<PAGE>
PFL Endeavor Target Account
Annual Report
December 31, 1999
<PAGE>
Policyholder Letter
Dear Valued Policyholder:
We are pleased to present you with the market activity information on PFL
Endeavor Target Account for the period ending December 31, 1999. We hope that
you will find the underlying investment information interesting and
informative.
This correspondence is also an opportunity to remind you that we welcome your
comments and ideas as to how we can serve you even better. If you have any
questions or comments, please call the Variable Annuity Department at 800-525-
6205.
You can be assured of our continuing commitment to providing quality products
and excellent service to our policyholders.
Sincerely yours,
/s/ Vincent J. McGuinness, Jr.
Vincent J. McGuinness, Jr.
President and Chief Executive Officer
PFL Endeavor Target Account
-1-
<PAGE>
Portfolio Manager Letter
Despite a rising interest rate environment, 1999 was generally positive for US
stocks. The stock market rose strongly in the first six months of the year and
then suffered through a correction lasting from mid-July through mid-October as
investors digested a couple of Federal Reserve interest rate hikes and their
potential impact of slowing corporate earnings growth. But the stock market
staged an impressive rally through the end of the year led by technology shares
as the nation's economy remained strong and investors' fears of Y2K subsided.
The trading during the latter part of this period was characterized by heavy
investor demand for early stage growth companies, particularly technology and
communications-related shares, at the expense of value stocks.
The DowSM July Target 5 Subaccount was rebalanced at mid year. Eastman Kodak
and Sears replaced AT&T and International Paper. Otherwise, Caterpillar,
General Motors and Philip Morris remained in the portfolio for the entire year.
The Subaccount has been hurt by substantial weakness in Philip Morris (down
54%) and Sears (down 31% in H2). In addition, Eastman Kodak (down 1% in H2),
Caterpillar (up 5%), and GM (up 20%) have all lagged the Dow Jones Industrial
Average in 1999.
The DowSM July Target 10 Subaccount has been hurt in 1999 as investors put
their faith in a glitzy high-tech future and moved away from the "smokestack
companies" that dominate the Dogs of the Dow strategy. The portfolio was
rebalanced at mid year and DuPont and Sears replaced AT&T and International
Paper. The rest of the stocks in the portfolio remained the same. Substantial
weakness occurred in Philip Morris (down 54%), Sears (down 31% in H2), and
Eastman Kodak (down 6%). Of the remaining seven components of the subaccount,
Caterpillar (up 5%), Chevron (up 7%), DuPont (down 3% in H2), Exxon Mobil (up
13%), GM (up 20%) and J.P. Morgan (up 24%) have all lagged the DJIA return.
Only Minnesota Mining (up 41%), has managed to beat the DJIA return for 1999.
Chevron was removed from the Dow Jones Industrial Average on November 1, 1999
and Exxon Corp. completed the purchase of Mobil Corp. on November 30, 1999.
The DowSM January Target 5 Subaccount has been hurt by substantial weakness in
two of its five components. Philip Morris has been hit hard (down 54%) due to
concerns about the tobacco industry's mounting legal battles. Goodyear Tire
(down 42%) has been punished due to disappointment over its fourth straight
quarter of declining earnings. In addition, Goodyear was removed from the Dow
Jones Industrial Average (DJIA) on November 1, 1999. Caterpillar, although up
for the year (up 5%), has lagged the index after announcing significantly lower
year over year third quarter profits and repeatedly warning analysts about 1999
full year earnings. DuPont (up 27%) has matched the DJIA return for the year
and only Minnesota Mining & Mfg. has outperformed the index, up 41%.
The DowSM January Target 10 Subaccount has been hurt in 1999 as investors put
their faith in a glitzy high-tech future and moved away from the "smokestack
companies" that dominate the Dogs of the Dow strategy. Substantial weakness
occurred in three of its ten components. Philip Morris has been hit hard (down
54%) due to concerns about the tobacco industry's mounting legal battles.
