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: June 30, 2004
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 $10.2 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 6.07%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 3.44%. The Portfolio outperformed its peer group, the Lipper Multi-Cap Growth Funds Index, which returned 4.62%.
How would you describe the investment environment during the period?
While the robust momentum of 2003 seemed to wane a bit during the first quarter of 2004, markets still managed to post positive returns throughout the period. Despite escalating fears of a stalled recovery in the labor market, stocks advanced during the first month of the year as investors chose to focus on rising consumer sentiment and stellar growth within the U.S. merger and acquisition business. The forward progress continued into February. Investors were heartened by news of significant growth in the manufacturing sector and the Fed’s indication that it would remain patient with regard to interest rate hikes. Most equity indices trended higher during the second month of the year, with mid-cap stocks leading the upturn. The positive momentum, however, seemed to slow down in March, with equity indices posting mixed results. While small and mid-cap stocks were able to remain in positive territory during March, large-cap stocks struggled, as geopolitical uncertainty began to weigh on investors. With continued unrest in Israel and Iraq and rising tensions between China and Taiwan, large-cap stocks of all styles trended downward during the final month of the quarter.
Despite a weak start to the second quarter, equity markets managed to post modest gains during the period. As the quarter began, solid fundamentals seemed to be trumped by fear and uncertainty. Despite better-than-expected growth in the housing market and strong earnings news, investors were shaken by escalating violence in Iraq and fears of a looming interest rate hike. Stocks of all sizes and styles trended downward during April. Fortunately, the negative momentum reversed course in May. Investors were heartened by better-than-expected first-quarter GDP growth and news that soaring oil prices had begun to moderate. Stocks moved higher during May, with mid-cap stocks leading the way. The advance continued into June. Despite continued uncertainty in regards the situation in Iraq, stocks rose on strong payroll growth and a large jump in consumer confidence. In addition, the modest 25 basis point interest rate hike on June 30, 2004 helped to relieve investors of some of their fear and uncertainty.
What strategies affected Portfolio performance during the period?
During the first six months of the year, the Portfolio benefited from solid security selection in both the consumer discretionary and information technology sectors along with an under-weighting in the weak Financials sector. At the stock level, performance benefited most positively from positions in Yahoo! Inc., eBay Inc., Broadcom Corp., Research In Motion Ltd. and Biogen. Conversely, the Portfolio was most negatively impacted by positions in Nortel Networks Corp., PeopleSoft Inc., King Pharmaceuticals Inc., Veritas Software Corp. and Millennium Pharmaceuticals Inc. Throughout the six-month period, Alger’s strategy remained uniform. Alger continued to emphasize individual security selection through thorough, internal research conducted by their analysts.
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Enterprise Multi-Cap Growth Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
Throughout the first half of the year, the number of Portfolio holdings increased to approximately 70 stocks, while the cash position increased to about 4% of net assets. During the same six-month time span, significant additions to the Portfolio included Aetna Inc., Aflac Inc., Netflix Inc., Sirius Satellite Radio Inc. and Tiffany & Co. Significant eliminations included Amgen Inc., Citigroup Inc. and Intel Corp.
Investments in small-capitalization and mid-capitalization stocks are generally riskier than large-capitalization stocks due to greater earnings and price fluctuations.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
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Enterprise Multi-Cap Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 87.50% | |||||
Advertising — 0.94% | |||||
Monster Worldwide Inc. (a) | 25,300 | $ | 650,716 | ||
Aerospace — 0.98% | |||||
Lockheed Martin Corporation | 13,100 | 682,248 | |||
Biotechnology — 3.33% | |||||
Genentech Inc. (a) | 25,200 | 1,416,240 | |||
Invitrogen Corporation (a) | 12,500 | 899,875 | |||
2,316,115 | |||||
Computer Hardware — 1.56% | |||||
Cisco Systems Inc. (a) | 45,700 | 1,083,090 | |||
Computer Services — 8.08% | |||||
Cognizant Technology Solutions | 25,800 | 655,578 | |||
Juniper Networks Inc. (a) (o) | 29,200 | 717,444 | |||
Pixar Inc. (a) (o) | 10,900 | 757,659 | |||
Yahoo! Inc. (a) | 95,900 | 3,484,047 | |||
5,614,728 | |||||
Computer Software — 11.87% | |||||
Activision Inc. (a) | 43,800 | 696,420 | |||
Microsoft Corporation | 77,700 | 2,219,112 | |||
Oracle Corporation (a) | 98,800 | 1,178,684 | |||
Palmone Inc. (o) | 32,900 | 1,143,933 | |||
Red Hat Inc. (a) (o) | 95,200 | 2,186,744 | |||
Take Two Interactive Software (a) (o) | 26,700 | 818,088 | |||
8,242,981 | |||||
Consumer Services — 2.35% | |||||
First Data Corporation | 15,100 | 672,252 | |||
Gentex Corporation | 12,100 | 480,128 | |||
Priceline Common Inc. (o) | 17,800 | 479,354 | |||
1,631,734 | |||||
Crude & Petroleum — 0.50% | |||||
Peabody Energy Corporation | 6,200 | 347,138 | |||
Entertainment & Leisure — 1.56% | |||||
Netflix Common Inc. (a) (o) | 30,200 | 1,085,690 | |||
Fiber Optics — 2.04% | |||||
Corning Inc. (a) | 108,600 | 1,418,316 | |||
Finance — 4.48% | |||||
Capital One Financial Corporation | 14,000 | 957,320 | |||
First Marblehead Corporation | 13,600 | 547,536 | |||
MGIC Investment Corporation | 15,725 | 1,192,899 | |||
Piper Jaffray Cos (o) | 9,200 | 416,116 | |||
3,113,871 | |||||
Gaming — 0.49% | |||||
International Game Technology | 8,800 | 339,680 |
Number of Shares or Principal Amount | Value | ||||
Health Care — 2.54% | |||||
Aetna Inc. | 7,900 | $ | 671,500 | ||
Amerigroup Corporation (a) | 2,400 | 118,080 | |||
Anthem Inc. (a) | 10,900 | 976,204 | |||
1,765,784 | |||||
Insurance — 0.96% | |||||
AFLAC Inc. | 16,300 | 665,203 | |||
Media — 4.26% | |||||
Sirius Satellite Radio Inc. (o) | 154,300 | 475,244 | |||
Time Warner Inc. (a) | 80,000 | 1,406,400 | |||
XM Satellite Radio Holdings Inc. (o) | 39,500 | 1,077,955 | |||
2,959,599 | |||||
Medical Instruments — 4.96% | |||||
Advanced Medical Optics Inc. | 13,400 | 570,438 | |||
Boston Scientific Corporation (a) | 33,300 | 1,425,240 | |||
Guidant Corporation | 1,500 | 83,820 | |||
Varian Medical Systems Inc. (a) | 5,500 | 436,425 | |||
Zimmer Holdings Inc. (a) | 10,500 | 926,100 | |||
3,442,023 | |||||
Medical Services — 6.70% | |||||
Biogen Idec Inc. (a) | 26,000 | 1,644,500 | |||
Given Imaging (o) | 9,900 | 350,559 | |||
Kinetic Concepts Inc. | 14,100 | 703,590 | |||
Pacificare Health Systems (o) | 18,100 | 699,746 | |||
Quest Diagnostics Inc. | 14,800 | 1,257,260 | |||
4,655,655 | |||||
Oil Services — 1.98% | |||||
EOG Resources Inc. | 17,200 | 1,027,012 | |||
National Oilwell Inc. | 11,100 | 349,539 | |||
1,376,551 | |||||
Pharmaceuticals — 7.05% | |||||
Allergan Inc. | 12,300 | 1,101,096 | |||
Millennium Pharmaceuticals Inc. (a) | 59,000 | 814,200 | |||
OSI Pharmaceuticals Inc. (a) (o) | 7,600 | 535,344 | |||
Pfizer Inc. | 63,980 | 2,193,234 | |||
Protein Design Labs Inc. (a) (o) | 13,300 | 254,429 | |||
4,898,303 | |||||
Retail — 8.77% | |||||
Aeropostale (a) | 23,400 | 629,694 | |||
Bed Bath & Beyond Inc. (a) | 18,400 | 707,480 | |||
Coach Inc. (a) | 21,000 | 948,990 | |||
eBay Inc. (a) | 31,100 | 2,859,645 | |||
Sharper Image Corporation (o) | 10,300 | 323,317 | |||
Tiffany & Company | 16,800 | 619,080 | |||
6,088,206 |
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Enterprise Multi-Cap Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Semiconductors — 8.33% | |||||
Applied Materials Inc. (a) | 36,800 | $ | 722,016 | ||
Broadcom Corporation (Class A) (a) | 51,400 | 2,403,978 | |||
Kulicke & Soffa Industries Inc. (a) (o) | 78,000 | 854,880 | |||
National Semiconductor | 48,800 | 1,073,112 | |||
Novellus Systems Inc. (a) | 23,200 | 729,408 | |||
5,783,394 | |||||
Technology — 1.03% | |||||
Symbol Technologies Inc. | 48,700 | 717,838 | |||
Travel/Entertainment/Leisure — 1.03% | |||||
Royal Caribbean Cruises Ltd. (o) | 16,400 | 711,924 | |||
Wireless Communications — 1.71% | |||||
Sierra Wireless Inc. (o) | 20,900 | 773,927 | |||
Spectrasite Inc. (a) | 9,500 | 410,590 | |||
1,184,517 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $51,768,000) | 60,775,304 | ||||
Foreign Stocks — 8.68% | |||||
Computer Software — 4.12% | |||||
Check Point Software Technologies Ltd. (a) | 42,000 | 1,133,580 | |||
Research in Motion Ltd. (a) | 25,200 | 1,724,688 | |||
2,858,268 | |||||
Electronics — 1.43% | |||||
Celestica Inc. (o) | 49,800 | 993,510 | |||
Manufacturing — 1.04% | |||||
Tyco International Ltd. | 21,800 | 722,452 | |||
Pharmaceuticals — 2.09% | |||||
QLT Inc. (a) (o) | 18,000 | 360,360 | |||
Teva Pharmaceutical Industries Ltd. (ADR) | 16,200 | 1,090,098 | |||
1,450,458 | |||||
Total Foreign Stocks | |||||
(Identified cost $4,809,342) | 6,024,688 |
Number of Shares or Principal Amount | Value | ||||||
Short-Term U. S. Government Obligations — 1.43% |
| ||||||
Fannie Mae — 1.43% | |||||||
Discount Notes | $ | 1,000,000 | $ | 995,555 | |||
Total Short-Term U. S. Government Obligations | |||||||
(Identified cost $995,555) | 995,555 | ||||||
Other Investments — 19.20% | |||||||
Securities Lending Quality | 13,335,900 | 13,335,900 | |||||
Total Other Investments | |||||||
(Identified cost $13,335,900) | 13,335,900 | ||||||
Repurchase Agreement — 1.71% | |||||||
State Street Bank & Trust Repurchase Agreement, | $ | 1,190,000 | 1,190,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $1,190,000) | 1,190,000 | ||||||
Total Investments | |||||||
(Identified cost $72,098,797) | $ | 82,321,447 | |||||
Other Assets Less | (12,866,111 | ) | |||||
Net Assets — 100% | $ | 69,455,336 |
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(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
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value, including securities loaned valued at $13,341,497 (Note 5) | $ | 82,321,447 | ||
Investment income receivable | 3,985 | |||
Receivable for fund shares sold | 10,706 | |||
Receivable for investments sold | 982,807 | |||
Cash | 73 | |||
Other assets | 1,019 | |||
Total assets | 83,320,037 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 29,748 | |||
Payable for investments purchased | 468,340 | |||
Payable upon return of securities loaned (Note 5) | 13,335,900 | |||
Accrued expenses and other liabilities | 30,713 | |||
Total liabilities | 13,864,701 | |||
Net assets | $ | 69,455,336 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 150,040,927 | ||
Undistributed (accumulated) net investment income (loss) | (354,457 | ) | ||
Undistributed (accumulated) net realized gain (loss) | (90,453,784 | ) | ||
Unrealized appreciation (depreciation) | 10,222,650 | |||
Net assets | $ | 69,455,336 | ||
Fund shares outstanding | 8,832,500 | |||
Net asset value per share | $7.86 | |||
Investments at cost | $ | 72,098,797 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Multi-Cap Growth Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends (net of foreign taxes withheld of $2,912) | $ | 106,624 | ||
Interest | 8,047 | |||
Securities lending income | 7,524 | |||
Total investment income | 122,195 | |||
Expenses: | ||||
Investment advisory fees | 345,539 | |||
Shareholder servicing fees | 103,544 | |||
Custodian and fund accounting fees | 13,048 | |||
Reports to shareholders | 2,046 | |||
Trustees’ fees | 980 | |||
Audit and legal fees | 8,935 | |||
Other expenses | 2,560 | |||
Total expenses | 476,652 | |||
Net investment income (loss) | (354,457 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 3,995,747 | |||
Net change in unrealized gain (loss) on investments | 423,775 | |||
Net realized and unrealized gain (loss) | 4,419,522 | |||
Net increase (decrease) in net assets resulting from operations | $ | 4,065,065 |
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (354,457 | ) | $ | (408,047 | ) | ||
Net realized gain (loss) | 3,995,747 | 5,810,118 | ||||||
Net change in unrealized gain (loss) | 423,775 | 12,032,737 | ||||||
Increase (decrease) in net assets resulting from operations | 4,065,065 | 17,434,808 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 3,712,266 | 8,386,660 | ||||||
Shares redeemed | (6,374,508 | ) | (10,355,196 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (2,662,242 | ) | (1,968,536 | ) | ||||
Total increase (decrease) in net assets | 1,402,823 | 15,466,272 | ||||||
Net assets: | ||||||||
Beginning of period | 68,052,513 | 52,586,241 | ||||||
End of period | $ | 69,455,336 | $ | 68,052,513 | ||||
Capital share activity: | ||||||||
Shares issued | 483,491 | 1,265,403 | ||||||
Shares redeemed | (837,274 | ) | (1,625,577 | ) | ||||
Net increase (decrease) | (353,783 | ) | (360,174 | ) | ||||
Undistributed net investment income | $ | — | $ | — |
See notes to financial statements.
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Enterprise Multi-Cap Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | For the Years Ended December 31, | 7/15/99 12/31/1999 | ||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | |||||||||||||||||||||
Net asset value, beginning of period | $ | 7.41 | $ | 5.51 | $ | 8.43 | $ | 10.15 | $ | 14.63 | $ | 5.00 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | (0.07 | ) | (0.04 | ) | (0.05 | ) | (0.02 | ) | (0.02 | ) | (0.01 | ) | ||||||||||||
Net realized and unrealized gain (loss) | 0.52 | 1.94 | (2.87 | ) | (1.70 | ) | (4.45 | ) | 9.64 | |||||||||||||||
Total from investment operations | 0.45 | 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 | $ | 7.86 | $ | 7.41 | $ | 5.51 | $ | 8.43 | $ | 10.15 | $ | 14.63 | ||||||||||||
Total return | 6.07 | %B | 34.48 | % | (34.64 | )% | (16.95 | )% | (30.59 | )% | 192.60 | %B | ||||||||||||
Net assets end of period (in thousands) | $ | 69,455 | $ | 68,053 | $ | 52,586 | $ | 99,957 | $ | 128,714 | $ | 47,960 | ||||||||||||
Ratio of expenses to average net assets | 1.38 | %A | 1.30 | % | 1.13 | % | 1.10 | % | 1.10 | % | 1.40 | %A | ||||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 1.38 | %A | 1.30 | % | 1.13 | % | 1.10 | % | 1.10 | % | 1.52 | %A | ||||||||||||
Ratio of net investment income (loss) to average net assets | (1.03 | )%A | (0.68 | )% | (0.68 | )% | (0.23 | )% | (0.13 | )% | (0.21 | )A | ||||||||||||
Portfolio turnover | 70 | % | 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
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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
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Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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. 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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $103,550 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.40%.
For the six months ended June 30, 2004, the Portfolio paid brokerage commissions of $76,990 to affiliates of the adviser and subadviser.
4. Investment Transactions
For the six months ended June 30, 2004, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 46,984,634 | $ | 51,267,708 |
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
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Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | |||||||
$ | 72,098,797 | $ | 11,651,212 | $ | 1,428,562 | $ | 10,222,650 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
ENTERPRISE Accumulation Trust
11
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 9,652,929.187 | |
Votes Against | 343,587.619 | |
Votes Abstained | 541,826.377 | |
Votes Withheld | 7,660,323.681 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 9,539,258.197 | |
Votes Against | 397,962.944 | |
Votes Abstained | 601,122.042 | |
Votes Withheld | 7,660,323.681 |
ENTERPRISE Accumulation Trust
12
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
13
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
14
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
15
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
16
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 Registered Public Accounting Firm
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
17
Enterprise 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 $2.4 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 1.36%. The Portfolio underperformed its benchmark, the Russell 2000 Index, which returned 6.76%. The Portfolio underperformed its peer group, the Lipper Small-Cap Growth Funds Index, which returned 3.43%.
How would you describe the investment environment during the period?
The second quarter of 2004 continued to exhibit the volatility that began in the first quarter. The market’s skittishness concerning the high-profile events that are occurring this year continued to present a challenging environment for fundamental investors. The dual nominating conventions, the U.S. Presidential election, the war in Iraq, the Olympics and terrorism were some of the non-economic issues being considered by investors. On the economic front, inflation and its counterpart, recession, were, on different occasions, additional reasons for the market being edgy during the period.
What strategies affected Portfolio performance during the period?
The Portfolio’s over-weight positions in the technology, consumer discretionary and healthcare sectors were the primary drags, as the performance spread between growth and value stocks continued to adversely affect the Portfolio’s faster-growing holdings. These sectors underperformed the more prosaic and slower growth sectors during the period, such as energy, basic materials and transportation. Holdings that positively impacted performance for the Portfolio were Ultra Petroleum Corporation, FLIR Systems, Ceradyne, Inc. and Lions Gate Entertainment Corportation. Underperforming holdings were Cray, Inc., NexMed, Inc., Neoware Systems, Inc. and Wilson Greatbatch.
What changes were made to the Portfolio over the period?
Witter continued to boost the Portfolio’s holdings in the faster-growing industry sectors. As the market has become more volatile, Witter continued to opportunistically add to core positions. New purchases in the rapidly-growing healthcare sector included I-Flow Corporation, a maker of infusion systems to administer chemotherapy, anesthesia, and nutritional supplements, which has had positive studies released recently on several of its products. The growth of radio stations catering to niche markets led to the purchase of Salem Communications, the largest Christian radio broadcaster, whose cash flow is growing to near 30% per year. Sales included K-Swiss Corporation, the sneaker company, which began losing market share to Nike, and Telik, a drug development company whose costs were rising as its pipeline of future products looked weaker than 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
1
Enterprise Small Company Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 94.35% | |||||
Automotive — 1.03% | |||||
Cummins Inc. (o) | 400 | $ | 25,000 | ||
Hayes Lemmerz International | 56,100 | 847,110 | |||
872,110 | |||||
Banking — 3.84% | |||||
Cascade Bancorp (o) | 26,624 | 492,012 | |||
Hanmi Financial Corporation (o) | 51,900 | 1,531,050 | |||
Hudson United Bancorp | 33,300 | 1,241,424 | |||
3,264,486 | |||||
Biotechnology — 0.55% | |||||
Momenta Pharmaceuticals Inc. | 52,000 | 468,000 | |||
Broadcasting — 0.89% | |||||
Salem Communications Corporation (Class A) (a) (o) | 27,900 | 756,927 | |||
Building & Construction — 0.48% | |||||
Infrasource Services Inc. (o) | 33,000 | 404,580 | |||
Chemicals — 0.50% | |||||
Georgia Gulf Corporation | 11,900 | 426,734 | |||
Computer Hardware — 3.02% | |||||
Dot Hill Systems Corporation (a) | 96,000 | 1,076,160 | |||
Integrated Silicon Solution | 56,500 | 689,865 | |||
Mobility Electronics Inc. (a) (o) | 94,700 | 797,374 | |||
2,563,399 | |||||
Computer Services — 5.14% | |||||
Citadel Securities Software Inc. (o) | 143,100 | 440,748 | |||
Concur Technologies Inc. (o) | 79,300 | 848,510 | |||
Corgentech Inc. (o) | 46,600 | 751,192 | |||
Cray Inc. (a) (o) | 133,780 | 885,624 | |||
Cyberguard Corporation | 44,900 | 366,384 | |||
Intergraph Corporation (o) | 18,600 | 480,996 | |||
Ultratech Inc. (o) | 36,500 | 594,220 | |||
4,367,674 | |||||
Computer Software — 11.85% | |||||
Ascential Software | 61,000 | 975,390 | |||
Avid Technology Inc. (a) (o) | 32,200 | 1,757,154 | |||
Digital River Inc. (a) (o) | 35,600 | 1,161,628 | |||
Kintera Inc. (a) (o) | 117,100 | 1,221,353 | |||
Macromedia Inc. (a) | 73,600 | 1,806,880 | |||
Neoware Systems Inc. (a) (o) | 86,600 | 716,182 | |||
Open Text Corporation (a) (o) | 30,700 | 979,330 | |||
Qad Inc. (a) (o) | 73,900 | 784,079 | |||
Ultimate Software Group Inc. (o) | 65,500 | 661,550 | |||
10,063,546 |
Number of Shares or Principal Amount | Value | ||||
Consumer Products — 2.89% | |||||
Lecroy Corporation | 65,100 | $ | 1,172,451 | ||
Yankee Candle Company Inc. (a) (o) | 43,900 | 1,284,075 | |||
2,456,526 | |||||
Electronics — 3.92% | |||||
Ceradyne Inc. (a) (o) | 72,000 | 2,575,440 | |||
Veeco Instruments Inc. (a) (o) | 29,100 | 751,071 | |||
3,326,511 | |||||
Energy — 2.51% | |||||
Omi Corporation (o) | 179,300 | 2,133,670 | |||
Entertainment & Leisure — 3.64% | |||||
Isle of Capri Casinos Inc. (a) (o) | 28,000 | 488,600 | |||
Lions Gate Entertainment | 299,300 | 2,089,114 | |||
Shuffle Master Inc. (o) | 14,250 | 517,418 | |||
3,095,132 | |||||
Finance — 0.73% | |||||
E-LOAN Inc. (a) (o) | 230,000 | 621,000 | |||
Food, Beverages & Tobacco — 1.69% | |||||
Coolbrands International | 87,600 | 1,433,383 | |||
Hotels & Restaurants — 1.38% | |||||
Ruby Tuesday Inc. (o) | 42,600 | 1,169,370 | |||
Insurance — 1.67% | |||||
Ohio Casualty Corporation (a) (o) | 70,400 | 1,417,152 | |||
Manufacturing — 1.35% | |||||
Gen-Probe Inc. (a) | 24,200 | 1,145,144 | |||
Media — 2.04% | |||||
Sonic Solutions (a) (o) | 81,600 | 1,734,000 | |||
Medical Instruments — 5.48% | |||||
Candela Corporation (a) (o) | 93,600 | 917,280 | |||
Cytyc Corporation (a) (o) | 46,800 | 1,187,316 | |||
Kensey Nash Corporation (a) (o) | 24,050 | 829,725 | |||
Martek Biosciences Corporation (o) | 14,300 | 803,231 | |||
Nuvasive Inc. (o) | 33,200 | 362,212 | |||
Zilog Inc. | 50,700 | 555,672 | |||
4,655,436 | |||||
Medical Services — 5.33% | |||||
Centene Corporation (a) (o) | 27,500 | 1,060,125 | |||
Closure Medical Corporation (o) | 31,700 | 795,987 | |||
Medcath Corporation | 38,700 | 774,000 | |||
Palomar Med Technologies Inc. | 39,300 | 659,847 | |||
Radiation Therapy Services Inc. (o) | 23,700 | 336,540 | |||
Regeneration Tech Inc. (o) | 57,900 | 621,267 | |||
Vasogen Inc. (o) | 56,800 | 275,480 | |||
4,523,246 |
ENTERPRISE Accumulation Trust
2
Enterprise Small Company Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Metals & Mining — 0.85% | |||||
Encore Med Corporation (a) (o) | 114,600 | $ | 721,980 | ||
Oil Services — 7.68% | |||||
Chesapeake Energy | 67,000 | 986,240 | |||
Cimarex Energy Company (a) (o) | 45,800 | 1,384,534 | |||
Enterra Energy Trust (m) | 28,200 | 366,318 | |||
Jed Oil Inc. (o) | 9,600 | 116,352 | |||
Ultra Petroleum | 73,800 | 2,754,954 | |||
Universal Display Corporation (o) | 14,500 | 155,730 | |||
Willbros Group Inc. (o) | 50,400 | 759,528 | |||
6,523,656 | |||||
Pharmaceuticals — 5.58% | |||||
Bio Imaging Technologies | 65,600 | 301,760 | |||
Critical Therapeutics Inc. (o) | 70,900 | 496,300 | |||
Discovery Partners International | 28,300 | 144,330 | |||
Dusa Pharmaceuticals Inc. (o) | 39,975 | 379,763 | |||
I Flow Corporation (o) | 28,500 | 338,010 | |||
Ligand Pharmaceuticals Inc. (a) (o) | 53,575 | 931,133 | |||
Nabi Biopharmaceuticals (a) (o) | 63,500 | 902,970 | |||
Nexmed Inc. (a) (o) | 276,800 | 550,832 | |||
Par Pharmaceutical Cos Inc. (o) | 19,650 | 691,876 | |||
4,736,974 | |||||
Restaurants — 1.22% | |||||
Chicago Pizza & Brewery | 68,000 | 1,034,280 | |||
Retail — 7.96% | |||||
Aeropostale (a) (o) | 46,650 | 1,255,351 | |||
PETCO Animal Supplies | 54,900 | 1,768,329 | |||
Sports Authority Inc. (a) (o) | 48,800 | 1,751,920 | |||
Too Inc. (a) (o) | 118,900 | 1,985,630 | |||
6,761,230 | |||||
Semiconductors — 6.19% | |||||
Mattson Technology Inc. (a) (o) | 73,600 | 884,672 | |||
MEMC Electronic Materials | 172,000 | 1,699,360 | |||
Mykrolis Corporation (a) (o) | 49,000 | 853,580 | |||
Omnivision Technologies Inc. (o) | 59,800 | 953,810 | |||
Tessera Technologies Inc. (o) | 48,200 | 868,564 | |||
5,259,986 | |||||
Technology — 3.35% | |||||
Flir Systems Inc. (a) (o) | 45,600 | 2,503,440 | |||
Foundry Networks Inc. (a) (o) | 24,200 | 340,494 | |||
2,843,934 | |||||
Telecommunications — 0.53% | |||||
Symmetricom Inc. (o) | 50,300 | 447,670 |
Number of Shares or Principal Amount | Value | ||||||
Transportation — 0.18% | |||||||
Vitran Corporation Inc. (a) | 9,400 | $ | 154,630 | ||||
Wireless Communications — 0.88% | |||||||
Alvarion Ltd. (o) | 56,000 | 743,680 | |||||
Total Domestic Common Stocks | |||||||
(Identified cost $72,950,274) | 80,126,046 | ||||||
Foreign Stocks — 1.28% | |||||||
Pharmaceuticals — 1.28% | |||||||
Angiotech Pharmaceuticals | 54,100 | 1,090,115 | |||||
Total Foreign Stocks | |||||||
(Identified cost $1,085,719) | 1,090,115 | ||||||
Other Investments — 25.40% | |||||||
Other Investments — 25.40% | |||||||
Securities Lending Quality | 21,575,181 | 21,575,181 | |||||
Total Other Investments | |||||||
(Identified cost $21,575,181) | 21,575,181 | ||||||
Repurchase Agreement — 4.16% | |||||||
State Street Bank & Trust Repurchase Agreement, | $ | 3,532,000 | 3,532,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $3,532,000) | 3,532,000 | ||||||
Total Investments | |||||||
(Identified cost $99,143,174) | $ | 106,323,342 | |||||
Other Assets Less | (21,396,874 | ) | |||||
Net Assets — 100% | $ | 84,926,468 |
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(s) | Represents investment of cash collateral received from securities on loan (See Note 5). |
See notes to financial statements.
ENTERPRISE Accumulation Trust
3
Enterprise Small Company Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value, including securities loaned valued at $20,816,104 (Note 5) | $ | 106,323,342 | ||
Investment income receivable | 23,737 | |||
Receivable for fund shares sold | 56 | |||
Receivable for investments sold | 1,020,989 | |||
Due from investment adviser | 5,053 | |||
Cash | 982 | |||
Other assets | 1,336 | |||
Total assets | 107,375,495 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 187,040 | |||
Payable for investments purchased | 649,480 | |||
Payable upon return of securities loaned (Note 5) | 21,575,181 | |||
Accrued expenses and other liabilities | 37,326 | |||
Total liabilities | 22,449,027 | |||
Net assets | $ | 84,926,468 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 92,003,472 | ||
Undistributed (accumulated) net investment income (loss) | (425,881 | ) | ||
Undistributed (accumulated) net realized gain (loss) | (13,831,301 | ) | ||
Unrealized appreciation (depreciation) | 7,180,178 | |||
Net assets | $ | 84,926,468 | ||
Fund shares outstanding | 11,383,374 | |||
Net asset value per share | $7.46 | |||
Investments at cost | $ | 99,143,174 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Small Company Growth Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends (net of foreign taxes withheld of $1,732) | $ | 81,637 | ||
Interest | 20,284 | |||
Securities lending income | 26,614 | |||
Total investment income | 128,535 | |||
Expenses: | ||||
Investment advisory fees | 426,474 | |||
Shareholder servicing fees | 127,822 | |||
Custodian and fund accounting fees | 14,570 | |||
Reports to shareholders | 2,544 | |||
Trustees’ fees | 1,187 | |||
Audit and legal fees | 11,051 | |||
Other expenses | 3,276 | |||
Total expenses | 586,924 | |||
Expense reimbursement | (32,508 | ) | ||
Total expenses, net of reimbursement | 554,416 | |||
Net investment income (loss) | (425,881 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 4,209,953 | |||
Net realized gain (loss) on foreign currency transactions | 3,787 | |||
Net change in unrealized gain (loss) on investments | (2,675,155 | ) | ||
Net realized and unrealized gain (loss) | 1,538,585 | |||
Net increase (decrease) in net assets resulting from operations | $ | 1,112,704 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Small Company Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (425,881 | ) | $ | (739,556 | ) | ||
Net realized gain (loss) on investments and foreign currency transactions | 4,213,740 | (10,208,991 | ) | |||||
Net change in unrealized gain (loss) on investments | (2,675,155 | ) | 26,244,280 | |||||
Increase (decrease) in net assets resulting from operations | 1,112,704 | 15,295,733 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 7,627,165 | 15,994,308 | ||||||
Shares redeemed | (7,709,993 | ) | (13,596,652 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (82,828 | ) | 2,397,656 | |||||
Total increase (decrease) in net assets | 1,029,876 | 17,693,389 | ||||||
Net assets: | ||||||||
Beginning of period | 83,896,592 | 66,203,203 | ||||||
End of period | $ | 84,926,468 | $ | 83,896,592 | ||||
Capital share activity: | ||||||||
Shares issued | 1,016,261 | 2,528,730 | ||||||
Shares redeemed | (1,031,896 | ) | (2,207,919 | ) | ||||
Net increase (decrease) | (15,635 | ) | 320,811 | |||||
Undistributed net investment income | $ | — | $ | — |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Small Company Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 7.36 | $ | 5.98 | $ | 7.87 | $ | 8.60 | $ | 8.50 | $ | 5.46 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | (0.07 | ) | (0.07 | ) | (0.05 | ) | (0.05 | ) | (0.03 | ) | (0.05 | ) | ||||||||||||
Net realized and unrealized gain (loss) on investments | 0.17 | 1.45 | (1.84 | ) | (0.38 | ) | 0.20 | E | 3.09 | |||||||||||||||
Total from investment operations | 0.10 | 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 | $ | 7.46 | $ | 7.36 | $ | 5.98 | $ | 7.87 | $ | 8.60 | $ | 8.50 | ||||||||||||
Total return | 1.36 | %B | 23.08 | % | (24.02 | )% | (3.80 | )% | 1.90 | % | 55.68 | % | ||||||||||||
Net assets end of period | $ | 84,926 | $ | 83,897 | $ | 66,203 | $ | 82,591 | $ | 82,061 | $ | 23,429 | ||||||||||||
Ratio of expenses to average | 1.30 | %A | 1.29 | % | 1.12 | % | 1.10 | % | 1.11 | % | 1.40 | % | ||||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.38 | %A | 1.29 | % | 1.12 | % | 1.10 | % | 1.11 | % | 1.55 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | (1.00 | )%A | (1.03 | )% | (0.79 | )% | (0.62 | )% | (0.32 | )% | (0.81 | )% | ||||||||||||
Portfolio turnover | 69 | % | 85 | % | 37 | % | 40 | % | 47 | % | 37 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
E | Per share income from investment operations may vary from anticipated results depending on the timing of capital share purchases and redemptions. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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-thecounter 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
8
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 1.00%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $127,854 for these services. ECM has voluntarily agreed to limit the Portfolios’ expense ratio to 1.30%.
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 56,005,586 | $ | 54,711,540 |
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
9
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | |||||||
$ | 99,143,174 | $ | 13,075,401 | $ | 5,895,233 | $ | 7,180,168 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
ENTERPRISE Accumulation Trust
10
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 12,252,318.334 | |
Votes Against | 376,083.705 | |
Votes Abstained | 854,246.633 | |
Votes Withheld | 9,419,157.122 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 12,198,356.165 | |
Votes Against | 387,794.855 | |
Votes Abstained | 896,497.652 | |
Votes Withheld | 9,419,157.122 |
ENTERPRISE Accumulation Trust
11
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
12
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
13
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
14
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
15
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 Registered Public Accounting Firm
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 Small Company Value Portfolio
SUBADVISER’S COMMENTS
GAMCO Investors, Inc.
Rye, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
GAMCO Investors, Inc. (“Gabelli”), which manages approximately $28.3 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 7.73%. The Portfolio outperformed its benchmark, the Russell 2000 Index, which returned 6.76%. The Portfolio outperformed its peer group, the Lipper Small-Cap Value Funds Index, which returned 7.70%.
How would you describe the investment environment during the period?
The economy has benefited from fiscal stimulus and the extraordinarily liquid monetary policy pursued by the Fed. Corporate earnings were strong. GDP grew about 5% over the past year and profit growth has been 25% or more. Returns were tempered by the belief that the economy will most likely slow to a more sustainable growth rate. Small company stocks had a solid half, despite challenges from interest rate increases, further turmoil and prisoner abuse scandals in Iraq, continued high oil prices, concern over a rise in inflation and uncertainty about the upcoming election.
What strategies affected Portfolio performance during the period?
Small-cap stocks continued to outperform in 2004, with the Russell 2000 Index outpacing both the Dow Jones Industrials and the S&P 500 Index by substantial margins. After the exceptional performance of more speculative small-caps in 2003, investors have been gravitating to higher quality, more reasonably valued small companies.
The period saw success in many industrial stocks, including those companies in the automotive aftermarket business. Other winners came from telecommunications, media, and clothing stocks. The Portfolio has held under-weight positions in both financial services and technology stocks. This strategy helped Portfolio performance in the period as both industry groups did poorly with the rise in interest rates. One year ago, the yield on the ten-year Treasury note was approximately 3.1%, and at the end of the first half of 2004 it was around 4.7%.
What changes were made to the Portfolio over the period?
During the period the Portfolio added shares of several mobile home manufacturers. With the aging of the population, Gabelli believes one of the industries likely to benefit is recreational vehicles — motor homes, travel trailers, and campers. It is a cyclical business, somewhat sensitive to interest rates, but it may benefit from an aging population. A subset of this business is mobile homes. Rising interest rates may make it a relative advantage to own a mobile home as a starter unit. The industry is also undergoing consolidation. The Portfolio also increased holdings in food companies Hain Celestial and International Multifoods, which were bought by JM Smucker for cash and stock.
