<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the Appropriate Box:
[X] Preliminary Proxy Statement [_] Confidential, for use of
the Commission only (as
permitted by Rule 14a-
6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
______________________________________________
PFL Endeavor Target Account
---------------------------
(Name of Registrant as Specified in Its Charter)
______________________________________________
PFL Endeavor Target Account
---------------------------
(Name of Person Filing Proxy Statement, if Other Than the Registrant)
______________________________________________
Payment of filing fee (check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: ______
(2) Aggregate number of securities to which transaction applies: _________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): ___________
(4) Proposed maximum aggregate value of transaction: ______________
(5) Total fee paid: _________________________
[_] Fee paid previously with preliminary material
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: _______________________________
(2) Form, Schedule or Registration Statement No.: ______________________
(3) Filing Party: _________________________________________
(4) Date Filed: ___________________________________________
<PAGE>
PFL ENDEAVOR TARGET ACCOUNT
2101 East Coast Highway
Suite 300
Corona del Mar, California 92625
____________, 1999
Dear Policy Owner:
As the owner of a variable annuity policy (the "Policy") issued by PFL Life
Insurance Company ("PFL Life"), some or all of your policy value is invested in
the PFL Endeavor Target Account (the "Target Account"). The Target Account will
hold a Special Meeting of Policy Owners on February 18, 2000 and you have the
right to vote at that meeting. Before the Special Meeting, I would like your
vote on the important proposals described in the accompanying Notice of Special
Meeting and Proxy Statement. You will be asked to vote on two proposals
regarding the Target Account:
1. New Advisory Agreements
First Trust Advisors, L.P. (the "Adviser"), serves as the investment
adviser to the subacounts and is responsible for the day-to-day management of
the subacounts' assets. Because of the recent death of the controlling person of
the Adviser, the investment advisory agreements between Endeavor Management Co.
(the "Manager") and the Adviser may be deemed to have terminated automatically,
as a matter of law. The Board of Managers of the Target Account recommends that
the Policy Owners of each subacount approve new investment advisory agreements,
with substantially identical terms to the current investment advisory
agreements, between the Manager and the Adviser.
2. Adviser Selection Process
The Manager is responsible for the selection and oversight of the
investment adviser for each subaccount. Currently, the Manager may select and
hire, terminate or change investment advisers for a subaccount only with the
approval of the subaccount's Policy Owners. The Manager requests unitholder
approval of a proposal to change the operation of the Target Account to permit
the Manager, with the approval of the Board of Managers, to hire or terminate an
investment adviser for a subaccount without a Policy Owner vote. This change
could benefit Policy Owners by reducing the subaccounts' expenses, permitting
faster changes in investment advisers when warranted, and improving operating
efficiencies.
You may think that your vote is not important, but it is. Please take the
time to familiarize yourself with the proposals and to sign and return your
proxy card(s) in the enclosed postage-paid envelope today. You may receive more
than one proxy card if you have policy value in more than one subaccount. Please
sign and return each card you receive. You may also vote by calling toll-free 1-
_________, or via the Internet at www._________.com, if eligible. Instructions
on how to complete the proxy card, vote by telephone, or via the Internet are
included immediately after the Notice of Special Meeting.
If you have any questions about the proxy, please call our proxy solicitor,
________________, at 1-800-_____________.
If we do not receive your completed proxy card(s) within several weeks, you
may be contacted by ________________ to remind you to vote.
Thank you for taking the time to participate in these important matters.
Sincerely,
Vincent J. McGuinness, Jr.
President
1
<PAGE>
PFL ENDEAVOR TARGET ACCOUNT
2101 East Coast Highway
Suite 300
Corona del Mar, California 92625
The Dow(SM) Target 10 (July Series)
The Dow(SM) Target 5 (July Series)
The Dow(SM) Target 10 (January Series)
The Dow(SM) Target 5 (January Series)
NOTICE OF SPECIAL MEETING OF UNITHOLDERS
To be held on February 18, 2000
To the Policy Owners of the PFL Endeavor Target Account:
NOTICE IS HEREBY GIVEN THAT a special meeting of the Policy Owners of the
PFL Endeavor Target Account (the "Target Account"), a managed separate account
established under Iowa law by the PFL Life Insurance Company, will be held at
4225 Edgewood Road NE, Cedar Rapids, Iowa 52499-0001 on February 18, 2000 at
1:00 p.m. Central Time and any adjournments thereof (collectively, the "Special
Meeting") for the following purposes:
1. To approve new investment advisory agreements between Endeavor
Management Co. and First Trust Advisors, L.P.;
2. To approve or disapprove a proposal to permit Endeavor Management Co.
to select, hire and replace investment advisers or to modify
investment advisory agreements without Policy Owner approval and to
disclose only the aggregate fee paid to the Manager, eliminating
various requirements to disclose the separate fees paid to each
advisor; and
3. To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.
The Board of Managers has fixed the close of business on December 27, 1999
as the record date for determination of Policy Owners entitled to notice of and
to vote at the Special Meeting.