Goodyear Tire (down 42%) has been punished due to disappointment over its
fourth straight quarter of declining earnings. In addition, Goodyear was
removed from the Dow Jones Industrial Average (DJIA) effective November 1,
1999. Eastman Kodak (down 6%) has had a tough fight with rival Fuji Photo in
the traditional film marketplace and has not convinced investors that its
vision of digital imaging will be realized. Of the remaining seven components
of the subaccount, five have underperformed the DJIA, one has matched the index
return, and only one has managed to beat the index. Caterpillar (up 5%),
Chevron (up 7%), Exxon Mobil (up 13%), GM (up 20%) and J.P. Morgan (up 24%)
have all lagged the market return. (Exxon Corp. purchased Mobil Corp. in
November for $85.2 billion.) Only DuPont (up 27%) and Minnesota Mining (up
41%), have managed to match or beat the DJIA return for 1999.
-2-
<PAGE>
Portfolio Manager Letter
The outlook for US stocks remains bullish as we enter 2000 due in large part to
the booming US economy. While negative factors such as the likelihood of
further Federal Reserve interest rate hikes, lofty valuation levels and the
perceived narrowness of the market may result in a correction sometime during
the next year, the expected continuing strength in US corporate earnings should
ultimately result in higher stock prices.
The Target Subaccounts identifies strong, established companies that are
currently out of favor on Wall Street and likely to rebound. We believe these
companies are well positioned to benefit from either a broadening of the
current market rally, or a rotation out of the speculative, high-tech names
that have been leading the market. Therefore, we expect the subaccount to
perform well going forward and reward the patient value-oriented investor.
PFPC Inc. Advisors, L.P.
-3-
<PAGE>
Schedule of Investments
PFL Endeavor Target Account
Dow Target 5--July Series Subaccount
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Value
------- -----------
<S> <C> <C>
COMMON STOCK--100.1%
Automotives--26.7%
General Motors Corporation.............................. 62,875 $ 4,570,227
-----------
Consumer Products--14.0%
Philip Morris Companies, Inc. .......................... 103,272 2,394,619
-----------
Machinery--19.1%
Caterpillar, Inc. ...................................... 69,167 3,255,172
-----------
Miscellaneous Manufacturing Industries--23.7%
Eastman Kodak Company................................... 61,242 4,057,283
-----------
Retail--16.6%
Sears Roebuck & Company................................. 93,029 2,831,570
-----------
Total Common Stock
(Cost $20,270,762)............................................. 17,108,871
-----------
TOTAL INVESTMENTS
(Cost $20,270,762*)...................................... 100.1% 17,108,871
OTHER ASSETS AND LIABILITIES (Net)........................ -0.1% (3,242)
------- -----------
NET ASSETS................................................ 100.0% $17,105,629
======= ===========
</TABLE>
*Aggregate cost for federal tax purposes.
See accompanying notes
-4-
<PAGE>
Schedule of Investments
PFL Endeavor Target Account
Dow Target 10--July Series Subaccount
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
<S> <C> <C>
COMMON STOCK--100.2%
Automotives--12.2%
General Motors Corporation............................... 27,585 $ 2,005,084
-----------
Consumer Products--6.4%
Philip Morris Companies, Inc............................. 45,312 1,050,672
-----------
Diversified Chemical--10.7%
duPont (E.I.) de Nemours & Company....................... 26,650 1,755,569
-----------
Diversified Manufacturing--12.4%
Minnesota Mining & Manufacturing Company................. 20,944 2,049,894
-----------
Financial Services--10.0%
J.P. Morgan & Company, Inc............................... 12,950 1,639,794
-----------
Machinery--8.7%
Caterpillar, Inc......................................... 30,351 1,428,394
-----------
Miscellaneous Manufacturing Industries--10.8%
Eastman Kodak Company.................................... 26,860 1,779,475
-----------
Oil & Gas Extraction--11.5%
Exxon Mobil Corporation.................................. 23,611 1,902,161
-----------
Petroleum Refining--10.0%
Chevron Corporation...................................... 19,118 1,656,097
-----------
Retail--7.5%
Sears Roebuck & Company.................................. 40,780 1,241,241
-----------
Total Common Stock
(Cost $17,345,759)............................................. 16,508,381
-----------
TOTAL INVESTMENTS
(Cost $17,345,759*)....................................... 100.2% 16,508,381
OTHER ASSETS AND LIABILITIES (Net)......................... -0.2% (31,457)
------ -----------
NET ASSETS................................................. 100.0% $16,476,924
====== ===========
</TABLE>
*Aggregate cost for federal tax purposes.