There are specific risks associated with investments in small company stocks. Limited volume and frequency of trading may result in greater price deviations, and smaller capitalization companies may experience higher growth rates and higher failure rates than large companies.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
1
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 95.52% | |||||
Advertising — 0.07% | |||||
Interep National Radio Sales | 48,000 | $ | 52,800 | ||
MDC Partners Inc (o) | 20,000 | 240,000 | |||
292,800 | |||||
Aerospace — 6.04% | |||||
AAR Corporation (a) (o) | 30,000 | 340,500 | |||
Ametek Inc. | 174,000 | 5,376,600 | |||
Curtiss-Wright Corporation | 22,000 | 1,182,940 | |||
Curtiss-Wright Corporation (o) | 42,000 | 2,359,980 | |||
GenCorp Inc. (o) | 313,000 | 4,191,070 | |||
Kaman Corporation (Class A) (o) | 170,000 | 2,378,300 | |||
Lockheed Martin Corporation | 12,000 | 624,960 | |||
Moog Inc. (Class A) (a) | 53,000 | 1,966,830 | |||
Sequa Corporation (Class A) (a) | 69,000 | 4,034,430 | |||
Sequa Corporation (Class B) | 43,000 | 2,569,250 | |||
25,024,860 | |||||
Apparel & Textiles — 0.60% | |||||
Hartmarx Corporation (a) | 235,000 | 1,480,500 | |||
Levcor International Inc. (a) | 51,347 | 110,396 | |||
Wolverine World Wide Inc. (o) | 34,000 | 892,500 | |||
2,483,396 | |||||
Automotive — 8.41% | |||||
A. O. Smith Corporation (Class A) | 12,000 | 372,000 | |||
A. O. Smith Corporation (o) | 18,000 | 572,220 | |||
Aaron Rents Inc. (Class A) | 1,500 | 45,345 | |||
ArvinMeritor Inc. | 20,000 | 391,400 | |||
BorgWarner Inc. | 128,000 | 5,602,560 | |||
Clarcor Inc. | 195,000 | 8,931,000 | |||
Earl Scheib Inc. (a) (f) | 240,000 | 746,400 | |||
Federal-Mogul Corporation (a) (o) | 60,000 | 17,400 | |||
Midas Inc. (a) | 220,000 | 3,828,000 | |||
Modine Manufacturing Company | 203,500 | 6,481,475 | |||
Navistar International | 43,000 | 1,666,680 | |||
Raytech Corporation (a) (o) | 27,000 | 44,820 | |||
Standard Motor Products Inc. (o) | 241,000 | 3,549,930 | |||
Tenneco Automotive Inc. (a) | 150,000 | 1,984,500 | |||
United Auto Group Inc. (o) | 20,000 | 613,000 | |||
34,846,730 | |||||
Banking — 0.67% | |||||
Sterling Bancorp (o) | 100,000 | 2,762,000 | |||
Biotechnology — 0.23% | |||||
Invitrogen Corporation (a) | 13,000 | 935,870 |
Number of Shares or Principal Amount | Value | ||||
Broadcasting — 4.19% | |||||
Acme Communications Inc. (a) (o) | 51,000 | $ | 351,900 | ||
Beasley Broadcast Group Inc. | 87,500 | 1,309,000 | |||
Cumulus Media Inc. (Class A) (a) | 10,005 | 168,184 | |||
Fisher Communications Inc. (a) | 60,000 | 3,019,800 | |||
Granite Broadcasting | 180,000 | 126,000 | |||
Gray Television Inc. | 250,000 | 3,472,500 | |||
Liberty Media Corporation | 156,000 | 1,402,440 | |||
Lin Tv Corporation (a) (o) | 15,000 | 318,000 | |||
Nexstar Broadcasting Group Inc. (Class A) (a) (o) | 20,000 | 219,600 | |||
Paxson Communications | 345,000 | 1,121,250 | |||
Salem Communications Corporation (Class A) (a) | 115,000 | 3,119,950 | |||
UnitedGlobalCom Inc. | 179,648 | 1,304,244 | |||
World Wrestling Federation Entertainment Inc. (o) | 10,000 | 127,500 | |||
Young Broadcasting Inc. | 100,000 | 1,315,000 | |||
17,375,368 | |||||
Building & Construction — 3.24% | |||||
Cavalier Homes Inc. | 30,000 | 160,500 | |||
Cavco Industries Incorporated (o) | 19,000 | 754,300 | |||
Champion Enterprises | 70,000 | 642,600 | |||
Core Materials Corporation (a) | 166,000 | 556,100 | |||
Fleetwood Enterprises Inc. (a) (o) | 100,000 | 1,455,000 | |||
Hughes Supply Inc. | 1,000 | 58,930 | |||
Huttig Building Products Inc. (a) | 45,444 | 349,010 | |||
Monaco Coach Corporation (a) (o) | 50,000 | 1,408,500 | |||
Rollins Inc. | 327,500 | 7,535,775 | |||
Skyline Corporation (o) | 12,000 | 487,800 | |||
Southern Energy Homes Inc. | 9,400 | 38,540 | |||
13,447,055 | |||||
Business Services — 1.62% | |||||
Chemed Corp (o) | 75,000 | 3,637,500 | |||
Edgewater Technology Inc. (a) (o) | 220,000 | 1,361,800 | |||
Marketwatch Common Inc. | 30,000 | 351,900 | |||
Nashua Corporation (a) | 82,700 | 801,363 | |||
National Processing Inc. (a) | 20,000 | 575,000 | |||
6,727,563 | |||||
Cable — 1.18% | |||||
Cablevision Systems Corporation (Class A) (a) | 185,000 | 3,635,250 | |||
Lamson & Sessions Company (a) | 120,000 | 964,800 | |||
Liberty Media International Inc. | 7,800 | 289,380 | |||
4,889,430 |
ENTERPRISE Accumulation Trust
2
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Chemicals — 3.02% | |||||
Albemarle Corporation | 4,000 | $ | 126,600 | ||
Church & Dwight Company Inc. | 50,000 | 2,289,000 | |||
Cytec Industries Inc. (a) | 5,000 | 227,250 | |||
Ferro Corporation | 100,000 | 2,668,000 | |||
Great Lakes Chemical | 132,000 | 3,571,920 | |||
Hercules Inc. (a) | 100,000 | 1,219,000 | |||
MacDermid Inc. | 15,000 | 507,750 | |||
Newmarket Corp (o) | 18,000 | 386,460 | |||
Omnova Solutions Inc. (a) | 250,000 | 1,525,000 | |||
12,520,980 | |||||
Computer Services — 0.19% | |||||
Startek Inc. | 4,000 | 143,200 | |||
Tyler Technologies Inc. (a) (o) | 25,000 | 236,500 | |||
Xanser Corporation (a) | 175,000 | 430,500 | |||
810,200 | |||||
Computer Software — 0.01% | |||||
OpenTV Corporation | 19,000 | 39,520 | |||
Conglomerates — 0.09% | |||||
Harbor Global Company Ltd. (a) | 40,000 | 380,000 | |||
Consumer Durables — 0.03% | |||||
Noel Group Liquidating Trust | 135,000 | — | |||
Oneida Ltd. (o) | 80,000 | 129,600 | |||
129,600 | |||||
Consumer Products — 0.81% | |||||
Delaware Laboratories Inc. | 2,000 | 62,040 | |||
Elizabeth Arden Inc. (a) (o) | 20,000 | 420,800 | |||
New England Business Service | 31,500 | 1,386,000 | |||
Revlon Inc. (Class A) (a) (o) | 77,005 | 227,165 | |||
Scotts Company (a) | 3,000 | 191,640 | |||
Sola International Inc. (a) (o) | 35,000 | 603,050 | |||
TL Administration Corporation | 85,000 | 2,210 | |||
WD-40 Company (o) | 15,000 | 449,100 | |||
3,342,005 | |||||
Drugs & Medical Products — 0.42% | |||||
Owens & Minor Inc. | 20,000 | 518,000 | |||
Thermo Electron Corporation (a) | 40,000 | 1,229,600 | |||
1,747,600 | |||||
Electrical Equipment — 4.47% | |||||
Ampco-Pittsburgh Corporation (o) | 130,000 | 1,671,800 | |||
Baldor Electric Company (o) | 90,000 | 2,101,500 | |||
C&D Technologies Inc. | 5,000 | 89,150 | |||
National Presto Industries Inc. (o) | 10,400 | 428,792 | |||
SL Industries Inc. | 84,000 | 924,840 | |||
Thomas & Betts Corporation (a) (o) | 220,000 | 5,990,600 | |||
Thomas Industries Inc. | 220,000 | 7,304,000 | |||
18,510,682 |
Number of Shares or Principal Amount | Value | ||||
Electronics — 0.57% | |||||
CTS Corporation (o) | 100,000 | $ | 1,206,000 | ||
Monolithic Systems Technology | 25,000 | 188,250 | |||
Park Electrochemical Corporation | 38,000 | 959,500 | |||
2,353,750 | |||||
Energy — 0.94% | |||||
AES Corporation (a) | 30,000 | 297,900 | |||
Aquila Inc. | 250,000 | 890,000 | |||
El Paso Electric Company (a) (o) | 160,000 | 2,470,400 | |||
SEMCO Energy Inc. (o) | 40,000 | 232,800 | |||
3,891,100 | |||||
Entertainment & Leisure — 3.98% | |||||
Churchill Downs Inc. (o) | 66,400 | 2,702,480 | |||
Dover Downs Gaming & Entertainment Inc. (o) | 75,000 | 843,750 | |||
Dover Motorsports Inc. (o) | 120,000 | 480,000 | |||
E.W. Scripps Company (Class A) | 20,000 | 2,100,000 | |||
Gaylord Entertainment | 218,000 | 6,843,020 | |||
K2 Inc. (a) (o) | 26,000 | 408,200 | |||
Magna Entertainment Corporation (Class A) (a) (o) | 110,000 | 649,000 | |||
Sinclair Broadcast Group Inc. | 155,000 | 1,591,850 | |||
Six Flags Inc. (a) (o) | 100,000 | 726,000 | |||
Thor Industries Inc. | 4,000 | 133,840 | |||
16,478,140 | |||||
Finance — 1.15% | |||||
BKF Capital Group Inc. | 44,000 | 1,278,200 | |||
Interactive Data Corporation (a) | 140,000 | 2,438,800 | |||
SWS Group Inc. (o) | 70,000 | 1,071,000 | |||
4,788,000 | |||||
Food, Beverages & Tobacco — 5.90% | |||||
Boston Beer Inc. (Class A) (a) (o) | 34,000 | 684,760 | |||
Corn Products International | 70,000 | 3,258,500 | |||
Del Monte Foods Company (a) | 61,000 | 619,760 | |||
Flowers Foods Inc. | 173,000 | 4,523,950 | |||
Hain Celestial Group Inc. (a) (o) | 12,000 | 217,200 | |||
Ingles Markets Inc. (Class A) | 145,000 | 1,619,650 | |||
J & J Snack Foods | 2,000 | 81,660 | |||
John B. Sanfilippo & Son Inc. (a) (o) | 1,000 | 26,720 | |||
PepsiAmericas Inc. | 90,000 | 1,911,600 | |||
Ralcorp Holdings Inc. (a) | 67,000 | 2,358,400 | |||
Robert Mondavi Corporation | 42,000 | 1,554,840 | |||
Sensient Technologies | 145,000 | 3,114,600 | |||
Tootsie Roll Industries Inc. | 107,120 | 3,481,400 | |||
Weis Markets Inc. | 29,000 | 1,016,450 | |||
24,469,490 |
ENTERPRISE Accumulation Trust
3
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Gaming — 0.34% | |||||
Lakes Entertainment Inc. (a) (o) | 120,000 | $ | 1,390,800 | ||
Health Care — 0.02% | |||||
Viasys Healthcare Inc. (a) | 3,500 | 73,185 | |||
Hotels & Restaurants — 2.83% | |||||
Aztar Corporation (a) | 185,000 | 5,180,000 | |||
Boca Resorts Inc. (a) (o) | 147,000 | 2,913,540 | |||
Caesars Entertainment Inc.(a) | 30,000 | 450,000 | |||
Louisiana Quinta Corporation (a) | 130,000 | 1,092,000 | |||
Marcus Corporation | 1,000 | 17,250 | |||
The Steak n Shake Company (a) (o) | 50,000 | 911,000 | |||
Triarc Companies Inc. (Class A) (o) | 40,000 | 413,200 | |||
Triarc Companies Inc. (Class B) (o) | 70,000 | 711,900 | |||
Trump Hotels & Casino Resorts | 5,000 | 12,100 | |||
Wyndham International Inc. (a) | 30,000 | 30,000 | |||
11,730,990 | |||||
Insurance — 3.34% | |||||
Argonaut Group Inc. (o) | 115,000 | 2,119,450 | |||
Danielson Holding | 133,650 | 923,518 | |||
Liberty Corporation | 142,000 | 6,666,900 | |||
Midland Company | 140,000 | 4,151,000 | |||
13,860,868 | |||||
Life Insurance — 0.01% | |||||
The Phoenix Companies Inc. (o) | 3,500 | 42,875 | |||
Machinery — 5.22% | |||||
AGCO Corporation (a) | 35,000 | 712,950 | |||
Baldwin Technology Company Inc. (Class A) | 239,500 | 857,410 | |||
CNH Global | 5,000 | 103,200 | |||
Fairchild Corporation | 250,000 | 1,070,000 | |||
Flowserve Corporation (a) | 75,000 | 1,870,500 | |||
Franklin Electric Company Inc. (o) | 74,000 | 2,794,240 | |||
IDEX Corporation | 105,000 | 3,606,750 | |||
Katy Industries Inc. (a) | 160,000 | 782,400 | |||
Paxar Corporation (a) (o) | 140,000 | 2,732,800 | |||
Robbins & Myers Inc. | 2,000 | 44,900 | |||
Standex International | 55,000 | 1,496,000 | |||
Tennant Company (o) | 36,000 | 1,492,200 | |||
The Gorman-Rupp Company (o) | 20,500 | 556,985 | |||
Watts Industries Inc. (Class A) | 130,000 | 3,503,500 | |||
21,623,835 | |||||
Manufacturing — 11.40% | |||||
Acuity Brands Inc. | 50,000 | 1,350,000 | |||
Aviall Inc. (a) (o) | 100,000 | 1,901,000 | |||
Barnes Group Inc. (o) | 42,000 | 1,217,160 | |||
Belden Inc. (o) | 90,000 | 1,928,700 | |||
Crane Company | 100,000 | 3,139,000 | |||
Cuno Inc. (a) | 62,000 | 3,307,700 |
Number of Shares or Principal Amount | Value | ||||
Donaldson Company Inc. | 40,000 | $ | 1,172,000 | ||
Energizer Holdings Inc. (a) | 65,000 | 2,925,000 | |||
Esco Technologies Inc. (a) | 1,500 | 80,040 | |||
Fedders Corporation (o) | 665,000 | 2,892,750 | |||
Gentek Inc. (a) (d) (m) | 15,000 | — | |||
Gerber Scientific Inc. (a) (o) | 30,000 | 211,800 | |||
GP Strategies Corporation (a) (o) | 10,000 | 65,900 | |||
Graco Inc. | 138,000 | 4,284,900 | |||
Graftech International Ltd. (o) (a) | 130,000 | 1,359,800 | |||
Industrial Distribution Group | 70,000 | 574,770 | |||
MagneTek Inc. (a) (o) | 70,000 | 583,800 | |||
Material Sciences | 190,000 | 2,023,500 | |||
Mathews International Corporation (Class A) | 10,000 | 329,400 | |||
Myers Industries Inc. (o) | 140,000 | 1,974,000 | |||
Oil-Dri Corporation of America (f) | 237,500 | 3,966,250 | |||
Park Ohio Holdings | 200,000 | 2,360,000 | |||
Precision Castparts Corporation | 110,000 | 6,015,900 | |||
Roper Industries Inc. (o) | 30,000 | 1,707,000 | |||
Strattec Security | 25,000 | 1,710,750 | |||
Tredegar Inds Incorporated (o) | 10,000 | 161,300 | |||
47,242,420 | |||||
Media — 2.31% | |||||
Gemstar-TV Guide International | 200,000 | 960,000 | |||
Media General Inc. (Class A) | 134,000 | 8,605,480 | |||
9,565,480 | |||||
Medical Instruments — 1.60% | |||||
Edwards Lifesciences | 30,000 | 1,045,500 | |||
Exactech Inc. (a) (o) | 34,000 | 737,800 | |||
ICU Medical Inc. (a) (o) | 9,000 | 301,770 | |||
INAMED Corporation (a) | 19,000 | 1,194,150 | |||
Kensey Nash Corporation (a) (o) | 2,500 | 86,250 | |||
Schick Technologies Inc (o) | 3,400 | 45,730 | |||
Sybron Dental Specialties (a) | 101,000 | 3,014,850 | |||
Thoratec Corporation (a) (o) | 10,000 | 107,300 | |||
Young Innovations | 4,000 | 101,600 | |||
6,634,950 | |||||
Medical Services — 0.61% | |||||
CIRCOR International Inc. | 60,000 | 1,223,400 | |||
Inverness Medical Innovations | 30,000 | 657,000 | |||
Regeneration Tech Inc. (o) | 25,000 | 268,250 | |||
Vitalworks Inc. (o) | 110,000 | 380,600 | |||
2,529,250 | |||||
Metals & Mining — 0.01% | |||||
WHX Corporation (a) (o) | 15,000 | 24,300 |
ENTERPRISE Accumulation Trust
4
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Multi-Line Insurance — 0.54% | |||||
Alleghany Corporation (a) | 7,792 | $ | 2,236,304 | ||
Neutraceuticals — 0.40% | |||||
Weider Nutrition International | 350,000 | 1,641,500 | |||
Oil Services — 0.12% | |||||
RPC Inc. (o) | 25,000 | 394,750 | |||
W-H Energy Services Inc. (a) (o) | 5,000 | 98,000 | |||
492,750 | |||||
Paper Products — 1.13% | |||||
Greif Brothers Corporation | 96,400 | 4,072,900 | |||
Schweitzer Mauduit International Inc. | 20,000 | 612,600 | |||
4,685,500 | |||||
Printing & Publishing — 5.94% | |||||
A.H. Belo Corporation (Class A) | 105,000 | 2,819,250 | |||
Journal Register Company (a) | 80,000 | 1,600,000 | |||
Lee Enterprises Inc. | 60,000 | 2,880,600 | |||
McClatchy Company (Class A) | 97,000 | 6,804,550 | |||
Meredith Corporation | 55,000 | 3,022,800 | |||
Penton Media Inc. (a) (o) | 100,000 | 41,000 | |||
Pulitzer Inc. (o) | 92,000 | 4,498,800 | |||
Thomas Nelson Inc. (o) | 57,000 | 1,296,180 | |||
Topps Company Inc. (o) | 170,000 | 1,649,000 | |||
24,612,180 | |||||
Property-Casualty Insurance — 0.13% | |||||
CNA Surety Corporation (o) | 48,500 | 531,075 | |||
Publishing — 0.26% | |||||
PRIMEDIA Inc. (a) (o) | 388,600 | 1,080,308 | |||
Real Estate — 0.68% | |||||
Griffin Land & Nurseries | 112,000 | 2,805,600 | |||
Retail — 2.27% | |||||
Big 5 Sporting Goods | 5,000 | 130,950 | |||
Blockbuster Inc. (Class A) (o) | 3,000 | 45,540 | |||
Burlington Coat Factory Warehouse Corporation (o) | 90,000 | 1,737,000 | |||
Gander Mtn Co (o) | 3,000 | 68,850 | |||
Movado Group Inc. | 6,000 | 103,500 | |||
Neiman-Marcus Group | 140,000 | 7,264,600 | |||
School Specialty Inc. (a) (o) | 2,000 | 72,620 | |||
9,423,060 | |||||
Telecommunications — 2.32% | |||||
Andrew Corporation (a) (o) | 37,000 | 740,370 | |||
Atlantic Tele-Network Inc. | 10,000 | 321,000 | |||
ATX Communications Inc. (a) | 30,000 | 1,800 |
Number of Shares or Principal Amount | Value | ||||
Cincinnati Bell Inc. (a) | 300,000 | $ | 1,332,000 | ||
Citizens Communications | 100,000 | 1,210,000 | |||
Commonwealth Telephone Enterprises Inc. (a) (o) | 73,378 | 3,285,133 | |||
Communications Systems Inc. (a) | 78,500 | 628,785 | |||
D&E Communications Inc. (o) | 49,000 | 657,580 | |||
Nextel Partners Inc. (a) (o) | 45,000 | 716,400 | |||
Plantronics Inc. (a) | 5,000 | 210,500 | |||
Qwest Communications International Inc. | 10,000 | 35,900 | |||
Rural Celluar Corporation (a) (o) | 55,000 | 487,850 | |||
9,627,318 | |||||
Transportation — 1.41% | |||||
GATX Corporation | 180,000 | 4,896,000 | |||
Oshkosh Truck Corporation | 6,000 | 343,860 | |||
TransPro Inc. (a) (o) | 105,000 | 604,800 | |||
5,844,660 | |||||
Travel/Entertainment/Leisure — 0.03% | |||||
Bowlin Travel Centers Inc. (a) | 70,000 | 112,000 | |||
Utilities — 2.01% | |||||
AGL Resources Inc. | 19,000 | 551,950 | |||
Allegheny Energy Inc. (o) | 30,000 | 462,300 | |||
CH Energy Group Inc. (o) | 46,000 | 2,136,240 | |||
Duquesne Light Holdings Inc. (o) | 130,000 | 2,510,300 | |||
ONEOK Inc. | 40,000 | 879,600 | |||
Westar Energy Inc. | 90,000 | 1,791,900 | |||
8,332,290 | |||||
Waste Management — 1.14% | |||||
Allied Waste Industries Inc. (a) (o) | 150,000 | 1,977,000 | |||
Republic Services Inc. | 95,000 | 2,749,300 | |||
4,726,300 | |||||
Wireless Communications — 1.62% | |||||
Centennial Communications Corporation (a) (o) | 55,000 | 393,250 | |||
Dobson Communications Corporation (a) (o) | 5,000 | 16,300 | |||
Nextel Communications Inc. | 10,000 | 266,600 | |||
Price Communications | 168,000 | 2,479,680 | |||
United States Cellular | 25,000 | 963,750 | |||
Western Wireless Corporation | 90,000 | 2,601,900 | |||
6,721,480 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $285,510,871) | 395,837,417 |
ENTERPRISE Accumulation Trust
5
Enterprise Small Company Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Foreign Stocks — 1.91% | ||||||
Aerospace — 0.03% | ||||||
Embraer Empresa Brasileira de Aeronautica (ADR) (o) | 4,000 | $ | 114,360 | |||
Cable — 0.11% | ||||||
Rogers Communications Inc. | 25,000 | 453,250 | ||||
Hotels & Restaurants — 0.32% | ||||||
Kerzner International Ltd. (a) (o) | 28,000 | 1,331,680 | ||||
Medical Instruments — 0.05% | ||||||
Orthofix International (o) | 5,000 | 213,650 | ||||
Metals & Mining — 0.20% | ||||||
Barrick Gold Corporation | 35,000 | 691,250 | ||||
Kinross Gold Corporation | 28,167 | 156,608 | ||||
847,858 | ||||||
Telecommunications — 0.63% | ||||||
Vimpel-Communications | 27,000 | 2,604,150 | ||||
Wireless Communications — 0.57% | ||||||
Rogers Wireless Communications (Class B) (a) | 86,600 | 2,342,530 | ||||
Total Foreign Stocks | ||||||
(Identified cost $3,828,038) | 7,907,478 | |||||
Short-Term U. S. Government Obligations — 1.94% | ||||||
United States Treasury Bill | $ | 8,019,000 | 8,014,580 | |||
Total Short-Term U. S. | ||||||
(Identified cost $8,014,580) | 8,014,580 | |||||
Other Investments — 12.83% | ||||||
Securities Lending Quality Trust(s) | 53,183,761 | 53,183,761 | ||||
Total Other Investments | ||||||
(Identified cost $53,183,761) | 53,183,761 |
Number of Shares or Principal Amount | Value | ||||||
Repurchase Agreement — 0.61% | |||||||
State Street Bank & Trust Repurchase Agreement, | $ | 2,532,000 | $ | 2,532,000 | |||
Total Repurchase Agreement | |||||||
(Identified cost $2,532,000) | 2,532,000 | ||||||
Total Investments | |||||||
(Identified cost $353,069,250) | $ | 467,475,236 | |||||
Other Assets Less | (53,067,654 | ) | |||||
Net Assets — 100% | $ | 414,407,582 |
(a) | Non-income producing security. |
(d) | Security is fair valued at June 30, 2004 |
(e) | The rate shown is the current effective yield. |
(f) | Considered as affiliated company as the Portfolio owns more than 5% of the outstanding voting securities of such company. The total market value of such investments at June 30, 2004 was $4,712,650. |
(g) | Restricted securities held at June 30, 2004 were as follows: |
Aggregate | ||||||||||||||||||
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 June 30, 2004 |
(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
6
Enterprise Small Company Value Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | |||
Investments at value, including securities loaned valued at $52,327,314 (Note 5) | $ | 467,475,236 | |
Investment income receivable | 306,584 | ||
Receivable for fund shares sold | 28,423 | ||
Receivable for investments sold | 959,166 | ||
Cash | 546 | ||
Other assets | 6,125 | ||
Total assets | 468,776,080 | ||
Liabilities: | |||
Payable for fund shares redeemed | 720,637 | ||
Payable for investments purchased | 290,548 | ||
Payable upon return of securities loaned (Note 5) | 53,183,761 | ||
Accrued expenses and other liabilities | 173,552 | ||
Total liabilities | 54,368,498 | ||
Net assets | $ | 414,407,582 | |
Analysis of net assets: | |||
Paid-in capital | $ | 296,892,123 | |
Undistributed (accumulated) net investment income (loss) | 522,291 | ||
Undistributed (accumulated) net realized gain (loss) | 2,587,170 | ||
Unrealized appreciation (depreciation) | 114,405,998 | ||
Net assets | $ | 414,407,582 | |
Fund shares outstanding | 16,328,289 | ||
Net asset value per share | $25.38 | ||
Investments at cost | $ | 353,069,250 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Small Company Value Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | |||
Dividends | $ | 2,609,777 | |
Interest | 55,953 | ||
Securities lending income | 46,525 | ||
Total investment income | 2,712,255 | ||
Expenses: | |||
Investment advisory fees | 1,614,100 | ||
Shareholder servicing fees | 605,734 | ||
Custodian and fund accounting fees | 50,914 | ||
Reports to shareholders | 12,122 | ||
Trustees’ fees | 5,735 | ||
Audit and legal fees | 52,399 | ||
Other expenses | 15,768 | ||
Total expenses | 2,356,772 | ||
Net investment income (loss) | 355,483 | ||
Realized and unrealized gain (loss)—net: | |||
Net realized gain (loss) on investments | 6,520,682 | ||
Net realized gain (loss) on foreign currency transactions | 28 | ||
Net change in unrealized gain (loss) on investments | 23,180,588 | ||
Net realized and unrealized gain (loss) | 29,701,298 | ||
Net increase (decrease) in net assets resulting from operations | $ | 30,056,781 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Enterprise Small Company Value Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 355,483 | $ | 47,321 | ||||
Net realized gain (loss) | 6,520,710 | 4,633,996 | ||||||
Net change in unrealized gain (loss) | 23,180,588 | 103,903,308 | ||||||
Increase (decrease) in net assets resulting from operations | 30,056,781 | 108,584,625 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (347,947 | ) | |||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | (347,947 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 19,496,523 | 31,257,317 | ||||||
Reinvestment of distributions | — | 347,947 | ||||||
Shares redeemed | (32,059,867 | ) | (49,372,332 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (12,563,344 | ) | (17,767,068 | ) | ||||
Total increase (decrease) in net assets | 17,493,437 | 90,469,610 | ||||||
Net assets: | ||||||||
Beginning of period | 396,914,145 | 306,444,535 | ||||||
End of period | $ | 414,407,582 | $ | 396,914,145 | ||||
Capital share activity: | ||||||||
Shares issued | 797,662 | 1,616,741 | ||||||
Shares issued in reinvestment of distributions | — | 16,506 | ||||||
Shares redeemed | (1,313,060 | ) | (2,651,871 | ) | ||||
Net increase (decrease) | (515,398 | ) | (1,018,624 | ) | ||||
Undistributed net investment income | $ | 522,291 | $ | 166,808 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Enterprise Small Company Value Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
| ||||||||||||||||||||||||
(Unaudited) June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 23.56 | $ | 17.16 | $ | 19.59 | $ | 26.19 | $ | 31.45 | $ | 27.36 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | 0.04 | 0.00 | D | 0.03 | 0.08 | 0.07 | 0.04 | |||||||||||||||||
Net realized and unrealized gain (loss) on investments | 1.78 | 6.42 | (1.87 | ) | 0.21 | 0.71 | 6.27 | |||||||||||||||||
Total from investment operations | 1.82 | 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 | $ | 25.38 | $ | 23.56 | $ | 17.16 | $ | 19.59 | $ | 26.19 | $ | 31.45 | ||||||||||||
Total return | 7.73 | %B | 37.43 | % | (9.25 | )% | 5.25 | % | 2.52 | % | 24.02 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 414,408 | $ | 396,914 | $ | 306,445 | $ | 359,481 | $ | 351,270 | $ | 455,563 | ||||||||||||
Ratio of expenses to average net assets | 1.17 | %A | 1.08 | % | 0.92 | % | 0.90 | % | 0.89 | % | 0.84 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 0.18 | %A | 0.01 | % | 0.14 | % | 0.35 | % | 0.23 | % | 0.12 | % | ||||||||||||
Portfolio turnover | 5 | % | 8 | % | 10 | % | 29 | % | 41 | % | 23 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Less than $0.01 per share. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest at $0.01 par value for the portfolios contained therein. The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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.
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $605,774 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%.
For the six months ended June 30, 2004, the Portfolio paid brokerage commissions of $83,245 to affiliates of the adviser and subadviser.
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 19,765,810 | $ | 29,423,656 |
ENTERPRISE Accumulation Trust
12
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the 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 six months ended June 30, 2004.
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 June 30, 2004, 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 | ||||||
$353,069,250 | $ | 134,157,141 | $ | 19,751,155 | $ | 114,405,986 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
ENTERPRISE Accumulation Trust
13
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 17,235,672.294 | |
Votes Against | 841,021.582 | |
Votes Abstained | 1,175,797.763 | |
Votes Withheld | 13,871,767.105 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 17,112,961.190 | |
Votes Against | 890,830.076 | |
Votes Abstained | 1,248,700.373 | |
Votes Withheld | 13,871,767.105 |
ENTERPRISE Accumulation Trust
14
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
15
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
16
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
17
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
18
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 Registered Public Accounting Firm
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 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 $34.5 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 1.43%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 3.44%. The Portfolio underperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 2.18%.
How would you describe the investment environment during the period?
Higher beta (i.e., smaller- and medium-capitalization companies) and “value” represented the market leaders during the period. Energy was the best-performing economic sector, followed by industrials and consumer staples. All sectors of the S&P 500 Index actually managed to post a positive return, although overall gains were modest in nature. Five sectors experienced increases of 2% or less. The weakest-performing sector was information technology.
In terms of industry-level returns, there was a considerably greater degree of performance dispersion. Some of the best performing industries were household and personal products and hotel/leisure, whereas some of the worst performing industries were semiconductors and media.
What strategies affected Portfolio performance during the period?
Positive factors impacting performance as compared to the S&P 500 Index included an over-weighted posture in health care equipment and services investments benefited investment results. Individual positions (e.g., Zimmer Holdings, UnitedHealth Group, Boston Scientific, and Quest Diagnostics) were among the Portfolio’s better-performing holdings during the period. In addition, biotechnology holding Genentech was a solid performer for the period. Hotel positions (e.g., Four Seasons Hotels, Mandalay Resort Group) were among the Portfolio’s better-performing holdings during the period. Select positions (e.g., Qualcomm) in the technology hardware and equipment industry also positively impacted performance
Factors that negatively impacted performance included certain holdings in the retailing industry, such as Tiffany & Co. and Amazon. An under-weighted posture in energy also negatively impacted performance. Semiconductor holdings such as Intel fell in value prior to being sold during the period, while Samsung also declined for the period. Certain holdings in the Capital Goods industry, including Caterpillar and Lockheed-Martin, also underperformed. Telecommunications services company Nextel Communications, Ryanair Holdings, a regional airline, Forest Laboratories, a biotechnology company and Comcast Corporation, a media company all declined during the period in which they were owned.
ENTERPRISE Accumulation Trust
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Enterprise Capital Appreciation Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
From the perspective of economic sector distribution, there was not a great deal of change to the Portfolio’s overall “complexion” during the period. Information technology positions were decreased early in the period, then modestly increased. Meanwhile, allocations to sectors such as Industrials and health care rose modestly. As of June 30, 2004 the Portfolio’s largest sector positions were: health care, consumer discretionary, information technology, financials, and industrials. The Portfolio had no holdings in energy, utilities, and telecommunications Services, and a minimal allocation to materials, as of June 30, 2004.
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 (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 94.29% | |||||
Aerospace — 0.60% | |||||
General Dynamics Corporation | 205 | $ | 20,357 | ||
Honeywell International Inc. | 8,159 | 298,864 | |||
319,221 | |||||
Banking — 0.18% | |||||
UCBH Holdings Inc. | 2,421 | 95,678 | |||
Biotechnology — 6.75% | |||||
Genentech Inc. (a) | 63,816 | 3,586,459 | |||
Building & Construction — 1.84% | |||||
Lennar Corporation (Class A) | 18,757 | 838,813 | |||
Lennar Corporation (Class B) | 3,416 | 141,525 | |||
980,338 | |||||
Business Services — 0.54% | |||||
Automatic Data Processing Inc. | 6,800 | 284,784 | |||
Chemicals — 0.32% | |||||
Monsanto Company | 4,468 | 172,018 | |||
Computer Services — 1.98% | |||||
Dell Inc. (a) | 29,334 | 1,050,744 | |||
Computer Software — 3.27% | |||||
Electronic Arts Inc. (a) | 13,970 | 762,063 | |||
Microsoft Corporation | 34,100 | 973,896 | |||
1,735,959 | |||||
Consumer Products — 5.45% | |||||
Nike, Inc. (Class B) | 15,476 | 1,172,307 | |||
Procter & Gamble Company | 31,632 | 1,722,046 | |||
2,894,353 | |||||
Electrical Equipment — 4.07% | |||||
General Electric Company | 66,818 | 2,164,903 | |||
Finance — 6.98% | |||||
Goldman Sachs Group Inc. | 10,845 | 1,021,165 | |||
SLM Corporation | 66,432 | 2,687,175 | |||
3,708,340 | |||||
Food, Beverages & Tobacco — 2.44% | |||||
PepsiCo Inc. | 24,028 | 1,294,629 | |||
Health Care — 5.54% | |||||
UnitedHealth Group Inc. | 47,294 | 2,944,051 | |||
Hotels & Restaurants — 6.56% | |||||
Four Season Hotels Inc. (o) | 31,874 | 1,919,134 | |||
Mandalay Resort Group | 10,808 | 741,861 | |||
Starbucks Corporation (a) | 16,860 | 733,073 | |||
Wynn Resorts Ltd. (a) (o) | 2,334 | 90,162 | |||
3,484,230 | |||||
Machinery — 3.13% | |||||
Caterpillar Inc. | 20,951 | 1,664,347 |
Number of Shares or Principal Amount | Value | ||||
Medical Instruments — 9.41% | |||||
Boston Scientific Corporation (a) | 33,817 | $ | 1,447,368 | ||
Medtronic Inc. | 20,006 | 974,692 | |||
St. Jude Medical Inc. (a) | 5,356 | 405,181 | |||
Zimmer Holdings Inc. (a) | 24,597 | 2,169,456 | |||
4,996,697 | |||||
Medical Services — 1.58% | |||||
Quest Diagnostics Inc. | 9,875 | 838,881 | |||
Misc. Financial Services — 10.72% | |||||
Citigroup Inc. | 55,716 | 2,590,794 | |||
Countrywide Financial Corporation | 21,679 | 1,522,950 | |||
Merrill Lynch & Company Inc. | 29,244 | 1,578,591 | |||
5,692,335 | |||||
Real Estate — 1.29% | |||||
M.D.C. Holdings Inc. | 10,778 | 685,588 | |||
Retail — 11.06% | |||||
Bed Bath & Beyond Inc. (a) | 4,700 | 180,715 | |||
CVS Corporation | 10,035 | 421,671 | |||
eBay Inc. (a) | 10,715 | 985,244 | |||
Lowe’s Companies Inc. | 29,045 | 1,526,315 | |||
Tiffany & Company | 50,637 | 1,865,973 | |||
Wal-Mart Stores Inc. | 16,923 | 892,858 | |||
5,872,776 | |||||
Telecommunications — 5.34% | |||||
QUALCOMM Inc. | 38,865 | 2,836,368 | |||
Transportation — 2.30% | |||||
FedEx Corporation | 14,962 | 1,222,246 | |||
Travel/Entertainment/Leisure — 1.24% | |||||
Royal Caribbean Cruises Ltd. (o) | 15,184 | 659,137 | |||
Wireless Communications — 1.70% | |||||
Motorola Inc. | 49,611 | 905,401 | |||
Total Domestic Common Stocks | |||||
(Identified cost $37,574,592) | 50,089,483 | ||||
Foreign Stocks — 4.51% | |||||
Drugs & Medical Products — 0.55% | |||||
Roche Holdings-Genusschein | 2,957 | 292,574 | |||
Electronics — 2.77% | |||||
Samsung Electronics (GDR) (144A) | 3,560 | 1,469,598 | |||
Manufacturing — 1.19% | |||||
Tyco International Ltd. | 19,031 | 630,687 | |||
Total Foreign Stocks | |||||
(Identified cost $2,497,742) | 2,392,859 |
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Enterprise Capital Appreciation Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Other Investments — 4.63% | ||||||
Securities Lending Quality Trust (s) | 2,458,486 | $ | 2,458,486 | |||
Total Other Investments | ||||||
(Identified cost $2,458,486) | 2,458,486 | |||||
Total Investments | ||||||
(Identified cost $42,530,820) | $ | 54,940,828 | ||||
Other Assets Less Liabilities — (3.43)% | (1,820,541 | ) | ||||
Net Assets — 100% | $ | 53,120,287 |
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(s) | Represents investment of cash collateral received from securities on loan (See Note 5). |
(GDR) | Global Depository Receipt. |
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value, including securities loaned valued at $2,437,571 (Note 5) | $ | 54,940,828 | ||
Foreign currency at value (cost — $1,711) | 1,700 | |||
Investment income receivable | 27,783 | |||
Receivable for fund shares sold | 3,250 | |||
Receivable for investments sold | 645,057 | |||
Other assets | 945 | |||
Total assets | 55,619,563 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 13,648 | |||
Payable upon return of securities loaned (Note 5) | 2,458,486 | |||
Accrued expenses and other liabilities | 27,142 | |||
Total liabilities | 2,499,276 | |||
Net assets | $ | 53,120,287 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 65,769,202 | ||
Undistributed (accumulated) net investment income (loss) | (39,759 | ) | ||
Undistributed (accumulated) net realized gain (loss) | (25,019,157 | ) | ||
Unrealized appreciation (depreciation) | 12,410,001 | |||
Net assets | $ | 53,120,287 | ||
Fund shares outstanding | 8,320,608 | |||
Net asset value per share | $6.38 | |||
Investments at cost | $ | 42,530,820 |
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends (net of foreign taxes withheld of $1,521) | $ | 248,571 | ||
Interest | 2,509 | |||
Securities lending income | 4,222 | |||
Total investment income | 255,302 | |||
Expenses: | ||||
Investment advisory fees | 202,056 | |||
Shareholder servicing fees | 80,757 | |||
Custodian and fund accounting fees | 11,246 | |||
Reports to shareholders | 1,569 | |||
Trustees’ fees | 743 | |||
Audit and legal fees | 6,878 | |||
Other expenses | 2,260 | |||
Total expenses | 305,509 | |||
Expenses reduced by expense offset arrangements | (10,448 | ) | ||
Total expenses, net of expense offset arrangements | 295,061 | |||
Net investment income (loss) | (39,759 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 2,118,051 | |||
Net realized gain (loss) on foreign currency transactions | (15,216 | ) | ||
Net change in unrealized gain (loss) on investments | (1,249,569 | ) | ||
Net realized and unrealized gain (loss) | 853,266 | |||
Net increase (decrease) in net assets resulting from operations | $ | 813,507 |
See notes to financial statements.
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Enterprise Capital Appreciation Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (39,759 | ) | $ | (121,799 | ) | ||
Net realized gain (loss) | 2,102,835 | 412,254 | ||||||
Net change in unrealized gain (loss) | (1,249,569 | ) | 13,333,370 | |||||
Increase (decrease) in net assets resulting from operations | 813,507 | 13,623,825 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 1,841,906 | 4,814,225 | ||||||
Reinvestment of distributions | — | — | ||||||
Shares redeemed | (4,172,261 | ) | (7,414,686 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (2,330,355 | ) | (2,600,461 | ) | ||||
Total increase (decrease) in net assets | (1,516,848 | ) | 11,023,364 | |||||
Net assets: | ||||||||
Beginning of period | 54,637,135 | 43,613,771 | ||||||
End of period | $ | 53,120,287 | $ | 54,637,135 | ||||
Capital share activity: | ||||||||
Shares issued | 291,015 | 875,125 | ||||||
Shares redeemed | (660,895 | ) | (1,412,643 | ) | ||||
Net increase (decrease) | (369,880 | ) | (537,518 | ) | ||||
Undistributed net investment income | $ | — | $ | — |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Capital Appreciation Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
| ||||||||||||||||||||||||
(Unaudited) Six Months Ended June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 6.29 | $ | 4.73 | $ | 5.69 | $ | 7.09 | $ | 8.65 | $ | 5.57 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | (0.01 | ) | (0.01 | ) | (0.01 | ) | 0.00 | D | 0.05 | (0.03 | ) | |||||||||||||
Net realized and unrealized gain (loss) on investments | 0.10 | 1.57 | (0.95 | ) | (1.36 | ) | (1.20 | ) | 3.11 | |||||||||||||||
Total from investment operations | 0.09 | 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 | $ | 6.38 | $ | 6.29 | $ | 4.73 | $ | 5.69 | $ | 7.09 | $ | 8.65 | ||||||||||||
Total return | 1.43 | %B | 32.98 | % | (16.87 | )% | (19.11 | )% | (13.82 | )% | 55.30 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 53,120 | $ | 54,637 | $ | 43,614 | $ | 57,542 | $ | 72,982 | $ | 33,129 | ||||||||||||
Ratio of expenses to average net assets (excluding expense offset arrangements) | 1.13 | %A | 1.05 | % | 0.88 | % | 0.87 | % | 0.86 | % | 1.16 | % | ||||||||||||
Ratio of expenses to average net assets | 1.10 | %A | 1.01 | % | 0.87 | % | 0.86 | % | 0.86 | % | 1.16 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | (0.15 | )%A | (0.26 | )% | (0.15 | )% | (0.04 | )% | 0.62 | % | (0.41 | )% | ||||||||||||
Portfolio turnover | 49 | % | 75 | % | 109 | % | 115 | % | 123 | % | 247 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Less than $0.01 per share. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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.
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Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $80,761 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%.
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Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
4. Investment Transactions
For the six months ended June 30, 2004, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 26,255,667 | $ | 28,553,756 |
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 six months ended June 30, 2004.
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.
At June 30, 2004, 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 | ||||||
$42,530,820 | $ | 12,902,870 | $ | 492,862 | $ | 12,410,008 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
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11
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 8,959,621.739 | |
Votes Against | 437,922.390 | |
Votes Abstained | 547,109.593 | |
Votes Withheld | 7,204,709.990 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 8,945,691.043 | |
Votes Against | 442,778.613 | |
Votes Abstained | 556,184.066 | |
Votes Withheld | 7,204,709.990 |
ENTERPRISE Accumulation Trust
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Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
13
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
14
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
15
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
16
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 Registered Public Accounting Firm
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 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 $424 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 2.13%. The Portfolio underperformed its benchmark, the Russell 1000 Value Index, which returned 3.93%. The Portfolio underperformed its peer group, the Lipper Large-Cap Value Funds Index, which returned 3.49%.
How would you describe the investment environment during the period?
Unlike the first quarter of 2004 when most of the focus was on the jobless U.S. economic recovery, investors spent much of the second quarter worrying about inflation. Keyed by strengthening employment data and stubbornly high oil prices, inflation surprised on the upside. In response, the Fed raised interest rates during their June meeting, ostensibly marking an end to an era of nearly 25 years of generally falling interest rates. U.S. equity markets spent most of the second quarter in a waiting mode in anticipation of the Fed’s meeting.
What strategies affected Portfolio performance during the period?
For the six-month period, relative performance was negatively impacted by stock selection in the information technology and materials sectors. Within information technology, weak performing holdings included Applied Materials, Inc. and Teradyne. Meanwhile, in the materials sector, the Portfolio’s holding in aluminum manufacturer Alcoa detracted from performance for the period. Stock selection in the health care and the consumer staples sectors, however was additive to Portfolio performance for the period. Within health care, C.R. Bard Corporation and Beckman Coulter were both good performers due to strong earnings results. In consumer staples, holdings such as Coca Cola Enterprises and CVS were strong contributors to performance.
ENTERPRISE Accumulation Trust
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Enterprise Deep Value Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
During the six-month period, the largest sector shifts were an increase in the Portfolio’s benchmark relative over-weight to the health care sector and an increase in an under-weight position in the telecommunication services sector. From a stock specific perspective, the Portfolio initiated a position in Wyeth Pharmaceuticals, as anticipated negative litigation news came to pass, while Wyeth’s strong drug portfolio and pipelines were being ignored. Wellington also added to the Portfolio’s position in Caterpillar, where earnings have been outstanding and should be sustainable as most of its customers are healthy. Wellington also initiated a position in General Dynamics as defense stocks in general had been weak, believing the company’s Gulfstream subsidiary should benefit from improvements in capital spending and business confidence. Wellington initiated a position in electric utility TXU, as moves by new management have driven improvement in profitability. These purchases were funded by sales of holdings that had achieved Wellington’s price objectives, including shares of Republic Services, Stancorp Financial, and a trimming of the strong performer CR Bard. Lastly, Wellington trimmed the position in ExxonMobil Corporation, as oil prices appeared unsustainably high and Wellington did not want to be over-weight the energy sector when oil prices peeled back.