By order of the Board of Managers
Gail Hanson
Secretary
January _______, 2000
2
<PAGE>
Policy Owners who do not expect to attend the Special Meeting are requested to
complete, sign, date and return the accompanying Proxy Card in the enclosed
envelope, which needs no postage if mailed in the United States, or follow the
instruction s in the materials relating to telephonic or internet voting.
Instructions for the proper execution of the Proxy Card are set forth on the
inside cover of this Notice. It is important that Proxies be returned promptly.
3
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and avoid the time and expense to the Target Account involved in validating
your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the
registration on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration
on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy
card should be indicated unless it is reflected in the form of
registration. For example:
Registration (Policy Owners) Valid Signature
---------------------------- ---------------
Corporate Accounts
------------------
(1) ABC Corp............................. ABC Corp.
(2) ABC Corp............................. John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer.............. John Doe
(4) ABC Corp. Profit Sharing Plan........ John Doe, Trustee
Trust Accounts
--------------
(1) ABC Trust............................ Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78....................... Jane B. Doe
Custodial or Estate Accounts
----------------------------
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA........ John B. Smith
(2) Estate of John B. Smith.............. John B. Smith, Jr., Executor
4
<PAGE>
INSTRUCTIONS FOR TELEPHONE VOTING
To vote your proxy by telephone follow the four easy steps below.
1. Read the accompanying proxy information and ballot.
2. Identify the fourteen-digit "CONTROL NO." in the middle portion of your
ballot on the left hand side. This control number is the key to casting your
vote over the telephone.
3. Dial 1-___________.
4. Follow the simple recorded instructions.
INSTRUCTIONS FOR VOTING OVER THE INTERNET
To vote your proxy via the Internet follow the four easy steps below.
1. Read the accompanying proxy information and ballot.
2. Go to www.__________.com.
3. Enter the fourteen-digit "CONTROL NO." from the upper left corner of your
proxy card.
4. Follow the simple online instructions.
If you hold your policy through an intermediary, please refer to your proxy card
to determine if the intermediary permits you to vote via another Internet site,
and follow the instructions provided on the proxy card. You do not need to
return your proxy card if you vote via an Internet site.
5
<PAGE>
PFL ENDEAVOR TARGET ACCOUNT
The Dow(SM) Target 10 (July Series)
The Dow(SM) Target 5 (July Series)
The Dow(SM) Target 10 (January Series)
The Dow(SM) Target 5 (January Series)
2101 East Coast Highway
Suite 300
Corona del Mar, California 92625
SPECIAL MEETING OF POLICY OWNERS
February 18, 2000
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Managers of the PFL Endeavor Target Account (the "Target
Account") for each of the four subacounts (the "Subaccounts") of the Target
Account for use at a Special Meeting of Policy Owners of the Target Account to
be held at 1:00 p.m. Central Time on February 18, 2000 at 4225 Edgewood Road NE,
Cedar Rapids, Iowa 52499-0001, and any adjournments thereof (collectively, the
"Special Meeting"). A notice of the Special Meeting and a proxy card accompany
this Proxy Statement. This Proxy Statement and the accompanying Notice of
Special Meeting and proxy card(s) are first being mailed to Policy Owners on or
about ____________. In addition to solicitations of proxies by mail, beginning
on or about ____________, proxy solicitations may also be made by telephone, e-
mail or personal interviews conducted by officers of the Target Account; regular
employees of Endeavor Management Co., the Target Account's manager (the
"Manager"); ________, the Target Account's proxy solicitor; or other
representatives of the Target Account. The Target Account has retained _________
Corporation as the Target Account's proxy solicitor for the Special Meeting of
Policy Owners. The estimated cost of the proxy solicitation is approximately
$_____. The costs of solicitation and the expenses incurred in connection with
preparing this Proxy Statement and its enclosures will be borne solely by the
Target Account. The Target Account's most recent annual and semi-annual report
are available upon request without charge by writing or calling the Target
Account at 2101 East Coast Highway, Suite 300, Corona del Mar, CA 92625 or
1-800-854-8393.
