waste Management Inc. | 44,200 | 1,308,320 | |||
Wireless Communications — 0.35% | |||||
Motorola Inc. | 173,100 | 2,435,517 | |||
Total Domestic Common Stocks | |||||
(Identified cost $444,364,663) | 494,243,455 | ||||
Foreign Stocks — 1.26% | |||||
Drugs & Medical Products — 0.16% | |||||
Biovail Corporation (a) (o) | 53,100 | 1,141,119 | |||
Manufacturing — 0.60% | |||||
Tyco International Ltd. | 156,100 | 4,136,650 | |||
Technology — 0.50% | |||||
Accenture LTD. (a) | 132,500 | 3,487,400 | |||
Total Foreign Stocks | |||||
(Identified cost $7,199,222) | 8,765,169 | ||||
Principal Amount | Value | |||||
Corporate Bonds and Notes — 7.23% | ||||||
Aerospace — 0.13% | ||||||
Mcdonnell Douglas Corporation 6.875% due 11/01/06 | $ | 425,000 | $ | 469,159 | ||
United Technologies Corporation 7.125% due 11/15/10 | 400,000 | 468,386 | ||||
937,545 | ||||||
Airlines — 0.22% | ||||||
American Airlines Inc. | 80,000 | 79,065 | ||||
American Airlines Inc. | 450,000 | 449,135 | ||||
Continental Airlines Inc. | 587,741 | 575,125 | ||||
Delta Air Lines Inc. | 450,000 | 453,769 | ||||
1,557,094 | ||||||
Banking — 0.30% | ||||||
First Massachusetts Bank | 300,000 | 351,149 | ||||
First Union National Bank | 95,000 | 113,990 | ||||
First Union National Bank | 400,000 | 436,261 | ||||
NCNB Corporation | 250,000 | 348,970 | ||||
Peoples Bank | 250,000 | 301,895 | ||||
Popular North America Inc. | 550,000 | 550,727 | ||||
2,102,992 | ||||||
Broadcasting — 0.05% | ||||||
Liberty Media Corporation | 300,000 | 343,971 | ||||
Building & Construction — 0.21% | ||||||
Centex Corporation | 500,000 | 535,639 | ||||
Lennar Corporation | 110,000 | 126,899 | ||||
Lennar Corporation | 120,000 | 125,563 | ||||
Masco Corporation | 225,000 | 239,354 | ||||
Pulte Homes Inc. | 425,000 | 451,167 | ||||
1,478,622 | ||||||
Cable — 0.15% | ||||||
Cox Communications Inc. | 320,000 | 369,092 | ||||
TCI Communications Inc. | 300,000 | 379,657 |
ENTERPRISE Accumulation Trust
6
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
TCI Communications Inc. | $ | 250,000 | $ | 271,122 | ||
1,019,871 | ||||||
Chemicals — 0.08% | ||||||
Dow Chemical Company | 200,000 | 210,527 | ||||
Monsanto Company | 300,000 | 342,337 | ||||
552,864 | ||||||
Electrical Equipment — 0.03% | ||||||
Oncor Electric Delivery Company | 200,000 | 219,797 | ||||
Energy — 0.92% | ||||||
Alabama Power Company | 375,000 | 382,296 | ||||
Alliant Energy Resources Inc. | 100,000 | 128,921 | ||||
American Electric Power Inc. | 375,000 | 404,095 | ||||
Calenergy Inc. | 185,000 | 211,273 | ||||
Carolina Power & Light Company | 150,000 | 163,855 | ||||
Consolidated Natural Gas Company | 350,000 | 375,203 | ||||
Florida Power Corporation | 300,000 | 301,083 | ||||
Keyspan Corporation | 210,000 | 226,969 | ||||
NSTAR | 425,000 | 511,744 | ||||
Old Dominion Electric Cooperative, | 650,000 | 715,929 | ||||
Peco Energy Company | 165,000 | 164,551 | ||||
Pennsylvania Electric Company | 175,000 | 184,014 | ||||
PPL Energy Supply | 250,000 | 273,027 | ||||
PSEG Power | 450,000 | 529,661 | ||||
Scana Corporation | 200,000 | 218,494 | ||||
Schlumberger Technology Corporation, | 675,000 | 752,057 | ||||
South Carolina Electric & Gas Company, | 350,000 | 352,142 | ||||
South Carolina Electric & Gas Company, | 180,000 | 179,146 | ||||
Wisconsin Energy Corporation | 255,000 | 281,001 | ||||
6,355,461 |
Principal Amount | Value | |||||
Finance — 0.33% | ||||||
Erac USA Finance Company | $ | 550,000 | $ | 654,150 | ||
Household Finance Corporation | 750,000 | 825,888 | ||||
Newcourt Credit Group Inc. | 750,000 | 791,089 | ||||
2,271,127 | ||||||
Food, Beverages & Tobacco — 0.40% | ||||||
Altria Group Inc | 270,000 | 288,035 | ||||
Altria Group Inc. | 150,000 | 161,845 | ||||
Archer Daniels Midland Company | 200,000 | 252,900 | ||||
General Mills Inc. | 200,000 | 213,874 | ||||
Kraft Foods Inc. | 220,000 | 229,576 | ||||
Pepsi Bottling Group Inc. | 330,000 | 378,190 | ||||
Tyson Foods Inc. | 350,000 | 359,639 | ||||
Unilever Capital Corporation | 430,000 | 431,031 | ||||
Whitman Corporation | 425,000 | 456,556 | ||||
2,771,646 | ||||||
Gaming — 0.06% | ||||||
International Game Technology | 325,000 | 389,044 | ||||
Insurance — 0.33% | ||||||
Allstate Financial Global Funding, | 275,000 | 309,716 | ||||
Amerus Group Company | 350,000 | 367,624 | ||||
Liberty Mutual Insurance Company, | 385,000 | 346,123 | ||||
Marsh & Mclennan Companies Inc. | 250,000 | 243,743 | ||||
Prudential Insurance Company America, | 300,000 | 326,797 | ||||
Prudential Insurance Company America, | 200,000 | 223,706 | ||||
RenaissanceRe Holdings Ltd. | 460,000 | 471,768 | ||||
2,289,477 | ||||||
Machinery — 0.06% | ||||||
Caterpillar Inc. | 350,000 | 397,427 |
ENTERPRISE Accumulation Trust
7
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Media — 0.14% | ||||||
AOL Time Warner Inc. | $ | 850,000 | $ | 992,040 | ||
Medical Services — 0.06% | ||||||
Cardinal Health Inc. | 200,000 | 221,156 | ||||
Cardinal Health Inc. | 150,000 | 169,285 | ||||
390,441 | ||||||
Metals & Mining — 0.07% | ||||||
Alcoa Inc. | 450,000 | 508,649 | ||||
Misc. Financial Services — 1.27% | ||||||
American Express Company | 110,000 | 118,373 | ||||
Canadian Oil Sands Ltd. | 300,000 | 335,835 | ||||
Citigroup Inc. | 600,000 | 699,335 | ||||
Ford Motor Credit Company | 130,000 | 138,946 | ||||
Ford Motor Credit Company | 1,350,000 | 1,464,161 | ||||
General Electric Capital Corporation, | 1,100,000 | 1,210,127 | ||||
General Motors Acceptance Corporation, | 1,075,000 | 1,156,513 | ||||
Goldman Sachs Group Inc. | 575,000 | 652,975 | ||||
Hartford Financial Services Group Inc., | 200,000 | 236,744 | ||||
Merrill Lynch & Company Inc. | 700,000 | 769,518 | ||||
Morgan Stanley Group Inc. | 900,000 | 1,018,278 | ||||
Russell Frank Company | 500,000 | 545,169 | ||||
USA Interactive | 400,000 | 441,031 | ||||
8,787,005 | ||||||
Multi-Line Insurance — 0.28% | ||||||
American General Corporation | 900,000 | 1,076,559 | ||||
John Hancock Global Funding, | 700,000 | 834,131 | ||||
1,910,690 | ||||||
Oil Services — 0.76% | ||||||
Burlington Resources Financial Company, | 450,000 | 532,715 | ||||
Canadian Natural Resources Ltd. | 475,000 | 502,201 | ||||
ChevronTexaco Capital Company | 450,000 | 458,314 |
Principal Amount | Value | |||||
Conagra Inc. | $ | 575,000 | $ | 686,072 | ||
Duke Energy Field Services | 215,000 | 230,126 | ||||
Energen Corporation | 200,000 | 234,946 | ||||
Halliburton Company | 75,000 | 78,436 | ||||
Kinder Morgan Energy Partners | 400,000 | 448,998 | ||||
Kinder Morgan Inc. | 275,000 | 303,462 | ||||
Motiva Enterprises | 700,000 | 712,620 | ||||
Murphy Oil Corporation | 350,000 | 384,645 | ||||
Northern Border Partners | 220,000 | 264,866 | ||||
Valero Energy Corporation | 400,000 | 445,788 | ||||
5,283,189 | ||||||
Paper & Forest Products — 0.04% | ||||||
Westvaco Corporation | 225,000 | 259,294 | ||||
Paper Products — 0.13% | ||||||
International Paper Company | 375,000 | 416,915 | ||||
Temple Inland Inc. | 270,000 | 313,102 | ||||
Willamette Industries Inc. | 175,000 | 188,286 | ||||
918,303 | ||||||
Pharmaceuticals — 0.14% | ||||||
Bristol Myers Squibb Company | 200,000 | 211,491 | ||||
Schering Plough Corporation | 145,000 | 147,530 | ||||
Schering Plough Corporation | 270,000 | 280,864 | ||||
Wyeth 6.70% due 03/15/11 | 300,000 | 338,810 | ||||
978,695 | ||||||
Property-Casualty Insurance — 0.33% | ||||||
Ace Capital Trust | 575,000 | 749,828 | ||||
Everest Reinsurance Holdings Inc., 8.50% due 03/15/05 | 370,000 | 396,762 | ||||
Fidelity National Financial Inc. | 225,000 | 255,583 | ||||
Mercury General Corporation | 425,000 | 461,547 | ||||
W.R. Berkley Corporation | 195,000 | 199,155 | ||||
W.R. Berkley Corporation | 200,000 | 238,621 | ||||
2,301,496 |
ENTERPRISE Accumulation Trust
8
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Real Estate — 0.23% | ||||||
AMB Property | $ | 350,000 | $ | 401,806 | ||
Duke Realty Corporation | 300,000 | 313,602 | ||||
Health Care Property Trust | 300,000 | 309,665 | ||||
Liberty Property Trust | 220,000 | 266,799 | ||||
Spieker Properties | 300,000 | 344,215 | ||||
1,636,087 | ||||||
Retail — 0.23% | ||||||
Kohl’s Corporation | 430,000 | 431,169 | ||||
Lowe’s Companies Inc. | 425,000 | 459,825 | ||||
Staples Inc. | 340,000 | 391,355 | ||||
Wal-Mart Stores Inc. | 275,000 | 313,537 | ||||
1,595,886 | ||||||
Telecommunications — 0.23% | ||||||
AT & T Corporation | 325,000 | 374,068 | ||||
CenturyTel Inc. | 125,000 | 148,053 | ||||
SBC Communications Inc. | 300,000 | 318,529 | ||||
Verizon Global Funding Corporation, | 660,000 | 764,780 | ||||
1,605,430 | ||||||
Wireless Communications — 0.05% | ||||||
AT&T Wireless Services Inc. | 275,000 | 339,303 | ||||
Total Corporate Bonds and Notes | ||||||
(Identified cost $47,360,590) | 50,193,446 | |||||
Foreign Bonds — 0.75% | ||||||
Banking — 0.09% | ||||||
Bayerische Landesbank Girozentrale, 5.65% due 02/01/09 | 200,000 | 217,194 | ||||
National Australia Bank Ltd. | 175,000 | 216,714 | ||||
Royal Bank Scotland Group | 200,000 | 222,959 | ||||
656,867 | ||||||
Chemicals — 0.03% | ||||||
Potash Corporation Saskatchewan Inc., | 175,000 | 205,479 |
Principal Amount | Value | |||||
Insurance — 0.06% | ||||||
XL Capital Finance Europe | $ | 350,000 | $ | 383,090 | ||
Media — 0.02% | ||||||
Grupo Televisa | 120,000 | 126,000 | ||||
Misc. Financial Services — 0.12% | ||||||
Pemex Project Funding Master Trust, 9.125% due 10/13/10 | 550,000 | 653,125 | ||||
UFJ Finance Aruba AEC | 200,000 | 213,300 | ||||
866,425 | ||||||
Oil Services — 0.08% | ||||||
Petroleos Mexicanos | 275,000 | 324,500 | ||||
Transocean Sedco Forex | 190,000 | 212,085 | ||||
536,585 | ||||||
Telecommunications — 0.28% | ||||||
British Telecommunications | 300,000 | 365,063 | ||||
Deutsche Telekom International | 250,000 | 302,279 | ||||
France Telecom | 550,000 | 660,595 | ||||
Singapore Telecommunications, | 520,000 | 613,837 | ||||
1,941,774 | ||||||
Wireless Communications — 0.07% | ||||||
Vodafone Airtouch | 275,000 | 325,928 | ||||
Vodafone Airtouch | 125,000 | 153,556 | ||||
479,484 | ||||||
Total Foreign Bonds | ||||||
(Identified cost $4,864,757) | 5,195,704 | |||||
Asset-Backed Securities — 1.20% | ||||||
Automotive — 0.55% | ||||||
Capital Auto Receivables, | 1,000,000 | 1,025,883 | ||||
Capital One Auto Financial Trust, | 1,500,000 | 1,527,558 | ||||
Nissan Auto Receivables, | 1,200,000 | 1,244,016 | ||||
3,797,457 |
ENTERPRISE Accumulation Trust
9
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Finance — 0.18% | ||||||
Onyx Acceptance Owner Trust, | $ | 1,200,000 | $ | 1,232,713 | ||
Misc. Financial Services — 0.29% | ||||||
American Express Credit Corporation, | 750,000 | 796,924 | ||||
Citibank Credit Card Issuance Trust, Series 2001-A8, Class A8, | 1,200,000 | 1,229,185 | ||||
2,026,109 | ||||||
Utilities — 0.18% | ||||||
Massachusetts Special Purpose Trust, Series 1999-1, Class A3, | 1,200,000 | 1,244,699 | ||||
Total Asset-Backed Securities | ||||||
(Identified cost $8,198,099) | 8,300,978 | |||||
Collateralized Mortgage Obligations — 1.46% | ||||||
Banking — 0.12% | ||||||
Greenwich Capital Commercial | 800,000 | 802,653 | ||||
Misc. Financial Services — 1.34% | ||||||
Asset Securitization Corporation, | 845,000 | 953,533 | ||||
Bear Stearns Commercial Mortgage Securities Inc., | 650,000 | 727,257 | ||||
Chase Commercial Mortgage Securities Corporation, | 820,000 | 911,133 | ||||
Morgan Stanley Dean Witter | 1,080,000 | 1,197,157 | ||||
Morgan Stanley Dean Witter Capital Corporation, | 425,000 | 479,924 | ||||
Morgan Stanley Dean Witter Capital Corporation, | 845,000 | 941,347 | ||||
Morgan Stanley Dean Witter Capital Corporation, | 1,150,000 | 1,283,795 |
Principal Amount | Value | |||||
Morgan Stanley Dean Witter Capital Corporation, | $ | 245,000 | $ | 273,635 | ||
Morgan Stanley Dean Witter Capital Corporation, | 1,150,000 | 1,250,770 | ||||
Nomura Asset Securities Corporation, | 150,000 | 167,857 | ||||
UBS Commercial Mortgage Trust, Series 2002-C1, Class A4, | 1,020,000 | 1,138,512 | ||||
9,324,920 | ||||||
Total Collateralized Mortgage Obligations | ||||||
(Identified cost $9,928,957) | 10,127,573 | |||||
U. S. Treasury Obligations — 2.32% | ||||||
U. S. Treasury Bonds — 1.92% | ||||||
8.875% due 08/15/17 | 1,000,000 | 1,416,250 | ||||
8.875% due 02/15/19 | 2,430,000 | 3,474,142 | ||||
8.125% due 05/15/21 | 3,500,000 | 4,769,296 | ||||
6.25% due 08/15/23 | 2,450,000 | 2,792,522 | ||||
6.00% due 02/15/26 | 750,000 | 831,709 | ||||
13,283,919 | ||||||
U. S. Treasury Notes — 0.40% | ||||||
7.50% due 11/15/16 | 2,200,000 | 2,800,875 | ||||
Total U. S. Treasury Obligations | ||||||
(Identified cost $16,124,755) | 16,084,794 | |||||
Foreign Government Obligations — 0.09% | ||||||
Trinidad & Tobago Republic | 250,000 | 327,500 | ||||
United Mexican States | 250,000 | 296,875 | ||||
624,375 | ||||||