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
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Enterprise Deep Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 90.64% | |||||
Aerospace — 0.36% | |||||
General Dynamics Corporation | 200 | $ | 19,860 | ||
Automotive — 1.52% | |||||
General Motors Corporation | 1,780 | 82,930 | |||
Banking — 10.62% | |||||
Bank of America Corporation | 2,600 | 220,012 | |||
Bank One Corporation | 1,150 | 58,650 | |||
National City Corporation | 4,440 | 155,444 | |||
SunTrust Banks Inc. | 800 | 51,992 | |||
Wells Fargo & Company | 1,650 | 94,430 | |||
580,528 | |||||
Cable — 2.08% | |||||
Comcast Corporation (Class A) (a) | 4,110 | 113,477 | |||
Chemicals — 2.40% | |||||
Du Pont (E. I.) de Nemours & Company | 2,950 | 131,039 | |||
Computer Hardware — 1.72% | |||||
Hewlett-Packard Company | 2,370 | 50,007 | |||
International Business Machines Corporation | 500 | 44,075 | |||
94,082 | |||||
Consumer Products — 1.70% | |||||
Kimberly-Clark Corporation | 720 | 47,434 | |||
Nike, Inc. (Class B) | 600 | 45,450 | |||
92,884 | |||||
Crude & Petroleum — 5.72% | |||||
ChevronTexaco Corporation | 450 | 42,349 | |||
Exxon Mobil Corporation | 6,090 | 270,457 | |||
312,806 | |||||
Electrical Equipment — 0.73% | |||||
Emerson Electric Company | 630 | 40,037 | |||
Electronics — 0.83% | |||||
Rockwell Automation Inc. | 1,210 | 45,387 | |||
Energy — 2.98% | |||||
Exelon Corporation | 2,140 | 71,241 | |||
Progress Energy Inc. | 610 | 26,870 | |||
TXU Corporation | 1,600 | 64,816 | |||
162,927 | |||||
Finance — 0.72% | |||||
Goldman Sachs Group Inc. | 420 | 39,547 | |||
Number of Shares or Principal Amount | Value | ||||
Food, Beverages & Tobacco — 4.11% | |||||
Coca-Cola Enterprises Inc. | 1,820 | $ | 52,762 | ||
Kellogg Company | 2,890 | 120,946 | |||
PepsiCo Inc. | 950 | 51,186 | |||
224,894 | |||||
Health Care — 1.15% | |||||
Anthem Inc. (a) | 700 | 62,692 | |||
Hotels & Restaurants — 2.15% | |||||
McDonald’s Corporation | 4,520 | 117,520 | |||
Insurance — 0.14% | |||||
Marsh & McLennan Companies Inc. | 170 | 7,715 | |||
Machinery — 2.83% | |||||
Caterpillar Inc. | 1,950 | 154,908 | |||
Manufacturing — 0.88% | |||||
Illinois Tool Works Inc. | 500 | 47,945 | |||
Media — 2.64% | |||||
Time Warner Inc. (a) | 8,210 | 144,332 | |||
Medical Instruments — 1.37% | |||||
Beckman Coulter Inc. | 630 | 38,430 | |||
C.R. Bard Inc. | 640 | 36,256 | |||
74,686 | |||||
Medical Services — 1.55% | |||||
Baxter International Inc. | 2,450 | 84,550 | |||
Metals & Mining — 3.43% | |||||
Alcoa Inc. | 5,670 | 187,280 | |||
Misc. Financial Services — 7.11% | |||||
Citigroup Inc. | 5,360 | 249,240 | |||
Fannie Mae | 830 | 59,229 | |||
Morgan Stanley Dean Witter & Company | 1,520 | 80,210 | |||
388,679 | |||||
Multi-Line Insurance — 1.02% | |||||
Principal Financial Group | 1,600 | 55,648 | |||
Oil Services — 1.26% | |||||
ConocoPhillips | 900 | 68,661 | |||
Paper & Forest Products — 1.79% | |||||
Weyerhaeuser Company | 1,550 | 97,836 | |||
Pharmaceuticals — 5.56% | |||||
Pfizer Inc. | 6,870 | 235,504 | |||
Wyeth | 1,900 | 68,704 | |||
304,208 | |||||
ENTERPRISE Accumulation Trust
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Enterprise Deep Value Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Property-Casualty Insurance — 3.32% | |||||
Chubb Corporation | 420 | $ | 28,635 | ||
St. Paul Companies Inc. | 3,770 | 152,836 | |||
181,471 | |||||
Retail — 3.94% | |||||
CVS Corporation | 2,890 | 121,438 | |||
Dollar General Corporation | 4,810 | 94,083 | |||
215,521 | |||||
Savings and Loan — 0.61% | |||||
Washington Mutual Inc. | 860 | 33,230 | |||
Semiconductors — 7.88% | |||||
Applied Materials Inc. (a) | 7,620 | 149,505 | |||
Intel Corporation | 4,300 | 118,680 | |||
Teradyne Inc. (a) | 7,150 | 162,305 | |||
430,490 | |||||
Telecommunications — 1.99% | |||||
BellSouth Corporation | 1,810 | 47,458 | |||
SBC Communications Inc. | 2,530 | 61,353 | |||
108,811 | |||||
Transportation — 3.28% | |||||
CSX Corporation | 2,830 | 92,739 | |||
Southwest Airlines Company | 5,160 | 86,533 | |||
179,272 | |||||
Utilities — 1.25% | |||||
Dominion Resources Inc. | 660 | 41,633 | |||
National Fuel Gas Company | 40 | 1,000 | |||
PPL Corporation | 230 | 10,557 | |||
SCANA Corporation | 420 | 15,275 | |||
68,465 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $4,621,401) | 4,954,318 |
Number of Shares or Principal Amount | Value | ||||||
Foreign Stocks — 8.34% | |||||||
Insurance — 0.34% | |||||||
ACE Ltd. | 440 | $ | 18,603 | ||||
Manufacturing — 3.79% | |||||||
Tyco International Ltd. | 6,250 | 207,125 | |||||
Oil Services — 4.21% | |||||||
Shell Transport & Trading Company (ADR) | 5,150 | 230,205 | |||||
Total Foreign Stocks | |||||||
(Identified cost $365,760) | 455,933 | ||||||
Repurchase Agreement — 2.00% | |||||||
State Street Bank & Trust | $ | 109,000 | 109,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $109,000) | 109,000 | ||||||
Total Investments | |||||||
(Identified cost $5,096,161) | $ | 5,519,251 | |||||
Other Assets Less Liabilities — (0.98)% | (53,357 | ) | |||||
Net Assets — 100% | $ | 5,465,894 |
(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
June 30, 2004 (Unaudited)
Assets: | |||
Investments at value | $ | 5,519,251 | |
Investment income receivable | 1,829 | ||
Receivable for investments sold | 12,680 | ||
Due from investment adviser | 2,164 | ||
Cash | 117 | ||
Other assets | 51 | ||
Total assets | 5,536,092 | ||
Liabilities: | |||
Payable for fund shares redeemed | 3,523 | ||
Payable for investments purchased | 62,666 | ||
Accrued expenses and other liabilities | 4,009 | ||
Total liabilities | 70,198 | ||
Net assets | $ | 5,465,894 | |
Analysis of net assets: | |||
Paid-in capital | $ | 4,888,137 | |
Undistributed (accumulated) net investment income (loss) | 24,896 | ||
Undistributed (accumulated) net realized gain (loss) | 129,771 | ||
Unrealized appreciation (depreciation) | 423,090 | ||
Net assets | $ | 5,465,894 | |
Fund shares outstanding | 438,550 | ||
Net asset value per share | $12.46 | ||
Investments at cost | $ | 5,096,161 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Deep Value Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends (net of foreign taxes withheld of $725) | $ | 50,437 | ||
Interest | 384 | |||
Total investment income | 50,821 | |||
Expenses: | ||||
Investment advisory fees | 18,517 | |||
Custodian and fund accounting fees | 8,245 | |||
Reports to shareholders | 170 | |||
Trustees’ fees | 77 | |||
Audit and legal fees | 714 | |||
Shareholder servicing fees | 2,978 | |||
Other expenses | 228 | |||
Total expenses | 30,929 | |||
Expense reimbursement | (5,004 | ) | ||
Total expenses, net of reimbursement | 25,925 | |||
Net investment income (loss) | 24,896 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 98,491 | |||
Net change in unrealized gain (loss) on investments | (10,172 | ) | ||
Net realized and unrealized gain (loss) | 88,319 | |||
Net increase (decrease) in net assets resulting from operations | $ | 113,215 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Deep Value Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | For the Period May 1, 2003(1) through December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 24,896 | $ | 17,272 | ||||
Net realized gain (loss) | 98,491 | 57,104 | ||||||
Net change in unrealized gain (loss) | (10,172 | ) | 433,262 | |||||
Increase (decrease) in net assets resulting from operations | 113,215 | 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 | 1,154,342 | 5,088,555 | ||||||
Reinvestment of distributions | — | 14,066 | ||||||
Shares redeemed | (167,434 | ) | (1,201,392 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 986,908 | 3,901,229 | ||||||
Total increase (decrease) in net assets | 1,100,123 | 4,365,771 | ||||||
Net assets: | ||||||||
Beginning of period | 4,365,771 | |||||||
End of period | $ | 5,465,894 | $ | 4,365,771 | ||||
Capital share activity: | ||||||||
Shares issued | 94,085 | 463,649 | ||||||
Shares issued in reinvestment of distributions | — | 1,179 | ||||||
Shares redeemed | (13,521 | ) | (106,842 | ) | ||||
Net increase (decrease) | 80,564 | 357,986 | ||||||
Undistributed net investment income | $ | 24,896 | $ | — |
(1) | Commencement of operations. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Deep Value Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | For the Period May 1, 2003 through December 31, 2003 | |||||||
Net asset value, beginning of period | $ | 12.20 | $ | 10.00 | ||||
Income from investment operations: | ||||||||
Net investment income (loss)C | 0.07 | 0.07 | ||||||
Net realized and unrealized gain (loss) | 0.19 | 2.25 | ||||||
Total from investment operations | 0.26 | 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 | $ | 12.46 | $ | 12.20 | ||||
Total return | 2.13 | %B | 23.27 | %B | ||||
Net assets end of period (in thousands) | $ | 5,466 | $ | 4,354 | ||||
Ratio of expenses to average net assets | 1.05 | %A | 1.05 | %A | ||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.25 | %A | 1.69 | %A | ||||
Ratio of net investment income (loss) to average net assets | 1.01 | %A | 1.23 | %A | ||||
Portfolio turnover rate | 18 | % | 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
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $3,143 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 $2,908,447 in the Portfolio at June 30, 2004.
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 1,980,245 | $ | 887,820 |
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 allocated portion of an annual commitment fee equal to 0.10% of the committed amount. The Portfolio had no loans outstanding at any time during the six months ended June 30, 2004.
ENTERPRISE Accumulation Trust
10
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 June 30, 2004, 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 | |||||||
$ | 5,096,161 | $ | 460,263 | $ | 37,173 | $ | 423,090 |
7. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
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11
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 431,526.275 | |
Votes Against | 19,701.521 | |
Votes Abstained | 927.387 | |
Votes Withheld | 363,395.009 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 414,853.007 | |
Votes Against | 32,488.732 | |
Votes Abstained | 4,813.444 | |
Votes Withheld | 363,395.009 |
ENTERPRISE Accumulation Trust
12
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
13
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
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14
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President, and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
15
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
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16
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 Registered Public Accounting Firm
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
17
Enterprise 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 $94.3 billion for institutional clients and its normal investment minimum for this investment objective is $100 million.
Investment Objective
The objective of the Enterprise Equity Portfolio is long-term capital appreciation.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 7.05%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 3.44%. The Portfolio outperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 2.18%.
How would you describe the investment environment during the period?
For the first six months of 2004, the markets took a breather after a very strong advance in 2003, with investors generally sold on rallies, such that sector rotations were of both short duration and a limited upside. The best performing sectors were those that benefited from upward earnings revisions. These sectors were energy, materials and industrials. Also, throughout the first half of the year, corporate growth exceeded consensus expectations, but multiplies contracted with the anticipation and realization of rising interest rates.
What strategies affected Portfolio performance during the period?
As in the past, TCW was able to distinguish themselves through stock selection, particularly with Portfolio holdings in the information technology and consumer discretionary sectors. TCW continued to invest in companies with sustainable competitive advantages that TCW believes can enjoy long-lived and open-ended growth opportunities. Some of the Portfolio’s better relative performers included the likes of QUALCOMM Inc., Starbucks Corporation, Wal-Mart Stores, Yahoo! Inc. and eBay Inc. Finally, a class action lawsuit settlement from Waste Management, Inc. added approximately 0.29% to the Portfolio’s performance for the period.
What changes were made to the Portfolio over the period?
During the six-month period the Portfolio’s positions in Medimmune Inc., Microsoft Corporation, Southwest Airlines Co. and Viacom Corporation were sold. During the period, positions in Apollo Group and XM Satellite Radio were initiated.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
1
Enterprise Equity Portfolio
PORTFOLIO OF INVESTMENTS — (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 99.58% | |||||
Biotechnology — 9.44% | |||||
Amgen Inc. (a) | 153,200 | $ | 8,360,124 | ||
Genentech Inc. (a) | 327,360 | 18,397,632 | |||
26,757,756 | |||||
Computer Hardware — 2.54% | |||||
Cisco Systems Inc. (a) | 303,600 | 7,195,320 | |||
Computer Services — 19.24% | |||||
Dell Inc. (a) | 293,900 | 10,527,498 | |||
Network Appliance Inc. (a) | 575,385 | 12,388,039 | |||
Pixar Inc. (a) (o) | 126,600 | 8,799,966 | |||
Yahoo! Inc. (a) | 628,400 | 22,829,772 | |||
54,545,275 | |||||
Consumer Durables — 1.61% | |||||
Harley-Davidson Inc. | 73,800 | 4,571,172 | |||
Education — 2.27% | |||||
Apollo Group Inc. (Class A) (a) | 73,000 | 6,445,170 | |||
Electrical Equipment — 1.93% | |||||
General Electric Company | 168,800 | 5,469,120 | |||
Hotels & Restaurants — 4.13% | |||||
Starbucks Corporation (a) | 269,000 | 11,696,120 | |||
Insurance — 11.29% | |||||
AFLAC Inc. | 196,600 | 8,023,246 | |||
Progressive Corporation | 281,285 | 23,993,611 | |||
32,016,857 | |||||
Media — 3.33% | |||||
XM Satellite Radio | 346,265 | 9,449,572 | |||
Misc. Financial Services — 1.44% | |||||
Charles Schwab Corporation | 423,430 | 4,069,162 | |||
Multi-Line Insurance — 1.81% | |||||
American International Group Inc. | 72,150 | 5,142,852 | |||
Pharmaceuticals — 3.22% | |||||
Eli Lilly & Company | 130,500 | 9,123,255 | |||
Retail — 17.40% | |||||
Amazon.com Inc. (a) | 364,230 | 19,814,112 | |||
eBay Inc. (a) | 201,600 | 18,537,120 | |||
Wal-Mart Stores Inc. | 113,100 | 5,967,156 | |||
Walgreen Company | 138,200 | 5,004,222 | |||
49,322,610 |
Number of Shares or Principal Amount | Value | ||||||
Semiconductors — 15.06% | |||||||
Applied Materials Inc. (a) | 452,860 | $ | 8,885,113 | ||||
Intel Corporation | 288,100 | 7,951,560 | |||||
Maxim Integrated Products Inc. | 309,100 | 16,203,022 | |||||
Xilinx Inc. | 289,400 | 9,639,914 | |||||
42,679,609 | |||||||
Telecommunications — 4.87% | |||||||
QUALCOMM Inc. | 189,100 | 13,800,518 | |||||
Total Domestic Common Stocks | |||||||
(Identified cost $219,116,621) | 282,284,368 | ||||||
Other Investments — 5.77% | |||||||
Securities Lending Quality | 16,367,741 | 16,367,741 | |||||
Total Other Investments | |||||||
(Identified cost $16,367,741) | 16,367,741 | ||||||
Repurchase Agreement — 0.57% | |||||||
State Street Bank & Trust | $ | 1,615,000 | 1,615,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $1,615,000) | 1,615,000 | ||||||
Total Investments | |||||||
(Identified cost $237,099,361) | $ | 300,267,109 | |||||
Other Assets Less Liabilities — (5.92)% | (16,793,956 | ) | |||||
Net Assets — 100% | $ | 283,473,153 |
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(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
2
Enterprise Equity Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value, including securities loaned valued at $16,607,711 (Note 5) | $ | 300,267,109 | ||
Investment income receivable | 35,246 | |||
Receivable for fund shares sold | 21,727 | |||
Due from investment adviser | 4,679 | |||
Cash | 519 | |||
Other assets | 4,316 | |||
Total assets | 300,333,596 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 375,815 | |||
Payable upon return of securities loaned (Note 5) | 16,367,741 | |||
Accrued expenses and other liabilities | 116,887 | |||
Total liabilities | 16,860,443 | |||
Net assets | $ | 283,473,153 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 362,432,387 | ||
Undistributed (accumulated) net investment income (loss) | (1,151,321 | ) | ||
Undistributed (accumulated) net realized gain (loss) | (140,975,661 | ) | ||
Unrealized appreciation (depreciation) | 63,167,748 | |||
Net assets | $ | 283,473,153 | ||
Fund shares outstanding | 14,142,469 | |||
Net asset value per share | $20.04 | |||
Investments at cost | $ | 237,099,361 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
3
Enterprise Equity Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends | $ | 428,911 | ||
Interest | 4,427 | |||
Securities lending income | 16,776 | |||
Total investment income | 450,114 | |||
Expenses: | ||||
Investment advisory fees | 1,114,042 | |||
Shareholder servicing fees | 417,228 | |||
Custodian and fund accounting fees | 30,672 | |||
Reports to shareholders | 8,072 | |||
Trustees’ fees | 3,903 | |||
Audit and legal fees | 35,394 | |||
Other expenses | 10,613 | |||
Total expenses | 1,619,924 | |||
Expense reimbursement | (18,489 | ) | ||
Total expenses, net of reimbursement | 1,601,435 | |||
Net investment income (loss) | (1,151,321 | ) | ||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | (8,602,362 | ) | ||
Net change in unrealized gain (loss) on investments | 28,763,489 | |||
Net realized and unrealized gain (loss) | 20,161,127 | |||
Net increase (decrease) in net assets resulting from operations | $ | 19,009,806 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Equity Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | (1,151,321 | ) | $ | (1,690,411 | ) | ||
Net realized gain (loss) on investments and foreign currency transactions | (8,602,362 | ) | (42,657,049 | ) | ||||
Net change in unrealized gain (loss) on investments and foreign currency denominated amounts | 28,763,489 | 143,904,975 | ||||||
Increase (decrease) in net assets resulting from operations | 19,009,806 | 99,557,515 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | — | ||||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | — | ||||||
From capital share transactions: | ||||||||
Shares sold | 8,263,976 | 21,220,780 | ||||||
Shares redeemed | (26,745,808 | ) | (37,419,967 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (18,481,832 | ) | (16,199,187 | ) | ||||
Total increase (decrease) in net assets | 527,974 | 83,358,328 | ||||||
Net assets: | ||||||||
Beginning of period | 282,945,179 | 199,586,851 | ||||||
End of period | $ | 283,473,153 | $ | 282,945,179 | ||||
Capital share activity: | ||||||||
Shares issued | 435,243 | 1,367,710 | ||||||
Shares redeemed | (1,410,791 | ) | (2,553,176 | ) | ||||
Net increase (decrease) | (975,548 | ) | (1,185,466 | ) | ||||
Undistributed net investment income | $ | — | $ | — |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Equity Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 18.72 | $ | 12.24 | $ | 17.34 | $ | 27.92 | $ | 38.62 | $ | 36.82 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | (0.14 | ) | (0.11 | ) | (0.08 | ) | (0.14 | ) | (0.21 | ) | 0.23 | |||||||||||||
Net realized and unrealized gain (loss) | 1.46 | 6.59 | (5.02 | ) | (6.42 | ) | 0.27 | E | 4.86 | |||||||||||||||
Total from investment operations | 1.32 | 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 | $ | 20.04 | $ | 18.72 | $ | 12.24 | $ | 17.34 | $ | 27.92 | $ | 38.62 | ||||||||||||
Total return | 7.05 | %B | 52.94 | % | (29.41 | )% | (18.81 | )% | (5.18 | )% | 15.61 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 283,473 | $ | 282,945 | $ | 199,587 | $ | 347,320 | $ | 487,915 | $ | 587,324 | ||||||||||||
Ratio of expenses to average net assets (excluding expense reimbursement and expense offset arrangements) | 1.15 | %A | 1.08 | % | 0.90 | % | 0.88 | % | 0.87 | % | 0.82 | % | ||||||||||||
Ratio of expenses to average net assets | 1.16 | %A | 1.06 | % | 0.89 | % | 0.88 | % | 0.87 | % | 0.82 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | (0.83 | )%A | (0.70 | )% | (0.58 | )% | (0.65 | )% | (0.55 | )% | 0.63 | % | ||||||||||||
Portfolio turnover rate | 9 | % | 19 | % | 15 | % | 21 | % | 44 | % | 155 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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
ENTERPRISE Accumulation Trust
7
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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. 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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $417,268 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.15%.
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 25,397,452 | $ | 44,644,205 |
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
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | ||||||
$237,099,361 | $ | 86,712,146 | $ | 23,544,398 | $ | 63,167,748 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
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9
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 15,079,902.294 | |
Votes Against | 625,878.448 | |
Votes Abstained | 1,324,115.446 | |
Votes Withheld | 12,215,467.620 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 14,900,447.945 | |
Votes Against | 704,485.314 | |
Votes Abstained | 1,424,962.929 | |
Votes Withheld | 12,215,467.620 |
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10
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
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11
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
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EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
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EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
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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 Registered Public Accounting Firm
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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15
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. 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 7.97%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 3.44%. The Portfolio outperformed its peer group, the Lipper Equity Income Funds Index, which returned 3.55%.
How would you describe the investment environment during the period?
The investment environment during the six-month period can best be described as lackluster. After a promising start, stocks floundered as investor enthusiasm for buying stocks quickly gave way to indecision. The desire to own stocks was neutralized by the prospect of the Fed raising interest rates, by the unexpectedly high price of crude oil, and by the greater uncertainty regarding the situation in Iraq. However, halfway through the period, stocks stabilized and, by the end of the period, had rallied to finish slightly ahead of where they began. Ironically, the market’s inability to advance meaningfully occurred against a backdrop of solid economic and corporate profit news.
What strategies affected Portfolio performance during the period?
The strategy of investing in stocks with dividend yields higher than that of the S&P 500 Index positively affected Portfolio performance during the period. According to Standard & Poor’s, dividend paying stocks in the S&P 500 Index were up more than 6% on average, compared to a little more than 3% for nonpayers.
The Portfolio’s stock selection parameters typically result in the construction of a portfolio that has a value bias and, as mentioned, value stocks generally outperformed growth stocks during the period. Indeed, the Portfolio’s performance relative to more growth-oriented benchmarks, such as the S&P 500 Index, reflected its value orientation. Although value outperformed growth for this period, a shift in leadership from value to growth was occurring between the first and second quarters.
Boston Advisors’ investment strategy endeavored to identify companies likely to show earnings improvement amid low investor expectations. During the period, a number of companies in the Portfolio reported earnings and made forecasts that positively surprised investors. In their enthusiastic response, investors bid up the shares of these companies higher, helping contribute to Portfolio performance.
Identifying companies likely to post a positive earnings surprise or experience some other positive near-term catalyst is a strategy that helped minimize one of the risks facing value investors — that of falling into a value trap. Without a catalyst, shareholder value may deteriorate over time, increasing the risk that the company will be unable to support its dividend, let alone increase it, in the future. Avoiding these types of value traps also positively impacted performance during the period.
ENTERPRISE Accumulation Trust
1
Enterprise Equity Income Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
During the period the Portfolio’s exposure to the auto and auto parts sector increased. This decision was corroborated later in the period by positive earning announcements and upbeat forecasts from companies in the sector. Toward the end of the period, the Portfolio’s exposure to the consumer staples sector was increased, based on a belief that market leadership is rotating back to the shares of market defensive/non-cyclical companies. Earnings momentum appears to be moderating and the Fed may engage in a series of interest rate hikes; these developments typically are catalysts for a shift in leadership from the stocks of companies whose profits more economically leveraged to those that are less so, especially after a period of rapid economic acceleration. This rationale was also behind a reduction in the Portfolio’s exposure to basic material stocks. Finally, within financial services, the Portfolio reduced its exposure to banks and increased its property and casualty and life insurance company exposure.
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 Equity Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 79.13% | |||||
Aerospace — 1.10% | |||||
Goodrich Corporation | 19,600 | $ | 633,668 | ||
Automotive — 2.62% | |||||
Cummins Inc. (o) | 5,100 | 318,750 | |||
Ford Motor Company | 37,700 | 590,005 | |||
General Motors Corporation (o) | 13,000 | 605,670 | |||
1,514,425 | |||||
Banking — 5.80% | |||||
Bank One Corporation | 10,000 | 510,000 | |||
Independence Community Bank Corporation | 16,300 | 593,320 | |||
J. P. Morgan Chase & Company | 5,900 | 228,743 | |||
KeyCorp | 26,400 | 789,096 | |||
U.S. Bancorp | 20,000 | 551,200 | |||
Wells Fargo & Company | 11,900 | 681,037 | |||
3,353,396 | |||||
Building & Construction — 1.06% | |||||
Vulcan Materials Company | 12,900 | 613,395 | |||
Chemicals — 3.87% | |||||
Eastman Chemical Company | 19,600 | 906,108 | |||
Monsanto Company | 21,300 | 820,050 | |||
RPM International Inc. | 33,700 | 512,240 | |||
2,238,398 | |||||
Computer Services — 0.92% | |||||
Electronic Data Systems Corporation | 27,900 | 534,285 | |||
Conglomerates — 1.62% | |||||
Textron Inc. | 15,800 | 937,730 | |||
Consumer Durables — 0.88% | |||||
Dana Corporation | 25,900 | 507,640 | |||
Consumer Products — 3.78% | |||||
Briggs & Stratton Corporation | 9,900 | 874,665 | |||
Kimberly-Clark Corporation | 8,500 | 559,980 | |||
Procter & Gamble Company | 13,800 | 751,272 | |||
2,185,917 | |||||
Crude & Petroleum — 2.17% | |||||
ChevronTexaco Corporation | 10,200 | 959,922 | |||
Unocal Corporation | 7,800 | 296,400 | |||
1,256,322 | |||||
Electrical Equipment — 0.49% | |||||
General Electric Company | 8,700 | 281,880 | |||
Electronics — 1.01% | |||||
Rockwell Automation Inc. | 15,600 | 585,156 |
Number of Shares or Principal Amount | Value | ||||
Energy — 3.57% | |||||
Energen Corporation | 17,200 | $ | 825,428 | ||
TXU Corporation | 14,986 | 607,083 | |||
Xcel Energy Inc. | 37,900 | 633,309 | |||
2,065,820 | |||||
Entertainment & Leisure — 1.43% | |||||
Harrah’s Entertainment Inc. | 15,300 | 827,730 | |||
Finance — 1.55% | |||||
Friedman Billings Ramsey Group (o) | 21,600 | 427,464 | |||
MBNA Corporation | 18,100 | 466,799 | |||
894,263 | |||||
Food, Beverages & Tobacco — 6.37% | |||||
Albertson’s Inc. (o) | 28,800 | 764,352 | |||
Archer-Daniels-Midland Company | 30,000 | 503,400 | |||
Coca-Cola Company | 8,000 | 403,840 | |||
J.M. Smucker Company | 10,900 | 500,419 | |||
Kellogg Company | 6,800 | 284,580 | |||
Sara Lee Corporation | 23,200 | 533,368 | |||
SUPERVALU Inc. | 22,600 | 691,786 | |||
3,681,745 | |||||
Hotels & Restaurants — 2.66% | |||||
Mandalay Resort Group | 9,900 | 679,536 | |||
McDonald’s Corporation | 10,300 | 267,800 | |||
Starwood Hotels & Resorts | 13,200 | 592,020 | |||
1,539,356 | |||||
Insurance — 1.31% | |||||
Aon Corporation | 26,600 | 757,302 | |||
Manufacturing — 3.25% | |||||
Eaton Corporation | 13,500 | 873,990 | |||
Stanley Works | 22,000 | 1,002,760 | |||
1,876,750 | |||||
Misc. Financial Services — 3.78% | |||||
Citigroup Inc. | 18,500 | 860,250 | |||
Fannie Mae | 9,500 | 677,920 | |||
Morgan Stanley Dean Witter & Company | 12,300 | 649,071 | |||
2,187,241 | |||||
Multi-Line Insurance — 1.46% | |||||
Lincoln National Corporation | 17,900 | 845,775 | |||
Oil Services — 7.07% | |||||
ConocoPhillips | 11,900 | 907,851 | |||
Kerr-McGee Corporation | 16,200 | 871,074 | |||
Marathon Oil Corporation | 17,800 | 673,552 | |||
Occidental Petroleum Corporation | 18,000 | 871,380 | |||
Sunoco Inc. | 12,000 | 763,440 | |||
4,087,297 |
ENTERPRISE Accumulation Trust
3
Enterprise Equity Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Paper & Forest Products — 1.00% | |||||
Georgia-Pacific Group | 15,700 | $ | 580,586 | ||
Paper Products — 1.01% | |||||
Boise Cascade Corporation | 15,500 | 583,420 | |||
Pharmaceuticals — 3.69% | |||||
Bristol Myers Squibb Company | 16,000 | 392,000 | |||
Johnson & Johnson | 9,800 | 545,860 | |||
Merck & Company Inc. | 9,100 | 432,250 | |||
Pfizer Inc. | 22,300 | 764,444 | |||
2,134,554 | |||||
Property-Casualty Insurance — 2.39% | |||||
Allstate Corporation | 13,700 | 637,735 | |||
St. Paul Companies Inc. | 18,300 | 741,882 | |||
1,379,617 | |||||
Real Estate — 2.18% | |||||
General Growth Properties Inc. | 22,600 | 668,282 | |||
Trizec Properties Inc. | 36,400 | 591,864 | |||
1,260,146 | |||||
Retail — 3.31% | |||||
J. C. Penney Company, Inc. | 11,500 | 434,240 | |||
Limited Brands | 43,900 | 820,930 | |||
May Department Stores Company | 23,900 | 657,011 | |||
1,912,181 | |||||
Savings and Loan — 1.33% | |||||
New York Community Bancorp | 27,300 | 535,899 | |||
Washington Mutual Inc. | 6,100 | 235,704 | |||
771,603 | |||||
Telecommunications — 1.34% | |||||
Sprint Corporation | 33,700 | 593,120 | |||
Telecom Corporation of New Zealand Ltd. (ADR) | 6,000 | 178,800 | |||
771,920 | |||||
Transportation — 1.51% | |||||
GATX Corporation | 32,200 | 875,840 | |||
Utilities — 3.60% | |||||
Alliant Energy Corporation | 28,600 | 745,888 | |||
Edison International | 29,200 | 746,644 | |||
Westar Energy Inc. | 29,500 | 587,345 | |||
2,079,877 | |||||
Total Domestic Common Stocks | |||||
(Identified cost $39,765,266) | 45,755,235 |
Number of Shares or Principal Amount | Value | ||||
Foreign Stocks — 13.38% | |||||
Automotive — 2.37% | |||||
Autoliv Inc. | 17,600 | $ | 742,720 | ||
Volvo Aktiebolaget (ADR) (o) | 18,000 | 630,198 | |||
1,372,918 | |||||
Banking — 1.09% | |||||
Bank of Montreal | 15,700 | 628,471 | |||
Business Services — 1.52% | |||||
Reuters Group (ADR) (o) | 21,600 | 879,984 | |||
Crude & Petroleum — 0.96% | |||||
BP (ADR) | 10,400 | 557,128 | |||
Food, Beverages & Tobacco — 1.18% | |||||
Cadbury Schweppes (ADR) (o) | 19,400 | 680,552 | |||
Insurance — 1.24% | |||||
ACE Ltd. | 16,900 | 714,532 | |||
Multi-Line Insurance — 1.88% | |||||
Partnerre Ltd. | 6,400 | 363,072 | |||
Sun Life Financial Inc. | 25,000 | 723,500 | |||
1,086,572 | |||||
Pharmaceuticals — 1.04% | |||||
GlaxoSmithKline (ADR) | 14,500 | 601,170 | |||
Telecommunications — 0.47% | |||||
Cable & Wireless (ADR) | 38,000 | 269,420 | |||
Transportation — 0.90% | |||||
Teekay Shipping Corporation | 14,000 | 523,320 | |||
Wireless Communications — 0.73% | |||||
Nokia Corporation (Class A) (ADR) | 29,000 | 421,660 | |||
Total Foreign Stocks | |||||
(Identified cost $6,554,846) | 7,735,727 | ||||
Other Investments — 6.10% | |||||
Securities Lending Quality Trust (s) | 3,526,882 | 3,526,882 | |||
Total Other Investments | |||||
(Identified cost $3,526,882) | 3,526,882 |
ENTERPRISE Accumulation Trust
4
Enterprise Equity Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||||
Repurchase Agreement — 6.81% | |||||||
State Street Bank & Trust | $ | 3,938,000 | $ | 3,938,000 | |||
Total Repurchase Agreement | |||||||
(Identified cost $3,938,000) | 3,938,000 | ||||||
Total Investments | |||||||
(Identified cost $53,784,994) | $ | 60,955,844 | |||||
Other Assets Less | (3,136,125 | ) | |||||
Net Assets — 100% | $ | 57,819,719 |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(s) | Represents investment of cash collateral received from securities on loan (See notes 5). |
(ADR) | American Depository Receipt. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Equity Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value, including securities loaned valued at $3,981,051 (Note 5) | $ | 60,955,844 | ||
Investment income receivable | 110,764 | |||
Receivable for fund shares sold | 27,989 | |||
Receivable for investments sold | 495,404 | |||
Due from investment adviser | 4,137 | |||
Cash | 473 | |||
Other assets | 1,378 | |||
Total assets | 61,595,989 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 31,732 | |||
Payable for investments purchased | 191,099 | |||
Payable upon return of securities loaned (Note 5) | 3,526,882 | |||
Accrued expenses and other liabilities | 26,557 | |||
Total liabilities | 3,776,270 | |||
Net assets | $ | 57,819,719 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 55,008,892 | ||
Undistributed (accumulated) net investment income (loss) | 1,077,383 | |||
Undistributed (accumulated) net realized gain (loss) on | ||||
investments and foreign currency | (5,438,045 | ) | ||
Unrealized appreciation (depreciation) on investments and foreign currency | 7,171,489 | |||
Net assets | $ | 57,819,719 | ||
Fund shares outstanding | 10,160,865 | |||
Net asset value per share | $5.69 | |||
Investments at cost | $ | 53,784,994 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Equity Income Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends (net of foreign taxes withheld of $12,936) | $ | 674,363 | ||
Interest | 9,357 | |||
Securities lending income | 6,312 | |||
Total investment income | 690,032 | |||
Expenses: | ||||
Investment advisory fees | 196,956 | |||
Shareholder servicing fees | 78,828 | |||
Custodian and fund accounting fees | 11,109 | |||
Reports to shareholders | 1,757 | |||
Trustees’ fees | 805 | |||
Audit and legal fees | 7,506 | |||
Other expenses | 1,922 | |||
Total expenses | 298,883 | |||
Expense reimbursement | (23,145 | ) | ||
Total expenses, net of reimbursement | 275,738 | |||
Net investment income (loss) | 414,294 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 2,911,472 | |||
Net realized gain (loss) on foreign currency transactions | 77 | |||
Net change in unrealized gain (loss) on investments | 702,041 | |||
Net realized and unrealized gain (loss) | 3,613,590 | |||
Net increase (decrease) in net assets resulting from operations | $ | 4,027,884 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Equity Income Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 414,294 | $ | 678,595 | ||||
Net realized gain (loss) on investments and foreign currency transactions | 2,911,549 | (2,399,294 | ) | |||||
Net change in unrealized gain (loss) on investments and foreign currency denominated amounts | 702,041 | 11,619,562 | ||||||
Increase (decrease) in net assets resulting from operations | 4,027,884 | 9,898,863 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (589,422 | ) | |||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | (589,422 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 8,889,471 | 9,009,380 | ||||||
Reinvestment of distributions | — | 586,108 | ||||||
Shares redeemed | (3,191,268 | ) | (8,526,855 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 5,698,203 | 1,068,633 | ||||||
Total increase (decrease) in net assets | 9,726,087 | 10,378,074 | ||||||
Net assets: | ||||||||
Beginning of period | 48,093,632 | 37,715,558 | ||||||
End of period | $ | 57,819,719 | $ | 48,093,632 | ||||
Capital share activity: | ||||||||
Shares issued | 1,610,632 | 1,989,756 | ||||||
Shares issued in reinvestment of distributions | — | 124,970 | ||||||
Shares redeemed | (577,243 | ) | (1,914,027 | ) | ||||
Net increase (decrease) | 1,033,389 | 200,699 | ||||||
Undistributed net investment income | $ | 1,077,383 | $ | 663,089 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Enterprise Equity Income Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 5.27 | $ | 4.22 | $ | 5.02 | $ | 5.69 | $ | 5.37 | $ | 5.09 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | 0.08 | 0.08 | 0.07 | 0.07 | 0.08 | 0.06 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.34 | 1.04 | (0.81 | ) | (0.69 | ) | 0.26 | 0.23 | ||||||||||||||||
Total from investment operations | 0.42 | 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 | $ | 5.69 | $ | 5.27 | $ | 4.22 | $ | 5.02 | $ | 5.69 | $ | 5.37 | ||||||||||||
Total return | 7.97 | %B | 26.65 | % | (14.76 | )% | (10.75 | )% | 6.45 | % | 5.70 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 57,820 | $ | 48,094 | $ | 37,716 | $ | 40,506 | $ | 32,829 | $ | 27,997 | ||||||||||||
Ratio of expenses to average net assets | 1.05 | %A | 1.05 | % | 0.90 | % | 0.88 | % | 0.88 | % | 1.05 | % | ||||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.14 | %A | 1.06 | % | 0.90 | % | 0.88 | % | 0.88 | % | 1.20 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 0.57 | %A | 1.70 | % | 1.44 | % | 1.43 | % | 1.43 | % | 1.21 | % | ||||||||||||
Portfolio turnover | 33 | % | 103 | % | 35 | % | 36 | % | 37 | % | 18 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 4, 2004.
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
10
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004, ECM incurred subadvisory fees payable to Boston Advisors, Inc. of $78,782. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $78,853 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.05%.
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 19,963,015 | $ | 16,465,948 |
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)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | ||||||
$53,784,994 | $ | 8,117,185 | $ | 946,335 | $ | 7,170,850 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 4, 2004.
ENTERPRISE Accumulation Trust
12
Shareholder Proxy Voting Information (Unaudited)
On June 4, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, a new Investment Sub-Advisory Agreement (“Sub-Advisory Agreement”) between The Trust, Enterprise Capital and Boston Advisors, Inc. (“Boston Advisors”), the terms of which are substantially identical to the existing Sub-Advisory Agreement with Boston Advisors and in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 10,395,739.163 | |
Votes Against | 280,644.372 | |
Votes Abstained | 347,786.221 | |
Votes Withheld | 7,952,336.314 |
To approve the new Investment Sub-Advisory Agreement
Votes For | 10,391,841.278 | |
Votes Against | 256,649.512 | |
Votes Abstained | 375,678.966 | |
Votes Withheld | 7,952,336.314 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 10,302,692.399 | |
Votes Against | 324,651.388 | |
Votes Abstained | 396,825.969 | |
Votes Withheld | 7,952,336.314 |
ENTERPRISE Accumulation Trust
13
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
14
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
15
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
16
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
17
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 Registered Public Accounting Firm
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
18
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”) is subadviser to the Enterprise Growth Portfolio. Montag manages approximately $29.5 billion for institutional clients, and its normal investment minimum is $40 million.
Investment Objective
The objective of the Enterprise Growth Portfolio is capital appreciation.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 3.88%. The Portfolio outperformed its benchmark, the S&P 500 Index, which returned 3.44%. The Portfolio outperformed its peer group, the Lipper Large-Cap Growth Funds Index, which returned 2.18%.
How would you describe the investment environment during the period?
The first six months of 2004 seemed to illustrate the crosswinds facing investors as they looked forward. January continued the trend we had seen in much of the latter part of 2003 where investors favored higher beta, lower quality, and small capitalization stocks. Late in January there was a perceptible change in sentiment as there was evidence of a gradual shift in the Fed’s risk assessment of the economy, with the Board of Governors stepping back from their commitment to holding interest rates low for a “considerable period,” but stating that “with inflation quite low and resource use slack, the committee believes it can be patient in removing its policy accommodation.” The Fed’s statement shifted the market’s focus and appeared to alter investor’s appetite for risk. This manifested itself in the rotation into higher quality companies in the market.
During this time period, there were positive signs of economic recovery by businesses with an ongoing rebound in capital spending and inventory restocking, slight improvements in the labor market and continued healthy corporate profits. These positive developments were countered to an extent, by higher interest rates, increased terrorist concerns, higher oil prices and uncertainties related to the intensifying political campaigns and their outcomes.
What strategies affected Portfolio performance during the period?
The Portfolio was well positioned with large multinational companies that benefited from the synchronized global economic recovery and the low dollar. Montag believed they found many of these opportunities in the consumer staples sector in companies like Gillette, PepsiCo, and Procter & Gamble. Montag believed these companies offered a compelling combination of double-digit earnings growth and attractive valuation. In addition to the high-quality consumer staples companies, Montag’s stock selection in information technology benefited the Portfolio with high quality companies such as Qualcomm, Electronic Arts, and Maxim.
What changes were made to the Portfolio over the period?
Significant additions to the Portfolio during the six months were Apollo Group, Illinois Tool Works, McDonalds Corporation, Boston Scientific Corp., American Express Corporation, and Maxim Integrated Products, Inc. Significant deletions from the Portfolio during this period included Masco Corporation, Lowe’s Companies, Marsh & McLennan Companies, Intel Corporation and Oracle Corporation.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
1
Enterprise Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 98.35% | |||||
Advertising — 2.44% | |||||
Omnicom Group Inc. | 86,800 | $ | 6,587,252 | ||
Biotechnology — 4.03% | |||||
Amgen Inc. (a) | 48,800 | 2,663,016 | |||
Genentech Inc. (a) | 146,100 | 8,210,820 | |||
10,873,836 | |||||
Business Services — 2.13% | |||||
Paychex Inc. | 169,700 | 5,749,436 | |||
Computer Hardware — 1.58% | |||||
Cisco Systems Inc. (a) | 180,000 | 4,266,000 | |||
Computer Software — 2.09% | |||||
Electronic Arts Inc. (a) | 103,512 | 5,646,580 | |||
Consumer Products — 12.05% | |||||
Colgate-Palmolive Company | 120,073 | 7,018,267 | |||
Gillette Company | 292,930 | 12,420,232 | |||
Procter & Gamble Company | 240,568 | 13,096,522 | |||
32,535,021 | |||||
Consumer Services — 3.62% | |||||
United Parcel Service Inc. | 130,000 | 9,772,100 | |||
Education — 2.13% | |||||
Apollo Group Inc. (Class A) (a) | 65,100 | 5,747,679 | |||
Electrical Equipment — 2.13% | |||||
General Electric Company | 177,900 | 5,763,960 | |||
Entertainment & Leisure — 2.08% | |||||
Walt Disney Company | 220,460 | 5,619,525 | |||
Food, Beverages & Tobacco — 7.37% | |||||
Coca-Cola Company | 215,300 | 10,868,344 | |||
PepsiCo Inc. | 167,645 | 9,032,712 | |||
19,901,056 | |||||
Hotels & Restaurants — 2.96% | |||||
Marriott International Inc. (Class A) | 79,889 | 3,984,863 | |||
McDonald’s Corporation | 154,300 | 4,011,800 | |||
7,996,663 | |||||
Machinery — 2.15% | |||||
Caterpillar Inc. | 73,131 | 5,809,527 | |||
Manufacturing — 5.25% | |||||
3M Company | 92,000 | 8,280,920 | |||
Illinois Tool Works Inc. | 61,600 | 5,906,824 | |||
14,187,744 | |||||
Media — 2.21% | |||||
Gannett Company Inc. | 70,200 | 5,956,470 | |||
Medical Instruments — 5.78% | |||||
Boston Scientific Corporation (a) | 177,100 | 7,579,880 | |||
Medtronic Inc. | 164,860 | 8,031,979 | |||
15,611,859 |
Number of Shares or Principal Amount | Value | ||||||
Misc. Financial Services — 5.13% | |||||||
American Express Company | 110,600 | $ | 5,682,628 | ||||
Citigroup Inc. | 175,700 | 8,170,050 | |||||
13,852,678 | |||||||
Multi-Line Insurance — 3.69% | |||||||
American International Group Inc. | 140,000 | 9,979,200 | |||||
Oil Services — 4.75% | |||||||
Schlumberger Ltd. | 202,074 | 12,833,720 | |||||
Pharmaceuticals — 10.38% | |||||||
Eli Lilly & Company | 139,900 | 9,780,409 | |||||
Johnson & Johnson | 183,400 | 10,215,380 | |||||
Pfizer Inc. | 234,500 | 8,038,660 | |||||
28,034,449 | |||||||
Retail — 5.50% | |||||||
Bed Bath & Beyond Inc. (a) | 148,400 | 5,705,980 | |||||
eBay Inc. (a) | 43,400 | 3,990,630 | |||||
Kohl’s Corporation (a) | 122,300 | 5,170,844 | |||||
14,867,454 | |||||||
Semiconductors — 3.36% | |||||||
Maxim Integrated Products Inc. | 173,400 | 9,089,628 | |||||
Telecommunications — 5.54% | |||||||
QUALCOMM Inc. | 205,000 | 14,960,900 | |||||
Total Domestic Common Stocks | |||||||
(Identified cost $228,681,602) | 265,642,737 | ||||||
Repurchase Agreement — 1.71% | |||||||
State Street Bank & Trust Repurchase Agreement, | $ | 4,616,000 | 4,616,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $4,616,000) | 4,616,000 | ||||||
Total Investments | |||||||
(Identified cost $233,297,602) | $ | 270,258,737 | |||||
Other Assets Less Liabilities — (0.06)% | (151,553 | ) | |||||
Net Assets — 100% | $ | 270,107,184 |
(a) | Non-income producing security. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
2
Enterprise Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value | $ | 270,258,737 | ||
Investment income receivable | 210,905 | |||
Receivable for fund shares sold | 15,116 | |||
Receivable for investments sold | 1,384,388 | |||
Cash | 435 | |||
Other assets | 4,341 | |||
Total assets | 271,873,922 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 1,201,268 | |||
Payable for investments purchased | 451,291 | |||
Accrued expenses and other liabilities | 114,179 | |||
Total liabilities | 1,766,738 | |||
Net assets | $ | 270,107,184 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 333,132,439 | ||
Undistributed (accumulated) net investment income (loss) | 836,589 | |||
Undistributed (accumulated) net realized gain (loss) | (100,822,979 | ) | ||
Unrealized appreciation (depreciation) | 36,961,135 | |||
Net assets | $ | 270,107,184 | ||
Fund shares outstanding | 55,993,700 | |||
Net asset value per share | $4.82 | |||
Investments at cost | $ | 233,297,602 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
3
Enterprise Growth Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | |||
Dividends | $ | 1,499,938 | |
Interest | 14,944 | ||
Securities lending income | 87 | ||
Total investment income | 1,514,969 | ||
Expenses: | |||
Investment advisory fees | 1,000,584 | ||
Shareholder servicing fees | 399,732 | ||
Custodian and fund accounting fees | 29,765 | ||
Reports to shareholders | 8,028 | ||
Trustees’ fees | 3,816 | ||
Audit and legal fees | 34,661 | ||
Other expenses | 10,640 | ||
Total expenses | 1,487,226 | ||
Net investment income (loss) | 27,743 | ||
Realized and unrealized gain (loss)—net: | |||
Net realized gain (loss) on investments | 7,040,166 | ||
Net change in unrealized gain (loss) on investments | 3,336,946 | ||
Net realized and unrealized gain (loss) | 10,377,112 | ||
Net increase (decrease) in net assets resulting from operations | $ | 10,404,855 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 27,743 | $ | 808,863 | ||||
Net realized gain (loss) | 7,040,166 | (8,059,516 | ) | |||||
Net change in unrealized gain (loss) | 3,336,946 | 45,886,324 | ||||||
Increase (decrease) in net assets resulting from operations | 10,404,855 | 38,635,671 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (1,021,049 | ) | |||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | (1,021,049 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 16,086,630 | 33,810,875 | ||||||
Shares exchanged due to merger | — | 16,758,178 | ||||||
Reinvestment of distributions | — | 1,020,154 | ||||||
Shares redeemed | (21,855,222 | ) | (32,342,999 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (5,768,592 | ) | 19,246,208 | |||||
Total increase (decrease) in net assets | 4,636,263 | 56,860,830 | ||||||
Net assets: | ||||||||
Beginning of period | 265,470,921 | 208,610,091 | ||||||
End of period | $ | 270,107,184 | $ | 265,470,921 | ||||
Capital share activity: | ||||||||
Shares issued | 3,407,297 | 8,007,031 | ||||||
Shares exchanged due to merger | — | 4,364,109 | ||||||
Shares issued in reinvestment of distributions | — | 230,804 | ||||||
Shares redeemed | (4,626,397 | ) | (7,742,602 | ) | ||||
Net increase (decrease) | (1,219,100 | ) | 4,859,342 | |||||
Undistributed net investment income | $ | 836,589 | $ | 808,846 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 4.64 | $ | 3.98 | $ | 5.21 | $ | 5.99 | $ | 6.56 | $ | 5.27 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | 0.00 | D | 0.01 | 0.02 | 0.02 | 0.03 | 0.02 | |||||||||||||||||
Net realized and unrealized gain (loss) | 0.18 | 0.67 | (1.23 | ) | (0.78 | ) | (0.54 | ) | 1.27 | |||||||||||||||
Total from investment operations | 0.18 | 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 | $ | 4.82 | $ | 4.64 | $ | 3.98 | $ | 5.21 | $ | 5.99 | $ | 6.56 | ||||||||||||
Total return | 3.88 | %B | 17.05 | % | (23.26 | )% | (12.56 | )% | (7.79 | )% | 24.48 | % | ||||||||||||
Net assets end of period | $ | 270,107 | $ | 265,471 | $ | 208,610 | $ | 280,279 | $ | 319,207 | $ | 230,720 | ||||||||||||
Ratio of expenses to average net assets | 1.11 | %A | 1.03 | % | 0.86 | % | 0.84 | % | 0.83 | % | 0.84 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 0.02 | %A | 0.34 | % | 0.42 | % | 0.34 | % | 0.45 | % | 0.29 | % | ||||||||||||
Portfolio turnover rate | 28 | % | 40 | % | 42 | % | 52 | % | 56 | % | 30 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Less than $0.01 per share. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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-thecounter 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
7
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $399,651 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 $241,000 in the Portfolio at
June 30, 2004.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 73,626,326 | $ | 79,779,310 |
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | ||||||
$233,297,602 | $ | 40,674,932 | $ | 3,713,797 | $ | 36,961,135 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
ENTERPRISE Accumulation Trust
9
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 60,601,984.225 | |
Votes Against | 1,990,570.406 | |
Votes Abstained | 3,839,254.977 | |
Votes Withheld | 47,000,995.712 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 60,312,432.295 | |
Votes Against | 2,091,267.066 | |
Votes Abstained | 4,028,110.247 | |
Votes Withheld | 47,000,995.712 |
ENTERPRISE Accumulation Trust
10
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
11
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
12
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
13
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
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 Registered Public Accounting Firm
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 $53.8 billion for all of its clients and its normal investment minimum is $25 million.