Your investment in the Target Account is measured by "Units". If the
enclosed proxy is properly executed and returned in time to be voted at the
Special Meeting, the units ("Units") represented by the proxy will be voted in
accordance with the instructions marked therein. Unless instructions to the
contrary are marked on the proxy, it will be voted FOR the matters listed in the
accompanying Notice of Special Meeting of Policy Owners. Any Policy Owner who
has given a proxy has the right to revoke it at any time prior to its exercise
either by attending the Special
6
<PAGE>
Meeting and voting his or her Units in person, or by submitting a letter of
revocation or a later-dated proxy to the Target Account at the above address
prior to the date of the Special Meeting.
If a quorum is not present at the Special Meeting, or if a quorum is
present but sufficient votes to approve each proposal are not received, the
persons named as proxies on the enclosed proxy card may propose one or more
adjournments of the Special Meeting to permit further solicitation of proxies.
In determining whether to adjourn the Special Meeting, the following factors may
be considered: the nature of the proposals that are the subject of the Special
Meeting, the percentage of votes actually cast, the percentage of negative votes
actually cast, the nature of any further solicitation and the information to be
provided to Policy Owners with respect to the reasons for the solicitation. Any
adjournment will require the affirmative vote of a majority of those Units
represented at the Special Meeting in person or by proxy. A Policy Owner vote
may be taken on one or more of the proposals in this Proxy Statement prior to
any such adjournment if sufficient votes have been received for approval. Under
the Target Account's Rules and Regulations, a quorum is constituted by the
presence, in person or by proxy, of the holders of a majority of the outstanding
Units of the Target Account entitled to vote at the Special Meeting.
The Board of Managers has fixed the close of business on December 27, 1999
as the record date (the "Record Date") for the determination of Policy Owners of
the Target Account entitled to notice of and to vote at the Special Meeting.
The number of Units of each Subaccount outstanding on the Record Date is
set forth in Exhibit A, as is the Policy Owners who known to own beneficially
more than 5% of the Units of each Subaccount on the Record Date.
As of December 27, 1999, the officers and the members of the Board of
Managers as a group beneficially owned less than 1% of the Units of each
Subaccount.
In order that your Units may be represented at the Special Meeting, you are
requested to:
-- indicate your instructions on the enclosed proxy card;
-- date and sign the proxy card;
-- mail the proxy card promptly in the enclosed envelope, which requires
no postage if mailed in the United States; and
-- allow sufficient time for the proxy card to be received on or before
3:30 Central Time on February 17, 2000.
You may also vote by telephone or via the Internet. Instructions for voting
by telephone or via the Internet appear immediately after the Notice of Special
Meeting at the front of this proxy statement.
7
<PAGE>
PROPOSAL 1
TO APPROVE OR DISAPPROVE NEW INVESTMENT ADVISORY
AGREEMENTS WITH THE ADVISER
SUMMARY OF PROPOSAL
The Manager has entered into two investment advisory agreements (the
"Current Investment Advisory Agreements") with the Adviser to provide investment
advisory services for each of the Subaccounts, subject to the Manager's overall
supervision, each of which were approved by Policy Owners on July 10, 1999 in
connection with the acquisition of the Manager by AUSA Holding Company an
affiliate of PFL Life Insurance Company. The two Current Investment Advisory
Agreements are identical in all respects, except that one applies to the two Dow
Target 10 Series, and the other applies to the two Dow Target 5 Series. As
required by Section 15(a) of the Investment Company Act of 1940 (the "1940
Act"), the Current Investment Advisory Agreements provide, in substance, that
they will terminate upon any "assignment," as defined in the 1940 Act.
The "change in control" described below constitutes an "assignment" of the
Current Investment Advisory Agreements. Accordingly, the change in control
automatically results in the termination of the Current Investment Advisory
Agreements. Therefore, in order to permit the Adviser to continue to provide
investment advisory services to the Subaccounts, it is necessary that the Policy
Owners of each Subaccount approve a new investment advisory agreement (the "New
Investment Advisory Agreements").
Based on an analysis of factors described below, the Board of Managers has
unanimously approved the Manager's execution of the New Investment Advisory
Agreements. At a meeting held November 15, 1999, the Managers, including all of
the Independent Managers, voted unanimously to approve the New Investment
Advisory Agreement for each Subaccount and to recommend to Policy Owners of each
Subaccount that they approve the New Investment Advisory Agreement. The New
Investment Advisory Agreements are each identical to the corresponding Current
Investment Advisory Agreement except for the dates of execution and termination.
1940 Act Considerations - Change in Control
Section 15(a) of the 1940 Act prohibits any person from serving as an
investment adviser to a registered investment company except pursuant to a
written contract that has been approved by the Policy Owners of the investment
company. Section 15(a), in conjunction with section 2(a)(4), also provides that
any such advisory contract must terminate on its "assignment" and that a direct
or indirect transfer of a controlling block of the voting securities of any
person controlling an investment adviser results in a change in control of the
investment adviser constitutes an
8
<PAGE>
"assignment." As described further below, the control of the Adviser has changed
and the Current Investment Advisory Agreements have terminated as a result of
that change.