See accompanying notes
-5-
<PAGE>
Schedule of Investments
PFL Endeavor Target Account
Dow Target 5--January Series Subaccount
December 31, 1999
<TABLE>
<CAPTION>
Market
Shares Value
------ ----------
<S> <C> <C>
COMMON STOCK--98.7%
Consumer Products--9.2%
Philip Morris Companies, Inc. ............................ 32,667 $ 757,466
----------
Diversified Chemicals--26.5%
duPont (E.I.) de Nemours & Company........................ 33,054 2,177,432
----------
Diversified Manufacturing--29.3%
Minnesota Mining & Manufacturing Company.................. 24,653 2,412,912
----------
Machinery--21.8%
Caterpillar, Inc. ........................................ 38,147 1,795,293
----------
Tires & Rubber--11.9%
Goodyear Tire & Rubber Company............................ 34,823 981,573
----------
Total Common Stock
(Cost $9,438,803)............................................... 8,124,677
----------
TOTAL INVESTMENTS
(Cost $9,438,803*)......................................... 98.7% 8,124,677
OTHER ASSETS AND LIABILITIES (Net).......................... 1.3% 107,955
------ ----------
NET ASSETS.................................................. 100.0% $8,232,632
====== ==========
</TABLE>
*Aggregate cost for federal tax purposes.
See accompanying notes
-6-
<PAGE>
Schedule of Investments
PFL Endeavor Target Account
Dow Target 10--January Series Subaccount
December 31, 1998
<TABLE>
<CAPTION>
Market
Shares Value
------ -----------
<S> <C> <C>
COMMON STOCK--94.1%
Automotives--7.6%
Delphi Automotive Systems Corporation.................... 4,045 $ 63,709
General Motors Corporation............................... 10,198 741,267
-----------
Total Automotive................................................ 804,976
-----------
Consumer Products--4.2%
Philip Morris Companies, Inc. ........................... 19,056 441,861
-----------
Diversified Chemicals--12.0%
duPont (E.I.) de Nemours & Company....................... 19,232 1,266,908
-----------
Diversified Manufacturing--13.3%
Minnesota Mining & Manufacturing Company................. 14,344 1,403,919
-----------
Financial Services--11.7%
J.P. Morgan & Company, Inc. ............................. 9,711 1,229,655
-----------
Machinery--9.9%
Caterpillar, Inc. ....................................... 22,214 1,045,446
-----------
Miscellaneous Manufacturing Industries--8.9%
Eastman Kodak Company.................................... 14,167 938,564
-----------
Oil & Gas Extraction--11.0%
Exxon Mobil Corporation.................................. 14,421 1,161,792
-----------
Petroleum Refining--10.1%
Chevron Corporation...................................... 12,306 1,066,007
-----------
Tires & Rubber--5.4%
Goodyear Tire & Rubber Company........................... 20,218 569,895
-----------
Total Common Stock
(Cost $10,627,046)............................................. 9,929,023
-----------
TOTAL INVESTMENTS
(Cost $10,627,046*)....................................... 94.1% 9,929,023
OTHER ASSETS AND LIABILITIES (Net)......................... 5.9% 620,101
------ -----------
NET ASSETS................................................. 100.0% $10,549,124
====== ===========
</TABLE>
*Aggregate cost for federal tax purposes.