Total Foreign Government Obligations | ||||||
(Identified cost $569,012) | 624,375 | |||||
Municipal Bonds — 0.01% | ||||||
Utilities — 0.01% | ||||||
State of Illinois Taxable Pension, | 85,000 | 80,237 | ||||
Total Municipal Bonds | ||||||
(Identified cost $84,893) | 80,237 | |||||
ENTERPRISE Accumulation Trust
10
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Agency Obligations — 11.43% | ||||||
Fannie Mae — 4.14% | ||||||
7.00% due 02/01/07 | $ | 19,626 | $ | 20,716 | ||
6.79% due 11/01/07 | 1,367,527 | 1,490,998 | ||||
6.525% due 06/01/09 | 654,195 | 725,018 | ||||
7.00% due 07/01/09 | 14,409 | 15,210 | ||||
6.625% due 09/15/09 | 900,000 | 1,029,131 | ||||
7.512% due 02/01/10 | 387,508 | 444,741 | ||||
7.125% due 06/15/10 | 1,500,000 | 1,763,607 | ||||
6.97% due 10/01/10 | 1,167,662 | 1,332,288 | ||||
6.30% due 03/01/11 | 1,042,423 | 1,149,232 | ||||
6.03% due 05/01/11 | 1,363,025 | 1,494,993 | ||||
1.00% due 11/01/11 | 1,369,225 | 1,500,758 | ||||
6.115% due 02/01/12 | 1,177,809 | 1,298,108 | ||||
5.898% due 04/01/12 | 1,376,991 | 1,501,778 | ||||
7.00% due 11/01/12 | 11,862 | 12,677 | ||||
7.00% due 12/01/12 | 427,417 | 456,776 | ||||
7.00% due 03/01/15 | 410,553 | 439,146 | ||||
7.00% due 05/01/15 | 34,057 | 36,429 | ||||
7.00% due 06/01/15 | 232,820 | 249,035 | ||||
7.00% due 11/01/15 | 2,363 | 2,527 | ||||
5.50% due 01/01/17 | 629,205 | 652,820 | ||||
7.00% due 04/01/17 | 527,747 | 564,769 | ||||
5.50% due 08/01/17 | 55,756 | 57,839 | ||||
5.50% due 09/01/17 | 841,688 | 873,143 | ||||
5.50% due 12/01/17 | 88,897 | 92,220 | ||||
5.50% due 01/01/18 | 340,080 | 352,789 | ||||
5.50% due 02/01/18 | 988,956 | 1,026,002 | ||||
5.50% due 04/01/18 | 1,521,285 | 1,578,201 | ||||
5.00% due 05/01/18 | 1,034,026 | 1,057,172 | ||||
5.50% due 08/01/18 | 146,411 | 151,896 | ||||
5.00% due 09/01/18 | 33,202 | 33,906 | ||||
5.00% due 10/01/18 | 946,762 | 966,847 | ||||
6.00% due 12/01/22 | 637,660 | 662,590 | ||||
6.00% due 01/01/23 | 1,050,394 | 1,091,460 | ||||
6.00% due 02/01/23 | 651,763 | 677,244 | ||||
5.00% due 08/01/33 | 1,363,953 | 1,350,514 | ||||
5.00% due 09/01/33 | 732,652 | 725,392 | ||||
5.00% due 10/01/33 | 679,228 | 672,499 | ||||
5.00% due 11/01/33 | 1,186,792 | 1,175,033 | ||||
28,725,504 | ||||||
Federal Home Loan Banks — 1.75% | ||||||
4.125% due 01/14/05 | 8,700,000 | 8,946,201 | ||||
6.50% due 06/01/16 | 51,368 | 54,414 | ||||
6.50% due 07/01/16 | 2,104,268 | 2,229,052 | ||||
6.50% due 08/01/16 | 89,779 | 95,103 | ||||
6.50% due 09/01/16 | 412,981 | 437,471 | ||||
6.50% due 11/01/16 | 224,925 | 238,264 | ||||
6.50% due 03/01/17 | 43,681 | 46,279 | ||||
7.00% due 05/01/29 | 76,459 | 80,960 | ||||
12,127,744 | ||||||
Freddie Mac — 0.80% | ||||||
7.00% due 07/15/05 | 1,560,000 | 1,685,469 | ||||
5.50% due 09/15/11 | 2,000,000 | 2,150,266 | ||||
6.50% due 01/01/17 | 1,622,123 | 1,718,315 | ||||
5,554,050 |
Number of Shares or Principal Amount | Value | |||||
Ginnie Mae — 4.74% | ||||||
6.50% due 04/15/28 | $ | 1,231,224 | $ | 1,299,988 | ||
6.50% due 05/15/28 | 545,993 | 576,486 | ||||
6.50% due 08/15/28 | 255,204 | 269,561 | ||||
7.00% due 09/15/28 | 1,493,915 | 1,594,739 | ||||
6.50% due 10/15/28 | 521,030 | 550,130 | ||||
6.50% due 11/15/28 | 2,351,978 | 2,503,505 | ||||
6.00% due 12/15/28 | 3,888,084 | 4,075,400 | ||||
7.00% due 03/15/29 | 74,281 | 79,219 | ||||
7.00% due 06/15/29 | 55,122 | 58,787 | ||||
7.00% due 08/15/29 | 55,154 | 58,820 | ||||
7.00% due 01/15/31 | 197,841 | 210,915 | ||||
7.00% due 04/15/31 | 51,822 | 55,247 | ||||
7.00% due 06/15/31 | 29,433 | 31,378 | ||||
6.00% due 07/15/31 | 27,616 | 28,721 | ||||
7.00% due 08/15/31 | 794,411 | 846,909 | ||||
7.00% due 09/15/31 | 26,268 | 28,003 | ||||
6.00% due 10/15/31 | 421,813 | 438,702 | ||||
6.00% due 12/15/31 | 157,413 | 163,709 | ||||
6.00% due 01/15/32 | 898,881 | 935,159 | ||||
6.00% due 02/15/32 | 867,084 | 902,079 | ||||
6.00% due 03/15/32 | 354,477 | 368,784 | ||||
6.00% due 04/15/32 | 245,664 | 255,579 | ||||
7.00% due 08/15/32 | 572,013 | 609,590 | ||||
6.00% due 09/15/32 | 736,701 | 766,433 | ||||
7.00% due 09/15/32 | 54,821 | 58,423 | ||||
6.00% due 10/15/32 | 1,430,012 | 1,487,726 | ||||
6.00% due 12/15/32 | 662,147 | 688,871 | ||||
6.00% due 01/15/33 | 4,530,884 | 4,711,938 | ||||
6.00% due 02/15/33 | 618,842 | 643,712 | ||||
6.00% due 03/15/33 | 668,814 | 695,691 | ||||
6.00% due 04/15/33 | 473,049 | 492,060 | ||||
6.00% due 05/15/33 | 1,574,340 | 1,637,609 | ||||
5.00% due 06/15/33 | 1,156,543 | 1,155,626 | ||||
5.00% due 07/15/33 | 3,412,387 | 3,384,875 | ||||
6.00% due 12/01/33 (TBA) | 1,190,000 | 1,236,484 | ||||
32,900,858 | ||||||
Total Agency Obligations | ||||||
(Identified cost $78,961,769) | 79,308,156 | |||||
Registered Investment Company — 0.49% | ||||||
Midcap SPDR Trust | 32,100 | 3,383,340 | ||||
Total Registered Investment Company | ||||||
(Identified cost $3,204,331) | 3,383,340 | |||||
Short-Term U.S. Government Obligations — 0.24% | ||||||
U.S. Treasury Bills — 0.24% | ||||||
0.938% due 01/22/04 (e) (s) | 100,000 | 99,945 | ||||
0.915% due 02/19/04 (e) (s) | 420,000 | 419,477 | ||||
0.925% due 02/26/04 (e) (s) | 625,000 | 624,101 | ||||
0.895% due 03/11/04 (e) (s) | 525,000 | 524,086 | ||||
1,667,609 | ||||||
Total Short-Term U.S. Government Obligations | ||||||
(Identified cost $1,667,609) | 1,667,609 | |||||
ENTERPRISE Accumulation Trust
11
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Units or Principal Amount | Value | ||||||
Other Investment — 1.93% | |||||||
Securities Lending Quality | 13,388,200 | $ | 13,388,200 | ||||
Total Other Investment | |||||||
(Identified cost $13,388,200) | 13,388,200 | ||||||
Repurchase Agreement — 2.18% | |||||||
State Street Bank & Trust Repurchase Agreement, | $ | 15,133,000 | 15,133,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $15,133,000) | 15,133,000 | ||||||
Total Investments | |||||||
(Identified cost $651,049,857) | $ | 706,496,036 | |||||
Other Assets Less Liabilities — (1.82)% | (12,651,775 | ) | |||||
Net Assets — 100% | $ | 693,844,261 | |||||
(a) | Non-income producing security. |
(e) | The rate shown is the current effective yield. |
(h) | Represents investment of cash collateral received from securities on loan (see note 5). |
(o) | Security, or portion thereof, out on loan at December 31, 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 903 & 904 of the Securities Act of 1933. |
(SPDR) | Standard and Poor’s Depositary Receipt. |
(TBA) | To Be Announced. Certain specific security details such as final par amount and maturity date have not yet been determined. |
Open futures contracts as of December 31, 2003 are as follows:
Description | Expiration Month | Number of Contracts | Unrealized Appreciation/ (Depreciation) | |||||
Short S&P 500 Index Futures | 03/04 | 56 | $ | (703,866 | ) | |||
Short U.S. Treasury 5 Year Notes | 03/04 | 96 | (48,077 | ) | ||||
$ | (751,943 | ) | ||||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
12
Enterprise Managed Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $15,161,496 (Note 5) | $ | 706,496,036 | ||
Cash | 766 | |||
Investment income receivable | 2,293,419 | |||
Receivable for fund shares sold | 19 | |||
Receivable for investments sold | 2,202,467 | |||
Other assets | 32,463 | |||
Total assets | 711,025,170 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 1,124,738 | |||
Payable for investments purchased | 2,291,279 | |||
Payable upon return of securities loaned (Note 5) | 13,388,200 | |||
Payable for variation margin on open futures | 52,600 | |||
Shareholder servicing fees payable | 174,744 | |||
Accrued expenses and other liabilities | 149,348 | |||
Total liabilities | 17,180,909 | |||
Net assets | $ | 693,844,261 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 796,844,272 | ||
Undistributed (accumulated) net investment income (loss) | 9,164,704 | |||
Undistributed (accumulated) net realized gain (loss) | (166,858,951 | ) | ||
Unrealized appreciation (depreciation) | 54,694,236 | |||
Net assets | $ | 693,844,261 | ||
Shares outstanding | 37,970,076 | |||
Net asset value per share | $18.27 | |||
Investments at cost | $ | 651,049,857 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
13
Enterprise Managed Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Dividends | $ | 6,400,728 | ||
Interest | 7,922,936 | |||
Securities lending income | 23,932 | |||
Total investment income | 14,347,596 | |||
Expenses: | ||||
Investment advisory fees | 5,151,890 | |||
Shareholder servicing fees | 1,349,915 | |||
Custodian and fund accounting fees | 207,753 | |||
Audit and legal fees | 157,872 | |||
Reports to shareholders | 36,171 | |||
Trustees’ fees | 23,278 | |||
Other expenses | 34,814 | |||
Total expenses | 6,961,693 | |||
Expenses reduced by expense offset arrangements | (119,578 | ) | ||
Total expenses, net of expense offset arrangements | 6,842,115 | |||
Net investment income (loss) | 7,505,481 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 1,839,373 | |||
Net realized gain (loss) on futures transactions | 556,000 | |||
Net change in unrealized gain (loss) on investments | 116,387,610 | |||
Net change in unrealized gain (loss) on futures transactions | (751,943 | ) | ||
Net realized and unrealized gain (loss) | 118,031,040 | |||
Net increase (decrease) in net assets resulting from operations | $ | 125,536,521 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
14
Enterprise Managed Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 7,505,481 | $ | 7,169,397 | ||||
Net realized gain (loss) | 2,395,373 | (153,059,693 | ) | |||||
Net change in unrealized gain (loss) | 115,635,667 | (71,878,581 | ) | |||||
Increase (decrease) in net assets resulting from operations | 125,536,521 | (217,768,877 | ) | |||||
Distributions to shareholders from: | ||||||||
Net investment income | (7,568,315 | ) | (7,429,619 | ) | ||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | (7,568,315 | ) | (7,429,619 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 21,855,592 | 47,768,878 | ||||||
Shares exchanged due to merger | 2,815,931 | — | ||||||
Reinvestment of distributions | 7,566,636 | 7,429,619 | ||||||
Shares redeemed | (119,956,922 | ) | (241,388,079 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (87,718,763 | ) | (186,189,582 | ) | ||||
Total increase (decrease) in net assets | 30,249,443 | (411,388,078 | ) | |||||
Net assets: | ||||||||
Beginning of period | 663,594,818 | 1,074,982,896 | ||||||
End of period | $ | 693,844,261 | $ | 663,594,818 | ||||
Capital share activity: | ||||||||
Shares issued | 1,326,872 | 2,697,893 | ||||||
Shares issued due to merger | 188,735 | — | ||||||
Shares issued in reinvestment of distributions | 438,138 | 503,703 | ||||||
Shares redeemed | (7,404,472 | ) | (14,623,886 | ) | ||||
Net increase (decrease) | (5,450,727 | ) | (11,422,290 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | 9,164,704 | $ | 7,568,295 | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
15
Enterprise Managed Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the years ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 15.28 | $ | 19.60 | $ | 24.19 | $ | 36.30 | $ | 40.56 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | 0.19 | 0.14 | 0.13 | 0.45 | 0.50 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 2.99 | (4.30 | ) | (3.10 | ) | (0.23 | ) | 2.65 | ||||||||||||
Total from investment operations | 3.18 | (4.16 | ) | (2.97 | ) | 0.22 | 3.15 | |||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.19 | ) | (0.16 | ) | (0.48 | ) | (0.75 | ) | (0.79 | ) | ||||||||||
Distributions from capital gains | — | — | (1.14 | ) | (11.58 | ) | (6.62 | ) | ||||||||||||
Total distributions | (0.19 | ) | (0.16 | ) | (1.62 | ) | (12.33 | ) | (7.41 | ) | ||||||||||
Net asset value, end of period | $ | 18.27 | $ | 15.28 | $ | 19.60 | $ | 24.19 | $ | 36.30 | ||||||||||
Total return | 20.91 | % | (21.20 | )% | (11.15 | )% | 1.46 | % | 9.22 | % | ||||||||||
Net assets end of period (in thousands) | $ | 693,844 | $ | 663,595 | $ | 1,074,983 | $ | 1,452,864 | $ | 2,292,467 | ||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 1.05 | % | 0.88 | % | 0.85 | % | 0.82 | % | 0.76 | % | ||||||||||
Ratio of expenses to average net assets | 1.04 | % | 0.85 | % | 0.84 | % | 0.82 | % | 0.76 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | 1.14 | % | 0.85 | % | 0.60 | % | 1.44 | % | 1.23 | % | ||||||||||
Portfolio turnover rate | 71 | % | 109 | % | 141 | % | 19 | % | 90 | % |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
16
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Managed Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
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:
Net Assets | Unrealized Appreciation/(Depreciation) | |||||||||||||
Portfolio | 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 in the preparation of its financial statements:
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.