Investment Objective
The objective of the Enterprise Growth and Income Portfolio is total return through capital appreciation with income as a secondary consideration.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 3.01%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 3.44%. In contrast, the Portfolio outperformed its peer group, the Lipper Large-Cap Core Funds Index, which returned 2.24%.
How would you describe the investment environment during the period?
The first six months of 2004 were characterized by shifting investor concerns surrounding the economy and uncertainty regarding the continuing unrest in Iraq. These elements largely overshadowed the presence of solid corporate fundamentals, and ultimately tempered equity and fixed-income returns over the period.
More specifically, in the first quarter, investors were preoccupied with the absence of meaningful job growth. In the second quarter, fears of a jobless economic recovery ended when the Labor Department reported that nearly one million new jobs were created from March through May 2004. This report, combined with telling Fed statements, created strong anticipation that a rate increase was imminent. Thus, it came as no surprise when the Fed did, in fact, raise the federal funds rate from 1.00% to 1.25% in June, the first rate hike in four years.
What strategies affected Portfolio performance during the period?
UBS adhered to the Portfolio’s disciplined investment approach that focuses on price to intrinsic value. Through fundamental research, UBS seeks to identify companies that are selling for less than their true, or intrinsic, value. For much of the period, UBS viewed the equity market as trading very close to fair value. As such, the Portfolio’s risk exposure was neutral to slightly lower than that of the Index. In terms of sector exposure, the Portfolio generally held over-weight positions in lower risk sectors, such as healthcare, capital goods and utilities. Conversely, the Portfolio was under-weight riskier sectors, including technology hardware and retailing.
ENTERPRISE Accumulation Trust
1
Enterprise Growth and Income Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
In general, UBS was cautious on technology because they believed its 2003 rally was not driven by fundamentals, but rather by investor speculation. Having said that, as bottom-up stock pickers UBS was able to find several holdings in the software area that met their intrinsic value criteria.
In healthcare, specifically the pharmaceuticals area, UBS continued to find attractive opportunities. The Portfolio’s exposure to select utilities was driven by attractive yields, not versus bonds, but to other industries. UBS focused on nuclear and coal generation stocks, as they expect profitability in these areas to improve. Furthermore, they expect that opportunistic consolidation within the industry may continue, and that investors may spend more time focusing on unappreciated merger and acquisition opportunities.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
2
Enterprise Growth and Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 96.36% | |||||
Advertising — 2.74% | |||||
Interpublic Group of Companies | 80,600 | $ | 1,106,638 | ||
Omnicom Group Inc. | 30,800 | 2,337,412 | |||
3,444,050 | |||||
Aerospace — 3.21% | |||||
Boeing Company | 34,700 | 1,772,823 | |||
Northrop Grumman Corporation | 27,600 | 1,482,120 | |||
United Technologies Corporation | 8,500 | 777,580 | |||
4,032,523 | |||||
Airlines — 0.24% | |||||
Delta Air Lines Inc. (o) | 43,100 | 306,872 | |||
Automotive — 1.00% | |||||
Johnson Controls Inc. | 23,600 | 1,259,768 | |||
Banking — 8.96% | |||||
J. P. Morgan Chase & Company | 78,000 | 3,024,060 | |||
Mellon Financial Corporation | 91,400 | 2,680,762 | |||
PNC Financial Services Group | 27,100 | 1,438,468 | |||
Wells Fargo & Company | 72,000 | 4,120,560 | |||
11,263,850 | |||||
Biotechnology — 1.35% | |||||
Genzyme Corporation (a) | 35,800 | 1,694,414 | |||
Broadcasting — 2.71% | |||||
Viacom Inc. (Class B) | 77,300 | 2,761,156 | |||
Westwood One Inc. (a) | 27,400 | 652,120 | |||
3,413,276 | |||||
Building & Construction — 3.74% | |||||
Martin Marietta Materials Inc. | 37,100 | 1,644,643 | |||
Masco Corporation | 98,000 | 3,055,640 | |||
4,700,283 | |||||
Business Services — 0.59% | |||||
Viad Corporation | 27,500 | 742,775 | |||
Chemicals — 0.64% | |||||
Eastman Chemical Company (o) | 17,300 | 799,779 | |||
Computer Services — 0.61% | |||||
Dell Inc. (a) | 21,500 | 770,130 | |||
Computer Software — 5.13% | |||||
Microsoft Corporation | 150,100 | 4,286,856 | |||
Oracle Corporation (a) | 121,000 | 1,443,530 | |||
Veritas Software Corporation (a) | 26,200 | 725,740 | |||
6,456,126 | |||||
Consumer Products — 1.51% | |||||
Kimberly-Clark Corporation | 28,800 | 1,897,344 |
Number of Shares or Principal Amount | Value | ||||
Crude & Petroleum — 2.55% | |||||
Exxon Mobil Corporation | 72,200 | $ | 3,206,402 | ||
Energy — 1.86% | |||||
Exelon Corporation | 70,400 | 2,343,616 | |||
Finance — 0.50% | |||||
Equifax Inc. | 25,300 | 626,175 | |||
Food, Beverages & Tobacco — 1.28% | |||||
Albertson’s Inc. (o) | 60,400 | 1,603,016 | |||
Health Care — 3.68% | |||||
Anthem Inc. (a) | 14,600 | 1,307,576 | |||
UnitedHealth Group Inc. | 53,300 | 3,317,925 | |||
4,625,501 | |||||
Insurance — 0.89% | |||||
AFLAC Inc. | 27,500 | 1,122,275 | |||
Machinery — 0.91% | |||||
Mettler-Toledo International | 23,200 | 1,140,048 | |||
Manufacturing — 3.93% | |||||
Illinois Tool Works Inc. | 34,200 | 3,279,438 | |||
Ingersoll-Rand Company Ltd. | 24,400 | 1,666,764 | |||
4,946,202 | |||||
Media — 2.59% | |||||
Gannett Company Inc. | 10,600 | 899,410 | |||
Time Warner Inc. (a) | 134,200 | 2,359,236 | |||
3,258,646 | |||||
Medical Instruments — 1.32% | |||||
Guidant Corporation | 11,700 | 653,796 | |||
Medtronic Inc. | 20,700 | 1,008,504 | |||
1,662,300 | |||||
Medical Services — 0.60% | |||||
Quest Diagnostics Inc. | 8,900 | 756,055 | |||
Misc. Financial Services — 9.54% | |||||
Citigroup Inc. | 118,900 | 5,528,850 | |||
Freddie Mac | 49,200 | 3,114,360 | |||
Morgan Stanley Dean | 63,500 | 3,350,895 | |||
11,994,105 | |||||
Multi-Line Insurance — 2.65% | |||||
American International Group Inc. | 27,800 | 1,981,584 | |||
Hartford Financial Services Group Inc. | 19,700 | 1,354,178 | |||
3,335,762 | |||||
Oil Services — 1.75% | |||||
ConocoPhillips | 22,000 | 1,678,380 | |||
Kerr-McGee Corporation | 9,700 | 521,569 | |||
2,199,949 |
ENTERPRISE Accumulation Trust
3
Enterprise Growth and Income Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Other — 1.34% | |||||
SPDR Trust Series 1 (o) | 14,700 | $ | 1,683,591 | ||
Paper & Forest Products — 0.62% | |||||
MeadWestvaco Corporation | 26,400 | 775,896 | |||
Pharmaceuticals — 11.75% | |||||
Allergan Inc. | 46,200 | 4,135,824 | |||
Bristol Myers Squibb Company | 45,900 | 1,124,550 | |||
Cephalon Inc. (a) (o) | 22,900 | 1,236,600 | |||
Johnson & Johnson | 57,300 | 3,191,610 | |||
Mylan Laboratories Inc. | 108,200 | 2,191,050 | |||
Wyeth | 80,100 | 2,896,416 | |||
14,776,050 | |||||
Retail — 3.68% | |||||
Costco Wholesale Corporation | 63,800 | 2,620,266 | |||
Kohl’s Corporation (a) | 25,700 | 1,086,596 | |||
TJX Companies Inc. | 38,300 | 924,562 | |||
4,631,424 | |||||
Telecommunications — 0.83% | |||||
SBC Communications Inc. | 43,000 | 1,042,750 | |||
Transportation — 2.94% | |||||
Burlington Northern Santa Fe Corporation | 105,300 | 3,692,871 | |||
Utilities — 4.63% | |||||
American Electric Power Inc. | 37,900 | 1,212,800 | |||
CMS Energy Corporation | 46,800 | 427,284 | |||
Dominion Resources Inc. | 12,100 | 763,268 | |||
FirstEnergy Corporation | 49,100 | 1,836,831 | |||
Pepco Holdings Inc. | 21,200 | 387,536 | |||
Sempra Energy | 34,600 | 1,191,278 | |||
5,818,997 | |||||
Wireless Communications — 4.09% | |||||
Nextel Communications Inc. | 192,900 | 5,142,714 | |||
Total Domestic Common Stocks | |||||
(Identified cost $106,944,423) | 121,165,535 |
Number of Shares or Principal Amount | Value | ||||||
Foreign Stocks — 1.34% | |||||||
Multi-Line Insurance — 1.27% | |||||||
Willis Group Holdings Ltd. | 42,800 | $ | 1,602,860 | ||||
Technology — 0.07% | |||||||
Accenture Ltd. (a) | 3,100 | 85,188 | |||||
Total Foreign Stocks | |||||||
(Identified cost $1,553,043) | 1,688,048 | ||||||
Other Investments — 4.52% | |||||||
Other Investments — 4.52% | |||||||
Securities Lending Quality Trust (s) | 5,680,125 | 5,680,125 | |||||
Total Other Investments | |||||||
(Identified cost $5,680,125) | 5,680,125 | ||||||
Repurchase Agreement — 1.60% | |||||||
State Street Bank & Trust | $ | 2,008,000 | 2,008,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $2,008,000) | 2,008,000 | ||||||
Total Investments | |||||||
(Identified cost $116,185,591) | $ | 130,541,708 | |||||
Other Assets Less | (4,798,297 | ) | |||||
Net Assets — 100% | $ | 125,743,411 |
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(s) | Represents investment of cash collateral received from securities on loan (See note 5). |
(SPDR) | S&P Depository Receipt. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Growth and Income Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value, including securities loaned valued at $5,629,858 (Note 5) | $ | 130,541,708 | ||
Investment income receivable | 111,019 | |||
Receivable for fund shares sold | 542,615 | |||
Receivable for investments sold | 439,321 | |||
Due from investment adviser | 5,578 | |||
Cash | 672 | |||
Other assets | 1,856 | |||
Total assets | 131,642,769 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 164,519 | |||
Payable upon return of securities loaned (Note 5) | 5,680,125 | |||
Accrued expenses and other liabilities | 54,714 | |||
Total liabilities | 5,899,358 | |||
Net assets | $ | 125,743,411 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 158,489,476 | ||
Undistributed (accumulated) net investment income (loss) | 1,306,133 | |||
Undistributed (accumulated) net realized gain (loss) | (48,408,315 | ) | ||
Unrealized appreciation (depreciation) | 14,356,117 | |||
Net assets | $ | 125,743,411 | ||
Fund shares outstanding | 24,450,314 | |||
Net asset value per share | $5.14 | |||
Investments at cost | $ | 116,185,591 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Growth and Income Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends | $ | 1,010,376 | ||
Interest | 9,880 | |||
Securities lending income | 3,261 | |||
Total investment income | 1,023,517 | |||
Expenses: | ||||
Investment advisory fees | 474,327 | |||
Shareholder servicing fees | 189,579 | |||
Custodian and fund accounting fees | 21,297 | |||
Reports to shareholders | 3,721 | |||
Trustees’ fees | 1,777 | |||
Audit and legal fees | 15,989 | |||
Other expenses | 4,648 | |||
Total expenses | 711,338 | |||
Expense reimbursement | (47,280 | ) | ||
Total expenses, net of reimbursement | 664,058 | |||
Net investment income (loss) | 359,459 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 6,104,260 | |||
Net change in unrealized gain (loss) on investments | (2,559,566 | ) | ||
Net realized and unrealized gain (loss) | 3,544,694 | |||
Net increase (decrease) in net assets resulting from operations | $ | 3,904,153 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Growth and Income Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 359,459 | $ | 946,672 | ||||
Net realized gain (loss) | 6,104,260 | (16,774,206 | ) | |||||
Net change in unrealized gain (loss) | (2,559,566 | ) | 43,723,486 | |||||
Increase (decrease) in net assets resulting from operations | 3,904,153 | 27,895,952 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (1,145,446 | ) | |||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | (1,145,446 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 5,076,503 | 8,956,733 | ||||||
Reinvestment of distributions | — | 1,143,225 | ||||||
Shares redeemed | (11,131,113 | ) | (20,385,556 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (6,054,610 | ) | (10,285,598 | ) | ||||
Total increase (decrease) in net assets | (2,150,457 | ) | 16,464,908 | |||||
Net assets: | ||||||||
Beginning of period | 127,893,868 | 111,428,960 | ||||||
End of period | $ | 125,743,411 | $ | 127,893,868 | ||||
Capital share activity: | ||||||||
Shares issued | 1,003,124 | 2,071,578 | ||||||
Shares issued in reinvestment of distributions | — | 250,159 | ||||||
Shares redeemed | (2,202,961 | ) | (4,888,936 | ) | ||||
Net increase (decrease) | (1,199,837 | ) | (2,567,199 | ) | ||||
Undistributed net investment income | $ | 1,306,133 | $ | 946,674 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Growth and Income Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 4.99 | $ | 3.95 | $ | 5.41 | $ | 6.20 | $ | 6.16 | $ | 5.11 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | 0.03 | 0.04 | 0.04 | 0.05 | 0.07 | 0.07 | ||||||||||||||||||
Net realized and unrealized gain (loss) | 0.12 | 1.04 | (1.45 | ) | (0.79 | ) | (0.01 | ) | 0.98 | |||||||||||||||
Total from investment operations | 0.15 | 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 | $ | 5.14 | $ | 4.99 | $ | 3.95 | $ | 5.41 | $ | 6.20 | $ | 6.16 | ||||||||||||
Total return | 3.01 | %B | 27.56 | % | (25.95 | )% | (11.87 | )% | 0.91 | % | 20.55 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 125,743 | $ | 127,894 | $ | 111,429 | $ | 172,531 | $ | 171,353 | $ | 89,887 | ||||||||||||
Ratio of expenses to average net assets | 1.05 | %A | 1.03 | % | 0.86 | % | 0.85 | % | 0.85 | % | 0.94 | % | ||||||||||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.12 | %A | 1.03 | % | 0.86 | % | 0.85 | % | 0.85 | % | 0.94 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 1.58 | %A | 0.84 | % | 0.81 | % | 0.92 | % | 1.09 | % | 1.22 | % | ||||||||||||
Portfolio turnover rate | 24 | % | 119 | % | 19 | % | 2 | % | 6 | % | 1 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
D | Less than $0.01 per share. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 4, 2004.
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
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $189,600 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.05%.
For the six months ended June 30, 2004, the Portfolio paid brokerage commissions of $1,594 to affiliates of the adviser or subadviser.
4. Investment Transactions
For the six months ended June 30, 2004, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 29,162,722 | $ | 33,892,669 |
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)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | |||||||
$ | 116,185,591 | $ | 17,868,767 | $ | 3,512,650 | $ | 14,356,117 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 4, 2004.
ENTERPRISE Accumulation Trust
11
Shareholder Proxy Voting Information (Unaudited)
On June 4, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 26,583,389.486 | |
Votes Against | 609,313.732 | |
Votes Abstained | 1,601,353.026 | |
Votes Withheld | 21,245,597.734 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 26,363,764.806 | |
Votes Against | 650,987.940 | |
Votes Abstained | 1,779,303.498 | |
Votes Withheld | 21,245,597.734 |
ENTERPRISE Accumulation Trust
12
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
13
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
14
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
15
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
16
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 Registered Public Accounting Firm
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
17
Enterprise 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 $105.9 billion and its normal investment minimum is $20 million.
Investment Objective
The objective of the Enterprise International Growth Portfolio is capital appreciation.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned –2.00%. The Portfolio underperformed its benchmark, the MSCI EAFE Index, which returned 4.56 %. The Portfolio underperformed its peer group, the Lipper International Funds Index, which returned 3.86%.
How would you describe the investment environment during the period?
The environment has been a challenging and frustrating one, with international equity markets generally struggling to make much progress over these six months. Unnerved by terrorist activity in March and against a backdrop of geopolitical problems in the Middle East, investors remained transfixed by short-term political developments. More recently, the first cautious move towards tighter global monetary policy saw investors focusing on the twin specters of rising interest rates and inflation. Throughout an admittedly anxious time, market participants have chosen to overlook improving measures of growth and output and the benefits already feeding through to the corporate level.
What strategies affected Portfolio performance during the period?
Once again, SSgA’s high-quality bias worked against the Portfolio as nervous investors refused to discriminate adequately between the well-capitalized and the more speculative companies. Although it is still true to say that both smaller companies and more value-oriented stocks outperformed large-cap growth vehicles, individual stock returns, as always, varied greatly. In general terms, SSgA’s over-weight to the semiconductor industry hurt performance over the period; on the other hand, SSgA’s continuing shift into Japanese stocks, many of them oriented to benefit from what SSgA believed will be an ongoing recovery in that region, was largely successful.
What changes were made to the Portfolio over the period?
SSgA’s trades generally reflected a shift in emphasis from Europe to Japan and the Pacific Rim markets. On the consumer side, the Portfolio shifted out of stocks like Moet Hennessy Louis Vuitton and L’Oreal into Seven-Eleven Japan and Nissan Motor Corporation. The Portfolio also liquidated Canon, Inc. and Volkwagen to move into BSkyB, a media stock classified as a late recovery play. Within industrials and materials, the Portfolio sold Rio Tinto (a commodity play) to move into Asahi Glass and Nitto Denko, both of these being Japanese companies involved in the LCD industry. Among financials, the Portfolio reduced insurance and some of the Portfolio’s European banking exposure (including UBS and BNP Paribas) to move into Sumitomo-Mitsui, a Japanese bank.
As with all international funds, the Portfolio carries additional risks associated with possibly less stable foreign securities, currencies, lack of uniform accounting standards and political instability.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
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Enterprise International Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | |||||
Foreign Common Stocks — 99.15% | |||||
France — 13.29% | |||||
BNP Paribas (ADR) | 33,056 | $ | 1,016,498 | ||
L’Oreal Company (ADR) (o) | 82,393 | 1,316,195 | |||
LVMH Moet Hennessy Louis Vuition (ADR) (o) | 88,557 | 1,281,066 | |||
Sanofi Synthelabo (ADR) (o) | 49,246 | 1,575,380 | |||
Total (ADR) | 19,181 | 1,842,910 | |||
7,032,049 | |||||
Germany — 6.36% | |||||
E.ON (ADR) (o) | 14,534 | 1,053,570 | |||
SAP (ADR) | 55,229 | 2,309,124 | |||
3,362,694 | |||||
Hong Kong — 3.43% | |||||
Sun Hung Kai Properties Ltd | 221,122 | 1,814,372 | |||
Ireland — 3.02% | |||||
CRH | 75,689 | 1,598,236 | |||
Italy — 6.47% | |||||
ENI (ADR) | 17,040 | 1,709,794 | |||
SanPaolo IMI (ADR) (o) | 70,400 | 1,715,648 | |||
3,425,442 | |||||
Japan — 27.12% | |||||
Asahi Glass Company Ltd. | 19,800 | 2,059,570 | |||
Komatsu Ltd (ADR) | 41,000 | 993,483 | |||
Nissan Motor Company Ltd (ADR) | 55,200 | 1,234,824 | |||
Nitto Denko Corporation | 4,200 | 2,147,826 | |||
Nomura Holdings Inc. (ADR) (o) | 79,000 | 1,181,050 | |||
NTT Docomo Inc. (ADR) | 80,500 | 1,457,855 | |||
Seven Eleven Japan Ltd. (ADR) (o) | 54,000 | 1,761,810 | |||
Sharp Corporation (ADR) (o) | 125,000 | 1,996,750 | |||
Sumitomo Mitsui Financial Group Inc. (ADR) (a) | 221,000 | 1,514,999 | |||
14,348,167 | |||||
Netherlands — 6.55% | |||||
ASML Holding (a) | 123,990 | 2,121,469 | |||
ING Group (ADR) | 56,629 | 1,342,107 | |||
3,463,576 | |||||
Singapore — 3.71% | |||||
Flextronics International Ltd. (a) | 123,200 | 1,965,040 |
Number of Shares or Principal Amount | ||||||
Switzerland — 13.03% | ||||||
Nestle (ADR) | 15,732 | $ | 1,048,884 | |||
Novartis (ADR) | 46,339 | 2,062,085 | ||||
Roche Holdings Ltd (ADR) | 10,660 | 1,055,446 | ||||
UBS | 28,185 | 1,984,701 | ||||
Zurich Financial Services (ADR) | 47,216 | 745,526 | ||||
6,896,642 | ||||||
Taiwan — 3.96% | ||||||
Taiwan Semiconductor Manufacturing Company Ltd. (ADR) | 251,943 | 2,093,648 | ||||
United Kingdom — 12.21% | ||||||
British Sky Broadcasting | 166,648 | 1,880,664 | ||||
GlaxoSmithKline | 71,550 | 1,448,754 | ||||
HBOS | 99,882 | 1,236,832 | ||||
Vodafone Group | 858,024 | 1,879,781 | ||||
Vodafone Group (ADR) | 700 | 15,470 | ||||
6,461,501 | ||||||
Total Foreign Common Stocks | ||||||
(Identified cost $46,027,598) | 52,461,367 | |||||
Other Investments — 11.47% | ||||||
Securities Lending Quality | 6,067,048 | 6,067,048 | ||||
Total Other Investments | ||||||
(Identified cost $6,067,048) | 6,067,048 | |||||
Total Investments | ||||||
(Identified cost $52,094,646) | $ | 58,528,415 | ||||
Other Assets Less | (5,620,641 | ) | ||||
Net Assets — 100% | $ | 52,907,774 |
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(s) | Represents investment of cash collateral received from securities on loan (see note 5). |
(ADR) | American Depository Receipt. |
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Enterprise International Growth Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Industry classifications for the Portfolio as a percentage of total market value at June 30, 2004 are as follows (unaudited):
Industry | ||
Automotive | 2.36% | |
Banks | 12.77% | |
Cable | 3.61% | |
Computer Software | 4.40% | |
Construction Materials | 13.07% | |
Electronic Equipment & Instruments | 15.13% | |
Food & Beverages | 5.41% |
Industry | ||
Financial Services | 9.88% | |
Insurance | 1.43% | |
Phamaceuticals | 11.75% | |
Retail | 4.99% | |
Utilities | 8.79% | |
Telecommunications | 6.41% | |
Total | 100.00% | |
See notes to financial statements.
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Enterprise International Growth Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | |||
Investments at value, including securities loaned valued at $5,886,549 (Note 5) | $58,528,415 | ||
Foreign currency at value (cost — $4,995) | 5,184 | ||
Investment income receivable | 331,176 | ||
Receivable for investments sold | 262,160 | ||
Cash | 25,925 | ||
Other assets | 4,932 | ||
Total assets | 59,157,792 | ||
Liabilities: | |||
Payable for fund shares redeemed | 122,649 | ||
Payable upon return of securities loaned (Note 5) | 6,067,048 | ||
Accrued expenses and other liabilities | 60,321 | ||
Total liabilities | 6,250,018 | ||
Net assets | $52,907,774 | ||
Analysis of net assets: | |||
Paid-in capital | $72,969,781 | ||
Undistributed (accumulated) net investment income (loss) | 756,743 | ||
Undistributed (accumulated) net realized gain (loss) on investments and foreign currency | (27,256,783 | ) | |
Unrealized appreciation (depreciation) on investments and foreign currency denominated amounts | 6,438,033 | ||
Net assets | $52,907,774 | ||
Fund shares outstanding | 11,973,032 | ||
Net asset value per share | $4.42 | ||
Investments at cost | $52,094,646 |
See notes to financial statements.
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Enterprise International Growth Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends (net of foreign taxes withheld of $106,766) | $ | 695,512 | ||
Interest | 28 | |||
Securities lending income | 19,820 | |||
Total investment income | 715,360 | |||
Expenses: | ||||
Investment advisory fees | 233,506 | |||
Shareholder servicing fees | 82,348 | |||
Custodian and fund accounting fees | 10,817 | |||
Reports to shareholders | 1,583 | |||
Trustees’ fees | 762 | |||
Audit and legal fees | 6,889 | |||
Other expenses | 2,142 | |||
Total expenses | 338,047 | |||
Net investment income (loss) | 377,313 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 988,333 | |||
Net realized gain (loss) on foreign currency transactions | 1,972,752 | |||
Net change in unrealized gain (loss) on investments | (4,475,284 | ) | ||
Net realized and unrealized gain (loss) | (1,514,199 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | (1,136,886 | ) |
See notes to financial statements.
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Enterprise International Growth Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 377,313 | $ | 396,823 | ||||
Net realized gain (loss) | 2,961,085 | (6,226,789 | ) | |||||
Net change in unrealized gain (loss) | (4,475,284 | ) | 19,265,059 | |||||
Increase (decrease) in net assets resulting from operations | (1,136,886 | ) | 13,435,093 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (229,092 | ) | |||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | (229,092 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 2,369,432 | 14,497,197 | ||||||
Shares exchanged due to merger | — | 1,998,364 | ||||||
Reinvestment of distributions | — | 227,975 | ||||||
Shares redeemed | (3,969,780 | ) | (18,436,839 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (1,600,348 | ) | (1,713,303 | ) | ||||
Total increase (decrease) in net assets | (2,737,234 | ) | 11,492,698 | |||||
Net assets: | ||||||||
Beginning of period | 55,645,008 | 44,152,310 | ||||||
End of period | $ | 52,907,774 | $ | 55,645,008 | ||||
Capital share activity: | ||||||||
Shares issued | 523,693 | 4,063,215 | ||||||
Shares exchanged due to merger | — | 622,543 | ||||||
Shares issued in reinvestment of distributions | — | 56,151 | ||||||
Shares redeemed | (882,481 | ) | (5,178,342 | ) | ||||
Net increase (decrease) | (358,788 | ) | (436,433 | ) | ||||
Undistributed net investment income | $ | 756,743 | $ | — |
See notes to financial statements.
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Enterprise International Growth Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 4.51 | $ | 3.46 | $ | 4.33 | $ | 6.94 | $ | 9.29 | $ | 6.74 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | 0.06 | 0.03 | 0.05 | 0.02 | (0.01 | ) | 0.03 | |||||||||||||||||
Net realized and unrealized gain (loss) | (0.15 | ) | 1.04 | (0.89 | ) | (2.02 | ) | (1.57 | ) | 2.74 | ||||||||||||||
Total from investment operations | (0.09 | ) | 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 | $ | 4.42 | $ | 4.51 | $ | 3.46 | $ | 4.33 | $ | 6.94 | $ | 9.29 | ||||||||||||
Total return | (2.00 | )%B | 30.94 | % | (19.46 | )% | (27.80 | )% | (17.21 | )% | 42.12 | % | ||||||||||||
Net assets end of period | $ | 52,908 | $ | 55,645 | $ | 44,152 | $ | 62,742 | $ | 100,550 | $ | 134,255 | ||||||||||||
Ratio of expenses to average net assets | 1.23 | %A | 1.14 | % | 1.06 | % | 1.09 | % | 1.04 | % | 1.01 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 1.37 | %A | 0.85 | % | 1.22 | % | 0.30 | % | (0.06 | )% | 0.41 | % | ||||||||||||
Portfolio turnover | 86 | % | 54 | % | 176 | % | 95 | % | 73 | % | 129 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
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Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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
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Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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.
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.
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9
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $82,324 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.55%.
For the six months ended June 30, 2004, the Portfolio paid brokerage commissions of $4,391 to affiliates of the adviser and subadviser.
4. Investment Transactions
For the six months ended June 30, 2004, purchases and sales proceeds of investment securities, other than short-term securities, were as follows:
U.S. Government/Agency Obligations | Other Investment Securities | |||||||
Purchases | Sales | Purchases | Sales | |||||
— | — | $ | 46,504,624 | $ | 47,398,485 |
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 six months ended June 30, 2004.
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.
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10
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 June 30, 2004, 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 | ||||||
$52,094,646 | $ | 7,689,915 | $ | 1,256,146 | $ | 6,433,769 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
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Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 12,859,816.850 | |
Votes Against | 377,674.996 | |
Votes Abstained | 909,042.198 | |
Votes Withheld | 10,322,954.772 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 12,727,509.706 | |
Votes Against | 478,911.562 | |
Votes Abstained | 940,112.776 | |
Votes Withheld | 10,322,954.772 |
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Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
13
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
14
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
15
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
16
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 Registered Public Accounting Firm
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 $4.2 billion in assets under management, is subadviser to the Enterprise Global Socially Responsive Portfolio. Rockefeller’s normal investment minimum is $10 million.
Investment Objective
The objective of the Global Socially Responsive Portfolio is total return.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 3.23%. The Portfolio underperformed its benchmark, the MSCI World Index, which returned 3.52%. The Portfolio underperformed its peer group, the Lipper Global Funds Index, which returned 3.20%.
How would you describe the investment environment during the period?
The year began on a strong note but markets retreated in March as geopolitical and economic concerns resurfaced. During the period, world equity markets were listless with generally positive economic news and corporate profits equally offset by political uncertainty and rising interest rates. New inflationary concerns impacted most world asset returns.
World equity markets drifted during the second quarter while bond market returns turned negative. This relatively subdued quarter finally saw inflationary pressures make their way into the consumer and producer price indices.
Interest rate increases in the U.S. and the U.K. as well as new inflationary pressures impacted most world asset returns. The Bank of England raised rates twice in the second quarter and four times since October 2003, while the Fed raised rates for the first time since May 2000, with a targeted 0.25% increase in June.
What strategies affected Portfolio performance during the period?
The Portfolio was broadly diversified with an over-weight in energy. Rockefeller is still focused on the supply/demand relationship as the underpinning of high oil prices and the Portfolio’s sector positioning. In financials, Rockefeller shifted out of traditional banking stocks to those it believed were less vulnerable to rising interest rates. The Portfolio remained under-weight in technology and has also pared back telecommunications holdings.
What changes were made to the Portfolio over the period?
During the period the Portfolio sold positions in Alcan when it reached Rockefeller’s price target. The Portfolio sold Edwards Life Sciences and bought Medtronic thus maintaining the exposure to medical devices. The Portfolio also sold the position in Telefonica and purchased Deutsche Telekom, whose valuation Rockefeller find more attractive.
Over the period, the Portfolio sold positions in HCA and Hyundai Motor, as Rockefeller turned cautious on their fundamentals and Danske Bank and Bank America as the Portfolio’s total exposure to the financial sector was reduced. The Portfolio established a position in Walgreen as well as eBay, Intel and Avocent and also purchased BG Group out of the UK, Societe Television Francaise 1 in France and Kookmin Bank in Korea.
ENTERPRISE Accumulation Trust
1
Enterprise Global Socially Responsive Portfolio
SUBADVISER’S COMMENTS — (Continued)
As with all global funds, the Portfolio carries additional risks associated with possibly less stable foreign securities, currencies, lack of uniform accounting standards and political instability.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
2
Enterprise Global Socially Responsive Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Common Stocks — 95.09% | |||||
Bermuda — 2.18% | |||||
XL Capital Ltd. (Class A) | 1,310 | $ | 98,852 | ||
Canada — 1.00% | |||||
National Bank of Canada | 1,410 | 45,300 | |||
Finland — 1.98% | |||||
Sampo Insurance Company Ltd. (Class A) | 9,230 | 89,591 | |||
France — 5.84% | |||||
BNP Paribas | 2,180 | 134,040 | |||
Schneider Electric | 1,260 | 85,979 | |||
Societe Television Francaise | 1,410 | 44,403 | |||
264,422 | |||||
Germany — 1.65% | |||||
Deutsche Telekom (a) | 4,260 | 74,823 | |||
Hong Kong — 1.14% | |||||
China Mobile Ltd. | 17,000 | 51,437 | |||
Japan — 4.37% | |||||
Asahi Glass Company Ltd. (a) | 5,000 | 51,867 | |||
Canon Inc. (ADR) | 1,340 | 71,556 | |||
NTT Corporation | 14 | 74,596 | |||
198,019 | |||||
Korea — 1.66% | |||||
Daewoo Shipbuilding & Marine | 3,280 | 39,599 | |||
Kookmin Bank (ADR) | 1,140 | 35,773 | |||
75,372 | |||||
Netherlands — 3.17% | |||||
Philips Electronics | 2,340 | 62,988 | |||
Royal Dutch Petroleum Company (ADR) | 1,250 | 64,588 | |||
STMicroelectronics | 730 | 16,009 | |||
143,585 | |||||
Sweden — 4.87% | |||||
Assa Abloy (Class B) | 10,200 | 130,273 | |||
Sandvik | 2,650 | 90,372 | |||
220,645 | |||||
Switzerland — 0.89% | |||||
Novartis | 910 | 40,118 | |||
United Kingdom — 9.89% | |||||
BG Group | 7,540 | 46,478 | |||
BP Amoco | 21,530 | 190,237 | |||
Cadbury Schweppes | 3,410 | 29,434 | |||
GlaxoSmithKline | 3,510 | 71,071 | |||
Reckitt Benckiser | 3,910 | 110,739 | |||
447,959 |
Number of Shares or Principal Amount | Value | ||||
United States — 56.45% | |||||
3M Company | 540 | $ | 48,605 | ||
AFLAC Inc. | 2,590 | 105,698 | |||
Anadarko Petroleum Corporation | 580 | 33,988 | |||
Apache Corporation | 830 | 36,147 | |||
Avocent Corporation | 880 | 32,331 | |||
Citigroup Inc. | 3,630 | 168,795 | |||
Comcast Corporation (Class A) (a) | 3,060 | 84,487 | |||
Devon Energy Corporation | 460 | 30,360 | |||
Doral Financial Corporation | 2,710 | 93,495 | |||
eBay Inc. (a) | 350 | 32,183 | |||
Eli Lilly & Company | 1,350 | 94,379 | |||
Family Dollar Stores Inc. | 910 | 27,682 | |||
Fannie Mae | 1,740 | 124,166 | |||
Illinois Tool Works Inc. | 260 | 24,931 | |||
Ingersoll-Rand Company Ltd. | 820 | 56,014 | |||
Intel Corporation | 760 | 20,976 | |||
International Business Machines Corporation | 1,270 | 111,950 | |||
Lexmark International Group Inc. (a) | 930 | 89,773 | |||
Medtronic Inc. | 1,830 | 89,158 | |||
Mellon Financial Corporation | 2,660 | 78,018 | |||
Microsoft Corporation | 3,290 | 93,962 | |||
Noble Energy Inc. | 960 | 48,960 | |||
PepsiCo Inc. | 2,180 | 117,458 | |||
Pfizer Inc. | 3,730 | 127,864 | |||
Praxair Inc. | 2,380 | 94,986 | |||
Regal Entertainment Group (Class A) | 1,370 | 24,797 | |||
Target Corporation | 2,030 | 86,214 | |||
Tiffany & Company | 2,910 | 107,233 | |||
UnionBanCal Corporation | 900 | 50,760 | |||
Viacom Inc. (Class B) | 1,480 | 52,866 | |||
Wal-Mart Stores Inc. | 1,760 | 92,858 | |||
Walgreen Company | 1,570 | 56,850 | |||
Walt Disney Company | 2,740 | 69,843 | |||
WellPoint Health Networks Inc. (a) | 1,330 | 148,973 | |||
2,556,760 | |||||
Total Common Stocks | |||||
(Identified cost $3,926,918) | 4,306,883 | ||||
Preferred Stocks — 2.84% | |||||
Korea — 2.84% | |||||
Samsung Electronics Company Ltd. | 490 | 128,490 | |||
Total Preferred Stocks | |||||
(Identified cost $103,263) | 128,490 |
ENTERPRISE Accumulation Trust
3
Enterprise Global Socially Responsive Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Principal Amount | Value | ||||||
Repurchase Agreements — 2.45% | |||||||
State Street Bank & Trust | $ | 111,000 | $ | 111,000 | |||
Total Repurchase Agreements | |||||||
(Identified cost $111,000) | 111,000 | ||||||
Total Investments | |||||||
(Identified cost $4,141,181) | $ | 4,546,373 | |||||
Other Assets Less Liabilities — (0.38)% | (17,352 | ) | |||||
Net Assets — 100% | $ | 4,529,021 |
(a) | Non-income producing security. |
(ADR) | American Depository Receipt. |
Industry classifications for the Portfolio as a percentage of total market value at June 30, 2004 are as follows (unaudited):
Industry | ||
Banking | 7.75% | |
Broadcasting | 2.19% | |
Business Services | 1.61% | |
Cable | 1.90% | |
Chemicals | 2.14% | |
Computer Hardware | 2.52% | |
Computer Software | 2.85% | |
Consumer Durables | 2.50% | |
Consumer Products | 2.94% | |
Crude & Petroleum | 2.22% | |
Electronics | 6.26% | |
Energy | 1.10% | |
Entertainment & Leisure | 2.13% |
Industry | ||
Food, Beverages & Tobacco | 3.31% | |
Insurance | 6.63% | |
Manufacturing | 7.02% | |
Medical Services & Products | 5.37% | |
Metals & Mining | 0.00% | |
Misc. Financial Services | 8.71% | |
Oil Services | 6.84% | |
Pharmaceuticals | 7.52% | |
Printing & Publishing | 2.02% | |
Retail | 9.11% | |
Semiconductors | 0.83% | |
Telecommunications | 4.53% | |
Total | 100.00% | |
See notes to financial statements.