See accompanying notes
-7-
<PAGE>
Statements of Assets and Liabilities
PFL Endeavor Target Account
December 31, 1999
<TABLE>
<CAPTION>
Dow Target 5 Dow Target 10 Dow Target 5 Dow Target 10
July Series July Series January Series January Series
Subaccount Subaccount Subaccount Subaccount
------------ ------------- -------------- --------------
<S> <C> <C> <C> <C>
Assets
Investment in
securities, at market
value $17,108,871 $16,508,381 $8,124,677 $ 9,929,023
Cash 74,325 187,531 222,282 874,172
Receivable from
investment securities
sold -- -- 50,036 --
Dividends and/or
interest receivable 98,367 56,181 16,527 25,480
----------- ----------- ---------- -----------
Total assets $17,281,563 $16,752,093 $8,413,522 $10,828,675
=========== =========== ========== ===========
Liabilities and
contract owners'
equity
Liabilities:
Payable for investment
securities purchased $ 155,135 $ 254,064 $ 164,853 $ 265,835
Management fee payable 10,705 10,267 5,071 6,273
Accrued Expenses
payable 10,094 10,838 8,390 7,443
Fund redemption payable -- -- 2,576 --
----------- ----------- ---------- -----------
Total liabilities 175,934 275,169 180,890 279,551
Deferred annuity
contracts terminable
by owners 17,105,629 16,476,924 8,232,632 10,549,124
----------- ----------- ---------- -----------
Total liabilities and
contract owners'
equity $17,281,563 $16,752,093 $8,413,522 $10,828,675
=========== =========== ========== ===========
</TABLE>
Contract owners'
equity:
See accompanying notes
-8-
<PAGE>
Statements of Operations
PFL Endeavor Target Account
For the year ended December 31, 1999, except as noted
<TABLE>
<CAPTION>
Dow Target 5 Dow Target 10 Dow Target 5 Dow Target 10
July Series July Series January Series January Series
Subaccount Subaccount Subaccount(1) Subaccount(1)
------------ ------------- -------------- --------------
<S> <C> <C> <C> <C>
Net investment income
(loss)
Investment income:
Dividends $ 514,982 $ 390,790 $ 175,211 $ 185,730
Interest -- -- -- --
----------- ----------- ----------- ---------
Total investment income 514,982 390,790 175,211 185,730
----------- ----------- ----------- ---------
Expenses:
Investment management fee 136,816 106,745 48,864 51,517
Administration fees 9,547 9,664 10,001 10,001
Custodian fees 7,798 6,985 4,944 5,543
Transfer agent fees 95 61 24 34
Legal fees 11,417 10,120 5,018 4,018
Audit fees 5,400 5,399 2,051 2,051
Trustee fees and expenses 4,399 7,080 1,227 1,309
Printing 15,518 10,947 7,588 8,714
Other 4,124 4,124 3,551 3,560
Policy Fees 7,136 2,943 446 125
Mortality and expense risk
charge 279,294 219,700 99,443 106,663
----------- ----------- ----------- ---------
Total gross expenses 481,544 383,768 183,157 193,535
Less:
Waiver/reimbursement from
investment manager -- -- (3,180) (3,430)
Credits allowed by
custodian (4,698) (1,621) (3,852) (4,944)
----------- ----------- ----------- ---------
Total net expenses 476,846 382,147 176,125 185,161
----------- ----------- ----------- ---------
Net investment income
(loss) 38,136 8,643 (914) 569
----------- ----------- ----------- ---------
Net realized and unrealized
capital (loss) from
investments
Proceeds from sale of
investments 16,651,910 5,495,778 7,350,304 1,317,414
Cost of investments sold 15,557,731 4,983,508 7,224,187 1,309,601
----------- ----------- ----------- ---------
Net realized capital gain
on investments 1,094,179 512,270 126,117 7,813
Net change in unrealized
appreciation/depreciation
of investments:
Beginning of the period 1,220,253 389,358 -- --
End of the period (3,161,891) (837,378) (1,314,126) (698,023)
----------- ----------- ----------- ---------
Net change in unrealized
appreciation/depreciation
of investments (4,382,144) (1,226,736) (1,314,126) (698,023)
----------- ----------- ----------- ---------
Net realized and
unrealized capital
(loss) from investments (3,287,965) (714,466) (1,188,009) (690,210)
Decrease from operations $(3,249,829) $ (705,823) $(1,188,923) $(689,641)
=========== =========== =========== =========
</TABLE>
(1) Commencement of operations, January 4, 1999.