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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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
ENTERPRISE Accumulation Trust
17
Notes to Financial Statements — (Continued)
December 31, 2003
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, U.S. Government or Agency 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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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.
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.
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.
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 are amortized daily for both financial and tax purposes, using the effective interest method.
ENTERPRISE Accumulation Trust
18
Notes to Financial Statements — (Continued)
December 31, 2003
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 to each Portfolio based on average net assets. The Portfolio may direct certain security trades to brokers who may pay a portion of the commissions for those trades to offset certain expenses of the Portfolio. This amount is reported in the Statement of Operations.
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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 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 year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $1,349,915 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 $157,658 in the Portfolio at December 31, 2003.
4. Investment Transactions
For the year ended December 31, 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 | |||
$130,670,104 | $111,351,840 | $324,343,639 | $395,975,623 |
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
ENTERPRISE Accumulation Trust
19
Notes to Financial Statements — (Continued)
December 31, 2003
In addition to the cash collateral received in connection with the lending of securities the Portfolio and other non-affiliated funds received a letter of credit from JP Morgan Chase Bank valued at $50,000,000. The Portfolio’s portion of this amount at December 31, 2003 was $2,368,400.
6. Borrowings
The Trust and another series of mutual funds 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 year ended December 31, 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. At times, these differences are primarily due to differing treatments for futures and options transactions, paydowns, losses deferred due to wash sales and capital loss carryforwards utilized.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | Tax | Net Unrealized | |||
$663,427,596 | $60,665,338 | $17,596,898 | $43,068,440 |
The tax character of distributions paid was as follows:
Ordinary Income | Long-Term Gain | Total Distributions | ||||||
2003 | $ | 7,568,315 | — | $ | 7,568,315 | |||
2002 | 7,429,619 | — | 7,429,619 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary | Undistributed Long-Term Gain | Capital Loss Carryforward | Expiration | |||||
$ | 9,164,704 | — | $ | 155,233,155 | 2009-2011 |
Included in the capital loss carryforward is $1,026,362 acquired in connection with the merger that occurred in 2003 (Note 1). Utilization of these losses may be limited in accordance with Federal Tax regulations.
8. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
20
Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
Managed Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Managed Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
21
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 |
Tax Reporting Information (Unaudited)
The portfolio had 77% of its 2003 ordinary income distributions qualify for the corporate dividends received deduction (“DRD”) but none qualify as qualifying dividend income (“QDI”).
ENTERPRISE Accumulation Trust
22
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND ( YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934 ) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF, EAT and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
23
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
24
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 $2 billion for institutional clients and its normal investment minimum is $3 million.
Investment Objective
The objective of the Enterprise High-Yield Bond Portfolio is maximum current income.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 22.64%. The Portfolio underperformed its benchmark, the Lehman Brothers High Yield Bond Index, which returned 28.96%. The Portfolio underperformed its peer group, the Lipper High Yield Bond Funds Index, which returned 26.36%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The Lehman Brothers High Yield Bond Index covers the universe of fixed rate, non-investment grade debt. Pay-in-kind (PIK) bonds, Eurobonds, and debt issues from countries designated as emerging markets are excluded, but Canadian and global bonds (SEC registered) of issuers in non-EMG countries are included. Original issue zeros, step-up coupon structures, and 144As are also included. The index includes both corporate and non-corporate sectors. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lehman Brothers High Yield Bond Index replaces the Lehman Brothers High Yield BA Bond Index (formerly known as The Lehman Brothers High Yield BB Bond Index) as the broad-based index as it more appropriately reflects the Portfolio’s broad-based market. During 2003, an investment in the above hypothetical account for the Portfolio increased by $3,853 or 22.64% compared to an increase of $3,707 or 19.95% in the Lehman Brothers High Yield BA Bond Index and an increase of $4,453 or 28.96% in the Lehman Brothers High Yield Bond Index. The Lipper High Yield Bond Funds Index is an unmanaged index of the 30 largest funds, based on year-end net asset value, in the Lipper High Yield Bond Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees and expenses. One cannot invest in an index.
ENTERPRISE Accumulation Trust
1
Enterprise High-Yield Bond Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
The U.S. economy’s strong second half expansion supports strengthening corporate credit conditions. Fueled by the stimulative fiscal and monetary policies embraced by both the administration and the Fed, corporate America finds itself with improving profitability, and more importantly for bondholders, increasing free cash flow. The income statement gains have been accomplished primarily through cost cutting, which is evident in the recent productivity statistics. In recognition of the probability of a prolonged recovery, there was a dramatic improvement in access to capital.
The improvement in access to capital allowed for attractively priced financing for many companies to overcome liquidity issues despite only modest operational gains. As a result, default rates have declined. In 2003, corporate credit rating cuts were at their lowest level since 1998. Conversely, upgrades were at their highest level since 1998. These credit rating actions reflected of the improving credit cycle, translating into a more normalized default expectation for the market. Demand for high-yield mutual funds was record-breaking in 2003. On the supply side of the equation, 2003 was a near record year for issuance.
What strategies affected Portfolio performance during the period?
Caywood-Scholl’s goal remained to stay fully invested, while monitoring both duration and credit issues, and investing in higher quality, high-yield names. Lower-rated high-yield names outperformed their higher quality counterparts throughout the year according to the Merrill Lynch High-Yield Master Index. Merrill Lynch’s weighting to the lower tiered bonds was significant with 16% versus approximately 2% for the Portfolio.
What changes were made to the Portfolio over the period?
Due to the improving economy, Caywood-Scholl increased the Portfolio’s exposure to the single B sector of the high-yield market in addition to adding more economically sensitive issues. Many of the best opportunities were from the new issue calendar, which helped further broaden diversification in sharp contrast with 2002 where most of the purchases came from the “fallen angels.”
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
2
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Principal Amount | �� | Value | ||||
Domestic Corporate Bonds — 89.79% | ||||||
Advertising — 0.40% | ||||||
RH Donnelley Finance Corporation 1 | $ | 300,000 | $ | 355,875 | ||
Aerospace — 0.38% | ||||||
DRS Technologies Inc. | 100,000 | 102,750 | ||||
Esterline Technologies Corporation 7.75%, due 06/15/13 (144A) | 225,000 | 241,875 | ||||
344,625 | ||||||
Apparel & Textiles — 0.67% | ||||||
Fruit of the Loom Inc. | 300,000 | — | ||||
Perry Ellis International Inc. | 450,000 | 473,625 | ||||
Phillips Van-Heusen Corporation | 125,000 | 132,813 | ||||
606,438 | ||||||
Automotive — 3.17% | ||||||
Autonation Inc. | 500,000 | 573,750 | ||||
Avis Group Holdings Inc. | 400,000 | 433,000 | ||||
Navistar International Corporation | 350,000 | 386,313 | ||||
TRW Automotive Acquisition | 350,000 | 399,875 | ||||
TRW Automotive Acquisition | 250,000 | 294,375 | ||||
United Rentals North America Inc. | 500,000 | 562,500 | ||||
United Rentals North America Inc. | 200,000 | 204,250 | ||||
2,854,063 | ||||||
Banking — 1.26% | ||||||
Western Financial Bank | 400,000 | 414,000 | ||||
Western Financial Bank | 650,000 | 724,750 | ||||
1,138,750 | ||||||
Broadcasting — 1.19% | ||||||
Echostar DBS Corporation | 550,000 | 578,188 | ||||
Echostar DBS Corporation | 100,000 | 102,500 | ||||
Sinclair Broadcast Group Inc. | 350,000 | 388,500 | ||||
1,069,188 |
Principal Amount | Value | |||||
Building & Construction — 2.66% | ||||||
Building Materials Corporation America | $ | 300,000 | $ | 306,750 | ||
Integrated Electrical Services | 700,000 | 735,000 | ||||
Nortek Inc. | 400,000 | 418,500 | ||||
Nortek Inc. (Series B) | 300,000 | 310,125 | ||||
Texas Industries Inc. | 550,000 | 621,500 | ||||
2,391,875 | ||||||
Business Services — 1.78% | ||||||
Sensus Metering Systems Inc. | 150,000 | 153,938 | ||||
Xerox Corporation | 200,000 | 214,000 | ||||
Xerox Corporation | 75,000 | 81,000 | ||||
Xerox Corporation | 1,125,000 | 1,150,312 | ||||
1,599,250 | ||||||
Cable — 2.85% | ||||||
Adelphia Communications Corporation | 50,000 | 45,750 | ||||
Adelphia Communications Corporation | 400,000 | 378,000 | ||||
Charter Communications Holdings | 300,000 | 261,750 | ||||
Charter Communications Holdings | 375,000 | 333,750 | ||||
CSC Holdings Inc. | 100,000 | 107,500 | ||||
CSC Holdings Inc. | 900,000 | 947,250 | ||||
DIRECTV Holdings | 150,000 | 174,000 | ||||
Mediacom LLC/Mediacom Capital Company | 300,000 | 318,000 | ||||
2,566,000 | ||||||
Chemicals — 1.90% | ||||||
Equistar Chemicals | 250,000 | 276,250 | ||||
FMC Corporation | 450,000 | 526,500 | ||||
Huntsman International | 100,000 | 109,500 | ||||
Nalco Company | 100,000 | 107,000 | ||||
Nalco Company | 175,000 | 185,500 |
ENTERPRISE Accumulation Trust
3
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
PCI Chemicals Canada Company | $ | 198,502 | $ | 179,644 | ||
Pioneer Americas Inc. | 62,908 | 56,932 | ||||
Westlake Chemical Corporation | 250,000 | 273,750 | ||||
1,715,076 | ||||||
Consumer Products — 3.42% | ||||||
Central Garden & Pet Company | 500,000 | 555,000 | ||||
Chattem Inc. (Series B) | 477,000 | 491,310 | ||||
Elizabeth Arden Inc. | 455,000 | 541,450 | ||||
French Fragrances Inc. (Series B) | 215,000 | 222,435 | ||||
Moore North America Finance Inc. | 275,000 | 311,437 | ||||
Sealy Mattress Company | 75,000 | 77,625 | ||||
Sealy Mattress Company (Series B) | 850,000 | 881,875 | ||||
3,081,132 | ||||||
Consumer Services — 0.52% | ||||||
Johnson Diversey Holdings Inc. | 100,000 | 76,500 | ||||
Johnson Diversey Inc. | 350,000 | 390,250 | ||||
466,750 | ||||||
Containers/Packaging — 1.66% | ||||||
Owens Illinois Inc. | 550,000 | 579,562 | ||||
Owens Illinois Inc. | 475,000 | 487,469 | ||||
Owens-Brockway Glass Container | 150,000 | 167,063 | ||||
Tekni-Plex Inc. | 250,000 | 260,625 | ||||
1,494,719 | ||||||
Electrical Equipment — 0.54% | ||||||
BRL Universal Equipment | 450,000 | 482,625 | ||||
Electronics — 0.46% | ||||||
Flextronics International Ltd. | 50,000 | 51,750 | ||||
Thomas & Betts Corporation | 350,000 | 360,500 | ||||
412,250 | ||||||
Energy — 4.29% | ||||||
CMS Energy Corporation | 150,000 | 162,750 | ||||
CMS Energy Corporation | 550,000 | 566,500 |
Principal Amount | Value | |||||
Cogentrix Energy Inc. | $ | 200,000 | $ | 201,500 | ||
El Paso Corporation | 350,000 | 322,875 | ||||
Massey Energy Company | 200,000 | 205,000 | ||||
MSW Energy Holdings | 450,000 | 490,500 | ||||
NRG Energy Inc. | 500,000 | 525,625 | ||||
PG&E Corporation | 250,000 | 270,625 | ||||
Reliant Resources Inc. | 450,000 | 477,000 | ||||
Reliant Resources Inc. | 300,000 | 321,000 | ||||
Teco Energy Inc. | 300,000 | 321,000 | ||||
3,864,375 | ||||||
Entertainment & Leisure — 0.23% | ||||||
Mohegan Tribal Gaming Authority | 200,000 | 206,500 | ||||
Finance — 1.33% | ||||||
Dollar Financial Group Inc. | 450,000 | 465,750 | ||||
Thornburg Mortgage Inc. | 700,000 | 735,000 | ||||
1,200,750 | ||||||
Food, Beverages & Tobacco — 3.87% | ||||||
Canandaigua Brands Inc. | 100,000 | 104,750 | ||||
Delhaize America Inc. | 75,000 | 80,625 | ||||
Delhaize America Inc. | 100,000 | 115,000 | ||||
Dole Food Inc. | 400,000 | 439,000 | ||||
Ingles Markets Inc. | 625,000 | 628,125 | ||||
NBTY Inc. (Series B) | 550,000 | 563,750 | ||||
PPC Escrow Corporation | 75,000 | 77,625 | ||||
Smithfield Foods Inc. | 450,000 | 454,500 | ||||
Stater Brothers Holdings Inc. | 650,000 | 684,937 | ||||
United Agriculture Products Inc. | 100,000 | 102,750 | ||||
Winn-Dixie Stores Inc. | 225,000 | 228,375 | ||||
3,479,437 | ||||||
Health Care — 2.68% | ||||||
Advanced Medical Optics Inc. | 711,000 | 778,545 |
ENTERPRISE Accumulation Trust
4
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Beverly Enterprises Inc. | $ | 575,000 | $ | 633,938 | ||
HCA Inc. | 200,000 | 214,442 | ||||
Healthsouth Corporation | 650,000 | 624,000 | ||||
Healthsouth Corporation | 50,000 | 46,750 | ||||
Vicar Operating Inc. | 100,000 | 111,000 | ||||
2,408,675 | ||||||
Hotels & Restaurants — 9.87% | ||||||
Boyd Gaming Corporation | 425,000 | 454,750 | ||||
Felcor Lodging | 275,000 | 297,000 | ||||
Felcor Lodging | 475,000 | 515,375 | ||||
Foodmaker Inc. | 520,000 | 543,504 | ||||
Hilton Hotels Corporation | 975,000 | 1,084,687 | ||||
HMH Properties Inc. | 150,000 | 156,000 | ||||
Host Marriott | 800,000 | 890,000 | ||||
John Q. Hammons Hotels | 250,000 | 275,625 | ||||
Mandalay Resort Group | 125,000 | 144,375 | ||||