The Adviser is registered as an investment adviser with the Securities and
Exchange Commission (the "SEC") under the Investment Advisers Act of 1940. The
Adviser's address is 1001 Warrenville Road, Lisle, Illinois 60532. The Adviser
is an Illinois limited partnership formed in 1991 with one limited partner,
Grace Partners of Dupage L.P., and one general partner, Nike Securities
Corporation. Grace Partners of Dupage L.P. is a limited partnership with one
general partner, Nike Securities Corporation, and a number of limited partners.
Nike Securities Corporation is an Illinois corporation that was controlled by
Robert Donald Van Kampen. On October 29, 1999, Mr. Van Kampen passed away. At
the time of his death, the stock of Nike Securities Corporation was held by two
members of the Van Kampen family and two trusts of which Van Kampen family
members were the beneficiaries. More specifically, Kristen Joy Wisen owns 25%,
Karla Van Kampen-Pierre owns 25% and the Robert D. Van Kampen Trust and the
Judith Van Kampen Trust each own 25% of Nike Securities Corporation. Pursuant to
a voting agreement, Mr. Van Kampen had power to vote the shares held by Mrs.
Wisen, Mrs. Van Kampen-Pierre and the Judith Van Kampen Trust. Mr. Van Kampen
therefore had the power to vote approximately 75% of the securities of Nike
Securities Corporation. Upon his death this voting power transferred to his
wife, Judith Van Kampen. The 1940 Act presumes that beneficial ownership of more
than 25% of a company's stock gives the owner "control" over the company. This
technical change of control has caused the Current Investment Advisory
Agreements with the Adviser to terminate on October 29, 1999.
The Adviser is also the portfolio supervisor of certain unit investment
trusts sponsored by Nike Securities L.P. which are substantially similar to the
Target Account Subaccounts in that they have the same investment objectives as
the Target Account Subaccounts but have a life of approximately one year. For
additional information regarding these similar funds, including their asset size
and the advisory fees, please see Exhibit B.
The principal executive officer and general partner of the Advisor and
their respective principal occupations is set forth in the chart below. The
mailing address of the officer and general partner is 1001 Warrenville Road,
Suite 300, Lisle, Illinois 60532.
9
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Name and Position with First Trust Principal Occupation
- ------------------------------------------------------------------------------------------------
<S> <C>
Ronald Dean McAlister, President/1/ Managing Director, Nike Securities
- ------------------------------------------------------------------------------------------------
Nike Securities Corporation, General Partner Providing investment advisory and
broker/dealer services through its various
interests
- ------------------------------------------------------------------------------------------------
</TABLE>
No member of the Board of Managers or officer of the Target Account is an
officer, employee, director or security holder of the Adviser or has any other
material direct or indirect interest in the Adviser or in its parents or
affiliates.
AFSG Securities Corporation is the underwriter of the Units of each
Subaccount. The administrator of the Target Account is PFL Life Insurance
Company.
To provide for continuity of investment advisory services to the
Subaccounts as a result of the change in control of the Adviser, all the members
of the Board of Managers, including the members who are not "interested" persons
of the Target Account, the Adviser or Nike Securities Corporation, at a meeting
held on November 15, 1999, voted to approve, a new investment advisory agreement
for each Subaccount (the "New Investment Advisory Agreements") with the Adviser
pursuant to Rule 15a-4 under the 1940 Act. Under that Rule, the New Investment
Advisory Agreements will terminate on February 26, 2000, if they are not
approved by Policy Owners. During the period from October 29, 1999 to February
26, the Adviser agreed to continue to provide services to each Subaccount on the
same terms as in the Current Investment Advisory Agreements. The Board of
Managers is now asking Policy Owners of each Subaccount to approve the New
Investment Advisory Agreements for their respective Subaccount.
Evaluation by the Board of Managers
The Board of Managers requested, received and considered such information
as they deemed reasonably necessary to enable them to evaluate the New
Investment Advisory Agreements. On November 15, 1999, the Board of Managers,
including all of the Independent Managers, voted unanimously to approve the New
Investment Advisory Agreements and to submit the proposed New Investment
Advisory Agreements to the Policy Owners of each Subaccount.
The material factors considered by the Managers were: the nature and
quality of services rendered by the Adviser; the Adviser's performance under the
Current Investment Advisory Agreements; the amount of advisory fees to be paid;
the Adviser's financial strength and insurance coverage; the Adviser's
investment advisory experience and reputation; the Adviser's code of ethics and
compliance controls; and administrative support services. The Board of Managers
also
_____________________
1 The limited partner of Grace Partners of DuPage L.P., the limited partner of
the First Trust.