ENTERPRISE Accumulation Trust
4
Enterprise Global Socially Responsive Portfolio
STATEMENT OF ASSET AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | |||
Investments at value | $ | 4,546,373 | |
Foreign currency at value (cost — $1,820) | 1,824 | ||
Investment income receivable | 3,642 | ||
Receivable for investments sold | 8,272 | ||
Due from investment adviser | 4,077 | ||
Cash | 131 | ||
Other assets | 72 | ||
Total assets | 4,564,391 | ||
Liabilities: | |||
Payable for fund shares redeemed | 2,178 | ||
Payable for investments purchased | 27,389 | ||
Accrued expenses and other liabilities | 5,803 | ||
Total liabilities | 35,370 | ||
Net assets | $ | 4,529,021 | |
Analysis of net assets: | |||
Paid-in capital | $ | 4,014,819 | |
Undistributed (accumulated) net investment income (loss) | 23,080 | ||
Undistributed (accumulated) net realized gain (loss) on investments and foreign currency | 85,909 | ||
Unrealized appreciation (depreciation) on investments and foreign currency denominated amounts | 405,213 | ||
Net assets | $ | 4,529,021 | |
Fund shares outstanding | 405,118 | ||
Net asset value per share | $11.18 | ||
Investments at cost | $ | 4,141,181 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Global Socially Responsive Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends (net of foreign taxes withheld of $4,682) | $ | 51,072 | ||
Interest | 13 | |||
Total investment income | 51,085 | |||
Expenses: | ||||
Investment advisory fees | 19,388 | |||
Custodian and fund accounting fees | 9,638 | |||
Reports to shareholders | 138 | |||
Trustees’ fees | 64 | |||
Audit and legal fees | 594 | |||
Shareholder servicing fees | 2,084 | |||
Other expenses | 176 | |||
Total expenses | 32,082 | |||
Expense reimbursement | (4,077 | ) | ||
Total expenses, net of reimbursement | 28,005 | |||
Net investment income (loss) | 23,080 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 168,105 | |||
Net realized gain (loss) on foreign currency transactions | (481 | ) | ||
Net change in unrealized gain (loss) on investments and foreign currency denominated amounts | (55,956 | ) | ||
Net realized and unrealized gain (loss) | 111,668 | |||
Net increase (decrease) in net assets resulting from operations | $ | 134,748 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Global Socially Responsive Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 23,080 | $ | 7,947 | ||||
Net realized gain (loss) on investments and foreign currency transactions | 167,624 | 46,481 | ||||||
Net change in unrealized gain (loss) on investments and foreign currency denominated amounts | (55,956 | ) | 504,119 | |||||
Increase (decrease) in net assets resulting from operations | 134,748 | 558,547 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (11,323 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (11,323 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 470,368 | 3,648,505 | ||||||
Reinvestment of distributions | — | 3,378 | ||||||
Shares redeemed | (161,355 | ) | (1,337,042 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 309,013 | 2,314,841 | ||||||
Total increase (decrease) in net assets | 443,761 | 2,862,065 | ||||||
Net assets: | ||||||||
Beginning of period | 4,085,260 | 1,223,195 | ||||||
End of period | $ | 4,529,021 | $ | 4,085,260 | ||||
Capital share activity: | ||||||||
Shares issued | 42,240 | 369,613 | ||||||
Shares issued in reinvestment of distributions | — | 318 | ||||||
Shares redeemed | (14,400 | ) | (135,390 | ) | ||||
Net increase (decrease) | 27,840 | 234,541 | ||||||
Undistributed net investment income | $ | 23,080 | $ | — |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Global Socially Responsive Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | For the Period 01/24/02 through 12/31/02 | ||||||||||
Net asset value, beginning of period | $ | 10.83 | $ | 8.57 | $ | 10.00 | ||||||
Income from investment operations: | ||||||||||||
Net investment income (loss)C | 0.11 | 0.04 | 0.04 | |||||||||
Net realized and unrealized gain (loss) | 0.24 | 2.25 | (1.44 | ) | ||||||||
Total from investment operations | 0.35 | 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 | $ | 11.18 | $ | 10.83 | $ | 8.57 | ||||||
Total return | 3.23 | %B | 26.73 | % | (13.98 | )%B | ||||||
Net assets end of period (in thousands) | $ | 4,529 | $ | 4,085 | $ | 1,223 | ||||||
Ratio of expenses to average net assets | 1.30 | %A | 1.30 | % | 1.30 | %A | ||||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.49 | %A | 1.56 | % | 2.84 | %A | ||||||
Ratio of net investment income (loss) to average net assets | 1.07 | %A | 0.41 | % | 0.42 | %A | ||||||
Portfolio turnover rate | 24 | % | 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
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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.
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $2,142 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.30%.
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10
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
The MONY Group Inc. and its subsidiaries and affiliates had an investment of $2,928,941 in the Portfolio at June 30, 2004.
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 1,332,232 | $ | 998,728 |
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | |||||||
$ | 4,141,181 | $ | 462,075 | $ | 56,883 | $ | 405,192 |
7. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
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11
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 390,475.732 | |
Votes Against | 3,060.136 | |
Votes Abstained | 47,873.516 | |
Votes Withheld | 349,483.278 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 390,332.888 | |
Votes Against | 3,202.980 | |
Votes Abstained | 47,873.516 | |
Votes Withheld | 349,483.278 |
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12
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
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13
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
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14
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
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15
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
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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 Registered Public Accounting Firm
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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17
Enterprise Mergers and Acquisitions Portfolio
SUBADVISER’S COMMENTS
GAMCO Investors, Inc.
Rye, New York
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
GAMCO Investors, Inc. (“Gabelli”), which manages approximately $28.3 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 0.54%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 3.44%.
How would you describe the investment environment during the period?
During the six months period, the economy benefited from fiscal stimulus and the extraordinarily liquid monetary policy pursued by the Fed. Corporate earnings were strong. GDP grew about 5% over the past year and profit growth has been 25% or more. For the later part of the period, investors were concerned about interest rate increases, further turmoil and prisoner abuse scandals in Iraq, continued high oil prices, concern over a rise in inflation and uncertainty about the upcoming election.
Merger activity was strong in the first quarter, with the highest level of announced deals since late 2000. Two of the largest were the Comcast “bear hug” bid for Walt Disney (which died an early death) and Sanofi-Synthelabo’s offer for Aventis SA. The deal between AT&T Wireless and Cingular Wireless also helped to generate solid returns through the period.
Spreads on high-quality merger and acquisition deals remained tight. With uncertainty in equity markets, weakness in fixed-income, and nominal returns in money market funds, risk arbitrage is attracting capital. One positive development in the period has been an increase in the number of hostile deals announced.
What strategies affected Portfolio performance during the period?
The Portfolio’s holding in AT&T Wireless helped Portfolio performance as the stock rose sharply in the first quarter. The deal caused other wireless telecommunications holdings to increase. Sprint PCS, Rogers Wireless and Rural Cellular also registered substantial gains.
To maintain a conservative strategy, the Portfolio continued to hold a substantial cash position. It also holds a large number of stocks, both in the announced and potential takeover portion of the Portfolio. At the end of the period one of the Portfolio’s holdings, Titan Corporation became a “busted” deal as Lockheed decided to end its plans to acquire the company based on a possible bribery situation at a subsidiary.
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1
Enterprise Mergers and Acquisitions Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
At the beginning of the period, Gabelli took a position in Bank One, which is being bought by JP Morgan Chase. Gabelli bought and sold Bank of Bermuda, which HSBC agreed to buy to bolster its private banking and asset management operations. The Portfolio closed out a position in Newhall Land, which was bought by Lennar and unwound positions in Bio Reliance, which was sold to Invitrogen and Esperion Therapeutics, which was bought by Pfizer.
During the period, the Portfolio increased the position in AT&T Wireless. The company will be bought by Cingular Wireless, which is a solid buyer with no financing conditions. The Portfolio also increased holdings in Dreyer’s Grand Ice Cream and bought InVision, which will be acquired by General Electric, as well as shares of Westport Resources, which was acquired by Kerr McGee. Lastly, the Portfolio sold Interpore International, which was bought by Biomet.
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 (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 47.91% | |||||
Advertising — 0.03% | |||||
Interep National Radio Sales Inc. (a) | 2,000 | $ | 2,200 | ||
Aerospace — 1.14% | |||||
Titan Corporation (a) | 6,000 | 77,880 | |||
Automotive — 0.62% | |||||
Midas Inc. (a) | 1,500 | 26,100 | |||
Modine Manufacturing Company | 500 | 15,925 | |||
42,025 | |||||
Banking — 4.17% | |||||
Bank One Corporation | 300 | 15,300 | |||
Charter One Financial Inc. | 1,000 | 44,190 | |||
Community First Bankshares Inc. | 1,500 | 48,285 | |||
First Republic Bank | 300 | 12,924 | |||
Gold Banc Corporation Inc. | 1,000 | 15,500 | |||
Mellon Financial Corporation | 500 | 14,665 | |||
National City Corporation | 833 | 29,163 | |||
PNC Financial Services Group | 444 | 23,568 | |||
Riggs National Corporation Washington DC | 3,000 | 63,360 | |||
Sovereign Bancorp Inc. | 769 | 16,995 | |||
283,950 | |||||
Broadcasting — 1.34% | |||||
Acme Communications Inc. (a) | 1,000 | 6,900 | |||
Fisher Communications Inc. (a) | 739 | 37,194 | |||
Lin TV Corporation (a) | 1,000 | 21,200 | |||
Paxson Communications | 2,000 | 6,500 | |||
Young Broadcasting Inc. (Class A) (a) | 1,500 | 19,725 | |||
91,519 | |||||
Business Services — 0.21% | |||||
National Processing Inc. (a) | 500 | 14,375 | |||
Cable — 1.01% | |||||
Cablevision Systems Corporation | 3,500 | 68,775 | |||
Chemicals — 0.61% | |||||
Hercules Inc. (a) | 2,000 | 24,380 | |||
Millennium Chemicals Inc. (a) | 1,000 | 17,320 | |||
41,700 | |||||
Computer Hardware — 0.86% | |||||
Cable Design Technologies | 5,500 | 58,300 | |||
Computer Services — 0.25% | |||||
Juniper Networks Inc. (a) | 702 | 17,248 | |||
StorageNetworks Inc. (a) (d) | 1,500 | — | |||
17,248 |
Number of Shares or Principal Amount | Value | ||||
Consumer Products — 0.72% | |||||
CNS Inc. | 500 | $ | 5,015 | ||
New England Business Service Inc. | 1,000 | 44,000 | |||
49,015 | |||||
Drugs & Medical Products — 0.23% | |||||
Thermo Electron Corporation (a) | 500 | 15,370 | |||
Electrical Equipment — 1.00% | |||||
Thomas & Betts Corporation (a) | 2,500 | 68,075 | |||
Electronics — 0.55% | |||||
Monolithic Systems Technology Inc. (a) | 5,000 | 37,650 | |||
Energy — 2.07% | |||||
Laclede Group Inc. | 300 | 8,223 | |||
SEMCO Energy Inc. (a) | 1,500 | 8,730 | |||
Unisource Energy Corporation | 5,000 | 124,250 | |||
141,203 | |||||
Entertainment & Leisure — 1.29% | |||||
Churchill Downs Inc. | 300 | 12,210 | |||
Metro Goldwyn Mayer Inc. (a) | 1,000 | 12,100 | |||
Walt Disney Company | 2,500 | 63,725 | |||
88,035 | |||||
Finance — 0.66% | |||||
H&R Block Inc. | 300 | 14,304 | |||
SWS Group Inc. | 2,000 | 30,600 | |||
44,904 | |||||
Food, Beverages & Tobacco — 4.59% | |||||
Del Monte Foods Company (a) | 1,000 | 10,160 | |||
Dreyer’s Grand Ice Cream Holdings | 2,500 | 197,725 | |||
Flowers Foods Inc. | 500 | 13,075 | |||
Golden State Vintners Inc. (a) | 1,100 | 9,064 | |||
J.M. Smucker Company | 501 | 22,983 | |||
Sensient Technologies Corporation | 2,000 | 42,960 | |||
Tootsie Roll Industries Inc. | 515 | 16,737 | |||
312,704 | |||||
Health Care — 0.81% | |||||
Oxford Health Plans Inc. | 1,000 | 55,040 | |||
Hotels & Restaurants — 1.85% | |||||
Aztar Corporation (a) | 1,500 | 42,000 | |||
Caesars Entertainment Inc. (a) | 1,000 | 15,000 | |||
Mandalay Resort Group | 1,000 | 68,640 | |||
125,640 | |||||
Machinery — 0.61% | |||||
Baldwin Technology Company Inc. (Class A) | 4,600 | 16,468 | |||
Flowserve Corporation (a) | 1,000 | 24,940 | |||
41,408 |
ENTERPRISE Accumulation Trust
3
Enterprise Mergers and Acquisitions Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Manufacturing — 0.92% | |||||
Belden Inc. | 1,000 | $ | 21,430 | ||
ITT Industries Inc. | 500 | 41,500 | |||
62,930 | |||||
Media — 0.47% | |||||
Media General Inc. (Class A) | 500 | 32,110 | |||
Medical Instruments — 2.30% | |||||
ArthroCare Corporation (a) | 200 | 5,816 | |||
Bio Rad Laboratories Inc. (a) | 200 | 11,772 | |||
Biosite Inc. (a) | 500 | 22,460 | |||
Bioveris Corporation | 300 | 2,496 | |||
Cholestech Corporation (a) | 200 | 1,630 | |||
Conmed Corporation (a) | 200 | 5,480 | |||
DJ Orthopedics Inc. (a) | 200 | 4,600 | |||
Exactech Inc. (a) | 500 | 10,850 | |||
ICU Medical Inc. (a) | 500 | 16,765 | |||
INAMED Corporation (a) | 500 | 31,425 | |||
Kensey Nash Corporation (a) | 500 | 17,250 | |||
Osteotech Inc. (a) | 200 | 1,298 | |||
Schick Technologies Inc. | 500 | 6,725 | |||
Thoratec Corporation (a) | 1,000 | 10,730 | |||
Young Innovations | 300 | 7,620 | |||
156,917 | |||||
Medical Services — 1.20% | |||||
CIRCOR International Inc. | 1,000 | 20,390 | |||
NWH Inc. | 1,000 | 17,660 | |||
Regeneration Technologies Inc. (a) | 1,000 | 10,730 | |||
US Oncology Inc. (a) | 2,000 | 29,440 | |||
Vitalworks Inc. | 1,000 | 3,460 | |||
81,680 | |||||
Metals & Mining — 0.05% | |||||
Encore Medical Corporation (a) | 500 | 3,150 | |||
Oil Services — 1.27% | |||||
Plains Resources Inc. (a) | 2,500 | 42,375 | |||
Prima Energy Corporation | 651 | 25,760 | |||
RPC Inc. | 500 | 7,895 | |||
Wiser Oil Company | 1,000 | 10,610 | |||
86,640 | |||||
Paper Products — 0.93% | |||||
Greif Brothers Corporation (Class A) | 1,500 | 63,375 | |||
Pharmaceuticals — 1.67% | |||||
Bristol Myers Squibb Company | 500 | 12,250 | |||
Cima Labs Inc. (a) | 1,000 | 33,730 | |||
Collagenex Pharmaceuticals Inc. (a) | 200 | 1,884 | |||
Neighborcare Inc. (a) | 1,500 | 46,995 | |||
Priority Healthcare Corporation | 500 | 11,475 | |||
UST Inc. | 200 | 7,200 | |||
113,534 |
Number of Shares or Principal Amount | Value | ||||
Printing & Publishing — 0.64% | |||||
McClatchy Company (Class A) | 300 | $ | 21,045 | ||
Pulitzer Inc. | 300 | 14,670 | |||
Readers Digest Association Inc. | 500 | 7,995 | |||
43,710 | |||||
Property-Casualty Insurance — 0.58% | |||||
CNA Surety Corporation (a) | 2,000 | 21,900 | |||
St. Paul Companies Inc. | 433 | 17,554 | |||
39,454 | |||||
Publishing — 0.48% | |||||
Information Holdings Inc. (a) | 1,000 | 27,370 | |||
PRIMEDIA Inc. (a) | 2,000 | 5,560 | |||
32,930 | |||||
Real Estate — 1.25% | |||||
American Home Mortgage Investment Corporation | 515 | 13,354 | |||
Chelsea Property Group Inc. | 200 | 13,044 | |||
Keystone Property Trust Corporation | 1,500 | 36,045 | |||
Taubman Centers Inc. | 1,000 | 22,890 | |||
85,333 | |||||
Retail — 2.65% | |||||
Cole National Corporation (a) | 5,000 | 116,750 | |||
Duane Reade Inc. (a) | 2,500 | 40,825 | |||
Maxwell Shoe Inc. (a) | 1,000 | 23,240 | |||
180,815 | |||||
Savings and Loan — 1.90% | |||||
New York Community Bancorp Inc. | 500 | 9,815 | |||
Newalliance Bancshares Inc | 1,250 | 17,450 | |||
Quaker City Bancorp Inc. | 500 | 27,470 | |||
Seacoast Financial Services Corporation | 587 | 20,310 | |||
Washington Mutual Inc. | 700 | 27,048 | |||
Waypoint Financial Corporation | 1,000 | 27,590 | |||
129,683 | |||||
Security & Investigation Services — 1.64% | |||||
Invision Technologies Inc. | 1,500 | 74,850 | |||
Kroll Inc. (a) | 1,000 | 36,880 | |||
111,730 | |||||
Semiconductors — 0.05% | |||||
ChipPac Inc. (a) | 500 | 3,135 | |||
Telecommunications — 2.93% | |||||
AT&T Corporation | 1,000 | 14,630 | |||
Centurytel Inc. | 1,000 | 30,040 | |||
Manitoba Telecom Services Inc. | 545 | 18,321 | |||
Panamsat Corporation (a) | 4,000 | 92,880 | |||
Sprint Corporation | 2,500 | 44,000 | |||
199,871 |
ENTERPRISE Accumulation Trust
4
Enterprise Mergers and Acquisitions Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Utilities — 0.46% | ||||||
Duquesne Light Holdings Inc. | 1,000 | $ | 19,310 | |||
Southwest Gas Corporation | 500 | 12,065 | ||||
31,375 | ||||||
Waste Management — 0.43% | ||||||
Republic Services Inc. | 1,000 | 28,940 | ||||
Wireless Communications — 1.47% | ||||||
AT&T Wireless Services Inc. (a) | 5,000 | 71,600 | ||||
MDSI Mobile Solutions Inc. | 2,000 | 13,000 | ||||
Price Communications Corporation (a) | 1,050 | 15,498 | ||||
100,098 | ||||||
Total Domestic Common Stocks | ||||||
(Identified cost $3,205,266) | 3,264,426 | |||||
Foreign Stocks — 1.98% | ||||||
Banking — 0.58% | ||||||
Deutsche Bank | 500 | 39,555 | ||||
Manufacturing — 0.26% | ||||||
Cooper Industries Ltd. (Class A) | 300 | 17,823 | ||||
Medical Instruments — 0.19% | ||||||
Orthofix International (a) | 300 | 12,819 | ||||
Pharmaceuticals — 0.88% | ||||||
Celltech Group (a) | 3,000 | 59,790 | ||||
Telecommunications — 0.07% | ||||||
Microcell Telecommunications Inc. (a) | 200 | 4,827 | ||||
Total Foreign Stocks | ||||||
(Identified cost $128,786) | 134,814 | |||||
Short-Term U.S. Government Obligations — 41.06% | ||||||
U.S. Treasury Bills — 41.06% | ||||||
0.975% due 07/08/04 (e) | $ | 500,000 | $ | 499,905 | ||
0.945% due 07/22/04 (e) | 200,000 | 199,890 | ||||
0.935% due 07/29/04 (e) | 200,000 | 199,855 | ||||
0.98% due 08/05/04 (e) | 500,000 | 499,524 | ||||
0.97% due 08/26/04 (e) | 500,000 | 499,245 | ||||
1.275% due 09/23/04 (e) | 500,000 | 498,512 | ||||
1.095% due 10/14/04 (e) | 402,000 | 400,716 | ||||
2,797,647 | ||||||
Total Short-Term U.S. Government Obligations | ||||||
(Identified cost $2,797,647) | 2,797,647 |
Number of Shares or Principal Amount | Value | |||||
Repurchase Agreement — 4.83% | ||||||
State Street Bank & Trust Repurchase Agreement, 0.70% due 07/01/04 Proceeds $329,006 Collateral: U.S. Treasury Bond $305,000, 6.125% due 08/15/07, Value $344,176 | $ | 329,000 | $ | 329,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $329,000) | 329,000 | |||||
Total Investments | ||||||
(Identified cost $6,460,699) | $ | 6,525,887 | ||||
Other Assets Less Liabilities — 4.22% | 287,880 | |||||
Net Assets — 100% | $ | 6,813,767 |
(a) | Non-income producing security. |
(d) | Security is fair valued at June 30, 2004. |
(e) | The rate shown is the current effective yield. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
5
Enterprise Mergers and Acquisitions Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | |||
Investments at value | $ | 6,525,887 | |
Investment income receivable | 3,110 | ||
Receivable for fund shares sold | 298,745 | ||
Receivable for investments sold | 14,638 | ||
Due from investment adviser | 1,915 | ||
Cash | 550 | ||
Other assets | 32 | ||
Total assets | 6,844,877 | ||
Liabilities: | |||
Payable for fund shares redeemed | 1,631 | ||
Payable for investments purchased | 24,633 | ||
Accrued expenses and other liabilities | 4,846 | ||
Total liabilities | 31,110 | ||
Net assets | $ | 6,813,767 | |
Analysis of net assets: | |||
Paid-in capital | $ | 6,655,971 | |
Undistributed (accumulated) net investment income (loss) | 4,799 | ||
Undistributed (accumulated) net realized gain (loss) | 87,809 | ||
Unrealized appreciation (depreciation) | 65,188 | ||
Net assets | $ | 6,813,767 | |
Fund shares outstanding | 614,329 | ||
Net asset value per share | $11.09 | ||
Investments at cost | $ | 6,460,699 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
6
Enterprise Mergers and Acquisitions Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends (net of foreign taxes withheld of $211) | $ | 28,937 | (1) | |
Interest | 9,724 | |||
Total investment income | 38,661 | |||
Expenses: | ||||
Investment advisory fees | 21,017 | |||
Custodian and fund accounting fees | 7,770 | |||
Shareholder servicing fees | 6,827 | |||
Reports to shareholders | 204 | |||
Trustees’ fees | 88 | |||
Audit and legal fees | 833 | |||
Other expenses | 163 | |||
Total expenses | 36,902 | |||
Expense reimbursement | (3,040 | ) | ||
Total expenses, net of reimbursement | 33,862 | |||
Net investment income (loss) | 4,799 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 49,454 | |||
Net change in unrealized gain (loss) on investments | (33,766 | ) | ||
Net realized and unrealized gain (loss) | 15,688 | |||
Net increase (decrease) in net assets resulting from operations | $ | 20,487 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
7
Enterprise Mergers and Acquisitions Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | For the Period May 1, 2003 through December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 4,799 | $ | (3,398 | ) | |||
Net realized gain (loss) | 49,454 | 55,114 | ||||||
Net change in unrealized gain (loss) | (33,766 | ) | 98,954 | |||||
Increase (decrease) in net assets resulting from operations | 20,487 | 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 | 4,195,492 | 3,984,246 | ||||||
Reinvestment of distributions | — | 13,361 | ||||||
Shares redeemed | (726,983 | ) | (810,145 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 3,468,509 | 3,187,462 | ||||||
Total increase (decrease) in net assets | 3,488,996 | 3,324,771 | ||||||
Net assets: | ||||||||
Beginning of period | 3,324,771 | — | ||||||
End of period | $ | 6,813,767 | $ | 3,324,771 | ||||
Capital share activity: | ||||||||
Shares issued | 378,671 | 374,496 | ||||||
Shares issued in reinvestment of distributions | — | 1,216 | ||||||
Shares redeemed | (65,846 | ) | (74,208 | ) | ||||
Net increase (decrease) | 312,825 | 301,504 | ||||||
Undistributed net investment income | $ | 4,799 | $ | — |
See notes to financial statements.
ENTERPRISE Accumulation Trust
8
Enterprise Mergers and Acquisitions Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | For the Period May 1, 2003 through December 31, 2003 | |||||||
Net asset value, beginning of period | $ | 11.03 | $ | 10.00 | ||||
Income from investment operations: | ||||||||
Net investment income (loss)C | 0.01 | (0.02 | ) | |||||
Net realized and unrealized gain (loss) on investments | 0.05 | 1.10 | ||||||
Total from investment operations | 0.06 | 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 | $ | 11.09 | $ | 11.03 | ||||
Total return | 0.54 | %B | 10.78 | %B | ||||
Net assets end of period (in thousands) | $ | 6,814 | $ | 3,325 | ||||
Ratio of expenses to average net assets | 1.45 | %A | 1.45 | %A | ||||
Ratio of expenses to average net assets (excluding reimbursement) | 1.58 | %A | 1.66 | %A | ||||
Ratio of net investment income (loss) to average net assets | 0.21 | %A | (0.29 | )%A | ||||
Portfolio turnover rate | 73 | % | 87 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio.
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-thecounter 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
10
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $7,064 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 1.45%.
For the six months ended June 30, 2004, the Portfolio paid brokerage commissions of $50 to affiliates of the adviser and subadviser.
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 3,924,455 | $ | 1,867,579 |
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 six months ended June 30, 2004.
ENTERPRISE Accumulation Trust
11
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 June 30, 2004, 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 | |||||||
$ | 6,460,699 | $ | 190,393 | $ | 125,205 | $ | 65,188 |
7. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
ENTERPRISE Accumulation Trust
12
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 367,290.603 | |
Votes Against | 114,270.910 | |
Votes Abstained | 5,287.042 | |
Votes Withheld | 334,821.857 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 362,519.284 | |
Votes Against | 115,737.548 | |
Votes Abstained | 8,591.723 | |
Votes Withheld | 334,821.857 |
ENTERPRISE Accumulation Trust
13
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
14
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
15
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
16
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
17
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 Registered Public Accounting Firm
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
18
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 $424 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 2.46%. The Portfolio underperformed its benchmark, the S&P 500 Index, which returned 3.44%. In contrast, the Portfolio outperformed its peer group, the Lipper Flexible Portfolio Funds Index, which returned 2.26%.
How would you describe the investment environment during the period?
After treading water for the first quarter, U.S. equity markets had modestly positive returns the second quarter. Higher energy prices and the prospects of rising interest rates, combined with tensions in Iraq weighed on stocks early in the period. This tide turned in the second quarter as improving jobs data and strong corporate profits eased investors’ concern about the impact of Fed rate hikes. The looming Fed meeting and the handover of power in Iraq at the end of the period kept prices in a narrow range.
What strategies affected Portfolio performance during the period?
The Portfolio continued to benefit from an over-weight to equities over the last six months. Despite this over-weight, the Portfolio’s asset allocation positioning has turned considerably more defensive over the last few months.
For the period, the Portfolio benefited from strong stock selection in the consumer discretionary and financials sectors. In the consumer discretionary sector stocks such as Michael’s Stores and PetsMart were strong contributors to performance as they continue to benefit from their ability to provide the consumer with a unique product in a convenient setting. In the financials sector, notable contributors included Countrywide Financial and Bank One.
Weak stock selection in the consumer staples and energy sectors detracted from performance. Detractors in the Consumer Staples sector included Hain Celestial, a specialty and snack food company, and a zero weight in cosmetics company Avon, whose stock had a strong six months. The Portfolio’s zero-weight in a number of strong performing energy names such as Valero Energy, Amerada Hess and Baker Hughes also negatively impacted Portfolio performance.
What changes were made to the Portfolio over the period?
The Portfolio began the period with a pro-cyclical stance. The Portfolio was positioned with an over-weight to equities and cash and an under-weight to bonds. At the end of January, the Portfolio’s equity exposure was reduced to a more conservative stance. At the end of March, Wellington again increased the equity over-weight. This move was shorter-term because at that time, they preferred equities to bonds, but believed that equity valuations were reasonable overall.
ENTERPRISE Accumulation Trust
1
Enterprise Managed Portfolio
SUBADVISER’S COMMENTS — (Continued)
Over the course of the second quarter, Wellington reduced the over-weight to equities and increased the allocation to bonds. This more-defensive posture resulted from a concern over decelerating economic growth and moderating earnings expectations. Although interest rates on shorter maturity bonds are set to rise, most of the damage to long bonds likely was done in the second quarter.
The equity portion of the Portfolio has a cyclical bias, with emphasis toward the improving industrial economy and away from consumer stocks due to higher interest rates, rising energy costs and lower government stimuli. In terms of changes, new positions were initiated in industrial companies such as Caterpillar, Kroll and Aramark. Kroll is best known for providing corporate security services; Kroll also provides bankruptcy and restructuring services (e.g. Enron and Parmalat); and offers forensic computer services, retrieval of e-mails and forensic accounting. Subsequent to this purchase, Marsh & McLennan announced their acquisition of the company at a premium and the position was sold as the stock rose. Aramark increased the Portfolio’s cyclical exposure as the company provides food service, uniforms and facilities management to higher education, corrections, health care and sporting/national park venues providing organic (and stable) growth based on outsourcing trends. Because the company benefits from increased employment in several of its businesses, it decreases its dependence on any one particular piece of the economy improving to continue growing. Further, with the continued strength of PetsMart, the Portfolio took profits during the period and rotated into sibling Petco.
In the fixed-income portion of the Portfolio, Wellington continues to under-weight the Portfolio’s exposure to government securities and over-weight the exposure to mortgage-backs and corporates.
The views expressed in this report reflect those of the subadviser only through the end of the period of the report as stated on the cover. The subadviser’s views are subject to change at any time based on market and other conditions.
ENTERPRISE Accumulation Trust
2
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Domestic Common Stocks — 67.84% | |||||
Advertising — 0.69% | |||||
Lamar Advertising Company (a) | 104,500 | $ | 4,530,075 | ||
Aerospace — 1.88% | |||||
General Dynamics Corporation | 35,500 | 3,525,150 | |||
Rockwell Collins Inc. | 80,600 | 2,685,592 | |||
United Technologies Corporation | 66,700 | 6,101,716 | |||
12,312,458 | |||||
Apparel & Textiles — 0.61% | |||||
Columbia Sportswear | 46,700 | 2,550,754 | |||
Liz Claiborne Inc. | 40,800 | 1,467,984 | |||
4,018,738 | |||||
Automotive — 0.66% | |||||
Lear Corporation | 29,700 | 1,752,003 | |||
O'Reilly Automotive Inc. (a) (o) | 56,200 | 2,540,240 | |||
4,292,243 | |||||
Banking — 2.76% | |||||
Bank of America Corporation | 150,500 | 12,735,310 | |||
Bank One Corporation | 104,000 | 5,304,000 | |||
18,039,310 | |||||
Biotechnology — 0.47% | |||||
Genzyme Corporation (a) | 65,500 | 3,100,115 | |||
Building & Construction — 0.40% | |||||
D.R. Horton Inc. | 91,200 | 2,590,080 | |||
Business Services — 1.80% | |||||
Aramark Corporation (Class B) | 164,500 | 4,731,020 | |||
ChoicePoint Inc. (a) | 56,700 | 2,588,922 | |||
Medco Health Solutions Inc. (a) | 118,300 | 4,436,250 | |||
11,756,192 | |||||
Chemicals — 0.84% | |||||
Du Pont (E. I.) de Nemours & Company | 124,100 | 5,512,522 | |||
Computer Hardware — 2.13% | |||||
Apple Computer Inc. (a) | 76,000 | 2,473,040 | |||
CDW Corporation | 31,300 | 1,995,688 | |||
Cisco Systems Inc. (a) | 238,600 | 5,654,820 | |||
International Business Machines Corporation | 43,700 | 3,852,155 | |||
13,975,703 | |||||
Computer Services — 3.13% | |||||
Checkfree Corporation (a) | 28,800 | 864,000 | |||
Dell Inc. (a) | 142,800 | 5,115,096 | |||
DST Systems Inc. (a) | 23,700 | 1,139,733 | |||
First Data Corporation | 151,000 | 6,722,520 | |||
Ingram Micro Inc. (a) | 90,800 | 1,313,876 | |||
Sungard Data Systems Inc. (a) | 22,362 | 581,412 | |||
VeriSign Inc. (a) | 132,700 | 2,640,730 | |||
Yahoo! Inc. (a) | 58,300 | 2,118,039 | |||
20,495,406 |
Number of Shares or Principal Amount | Value | ||||
Computer Software — 2.81% | |||||
Cadence Design Systems Inc. (a) | 77,329 | $ | 1,131,323 | ||
Microsoft Corporation | 566,100 | 16,167,816 | |||
THQ Inc. | 47,300 | 1,083,170 | |||
18,382,309 | |||||
Consumer Products — 1.51% | |||||
Gillette Company | 138,000 | 5,851,200 | |||
Procter & Gamble Company | 74,600 | 4,061,224 | |||
9,912,424 | |||||
Consumer Services — 0.25% | |||||
ITT Educational Services Inc. (a) | 43,800 | 1,665,276 | |||
Containers/Packaging — 1.52% | |||||
Pactiv Corporation (a) | 301,000 | 7,506,940 | |||
Smurfit — Stone Container | 123,900 | 2,471,805 | |||
9,978,745 | |||||
Crude & Petroleum — 2.40% | |||||
ChevronTexaco Corporation | 62,600 | 5,891,286 | |||
Exxon Mobil Corporation | 221,700 | 9,845,697 | |||
15,736,983 | |||||
Drugs & Medical Products — 0.19% | |||||
Cooper Companies Inc. | 19,900 | 1,257,083 | |||
Electrical Equipment — 1.71% | |||||
General Electric Company | 345,400 | 11,190,960 | |||
Electronics — 0.39% | |||||
KLA-Tencor Corporation (a) | 51,500 | 2,543,070 | |||
Energy — 0.58% | |||||
American Power Conversion Corporation | 87,400 | 1,717,410 | |||
Exelon Corporation | 62,600 | 2,083,954 | |||
3,801,364 | |||||
Fiber Optics — 0.85% | |||||
Corning Inc. (a) | 428,400 | 5,594,904 | |||
Finance — 1.06% | |||||
E* Trade Group Inc. (a) | 234,300 | 2,612,445 | |||
Federated Investors Inc. | 88,600 | 2,688,124 | |||
Legg Mason Inc. | 18,000 | 1,638,180 | |||
6,938,749 | |||||
Food, Beverages & Tobacco — 2.39% | |||||
Altria Group Inc. | 100,500 | 5,030,025 | |||
Constellation Brands Inc. | 11,500 | 426,995 | |||
Hain Celestial Group Inc. (o) | 102,100 | 1,848,010 | |||
Krispy Kreme Doughnuts Inc. (o) | 28,400 | 542,156 | |||
PepsiCo Inc. | 144,700 | 7,796,436 | |||
15,643,622 |
ENTERPRISE Accumulation Trust
3
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Gaming — 0.04% | |||||
International Game Technology | 6,800 | $ | 262,480 | ||
Health Care — 0.92% | |||||
Coventry Health Care Inc. (a) | 28,200 | 1,378,980 | |||
Health Net Inc. (a) | 64,900 | 1,719,850 | |||
Triad Hospitals Inc. (a) | 48,900 | 1,820,547 | |||
Viasys Healthcare Inc. (a) (o) | 42,100 | 880,311 | |||
Wellcare Group Inc. (a) | 13,900 | 236,300 | |||
6,035,988 | |||||
Insurance — 0.47% | |||||
Gallagher Arthur J & Company | 100,500 | 3,060,225 | |||
Machinery — 0.26% | |||||
Caterpillar Inc. | 21,200 | 1,684,128 | |||
Manufacturing — 1.68% | |||||
3M Company | 48,900 | 4,401,489 | |||
Cognex Corporation | 57,100 | 2,197,208 | |||
Precision Castparts Corporation | 80,600 | 4,408,014 | |||
11,006,711 | |||||
Media — 1.63% | |||||
Time Warner Inc. (a) | 607,500 | 10,679,850 | |||
Medical Instruments — 2.31% | |||||
Diagnostic Products | 58,500 | 2,570,490 | |||
Edwards Lifesciences | 36,000 | 1,254,600 | |||