Mandalay Resort Group | 250,000 | 259,375 | ||||
Meristar Hospitality Operating | 250,000 | 265,000 | ||||
MGM Mirage Inc. | 600,000 | 688,500 | ||||
Mirage Resorts Inc. | 200,000 | 213,000 | ||||
Park Place Entertainment Corporation | 850,000 | 941,375 | ||||
Park Place Entertainment Corporation | 475,000 | 532,594 | ||||
Starwood Hotels Resorts | 850,000 | 956,250 | ||||
Station Casinos Inc. | 100,000 | 103,500 | ||||
Station Casinos Inc. | 250,000 | 275,000 | ||||
Yum Brands Inc. | 250,000 | 287,813 | ||||
8,883,723 | ||||||
Machinery — 3.45% | ||||||
Briggs & Stratton Corporation | 500,000 | 587,500 | ||||
Case New Holland Inc. | 450,000 | 504,000 |
Principal Amount | Value | |||||
Flowserve Corporation | $ | 625,000 | $ | 725,000 | ||
Navistar International Corporation | 150,000 | 154,125 | ||||
Teekay Shipping Corporation | 1,000,000 | 1,135,000 | ||||
3,105,625 | ||||||
Manufacturing — 0.71% | ||||||
Rayovac Corporation | 450,000 | 477,000 | ||||
Transdigm Inc. | 100,000 | 106,375 | ||||
United States Steel Corporation | 50,000 | 58,500 | ||||
641,875 | ||||||
Media — 1.47% | ||||||
Corus Entertainment Inc. | 800,000 | 880,000 | ||||
Imax Corporation | 425,000 | 446,781 | ||||
1,326,781 | ||||||
Medical Instruments — 0.92% | ||||||
Fisher Scientific International Inc. | 350,000 | 375,375 | ||||
Medex Inc. | 425,000 | 456,875 | ||||
832,250 | ||||||
Medical Services — 1.90% | ||||||
AmerisourceBergen Corporation | 150,000 | 169,125 | ||||
NDCHealth Corp | 375,000 | 421,875 | ||||
Quintiles Transnational Corporation | 300,000 | 324,000 | ||||
Warner Chilcott Inc. | 750,000 | 798,750 | ||||
1,713,750 | ||||||
Metals & Mining — 3.64% | ||||||
Alaska Steel Corporation | 100,000 | 87,750 | ||||
Alaska Steel Corporation | 200,000 | 171,000 | ||||
ANR Pipeline Company | 100,000 | 112,500 | ||||
Dresser Inc. | 650,000 | 706,875 | ||||
Dynegy Holdings Inc. | 100,000 | 112,500 | ||||
Dynegy Holdings Inc. | 100,000 | 115,000 | ||||
Southern Natural Gas Company | 375,000 | 421,875 | ||||
Steel Dynamics Inc. | 450,000 | 499,500 |
ENTERPRISE Accumulation Trust
5
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Williams Companies Inc. | $ | 225,000 | $ | 252,563 | ||
Williams Companies Inc. | 750,000 | 793,125 | ||||
3,272,688 | ||||||
Misc. Financial Services — 0.38% | ||||||
Ucar Finance Inc. | 300,000 | 345,000 | ||||
Oil Services — 5.01% | ||||||
Chesapeake Energy Corporation | 700,000 | 770,000 | ||||
Ferrellgas Partner | 200,000 | 220,000 | ||||
Grant Prideco Inc. | 450,000 | 504,000 | ||||
Hanover Compressor Company | 100,000 | 73,500 | ||||
Hanover Equipment Test | 650,000 | 689,000 | ||||
Key Energy Services Inc. | 250,000 | 267,500 | ||||
Nuevo Energy Company | 320,000 | 335,200 | ||||
Paramount Resources Ltd. | 200,000 | 199,000 | ||||
Pioneer Natural Resources Company | 1,075,000 | 1,337,751 | ||||
Westport Resources Corporation | 100,000 | 110,000 | ||||
4,505,951 | ||||||
Paper & Forest Products — 1.12% | ||||||
Georgia Pacific Corporation | 550,000 | 605,000 | ||||
Georgia Pacific Corporation | 350,000 | 406,000 | ||||
1,011,000 | ||||||
Paper Products — 0.57% | ||||||
Bowater Inc. | 200,000 | 194,101 | ||||
Buckeye Technologies Inc. | 300,000 | 321,000 | ||||
515,101 | ||||||
Pharmaceuticals — 1.11% | ||||||
AdvancePCS | 500,000 | 542,500 | ||||
Biovail Corporation | 450,000 | 459,000 | ||||
1,001,500 | ||||||
Printing & Publishing — 3.66% | ||||||
CBD Media/CBD Finance Inc. | 175,000 | 192,500 | ||||
Dex Media East | 200,000 | 229,000 |
Principal Amount | Value | |||||
Dex Media East | $ | 500,000 | $ | 615,000 | ||
Dex Media Inc. | 350,000 | 367,500 | ||||
Dex Media West | 450,000 | 523,125 | ||||
Houghton Mifflin Company | 450,000 | 481,500 | ||||
Nebraska Book Company Inc. | 450,000 | 465,750 | ||||
Primedia Inc. | 400,000 | 422,000 | ||||
3,296,375 | ||||||
Retail — 8.22% | ||||||
Amerigas Partners/Amerigas Eagle Finance Corporation | 425,000 | 467,500 | ||||
Asbury Automotive Group Inc. | 200,000 | 201,000 | ||||
Buhrmann U.S. Inc. | 325,000 | 364,000 | ||||
Cole National Group Inc. | 900,000 | 918,000 | ||||
Gap Inc. | 550,000 | 677,875 | ||||
Hines Nurseries Inc. | 75,000 | 81,750 | ||||
Michaels Stores Inc. | 1,175,000 | 1,296,906 | ||||
Payless Shoesource Inc. | 150,000 | 144,375 | ||||
Penney (JC) Company Inc. | 700,000 | 767,375 | ||||
Penney (JC) Company Inc. | 512,000 | 529,280 | ||||
Penney (JC) Corporation Inc. | 500,000 | 573,125 | ||||
Petco Animal Supplies Inc. | 550,000 | 643,500 | ||||
Saks Inc. | 350,000 | 388,500 | ||||
Sonic Automotive Inc. | 325,000 | 342,875 | ||||
7,396,061 | ||||||
Security & Investigation Services — 0.38% | ||||||
Corrections Corporation of America | 325,000 | 341,250 | ||||
Semiconductors — 0.77% | ||||||
Amkor Technology Inc. | 650,000 | 697,125 | ||||
Telecommunications — 5.54% | ||||||
Accident Escrow Corporation | 550,000 | 613,250 | ||||
Block Communications Inc. | 250,000 | 268,750 |
ENTERPRISE Accumulation Trust
6
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Crown Castle International Corporation | $ | 100,000 | $ | 111,000 | ||
Crown Castle International Corporation | 100,000 | 100,500 | ||||
Dobson Communications Corporation | 375,000 | 379,688 | ||||
Intermedia Communications Inc. | 100,000 | 85,500 | ||||
Intermedia Communications Inc. | 150,000 | 133,500 | ||||
Panamsat Corporation | 650,000 | 721,500 | ||||
Pathnet Inc. | 250,000 | 125 | ||||
QWest Capital Funding Inc. | 150,000 | 147,750 | ||||
QWest Corporation | 100,000 | 114,750 | ||||
QWest Services Corporation | 1,382,000 | 1,679,130 | ||||
Telecorp PCS Inc. | 422,000 | 493,288 | ||||
Worldcom Inc. | 400,000 | 134,000 | ||||
4,982,731 | ||||||
Textiles — 1.34% | ||||||
Interface Inc. | 350,000 | 370,125 | ||||
Phillips Van-Heusen Corporation | 800,000 | 832,000 | ||||
1,202,125 | ||||||
Travel/Entertainment/Leisure — 0.06% | ||||||
Bombardier Recreational Products | 50,000 | 52,250 | ||||
Utilities — 3.01% | ||||||
AES Corporation | 425,000 | 471,219 | ||||
AES Corporation | 200,000 | 218,000 | ||||
AES Corporation | 200,000 | 223,500 | ||||
Calpine Corporation | 100,000 | 97,500 | ||||
Calpine Corporation | 300,000 | 292,500 | ||||
CMS Energy Corporation | 250,000 | 262,812 | ||||
Illinois Power Company | 950,000 | 1,140,000 | ||||
2,705,531 |
Number of Shares or Principal Amount | Value | |||||
Waste Management — 1.28% | ||||||
Allied Waste North America Inc. | $ | 450,000 | $ | 473,625 | ||
Allied Waste North America Inc. | 625,000 | 675,000 | ||||
1,148,625 | ||||||
Wireless Communications — 0.12% | ||||||
Nextel Communications | 100,000 | 109,000 | ||||
Voicestream Wireless Corporation | 918 | 1,022 | ||||
110,022 | ||||||
Total Domestic Corporate Bonds | ||||||
(Identified cost $75,264,918) | 80,825,692 | |||||
Convertible Corporate Bonds — 0.68% | ||||||
Wireless Communications — 0.68% | ||||||
Nextel Communications | 600,000 | 609,000 | ||||
Total Convertible Corporate Bonds | ||||||
(Identified cost $420,156) | 609,000 | |||||
Domestic Stocks, Rights and Warrants — 1.42% | ||||||
Chemicals — 0.12% | ||||||
Pioneer Companies Inc. (a) | 12,835 | 104,605 | ||||
Communications — 0.00% | ||||||
Globalstar Telecommunications | 450 | — | ||||
Loral Space & Communication Ltd. | 600 | 5 | ||||
Loral Space & Communications | 5,235 | — | ||||
5 | ||||||
Computer Software — 0.00% | ||||||
Verado Holdings Inc. (Wts) (a) | 300 | 119 | ||||
Electronics — 0.00% | ||||||
Axiohm Transaction Solutions Private Placement (a) (d) (m) | 4,056 | — | ||||
Health Care — 0.93% | ||||||
Dade Behring Holdings Inc. (a) | 23,333 | 833,921 | ||||
Medical Instruments — 0.06% | ||||||
Charles River Labs Inc. (Wts) (a) | 250 | 55,442 | ||||
Misc. Financial Services — 0.13% | ||||||
Leucadia National Corporation (a) | 2,606 | 120,140 | ||||
Telecommunications — 0.18% | ||||||
E. Spire Communications Inc. | 300 | — | ||||
Flag Telecom Group (a) | 1,606 | 151,976 | ||||
Nextlink Communications Inc. | 1,050,000 | — |
ENTERPRISE Accumulation Trust
7
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Number of Shares or Principal Amount | Value | |||||
Nextlink Communications Inc. | 50,000 | $ | — | |||
Pathnet Inc. (Wts) (a) (d) (144A) | 250 | — | ||||
Williams Communications Group | 575,000 | — | ||||
Wiltel Communications | 6,144 | — | ||||
XO Communications Inc. | 1,872 | 3,651 | ||||
XO Communications Inc. | 1,403 | 2,385 | ||||
XO Communications Inc. | 1,403 | 1,543 | ||||
XO Communications Inc. (a) (o) | 935 | 5,376 | ||||
164,931 | ||||||
Wireless Communications — 0.00% | ||||||
Leap Wireless International Inc. | 4,500 | — | ||||
Total Domestic Stocks, Rights and Warrants | ||||||
(Identified cost $3,296,758) | 1,279,163 | |||||
Yankee Bonds — 0.53% | ||||||
Manufacturing — 0.53% | ||||||
Tyco International Group | $ | 450,000 | 480,937 | |||
Total Yankee Bonds | ||||||
(Identified cost $426,982) | 480,937 | |||||
Foreign Bonds — 4.71% | ||||||
Broadcasting — 0.75% | ||||||
Grupo Televisa | 600,000 | 671,250 | ||||
Energy — 0.61% | ||||||
YPF Sociedad Anonima | 500,000 | 548,750 | ||||
Finance — 0.46% | ||||||
PDVSA Finance Ltd. | 400,000 | 417,000 | ||||
Oil Services — 0.40% | ||||||
Petroleos Mexicano | 300,000 | 357,000 | ||||
Telecommunications — 1.91% | ||||||
Rogers Cantel Inc. | 900,000 | 924,750 | ||||
Telewest | 250,000 | 162,500 | ||||
Telewest Communications | 1,100,000 | 572,000 | ||||
Telewest Communications | 100,000 | 62,000 | ||||
1,721,250 |
Number of Shares, Units or Principal Amount | Value | |||||
Transportation — 0.07% | ||||||
TBS Shipping International | $ | 211,375 | $ | 61,299 | ||
Travel/Entertainment/Leisure — 0.51% | ||||||
Royal Caribbean Cruises Ltd. | 425,000 | 463,250 | ||||
Total Foreign Bonds | ||||||
(Identified cost $4,882,734) | 4,239,799 | |||||
Foreign Stocks and Warrants — 0.00% | ||||||
Transportation — 0.00% | ||||||
TBS Shipping International Ltd. | 2,059 | — | ||||
TBS Shipping International Ltd. | 2,428 | — | ||||
TBS Shipping International Ltd. | 5,000 | — | ||||
TBS Shipping International Ltd. | 5,940 | — | ||||
TBS Shipping International Ltd. | 8,846 | — | ||||
— | ||||||
Total Foreign Stocks and Warrants | ||||||
(Identified cost $0) | — | |||||
Other Investments — 14.68% | ||||||
Securities Lending Quality | 13,209,605 | 13,209,605 | ||||
Total Other Investments | ||||||
(Identified cost $13,209,605) | 13,209,605 | |||||
Repurchase Agreement — 0.94% | ||||||
State Street Bank & Trust Repurchase Agreement | $ | 849,000 | 849,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $849,000) | 849,000 | |||||
Total Investments | ||||||
(Identified cost $98,350,153) | $ | 101,493,196 | ||||
Other Assets Less Liabilities — (12.75)% | �� | (11,479,182) | ||||
Net Assets — 100% | $ | 90,014,014 | ||||
ENTERPRISE Accumulation Trust
8
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
(a) | Non-income producing security. |
(b) | Security is in bankruptcy and/or is in default of interest payment. Portfolio 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 December 31, 2003. |
(m) | Illiquid security. |
(o) | Security, or portion thereof, out on loan at December 31, 2003. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
(v) | Variable interest rate security; Interest rate is as of December 31, 2003. |
(Wts) | Warrants — Warrants entitle the Portfolio 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. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Enterprise High-Yield Bond Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value, including securities loaned valued at $12,949,537 (Note 5) | $ | 101,493,196 | ||
Cash | 10,820 | |||
Investment income receivable | 1,772,698 | |||
Receivable for fund shares sold | 52,843 | |||
Other assets | 4,062 | |||
Total assets | 103,333,619 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 76,155 | |||
Payable upon return of securities loaned (Note 5) | 13,209,605 | |||
Shareholder servicing fees payable | 11,411 | |||
Accrued expenses and other liabilities | 22,434 | |||
Total liabilities | 13,319,605 | |||
Net assets | $ | 90,014,014 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 109,710,284 | ||
Undistributed (accumulated) net investment income (loss) | 4,113,290 | |||
Undistributed (accumulated) net realized gain (loss) | (26,952,603 | ) | ||
Unrealized appreciation (depreciation) | 3,143,043 | |||
Net assets | $ | 90,014,014 | ||
Shares outstanding | 18,684,617 | |||
Net asset value per share | $4.82 | |||
Investments at cost | $ | 98,350,153 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Enterprise High-Yield Bond Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Interest | $ | 6,994,698 | ||
Dividends | 652 | |||
Securities lending income | 44,792 | |||
Total investment income | 7,040,142 | |||
Expenses: | ||||
Investment advisory fees | 507,818 | |||
Shareholder servicing fees | 87,835 | |||
Custodian and fund accounting fees | 46,141 | |||
Audit and legal fees | 20,463 | |||
Other expenses | 2,532 | |||
Total expenses | 664,789 | |||
Net investment income (loss) | 6,375,353 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (2,011,195 | ) | ||
Net change in unrealized gain (loss) on investments | 12,723,046 | |||
Net realized and unrealized gain (loss) | 10,711,851 | |||
Net increase (decrease) in net assets resulting from operations | $ | 17,087,204 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
11
Enterprise High-Yield Bond Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, | ||||||||
2003 | 2002 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 6,375,353 | $ | 8,359,552 | ||||
Net realized gain (loss) | (2,011,195 | ) | (11,078,830 | ) | ||||
Net change in unrealized gain (loss) | 12,723,046 | 1,510,531 | ||||||
Increase (decrease) in net assets resulting from operations | 17,087,204 | (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 | 11,976,394 | 17,051,159 | ||||||
Reinvestment of distributions | 2,207,538 | 8,359,552 | ||||||
Shares redeemed | (16,179,218 | ) | (46,398,634 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (1,995,286 | ) | (20,987,923 | ) | ||||
Total increase (decrease) in net assets | 12,884,380 | (30,556,222 | ) | |||||
Net assets: | ||||||||
Beginning of period | 77,129,634 | 107,685,856 | ||||||
End of period | $ | 90,014,014 | $ | 77,129,634 | ||||
Capital share activity: | ||||||||
Shares issued | 2,753,455 | 4,037,282 | ||||||
Shares issued in reinvestment of distributions | 529,961 | 2,031,996 | ||||||
Shares redeemed | (3,687,004 | ) | (11,766,449 | ) | ||||
Net increase (decrease) | (403,588 | ) | (5,697,171 | ) | ||||
Undistributed (accumulated) net investment income (loss) | $ | 4,113,290 | $ | (73,481 | ) | |||
See notes to financial statements.