10
<PAGE>
considered the fact that there were no material differences between the terms of
the New Investment Advisory Agreements and the terms of the Current Investment
Advisory Agreements.
The factor that the Board of Managers considered most significant was that
the Subaccounts would continue to receive the benefit of advisory services from
the same Adviser with the same personnel as under the Current Investment
Advisory Agreements, at no increase in the advisory fee to be paid for such
services. The Board of Managers was also satisfied that the Adviser (1) was
knowledgeable and experienced in the operations of the relevant financial
markets and in the laws that are applicable to such operations insofar as they
might affect a Subaccount, and (2) had the personnel, financial resources and
standing in the financial community to enable it to discharge its duties under
the New Investment Advisory Agreements adequately. The Board of Managers
determined that the Subaccounts would receive the benefit of maintaining
uninterrupted advisory services of the same quality, scope and cost as the
Subaccounts received before the change in control.
After careful consideration, the Board of Managers believes that the best
interests of the Policy Owners of the Subaccounts would be served if the New
Investment Advisory Agreements are approved.
Terms of the Current Investment Advisory Agreements and the New Investment
Advisory Agreements
The New Investment Advisory Agreements, like the Current Investment
Advisory Agreements, each provides in substance (1) that the Manager will pay
the Adviser the same fee as paid under the corresponding Current Investment
Advisory Agreement; (2) that it will continue for a period of two years from its
effective date and thereafter from year to year if approved at least annually by
a Majority Vote of the outstanding Units of the Subaccount or by a majority of
the Board of Managers and a majority of the Independent Managers; (3) that it
may be terminated, without penalty, by the Manager, by the Board of Managers or
by Majority Vote of the outstanding Units of the Subaccount upon 60 days' prior
written notice; (4) that it may be terminated by the Adviser on 90 days' prior
written notice to the Manager; and (5) that it will terminate automatically in
the event of its "assignment" as such term is defined in the 1940 Act. Both the
Current Investment Advisory Agreements and New Investment Advisory Agreements
provide that the Adviser is not liable to the Target Account or to the Manager
for any act or omissions under the Agreements, but that the Adviser is not
protected against liability arising out of its own willful misfeasance, bad
faith, gross negligence or reckless disregard in the performance of its duties.
The New Investment Advisory Agreements are attached to this Proxy Statement as
Exhibits C1 and C2 respectively, and the description of the New Investment
Advisory Agreements set forth in this Proxy Statement is qualified in its
entirety by reference to Exhibits C1 and C2.
Brokerage Allocation
11
<PAGE>
The Adviser invests the assets of the Subaccounts in common stock and
incurs brokerage costs in connection with these transactions.
Allocations of transactions by the Subaccounts, including their frequency,
to various dealers is determined by the Adviser in its best judgment and in a
manner deemed to be in the best interest of the investors in the Subaccounts
rather than by any formula. The primary consideration is prompt execution of
orders in an effective manner at the most favorable price. Purchases and sales
of securities may be principal transactions; that is, securities may be
purchased directly from the issuer or from an underwriter or market maker for
the securities. Any transactions for which the Subaccounts pay a brokerage
commission will be effected at the best price and execution available. Purchases
from underwriters of securities include a commission or concession paid by the
issuer to the underwriter, and purchases from dealers serving as market makers
include the spread between the bid and the asked price. Brokerage may be
allocated based on the sale of insurance policies for which allocations are made
to the Subaccounts by dealers or activities in support of sales of the policies.
The Target Account has adopted a Brokerage Enhancement Plan, in accordance with
Rule 12b-1 under the 1940 Act, whereby all or a portion of certain brokerage
commissions paid by the Subaccounts may be allocated or credited to Endeavor
Group, a registered broker-dealer that is an affiliate of the Manager, or other
entities marketing the policies, to help to finance sales activities.
For the year ended December 31, 1998, the Dow Target 10 Subaccount (July
Series) and the Dow Target 5 Subaccount (July Series) paid brokerage commissions
of $4,915 and $7,714, respectively. The Dow Target 10 Subaccount (January
Series) and the Dow Target 5 Subaccount (January Series) did not commence
operations until January 4, 1999. None of the Subaccounts paid any compensation
to any affiliated broker of the Manager or the Adviser during the year ended
December 31, 1998.