Fisher Scientific International | 44,200 | 2,552,550 | |||
Guidant Corporation | 21,000 | 1,173,480 | |||
Medtronic Inc. | 131,900 | 6,426,168 | |||
Waters Corporation (a) | 23,348 | 1,115,567 | |||
15,092,855 | |||||
Medical Services — 0.30% | |||||
Odyssey Healthcare Inc. (o) (a) | 103,500 | 1,947,870 | |||
Metals & Mining — 0.63% | |||||
Alcoa Inc. | 124,400 | 4,108,932 | |||
Misc. Financial Services — 4.52% | |||||
Ambac Financial Group Inc. | 37,700 | 2,768,688 | |||
American Express Company | 47,300 | 2,430,274 | |||
Citigroup Inc. | 281,700 | 13,099,050 | |||
Countrywide Financial Corporation | 62,500 | 4,390,625 | |||
Merrill Lynch & Company Inc. | 128,500 | 6,936,430 | |||
29,625,067 | |||||
Multi-Line Insurance — 1.90% | |||||
American International Group Inc. | 138,300 | 9,858,024 | |||
Principal Financial Group | 73,800 | 2,566,764 | |||
12,424,788 |
Number of Shares or Principal Amount | Value | ||||
Oil Services — 2.33% | |||||
Apache Corporation | 94,900 | $ | 4,132,895 | ||
Chesapeake Energy Corporation | 243,500 | 3,584,320 | |||
Ensco International Inc. | 67,200 | 1,955,520 | |||
Schlumberger Ltd. | 88,300 | 5,607,933 | |||
15,280,668 | |||||
Paper Products — 0.57% | |||||
International Paper Company | 83,600 | 3,736,920 | |||
Pharmaceuticals — 5.13% | |||||
Abbott Laboratories | 152,800 | 6,228,128 | |||
Albany Molecular Research | 13,700 | 177,141 | |||
Caremark Rx Inc. (a) | 16,100 | 530,334 | |||
Eli Lilly & Company | 81,700 | 5,711,647 | |||
King Pharmaceuticals Inc. (a) | 110,000 | 1,259,500 | |||
Pfizer Inc. | 344,700 | 11,816,316 | |||
Schering-Plough Corporation | 119,100 | 2,200,968 | |||
Watson Pharmaceuticals Inc. (a) | 15,000 | 403,500 | |||
Wyeth | 146,000 | 5,279,360 | |||
33,606,894 | |||||
Property-Casualty Insurance — 0.80% | |||||
St. Paul Companies Inc. | 129,640 | 5,255,606 | |||
Retail — 5.02% | |||||
Chico's FAS Inc. | 34,800 | 1,571,568 | |||
Coach Inc. (a) | 20,000 | 903,800 | |||
Fastenal Company (o) | 15,500 | 880,865 | |||
Gap Inc. | 157,200 | 3,812,100 | |||
Lowe's Companies Inc. | 144,400 | 7,588,220 | |||
Michaels Stores Inc. | 83,100 | 4,570,500 | |||
Pacific Sunwear of California (a) (o) | 104,850 | 2,051,915 | |||
Petco Animal Supplies Inc. | 22,700 | 731,167 | |||
Petsmart Inc. (a) | 67,700 | 2,196,865 | |||
Staples Inc. | 69,000 | 2,022,390 | |||
Wal-Mart Stores Inc. | 123,700 | 6,526,412 | |||
32,855,802 | |||||
Semiconductors — 3.20% | |||||
Applied Materials Inc. (a) | 184,000 | 3,610,080 | |||
Fairchild Semiconductor International (Class A) (a) | 49,700 | 813,589 | |||
Intel Corporation | 220,300 | 6,080,280 | |||
International Rectifier | 106,200 | 4,398,804 | |||
Novellus Systems Inc. (a) | 39,400 | 1,238,736 | |||
Texas Instruments Inc. | 110,000 | 2,659,800 | |||
Varian Semi Equipment Associates Incorporated (o) | 56,300 | 2,170,928 | |||
20,972,217 | |||||
Technology — 0.13% | |||||
SanDisk Corporation (a) | 40,500 | 878,445 |
ENTERPRISE Accumulation Trust
4
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Telecommunications — 1.62% | ||||||
Polycom Inc. | 220,000 | $ | 4,930,200 | |||
Sprint Corporation | 229,500 | 4,039,200 | ||||
Tekelec (a) | 88,800 | 1,613,496 | ||||
10,582,896 | ||||||
Transportation — 2.23% | ||||||
CSX Corporation | 97,200 | 3,185,244 | ||||
FedEx Corporation | 55,474 | 4,531,671 | ||||
Norfolk Southern Corporation | 161,900 | 4,293,588 | ||||
Yellow Roadway Corp (o) | 64,200 | 2,559,012 | ||||
14,569,515 | ||||||
Wireless Communications — 1.12% | ||||||
Motorola Inc. | 159,700 | 2,914,525 | ||||
Nextel Communications Inc. | 166,200 | 4,430,892 | ||||
7,345,417 | ||||||
Total Domestic Common Stocks | ||||||
(Identified cost $407,750,722) | 444,281,605 | |||||
Foreign Stocks — 1.38% | ||||||
Drugs & Medical Products — 0.20% | ||||||
Biovail Corporation (a) (o) | 68,100 | 1,292,538 | ||||
Manufacturing — 1.18% | ||||||
Tyco International Ltd. | 232,900 | 7,718,306 | ||||
Total Foreign Stocks | ||||||
(Identified cost $7,375,071) | 9,010,844 | |||||
Corporate Bonds — 7.51% | ||||||
Aerospace — 0.14% | ||||||
McDonnell Douglas Corporation 6.875% due 11/01/06 | $ | 425,000 | 454,809 | |||
United Technologies Corporation 7.125% due 11/15/10 | 400,000 | 453,150 | ||||
907,959 | ||||||
Airlines — 0.23% | ||||||
American Airlines Inc. | 450,000 | 444,936 | ||||
American Airlines Inc. | 78,156 | 75,488 | ||||
Continental Airlines Inc. | 585,732 | 546,231 | ||||
Delta Air Lines Inc. (o) | 450,000 | 417,648 | ||||
1,484,303 | ||||||
Automotive — 0.08% | ||||||
DaimlerChrysler North Holding Company, 7.20% due 09/01/09 | 475,000 | 517,063 |
Number of Shares or Principal Amount | Value | |||||
Banking — 0.24% | ||||||
First Massachusetts Bank | $ | 300,000 | $ | 344,539 | ||
First Union National Bank | 95,000 | 109,716 | ||||
First Union National Bank | 400,000 | 422,484 | ||||
Mizuho Financial Group | 200,000 | 196,598 | ||||
NCNB Corporation | 250,000 | 337,028 | ||||
Sanwa Bank Limited New York Branch, 7.40% due 06/15/11 | 150,000 | 163,101 | ||||
1,573,466 | ||||||
Broadcasting — 0.05% | ||||||
Liberty Media Corporation | 300,000 | 335,000 | ||||
Building & Construction — 0.22% | ||||||
Centex Corporation | 500,000 | 515,941 | ||||
Lennar Corporation | 110,000 | 121,801 | ||||
Lennar Corporation (o) | 120,000 | 120,981 | ||||
Masco Corporation | 225,000 | 233,686 | ||||
Pulte Homes Inc. | 425,000 | 434,140 | ||||
1,426,549 | ||||||
Cable — 0.15% | ||||||
Cox Communications Inc. | 320,000 | 350,704 | ||||
TCI Communications Inc. | 300,000 | 361,401 | ||||
TCI Communications Inc. | 250,000 | 260,060 | ||||
972,165 | ||||||
Chemicals — 0.11% | ||||||
Dow Chemical Company | 200,000 | 206,666 | ||||
Monsanto Company | 300,000 | 339,098 | ||||
Potash Corporation Saskatchewan Inc., 7.75% due 05/31/11 | 175,000 | 200,616 | ||||
746,380 | ||||||
Electrical Equipment — 0.03% | ||||||
Oncor Electric Delivery Company 6.375% due 05/01/12 | 200,000 | 214,035 | ||||
Energy — 0.80% | ||||||
Alabama Power Company | 375,000 | 372,518 | ||||
Alliant Energy Resources Inc. | 100,000 | 127,279 |
ENTERPRISE Accumulation Trust
5
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
American Electric Power Inc. | $ | 375,000 | $ | 393,662 | ||
Calenergy Inc. | 185,000 | 204,925 | ||||
Carolina Power & Light Company 5.95% due 03/01/09 | 150,000 | 158,006 | ||||
Consolidated Natural Gas Company 5.375% due 11/01/06 | 350,000 | 364,242 | ||||
Florida Power Corporation | 300,000 | 285,515 | ||||
Keyspan Corporation | 210,000 | 221,189 | ||||
NSTAR 8.00% due 02/15/10 | 425,000 | 494,297 | ||||
Old Dominion Electric Cooperative, 6.25% due 06/01/11 | 650,000 | 700,782 | ||||
Peco Energy Company | 165,000 | 160,959 | ||||
Pennsylvania Electric Company | 175,000 | 179,421 | ||||
PPL Energy Supply | 250,000 | 264,973 | ||||
PSEG Power 7.75% due 04/15/11 | 450,000 | 509,638 | ||||
Scana Corporation | 200,000 | 213,161 | ||||
South Carolina Electric & Gas Company, 5.80% due 01/15/33 | 180,000 | 172,879 | ||||
Southern California Edison Company, 5.00% due 01/15/14 | 170,000 | 165,392 | ||||
Wisconsin Energy Corporation | 255,000 | 274,405 | ||||
5,263,243 | ||||||
Finance — 0.34% | ||||||
Erac USA Finance Company (144A) 8.00% due 01/15/11 | 550,000 | 639,573 | ||||
Household Finance Corporation | 750,000 | 800,555 | ||||
Newcourt Credit Group Inc. | 750,000 | 771,009 | ||||
2,211,137 | ||||||
Food, Beverages & Tobacco — 0.41% | ||||||
Altria Group Inc. | 270,000 | 274,947 | ||||
Altria Group Inc. | 150,000 | 153,370 | ||||
Archer-Daniels Midland Company 8.875% due 04/15/11 | 200,000 | 245,189 | ||||
General Mills Inc. | 200,000 | 209,425 | ||||
Kraft Foods Inc. | 220,000 | 225,266 | ||||
Pepsi Bottling Group Inc. | 330,000 | 368,037 | ||||
Tyson Foods Inc. | 350,000 | 352,945 |
Number of Shares or Principal Amount | Value | |||||
Unilever Capital Corporation | $ | 430,000 | $ | 418,203 | ||
Whitman Corporation | 425,000 | 445,556 | ||||
2,692,938 | ||||||
Gaming — 0.06% | ||||||
International Game Technology | 325,000 | 382,343 | ||||
Health Care — 0.05% | ||||||
Healthcare Realty Trust Inc. | 175,000 | 201,201 | ||||
Healthcare Realty Trust Inc. | 175,000 | 162,866 | ||||
364,067 | ||||||
Hotels & Restaurants — 0.04% | ||||||
Tricon Global Restaurants Inc. | 210,000 | 234,481 | ||||
Insurance — 0.42% | ||||||
Allstate Financial Global Funding (144A), 6.50% due 06/14/11 | 275,000 | 300,196 | ||||
Amerus Group Company | 350,000 | 360,701 | ||||
Dai Ichi Mutual Life | 300,000 | 289,025 | ||||
Liberty Mutual Group Inc. (144A) | 205,000 | 197,835 | ||||
Liberty Mutual Insurance Company (144A), 7.697% due 10/15/97 | 385,000 | 380,826 | ||||
Marsh & McLennan Companies Inc. | 250,000 | 235,268 | ||||
Prudential Insurance Company America (144A), | 300,000 | 318,444 | ||||
Prudential Insurance Company America (144A), | 200,000 | 220,212 | ||||
RenaissanceRe Holdings Ltd. | 460,000 | 466,415 | ||||
2,768,922 | ||||||
Machinery — 0.06% | ||||||
Caterpillar Inc. | 350,000 | 387,339 | ||||
Media — 0.22% | ||||||
AOL Time Warner Inc. | 850,000 | 928,557 | ||||
News America Holdings Inc. | 450,000 | 508,904 | ||||
1,437,461 | ||||||
Medical Services — 0.06% | ||||||
Cardinal Health Inc. | 200,000 | 214,271 | ||||
Cardinal Health Inc. | 150,000 | 163,984 | ||||
378,255 |
ENTERPRISE Accumulation Trust
6
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Metals & Mining — 0.14% | ||||||
Alcoa Inc. 6.50% due 06/01/11 | $ | 450,000 | $ | 490,578 | ||
Noram Energy Corporation | 425,000 | 449,580 | ||||
940,158 | ||||||
Misc. Financial Services — 1.28% | ||||||
American Express Company | 110,000 | 115,160 | ||||
Citigroup Inc. | 600,000 | 675,723 | ||||
Ford Motor Credit Company | 130,000 | 136,092 | ||||
Ford Motor Credit Company | 1,350,000 | 1,409,793 | ||||
General Electric Capital Corporation, | 1,100,000 | 1,178,033 | ||||
General Motors Acceptance Corporation, | 1,075,000 | 1,093,552 | ||||
Goldman Sachs Group Inc. | 575,000 | 631,218 | ||||
Hartford Financial Services Group Inc., 7.90% due 06/15/10 | 200,000 | 231,768 | ||||
Merrill Lynch & Company Inc. | 700,000 | 744,091 | ||||
Morgan Stanley Group Inc. | 900,000 | 986,282 | ||||
Russell Frank Company (144A) | 500,000 | 528,448 | ||||
UFJ Finance Aruba AEC | 200,000 | 206,814 | ||||
USA Interactive | 400,000 | 431,360 | ||||
8,368,334 | ||||||
Multi-Line Insurance — 0.28% | ||||||
American General Corporation | 900,000 | 1,030,180 | ||||
John Hancock Global Funding (144A), 7.90% due 07/02/10 | 700,000 | 810,934 | ||||
1,841,114 | ||||||
Oil Services — 0.74% | ||||||
Burlington Resources Financial Company, 7.40% due 12/01/31 | 450,000 | 511,593 | ||||
ChevronTexaco Capital Company | 450,000 | 449,483 | ||||
Conagra Inc. | 575,000 | 666,074 | ||||
Duke Energy Field Services | 215,000 | 224,311 | ||||
Energen Corporation | 200,000 | 228,980 | ||||
Halliburton Company | 75,000 | 75,877 | ||||
Kinder Morgan Energy Partners | 400,000 | 430,829 |
Number of Shares or Principal Amount | Value | |||||
Kinder Morgan Inc. | $ | 275,000 | $ | 291,366 | ||
Motiva Enterprises (144A) | 700,000 | 694,593 | ||||
Murphy Oil Corporation | 350,000 | 373,813 | ||||
Northern Border Partners | 220,000 | 259,586 | ||||
Transocean Sedco Forex | 190,000 | 207,323 | ||||
Valero Energy Corporation | 400,000 | 444,951 | ||||
4,858,779 | ||||||
Paper & Forest Products — 0.06% | ||||||
Westvaco Corporation | 210,000 | 232,099 | ||||
Weyerhaeuser Company | 75,000 | 81,222 | ||||
Weyerhaeuser Company | 75,000 | 84,159 | ||||
397,480 | ||||||
Paper Products — 0.14% | ||||||
International Paper Company | 375,000 | 406,448 | ||||
Temple Inland Inc. | 270,000 | 305,521 | ||||
Willamette Industries Inc. | 175,000 | 187,112 | ||||
899,081 | ||||||
Pharmaceuticals — 0.13% | ||||||
Bristol Myers Squibb Company | 200,000 | 206,055 | ||||
Schering Plough Corporation | 145,000 | 142,395 | ||||
Schering Plough Corporation | 270,000 | 268,436 | ||||
Wyeth 6.95% due 09/15/04 | 200,000 | 213,586 | ||||
830,472 | ||||||
Property-Casualty Insurance — 0.38% | ||||||
Ace Capital Trust | 575,000 | 756,032 | ||||
Everest Reinsurance Holdings Inc., | 370,000 | 383,662 | ||||
Fidelity National Financial Inc., | 225,000 | 250,318 | ||||
Mercury General Corporation | 425,000 | 469,467 | ||||
Safeco Corporation | 175,000 | 176,236 | ||||
W.R. Berkley Corporation | 195,000 | 199,015 | ||||
W.R. Berkley Corporation | 200,000 | 235,101 | ||||
2,469,831 |
ENTERPRISE Accumulation Trust
7
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Real Estate — 0.20% | ||||||
AMB Property | $ | 350,000 | $ | 389,698 | ||
Duke Realty Corporation | 300,000 | 308,788 | ||||
Liberty Property Trust | 220,000 | 260,611 | ||||
Spieker Properties | 300,000 | 330,966 | ||||
1,290,063 | ||||||
Retail — 0.22% | ||||||
Kohl’s Corporation | 300,000 | 322,813 | ||||
Lowe's Companies Inc. | 425,000 | 445,941 | ||||
Staples Inc. 7.375% due 10/01/12 | 340,000 | 382,927 | ||||
Wal-Mart Stores Inc. | 275,000 | 302,333 | ||||
1,454,014 | ||||||
Telecommunications — 0.18% | ||||||
CenturyTel Inc. | 125,000 | 138,451 | ||||
SBC Communications Inc. | 300,000 | 307,911 | ||||
Verizon Global Funding Corporation, | 660,000 | 742,345 | ||||
1,188,707 | ||||||
Wireless Communications — 0.05% | ||||||
AT&T Wireless Services Inc. | 275,000 | 335,271 | ||||
Total Corporate Bonds | ||||||
(Identified cost $47,780,835) | 49,170,410 | |||||
Foreign Bonds — 0.87% | ||||||
Banking — 0.12% | ||||||
Bayerische Landesbank Girozentrale, 5.65% due 02/01/09 | 200,000 | 210,511 | ||||
Export Import Bank Korea | 200,000 | 194,012 | ||||
National Australia Bank Ltd. | 175,000 | 206,736 | ||||
Royal Bank of Scotland Group | 200,000 | 217,596 | ||||
828,855 | ||||||
Insurance — 0.06% | ||||||
XL Capital Finance Europe | 350,000 | 374,360 |
Number of Shares or Principal Amount | Value | ||||
Media — 0.02% | |||||
Grupo Televisa | 120,000 | $ | 120,900 | ||
Metals & Mining — 0.05% | |||||
Companhia Brasileira De Bebida | 325,000 | 340,437 | |||
Misc. Financial Services — 0.15% | |||||
Canadian Oil Sands Ltd. (144A) | 300,000 | 331,009 | |||
Pemex Project Funding Master Trust, 9.125% due 10/13/10 | 550,000 | 629,750 | |||
960,759 | |||||
Oil Services — 0.12% | |||||
Canadian Natural Resources Ltd. | 475,000 | 480,367 | |||
Petroleos Mexicano | 275,000 | 308,000 | |||
788,367 | |||||
Telecommunications — 0.28% | |||||
British Telecommunications | 250,000 | 308,422 | |||
Deutsche Telekom International | 250,000 | 292,139 | |||
France Telecom | 550,000 | 637,352 | |||
Singapore Telecommunications (144A), 7.375% due 12/01/31 | 520,000 | 576,818 | |||
1,814,731 | |||||
Wireless Communications — 0.07% | |||||
Vodafone Airtouch | 275,000 | 315,313 | |||
Vodafone Airtouch | 125,000 | 148,700 | |||
464,013 | |||||
Total Foreign Bonds | |||||
(Identified cost $5,604,306) | 5,692,422 | ||||
Asset-Backed Securities — 1.17% | |||||
Automotive — 0.57% | |||||
Capital Auto Receivables, Series 2002-1, Class A4, | 1,000,000 | 1,013,119 | |||
Capital One Auto Financial Trust, Series2002-B, Class A4A, | 1,500,000 | 1,504,908 | |||
Nissan Auto Receivables, | 1,200,000 | 1,222,859 | |||
3,740,886 |
ENTERPRISE Accumulation Trust
8
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Misc. Financial Services — 0.47% | ||||||
American Express Credit Corporation, Series 2000-1, | $ | 750,000 | $ | 774,158 | ||
Citibank Credit Card Issuance Trust, Series 2001-A8, Class A8, | 1,200,000 | 1,211,753 | ||||
Onyx Acceptance Owner Trust, Series 2001-D, Class A4, | 1,070,455 | 1,084,053 | ||||
3,069,964 | ||||||
Utilities — 0.13% | ||||||
Massachusetts Special Purpose Trust, Series 1999-1, Class A3, | 795,047 | 812,341 | ||||
Total Asset-Backed Securities | ||||||
(Identified cost $7,561,256) | 7,623,191 | |||||
Collateralized Mortgage Obligations — 1.71% | ||||||
Misc. Financial Services — 1.71% | ||||||
Asset Securitization Corporation, Series 1997-D4, Class A4, | 824,335 | 892,713 | ||||
Bear Stearns Commercial Mortgage Securities Inc., Series 2001-TOP2, Class A2, 6.48% due 02/15/35 | 650,000 | 706,141 | ||||
Chase Commercial Mortgage Securities Corporation, Series 1998-2, Class A2, | 820,000 | 883,619 | ||||
Greenwich Capital Commercial Funding Corporation, | 900,000 | 898,594 | ||||
Greenwich Capital Commercial Funding Corporation, | 800,000 | 779,226 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 1998-WF1, Class A2, 6.55% due 03/15/30 | 1,080,000 | 1,160,565 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2001-TOP1, Class A4, 6.66% due 02/15/33 | 425,000 | 465,786 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2001-TOP3, Class A4, 6.39% due 07/15/33 | 845,000 | 912,841 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2001-TOP5, Class A4, 6.39% due 10/15/35 | 1,150,000 | 1,243,969 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2002-HQ, | 245,000 | 265,829 | ||||
Morgan Stanley Dean Witter Capital Corporation, Series 2002-TOP7, Class A2, 5.98% due 01/15/39 | 1,150,000 | 1,213,508 |
Number of Shares or Principal Amount | Value | ||||
Nomura Asset Securities Corporation, Series 1998-D6, Class A1B, | 150,000 | $ | 162,815 | ||
UBS Commercial Mortgage Trust 6.133% due 12/15/30 | 500,000 | 533,664 | |||
UBS Commercial Mortgage Trust, Series 2002-C1, Class A4, | 1,020,000 | 1,103,892 | |||
11,223,162 | |||||
Total Collateralized Mortgage Obligations | |||||
(Identified cost $11,278,597) | 11,223,162 | ||||
U. S. Treasury Obligations — 4.27% | |||||
U. S. Treasury Bills — 0.93% | |||||
0.99% due 08/12/04 (s) | 1,150,000 | 1,148,672 | |||
1.50% due 11/04/04 | 3,000,000 | 2,984,250 | |||
1.69% due 12/23/04 | 2,000,000 | 1,983,569 | |||
6,116,491 | |||||
U. S. Treasury Bonds — 3.03% | |||||
7.50% due 11/15/16 | 2,200,000 | 2,712,101 | |||
8.875% due 08/15/17 | 1,000,000 | 1,370,273 | |||
8.875% due 02/15/19 | 2,430,000 | 3,364,410 | |||
7.875% due 02/15/21 | 3,650,000 | 4,711,635 | |||
8.125% due 05/15/21 | 3,500,000 | 4,624,648 | |||
6.25% due 08/15/23 | 2,000,000 | 2,214,688 | |||
6.00% due 02/15/26 | 750,000 | 808,154 | |||
19,805,909 | |||||
U. S. Treasury Notes — 0.31% | |||||
5.875% due 11/15/04 | 2,000,000 | 2,031,562 | |||
Total U. S. Treasury Obligations | |||||
(Identified cost $28,630,784) | 27,953,962 | ||||
Agency Obligations — 11.27% | |||||
Fannie Mae — 6.50% | |||||
4.544% due 07/01/04 | 690,990 | 672,523 | |||
6.97% due 06/01/05 | 1,161,807 | 1,292,319 | |||
7.00% due 02/01/07 | 15,425 | 16,048 | |||
6.79% due 11/01/07 | 1,356,273 | 1,442,589 | |||
6.525% due 06/01/09 | 649,402 | 703,841 | |||
7.00% due 07/01/09 | 10,500 | 10,924 | |||
6.625% due 09/15/09 | 900,000 | 995,600 | |||
7.27% due 02/01/10 | 385,621 | 430,971 | |||
7.125% due 06/15/10 | 1,500,000 | 1,702,879 | |||
6.30% due 03/01/11 | 1,036,673 | 1,113,967 | |||
6.03% due 05/01/11 | 1,355,157 | 1,447,249 | |||
1.00% due 11/01/11 | 1,163,859 | 1,241,960 | |||
6.115% due 02/01/12 | 1,171,444 | 1,257,450 | |||
5.898% due 04/01/12 | 1,369,640 | 1,449,839 | |||
7.00% due 11/01/12 | 10,922 | 11,603 | |||
7.00% due 12/01/12 | 283,650 | 301,351 | |||
7.00% due 03/01/15 | 196,650 | 208,941 |
ENTERPRISE Accumulation Trust
9
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
7.00% due 05/01/15 | $ | 28,898 | $ | 30,705 | ||
7.00% due 06/01/15 | 168,572 | 179,108 | ||||
7.00% due 11/01/15 | 1,252 | 1,330 | ||||
5.50% due 09/01/16 | 104,477 | 107,224 | ||||
5.50% due 01/01/17 | 505,466 | 518,758 | ||||
7.00% due 04/01/17 | 340,516 | 361,836 | ||||
5.50% due 08/01/17 | 46,864 | 48,067 | ||||
5.50% due 11/01/17 | 415,487 | 426,159 | ||||
5.50% due 12/01/17 | 72,924 | 74,797 | ||||
5.50% due 01/01/18 | 260,777 | 267,475 | ||||
5.50% due 02/01/18 | 872,475 | 894,541 | ||||
5.50% due 03/01/18 | 390,015 | 399,873 | ||||
5.50% due 04/01/18 | 2,110,205 | 2,163,843 | ||||
5.00% due 05/01/18 | 1,485,074 | 1,501,788 | ||||
5.00% due 06/01/18 | 121,511 | 121,943 | ||||
5.00% due 09/01/18 | 27,371 | 27,468 | ||||
5.00% due 10/01/18 | 983,129 | 988,656 | ||||
5.50% due 11/01/18 | 705,377 | 723,206 | ||||
5.00% due 12/01/18 | 716,479 | 719,029 | ||||
5.00% due 04/01/19 | 894,090 | 897,272 | ||||
6.00% due 03/01/17 | 806,702 | 841,415 | ||||
6.00% due 09/01/17 | 193,198 | 201,512 | ||||
5.00% due 01/01/19 | 2,181,230 | 2,188,914 | ||||
5.00% due 02/01/19 | 2,329,693 | 2,337,907 | ||||
5.00% due 03/01/19 | 1,625,936 | 1,631,521 | ||||
5.00% due 04/01/19 | 1,158,664 | 1,162,603 | ||||
5.00% due 05/01/19 | 3,322,046 | 3,333,340 | ||||
5.00% due 06/01/19 | 433,309 | 434,782 | ||||
6.00% due 12/01/22 | 501,030 | 517,222 | ||||
6.00% due 01/01/23 | 835,569 | 862,573 | ||||
6.00% due 02/01/23 | 516,763 | 533,464 | ||||
5.00% due 10/01/33 | 317,202 | 307,418 | ||||
5.00% due 11/01/33 | 1,122,102 | 1,087,490 | ||||
5.00% due 04/01/34 | 2,484,052 | 2,402,419 | ||||
42,595,712 | ||||||
Federal Home Loan Banks — 1.51% | ||||||
4.125% due 01/14/05 | 7,000,000 | 7,088,830 | ||||
5.75% due 05/15/12 | 410,000 | 432,685 | ||||
6.50% due 06/01/16 | 38,937 | 41,145 | ||||
6.50% due 07/01/16 | 1,579,684 | 1,669,285 | ||||
6.50% due 08/01/16 | 68,700 | 72,597 | ||||
6.50% due 09/01/16 | 307,747 | 325,203 | ||||
6.50% due 11/01/16 | 169,108 | 178,699 | ||||
6.50% due 03/01/17 | 29,219 | 30,868 | ||||
7.00% due 05/01/29 | 40,467 | 42,839 | ||||
9,882,151 | ||||||
Freddie Mac — 0.77% | ||||||
7.00% due 07/15/05 | 1,560,000 | 1,635,126 | ||||
5.50% due 09/15/11 | 2,000,000 | 2,084,782 | ||||
6.50% due 01/01/17 | 1,257,861 | 1,329,208 | ||||
5,049,116 |
Number of Shares or Principal Amount | Value | |||||
Ginnie Mae — 2.49% | ||||||
6.50% due 04/15/28 | $ | 947,473 | $ | 992,577 | ||
6.50% due 05/15/28 | 359,830 | 376,959 | ||||
6.50% due 08/15/28 | 193,655 | 202,960 | ||||
7.00% due 09/15/28 | 1,060,360 | 1,128,512 | ||||
6.50% due 10/15/28 | 400,199 | 419,250 | ||||
6.50% due 11/15/28 | 1,765,482 | 1,871,113 | ||||
6.00% due 12/15/28 | 3,041,915 | 3,156,577 | ||||
7.00% due 03/15/29 | 56,233 | 59,803 | ||||
7.00% due 06/15/29 | 42,008 | 44,676 | ||||
7.00% due 08/15/29 | 38,528 | 40,974 | ||||
7.00% due 01/15/31 | 166,637 | 177,129 | ||||
7.00% due 04/15/31 | 39,857 | 42,366 | ||||
7.00% due 06/15/31 | 29,262 | 31,104 | ||||
7.00% due 08/15/31 | 453,703 | 482,267 | ||||
6.50% due 09/15/31 | 489,954 | 512,918 | ||||
6.50% due 10/15/31 | 54,330 | 56,847 | ||||
6.50% due 11/15/31 | 247,379 | 258,840 | ||||
6.00% due 01/15/32 | 799,283 | 820,720 | ||||
7.00% due 08/15/32 | 365,876 | 388,790 | ||||
7.00% due 09/15/32 | 39,290 | 41,751 | ||||
6.00% due 10/15/32 | 1,172,455 | 1,203,900 | ||||
5.00% due 06/15/33 | 942,574 | 915,852 | ||||
5.00% due 07/15/33 | 3,172,188 | 3,082,254 | ||||
16,308,139 | ||||||
Total Agency Obligations | ||||||
(Identified cost $74,464,557) | 73,835,118 | |||||
Foreign Government Obligations — 0.11% | ||||||
South Africa Republic | 110,000 | 111,100 | ||||
Trinidad & Tobago Republic (REG S), 9.75% due 07/01/20 | 250,000 | 320,000 | ||||
United Mexican States | 250,000 | 282,500 | ||||
713,600 | ||||||
Total Foreign Government Obligations | ||||||
(Identified cost $675,889) | 713,600 | |||||
Registered Investment Company — 0.52% | ||||||
Midcap SPDR Trust | 30,800 | 3,421,880 | ||||
Total Registered Investment Company | ||||||
(Identified cost $3,349,518) | 3,421,880 |
ENTERPRISE Accumulation Trust
10
Enterprise Managed Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||||
Other Investments — 2.47% | |||||||
Securities Lending Quality | 16,200,567 | $ | 16,200,567 | ||||
Total Other Investments | |||||||
(Identified cost $16,200,567) | 16,200,567 | ||||||
Repurchase Agreement — 3.01% | |||||||
State Street Bank & Trust Repurchase Agreement, | $ | 19,717,000 | 19,717,000 | ||||
Total Repurchase Agreement | |||||||
(Identified cost $19,717,000) | 19,717,000 | ||||||
Total Investments | |||||||
(Identified cost $630,389,102) | $ | 668,843,761 | |||||
Other Assets Less Liabilities — (2.13)% | (13,917,686 | ) | |||||
Net Assets — 100% | $ | 654,926,075 |
(a) | Non-income producing security. |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(s) | Security segregated as collateral for open futures contracts. |
(y) | Represents investment of cash collateral received from securities loaned (See Note 5). |
(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. |
(TBA) | To Be Announced. Certain specific security details such as final par amount and maturity date have not yet been determined. |
(SPDR) | S&P Depository Receipt. |
Open futures contracts as of June 30, 2004 are as follows:
Description | Expiration Month | Contracts | Unrealized Appreciation/ (Depreciation) | |||||
Short S&P 500 Index Futures | 09/04 | 56 | $ | (26,454 | ) | |||
Short U. S. Treasury | 09/04 | 114 | (105,445 | ) | ||||
Short U.S. Treasury | 09/04 | 11 | (7,435 | ) | ||||
10-Year Notes Interest Rate SWAP | 09/04 | 9 | (15,646 | ) | ||||
$ | (154,980 | ) | ||||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
11
Enterprise Managed Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | |||
Investments at value, including securities loaned valued at $16,076,299 (Note 5) | $668,843,761 | ||
Investment income receivable | 2,213,900 | ||
Receivable for investments sold | 2,372,060 | ||
Due from investment adviser | 43,130 | ||
Cash | 704 | ||
Other assets | 11,203 | ||
Total assets | 673,484,758 | ||
Liabilities: | |||
Payable for fund shares redeemed | 1,234,846 | ||
Payable for investments purchased | 703,553 | ||
Payable upon return of securities loaned (Note 5) | 16,200,567 | ||
Payable for variation margin on open futures | 133,650 | ||
Accrued expenses and other liabilities | 286,067 | ||
Total liabilities | 18,558,683 | ||
Net assets | $654,926,075 | ||
Analysis of net assets: | |||
Paid-in capital | $741,746,575 | ||
Undistributed (accumulated) net investment income (loss) | 12,822,173 | ||
Undistributed (accumulated) net realized gain (loss) | (137,942,354 | ) | |
Unrealized appreciation (depreciation) | 38,299,681 | ||
Net assets | $654,926,075 | ||
Fund shares outstanding | 34,989,185 | ||
Net asset value per share | $18.72 | ||
Investments at cost | $630,389,102 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
12
Enterprise Managed Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Dividends | $ | 2,753,094 | ||
Interest | 4,336,243 | |||
Securities lending income | 208,899 | |||
Total investment income | 7,298,236 | |||
Expenses: | ||||
Investment advisory fees | 2,620,873 | |||
Shareholder servicing fees | 1,007,247 | |||
Custodian and fund accounting fees | 113,324 | |||
Reports to shareholders | 18,938 | |||
Trustees’ fees | 9,144 | |||
Audit and legal fees | 81,903 | |||
Other expenses | 27,761 | |||
Total expenses | 3,879,190 | |||
Expense reimbursement | (238,423 | ) | ||
Total expenses, net of reimbursement | 3,640,767 | |||
Net investment income (loss) | 3,657,469 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 29,154,454 | |||
Net realized gain (loss) on futures transactions | (237,857 | ) | ||
Net change in unrealized gain (loss) on investments | (16,239,576 | ) | ||
Net change in unrealized gain (loss) on futures transactions | (154,979 | ) | ||
Net realized and unrealized gain (loss) | 12,522,042 | |||
Net increase (decrease) in net assets resulting from operations | $ | 16,179,511 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
13
Enterprise Managed Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 3,657,469 | $ | 7,505,481 | ||||
Net realized gain (loss) | 28,916,597 | 2,395,373 | ||||||
Net change in unrealized gain (loss) | (16,394,555 | ) | 115,635,667 | |||||
Increase (decrease) in net assets resulting from operations | 16,179,511 | 125,536,521 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (7,568,315 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (7,568,315 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 10,603,063 | 21,855,592 | ||||||
Shares exchanged due to merger | — | 2,815,931 | ||||||
Reinvestment of distributions | — | 7,566,636 | ||||||
Shares redeemed | (65,700,760 | ) | (119,956,922 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (55,097,697 | ) | (87,718,763 | ) | ||||
Total increase (decrease) in net assets | (38,918,186 | ) | 30,249,443 | |||||
Net assets: | ||||||||
Beginning of period | 693,844,261 | 663,594,818 | ||||||
End of period | $ | 654,926,075 | $ | 693,844,261 | ||||
Capital share activity: | ||||||||
Shares issued | 574,087 | 1,326,872 | ||||||
Shares exchanged due to merger | — | 188,735 | ||||||
Shares issued in reinvestment of distributions | — | 438,138 | ||||||
Shares redeemed | (3,554,978 | ) | (7,404,472 | ) | ||||
Net increase (decrease) | (2,980,891 | ) | (5,450,727 | ) | ||||
Undistributed net investment income | $ | 12,822,173 | $ | 9,164,704 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
14
Enterprise Managed Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 18.27 | $ | 15.28 | $ | 19.60 | $ | 24.19 | $ | 36.30 | $ | 40.56 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | 0.10 | 0.19 | 0.14 | 0.13 | 0.45 | 0.50 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investments | 0.35 | 2.99 | (4.30 | ) | (3.10 | ) | (0.23 | ) | 2.65 | |||||||||||||||
Total from investment operations | 0.45 | 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 | $ | 18.72 | $ | 18.27 | $ | 15.28 | $ | 19.60 | $ | 24.19 | $ | 36.30 | ||||||||||||
Total return | 2.46 | %B | 20.91 | % | (21.20 | )% | (11.15 | )% | 1.46 | % | 9.22 | % | ||||||||||||
Net assets end of period (in thousands) | $ | 654,926 | $ | 693,844 | $ | 663,595 | $ | 1,074,983 | $ | 1,452,864 | $ | 2,292,467 | ||||||||||||
Ratio of expenses to average net assets (excluding expense reimbursement and expense offset arrangements) | 1.15 | %A | 1.05 | % | 0.88 | % | 0.85 | % | 0.82 | % | 0.76 | % | ||||||||||||
Ratio of expenses to average net assets | 1.08 | %A | 1.04 | % | 0.85 | % | 0.84 | % | 0.82 | % | 0.76 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 0.59 | %A | 1.14 | % | 0.89 | % | 0.60 | % | 1.44 | % | 1.23 | % | ||||||||||||
Portfolio turnover rate | 34 | % | 71 | % | 109 | % | 141 | % | 19 | % | 90 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
15
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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-thecounter 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
16
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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, 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-
ENTERPRISE Accumulation Trust
17
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $1,007,185 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 $161,542 in the Portfolio at June 30, 2004
4. Investment Transactions
For the six months ended June 30, 2004, 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 | ||||||
$34,062,254 | $ | 20,307,184 | $ | 189,402,126 | $ | 253,765,502 |
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
18
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | |||||||
$ | 630,389,102 | $ | 54,387,486 | $ | 15,932,827 | $ | 38,454,659 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
ENTERPRISE Accumulation Trust
19
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 37,562,452.273 | |
Votes Against | 2,470,527.310 | |
Votes Abstained | 2,531,654.047 | |
Votes Withheld | 30,224,443.708 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 37,242,992.378 | |
Votes Against | 2,541,921.309 | |
Votes Abstained | 2,779,719.943 | |
Votes Withheld | 30,224,443.708 |
ENTERPRISE Accumulation Trust
20
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
21
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
22
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
23
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
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24
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 Registered Public Accounting Firm
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
25
Enterprise High-Yield Bond Portfolio
SUBADVISER’S COMMENTS
Caywood-Scholl Capital Management
San Diego, California
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Caywood-Scholl Capital Management (“Caywood-Scholl”) is subadviser to the Enterprise High-Yield Bond Portfolio. Caywood-Scholl manages approximately $1.8 billion for institutional clients, and its normal investment minimum is $3 million.
Investment Objective
The objective of the Enterprise High-Yield Bond Portfolio is maximum current income.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 1.04%. The Portfolio underperformed its benchmark, the Lehman Brothers High Yield Bond Index, which returned 1.36%. The Portfolio underperformed its peer group, the Lipper High Current Yield Bond Funds Index, which returned 1.39%.
How would you describe the investment environment during the period?
The first six months saw less participation by hedge funds and investment grade managers, while over the past quarter, there has been increased participation in the high-yield market from traditional high-yield buyers (pension funds, insurance companies, CBOs). As the economy continues to exhibit signs of strength, the positive credit cycle has remained intact. Most economic indicators are pointing to an improving economy with the sole exception being the June employment report. Consumer confidence and productivity reports both came in strong, while personal income and consumer spending also showed continued strength. Corporate earnings and cash flow are stable to improving in most sectors, and much of the high-yield universe saw increasing revenues year-over-year through the first quarter.
Investors’ confidence in the credit cycle has increased access to capital. As a result of reduced costs of capital, Caywood-Scholl has witnessed a larger percentage of lower quality deals coming to market year-to-date, more than twice that of the pace seen in 2003. The majority of the proceeds from these lower quality deals have been to refinance existing debt.
What strategies affected Portfolio performance during the period?
Over the six-month period, Caywood-Scholl has increased the Portfolio’s exposure to single B names (thus decreasing the double B exposure), shortened the duration, and increased exposure to economically sensitive names. These changes generally helped Portfolio performance for the six-month period. Single Bs outperformed, followed by double Bs, then CCCs. Those bonds that had a shorter maturity also outperformed, and cyclical names generally outperformed non-cyclical names.
ENTERPRISE Accumulation Trust
1
Enterprise High-Yield Bond Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
Given the positive technicals in the high-yield market, Caywood-Scholl continued to find the best value for new investments from the primary market. Throughout the period, Caywood-Scholl actively shortened the duration in the BB holdings and has and will continue to increase investments in those mid- and lower- single B names (increasing the Portfolio’s average coupon). Additionally, Caywood-Scholl increased exposure to economically sensitive industries. More recently in the second quarter, Caywood-Scholl sold various issues that were fully priced and more closely tied to the treasury curve; in general, these issues were of higher quality and had lower coupons.