ENTERPRISE Accumulation Trust
12
Enterprise High-Yield Bond Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
For the years ended December 31, | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
Net asset value, beginning of period | $ | 4.04 | $ | 4.34 | $ | 4.48 | $ | 5.06 | $ | 5.37 | ||||||||||
Income from investment operations: | ||||||||||||||||||||
Net investment income (loss)C | 0.33 | 0.36 | 0.40 | 0.46 | 0.46 | |||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.54 | (0.30 | ) | (0.14 | ) | (0.58 | ) | (0.26 | ) | |||||||||||
Total from investment operations | 0.87 | 0.06 | 0.26 | (0.12 | ) | 0.20 | ||||||||||||||
Less dividends and distributions: | ||||||||||||||||||||
Dividends from net investment income | (0.09 | ) | (0.36 | ) | (0.40 | ) | (0.46 | ) | (0.46 | ) | ||||||||||
Distributions from capital gains | — | — | — | — | (0.05 | ) | ||||||||||||||
Total distributions | (0.09 | ) | (0.36 | ) | (0.40 | ) | (0.46 | ) | (0.51 | ) | ||||||||||
Net asset value, end of period | $ | 4.82 | $ | 4.04 | $ | 4.34 | $ | 4.48 | $ | 5.06 | ||||||||||
Total return | 22.64 | % | 1.51 | % | 5.90 | % | (2.52 | )% | 3.86 | % | ||||||||||
Net assets end of period (in thousands) | $ | 90,014 | $ | 77,130 | $ | 107,686 | $ | 88,336 | $ | 109,816 | ||||||||||
Ratio of expenses to average net assets | 0.79 | % | 0.79 | % | 0.77 | % | 0.75 | % | 0.69 | % | ||||||||||
Ratio of net investment income (loss) to average net assets | 7.53 | % | 8.61 | % | 8.92 | % | 9.57 | % | 8.76 | % | ||||||||||
Portfolio turnover | 60 | % | 81 | % | 73 | % | 54 | % | 97 | % |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
13
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the High-Yield Bond Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the High-Yield Bond Portfolio in the preparation of its financial statements:
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.
Valuation of Investments — 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. 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. Portfolio investments in any investment companies, unit investment trusts or similar investment funds are valued daily at their closing net asset values (or unit value) per share on each valuation day. 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.
ENTERPRISE Accumulation Trust
14
Notes to Financial Statements — (Continued)
December 31, 2003
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, U.S. Government or Agency 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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 0.60%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $87,835 for these services. ECM has contractually agreed to limit the Portfolio’s expense ratio to 0.85% through April 30, 2004.
4. Investment Transactions
For the year ended December 31, 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 | |||
— | — | $51,600,459 | $48,458,392 |
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
ENTERPRISE Accumulation Trust
15
Notes to Financial Statements — (Continued)
December 31, 2003
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 Securities Lending Quality Trust (SLQT), a New Hampshire investment trust, organized and managed by State Street Bank & Trust, which is limited to investment activities incidental to or in support of the securities lending program organized and managed by State Street Bank & Trust.
6. Borrowings
The Trust and another series of mutual funds 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. There were no loans outstanding at any time during the year ended December 31, 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. At times, these differences are primarily due to differing treatments for capital loss carryforwards utilized, defaulted bond interest and losses deferred due to wash sales.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | |||||||
$ | 98,519,134 | $ | 7,441,692 | $ | 4,467,630 | $ | 2,974,062 |
The tax character of distributions paid was as follows:
Ordinary Income | Long-Term Gain | Total Distributions | ||||||
2003 | $ | 2,207,538 | — | $ | 2,207,538 | |||
2002 | 8,359,552 | — | 8,359,552 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Gain | Capital Loss Carryforward | Expiration | |||||
$ | 4,180,130 | — | $ | 26,783,622 | 2007-2011 |
8. Subsequent Events
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
16
Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
High-Yield Bond Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of High-Yield Bond Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
17
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EAT, EGF and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
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
19
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 $12.8 billion for institutional clients and its normal investment minimum is $10 million.
Investment Objective
The objective of the Enterprise Short Duration Bond Portfolio is current income with reduced volatility of principal.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
The Portfolio commenced operations on May 1, 2003. For the period ended December 31, 2003, the Portfolio returned 1.15%. The Portfolio outperformed its benchmark, the Lehman Brothers 1-3 Year Government/Credit Index, which returned 0.90%. In contrast, the Portfolio underperformed its peer group, the Lipper Short-Intermediate Investment Grade Debt Funds Index, which returned 1.79%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The Lehman Brothers 1-3 Year Government/Credit Index is a subset of the Lehman Brother’s Government/Credit Index. It includes all government and investment-grade corporate bonds with maturities from one to three years. It includes reinvested interest and does not include any management fees or expenses. The Lipper Short-Intermediate Investment Grade Debt Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper Short-Intermediate Investment Grade Debt Funds category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index. The performance period for the Lehman Brothers 1-3 Year Government/Credit Index and the Lipper Short-Intermediate Investment Grade Debt Funds Index is 4/30/03 to 12/31/03.
ENTERPRISE Accumulation Trust
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Enterprise Short Duration Bond Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
Interest rates generally moved lower during the first half of the year, but reversed sharply higher in mid-summer on renewed confidence of an economic recovery. The last four months displayed a relatively stable rate environment. Throughout the period, the market became more comfortable with, and rewarded, riskier non-U.S. government fixed-income instruments such as corporate and asset-backed securities.
What strategies affected Portfolio performance during the period?
Over the course of the year, MONY Capital followed their core strategy of surveying all subsectors of the short-duration investment-grade bond market to find the best relative value. Early in the year, MONY Capital found the best value in the corporate securities market. However, as the year progressed and corporate securities increased in price, MONY Capital shifted their focus to the securitized asset-backed and mortgage-backed market. MONY Capital has also tried to overweight floating-rate instruments, and keep duration short, in anticipation of higher interest rates over the next several quarters.
What changes were made to the Portfolio over the period?
The Portfolio’s duration was maintained slightly on the shorter side of its target range, reflecting MONY Capital’s view that interest rates are beginning to respond to the anticipated economic recovery. Incremental acquisitions were made in the home-mortgage and credit-card subsectors of the asset-backed securities market.
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
2
Enterprise Short Duration Bond Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Principal Amount | Value | |||||
Domestic Corporate Bonds — 16.98% | ||||||
Banking — 2.53% | ||||||
Wells Fargo & Company | $ | 250,000 | $ | 246,970 | ||
Finance — 6.82% | ||||||
CIT Group Holdings Inc. | 200,000 | 213,637 | ||||
Ford Motor Credit Company | 200,000 | 211,083 | ||||
General Motors Acceptance Corporation | 225,000 | 241,548 | ||||
666,268 | ||||||
Media — 2.51% | ||||||
Walt Disney Company | 225,000 | 244,720 | ||||
Metals & Mining — 2.55% | ||||||
Alcan Aluminum Corporation | 250,000 | 249,346 | ||||
Utilities — 2.57% | ||||||
Northern States Power Company | 250,000 | 250,947 | ||||
Total Domestic Corporate Bonds | ||||||
(Identified cost $1,643,438) | 1,658,251 | |||||
Asset-Backed Securities — 42.95% | ||||||
Finance — 27.18% | ||||||
Asset Backed Funding Certificates, Series 2001-AQ1, (Class M) | 375,000 | 385,565 | ||||
Atherton Franchise Loan Funding, Series 1998-A | 233,667 | 230,830 | ||||
Bayview Financial Acquisition Trust | 750,000 | 759,404 | ||||
Capital One Multi-Asset Trust, | 250,000 | 258,008 | ||||
Circuit City Credit Card Master Trust, Series 2003-2, Class CTSF | 400,000 | 404,499 | ||||
GE Business Loan Trust, | 100,000 | 100,168 | ||||
Principal Financial Group | 500,000 | 516,828 | ||||
2,655,302 |
Principal Amount | Value | |||||
Medical Instruments — 0.82% | ||||||
DVI Receivables XIX, | $ | 160,268 | $ | 80,134 | ||
Misc. Financial Services — 14.95% | ||||||
Ameriquest Mortgage Securities Inc., Series 2003-6, Class M1 | 400,000 | 402,297 | ||||
Amresco Residential Securities | 184,419 | 190,111 | ||||
Citibank Credit Card Issuance Trust 2.31%, due 03/15/04 | 250,000 | 254,776 | ||||
Hedged Mutual Fund Fee Trust, Series 2003-2, (Class 1) | 213,143 | 213,324 | ||||
Hedged Mutual Fund Fee Trust, Series 2003-IA, (Class 1) | 225,034 | 225,169 | ||||
Lehman Manufactured Housing, Series 2003-1, (Class M1) | 173,743 | 174,171 | ||||
1,459,848 | ||||||
Total Asset-Backed Securities | ||||||
(Identified cost $4,256,686) | 4,195,284 | |||||
Collateralized Mortgage Obligations — 9.95% | ||||||
Bank of America Mortgage | 737,898 | 743,006 | ||||
Bayview Commercial Asset Trust | 228,848 | 229,225 | ||||
972,231 | ||||||
Total Collateralized Mortgage Obligations | ||||||
(Identified cost $966,456) | 972,231 | |||||
U.S. Government and Agency Obligations — 18.20% | ||||||
Fannie Mae — 13.06% | ||||||
2.75%, due 08/11/06 | 500,000 | 500,259 | ||||
4.32%, due 11/01/09 (v) | 766,763 | 774,910 | ||||
1,275,169 | ||||||
U. S. Treasury Notes — 5.14% | ||||||
1.625%, due 01/31/05 | 500,000 | 501,934 | ||||
Total U.S. Government and Agency Obligations | ||||||
(Identified cost $1,783,746) | 1,777,103 | |||||
ENTERPRISE Accumulation Trust
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Enterprise Short Duration Bond Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Short-Term Investments — 7.16% | ||||||
Freddie Mac — 7.16% | ||||||
1.03%, due 01/15/04 (e) | $ | 200,000 | $ | 199,920 | ||
1.03%, due 02/12/04 (e) | 500,000 | 499,399 | ||||
699,319 | ||||||
Total Short-Term Investments | ||||||
(Identified cost $699,319) | 699,319 | |||||
Repurchase Agreement — 3.94% | ||||||
State Street Bank & Trust | 385,000 | 385,000 | ||||
Total Repurchase Agreement | ||||||
(Identified cost $385,000) | 385,000 | |||||
Value | |||||
Total Investments | |||||
(Identified cost $9,734,645) | $ | 9,687,188 | |||
Other Assets Less | 79,984 | ||||
Net Assets — 100% | $ | 9,767,172 | |||
(a) | Illiquid security. |
(e) | The rate shown is the effective yield. |
(v) | Variable interest rate security, interest rate is as of December 31, 2003. |
(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
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Enterprise Short Duration Bond Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | ||||
Investments at value | $ | 9,687,188 | ||
Cash | 349 | |||
Investment income receivable | 59,113 | |||
Receivable for fund shares sold | 24,304 | |||
Due from investment adviser | 3,051 | |||
Other assets | 242 | |||
Total assets | 9,774,247 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 3,417 | |||
Shareholder servicing fees payable | 570 | |||
Accrued expenses and other liabilities | 3,088 | |||
Total liabilities | 7,075 | |||
Net assets | $ | 9,767,172 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 9,818,751 | ||
Undistributed (accumulated) net investment income (loss) | — | |||
Undistributed (accumulated) net realized gain (loss) | (4,122 | ) | ||
Unrealized appreciation (depreciation) | (47,457 | ) | ||
Net assets | $ | 9,767,172 | ||
Shares outstanding | 978,247 | |||
Net asset value per share | $9.98 | |||
Investments at cost | $ | 9,734,645 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Short Duration Bond Portfolio
STATEMENT OF OPERATIONS
For the Period May 1, 2003(1) to December 31, 2003 | ||||
Investment income: | ||||
Interest | $ | 158,899 | ||
Total investment income | 158,899 | |||
Expenses: | ||||
Investment advisory fees | 22,422 | |||
Custodian and fund accounting fees | 7,389 | |||
Shareholder servicing fees | 2,444 | |||
Audit and legal fees | 2,165 | |||
Reports to shareholders | 590 | |||
Trustees’ fees | 210 | |||
Other expenses | 414 | |||
Total expenses | 35,634 | |||
Expense reimbursement | (3,246 | ) | ||
Total expenses, net of reimbursement | 32,388 | |||
Net investment income (loss) | 126,511 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 1,728 | |||
Net change in unrealized gain (loss) on investments | (47,457 | ) | ||
Net realized and unrealized gain (loss) | (45,729 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | 80,782 | ||
(1) | Commencement of operations. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Short Duration Bond Portfolio
STATEMENT OF CHANGES IN NET ASSETS
For the Period May 1, 2003 through December 31, 2003 | ||||
From operations: | ||||
Net investment income (loss) | $ | 126,511 | ||
Net realized gain (loss) | 1,728 | |||
Net change in unrealized gain (loss) | (47,457 | ) | ||
Increase (decrease) in net assets resulting from operations | 80,782 | |||
Distributions to shareholders from: | ||||
Net investment income | (132,777 | ) | ||
Net realized gains | — | |||
Total distributions to shareholders | (132,777 | ) | ||
From capital share transactions: | ||||
Shares sold | 11,763,908 | |||
Reinvestment of distributions | 132,776 | |||
Shares redeemed | (2,077,517 | ) | ||
Total increase (decrease) in net assets resulting from capital share transactions | 9,819,167 | |||
Total increase (decrease) in net assets | 9,767,172 | |||
Net assets: | ||||
Beginning of period | — | |||
End of period | $ | 9,767,172 | ||
Capital share activity: | ||||
Shares issued | 1,171,673 | |||
Shares issued in reinvestment of distributions | 13,304 | |||
Shares redeemed | (206,730 | ) | ||
Net increase (decrease) | 978,247 | |||
Undistributed (accumulated) net investment income (loss) | $ | — | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Short Duration Bond Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTTHEPERIODISASFOLLOWS:
For the Period May 1, 2003 through December 31, 2003 | ||||
Net asset value, beginning of period | $ | 10.00 | ||
Income from investment operations: | ||||
Net investment income (loss)C | 0.15 | |||
Net realized and unrealized gain (loss) on investments | (0.04 | ) | ||
Total from investment operations | 0.11 | |||
Less dividends and distributions: | ||||
Dividends from net investment income | (0.13 | ) | ||
Distributions from capital gains | — | |||
Total distributions | (0.13 | ) | ||
Net asset value, end of period | $ | 9.98 | ||
Total return | 1.15 | %B | ||
Net assets end of period (in thousands) | $ | 9,767 | ||
Ratio of expenses to average net assets | 0.65 | %A | ||
Ratio of expenses to average net assets (excluding reimbursement) | 0.72 | %A | ||
Ratio of net investment income (loss) to average net assets | 2.54 | %A | ||
Portfolio turnover | 4 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
December 31, 2003
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 amended, as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest 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. The financial statements herein are those of the Short Duration Bond Portfolio (the “Portfolio”). The financial statements of the other portfolios are reported separately. The assets of each portfolio are segregated, and a shareholder’s interest is limited to the portfolio in which shares are held. The prospectus provides a detailed description of the portfolios’ investment objectives and strategies.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the Short Duration Bond Portfolio in the preparation of its financial statements:
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.