See accompanying notes
-9-
<PAGE>
Statements of Changes in Contract Owners' Equity
PFL Endeavor Target Account
For the year ended December 31, 1999 and for the period July 1, 1998
(commencement of operations) through December 31, 1998, except as noted
<TABLE>
<CAPTION>
Dow Target 5 Dow Target 10 Dow Target 5 Dow Target 10
July Series July Series January Series January Series
Subaccount Subaccount Subaccount Subaccount
1999 1998 1999 1998 1999(1) 1999(1)
----------- ----------- ----------- ----------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income
(loss) $ 38,136 $ 4,821 $ 8,643 $ 5,440 $ (914) $ 569
Net realized capital
gain 1,094,179 -- 512,270 -- 126,117 7,813
Net change in
unrealized
appreciation/
depreciation of
investments (4,382,144) 1,220,253 (1,226,736) 389,358 (1,314,126) (698,023)
----------- ----------- ----------- ----------- ----------- -----------
Increase (decrease)
from operations (3,249,829) 1,225,074 (705,823) 394,798 (1,188,923) (689,641)
----------- ----------- ----------- ----------- ----------- -----------
Contract transactions
Net contract purchase
payments 6,265,956 9,410,629 5,640,536 6,950,064 6,605,239 7,479,940
Transfer payments from
other subaccounts or
general account 803,957 3,801,466 2,238,202 2,952,437 2,961,916 3,874,139
Contract terminations,
withdrawals, and
other deductions (971,056) (180,568) (923,723) (69,567) (145,600) (115,314)
----------- ----------- ----------- ----------- ----------- -----------
Increase from contract
transactions 6,098,857 13,031,527 6,955,015 9,832,934 9,421,555 11,238,765
----------- ----------- ----------- ----------- ----------- -----------
Net increase in
contract owners'
equity 2,849,028 14,256,601 6,249,192 10,227,732 8,232,632 10,549,124
Beginning of the
period 14,256,601 -- 10,227,732 -- -- --
----------- ----------- ----------- ----------- ----------- -----------
End of the period $17,105,629 $14,256,601 $16,476,924 $10,227,732 $ 8,232,632 $10,549,124
=========== =========== =========== =========== =========== ===========
</TABLE>
Contract owner's equity
(1) Commencement of operations, January 4, 1999
See accompanying notes
-10-
<PAGE>
Notes to Financial Statements
PFL Endeavor Target Account
December 31, 1999
1.Organization and Summary of Significant Accounting Policies
Organization:
The PFL Endeavor Target Account (the Target Account) is a segregated investment
subaccount of PFL Life Insurance Company (PFL Life), an indirect wholly-owned
subsidiary of AEGON N.V., a holding company organized under the laws of The
Netherlands.
The Target Account is registered with the Securities and Exchange Commission
(SEC) as an open-end management investment company pursuant to provisions of
the Investment Company Act of 1940. The SEC, however, does not supervise the
management or the investment practices or policies of the Target Account. The
Target Account is currently divided into four investment subaccounts, DOW
Target 5--July Series (Target 5--July), DOW Target 10--July Series (Target 10--
July), DOW Target 5--January Series (Target 5--January) and DOW Target 10--
January Series (Target 10--January). These four investment subaccounts are
collectively referred to as the subaccounts. Investment activity in these
investment subaccounts is available for investment to contract owners of The
Endeavor Variable Annuity, The Endeavor Platinum Variable Annuity, and The
Endeavor ML Variable Annuity (the Variable Annuities), issued by PFL Life. Net
purchase payments received by the Target Account for the Variable Annuities are
invested in the subaccounts as selected by the contract owner. The Target 5--
July and Target 10--July commenced operations on July 1, 1998. The Target 5--
January and Target 10--January commenced operations on January 4, 1999.
Portfolio Valuation:
The Target Account's investments are valued at market value as determined using
the last reported sale price at the close of the New York Stock Exchange on
December 31, 1999.
Securities Transactions and Investment Income:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Unrealized gains or losses
from investments are credited or charged to contract owners' equity.
Concentration of Risk:
An investment in the Target Account may be subject to additional risk due to
the relative lack of diversity in its portfolio.
Income Taxes:
Operations of the Target Account form a part of PFL Life, which is taxed as a
life insurance company under Subchapter L of the Internal Revenue Code of 1986,
as amended (the "Code"). The operations of the Target Account are accounted for
separately from other operations of PFL Life for purposes of federal income
taxation. The Target Account is not separately taxable as a regulated
investment company under Subchapter M of the Code and is not otherwise taxable
as an entity separate from PFL Life. Under existing federal income tax laws,
the income of the Target Account, to the extent applied to increase reserves
under the variable annuity contracts, is not taxable to PFL Life.
2.Fees and Expenses
The Target Account is managed by Endeavor Management Company, (the Investment
Manager), an affiliate of PFL Life pursuant to a management agreement. The
Investment Manager is responsible for providing
-11-
<PAGE>
Notes to Financial Statements
PFL Endeavor Target Account
December 31, 1999
2.Fees and Expenses (continued)
investment management and administrative services to the Target Account. First
Trust Advisers L.P. (the Adviser) is the Account's investment Adviser. As
compensation for these services, the Target Account pays the Investment Manager
a monthly fee based on a percentage of the average daily net assets at the
annual rate of 0.75% for each Subaccount. In addition, the Investment Manager
pays the Adviser a fee equal to 0.35% of the average daily net assets.