REQUIRED VOTE
Approval of the New Investment Advisory Agreements with respect to a
Subaccount (each Subaccount votes separately) requires a Majority Vote of the
Units of that Subaccount. When used in this proxy statement, a "Majority Vote"
means the affirmative vote of the lesser of:
(1) 67% or more of the voting Units present at the meeting if the
holders of more than 50% of the outstanding Units are present in person or
represented by proxy; or
(2) more than 50% of the issuer's outstanding Units.
If a New Investment Advisory Agreement is not approved by the Policy Owners
of a Subaccount, the Managers will consider other possible courses of action
which are in the best interests of Policy Owners.
12
<PAGE>
The Board of Managers, including all of the independent Managers, recommends
that the Policy Owners of each Subaccount vote "FOR" the New Investment Advisory
Agreement for that Subaccount.
PROPOSAL 2
TO APPROVE OR DISAPPROVE A PROPOSAL TO PERMIT THE MANAGER TO
HIRE AND TERMINATE ADVISERS OR MODIFY ADVISORY AGREEMENTS
WITHOUT POLICY OWNER APPROVAL
As discussed above, the Manager currently provides management services to
each Subaccount pursuant to a management agreement. The Manager has overall
responsibility for the general management and administration of each Subaccount,
but selects one or more Advisers for each Subaccount. The Target Account
proposes that the Manager, with the approval of the Board of Managers, be
permitted to enter into, terminate, or modify advisory agreements on behalf of
the Subaccounts with the Advisers without obtaining the prior approval of a
majority of the outstanding voting securities of the Subaccounts, as is
otherwise required by Section 15 of the 1940 Act.
Section 15 of the 1940 Act and Rule 18f-2 under the 1940 Act require that
investors in an investment company approve any advisory or subadvisory
agreements or amendments to those agreements. The SEC has issued an exemptive
order (the "Order") under which, the Manager would be permitted, with the
approval of the Board of Managers, to hire new Advisers, terminate Advisers, and
modify advisory agreements with advisers without the prior approval of Policy
Owners and to disclose only the aggregate fee paid to the Manager, eliminating
various requirements to disclose the separate fees paid to each advisor. By
eliminating Policy Owner approval in these matters, the Manager would have
greater flexibility in overseeing the advisers, and the Subaccounts would be
spared the time and expense of holding unitholder meetings and soliciting
proxies. The Order is subject to several conditions, including the following
conditions:
1. The Target Account will disclose in its registration statement the
aggregate fee disclosure.
2. The Target Account will not enter into an investment advisory
agreement on behalf of the Target Account with an affiliated adviser without
that agreement, including the compensation to be paid thereunder, being approved
by the Policy Owners of the applicable Subaccount.
3. At all times, a majority of the Board of Managers will be
Independent Mangers and the nomination of new or additional Independent Managers
will be placed within the discretion of the then existing Independent Managers.
13
<PAGE>
4. Independent counsel knowledgeable about the 1940 Act and the
duties of Independent Managers will be engaged to represent the Independent
Managers of the Target Account. The selection of such counsel will be within the
discretion of the Independent Managers.
5. The Manager will provide the Board of Managers of the Target
Account, no less often than quarterly, information about the Manager's
profitability for each Subaccount relying on the relief in the Order. Such
information will reflect the impact on profitability of the hiring or
termination of any adviser during the applicable quarter.
6. Whenever an adviser is hired or terminated, the Manager will
provide the Board of Managers information showing the expected impact on the
Manager's profitability.
7. When a change of adviser is proposed for a Subaccount with an
affiliated adviser, the Board of Managers, including a majority of the
Independent Managers, will make a separate finding, reflected in the minutes of
meetings of the Board of Managers, that the change of adviser is in the best
interest of the Subaccount and its Policy Owners, and does not involve a
conflict of interest from which the Manager or the affiliated adviser derives an
inappropriate advantage.
8. Before an existing Subaccount may rely on the order requested in
the application, the operation of the Subaccount in the manner described in the
application will be approved by a majority of the outstanding units of the
Subaccount, as defined in the 1940 Act or, in the case of a new Subaccount whose
Policy Owners invested on the basis of a prospectus containing the disclosure
contemplated by condition 10 below, by the sole initial security holder before
offering Policies of such Subaccount to the public.
9. The Manager will provide management and administrative services
to each Subaccount relying on the requested order and, subject to the review and
approval of the Board of Managers, will: set the overall investment strategies
of the Subaccounts; recommend advisers; allocate, and when appropriate,
reallocate, the assets of the Subaccounts among advisers; and monitor and
evaluate the investment performance of the advisers, and implement procedures
reasonably designed to ensure that the advisers comply with the investment
objectives, policies, and restrictions of the Subaccounts.