Valuation of Investments — 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. 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. 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.
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
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
December 31, 2003
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, U.S. Government or Agency 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 may not be able to sell at the price used by the Portfolio. 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 are denoted as such in the Portfolio of Investments.
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.
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. 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 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 to each Portfolio 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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 an annual rate of 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 year ended December 31, 2003, ECM incurred subadvisory fees payable to MONY Capital Management, Inc., Inc. of $4,969. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the period ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $2,444 for these services. ECM has contractually agreed to limit the Portfolio’s expense ratio to 0.65% through April 30, 2004.
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $5,057,432 in the Portfolio at December 31, 2003.
ENTERPRISE Accumulation Trust
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Notes to Financial Statements — (Continued)
December 31, 2003
4. Investment Transactions
For the period ended December 31, 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 | |||
$1,947,808 | — | $7,385,760 | $251,715 |
5. Borrowings
The Trust and another series of mutual funds 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 December 31, 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. At times, these differences are primarily due to differing treatments for paydowns.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 Loss | |||||||
$ | 9,734,645 | $ | 60,802 | $ | 108,259 | $ | 47,457 |
The tax character of distributions paid in 2003 was as follows:
Ordinary Income | Long-Term Gain | Total Distributions | ||||
$ | 132,777 | — | $ | 132,777 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary Income | Undistributed Gain | Capital Loss Carryforward | Expiration | ||||
— | — | $ | 4,123 | 2011 |
7. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
11
Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
Short Duration Bond Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Short Duration Bond Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, and the results of its operations, the changes in its net assets and the financial highlights for the period May 1, 2003 (commencement of operations) through December 31, 2003, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at December 31, 2003 by correspondence with the custodian, provides a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
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TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF, EAT and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, EAT, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
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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
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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, LLC (“PIMCO”) is the subadviser to the Enterprise Total Return Portfolio. The firm has approximately $364 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.
2003 Performance Review
How did the Portfolio perform for the year ended December 31, 2003?
For the period ended December 31, 2003, the Portfolio returned 5.65%. The Portfolio underperformed its benchmark, the Lehman Brothers U.S. Universal Index, which returned 5.84%. The Portfolio underperformed its peer group, the Lipper BBB Rated Funds Index, which returned 9.75%.
Enterprise performance numbers do not include variable account or insurance contract expenses. Performance numbers are also not adjusted for any taxes paid by a shareholder. Remember that historic performance does not predict future performance. The investment returns and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.
*The Lehman Brothers U.S. Universal Index (formerly known as the Lehman Brothers Universal Index) consists of all the bonds in the Lehman Brothers Aggregate Bond Index plus U.S. dollar-denominated Eurobonds, 144A’s, Non-ERISA CMBS, High Yield CMBS, U.S. High Yield Corporates and Emerging Markets, but excludes tax-exempt municipal securities, CMO’s, convertible securities, perpetual notes, warrants, linked bonds, and structured products. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. The Lipper BBB Rated Funds Index is an unmanaged index of the 30 largest funds, based on total year-end net asset value, in the Lipper BBB Rated Fund category. It assumes the reinvestment of dividends and capital gains and does not include any management fees or expenses. One cannot invest in an index.
ENTERPRISE Accumulation Trust
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Enterprise Total Return Portfolio
SUBADVISER’S COMMENTS — (Continued)
How would you describe the investment environment during the period?
During 2003, fixed-income assets gained ground despite volatile interest rates. While treasury yields ended the year only 0.20% to 0.40% higher than where they started, 2003 witnessed a dramatic jump in yields in July, one of the worst months for the U.S. government bond market in years. The increase reversed a rally that had seen the 10-year treasury yield plunge to a 45-year low in June. This volatility illustrated the divergence in market psychology between the first and second halves of 2003.
In the first half of the year, markets were anxious about deflation, leading the Fed to cut the fed funds rate to 1% in June. Treasury yields fell in anticipation of this move. The market’s mood swung toward optimism about growth in the second half, as business investment revived. Massive fiscal stimulus and the lagged impact of the mortgage refinancing boom sustained consumption, leading to 8.2% annual growth in the third quarter, the fastest pace in almost two decades. Interest rates rose as investors anticipated that growth would continue. The 10-year treasury yield finished the year up approximately 0.4%.
Commodity prices surged in 2003 as growth revived, while the dollar plunged against most currencies amid concern about the U.S. trade deficit. Despite these trends, inflation overall was well behaved, mitigating the rise in interest rates. In the global economy, slack labor markets and gains in labor productivity allowed companies to absorb higher prices of physical inputs without raising prices.
What strategies affected Portfolio performance during the period?
Interest rate strategies were largely neutral. Over the course of the year, the Portfolio made a modest shift from emphasizing the short and long end of the maturity spectrum to emphasizing the intermediate maturity. The Portfolio maintained its interest rate sensitivity close to that of the benchmark. On net, these strategies neither helped nor hindered Portfolio performance.
In terms of sector strategies, a structural allocation to mortgages, which offered enhanced yield and exceptional credit quality, was modestly positive for performance. A corporate underweight was negative as the sector outperformed Treasuries. An underweight to high-yield issues also hurt returns as this sector enjoyed strong returns in 2003. Non-dollar holdings, mainly eurozone issues, were neutral for returns as foreign rates behaved in a fashion that was broadly comparable to those in the U.S. Emerging market bonds, especially Brazil, added to returns, sustaining their recovery that began in the fourth quarter of 2002.
What changes were made to the Portfolio over the period?
Over the year, the Portfolio maintained relatively stable interest rate exposure. The Portfolio did make a modest shift from emphasizing longer and shorter maturities to emphasizing short to intermediate bonds.
In terms of sectors, the Portfolio modestly increased its exposure to emerging market and high-yield debt. In terms of developed non-dollar exposure, the Portfolio continued to emphasize shorter maturity non-dollar assets, especially in Europe, where growth remained weak. Lastly, the Portfolio modestly increased its exposure to mortgages while tempering its position in investment grade corporate securities.
There are specific risks associated with some of the securities held in this Portfolio. 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 Portfolio to loss of principal. In addition, this Portfolio 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
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Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS
December 31, 2003
Principal Amount | Value | |||||
Domestic Corporate Bonds — 15.54% | ||||||
Airlines — 0.60% | ||||||
Continental Airlines Inc. | $ | 110,000 | $ | 112,080 | ||
Delta Air Lines Inc. | 110,000 | 110,921 | ||||
United Airlines Inc. | 49,079 | 42,126 | ||||
United Airlines Inc. | 50,000 | 42,799 | ||||
307,926 | ||||||
Automotive — 0.34% | ||||||
Daimlerchrysler North America | 50,000 | 49,976 | ||||
Daimlerchrysler North America | 60,000 | 63,204 | ||||
Dura Operating Corporation | 60,000 | 63,900 | ||||
177,080 | ||||||
Banking — 0.19% | ||||||
Rabobank Capital Fund | 100,000 | 100,138 | ||||
Cable — 0.11% | ||||||
Continental Cablevision Inc. | 50,000 | 56,059 | ||||
Chemicals — 0.41% | ||||||
Nalco Company | 200,000 | 212,000 | ||||
Containers/Packaging — 0.42% | ||||||
Packaging Corporation of America | 143,000 | 143,142 | ||||
Packaging Corporation of America | 72,000 | 72,735 | ||||
215,877 | ||||||
Electrical Equipment — 0.21% | ||||||
Oncor Electric Delivery Company | 50,000 | 54,949 | ||||
Oncor Electric Delivery Company | 50,000 | 54,357 | ||||
109,306 | ||||||
Electronics — 0.41% | ||||||
Delphi Corporation | 200,000 | 210,032 | ||||
Energy — 2.04% | ||||||
AEP Texas Central Company | 200,000 | 211,169 | ||||
El Paso Energy Corporation | 25,000 | 21,313 | ||||
El Paso Natural Gas Company | 50,000 | 51,100 |
Principal Amount | Value | |||||
El Paso Production Holding Company, | $ | 60,000 | $ | 59,100 | ||
Florida Power Corporation | 130,000 | 129,137 | ||||
Gulfterra Energy Partners | 51,000 | 57,885 | ||||
NRG Energy Inc. | 210,000 | 220,762 | ||||
Progress Energy Inc. | 200,000 | 201,492 | ||||
PSEG Power | 62,000 | 69,923 | ||||
Sonat Inc. | 35,000 | 32,419 | ||||
1,054,300 | ||||||
Entertainment & Leisure — 0.26% | ||||||
Station Casinos Inc. | 75,000 | 80,344 | ||||
Walt Disney Company | 50,000 | 55,939 | ||||
136,283 | ||||||
Hotels & Restaurants — 0.31% | ||||||
Hilton Hotels Corporation | 100,000 | 102,500 | ||||
Starwood Hotels Resorts | 50,000 | 56,250 | ||||
158,750 | ||||||
Insurance — 0.76% | ||||||
Metropolitan Life Global Funding | 100,000 | 100,019 | ||||
Principal Life Global Funding | 130,000 | 130,554 | ||||
Protective Life U.S. Funding Trust | 70,000 | 70,006 | ||||
Travelers Property Casualty Corporation, | 60,000 | 60,040 | ||||
Travelers Property Casualty Corporation, | 30,000 | 31,283 | ||||
391,902 | ||||||
Media — 0.59% | ||||||
Time Warner Inc. | 125,000 | 141,504 | ||||
Time Warner Inc. | 100,000 | 112,531 | ||||
Turner Broadcasting System Inc. | 50,000 | 50,215 | ||||
304,250 | ||||||
Metals & Mining — 0.13% | ||||||
Alcan Aluminum Corp | 70,000 | 69,817 |
ENTERPRISE Accumulation Trust
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Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Misc. Financial Services — 3.35% | ||||||
Bear Stearns Companies Inc. | $ | 60,000 | $ | 70,804 | ||
CIT Group Inc. | 203,000 | 204,419 | ||||
CIT Group Inc. | 150,000 | 177,216 | ||||
Eircom Funding | 60,000 | 66,450 | ||||
General Motors Acceptance Corporation, | 100,000 | 100,025 | ||||
General Motors Acceptance Corporation, | 450,000 | 453,379 | ||||
General Motors Acceptance Corporation, | 250,000 | 268,957 | ||||
Household Finance Corporation | 50,000 | 50,120 | ||||
HSBC Capital Funding | 100,000 | 146,464 | ||||
Restructured Asset Certificates | 200,000 | 197,787 | ||||
1,735,621 | ||||||
Oil Services — 0.75% | ||||||
Amerada Hess Corporation | 150,000 | 162,562 | ||||
Chesapeake Energy Corporation | 5,000 | 5,550 | ||||
Tennessee Gas Pipeline Company | 150,000 | 159,188 | ||||
Vintage Petroleum Inc. | 60,000 | 63,300 | ||||
390,600 | ||||||
Paper & Forest Products — 0.75% | ||||||
Georgia Pacific Corporation | 60,000 | 62,400 | ||||
Georgia Pacific Corporation | 320,000 | 326,400 | ||||
388,800 | ||||||
Retail — 0.31% | ||||||
Kroger Company | 150,000 | 160,879 | ||||
Telecommunications — 1.44% | ||||||
Accident Escrow Corporation | 60,000 | 66,900 | ||||
Cincinnati Bell Inc. | 200,000 | 215,000 | ||||
Panamsat Corporation | 60,000 | 66,600 | ||||
Sprint Capital Corporation | 50,000 | 58,390 | ||||
Verizon Global Funding Corporation, | 65,000 | 71,133 |
Principal Amount | Value | |||||
Verizon Maryland Inc. | $ | 250,000 | $ | 268,398 | ||
746,421 | ||||||
Transportation — 0.26% | ||||||
Norfolk Southern Corporation | 100,000 | 100,368 | ||||
Norfolk Southern Corporation | 30,000 | 34,165 | ||||
134,533 | ||||||
Utilities — 0.61% | ||||||
National Rural Utilities | 200,000 | 200,593 | ||||
Niagara Mohawk Power Corporation | 100,000 | 116,048 | ||||
316,641 | ||||||
Waste Management — 0.57% | ||||||
Allied Waste North America Inc. | 60,000 | 64,800 | ||||
USA Waste Services Inc. | 95,000 | 98,313 | ||||
Waste Management Inc. | 120,000 | 130,253 | ||||
293,366 | ||||||
Wireless Communications — 0.72% | ||||||
AT&T Wireless | 160,000 | 188,152 | ||||
Cingular Wireless | 60,000 | 65,615 | ||||
Nextel Communications Inc. | 60,000 | 64,500 | ||||
Rogers Cantel | 50,000 | 52,312 | ||||
370,579 | ||||||
Total Domestic Corporate Bonds | ||||||
(Identified cost $7,685,723) | 8,041,160 | |||||
Yankee Bonds — 0.32% | ||||||
Cable — 0.06% | ||||||
Rogers Cablesystems Ltd. | 30,000 | 32,175 | ||||
Manufacturing — 0.26% | ||||||
Tyco International Group | 60,000 | 65,550 | ||||
Tyco International Group | 65,000 | 69,469 | ||||
135,019 | ||||||
Total Yankee Bonds | ||||||
(Identified cost $153,425) | 167,194 | |||||
ENTERPRISE Accumulation Trust
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Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Foreign Bonds — 1.10% | ||||||
Banking — 0.25% | ||||||
European Investment Bank | ¥ | 14,000,000 | $ | 131,266 | ||
Misc. Financial Services — 0.11% | ||||||
Pemex Project Funding Master Trust, 8.625% due 02/01/22 | $ | 50,000 | 55,375 | |||
Telecommunications — 0.74% | ||||||
Deutsche Telekom International | 65,000 | 70,509 | ||||
Deutsche Telekom International | 100,000 | 120,912 | ||||
France Telecom | 145,000 | 192,658 | ||||
384,079 | ||||||
Total Foreign Bonds | ||||||
(Identified cost $527,252) | 570,720 | |||||
Asset-Backed Securities — 0.81% | ||||||
Misc. Financial Services — 0.81% | ||||||
EFSI Federated Student Finance Corporation, | 200,000 | 199,828 | ||||
Merrill Lynch Mortgage Inc., | 24,643 | 24,669 | ||||
Morgan Stanley Capital Inc., Series 2003-HE2, Class A2, | 113,722 | 113,667 | ||||
Structured Asset Securities Corporation, Series 2002-BC4, Class A, | 48,067 | 47,980 | ||||
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class A1, | 34,887 | 35,118 | ||||
421,262 | ||||||
Total Asset-Backed Securities | ||||||