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
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Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Domestic Corporate Bonds — 89.33% | ||||||
Advertising — 0.41% | ||||||
RH Donnelley Finance Corporation 10.875%, due 12/15/12 | $ | 300,000 | $ | 348,000 | ||
Aerospace — 0.64% | ||||||
Argo Tech Corporation | 300,000 | 309,000 | ||||
Esterline Technologies Corporation 7.75%, due 06/15/13 | 225,000 | 231,750 | ||||
540,750 | ||||||
Apparel & Textiles — 2.21% | ||||||
Fruit of the Loom Inc. | 300,000 | — | ||||
Invista 9.25%, due 05/01/12 | 225,000 | 226,125 | ||||
Perry Ellis International Inc. | 500,000 | 516,250 | ||||
Phillips Van-Heusen Corporation 7.25%, due 02/15/11 | 500,000 | 502,500 | ||||
Phillips Van-Heusen Corporation 8.125%, due 05/01/13 | 125,000 | 130,312 | ||||
Sealy Mattress Company | 500,000 | 502,500 | ||||
1,877,687 | ||||||
Automotive — 3.53% | ||||||
Adesa Inc 7.625%, due 06/15/12 | 400,000 | 403,500 | ||||
Autonation Inc. | 500,000 | 565,000 | ||||
Dura Operating Corporation | 325,000 | 318,500 | ||||
Navistar International Corporation 9.375%, due 06/01/06 (o) | 350,000 | 378,000 | ||||
TRW Automotive Acquisition | 412,000 | 464,530 | ||||
TRW Automotive Acquisition | 163,000 | 192,340 | ||||
United Rentals North America Inc. 6.50%, due 02/15/12 | 275,000 | 259,875 | ||||
United Rentals North America Inc. 7.75%, due 11/15/13 (o) | 150,000 | 141,750 | ||||
United Rentals North America Inc. 7.00%, due 02/15/14 | 300,000 | 267,000 | ||||
2,990,495 | ||||||
Banking — 0.84% | ||||||
Western Financial Bank | 650,000 | 715,000 | ||||
Broadcasting — 0.44% | ||||||
Sinclair Broadcast Group Inc. | 350,000 | 374,500 |
Number of Shares or Principal Amount | Value | |||||
Building & Construction — 3.86% | ||||||
Building Materials Corporation America 7.75%, due 07/15/05 | $ | 300,000 | $ | 301,500 | ||
Corrections Corporation America 7.50%, due 05/01/11 | 325,000 | 328,250 | ||||
Integrated Electrical Services | 126,000 | 130,095 | ||||
Integrated Electrical Services | 425,000 | 438,813 | ||||
Ply Gem Industries Inc. | 475,000 | 484,500 | ||||
Riverside Forest Products Ltd. 7.875%, due 03/01/14 | 300,000 | 306,000 | ||||
Texas Industries Inc. | 550,000 | 613,250 | ||||
U.S. Concrete Inc. | 675,000 | 673,312 | ||||
3,275,720 | ||||||
Business Services — 2.26% | ||||||
Buhrmann U.S. Inc. | 500,000 | 498,750 | ||||
Quintiles Transnational Corporation 10.00%, due 10/01/13 | 300,000 | 297,000 | ||||
Xerox Corporation | 200,000 | 204,000 | ||||
Xerox Corporation | 75,000 | 76,687 | ||||
Xerox Corporation | 875,000 | 840,000 | ||||
1,916,437 | ||||||
Cable — 3.09% | ||||||
Adelphia Communications Corporation | 50,000 | 47,625 | ||||
Adelphia Communications Corporation | 400,000 | 405,000 | ||||
Cablevision Systems Corporation 8.00%, due 04/15/12 | 150,000 | 147,750 | ||||
CCO Holdings | 300,000 | 287,250 | ||||
CSC Holdings Inc. (Series B) | 100,000 | 104,000 | ||||
CSC Holdings Inc. (Series B) | 900,000 | 902,250 | ||||
DIRECTV Holdings | 150,000 | 165,937 | ||||
Echostar DBS Corporation | 100,000 | 98,500 | ||||
Mediacom LLC/Mediacom Capital Company 9.50%, due 01/15/13 (o) | 475,000 | 458,375 | ||||
2,616,687 |
ENTERPRISE Accumulation Trust
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Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Chemicals — 3.24% | ||||||
Equistar Chemicals | $ | 250,000 | $ | 277,500 | ||
FMC Corporation | 450,000 | 517,500 | ||||
Hercules Inc. 6.75%, due 10/15/29 | 650,000 | 624,000 | ||||
Huntsman International LLC | 250,000 | 270,000 | ||||
Nalco Company | 100,000 | 104,750 | ||||
Nalco Company | 175,000 | 183,312 | ||||
Nova Chemicals Corporation | 250,000 | 246,250 | ||||
PCI Chemicals Canada Company 10.00%, due 12/31/08 (o) | 198,502 | 188,577 | ||||
Pioneer Americas Inc. | 62,908 | 59,448 | ||||
Westlake Chemical Corporation 8.75%, due 07/15/11 | 250,000 | 271,250 | ||||
2,742,587 | ||||||
Consumer Products — 1.48% | ||||||
Central Garden & Pet Company 9.125%, due 02/01/13 | 600,000 | 651,000 | ||||
Chattem Inc. 7.00%, due 03/01/14 | 150,000 | 144,000 | ||||
Elizabeth Arden Inc. | 450,000 | 457,875 | ||||
1,252,875 | ||||||
Consumer Services — 0.68% | ||||||
Hines Nurseries | 75,000 | 81,750 | ||||
Johnson Diversey Inc. | 350,000 | 381,500 | ||||
JohnsonDiversey Holdings Inc. | 50,000 | 38,500 | ||||
Service Corporation International 7.70%, due 04/15/09 | 75,000 | 76,875 | ||||
578,625 | ||||||
Containers/Packaging — 1.42% | ||||||
Owens Illinois Inc. | 550,000 | 566,500 | ||||
Owens Illinois Inc. | 475,000 | 473,813 | ||||
Owens-Brockway Glass Container 8.75%, due 11/15/12 | 150,000 | 162,750 | ||||
1,203,063 | ||||||
Electrical Equipment — 0.57% | ||||||
BRL Universal Equipment | 450,000 | 482,063 |
Number of Shares or Principal Amount | Value | |||||
Electronics — 1.20% | ||||||
Amkor Technology Inc. | $ | 200,000 | $ | 187,500 | ||
Amkor Technology Inc. | 650,000 | 615,875 | ||||
Thomas & Betts Corporation | 200,000 | 211,844 | ||||
1,015,219 | ||||||
Energy — 3.91% | ||||||
CMS Energy Corporation | 150,000 | 157,125 | ||||
CMS Energy Corporation | 550,000 | 547,250 | ||||
Cogentrix Energy Inc. | 200,000 | 206,500 | ||||
El Paso Corporation | 200,000 | 175,000 | ||||
MSW Energy Holdings | 450,000 | 475,875 | ||||
NRG Energy Inc. | 850,000 | 858,500 | ||||
Reliant Resources Inc. | 350,000 | 373,625 | ||||
Reliant Resources Inc. | 200,000 | 215,500 | ||||
Teco Energy Inc. | 300,000 | 303,000 | ||||
3,312,375 | ||||||
Entertainment & Leisure — 1.01% | ||||||
American Casino & Entertainment 7.85%, due 02/01/12 | 350,000 | 355,250 | ||||
Mohegan Tribal Gaming Authority 6.375%, due 07/15/09 | 200,000 | 200,500 | ||||
Seneca Gaming Corporation | 300,000 | 299,625 | ||||
855,375 | ||||||
Finance — 2.75% | ||||||
BCP Caylux Holdings Luxembourg 9.625%, due 06/15/14 | 625,000 | 647,656 | ||||
Dollar Financial Group Inc. | 600,000 | 627,000 | ||||
New Asat Finance Ltd. | 350,000 | 346,500 | ||||
Thornburg Mortgage Inc. | 700,000 | 710,500 | ||||
2,331,656 | ||||||
Food, Beverages & Tobacco — 3.36% | ||||||
Delhaize America Inc. | 75,000 | 79,033 | ||||
Delhaize America Inc. | 100,000 | 109,153 |
ENTERPRISE Accumulation Trust
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Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Dole Food Inc. | $ | 500,000 | $ | 523,750 | ||
Ingles Markets Inc. | 625,000 | 642,187 | ||||
NBTY Inc. (Series B) | 550,000 | 558,250 | ||||
Pilgrims Pride Corporation | 75,000 | 79,875 | ||||
Smithfield Foods Inc. | 400,000 | 420,000 | ||||
Smithfield Foods Inc. | 200,000 | 210,000 | ||||
Stater Bros Holdings Inc. | 225,000 | 225,844 | ||||
2,848,092 | ||||||
Health Care — 0.94% | ||||||
Healthsouth Corporation | 650,000 | 639,438 | ||||
Healthsouth Corporation | 50,000 | 47,125 | ||||
Vicar Operating Inc. | 100,000 | 110,000 | ||||
796,563 | ||||||
Hotels & Restaurants — 7.39% | ||||||
Boyd Gaming Corporation | 475,000 | 479,750 | ||||
Boyd Gaming Corporation | 100,000 | 94,250 | ||||
Felcor Lodging | 127,000 | 133,985 | ||||
Felcor Lodging | 775,000 | 800,187 | ||||
Hilton Hotels Corporation | 125,000 | 134,688 | ||||
HMH Properties Inc. | 80,000 | 82,000 | ||||
Host Marriott | 800,000 | 874,000 | ||||
John Q. Hammons Hotels | 250,000 | 271,250 | ||||
Mandalay Resort Group | 125,000 | 138,750 | ||||
Meristar Hospitality Operating 9.125%, due 01/15/11 (o) | 250,000 | 252,500 | ||||
MGM Mirage Inc. | 600,000 | 648,000 | ||||
Mirage Resorts Inc. | 200,000 | 206,500 | ||||
Park Place Entertainment Corporation 7.875%, due 03/15/10 (o) | 850,000 | 896,750 | ||||
Park Place Entertainment Corporation 8.125%, due 05/15/11 | 475,000 | 504,094 | ||||
Starwood Hotels & Resorts | 700,000 | 749,000 | ||||
6,265,704 |
Number of Shares or Principal Amount | Value | |||||
Machinery — 4.39% | ||||||
Briggs & Stratton Corporation 8.875%, due 03/15/11 (o) | $ | 500,000 | $ | 583,750 | ||
Case New Holland Inc. | 375,000 | 348,750 | ||||
Case New Holland Inc. | 575,000 | 603,750 | ||||
Case New Holland Inc. | 350,000 | 367,500 | ||||
Flowserve Corporation | 625,000 | 707,812 | ||||
Teekay Shipping Corporation | 1,000,000 | 1,106,250 | ||||
3,717,812 | ||||||
Manufacturing — 1.16% | ||||||
Rayovac Corporation | 550,000 | 577,500 | ||||
Trinity Inds Inc. | 400,000 | 366,000 | ||||
United States Steel Corporation 10.75%, due 08/01/08 (o) | 33,000 | 37,703 | ||||
981,203 | ||||||
Media — 2.07% | ||||||
American Media Operations Inc. 8.875%, due 01/15/11 (o) | 275,000 | 266,063 | ||||
Corus Entertainment Inc. | 750,000 | 801,562 | ||||
Emmis Operation Company | 250,000 | 245,000 | ||||
Imax Corporation | 475,000 | 445,312 | ||||
1,757,937 | ||||||
Medical Instruments — 0.97% | ||||||
Fisher Scientific International Inc. 8.125%, due 05/01/12 (o) | 350,000 | 374,500 | ||||
Medex Inc. 8.875%, due 05/15/13 | 425,000 | 448,375 | ||||
822,875 | ||||||
Medical Services — 1.42% | ||||||
AmerisourceBergen Corporation 8.125%, due 09/01/08 | 150,000 | 161,625 | ||||
Beverly Enterprises Inc. | 350,000 | 344,313 | ||||
Iasis Healthcare | 275,000 | 281,188 | ||||
NDCHealth Corporation | 375,000 | 413,437 | ||||
1,200,563 |
ENTERPRISE Accumulation Trust
5
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Metals & Mining — 4.08% | ||||||
Alaska Steel Corporation | $ | 100,000 | $ | 93,500 | ||
Alaska Steel Corporation | 200,000 | 180,500 | ||||
ANR Pipeline Company | 100,000 | 109,250 | ||||
Dresser Inc. 9.375%, due 04/15/11 | 650,000 | 695,500 | ||||
Ispat Inland 9.75%, due 04/01/14 | 450,000 | 463,500 | ||||
Southern Natural Gas Company 8.875%, due 03/15/10 | 375,000 | 409,687 | ||||
Steel Dynamics Inc. | 450,000 | 497,250 | ||||
Williams Companies Inc. | 225,000 | 247,500 | ||||
Williams Companies Inc. | 750,000 | 761,250 | ||||
3,457,937 | ||||||
Misc. Financial Services — 0.39% | ||||||
Ucar Finance Inc. | 300,000 | 333,750 | ||||
Oil Services — 3.74% | ||||||
Chesapeake Energy Corporation 8.375%, due 11/01/08 | 700,000 | 756,000 | ||||
Ferrellgas Partner | 300,000 | 320,250 | ||||
Grant Prideco Inc. (o) | 450,000 | 495,000 | ||||
Hanover Compressor Company | 100,000 | 79,000 | ||||
Hanover Equipment Test | 650,000 | 695,500 | ||||
Key Energy Services Inc. | 250,000 | 258,750 | ||||
Massey Energy Company | 200,000 | 199,000 | ||||
Pride International Inc. | 250,000 | 252,500 | ||||
Westport Resources Corporation 8.25%, due 11/01/11 | 100,000 | 113,125 | ||||
3,169,125 | ||||||
Other — 0.44% | ||||||
Service Corporation International 6.75%, due 04/01/16 | 400,000 | 370,000 | ||||
Paper & Forest Products — 1.74% | ||||||
Georgia Pacific Corporation | 550,000 | 607,750 | ||||
Georgia Pacific Corporation | 350,000 | 411,250 | ||||
Norske Skog Cda Ltd. | 75,000 | 72,563 | ||||
Tembec Industries Inc. | 400,000 | 386,000 | ||||
1,477,563 |
Number of Shares or Principal Amount | Value | |||||
Paper Products — 0.66% | ||||||
Bowater Inc. 6.50%, due 06/15/13 | $ | 275,000 | $ | 258,712 | ||
Buckeye Technologies Inc. | 300,000 | 303,000 | ||||
561,712 | ||||||
Pharmaceuticals — 0.67% | ||||||
Leiner Health Products Inc. | 150,000 | 154,875 | ||||
WH Holdings Ltd. | 400,000 | 416,000 | ||||
570,875 | ||||||
Printing & Publishing — 2.89% | ||||||
Dex Media East | 200,000 | 224,500 | ||||
Dex Media East | 500,000 | 583,750 | ||||
Dex Media Inc. | 200,000 | 192,000 | ||||
Dex Media West | 100,000 | 109,000 | ||||
Dex Media West | 450,000 | 493,875 | ||||
Houghton Mifflin Company | 450,000 | 450,000 | ||||
Primedia Inc. 8.875%, due 05/15/11 | 400,000 | 396,000 | ||||
2,449,125 | ||||||
Publishing — 0.22% | ||||||
CBD Media / CBD Finance Inc. 8.625%, due 06/01/11 | 175,000 | 184,188 | ||||
Retail — 9.19% | ||||||
Amerigas Partners / Amerigas Eagle Finance Corporation | 425,000 | 452,625 | ||||
Asbury Automotive Group Inc. | 150,000 | 153,000 | ||||
Asbury Automotive Group Inc. | 200,000 | 191,000 | ||||
Buhrmann U.S. Inc. | 325,000 | 356,069 | ||||
Cole National Group Inc. | 900,000 | 909,000 | ||||
Finlay Fine Jewelry Corporation 8.375%, due 06/01/12 | 450,000 | 466,875 | ||||
FTD Inc. 7.75%, due 02/15/14 | 350,000 | 324,625 | ||||
Gap Inc. 10.55%, due 12/15/08 (o) | 550,000 | 665,500 | ||||
Jo Ann Stores Inc. | 700,000 | 686,000 | ||||
Michaels Stores Inc. | 625,000 | 684,375 | ||||
Payless Shoesource Inc. | 200,000 | 198,000 | ||||
Penney (JC) Company Inc. | 700,000 | 761,250 |
ENTERPRISE Accumulation Trust
6
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Penney (JC) Company Inc. | $ | 512,000 | $ | 532,480 | ||
Penney (JC) Corporation Inc. | 500,000 | 558,750 | ||||
Petco Animal Supplies Inc. | 122,000 | 136,640 | ||||
Saks Inc. 8.25%, due 11/15/08 (o) | 350,000 | 378,875 | ||||
Sonic Automotive Inc. | 325,000 | 338,812 | ||||
7,793,876 | ||||||
Telecommunications — 4.01% | ||||||
American Cellular Corporation 10.00%, due 08/01/11 | 450,000 | 388,125 | ||||
Block Communications Inc. | 250,000 | 262,500 | ||||
Crown Castle International Corporation 9.375%, due 08/01/11 (o) | 100,000 | 110,000 | ||||
Dobson Communications Corporation 8.875%, due 10/01/13 (o) | 225,000 | 171,000 | ||||
MCI Inc. 5.908%, due 05/01/07 | 75,000 | 72,750 | ||||
Panamsat Corporation | 600,000 | 681,000 | ||||
Pathnet Inc. 12.25%, | 250,000 | 125 | ||||
QWest Corporation | 100,000 | 108,000 | ||||
QWest Services Corporation | 1,382,000 | 1,606,575 | ||||
3,400,075 | ||||||
Textiles — 0.46% | ||||||
Interface Inc. | 350,000 | 390,250 | ||||
Transportation — 0.27% | ||||||
Horizon Lines 9.00%, due 11/01/12 | 225,000 | 226,625 | ||||
Utilities — 4.47% | ||||||
AES Corporation | 425,000 | 454,219 | ||||
AES Corporation | 200,000 | 207,500 | ||||
AES Corporation | 200,000 | 214,250 | ||||
AES Corporation | 125,000 | 120,156 | ||||
CMS Energy Corporation | 50,000 | 49,750 | ||||
Edison Mission Energy | 375,000 | 390,937 | ||||
Illinois Power Company | 950,000 | 1,123,375 | ||||
Midwest Generation | 450,000 | 454,500 | ||||
Nevada Power Company | 300,000 | 285,000 | ||||
Sierra Pacific Resources | 500,000 | 487,500 | ||||
3,787,187 |
Number of Shares or Principal Amount | Value | |||||
Waste Management — 0.53% | ||||||
Allied Waste North America Inc. 7.625%, due 01/01/06 | $ | 250,000 | $ | 262,188 | ||
Allied Waste North America Inc. 5.75%, due 02/15/11 | 200,000 | 189,500 | ||||
451,688 | ||||||
Wireless Communications — 0.33% | ||||||
American Towers Inc. | 175,000 | 175,438 | ||||
Crown Castle International Corporation 7.50%, due 12/01/13 | 100,000 | 99,500 | ||||
Voicestream Wireless Corporation 10.375%, due 11/15/09 | 918 | 989 | ||||
275,927 | ||||||
Total Domestic Corporate Bonds | ||||||
(Identified cost $73,503,920) | 75,719,766 | |||||
Convertible Corporate Bonds — 0.63% | ||||||
Wireless Communications — 0.63% | ||||||
Nextel Communications | 550,000 | 534,875 | ||||
Total Convertible Corporate Bonds | ||||||
(Identified cost $395,008) | 534,875 | |||||
Domestic Stocks, Rights and Warrants — 1.68% | ||||||
Chemicals — 0.11% | ||||||
Pioneer Companies Inc. (a) (o) | 12,835 | 91,257 | ||||
Communications — 0.00% | ||||||
Loral Space & Communication Ltd. (Wts) (a) (d) (m) | 600 | — | ||||
Loral Space & Communications | 5,235 | — | ||||
— | ||||||
Computer Software — 0.00% | ||||||
Verado Holdings Inc. (Wts) (a) | 300 | 145 | ||||
Electronics — 0.00% | ||||||
Axiohm Transaction Solutions Private Placement (a) (d) (m) | 4,056 | — | ||||
Health Care — 1.31% | ||||||
Dade Behring Holdings Inc. (a) (o) | 23,333 | 1,108,784 | ||||
Medical Instruments — 0.10% | ||||||
Charles River Labs Inc. (Wts) (a) | 250 | 82,631 | ||||
Misc. Financial Services — 0.15% | ||||||
Leucadia National Corporation (o) | 2,606 | 129,518 |
ENTERPRISE Accumulation Trust
7
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | ||||
Telecommunications — 0.01% | |||||
E. Spire Communications Inc. | 300 | $ | — | ||
MCI Inc. (o) Com | 181 | 2,616 | |||
Nextlink Communications Inc. | 1,050,000 | — | |||
Nextlink Communications Inc. | 50,000 | — | |||
Pathnet Inc. (Wts) (a) (d) (m) (144A) | 250 | — | |||
Williams Communications Group Escrow shares (a) (d) (m) | 575,000 | — | |||
Wiltel Communications | 6,144 | — | |||
XO Communications Inc. | 1,872 | 2,808 | |||
XO Communications Inc. | 1,403 | 1,473 | |||
XO Communications Inc. | 1,403 | 982 | |||
XO Communications Inc. (a) (o) | 935 | 3,881 | |||
11,760 | |||||
Wireless Communications — 0.00% | |||||
Leap Wireless International Inc. | 4,500 | — | |||
Total Domestic Stocks, Rights and Warrants | |||||
(Identified cost $2,749,608) | 1,424,095 | ||||
Foreign Bonds — 3.67% | |||||
Broadcasting — 0.64% | |||||
Grupo Televisa | 500,000 | 540,000 | |||
Energy — 0.64% | |||||
YPF Sociedad Anonima | 500,000 | 540,000 | |||
Finance — 0.52% | |||||
PDVSA Finance Ltd. | 400,000 | 437,000 | |||
Oil Services — 0.40% | |||||
Petroleos Mexicano | 300,000 | 343,650 | |||
Telecommunications — 0.86% | |||||
Telewest 11.00%, due 10/01/07 (b) | 250,000 | 146,875 | |||
Telewest Communications | 1,100,000 | 528,000 | |||
Telewest Communications | 100,000 | 55,000 | |||
729,875 |
Number of Shares or Principal Amount | Value | |||||
Transportation — 0.07% | ||||||
TBS Shipping International Ltd. 10.00%, due 02/08/08 (d) (m) | 203,875 | $ | 59,124 | |||
Travel/Entertainment/Leisure — 0.54% | ||||||
Royal Caribbean Cruises Ltd. | 425,000 | 457,937 | ||||
Total Foreign Bonds | ||||||
(Identified cost $3,866,234) | 3,107,586 | |||||
Foreign Stocks and Warrants — 0.00% | ||||||
Transportation — 0.00% | ||||||
TBS Shipping International Ltd. | 2,428 | — | ||||
TBS Shipping International Ltd. | 8,846 | — | ||||
TBS Shipping International Ltd. | 2,059 | — | ||||
Total Foreign Stocks and Warrants | ||||||
(Identified cost $0) | — | |||||
Other Investments — 11.61% | ||||||
Securities Lending Quality Trust (y) | 9,844,301 | 9,844,301 | ||||
Total Other Investments | ||||||
(Identified cost $9,844,301) | 9,844,301 | |||||
Repurchase Agreement — 4.38% | ||||||
State Street Bank & Trust Repurchase Agreement 0.70%, due 07/01/04 Proceeds $3,715,072 Collateral: | $ | 3,715,000 | 3,715,000 | |||
Total Repurchase Agreement | ||||||
(Identified cost $3,715,000) | 3,715,000 | |||||
Total Investments | ||||||
(Identified cost $94,074,071) | $ | 94,345,623 | ||||
Other Assets Less | (9,578,592) | |||||
Net Assets — 100% | $ | 84,767,031 |
ENTERPRISE Accumulation Trust
8
Enterprise High-Yield Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
(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 June 30, 2004. |
(m) | Illiquid security. |
(o) | Security, or portion thereof, out on loan at June 30, 2004. |
(v) | Variable interest rate security, interest rate is as of June 30, 2004. |
(y) | Represents investment of cash collateral received from securities on loan (See Note 5). |
(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
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value, including Securities loaned valued at $9,086,588 (Note 5) | $ | 94,345,623 | ||
Investment income receivable | 1,540,573 | |||
Receivable for fund shares sold | 4,033 | |||
Receivable for investments sold | 271,186 | |||
Cash | 969 | |||
Other assets | 1,404 | |||
Total assets | 96,163,788 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 235,005 | |||
Payable for investments purchased | 1,284,933 | |||
Payable upon return of securities loaned (Note 5) | 9,844,301 | |||
Accrued expenses and other liabilities | 32,518 | |||
Total liabilities | 11,396,757 | |||
Net assets | $ | 84,767,031 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 103,408,498 | ||
Undistributed (accumulated) net investment income (loss) | 7,065,499 | |||
Undistributed (accumulated) net realized gain (loss) | (25,978,518 | ) | ||
Unrealized appreciation (depreciation) | 271,552 | |||
Net assets | $ | 84,767,031 | ||
Fund shares outstanding | 17,389,382 | |||
Net asset value per share | $4.87 | |||
Investments at cost | $ | 94,074,071 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Enterprise High-Yield Bond Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Interest | $ | 3,323,596 | ||
Securities lending income | 1,758 | |||
Total investment income | 3,325,354 | |||
Expenses: | ||||
Investment advisory fees | 263,397 | |||
Shareholder servicing fees | 65,821 | |||
Custodian and fund accounting fees | 27,368 | |||
Reports to shareholders | 2,477 | |||
Trustees’ fees | 1,195 | |||
Audit and legal fees | 10,627 | |||
Other expenses | 3,401 | |||
Total expenses | 374,286 | |||
Expense reimbursement | (1,141 | ) | ||
Total expenses, net of reimbursement | 373,145 | |||
Net investment income (loss) | 2,952,209 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 974,085 | |||
Net change in unrealized gain (loss) on investments | (2,871,491 | ) | ||
Net realized and unrealized gain (loss) | (1,897,406 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | 1,054,803 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
11
Enterprise High-Yield Bond Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 2,952,209 | $ | 6,375,353 | ||||
Net realized gain (loss) | 974,085 | (2,011,195 | ) | |||||
Net change in unrealized gain (loss) | (2,871,491 | ) | 12,723,046 | |||||
Increase (decrease) in net assets resulting from operations | 1,054,803 | 17,087,204 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (2,207,538 | ) | |||||
Net realized gains | — | — | ||||||
Total distributions to shareholders | — | (2,207,538 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 5,121,793 | 11,976,394 | ||||||
Reinvestment of distributions | — | 2,207,538 | ||||||
Shares redeemed | (11,423,579 | ) | (16,179,218 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | (6,301,786 | ) | (1,995,286 | ) | ||||
Total increase (decrease) in net assets | (5,246,983 | ) | 12,884,380 | |||||
Net assets: | ||||||||
Beginning of period | 90,014,014 | 77,129,634 | ||||||
End of period | $ | 84,767,031 | $ | 90,014,014 | ||||
Capital share activity: | ||||||||
Shares issued | 1,053,192 | 2,753,455 | ||||||
Shares issued in reinvestment of distributions | — | 529,961 | ||||||
Shares redeemed | (2,348,427 | ) | (3,687,004 | ) | ||||
Net increase (decrease) | (1,295,235 | ) | (403,588 | ) | ||||
Undistributed net investment income | $ | 7,065,499 | $ | 4,113,290 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
12
Enterprise High-Yield Bond Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) June 30, 2004 | For the Years Ended December 31, | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||
Net asset value, beginning of period | $ | 4.82 | $ | 4.04 | $ | 4.34 | $ | 4.48 | $ | 5.06 | $ | 5.37 | ||||||||||||
Income from investment operations: | ||||||||||||||||||||||||
Net investment income (loss)C | 0.30 | 0.33 | 0.36 | 0.40 | 0.46 | 0.46 | ||||||||||||||||||
Net realized and unrealized gain (loss) on investments | (0.25 | ) | 0.54 | (0.30 | ) | (0.14 | ) | (0.58 | ) | (0.26 | ) | |||||||||||||
Total from investment operations | 0.05 | 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 | $ | 4.87 | $ | 4.82 | $ | 4.04 | $ | 4.34 | $ | 4.48 | $ | 5.06 | ||||||||||||
Total return | 1.04 | %B | 22.64 | % | 1.51 | % | 5.90 | % | (2.52 | )% | 3.86 | % | ||||||||||||
Net assets end of period | $ | 84,767 | $ | 90,014 | $ | 77,130 | $ | 107,686 | $ | 88,336 | $ | 109,816 | ||||||||||||
Ratio of expenses to average | 0.85 | %A | 0.79 | % | 0.79 | % | 0.77 | % | 0.75 | % | 0.69 | % | ||||||||||||
Ratio of expenses to average | 0.85 | %A | 0.79 | % | 0.79 | % | 0.77 | % | 0.75 | % | 0.69 | % | ||||||||||||
Ratio of net investment income (loss) to average net assets | 6.72 | %A | 7.53 | % | 8.61 | % | 8.92 | % | 9.57 | % | 8.76 | % | ||||||||||||
Portfolio turnover | 37 | % | 60 | % | 81 | % | 73 | % | 54 | % | 97 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
13
Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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)
June 30, 2004 (Unaudited)
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 six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $65,809 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 0.85%.
4. Investment Transactions
For the six months ended June 30, 2004, 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 | |||||
— | — | $ | 31,308,751 | $ | 36,032,888 |
ENTERPRISE Accumulation Trust
15
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
5. Securities Lending
The Portfolio may lend portfolio securities to qualified institutions. Loans are required to be secured at all times by collateral at least equal to 102% (105% for foreign securities) of the market value of securities loaned. The Portfolio receives a portion of the income earned on the collateral and also continues to earn income on the loaned securities. Any gain or loss in the market price of the securities loaned that may occur during the term of the loan will be for the account of the Portfolio. The lending agent provides the Portfolio with indemnification against losses due to borrower default. The Portfolio bears the risk of loss only with respect to the investment of any cash collateral. Any securities currently out on loan are denoted in the Portfolio of Investments.
The Portfolio generally receives cash as collateral for securities lending. The cash is invested in the 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 six months ended June 30, 2004.
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 June 30, 2004, 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 | |||||||
$ | 94,074,071 | $ | 4,775,740 | $ | 4,504,188 | $ | 271,552 |
8. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
ENTERPRISE Accumulation Trust
16
Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 18,485,302.566 | |
Votes Against | 1,032,833.184 | |
Votes Abstained | 1,494,878.795 | |
Votes Withheld | 14,837,239.439 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 18,388,156.404 | |
Votes Against | 1,072,362.653 | |
Votes Abstained | 1,552,495.488 | |
Votes Withheld | 14,837,239.439 |
ENTERPRISE Accumulation Trust
17
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
18
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
19
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
20
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
21
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 Registered Public Accounting Firm
PricewaterhouseCoopers LLP
250 West Pratt Street
Suite 2100
Baltimore, Maryland 21201
This report is authorized for distribution only to contractholders and to others who have received a copy of this Trust’s prospectus.
ENTERPRISE Accumulation Trust
22
Enterprise 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 $12.9 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.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 0.40%. The Portfolio outperformed its benchmark, the Lehman Brothers 1-3 Year Government/Credit Index, which returned 0.03%. The Portfolio outperformed its peer group, the Lipper Short/Intermediate Investment Grade Funds Index, which returned 0.05%.
How would you describe the investment environment during the period?
Several robust economic statistical measures released in the late spring led the Fed to hike their benchmark Fed Funds Rate by 0.25% in June. The forward-looking marketplace had anticipated this move, as well as additional future upward moves, sending short- and intermediate-term bond yields significantly higher.
What strategies affected Portfolio performance during the period?
The Portfolio maintained a duration position slightly shorter than that of its benchmark over the course of the period. While fixed-rate bond prices generally declined in anticipation of the Fed’s tightening move, this reduced interest-rate exposure limited the Portfolio’s decline. There was little in the way of relative subsector performance in the first half, although in general, the Portfolio’s over-weight in the risk-sectors of corporate and asset-backed securities earned a higher coupon income. Most incremental purchases were in floating-rate bonds, whose interest rate periodically adjusts to market levels.
What changes were made to the Portfolio over the period?
The Portfolio’s duration was maintained at a slightly shortened position, reflecting MONY Capital’s view that interest rates are beginning to respond to the anticipated economic recovery. Incremental purchases were made in the securitized first-mortgage and home-equity subsectors of the short-duration population.
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
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Enterprise Short Duration Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Domestic Corporate Bonds — 34.30% | ||||||
Automotive — 1.67% | ||||||
Daimlerchrysler North America Holdings 1.88%, due 05/24/06 (v) | $ | 200,000 | $ | 200,560 | ||
Banking — 2.00% | ||||||
Wells Fargo & Company | 250,000 | 240,232 | ||||
Finance — 7.49% | ||||||
CIT Group Holdings Inc. | 200,000 | 207,456 | ||||
Deere John Capital Corporation 3.625%, due 05/25/07 | 250,000 | 249,446 | ||||
Ford Motor Credit Company | 200,000 | 206,662 | ||||
General Motors Acceptance Corporation 6.75%, due 01/15/06 | 225,000 | 235,766 | ||||
899,330 | ||||||
Food, Beverages & Tobacco — 2.07% | ||||||
Pepsico Inc. 3.20%, due 05/15/07 | 250,000 | 248,573 | ||||
Media — 1.99% | ||||||
Walt Disney Company | 225,000 | 238,339 | ||||
Metals & Mining — 2.08% | ||||||
Alcan Aluminum Corporation | 250,000 | 249,975 | ||||
Oil Services — 11.67% | ||||||
Pacific Gas & Electric Company 1.81%, due 04/03/06 (v) | 1,000,000 | 1,000,603 | ||||
Sempra Energy 1.74%, | 400,000 | 399,472 | ||||
1,400,075 | ||||||
Pharmaceuticals — 3.27% | ||||||
Pfizer Inc. 2.50%, due 03/15/07 | 400,000 | 392,374 | ||||
Utilities — 2.06% | ||||||
Northern States Power Company 2.875%, due 08/01/06 | 250,000 | 247,582 | ||||
Total Domestic Corporate Bonds | ||||||
(Identified cost $4,130,164) | 4,117,040 | |||||
U.S. Government and Agency Obligations — 20.00% | ||||||
Fannie Mae — 13.34% | ||||||
1.25%, due 07/23/04 | 200,000 | 199,847 | ||||
2.75%, due 08/11/06 | 500,000 | 495,774 | ||||
4.664%, due 05/01/33 | 666,430 | 659,752 | ||||
3.732%, due 06/01/34 | 244,735 | 246,489 | ||||
1,601,862 |
Number of Shares or Principal Amount | Value | |||||
Freddie Mac — 2.50% | ||||||
1.16%, due 07/13/04 | $ | 300,000 | $ | 299,884 | ||
U.S. Treasury Notes — 4.16% | ||||||
1.625%, due 01/31/05 | 500,000 | 499,707 | ||||
Total U.S. Government and Agency Obligations | ||||||
(Identified cost $2,425,218) | 2,401,453 | |||||
Asset-Backed Securities — 34.93% | ||||||
Finance — 21.92% | ||||||
Asset Backed Funding Certificates, Series 2001-AQ1, Class M1r 6.863%, due 05/20/32 | 375,000 | 382,512 | ||||
Atherton Franchise Loan Funding, Series 1998-A, Class A2 | 207,486 | 201,896 | ||||
Bayview Financial Acquisition Trust, Series 2003-CA, Class M2 | 750,000 | 764,443 | ||||
Capital One Multi-Asset Trust, | 250,000 | 267,447 | ||||
Circuit City Credit Card Master Trust, Series 2003-2, Class CTSF | 400,000 | 410,885 | ||||
GE Business Loan Trust, Series | 96,956 | 100,452 | ||||
Principal Financial Group | 500,000 | 503,013 | ||||
2,630,648 | ||||||
Medical Instruments — 0.13% | ||||||
DVI Receivables XIX, Series 2003-1, Class D1 | 160,268 | 16,027 | ||||
Misc. Financial Services — 12.88% | ||||||
Ameriquest Mortgage Securities Inc., Series 2003-6, Class M1 | 400,000 | 403,956 | ||||
Amresco Residential Securities Mortgage Loan Trust, Series 1998-2, Class M1F 6.745%, due 06/25/28 | 134,360 | 137,297 | ||||
Citibank Credit Card Issuance Trust, Series 2002-C3, Class C3 | 250,000 | 256,088 | ||||
Hedged Mutual Fund Fee Trust, Series 2003-2, Class 1 | 205,168 | 206,050 | ||||
Hedged Mutual Fund Fee Trust, Series 2003-IA, Class 1 | 186,258 | 187,133 |
ENTERPRISE Accumulation Trust
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Enterprise Short Duration Bond Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Lehman Manufactured Housing, Series 2003-1, Class M1 | $ | 156,300 | $ | 155,647 | ||
Morgan Stanley Asset Backed Capital, Series 2004-HE4, Class M3 | 200,000 | 199,500 | ||||
1,545,671 | ||||||
Total Asset-Backed Securities | ||||||
(Identified cost $4,294,561) | 4,192,346 | |||||
Collateralized Mortgage Obligations — 8.64% | ||||||
Bank of America Mortgage Securities Inc., Series 2003-I, Class 1A1 3.32%, due 07/01/04 (v) | 494,406 | 493,338 | ||||
Bank of America Mortgage Securities Inc., Series 2004-A, Class 1A1 3.473%, due 02/25/34 (v) | 334,401 | 331,406 | ||||
Bayview Commercial Asset Trust, Series 2003-1, Class B | 209,535 | 212,244 | ||||
1,036,988 | ||||||
Total Collateralized Mortgage Obligations | ||||||
(Identified cost $1,041,377) | $ | 1,036,988 |
Number of Shares or Principal Amount | Value | |||||
Repurchase Agreement — 1.44% | ||||||
State Street Bank & Trust Repurchase Agreement 0.70%, due 07/01/04 Proceeds $173,003 Collateral: | $ | 173,000 | $ | 173,000 | ||
Total Repurchase Agreement | ||||||
(Identified cost $173,000) | 173,000 | |||||
Total Investments | ||||||
(Identified cost $12,064,320) | $ | 11,920,827 | ||||
Other Assets Less Liabilities — 0.69% | 82,864 | |||||
Net Assets — 100% | $ | 12,003,691 |
(a) | Illiquid security. |
(d) | Security is in default of interest payments and is fair valued at June 30, 2004. Portfolio has ceased accrual of interest. |
(v) | Variable interest rate security, interest rate is as of June 30, 2004. |
(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
June 30, 2004 (Unaudited)
Assets: | ||||
Investments at value | $ | 11,920,827 | ||
Investment income receivable | 71,677 | |||
Receivable for fund shares sold | 23,703 | |||
Due from investment adviser | 726 | |||
Cash | 540 | |||
Other assets | 90 | |||
Total assets | 12,017,563 | |||
Liabilities: | ||||
Payable for fund shares redeemed | 9,384 | |||
Accrued expenses and other liabilities | 4,488 | |||
Total liabilities | 13,872 | |||
Net assets | $ | 12,003,691 | ||
Analysis of net assets: | ||||
Paid-in capital | $ | 12,023,325 | ||
Undistributed (accumulated) net investment income (loss) | 127,974 | |||
Undistributed (accumulated) net realized gain (loss) | (4,115 | ) | ||
Unrealized appreciation (depreciation) | (143,493 | ) | ||
Net assets | $ | 12,003,691 | ||
Fund shares outstanding | 1,197,982 | |||
Net asset value per share | $10.02 | |||
Investments at cost | $ | 12,064,320 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Short Duration Bond Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Interest | $ | 162,877 | ||
Total investment income | 162,877 | |||
Expenses: | ||||
Investment advisory fees | 24,164 | |||
Shareholder servicing fees | 4,142 | |||
Custodian and fund accounting fees | 5,993 | |||
Reports to shareholders | 353 | |||
Trustees’ fees | 160 | |||
Audit and legal fees | 1,496 | |||
Other expenses | 899 | |||
Total expenses | 37,207 | |||
Expense reimbursement | (2,304 | ) | ||
Total expenses, net of reimbursement | 34,903 | |||
Net investment income (loss) | 127,974 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 7 | |||
Net change in unrealized gain (loss) on investments | (96,036 | ) | ||
Net realized and unrealized gain (loss) | (96,029 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | 31,945 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Short Duration Bond Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | For the Period May 1, 2003(1) through December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 127,974 | $ | 126,511 | ||||
Net realized gain (loss) | 7 | 1,728 | ||||||
Net change in unrealized gain (loss) | (96,036 | ) | (47,457 | ) | ||||
Increase (decrease) in net assets resulting from operations | 31,945 | 80,782 | ||||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (132,777 | ) | |||||
Net realized gains on investments | — | — | ||||||
Total distributions to shareholders | — | (132,777 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 3,304,439 | 11,763,908 | ||||||
Reinvestment of distributions | — | 132,776 | ||||||
Shares redeemed | (1,099,865 | ) | (2,077,517 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 2,204,574 | 9,819,167 | ||||||
Total increase (decrease) in net assets | 2,236,519 | 9,767,172 | ||||||
Net assets: | ||||||||
Beginning of period | 9,767,172 | — | ||||||
End of period | $ | 12,003,691 | $ | 9,767,172 | ||||
Capital share activity: | ||||||||
Shares issued | 329,412 | 1,171,673 | ||||||
Shares issued in reinvestment of distributions | — | 13,304 | ||||||
Shares redeemed | (109,677 | ) | (206,730 | ) | ||||
Net increase (decrease) | 219,735 | 978,247 | ||||||
Undistributed net investment income | $ | 127,974 | $ | — |
(1) | Commencement of operations. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Enterprise Short Duration Bond Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | For the Period May 1, 2003 through December 31, 2003 | |||||||
Net asset value, beginning of period | $ | 9.98 | $ | 10.00 | ||||
Income from investment operations: | ||||||||
Net investment income (loss)C | 0.13 | 0.15 | ||||||
Net realized and unrealized gain (loss) on investments | (0.09 | ) | (0.04 | ) | ||||
Total from investment operations | 0.04 | 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 | $ | 10.02 | $ | 9.98 | ||||
Total return | 0.40 | %B | 1.15 | %B | ||||
Net assets end of period (in thousands) | $ | 12,004 | $ | 9,767 | ||||
Ratio of expenses to average net assets | 0.65 | %A | 0.65 | %A | ||||
Ratio of expenses to average net assets (excluding reimbursement) | 0.69 | %A | 0.71 | %A | ||||
Ratio of net investment income (loss) to average net assets | 2.36 | %A | 2.54 | %A | ||||
Portfolio turnover | 0 | % | 4 | % |
A | Annualized. |
B | Not annualized. |
C | Based on average shares outstanding. |
See notes to financial statements.
ENTERPRISE Accumulation Trust
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Notes to Financial Statements
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as 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.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 28, 2004.
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.
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Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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.
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 six months ended June 30, 2004, ECM incurred subadvisory fees payable to MONY Capital Management, Inc., Inc. of $5,370. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $4,282 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 0.65%. The MONY Group Inc. and its subsidiaries and affiliates had an investment of $5,072,634 in the Portfolio at June 30, 2004.
ENTERPRISE Accumulation Trust
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Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
4. Investment Transactions
For the six months ended June 30, 2004, 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 | ||||
$247,053 | — | $ | 3,152,652 | — |
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 six months ended June 30, 2004.
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 June 30, 2004, 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 | |||||||
$ | 12,064,320 | $ | 74,236 | $ | 217,729 | $ | 143,493 |
7. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 28, 2004.
ENTERPRISE Accumulation Trust
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Shareholder Proxy Voting Information (Unaudited)
On June 28, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital, a new Sub-Advisory Agreement between the Trust, Enterprise Capital and MONY Capital Management, Inc. (“MONY Capital”), the terms of which are substantially identical to the existing Sub-Advisory Agreement with MONY Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 1,034,040.506 | |
Votes Against | 136,041.040 | |
Votes Abstained | 62,425.861 | |
Votes Withheld | 924,560.419 |
To approve the new Investment Sub-Advisory Agreement
Votes For | 1,030,485.095 | |
Votes Against | 152,428.570 | |
Votes Abstained | 49,593.742 | |
Votes Withheld | 924,560.419 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 1,036,605.613 | |
Votes Against | 135,405.162 | |
Votes Abstained | 60,496.632 | |
Votes Withheld | 924,560.419 |
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Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
12
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
ENTERPRISE Accumulation Trust
13
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
ENTERPRISE Accumulation Trust
14
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
ENTERPRISE Accumulation Trust
15
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 Registered Public Accounting Firm
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 Total Return Portfolio
SUBADVISER’S COMMENTS
Pacific Investment Management Company, LLC
Newport Beach, California
Investment Management
Enterprise Capital Management, Inc. is the registered investment adviser for Enterprise Accumulation Trust.
Pacific Investment Management Company (“PIMCO”) is the subadviser to the Enterprise Total Return Portfolio. The firm has approximately $392 billion in assets under management, and its normal investment minimum is $75 million.
Investment Objective
The objective of the Enterprise Total Return Portfolio is total return.
First Half 2004 Performance Review
How did the Portfolio perform for the six months ended June 30, 2004?
For the six-month period ended June 30, 2004, the Portfolio returned 0.19%. The Portfolio outperformed its benchmark, the Lehman Brothers Universal Bond Index, which returned 0.16%. The Portfolio outperformed its peer group, the Lipper BBB Rated Funds Index, which returned -0.29%.
How would you describe the investment environment during the period?
Bonds fared poorly in the first half of 2004 after a difficult second quarter in which some interest rates climbed more than 0.90%. The yield on the 10-year Treasury ended the first six months at 4.61%, up 0.35% from where it began the period.
Bonds had gained ground in the first quarter as concern about the durability of the economic recovery pushed already low rates lower. Demand for relatively safe assets such as bonds rose amid renewed fears of terrorism after the Madrid bombing. However, rates rose after stronger payroll and inflation prints in April. The impetus for rising rates was confidence that the Fed had succeeded in reviving the economy, as evidenced by continued growth in employment, and would soon begin raising rates. That confidence proved justified as the Fed met expectations with a 0.25% rate hike in June. The Fed had held the federal funds rate at 1%, which implies a negative real rate, since June of 2003.
What strategies affected Portfolio performance during the period?
Interest Rate Strategies
· | Interest rate strategies were slightly negative for performance. An early positioning for reflation with a below benchmark duration was negative as rates fell during the first quarter, but this defensive stance added to returns as rates rose in the second quarter. An emphasis on short and intermediate maturities during the second quarter was negative, as rates increased most on this part of the yield curve. |
Sectors Strategies
· | A mortgage underweight was modestly negative as heavy demand from banks supported the sector throughout much of the first half of the year. However, favorable coupon selection offset much of this impact. |
· | Under-weighting corporates was modestly negative as the yield advantage in this sector offset concerns about slower growth and profits. |
· | Non-U.S. positions were positive as short to intermediate maturity issues outpaced U.S. alternatives amid expectations of slower growth and lower inflation in Europe. |
· | An allocation to real return bonds was positive as these assets outperformed Treasuries of like duration. |
· | Emerging Market (EM) bonds detracted from performance as leveraged tactical investors sold EM bonds as rates rose. |
ENTERPRISE Accumulation Trust
1
Enterprise Total Return Portfolio
SUBADVISER’S COMMENTS — (Continued)
What changes were made to the Portfolio over the period?
Over the six-month period, the Portfolio modestly increased its interest rate exposure but maintained its emphasis on short- to intermediate-term bonds. In terms of sectors, the Portfolio modestly reduced its exposure to Treasury Inflation Protected Securities (TIPS) and mortgages. Initially, the Portfolio increased its exposure to non-dollar denominated debt instruments, but the allocation was subsequently reduced, as PIMCO sought to harvest the gains. The Portfolio also increased its exposure to municipals, especially in May and June when muni yields were attractive relative to Treasuries.