10. The Target Account will disclose in its prospectus the existence,
substance, and effect of the Order. In addition, each Subaccount relying on the
Order will hold itself out to the public as employing the management structure
described in the application. The prospectus will prominently disclose that the
Manager has the ultimate responsibility (subject to oversight by the Board of
Managers) to oversee the advisers and recommend their hiring, termination and
replacement.
11. Within 60 days of the hiring of any adviser, the affected
Subaccount will furnish its Policy Owners with all information about the new
adviser that would be included in a
14
<PAGE>
proxy statement, except as modified to permit aggregate fee disclosure. Such
information will include aggregate fee disclosure and any change in such
disclosure caused by the addition of a new adviser. The Manager will meet this
condition by providing Policy Owwners with an information statement meeting the
requirements of Regulation 14C, Schedule 14C and Item 22 of Schedule 14A under
the 1934 Act except as modified by the order to permit aggregate fee disclosure.
12. No Manager or officer of the Target Account or director or
officer of the Manager will own directly or indirectly (other than through a
pooled investment vehicle that is not controlled by any such Manager or officer
or director) any interest in an adviser except for (a) ownership of interests in
the Manager or any entity that controls, is controlled by, or is under common
control with the Manager; or (b) ownership of less than 1% of the outstanding
securities of any class of equity or debt securities of any publicly traded
company that is either an adviser or controls, is controlled by, or is under
common control with an adviser.
In accordance with condition 8, approval of this proposed new arrangement
is being sought. Even if the Policy Owners of the Subaccount approve this
arrangement, any new advisers engaged or terminated, or any change in an
advisory agreement will still require approval of the Board of Managers. In
order to approve new advisers, the members of the Board of Managers will analyze
the factors they deem relevant, including the nature, quality and scope of
services provided by advisers to investment companies comparable to the Target
Account. The members of the Board of Managers will review the ability of the
adviser to provide its services to a Subaccount, as well as its personnel,
operation, financial condition or any other factor which would affect the
adviser with respect to compliance and regulatory matters over the past fiscal
year. The members of the Board of Managers will review the adviser's investment
performance with respect to accounts deemed comparable. Finally, the members of
the Board of Managers will consider other factors deemed relevant to the
adviser's performance as an investment adviser. The Target Account believes that
this review provides adequate Policy Owner protection in the selection of
advisers.
REQUIRED VOTE
Approval of the change in operations contemplated in the Order with respect
to a Subaccount (each Subaccount votes separately) requires a Majority Vote of
the Units of that Subaccount. If the Policy Owners of a Subaccount do not
approve this Proposal, the terms and conditions of the Order will not be
applicable to that Subaccount.
The Board of Managers, including all of the independent Managers, recommend
that Policy Owners vote "FOR" the proposal to permit the manager to hire and
terminate advisers or modify advisory agreements without Policy Owner approval.
15
<PAGE>
OTHER MATTERS
Submission of Policy Owners' Proposals
The Target Account is not generally required to hold annual or special
meetings of Policy Owners. Policy Owners wishing to submit proposals for
inclusion in a proxy statement for a subsequent Policy Owners' meeting should
send their written proposals to the Secretary of the Target Account, c/o PFPC,
Inc., Mail Zone BOS610, 101 Federal Street, Boston, MA 02110.
Policy Owners' Request for Special Meeting
Policy Owners holding at least 10% of the Target Account's outstanding
voting securities (as defined in the 1940 Act) may require the calling of a
meeting of the Target Account's Policy Owners for the purpose of voting on the
removal of any Board member. Meetings of the Target Account's Policy Owners for
any other purpose will also be called by the Board of Managers when requested in
writing by Policy Owners holding at least 10% of the Units then outstanding or,
if the Board members shall fail to call or give notice of any meeting of Policy
Owners for a period of 30 days after such application, Policy Owners holding at
least 10% of the Units then outstanding may call and give notice of such
meeting.
Other Matters to Come Before the Meeting
The Board of Managers does not intend to present any other business at the
Special Meeting other than as described in this Proxy Statement, nor is the
Board aware that any unitholder intends to do so. If, however, any other matters
are properly brought before the Special Meeting, the persons named in the
accompanying proxy card will vote thereon in accordance with their judgment.
It is important that proxies be returned promptly. Policy Owners who do not
expect to attend the meeting are therefore urged to complete, sign, date, and
return the proxy as soon as possible in the enclosed postage paid envelope.