(Identified cost $421,317) | 421,262 | |||||
Collateralized Mortgage Obligations — 6.86% | ||||||
Banking — 0.86% | ||||||
Chase Mortgage Finance Corporation, | 49,128 | 49,073 |
Principal Amount | Value | |||||
Citicorp Mortgage Securities Inc., Series 1999-2, Class A-5, | $ | 150,229 | $ | 151,245 | ||
Countrywide Alternative Loan Trust, Series 2003-J1, Class 4A1, | 42,132 | 43,245 | ||||
Countrywide Home Loans Inc. | 51,329 | 52,686 | ||||
Countrywide Home Loans Inc. Series 2002-HYB2, Class-6A1, | 56,340 | 57,019 | ||||
Wells Fargo Mortgage Backed Securities Trust, | 70,886 | 70,808 | ||||
Wells Fargo Mortgage Backed Securities, Series 2002-E, Class 2A1, 5.018% due 05/25/31 | 20,060 | 20,396 | ||||
444,472 | ||||||
Finance — 0.43% | ||||||
Credit Suisse First Boston Mortgage, Series 2002-P1, Class A-1, | 43,076 | 43,238 | ||||
Credit Suisse First Boston Mortgage, Series 2002-P3, Class A, | 179,625 | 179,625 | ||||
222,863 | ||||||
Misc. Financial Services — 2.78% | ||||||
Bear Stearns Arm Trust, | 99,896 | 101,270 | ||||
Bear Stearns Arm Trust, | 5,578 | 5,829 | ||||
Bear Stearns Arm Trust, | 13,231 | 13,706 | ||||
Bear Stearns Arm Trust, | 198,303 | 202,269 | ||||
Bear Stearns Arm Trust, | 399,889 | 405,387 | ||||
C Bass Trust, | 40,944 | 40,971 | ||||
First Horizon Asset Securities, | 7,509 | 7,636 | ||||
GSMPS Mortgage Loan Trust, | 92,803 | 98,454 |
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Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Sequoia Mortgage Trust, | $ | 263,670 | $ | 264,217 | ||
Small Business Administration, | 50,000 | 50,587 | ||||
Structured Asset Securities Corporation, Series 2002-9, Class A2, | 58,270 | 58,220 | ||||
Structured Asset Securities Corporation, | 20,562 | 20,513 | ||||
Washington Mutual Mortgage Loan Trust, Series 2000-3, Class A, 2.843% due 12/25/40 | 117,649 | 118,504 | ||||
Washington Mutual Mortgage Loan Trust, Series 2002-AR2, | 42,096 | 42,764 | ||||
Washington Mutual Mortgage Securities Corporation, | 10,138 | 10,128 | ||||
1,440,455 | ||||||
Fannie Mae — 1.03% | ||||||
Fannie Mae REMIC, | 100,000 | 100,378 | ||||
Fannie Mae, | 172,236 | 173,129 | ||||
Fannie Mae, | 130,000 | 131,665 | ||||
Fannie Mae, | 126,260 | 126,465 | ||||
531,637 | ||||||
Freddie Mac — 1.76% | ||||||
Freddie Mac, Series 1476, Class H, 6.00% due 12/15/07 | 35,199 | 36,035 | ||||
Freddie Mac, Series 2142, Class 2, 6.50% due 04/15/29 | 135,326 | 144,058 | ||||
Freddie Mac, Series 2215, Class PG, 6.50% due 02/15/30 | 44,340 | 45,445 | ||||
Freddie Mac, Series 2341, Class PM, 6.50% due 12/15/28 | 157,435 | 159,343 | ||||
Freddie Mac, Series 2371, Class JD, 6.00% due 03/15/27 | 8,995 | 8,989 | ||||
Freddie Mac, Series 2388, Class LQ, 6.00% due 04/15/27 | 76,445 | 76,796 | ||||
Freddie Mac, Series 2390, Class PD, 6.00% due 08/15/27 | 83,000 | 83,670 | ||||
Freddie Mac, Series 2399, Class TE, 6.50% due 02/15/28 | 49,604 | 49,825 |
Principal Amount | Value | |||||
Freddie Mac, Series 2411, Class FJ, 1.513% due 01/15/04 (v) | $ | 35,818 | $ | 35,734 | ||
Freddie Mac, Series 2434, Class TA, 5.625% due 07/15/28 | 26,646 | 26,774 | ||||
Freddie Mac, Series 2454, Class BD, 6.00% due 04/15/28 | 47,244 | 47,383 | ||||
Freddie Mac, Series 2455, Class 6D, 6.00% due 11/15/27 | 3,688 | 3,685 | ||||
Freddie Mac, Series 2504, Class DX, 5.25% due 04/15/26 | 11,666 | 11,734 | ||||
Freddie Mac, Series 2535, Class DT, 5.00% due 09/15/16 | 112,325 | 115,654 | ||||
Freddie Mac, Series 2553, Class JD, 4.50% due 08/15/31 | 7,322 | 7,272 | ||||
Freddie Mac, Series T-57, Class 1A1, 6.50% due 07/25/43 | 56,982 | 59,079 | ||||
911,476 | ||||||
Total Collateralized Mortgage Obligations | ||||||
(Identified cost $3,534,606) | 3,550,903 | |||||
U. S. Treasury Obligations — 6.04% | ||||||
U. S. Treasury Bonds — 0.00% | ||||||
3.875% due 04/15/29 (TIPS) | 16 | 21 | ||||
U. S. Treasury Notes — 6.04% | ||||||
7.50% due 11/15/16 | 370,000 | 471,056 | ||||
3.875% due 01/15/09 (TIPS) | 101,528 | 114,647 | ||||
3.375% due 01/15/12 (TIPS) | 2,271,364 | 2,541,620 | ||||
3,127,323 | ||||||
Total U. S. Treasury Obligations | ||||||
(Identified cost $3,172,372) | 3,127,344 | |||||
Foreign Government Obligations — 4.67% | ||||||
Brazil Federative Republic | 140,000 | 138,320 | ||||
Brazil Federative Republic | 32,353 | 30,614 | ||||
Brazil Federative Republic | 54,000 | 62,640 | ||||
Brazil Federative Republic | 150,000 | 174,000 | ||||
Brazil Federative Republic | 214,265 | 209,980 | ||||
Brazil Federative Republic | 50,000 | 48,750 | ||||
Brazil Federative Republic | 29,000 | 31,900 | ||||
Chile Republic | 140,000 | 159,824 | ||||
Germany Federal Republic | € | 46,000 | 58,283 | |||
Republic of Panama | 30,000 | 33,000 | ||||
Republic of Panama | 20,000 | 23,100 |
ENTERPRISE Accumulation Trust
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Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Republic of Panama | $ | 305,000 | $ | 332,450 | ||
Republic of Peru | 250,000 | 293,750 | ||||
Russian Federation | 430,000 | 412,263 | ||||
South Africa Republic | € | 150,000 | 180,072 | |||
United Mexican States | $ | 25,000 | 29,688 | |||
United Mexican States | 175,000 | 197,312 | ||||
2,415,946 | ||||||
Total Foreign Government Obligations | ||||||
(Identified cost $2,200,024) | 2,415,946 | |||||
Municipal Bonds — 2.86% | ||||||
Education — 1.16% | ||||||
Brazos Student Loan Finance | 100,000 | 100,000 | ||||
Brazos Texas Higher Education Authority Inc., | 100,000 | 100,000 | ||||
Brazos Texas Higher Education Authority Inc., | 200,000 | 200,000 | ||||
Michigan Higher Education | 100,000 | 100,000 | ||||
Pennsylvania Higher Education Student Loan, | 100,000 | 100,000 | ||||
600,000 | ||||||
Food, Beverages & Tobacco — 0.59% | ||||||
Golden State Tobacco Securitization, 6.75% due 06/01/39 | 40,000 | 39,416 | ||||
Golden State Tobacco Securitization, 7.90% due 06/01/42 | 25,000 | 26,944 | ||||
Tobacco Settlement Authority (Iowa), | 100,000 | 84,382 | ||||
Tobacco Settlement Financing Corporation (New Jersey), | 95,000 | 92,148 | ||||
Tobacco Settlement Financing Corporation (New Jersey), | 70,000 | 62,554 | ||||
305,444 | ||||||
Transportation — 0.02% | ||||||
Florida State Turnpike Authority Revenue Bond, | 10,000 | 10,250 |
Principal Amount | Value | |||||
Utilities — 1.09% | ||||||
Cook County Illinois (FGIC Insured), 5.125% due 11/15/26 | $ | 150,000 | $ | 153,075 | ||
Illinois State Taxable Pension | 50,000 | 45,973 | ||||
New York City Municipal | 160,000 | 163,176 | ||||
New York State Environmental Facilities Clean Water & Drinking, | 20,000 | 20,535 | ||||
New York State Environmental Facilities Clean Water & Drinking, | 10,000 | 10,268 | ||||
New York State Environmental Facilities Clean Water & Drinking, | 10,000 | 10,270 | ||||
San Antonio Texas Water Revenue (FSA Insured), | 150,000 | 152,677 | ||||
South Central Connecticut | 10,000 | 10,271 | ||||
566,245 | ||||||
Total Municipal Bonds | ||||||
(Identified cost $1,455,105) | 1,481,939 | |||||
Agency Obligations — 18.51% | ||||||
Fannie Mae — 15.07% | ||||||
5.266% due 01/01/04 (v) | 42,053 | 43,004 | ||||
5.00% due 01/01/17 | 117,934 | 120,437 | ||||
5.00% due 02/01/18 | 577,436 | 589,686 | ||||
5.00% due 08/01/18 | 493,528 | 503,998 | ||||
5.00% due 09/01/18 | 262,552 | 268,122 | ||||
6.00% due 09/01/32 | 744,903 | 770,312 | ||||
6.00% due 03/01/33 | 804,067 | 831,496 | ||||
5.50% due 07/01/33 | 155,841 | 157,949 | ||||
6.00% due 07/01/33 | 2,350,866 | 2,431,096 | ||||
5.50% due 08/01/33 | 526,000 | 533,117 | ||||
6.00% due 11/01/33 | 499,999 | 517,076 | ||||
6.00% due 12/01/33 (TBA) | 1,000,000 | 1,033,438 | ||||
7,799,731 | ||||||
Freddie Mac — 0.83% | ||||||
3.464% due 01/01/04 (v) | 90,956 | 94,780 | ||||
6.50% due 08/01/32 | 317,821 | 332,897 | ||||
427,677 | ||||||
Ginnie Mae — 2.61% | ||||||
6.00% due 12/01/33 (TBA) | 1,300,000 | 1,350,781 | ||||
Total Agency Obligations | ||||||
(Identified cost $9,533,719) | 9,578,189 | |||||
ENTERPRISE Accumulation Trust
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Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Principal Amount | Value | |||||
Short-Term U. S. Government and Agency Obligations — 36.22% | ||||||
Fannie Mae (z) — 9.26% | ||||||
1.07% due 02/18/04 (e) | $ | 1,000,000 | $ | 998,571 | ||
1.065% due 03/10/04 (e) | 1,500,000 | 1,496,938 | ||||
1.07% due 03/24/04 (e) | 1,600,000 | 1,596,081 | ||||
1.03% due 03/31/04 (e) | 700,000 | 698,197 | ||||
4,789,787 | ||||||
Freddie Mac (z) — 11.78% | ||||||
1.06% due 01/08/04 (e) | 2,900,000 | 2,899,402 | ||||
1.06% due 01/15/04 (e) | 600,000 | 599,753 | ||||
1.083% due 01/22/04 (e) | 1,600,000 | 1,598,990 | ||||
1.08% due 01/29/04 (e) | 1,000,000 | 999,160 | ||||
6,097,305 | ||||||
U. S. Treasury Bills — 15.18% | ||||||
0.902% due 03/04/04 (e) (s) | 185,000 | 184,700 | ||||
0.866% due 03/18/04 (e) (s) | 100,000 | 99,815 | ||||
0.949% due 04/15/04 (e) | 2,500,000 | 2,492,953 | ||||
1.02% due 04/29/04 (e) | 1,800,000 | 1,793,931 | ||||
1.04% due 05/13/04 (e) | 1,500,000 | 1,494,237 | ||||
1.031% due 06/03/04 (e) | 1,800,000 | 1,792,065 | ||||
7,857,701 | ||||||
Total Short-Term U. S. Government and Agency Obligations | ||||||
(Identified cost $18,744,622) | 18,744,793 | |||||
Commercial Paper — 8.69% | ||||||
ANZ Delaware Inc. | 700,000 | 699,272 | ||||
European Investment Bank | 1,500,000 | 1,498,234 | ||||
General Electric Capital Corporation, 1.09% due 01/27/04 | 1,500,000 | 1,498,819 | ||||
Royal Bank of Scotland | 800,000 | 798,232 | ||||
4,494,557 | ||||||
Total Commercial Paper | ||||||
(Identified cost $4,494,557) | 4,494,557 | |||||
Repurchase Agreement — 1.27% | ||||||
State Street Bank & Trust | 657,000 | 657,000 | ||||
Total Repurchase Agreement | ||||||
(Identified cost $657,000) | 657,000 | |||||
Notional Amount | Value | ||||||
Total Investments | |||||||
(Identified cost $52,579,744) |
| $ | 53,251,007 | ||||
Call Options Written — (0.02)% |
| ||||||
Swap Option 3 Month LIBOR, Strike Price 4.00, Expires 01/07/05 | (600,000 | ) | (7,017 | ) | |||
Swap Option 3 Month LIBOR, | (1,600,000 | ) | (3,053 | ) | |||
(10,070 | ) | ||||||
Total Call Options Written | |||||||
(Premiums received $34,641) |
| (10,070 | ) | ||||
Put Options Written — 0.00% |
| ||||||
Swap Option 3 Month LIBOR, Strike Price 7.00, | (600,000 | ) | (2,833 | ) | |||
Total Put Options Written | |||||||
(Premiums received $7,950) |
| (2,833 | ) | ||||
Other Assets Less Liabilities — (2.87)% |
| (1,485,818 | ) | ||||
Net Assets — 100% |
| $ | 51,752,286 | ||||
(b) | Company has filed for bankruptcy protection, but is currently not in default of any interest. |
(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 principal or interest payments since there is a high default rate of commercial bank loans by countries issuing these securities. |
(v) | Variable rate security; interest rate is as of December 31, 2003. |
(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. |
(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 903 & 904 of the Securities Act of 1933. |
(TIPS) | Treasury Inflation Protected Security. Principal amount of the security is periodically adjusted for inflation. |
ENTERPRISE Accumulation Trust
8
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS — (Continued)
December 31, 2003
Interest rate swap agreements outstanding at December 31, 2003:
Description | Termination Date | Notional Amount (000) | Unrealized Appreciation/ (Depreciation) | |||||
Pay variable rate payments on the three month CHF LIBOR-BBA floating rate and receive fixed rate of 1.50% (Counterparty: J.P. Morgan) | 03/29/2005 | 7,000 | $ | 10,660 | ||||
Receive variable rate payments on the six month JPY LIBOR-BBA floating rate and pay fixed rate of 1.07% (Counterparty: Morgan Stanley) | 06/02/2012 | 100,000 | 21,546 | |||||
Receive variable rate payments on the six month JPY LIBOR-BBA floating rate and pay fixed rate of 1.645% (Counterparty: Morgan Stanley) | 06/18/2013 | 160,000 | 1,060 | |||||
Receive variable rate payments on the six month LIBOR-BBA floating rate and pay fixed rate of 5.00% (Counterparty: | 06/16/2004 | 600 | (1,320 | ) | ||||
$ | 31,946 | |||||||
Open futures contracts outstanding at December 31, 2003:
Description | Expiration Month | Contracts | Unrealized Appreciation/ (Depreciation) | |||||
Long Euribor Futures | 03/05 | 18 | $ | (1,980 | ) | |||
Long Germany Federative Republic 5-Year Bonds | 03/04 | 16 | 16,090 | |||||
Long Eurodollar Futures | 09/04 | 11 | 20,900 | |||||
Long Eurodollar Futures | 12/04 | 11 | 23,375 | |||||
Long Eurodollar Futures | 06/05 | 21 | 16,663 | |||||
Long Eurodollar Futures | 03/05 | 11 | 22,963 | |||||
Long U.S. Treasury 10-Year Notes | 03/04 | 81 | 55,047 | |||||
Long U.S. Treasury 5-Year Notes | 03/04 | 55 | 3,594 | |||||
$ | 156,651 | |||||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Enterprise Total Return Portfolio
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2003
Assets: | |||
Investments at value | $ | 53,251,007 | |
Foreign currency at value (cost — $171,736) | 177,887 | ||
Cash | 782 | ||
Investment income receivable | 269,791 | ||
Receivable for variation margin on open futures | 21,758 | ||
Receivable for fund shares sold | 29,068 | ||
Receivable for investments sold | 2,703,926 | ||
Due from investment adviser | 11,441 | ||
Other assets | 15,064 | ||
Total assets | 56,480,724 | ||
Liabilities: | |||
Payable for fund shares redeemed | 26,400 | ||
Options written, at market value (premiums received $42,591) | 12,903 | ||
Payable for investments purchased | 4,661,434 | ||
Shareholder servicing fees payable | 6,308 | ||
Unrealized depreciation on forward currency contracts | 7,510 | ||
Accrued expenses and other liabilities | 13,883 | ||
Total liabilities | 4,728,438 | ||
Net assets | $ | 51,752,286 | |
Analysis of net assets: | |||
Paid-in capital | $ | 50,706,239 | |
Undistributed (accumulated) net investment income (loss) | — | ||
Undistributed (accumulated) net realized gain (loss) | 157,544 | ||
Unrealized appreciation (depreciation) | 888,503 | ||
Net assets | $ | 51,752,286 | |
Shares outstanding | 5,007,942 | ||
Net asset value per share | $10.33 | ||
Investments at cost | $ | 52,579,744 | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Enterprise Total Return Portfolio
STATEMENT OF OPERATIONS
For the Year Ended December 31, 2003
Investment income: | ||||
Interest | $ | 1,338,403 | ||
Total investment income | 1,338,403 | |||
Expenses: | ||||
Investment advisory fees | 252,663 | |||
Custodian and fund accounting fees | 50,694 | |||
Shareholder servicing fees | 46,677 | |||
Audit and legal fees | 12,512 | |||
Reports to shareholders | 9,175 | |||
Trustees’ fees | 2,020 | |||
Other expenses | 700 | |||
Total expenses | 374,441 | |||
Expense reimbursement | (75,839 | ) | ||
Total expenses, net of reimbursement | 298,602 | |||
Net investment income (loss) | 1,039,801 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 526,991 | |||
Net realized gain (loss) on foreign currency transactions | 35,944 | |||
Net realized gain (loss) on swap transactions | 92,142 | |||
Net realized gain (loss) on futures transactions | 262,767 | |||
Net realized gain (loss) on options transactions | 86,587 | |||
Net change in unrealized gain (loss) on investments | 393,284 | |||
Net change in unrealized gain (loss) on foreign currency | (579 | ) | ||
Net change in unrealized gain (loss) on swap transactions | (6,922 | ) | ||
Net change in unrealized gain (loss) on futures transactions | (55,877 | ) | ||
Net change in unrealized gain (loss) on options transactions | 11,293 | |||
Net realized and unrealized gain (loss) | 1,345,630 | |||
Net increase (decrease) in net assets resulting from operations | $ | 2,385,431 | ||
See notes to financial statements.