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
2
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Domestic Corporate Bonds and Notes — 11.39% | ||||||
Airlines — 0.34% | ||||||
Continental Airlines Inc. | $ | 110,000 | $ | 108,823 | ||
United Airlines Inc. | 49,079 | 40,835 | ||||
United Airlines Inc. | 50,000 | 41,649 | ||||
191,307 | ||||||
Automotive — 0.31% | ||||||
Daimlerchrysler North America | 60,000 | 61,515 | ||||
Daimlerchrysler North America, | 50,000 | 49,988 | ||||
Dura Operating Corporation | 60,000 | 61,200 | ||||
172,703 | ||||||
Banking — 0.17% | ||||||
Rabobank Capital Fund | 100,000 | 96,768 | ||||
Cable — 0.10% | ||||||
Continental Cablevision Inc. | 50,000 | 54,280 | ||||
Chemicals — 0.38% | ||||||
Nalco Company | 200,000 | 209,500 | ||||
Containers/Packaging — 0.26% | ||||||
Packaging Corporation of America 4.375% due 08/01/08 | 143,000 | 141,501 | ||||
Crude & Petroleum — 0.09% | ||||||
Ras Laffan Liquified Natural Gas, 3.437% due 09/15/09 (144A) | 53,000 | 51,781 | ||||
Electrical Equipment — 0.10% | ||||||
Oncor Electric Delivery Company 6.375% due 05/01/12 | 50,000 | 53,509 | ||||
Electronics — 0.37% | ||||||
Delphi Corporation | 200,000 | 203,555 | ||||
Energy — 1.46% | ||||||
AEP Texas Central Company | 200,000 | 202,968 | ||||
El Paso Energy Corporation | 25,000 | 20,063 | ||||
El Paso Natural Gas Company | 50,000 | 47,750 | ||||
El Paso Production Holding Company, 7.75% due 06/01/13 | 60,000 | 55,050 | ||||
Florida Power Corporation | 130,000 | 125,553 |
Number of Shares or Principal Amount | Value | |||||
Gulfterra Energy Partners | $ | 43,000 | $ | 46,762 | ||
NRG Energy Inc. | 210,000 | 212,100 | ||||
PSEG Power 6.95% due 06/01/12 | 62,000 | 67,418 | ||||
Sonat Inc. 7.625% due 07/15/11 | 35,000 | 31,237 | ||||
808,901 | ||||||
Hotels & Restaurants — 0.28% | ||||||
Hilton Hotels Corporation | 100,000 | 100,000 | ||||
Starwood Hotels & Resorts | 50,000 | 53,500 | ||||
153,500 | ||||||
Insurance — 0.54% | ||||||
Metropolitan Life Global Funding, 1.38% due 08/23/04 (144A) (v) | 100,000 | 99,965 | ||||
Principal Life Global Funding, | 130,000 | 130,502 | ||||
Protective Life US Funding Trust, 1.686% due 09/27/04 (144A) (v) | 70,000 | 69,857 | ||||
300,324 | ||||||
Media — 0.44% | ||||||
Time Warner Inc. | 125,000 | 136,308 | ||||
Time Warner Inc. | 100,000 | 108,059 | ||||
244,367 | ||||||
Metals & Mining — 0.13% | ||||||
Alcan Aluminum Corporation | 70,000 | 69,993 | ||||
Misc. Financial Services — 2.80% | ||||||
CIT Group Inc. | 203,000 | 203,120 | ||||
CIT Group Inc. 7.75% due 04/02/12 | 150,000 | 171,068 | ||||
General Motors Acceptance Corporation, | 250,000 | 254,315 | ||||
General Motors Acceptance Corporation, | 450,000 | 453,653 | ||||
HSBC Capital Funding | 100,000 | 139,266 | ||||
Restructured Asset Certificates, | 200,000 | 195,170 | ||||
Small Business Administration | 148,984 | 140,952 | ||||
1,557,544 |
ENTERPRISE Accumulation Trust
3
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Oil Services — 0.99% | ||||||
Amerada Hess Corporation | $ | 150,000 | $ | 158,731 | ||
Chesapeake Energy Corporation 8.125% due 04/01/11 | 4,999 | 5,399 | ||||
Pacific Gas & Electric Company 1.81% due 07/05/04 (v) | 180,000 | 180,108 | ||||
Tennessee Gas Pipeline Company 8.375% due 06/15/32 | 150,000 | 146,250 | ||||
Vintage Petroleum Inc. | 60,000 | 61,500 | ||||
551,988 | ||||||
Telecommunications — 1.80% | ||||||
American Cellular Corporation 10.00% due 08/01/11 | 60,000 | 51,750 | ||||
Cincinnati Bell Inc. | 200,000 | 178,000 | ||||
Panamsat Corporation | 60,000 | 68,100 | ||||
SBC Communications Inc., | 310,000 | 314,802 | ||||
Sprint Capital Corporation | 50,000 | 57,467 | ||||
Verizon Global Funding Corporation, 6.125% due 06/15/07 | 65,000 | 69,271 | ||||
Verizon Maryland Inc. | 250,000 | 260,471 | ||||
999,861 | ||||||
Transportation — 0.24% | ||||||
Norfolk Southern Corporation | 30,000 | 32,814 | ||||
Norfolk Southern Corporation | 100,000 | 100,407 | ||||
133,221 | ||||||
Utilities — 0.20% | ||||||
Niagara Mohawk Power Corporation (Series G), 7.75% due 10/01/08 | 100,000 | 112,566 | ||||
Waste Management — 0.17% | ||||||
USA Waste Services Inc. | 95,000 | 96,006 | ||||
Wireless Communications — 0.22% | ||||||
Cingular Wireless | 60,000 | 64,086 | ||||
Nextel Communications Inc. | 60,000 | 60,600 | ||||
124,686 | ||||||
Total Domestic Corporate Bonds and Notes | ||||||
(Identified cost $6,252,036) | 6,327,861 |
Number of Shares or Principal Amount | Value | |||||
Foreign Bonds — 2.83% | ||||||
Banking — 0.28% | ||||||
HSBC Holdings | $ | 120,000 | $ | 153,634 | ||
Cable — 0.06% | ||||||
Rogers Cablesystems Ltd. (Series B), 10.00% due 03/15/05 | 30,000 | 31,141 | ||||
Finance — 0.20% | ||||||
Deutsche Telekom International 8.125% due 05/29/12 | 76,000 | 112,357 | ||||
Misc. Financial Services — 1.83% | ||||||
AIG Sunamerica Institutional Funding, 1.20% due 01/26/05 | 13,000,000 | 119,467 | ||||
Eircom Funding | 60,000 | 62,400 | ||||
European Investment Bank | 14,000,000 | 128,321 | ||||
KFW International Finance Company, 1.00% due 12/20/04 | 60,000,000 | 550,597 | ||||
Pemex Project Funding Master Trust, 8.00% due 11/15/11 | 100,000 | 107,750 | ||||
Pemex Project Funding Master Trust, 8.625% due 02/01/22 | 50,000 | 52,000 | ||||
1,020,535 | ||||||
Telecommunications — 0.46% | ||||||
Deutsche Telekom International 8.25% due 06/15/05 | 65,000 | 68,343 | ||||
France Telecom | 139,000 | 187,458 | ||||
255,801 | ||||||
Total Foreign Bonds | ||||||
(Identified cost $1,597,621) | 1,573,468 | |||||
Asset-Backed Securities — 0.48% | ||||||
Banking — 0.21% | ||||||
Centex Home Equity Loan Trust. Series 2004-A, Class AV2, | 119,642 | 119,664 | ||||
Misc. Financial Services — 0.27% | ||||||
Merrill Lynch Mortgage Inc., | 12,666 | 12,693 | ||||
Morgan Stanley Capital Inc., | 93,888 | 94,069 | ||||
Structured Asset Securities Corporation, Series 2002-BC4, Class A, | 25,687 | 25,699 | ||||
Vanderbilt Acquisition Loan Trust, Series 2002-1, Class A1, | 15,274 | 15,304 | ||||
147,765 | ||||||
ENTERPRISE Accumulation Trust
4
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Total Asset-Backed Securities | ||||||
(Identified cost $267,158) | $ | 267,429 | ||||
Mortgage-Backed Securities — 5.49% | ||||||
Banking — 0.34% | ||||||
Citicorp Mortgage Securities Inc., Series 1999-2, Class A-5, | $ | 63,116 | 63,175 | |||
Countrywide Alternative Loan Trust, Series 2003-J1, Class 4A1, | 24,348 | 24,621 | ||||
Countrywide Home Loans Inc. Series 2002-1, Class 5A1, Pass Thru Certificates, 5.70% due 07/01/04 | 34,471 | 35,318 | ||||
Countrywide Home Loans Inc. Series 2002-HYB2, Class-6A1, | 26,765 | 26,904 | ||||
Countrywide Home Loans Inc. Series 2004-7, Class-5A2, | 27,040 | 26,849 | ||||
Wells Fargo Mortgage Backed Securities, Series 2002-E, Class 2A1, | 13,427 | 13,588 | ||||
190,455 | ||||||
Finance — 0.32% | ||||||
Credit Suisse First Boston Mortgage, Series 2002-P1, Class A-1, | 35,093 | 35,229 | ||||
Credit Suisse First Boston Mortgage, Series 2002-P3, Class A, | 144,521 | 145,032 | ||||
180,261 | ||||||
Misc. Financial Services — 2.98% | ||||||
Ameriquest Mortgage Securities Inc., Series 2004-X2, Class A, | 130,000 | 129,751 | ||||
Bear Stearns Arm Trust, Series 2002-2, Class IIIA, 6.917% due 07/01/04 | 2,317 | 2,440 | ||||
Bear Stearns Arm Trust, Series 2002-5, Class 6A, 5.973% due 07/01/04 | 9,471 | 9,519 | ||||
Bear Stearns Arm Trust, Series 2003-8, Class 2A1, 4.932% due 07/01/04 | 76,781 | 77,072 | ||||
Bear Stearns Arm Trust, Series 2003-8, Class 4A1, 4.812% due 07/01/04 | 157,804 | 157,270 | ||||
Bear Stearns Arm Trust, Series 2003-8, Class A-1, 4.369% due 07/01/04 | 307,981 | 308,742 | ||||
C Bass Trust, Series 2002-CB1, Class A2A, 1.64% due 07/25/04 (v) | 26,821 | 26,869 | ||||
C Bass Trust, Series 2002-CB6, Class 2A1, 1.80% due 07/25/04 (v) | 12,470 | 12,503 | ||||
First Horizon Asset Securities, Series 2000-H, Class 1A, | 5,183 | 5,176 | ||||
GSMPS Mortgage Loan Trust, Series 2003-A1, Class A1, | 64,928 | 68,184 |
Number of Shares or Principal Amount | Value | |||||
Sequoia Mortgage Trust, Series 10, Class 2A1, | $ | 243,716 | $ | 244,394 | ||
Small Business Administration, Series 2003-201, Class 1, | 49,045 | 48,810 | ||||
Small Business Administration, Series 2004-20C, Class 1, | 290,000 | 272,246 | ||||
Structured Asset Investment Loan Trust, Series 2003-BC3, Class 2A, 1.40% due 07/25/04 (v) | 64,830 | 64,818 | ||||
Structured Asset Securities Corporation, Series 2002-9, Class A2, | 49,372 | 49,320 | ||||
Structured Asset Securities Corporation, Series 2002-HF1, | 12,553 | 12,545 | ||||
Structured Asset Securities Corporation, Series 2003-S1, Class A1, | 12,960 | 12,962 | ||||
Washington Mutual Mortgage Loan Trust, Series 2000-3, Class A, | 99,290 | 99,384 | ||||
Washington Mutual Mortgage Loan Trust, Series 2002-AR2, Class A, 3.065% due 02/27/34 (v) | 34,299 | 34,306 | ||||
Washington Mutual Mortgage Securities Trust, Series 2002-AR10, Class A6, 4.82% due 06/01/04 | 19,931 | 20,121 | ||||
1,656,432 | ||||||
Fannie Mae — 0.29% | ||||||
Fannie Mae (REMIC), | 100,000 | 99,821 | ||||
5.219% due 07/01/04 (v) | 32,900 | 33,068 | ||||
Fannie Mae, Series 2001-51, Class PG, 6.00% due 11/25/27 | 27,638 | 27,700 | ||||
160,589 | ||||||
Freddie Mac — 0.94% | ||||||
Freddie Mac, Series 1476, Class H, 6.00% due 12/15/07 | 21,183 | 21,495 | ||||
Freddie Mac, Series 2142, Class 2, 6.50% due 04/15/29 | 139,784 | 144,529 | ||||
3.477% due 07/01/04 (e) | 77,886 | 80,518 | ||||
Freddie Mac, Series 2215, Class PG, 6.50% due 02/15/30 | 26,613 | 27,825 | ||||
Freddie Mac, Series 2341, Class PM, 6.50% due 12/15/28 | 56,501 | 56,746 | ||||
Freddie Mac, Series 2390, Class PD, 6.00% due 08/15/27 | 20,287 | 20,302 | ||||
Freddie Mac, Series 2411, Class FJ, 1.589% due 07/15/04 (v) | 26,431 | 26,441 | ||||
Freddie Mac, Series 2535, Class DT, 5.00% due 09/15/16 | 90,079 | 91,808 | ||||
Freddie Mac, Series T-57, Class 1A1, 6.50% due 07/25/43 | 50,138 | 52,379 | ||||
522,043 |
ENTERPRISE Accumulation Trust
5
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Ginnie Mae — 0.62% | ||||||
3.00% due 07/01/04 (e) | $ | 349,966 | $ | 340,982 | ||
Total Mortgage-Backed Securities | ||||||
(Identified cost $2,613,298) | 3,050,762 | |||||
U. S. Treasury Obligations — 2.39% | ||||||
United States Treasury Notes (TIPS), 3.375% due 01/15/12 | $ | 1,196,286 | 1,325,354 | |||
Total U. S. Treasury Obligations | ||||||
(Identified cost $1,345,799) | 1,325,354 | |||||
Agency Obligations — 19.31% | ||||||
Fannie Mae — 16.71% | ||||||
5.00% due 01/01/17 | 98,989 | 99,698 | ||||
5.00% due 02/01/18 | 498,310 | 500,083 | ||||
5.00% due 08/01/18 | 470,637 | 472,312 | ||||
5.00% due 09/01/18 | 246,066 | 246,942 | ||||
6.00% due 09/01/32 | 78,313 | 80,091 | ||||
5.50% due 08/01/33 | 499,888 | 498,940 | ||||
5.00% due 12/01/99 TBA | 7,550,000 | 7,388,203 | ||||
9,286,269 | ||||||
Freddie Mac — 0.42% | ||||||
6.50% due 08/01/32 | 224,323 | 234,166 | ||||
Ginnie Mae — 2.18% | ||||||
6.00% due 08/15/32 | 326,286 | 335,037 | ||||
6.00% due 02/15/33 | 577,979 | 593,287 | ||||
6.00% due 10/15/33 | 47,701 | 48,964 | ||||
6.00% due 01/15/34 | 226,252 | 232,196 | ||||
1,209,484 | ||||||
Total Agency Obligations | ||||||
(Identified cost $10,650,520) | 10,729,919 | |||||
Foreign Government Obligations — 2.46% | ||||||
Brazil Federative Republic | 170,826 | 163,558 | ||||
Brazil Federative Republic | 54,000 | 57,699 | ||||
Brazil Federative Republic | 250,000 | 251,500 | ||||
Brazil Federative Republic | 50,000 | 40,750 | ||||
Brazil Federative Republic | 44,000 | 41,470 | ||||
Germany (Federal Republic) | 46,000 | 56,091 | ||||
Republic of Panama | 30,000 | 32,400 |
Number of Shares or Principal Amount | Value | |||||
Republic of Peru | $ | 250,000 | $ | 271,250 | ||
Russian Federation | 90,000 | 82,170 | ||||
South Africa Republic | 50,000 | 59,145 | ||||
South Africa Republic | 100,000 | 101,000 | ||||
United Mexican States | 25,000 | 28,250 | ||||
United Mexican States | 175,000 | 183,312 | ||||
1,368,595 | ||||||
Total Foreign Government Obligations | ||||||
(Identified cost $1,321,349) | 1,368,595 | |||||
Municipal Bonds — 2.59% | ||||||
Consumer Services — 0.21% | ||||||
South Carolina State Public Service Authority (FSA Insured), | 110,000 | 118,698 | ||||
Education — 0.10% | ||||||
Fairfax County Virginia | 50,000 | 55,203 | ||||
Food, Beverages & Tobacco — 0.50% | ||||||
Golden State Tobacco Securitization, 6.75% due 06/01/39 | 40,000 | 35,937 | ||||
Golden State Tobacco Securitization, 7.90% due 06/01/42 | 25,000 | 25,461 | ||||
Tobacco Settlement Authority (Iowa), 5.60% due 06/01/35 | 100,000 | 75,609 | ||||
Tobacco Settlement Financing Corporation (New Jersey), | 95,000 | 85,083 | ||||
Tobacco Settlement Financing Corporation (New Jersey), | 70,000 | 56,862 | ||||
278,952 | ||||||
Transportation — 0.02% | ||||||
Florida State Turnpike Authority Revenue Bond, | 10,000 | 9,807 | ||||
Utilities — 1.76% | ||||||
California State Economic Recovery, 5.25% due 01/01/10 | 10,000 | 10,922 | ||||
California State Economic Recovery, 5.25% due 01/01/11 | 10,000 | 10,953 | ||||
California State Economic Recovery, 5.25% due 07/01/12 | 20,000 | 21,927 | ||||
California State Economic Recovery, 5.25% due 07/01/13 | 40,000 | 43,756 |
ENTERPRISE Accumulation Trust
6
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
California State Economic Recovery, 5.25% due 07/01/14 | $ | 10,000 | $ | 10,905 | ||
California State Economic Recovery, 5.00% due 07/01/23 | 10,000 | 10,709 | ||||
California State Economic Recovery (MBIA Insured), | 10,000 | 10,897 | ||||
California State Economic Recovery (MBIA Insured), | 20,000 | 21,729 | ||||
Cook County Illinois (FGIC Insured), 5.125% due 11/15/26 | 150,000 | 150,103 | ||||
Illinois State 5.00% due 03/01/34 | 100,000 | 96,276 | ||||
Illinois State Taxable Pension | 50,000 | 44,363 | ||||
New York City Municipal Water 5.00% due 06/15/35 | 160,000 | 154,659 | ||||
New York City Transitional Finance, 5.00% due 02/01/33 | 200,000 | 194,114 | ||||
New York State Environmental Facilities Clean Water & Drinking, 5.00% due 06/15/32 | 20,000 | 19,766 | ||||
New York State Environmental Facilities Clean Water & Drinking, 5.00% due 06/15/33 | 10,000 | 9,882 | ||||
New York State Environmental Facilities Clean Water & Drinking, 5.00% due 07/15/33 | 10,000 | 9,882 | ||||
San Antonio Texas Water Revenue (FSA Insured), | 150,000 | 146,061 | ||||
South Central Connecticut Water Authority, 5.00% due 08/01/33 | 10,000 | 9,942 | ||||
976,846 | ||||||
Total Municipal Bonds | ||||||
( Identified cost $1,484,726 ) | 1,439,506 | |||||
Short-Term Investments — 18.30% | ||||||
Fannie Mae — 10.60% | ||||||
1.025% due 07/07/04 (e) | 1,500,000 | 1,499,744 | ||||
1.04% due 07/14/04 (e) | 1,000,000 | 999,624 | ||||
1.178% due 08/25/04 (e) | 1,300,000 | 1,297,659 | ||||
1.13% due 09/08/04 (e) | 700,000 | 698,139 | ||||
1.415% due 09/15/04 (e) | 1,100,000 | 1,096,714 | ||||
1.45% due 09/22/04 (e) | 300,000 | 298,997 | ||||
5,890,877 | ||||||
Federal Home Loan Banks — 1.44% | ||||||
1.17% due 07/16/04 (e) | 300,000 | 299,854 | ||||
1.18% due 08/25/04 (e) | 500,000 | 499,098 | ||||
798,952 |
Number of Shares or Principal Amount | Value | |||||
Freddie Mac — 5.56% | ||||||
1.12% due 08/10/04 (e) | $ | 500,000 | $ | 499,378 | ||
1.20% due 09/08/04 (e) | 500,000 | 498,850 | ||||
1.44% due 09/14/04 (e) | 1,500,000 | 1,495,491 | ||||
1.56% due 10/20/04 (e) | 600,000 | 597,114 | ||||
3,090,833 | ||||||
U. S. Treasury Bills — 0.70% | ||||||
1.135% due 09/02/04 (e) (s) | 330,000 | 329,345 | ||||
1.391% due 09/16/04 (e) (s) | 60,000 | 59,821 | ||||
389,166 | ||||||
Total Short-Term Investments | ||||||
( Identified cost $10,622,954 ) | 10,169,828 | |||||
Commercial Paper — 45.72% | ||||||
ANZ Delaware Inc. | 600,000 | 599,896 | ||||
Bank of Ireland | 1,500,000 | 1,496,573 | ||||
Barclays United States Fund | 300,000 | 299,453 | ||||
Barclays United States Fund | 1,300,000 | 1,296,210 | ||||
CBA Delaware Finance Inc. | 700,000 | 699,709 | ||||
CBA Delaware Finance Inc. | 600,000 | 599,532 | ||||
CBA Delaware Finance Inc. | 200,000 | 199,639 | ||||
CDC 1.10% due 08/04/04 | 1,000,000 | 998,961 | ||||
CDC 1.12% due 08/24/04 | 500,000 | 499,160 | ||||
Dexia 1.40% due 08/30/04 | 600,000 | 598,600 | ||||
European Investment Bank | 100,000 | 99,956 | ||||
General Electric Capital Corporation, 1.05% due 07/07/04 | 700,000 | 699,878 | ||||
General Electric Capital Corporation, 1.06% due 07/12/04 | 900,000 | 899,708 | ||||
HBOS Treasury Services 1.055% due 07/16/04 | 900,000 | 899,604 | ||||
HBOS Treasury Services | 600,000 | 596,802 | ||||
HSBC Bank 4.625% due 04/01/14 | 40,000 | 37,234 | ||||
ING U.S. Funding | 100,000 | 99,739 | ||||
KFW International Finance Inc. | 1,000,000 | 998,366 | ||||
Lloyds Bank TSB | 1,300,000 | 1,299,144 | ||||
National Australia Funding Delaware Inc., 1.05% due 07/02/04 | 300,000 | 299,991 | ||||
Nestle Finance France | 1,500,000 | 1,500,000 | ||||
Nordea North America Inc. | 700,000 | 698,056 |
ENTERPRISE Accumulation Trust
7
Enterprise Total Return Portfolio
PORTFOLIO OF INVESTMENTS (Unaudited) — (Continued)
June 30, 2004
Number of Shares or Principal Amount | Value | |||||
Royal Bank of Scotland | $ | 1,300,000 | $ | 1,299,814 | ||
Royal Bank of Scotland | 200,000 | 199,953 | ||||
Royal Bank of Scotland | 100,000 | 99,961 | ||||
Statens Bostadsfransier | 500,000 | 499,641 | ||||
Statens Bostadsfransier | 1,500,000 | 1,498,729 | ||||
Svenska Handlesbanken Inc. | 700,000 | 699,258 | ||||
Swedbank Forenings | 1,300,000 | 1,296,195 | ||||
Toyota Motor Credit Company 1.39% due 09/15/04 | 100,000 | 99,707 | ||||
UBS Finance Inc. | 700,000 | 699,754 | ||||
UBS Finance Inc. | 500,000 | 499,792 | ||||
UBS Finance Inc. | 300,000 | 299,229 | ||||
Unicredit Delaware | 1,500,000 | 1,495,406 | ||||
Westpactrust Securities | 1,300,000 | 1,298,140 | ||||
Total Commercial Paper | ||||||
(Identified cost $25,401,790) | 25,401,790 | |||||
Repurchase Agreement — 0.79% | ||||||
State Street Bank & Trust | 440,000 | 440,000 | ||||
Total Repurchase Agreement | ||||||
(Identified cost $440,000) | 440,000 | |||||
Total Investments | ||||||
(Identified cost $61,997,251) | 62,094,512 | |||||
Call Options Written — 0.00% | ||||||
Swap Option 3 Month LIBOR, Strike Price 4.00, Expires 01/07/05 | (600,000) | $ | (783) | |||
U.S. Treasury Notes 10-Yr Futures, Strike Price 115, Expires 9/16/04 | (6) | (187) | ||||
Number of Shares or Principal Amount | Value | ||||
Total Call Options Written | |||||
(Premiums received $12,901) | (970) | ||||
Put Options Written — (0.06)% | |||||
Swap Option 3 Month LIBOR, Strike Price 7.00, Expires 01/07/05 | (600,000) | (236) | |||
U.S. Treasury Notes 5-Yr Futures, Strike Price 109, Expires 9/16/04 | (38) | (36,219) | |||
Total Put Options Written | |||||
(Premiums received $52,774) | (36,455) | ||||
Other Assets Less | (6,496,982) | ||||
Net Assets — 100% | $ | 55,560,105 |
(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. |
(r) | Remarketable security with remarketable securities the remarketing dealer or lead manager may opt to either redeem or remarket the security during a specified period of time. |
(s) | Security segregated as collateral for open futures contracts. |
(t) | Represents a Brady Bond. Brady Bonds are securities which have been issued to refinance commercial bank loans and other debt. The risk associated with these instruments is the amount of any uncollateralized principle or interest payments since there is a high default rate of commercial bank loans by countries issuing these securities. |
(v) | Variable rate security; interest rate is as of June 30, 2004. |
(TBA) | To Be Announced. Certain specific security details such as final par amount and maturity date have not yet been determined. |
(144A) | 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. |
(MBIA) | Municipal Bond Insurance Association. |
(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 and 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 (Unaudited) — (Continued)
June 30, 2004
Interest rate swap agreements outstanding at June 30, 2004:
Description | Termination Date | Notional Amount (000) | Unrealized Appreciation/ (Depreciation) | |||||
Pay variable rate payments on the six month EUR EURIBOR floating rate and receive fixed rate of 4.00% (Counterparty: J.P. Morgan) | 3/15/2007 | 1,000,000 | $ | (6,849 | ) | |||
Pay variable rate payments on the six month EUR EURIBOR floating rate and receive fixed rate of 4.00% (Counterparty: Merrill Lynch) | 3/15/2007 | 600,000 | 298 | |||||
Pay variable rate payments on the six month EUR EURIBOR floating rate and receive fixed rate of 4.00% (Counterparty: Barclays Capital) | 3/15/2007 | 800,000 | (1,492 | ) | ||||
Receive variable rate payments on the three month LIBOR-BBA floating rate and pay fixed | 12/15/2004 | 600,000 | (9,613 | ) | ||||
$ | (17,656 | ) | ||||||
Open futures contracts outstanding at June 30, 2004:
Description | Expiration Month | Contracts | Unrealized Appreciation/ (Depreciation) | |||||
Long Germany Federative Republic 10-Year Bonds | 09/04 | 6 | $ | 5,328 | ||||
Long Euribor Futures | 09/05 | 10 | (8,666 | ) | ||||
Long Euribor Futures | 12/05 | 28 | (39,319 | ) | ||||
Long Eurodollar Futures | 12/04 | 11 | 13,613 | |||||
Long Eurodollar Futures | 03/05 | 11 | 11,963 | |||||
Long Eurodollar Futures | 06/05 | 24 | (12,944 | ) | ||||
Long Eurodollar Futures | 09/05 | 3 | (9,656 | ) | ||||
Long Eurodollar Futures | 12/05 | 3 | (9,656 | ) | ||||
Long Eurodollar Futures | 03/06 | 3 | (9,394 | ) | ||||
Long U.S. Treasury 5-Year Notes | 09/04 | 66 | 54,906 | |||||
Long U.S. Treasury 10-Year Notes | 09/04 | 87 | 79,156 | |||||
$ | 75,331 | |||||||
See notes to financial statements.
ENTERPRISE Accumulation Trust
9
Enterprise Total Return Portfolio
STATEMENT OF ASSETS AND LIABILITIES
June 30, 2004 (Unaudited)
Assets: | ||
Investments at value | $62,094,512 | |
Foreign currency at value (cost — $452,568) | 447,869 | |
Investment income receivable | 200,830 | |
Receivable for variation margin on open futures | 128,826 | |
Receivable for fund shares sold | 15,664 | |
Receivable for investments sold | 3,970,347 | |
Due from investment adviser | 9,762 | |
Cash | 893 | |
Other assets | 60,850 | |
Total assets | 66,929,553 | |
Liabilities: | ||
Payable for fund shares redeemed | 49,641 | |
Options written, at market value (premiums received $65,675) | 37,425 | |
Payable for investments purchased | 11,258,245 | |
Accrued expenses and other liabilities | 24,137 | |
Total liabilities | 11,369,448 | |
Net assets | $55,560,105 | |
Analysis of net assets: | ||
Paid-in capital | $54,508,675 | |
Undistributed (accumulated) net investment income (loss) | 535,152 | |
Undistributed (accumulated) net realized gain (loss) | 324,541 | |
Unrealized appreciation (depreciation) | 191,737 | |
Net assets | $55,560,105 | |
Fund shares outstanding | 5,368,515 | |
Net asset value per share | $10.35 | |
Investments at cost | $61,997,251 |
See notes to financial statements.
ENTERPRISE Accumulation Trust
10
Enterprise Total Return Portfolio
STATEMENT OF OPERATIONS
June 30, 2004 (Unaudited)
Investment income: | ||||
Interest | $ | 710,180 | ||
Total investment income | 710,180 | |||
Expenses: | ||||
Investment advisory fees | 148,101 | |||
Shareholder servicing fees | 41,173 | |||
Custodian and fund accounting fees | 28,494 | |||
Reports to shareholders | 1,724 | |||
Trustees’ fees | 2,454 | |||
Audit and legal fees | 7,246 | |||
Other expenses | 501 | |||
Total expenses | 229,693 | |||
Expense reimbursement | (54,665 | ) | ||
Total expenses, net of reimbursement | 175,028 | |||
Net investment income (loss) | 535,152 | |||
Realized and unrealized gain (loss)—net: | ||||
Net realized gain (loss) on investments | 50,680 | |||
Net realized gain (loss) on foreign currency transactions | 1,760 | |||
Net realized gain (loss) on futures transactions | 61,479 | |||
Net realized gain (loss) on options transactions | 53,078 | |||
Net change in unrealized gain (loss) on investments | (574,001 | ) | ||
Net change in unrealized gain (loss) on foreign currency | (10,850 | ) | ||
Net change in unrealized gain (loss) on swap transactions | (49,602 | ) | ||
Net change in unrealized gain (loss) on futures transactions | (81,320 | ) | ||
Net change in unrealized gain (loss) on options transactions | (1,438 | ) | ||
Net realized and unrealized gain (loss) | (550,214 | ) | ||
Net increase (decrease) in net assets resulting from operations | $ | (15,062 | ) |
See notes to financial statements.
ENTERPRISE Accumulation Trust
11
Enterprise Total Return Portfolio
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | |||||||
From operations: | ||||||||
Net investment income (loss) | $ | 535,152 | $ | 1,039,801 | ||||
Net realized gain (loss) | 166,997 | 1,004,431 | ||||||
Net change in unrealized gain (loss) | (717,211 | ) | 341,199 | |||||
Increase (decrease) in net assets resulting from operations | (15,062 | ) | 2,385,431 | |||||
Distributions to shareholders from: | ||||||||
Net investment income | — | (1,164,067 | ) | |||||
Net realized gains | — | (796,071 | ) | |||||
Total distributions to shareholders | — | (1,960,138 | ) | |||||
From capital share transactions: | ||||||||
Shares sold | 10,130,083 | 28,817,694 | ||||||
Reinvestment of distributions | — | 1,910,525 | ||||||
Shares redeemed | (6,307,202 | ) | (10,700,955 | ) | ||||
Total increase (decrease) in net assets resulting from capital share transactions | 3,822,881 | 20,027,264 | ||||||
Total increase (decrease) in net assets | 3,807,819 | 20,452,557 | ||||||
Net assets: | ||||||||
Beginning of period | 51,752,286 | 31,299,729 | ||||||
End of period | $ | 55,560,105 | $ | 51,752,286 | ||||
Capital share activity: | ||||||||
Shares issued | 969,970 | 2,778,731 | ||||||
Shares issued in reinvestment of distributions | — | 184,636 | ||||||
Shares redeemed | (609,397 | ) | (1,026,695 | ) | ||||
Net increase (decrease) | 360,573 | 1,936,672 | ||||||
Undistributed net investment income | $ | 535,152 | $ | — |
See notes to financial statements.
ENTERPRISE Accumulation Trust
12
Enterprise Total Return Portfolio
FINANCIAL HIGHLIGHTS
FORASHAREOUTSTANDINGTHROUGHOUTEACHPERIODISASFOLLOWS:
(Unaudited) Six Months Ended June 30, 2004 | Year Ended December 31, 2003 | For the Period 01/24/02 through 12/31/02 | ||||||||||
Net asset value, beginning of period | $ | 10.33 | $ | 10.19 | $ | 10.00 | ||||||
Income from investment operations: | ||||||||||||
Net investment income (loss)C | 0.15 | 0.24 | 0.34 | |||||||||
Net realized and unrealized gain (loss) on investments | (0.13 | ) | 0.31 | 0.35 | ||||||||
Total from investment operations | 0.02 | 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 | $ | 10.35 | $ | 10.33 | $ | 10.19 | ||||||
Total return | 0.19 | %B | 5.65 | % | 7.09 | %B | ||||||
Net assets end of period (in thousands) | $ | 55,560 | $ | 51,752 | $ | 31,300 | ||||||
Ratio of expenses to average net assets | 0.65 | %A | 0.65 | % | 0.65 | %A | ||||||
Ratio of expenses to average net assets (excluding reimbursement) | 0.85 | %A | 0.82 | % | 0.96 | %A | ||||||
Ratio of net investment income (loss) to average net assets | 1.53 | %A | 2.26 | % | 3.46 | %A | ||||||
Portfolio turnover rate | 184 | % | 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
June 30, 2004 (Unaudited)
1. Organization
Enterprise Accumulation Trust (the “Trust”) was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Trust is authorized to issue an unlimited number of shares of beneficial interest at $0.01 par value for the portfolios contained therein. The Trust is currently offered only to separate accounts of certain insurance companies as an investment medium for both variable annuity contracts and variable life insurance policies.
On January 13, 2004, the Board of Trustees approved a resolution to merge the Portfolio into 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 was also approved by the shareholders of the Portfolio on June 4, 2004.
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.
ENTERPRISE Accumulation Trust
14
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 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 the Portfolio writes a swap option, an amount equal to the premium received by the Portfolio 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
ENTERPRISE Accumulation Trust
15
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
and the expense is incurred. Exchange gains and losses are realized upon ultimate receipt or disbursement. The Portfolio does not isolate that portion of their realized and unrealized gains on investments from changes in foreign exchange rates from the fluctuations arising due to changes in the market prices of the investments.
Forward Currency Exchange Contracts — As part of its investment program, the Portfolio may utilize forward currency exchange contracts to manage exposure to currency fluctuations and hedge against adverse changes in connection with purchases and sales of securities. All commitments are marked to market daily at the applicable translation rates and any resulting realized gains or losses are recorded. Realized gains or losses are recorded at the time the forward contract matures or by delivery of the currency. Risks arise from the possible inability of counterparties to meet their contracts and from movements in currency values.
Delayed Delivery Transactions — The Portfolio may purchase or sell securities on a when-issued or delayed delivery basis. These transactions involve a commitment by the Portfolio to purchase or sell securities for a predetermined price or yield, with payment and delivery taking place beyond the customary settlement period. When delayed delivery 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.
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16
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
3. Transactions with Affiliates
An investment advisory fee is payable monthly to ECM, a wholly-owned subsidiary of MONY Life Insurance Company, and is computed as a percentage of the Portfolio’s average daily net assets as of the close of business each day at an annual rate of 0.55%. MONY Life Insurance Company also provides sub-transfer agency, printing and other services to the Portfolio. For the six months ended June 30, 2004, the Portfolio paid MONY Life Insurance Company $40,439 for these services. ECM has voluntarily agreed to limit the Portfolio’s expense ratio to 0.65%.
4. Investment Transactions
Outstanding forward foreign currency contracts at June 30, 2004 were as follows:
Settlement Date | Sales | Net Unrealized Appreciation/ (Depreciation) | |||||||||||
Receive | Deliver | ||||||||||||
07/20/04 | USD | $ | 1,073,781 | EURO | 1,060,223 | $ | 13,558 | ||||||
07/21/04 | USD | 125,456 | JPY | 125,825 | (369 | ) | |||||||
$ | 13,189 | ||||||||||||
For the six months ended June 30, 2004, 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 | |||||
$44,027,030 | $44,348,537 | $ | 7,582,696 | $ | 8,505,470 |
Transactions in options written for the six months ended June 30, 2004, were as follows:
Number of Contracts/ Notional Amounts | Premiums Received | ||||||
Outstanding put and call options written at December 31, 2003 | 2,800,000 | $ | 42,591 | ||||
Call options written | 26 | 17,824 | |||||
Call options expired | (14 | ) | (10,698 | ) | |||
Call swap options expired | (1,600,000 | ) | (24,576 | ) | |||
Call options closed | (6 | ) | (4,290 | ) | |||
Put options written | 58 | 58,830 | |||||
Put options expired | (20 | ) | (14,006 | ) | |||
Outstanding put and call options written at June 30, 2004 | 1,200,044 | $ | 65,675 | ||||
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 six months ended June 30, 2004.
ENTERPRISE Accumulation Trust
17
Notes to Financial Statements — (Continued)
June 30, 2004 (Unaudited)
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 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 June 30, 2004, 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 (Loss) | ||||||
$61,997,251 | $ | 364,463 | $ | 267,202 | $ | 97,261 |
7. Subsequent Event
After the close of business on July 9, 2004 the Portfolio was reorganized into its respective corresponding newly created portfolio of EQ Advisors Trust, a registered investment company managed by The Equitable Life Assurance Society of the United States, a subsidiary of AXA Financial, in accordance with the Portfolio’s shareholders’ approval that was obtained on June 4, 2004.
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18
Shareholder Proxy Voting Information (Unaudited)
On June 4, 2004, shareholders of the Portfolio voted to approve a new Investment Advisory Agreement between the Enterprise Accumulation Trust (the “Enterprise Trust”), on behalf of each of its series (the “Enterprise Portfolios”), and Enterprise Capital Management, Inc. (“Enterprise Capital”), the terms of which are substantially identical to the existing investment advisory agreement with Enterprise Capital and also to approve an Agreement and Plan of Conversion and Termination providing for the conversion of the Enterprise Portfolios into a corresponding, newly created series (“EQ Portfolio”) of the EQ Advisor Trust, and, in connection therewith, the acquisition by such EQ Portfolio of all of the assets of the Enterprise Portfolio, in exchange solely for the assumption of all liabilities of such Enterprise Portfolio and shares of such EQ Portfolio, and the subsequent liquidation of such Enterprise Portfolio as follows:
To approve the new Investment Advisory Agreement
Votes For | 6,076,513.770 | |
Votes Against | 132,917.729 | |
Votes Abstained | 136,784.759 | |
Votes Withheld | 4,093,949.368 |
To approve the Agreement and Plan of Conversion and Termination
Votes For | 6,052,278.678 | |
Votes Against | 139,776.976 | |
Votes Abstained | 154,160.604 | |
Votes Withheld | 4,093,949.368 |
ENTERPRISE Accumulation Trust
19
Enterprise Accumulation Trust
TRUSTEES AND OFFICERS
(The directors and officers below were replaced with the EQ Advisors Trust directors and officers effective July 9, 2004.)
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, 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 and ECM | — | — | |||||
Herbert M. Williamson Atlanta, GA (1951) | Treasurer and Assistant Secretary | 1994 | Vice President, ECM; Assistant Secretary and Treasurer, EGF, ECM and EFD | — | — | |||||
Catherine R. McClellan Atlanta, GA (1955) | Secretary | 1994 | Secretary, EGF; Senior Vice President, Secretary and Chief Counsel, ECM and EFD | — | — |
Footnotes: | ||
EGF - The Enterprise Group of Funds, Inc. | EFD - Enterprise Fund Distributors, Inc. | |
EAT - Enterprise Accumulation Trust | EGF plc - Enterprise Global Funds plc | |
ECM - Enterprise Capital Management, Inc. |
ENTERPRISE Accumulation Trust
20
EQ Advisors Trust
TRUSTEES AND OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE **AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
INTERESTED TRUSTEE: | ||||||||||
Peter D. Noris * (48) 1290 Avenue of the Americas New York, New York | Chairman and Trustee | Chairman from December 2002 to present, Trustee from March 1997 to present | From May 1995 to present, Executive Vice President and Chief Investment Officer, AXA Financial ; from September 1999 to present; Executive Vice President and Chief Executive Officer of AXA Financial Services, LLC from November 1995 to present, and Executive Vice President of AXA Advisors LLC. | 78 | Director, Alliance Capital Management, L.P.; Director of AXA Alternative Advisors Inc. | |||||
INDEPENDENT TRUSTEES: | ||||||||||
Theodossios (65) Athanassiades c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 2000 to present | Retired. | 52 | From May 1994 to present, Director, Atlantic Bank of New York. | |||||
Jettie M. Edwards (58) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | Retired. From 1986 to 2001, Partner and Consultant, Syrus Associates (business and marketing consulting firm). | 52 | From 1997 to present, Director, The PBHG Funds, Inc. | |||||
David W. Fox (73) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Lead Independent Trustee | From May 2000 to present | Retired. From 1989 to 2000, Public Governor and from 1996-2000 Chairman of the Chicago Stock Exchange. | 52 | From 1987 to present, Director of USG Corporation. | |||||
William M. Kearns, Jr. (69) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1994 to present, President, W.M. Kearns & Co., Inc. (private investment company); from 2002 to present, Chairman and from 1998 to 2002, Vice Chairman Keefe Managers, Inc. | 52 | From 1975 to present, Director, Selective Insurance Group, Inc.; from 1991 to present, Director, Transistor Devices, Inc.; from 1999 to present Advisory Director, Proudfoot PLC (N.A.) (consulting firm); from 2001 to present Advisory Director, Gridley & Company LLC; from 2002 to present Director, United States Shipping Corp. |
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21
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH | TERMOF OFFICE ** AND LENGTHOF | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | NUMBER OF PORTFOLIOS OVERSEEN | OTHER DIRECTORSHIPS NOMINEE FOR TRUSTEE | |||||
Christopher P.A. Komisarjevsky (59) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1998 to present, President and Chief Executive Officer, Burson-Marsteller Worldwide (public relations). | 52 | None | |||||
Harvey Rosenthal (61) c/o EQ Advisors Trust 1290 Avenue of the Americas New York, New York | Trustee | From March 1997 to present | From 1997 to present, Consultant/Director. | 52 | From 1997 to present, Director, LoJack Corporation. | |||||
Gary S. Schpero (50) c/o EQ Advisors Trust 1920 Avenue of the Americas New York, New York | Trustee | From May 2000 to present | Retired. Prior to January 1, 2000, Partner of Simpson Thacher & Bartlett (law firm) and Managing Partner of Investment Management and Investment Company Practice Group. | 52 | None |
OFFICERS
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Steven M. Joenk *** (45) 1290 Avenue of the Americas New York, New York | President and Chief Executive Officer | From December 2002 to Present | From July 1999 to present, Senior Vice President AXA Financial; from July 1999 to December 2002, Vice President and Chief Financial Officer of the Trust; from 1996 to 1999, Managing Director of MeesPierson (an investment company). | |||
Patricia Louie, Esq. (48) 1290 Avenue of the Americas New York, New York | Vice President and Secretary | From July 1999 to Present | From May 2003 to present, Vice President and Associate General Counsel of AXA Financial and Equitable; from July 1999 to May 2003, Vice President and counsel, AXA Financial and Equitable; from September 1994 to July 1999, Assistant General Counsel of The Dreyfus Corporation. | |||
Kenneth T. Kozlowski (42) 1290 Avenue of the Americas New York, New York | Chief Financial Officer and Treasurer | From December 2002 to Present | From February 2001 to present, Vice President, AXA Financial, from December 1999 to December 2002, Controller of the Trust; from October 1999 to February 2001, Assistant Vice President, AXA Financial; from October 1996 to October 1999, Director-Fund Administration, Prudential Investments. | |||
Kenneth B. Beitler (45) 1290 Avenue of the Americas New York, New York | Vice President | From March 2002 to Present | From February 2003 to present, Vice President of AXA Financial; from February 2002 to February 2003, Assistant Vice President of AXA Financial; from May 1999 to February 2000, Senior Investment Analyst of AXA Financial. Prior thereto, an Investment Systems Development Analyst with TIAA-CREF. |
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22
EQ Advisors Trust
TRUSTEES AND OFFICERS — (Continued)
NAME, AGE,AND ADDRESS | POSITION(S) HELD WITH FUND | TERMOF OFFICE ** TIME SERVED | PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS | |||
Mary E. Cantwell (42) 1290 Avenue of the Americas New York, New York | Vice President | From July 1999 to Present | From February 2001 to present, Vice President, AXA Financial; from July 1999 to present, Vice President Equitable; from September 1997 to January 2001, Assistant Vice President, Office of the Chief Investment Officer, AXA Financial. | |||
Brian E. Walsh (36) 1290 Avenue of the Americas New York, New York | Vice President and Controller | December 2002 to Present | From February 2003 to present, Vice President of Equitable; From January 2001 to February 2003, Assistant Vice President of Equitable; from December 1999 to January 2001, Senior Fund Administrator of Equitable; from January 1993 to December 1999, Manager of Prudential Investment Fund Management. | |||
Andrew S. Novak (35) 1290 Avenue of the Americas New York, New York | Assistant Secretary | From September 2002 to Present | From May 2003 to present, Vice President and Counsel of AXA Financial and Equitable; from May 2002 to May 2003, Counsel, AXA Financial and Equitable; from May 2001 to April 2002, Associate General Counsel and Chief Compliance Officer, Royce & Associates, Inc.; from August 1994 to August 2000, Vice President and Assistant General Counsel, Mitchell Hutchins Asset Management. |
* | Affiliated with the Manager and Distributors. Mr. Noris has resigned as a Trustee and the Chairman, effective as of August 31, 2004. |
** | Each Trustee serves until his or her resignation or retirement. Each officer is elected on an annual basis. |
*** | Mr. Joenk is expected to be appointed as a Trustee and the Chairman of the Board of Trustees, effective as of September 1, 2004. |
The EQ Advisors Trust Statement of Additional Information (SAI) includes additional information about Fund directors and is available by calling 1-888-292-4492.
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23
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 Registered Public Accounting Firm
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
Table of Contents
Item 2. Code of Ethics.
Not applicable when filing a Semi-Annual report.
Item 3. Audit Committee Financial Expert.
Not applicable when filing a Semi-Annual report.
Item 4. Principal Accountant Fees and Services.
Not applicable when filing a Semi-Annual report.
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 (as of June 30, 2004) and vp/chief financial officer (as of June 30, 2004) 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 (as of June 30, 2004) and vp/chief financial officer (as of June 30, 2004) 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) Separate certifications by the registrant’s president/chief executive officer (as of June 30, 2004) and vp/chief financial officer (as of June 30, 2004), 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 (as of June 30, 2004) and vp/chief financial officer (as of June 30, 2004), 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 | |
(as of June 30, 2004) | ||
Date: | August 19, 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 | |
(as of June 30, 2004) | ||
Date: | August 19, 2004 | |
By: | /s/ Phillip G. Goff | |
Name: | Phillip G. Goff | |
Title: | VP/Chief Financial Officer | |
(as of June 30, 2004) | ||
Date: | August 19, 2004 |