January __________, 2000
16
<PAGE>
EXHIBIT A
INFORMATION CONCERNING UNITS
OUTSTANDING AS OF DECEMBER 27, 1999
- --------------------------------------------------------------------------------
Name of Subaccount Number of Units Outstanding
- --------------------------------------------------------------------------------
The Dow(SM) Target 10 (July Series)
- --------------------------------------------------------------------------------
The Dow(SM) Target 5 (July Series)
- --------------------------------------------------------------------------------
The Dow(SM) Target 10 (January Series)
- --------------------------------------------------------------------------------
The Dow(SM) Target 5 (January Series)
- --------------------------------------------------------------------------------
INFORMATION CONCERNING BENEFICIAL OWNERSHIP OF MORE THAN 5%
OF THE UNITS OF EACH SUBACCOUNT AS OF DECEMBER 27, 1999
- --------------------------------------------------------------------------------
Name and Address of Amount of Percentage of
Subaccount Beneficial Owner Beneficial Ownership Subaccount Interest
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT B
The charts below set forth the asset size as of November 5, 1999 and fee
rate of each open-end investment company or series thereof which First Trust
subadvises that has a similar investment methodology. Because First Trust serves
as a subadvisor to these funds and an unaffiliated person serves as investment
adviser, First Trust only receives a portion of the advisory fee assessed. The
chart therefore reflects the full advisory fee charged to each fund and the
sub-advisory fee paid to First Trust from this advisory fee.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
The Dow(sm) Target 5 Subaccount
- -----------------------------------------------------------------------------------------------------------------------
Similar Funds Asset Size Fee Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advisory Sub-advisory
Fee Fee
---------------------------------
The Dow(sm) Target Variable $ 603,192 .60% .35%
Fund LLC
- -----------------------------------------------------------------------------------------------------------------------
JNL Variable Fund LLC -- $2,733,013 Assets under management
JNL/First Trust The Dow(sm) under $500 million .75% .35%
Target 5 Series
------------------------------------------------------------------
$500 million-$1 billion .70% .30%
------------------------------------------------------------------
More than $1 billion .65% .25%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
The Dow(sm) Target 10 Subaccount
- -----------------------------------------------------------------------------------------------------------------------
Similar Funds Asset Size Fee Rate
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Advisory Sub-advisory
Fee Fee
----------------------------------
JNL Variable Fund LLC -- $5,272,579 Assets under management
The S&P Target 10 Series under $500 million .75% .35%
------------------------------------------------------------------
$500 million-$1 billion .70% .30%
------------------------------------------------------------------
More than $1 billion .65% .25%
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C1
INVESTMENT ADVISORY AGREEMENT
FOR THE
THE DOW(SM) TARGET 5 SUBACCOUNT
<PAGE>
EXHIBIT C2
INVESTMENT ADVISORY AGREEMENT
FOR THE
THE DOW(SM) TARGET 10 SUBACCOUNT
<PAGE>
PFL ENDEAVOR TARGET ACCOUNT
The Dow(SM) Target 10 (July Series)
The Dow(SM) Target 5 (July Series)
The Dow(SM) Target 10 (January Series)
The Dow(SM) Target 5 (January Series)
THIS SOLICITATION IS BEING MADE ON BEHALF OF
THE BOARD OF MANAGERS.
The undersigned contract owner, annuitant or participant, by completing this
form, does hereby appoint PFL Life Insurance Company attorney and proxy for the
undersigned, with full powers of substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all units of beneficial
interest which the undersigned is entitled to vote at a Special Meeting of
Policy Owners to be held at 4225 Edgewood Road NE, Cedar Rapids, Iowa 52499-0001
on February 18, 2000 at 1:00 p.m. Central Time and at any adjournments thereof.
The interest represented by this proxy will be voted as directed on the reverse
side, or if no direction is indicated, will be voted FOR the proposals. If a
proxy is not received from a particular contract owner, participant or
annuitant, then votes attributable to that interest will be allocated in the
same ratio as votes for which instructions have been received.
The undersigned, by completing this form, does hereby request that the proxy be
authorized to exercise its discretion in voting upon such other business as may
properly come before the meeting. The undersigned hereby acknowledges receipt of
the Notice of Special Meeting and Proxy Statement, and revokes any proxy
heretofore given with respect to the votes covered by this proxy.
PLEASE VOTE, DATE, SIGN EXACTLY AS YOUR NAME APPEARS AT LEFT AND RETURN THIS
FORM IN THE ENCLOSED SELF-ADDRESSED ENVELOPE.
Dated_______________, 2000 ______________________________
<PAGE>
Please vote by filling in the appropriate box(es) below.
1. To approve or disapprove a new investment advisory agreement between
Endeavor Management Co. and each Subaccount's investment adviser.
- --------------------------------------------------------------------------------
UNITS FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2. To approve or disapprove a proposal to permit Endeavor Management Co. to
hire and replace investment advisers or to modify investment advisory
agreements without unitholder approval.
- --------------------------------------------------------------------------------
UNITS FOR AGAINST ABSTAIN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