ENTERPRISE Accumulation Trust
11
Enterprise Total Return Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended December 31, 2003 | For the Period 2002 through | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 1,039,801 | $ | 470,087 | ||||
Net realized gain (loss) | 1,004,431 | 574,651 | ||||||
Net change in unrealized gain (loss) | 341,199 | 547,304 | ||||||
Increase (decrease) in net assets resulting from operations | 2,385,431 | 1,592,042 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | (1,164,067 | ) | (490,385 | ) | ||||
Net realized gains | (796,071 | ) | (480,903 | ) | ||||
Total distributions to shareholders | (1,960,138 | ) | (971,288 | ) | ||||
From capital share transactions: | ||||||||
Shares sold | 28,817,694 | 35,548,535 | ||||||
Reinvestment of distributions | 1,910,525 | 720,161 | ||||||
Shares redeemed | (10,700,955 | ) | (5,589,721 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 20,027,264 | 30,678,975 | ||||||
Total increase (decrease) in net assets | 20,452,557 | 31,299,729 | ||||||
Net assets: | ||||||||
Beginning of period | 31,299,729 | — | ||||||
End of period | $ | 51,752,286 | $ | 31,299,729 | ||||
Capital share activity: | ||||||||
Shares issued | 2,778,731 | 3,552,733 | ||||||
Shares issued in reinvestment of distributions | 184,636 | 71,049 | ||||||
Shares redeemed | (1,026,695 | ) | (552,512 | ) | ||||
Net increase (decrease) | 1,936,672 | 3,071,270 | ||||||
Undistributed (accumulated) net investment income (loss) | $ | — | $ | — | ||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
12
Enterprise Total Return Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
Year Ended December 31, 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 | 0.24 | 0.34 | ||||||
Net realized and unrealized gain (loss) on investments | 0.31 | 0.35 | ||||||
Total from investment operations | 0.55 | 0.69 | ||||||
Less dividends and distributions: | ||||||||
Dividends from net investment income | (0.25 | ) | (0.34 | ) | ||||
Distributions from capital gains | (0.16 | ) | (0.16 | ) | ||||
Total distributions | (0.41 | ) | (0.50 | ) | ||||
Net asset value, end of period | $ | 10.33 | $ | 10.19 | ||||
Total return | 5.65 | % | 7.09 | %B | ||||
Net assets end of period (in thousands) | $ | 51,752 | $ | 31,300 | ||||
Ratio of expenses to average net assets | 0.65 | % | 0.65 | %A | ||||
Ratio of expenses to average net assets (excluding reimbursement) | 0.82 | % | 0.96 | %A | ||||
Ratio of net investment income (loss) to average net assets | 2.26 | % | 3.46 | %A | ||||
Portfolio turnover rate | 364 | % | 493 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
13
Notes to Financial Statements
December 31, 2003
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 in the preparation of its financial statements:
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 loss from such claims is considered remote.
Valuation of Investments — 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. 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. 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,
ENTERPRISE Accumulation Trust
14
Notes to Financial Statements — (Continued)
December 31, 2003
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 they it not be able to sell at the price used by the Portfolio. 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 are 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.
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.
ENTERPRISE Accumulation Trust
15
Notes to Financial Statements — (Continued)
December 31, 2003
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 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.
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.
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 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 the Internal Revenue Code and distribute substantially all of its taxable income to shareholders.
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
16
Notes to Financial Statements — (Continued)
December 31, 2003
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 an annual rate of 0.55%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the year ended December 31, 2003, the Portfolio paid MONY Life Insurance Company $46,677 for these services. ECM has contractually agreed to limit the Portfolio’s expense ratio to 0.65% through April 30, 2004.
4. Investment Transactions
Outstanding forward foreign currency contracts at December 31, 2003 were as follows:
Settlement Date | Receive | Deliver | Net Unrealized (Depreciation) | |||||||||
01/07/04 | USD | 161,480 | EURO | 134,000 | $ | (6,933 | ) | |||||
01/15/04 | USD | 152,824 | JPY | 16,470,000 | (577 | ) | ||||||
$ | (7,510 | ) | ||||||||||
For the year ended December 31, 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 | |||
$107,230,181 | $99,254,834 | $35,590,396 | $33,257,378 |
Transactions in options written for the year ended December 31, 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 | 2,000,045 | 21,922 | |||||
Call swap options written | 1,600,000 | 24,576 | |||||
Call options expired | (2,000,045 | ) | (21,922 | ) | |||
Call swap option expired | (1,500,000 | ) | (12,750 | ) | |||
Call swap options closed | (3,000,000 | ) | (27,880 | ) | |||
Put options written | 45 | 13,347 | |||||
Put options expired | (88 | ) | (37,247 | ) | |||
Put swap options expired | (1,400,000 | ) | (12,950 | ) | |||
Outstanding put and call options written at December 31, 2003 | 2,800,000 | $ | 42,591 | ||||
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. There were no loans outstanding at any time during the year ended December 31, 2003.
ENTERPRISE Accumulation Trust
17
Notes to Financial Statements — (Continued)
December 31, 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. At times, these differences are primarily due to differing treatments for futures and options transactions, foreign currency transactions and paydowns.
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 value per share. Any taxable gain remaining at fiscal year end is distributed in the following year.
At December 31, 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 | Tax Unrealized Gain | Tax Unrealized Loss | Net | |||
$52,579,744 | $750,835 | $79,572 | $671,263 |
The tax character of distributions paid was as follows:
Ordinary Income | Long-Term Gain | Total Distributions | ||||
2003 | $1,860,609 | $ 99,529 | $1,960,138 | |||
2002 | 855,099 | 116,189 | 971,288 |
The tax character of distributable earnings/accumulated losses at December 31, 2003 was as follows:
Undistributed Ordinary | Undistributed Long-Term Gain | Capital Loss | ||
$224,669 | $67,905 | — |
7. Subsequent Event
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into the EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, Inc. The merger must be approved by the shareholders of the Portfolio. The merger is conditioned upon the completion of the proposed acquisition of The MONY Group Inc. (the parent of Enterprise Capital Management, Inc.) by AXA Financial, Inc., which must be approved by a vote of The MONY Group Inc. shareholders.
ENTERPRISE Accumulation Trust
18
Report of Independent Auditors
To the Board of Trustees of
Enterprise Accumulation Trust and Shareholders of
Total Return Portfolio
In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Total Return Portfolio (one of the portfolios constituting Enterprise Accumulation Trust, hereafter referred to as the “Portfolio”) at December 31, 2003, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for the year then ended and for the period January 24, 2002 (commencement of operations) through December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Portfolio’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Baltimore, Maryland
February 12, 2004
ENTERPRISE Accumulation Trust
19
TRUSTEESAND OFFICERS
NAME, ADDRESS,AND (YEAROF BIRTH) | POSITIONS HELD | YEAR ELECTED | PRINCIPAL OCCUPATIONS PAST FIVE YEARS | NUMBEROF PORTFOLIOS IN COMPLEX | OTHER DIRECTORSHIPS | |||||
NON-INTERESTED PARTIES: | ||||||||||
Arthur T. Dietz Atlanta, GA (1923) | Trustee and Audit Committee Member | 1994 | President, ATD Advisory Corp. | 16 | EGF - 22 Funds | |||||
Arthur Howell, Esquire Atlanta, GA (1918) | Trustee and Audit Committee Chairman | 1994 | Of Counsel, Alston & Bird LLP (law firm) | 16 | EGF - 22 Funds | |||||
William A. Mitchell, Jr. Atlanta, GA (1940) | Trustee | 1994 | Chairman, Carter & Associates (real estate development) | 16 | EGF - 22 Funds | |||||
Lonnie H. Pope Macon, GA (1934) | Trustee and Audit Committee Member | 1994 | CEO, Longleaf Industries, Inc. (chemical manufacturing) | 16 | EGF - 22 Funds | |||||
INTERESTED PARTIES: | ||||||||||
Victor Ugolyn Atlanta, GA (1947) | Chairman, President & Chief Executive Officer, Trustee | 1994 | Chairman, President & CEO, ECM, EAT, EGF, and EFD | 16 | EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Michael I. Roth New York, NY (1945) | Trustee | 1994 | 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 New York, NY (1952) | Trustee | 1994 | President and COO, The MONY Group Inc. | 16 | The MONY Group Inc. EGF - 22 Funds, EGF plc - 7 Portfolios | |||||
Phillip G. Goff Atlanta, GA (1963) | Vice President and Chief Financial Officer | 1995 | Senior Vice President and CFO, EFD; Vice President and CFO, EGF, EAT and ECM; Controller, MSF | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM, EAT and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EAT, EGF and MSF; 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. | MSF - MONY Series Fund, 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
20
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
21
Table of Contents
Item 2. | Code of Ethics. |
The registrant has adopted a code of ethics that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller.
Item 3. | Audit Committee Financial Expert. |
The registrant’s Board has determined that Mr. Arthur T. Dietz, a member of the Board’s Audit Committee is an “audit committee financial expert,” and that he is “independent,” for purposes this Item.
Item 4. | Principal Accountant Fees and Services. |
(a) Audit Fees. The aggregate audit fees billed to the registrant for 2003 and 2002 by the principal accountant were $279,200 and $289,000, respectively.
(b) Audit-Related Fees. The aggregate audit related fees billed to the registrant for 2003 and 2002 by the principal accountant were $10,100 and $10,000, respectively. These services were primarily for work related to reviewing various SEC filings and agreed upon procedures relating to the semi-annual report.
(c) Tax Fees. The aggregate tax fees billed to the registrant for 2003 and 2002 by the principal accountant were $132,980 and $102,390, respectively. These services related primarily to finalizing year-end tax calculations, reviewing tax compliance and preparation of state and federal tax returns.
(d) All Other Fees. There were no fees, other than those noted under the “Audit Fees”, “Audit Related Fees” and “Tax Fees” disclosures, billed to the registrant for the last two fiscal years by the principal accountant
(e) (1) Pre-Approval Policy. The registrant’s audit committee (the “Committee”) has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the registrant’s affiliated service providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are a) consistent with the SEC’s auditor independence rules and b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis (“general pre-approval”). Any proposed services not subject to general pre-approval (e.g., unanticipated but permissible services)will require specific pre-approval by the Committee. The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting.
(e) (2) 100% of the services that were described in paragraphs (b) thru (d) of this item were approved by the audit committee
(f) Not applicable
(g) The aggregate non-audit fees billed by the registrant’s principal accountant for 2003 and 2002 to the registrant’s investment adviser and other qualifying affiliated entities were $848,403 and $2,964,529, respectively.
(h) The registrant’s audit committee of the board of directors has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser and other qualifying affiliated entities that were not
pre-approved pursuant to paragraph (c)(7)(ii) or Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence.
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) | Code of Ethics attached hereto. | |
(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: | February 25, 2004 |
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: | February 25, 2004 |
By: | /s/ Phillip G. Goff | |||||||||
Name: | Phillip G. Goff | |||||||||
Title: | VP/ Chief Financial Officer | |||||||||
Date: | February 25, 2004 |