The Subaccounts pay all expenses not assumed by the Investment Manager. PFPC
Inc. (PFPC), formerly First Data Investor Services Group, Inc., a majority-
owned subsidiary of PNC Bank Corp, serves as Administrator to the Subaccounts
and is paid a flat fee of $10,000 per annum for each Subaccount. PFPC also
serves as the Fund's transfer agent.
From time to time the Investment Manager may waive a portion or all of the fees
otherwise payable to it and/or reimburse the Target Account for expenses. The
Investment Manager has voluntarily undertaken to waive its fees and has agreed
to bear certain expenses to ensure that total expenses do not exceed 1.30% of
the Subaccount's average daily net assets. For the period ended December 31,
1999, the Investment Manager waived and reimbursed expenses of $3,180 for the
Target 5--January and $3,430 for the Target 10--January. Boston Safe Deposit
and Trust Company (BSDT), an indirect wholly-owned subsidiary of Mellon Bank
Corporation, serves as the Subaccounts' custodian. BSDT has agreed to
compensate the Target Account and decrease custody fees for cash balances left
uninvested by the Subaccounts. For the period ended December 31, 1999, the
Target Account's expenses were reduced as follows: DOW Target 5--July Series
$4,698, DOW Target 10--July Series $1,621, DOW Target 5--January Series $3,852,
DOW Target 10--January Series $4,944.
No director, officer or employee of the Investment Manager, Endeavor Management
Co., the Advisers or PFPC received any compensation from the Fund for serving
as an officer or Trustee of the Fund. The Target Account pays each Trustee who
is not a director, officer or employee of the Investment Manager, Endeavor
Management Co., the Advisers, PFPC or any of their affiliates $1,000 per annum
plus $100 per regularly scheduled meeting attended and reimburses them for
travel and out-of-pocket expenses.
Administrative charges include an annual charge of the lesser of 2% of the
policy value or $35 per contract which will commence on the first policy
anniversary of each contract owner's account. For policies issued on or after
May 1, 1995, the fee is waived if the sum of the premium payments less the sum
of all partial withdrawals is at least $50,000 on the policy anniversary.
Charges for administrative fees to the variable annuity contracts are an
expense of the Target Account.
PFL Life deducts a daily charge for assuming certain mortality and expense
risks. For the 5% Annually Compounding Death Benefit and the Annual Step-Up
Death Benefit, this charge is equal to an effective annual rate of 1.25% of the
value of the contract owners' individual account. For the Return of Premium
Death Benefit, the corresponding charge is equal to an effective annual rate of
1.10% of the value of the contract owners' individual account. PFL Life also
deducts a daily administrative charge equal to an annual rate of .15% of the
contract owners' account for administrative expenses. For certain policies of
Endeavor Variable Annuity and of Endeavor ML Variable annuity sold on or after
May 1, 1997, during the first seven policy years, PFL Life deducts a daily
Distribution Finance Charge equal to an effective annual rate of .15% of the
contract owners' account. For certain policies of Endeavor Platinum Variable
Annuity sold on or after May 1, 1997, during the first ten policy years, PFL
Life deducts a daily Distribution Finance Charge equal to an effective annual
rate of .25% of the contract owners' account.
-12-
<PAGE>
Notes to Financial Statements
PFL Endeavor Target Account
December 31, 1999
3.Securities Transactions
The aggregate cost of purchases and proceeds from sales of investments were as
follows:
<TABLE>
<CAPTION>
Period Ended December 31,
-----------------------------------------
1999 1998
----------------------- -----------------
Purchases Sales Purchases Sales
----------- ----------- ----------- -----
<S> <C> <C> <C> <C>
Dow Target 5--July Series Subaccount $22,486,933 $16,651,910 $13,341,560 $--
Dow Target 10--July Series
Subaccount 12,059,101 5,495,778 10,270,166 --
Dow Target 5--January Series
Subaccount 16,662,993 7,350,304 -- --
Dow Target 10--January Series
Subaccount 11,936,647 1,317,414 -- --
</TABLE>
Net unrealized appreciation (depreciation) of investments at December 31, 1999
was composed of the following:
<TABLE>
<CAPTION>
Gross Gross Net
Unrealized Unrealized Unrealized
Appreciation (Depreciation) (Depreciation)
------------ -------------- --------------
<S> <C> <C> <C>
Dow Target 5--July Series
Subaccount $459,735 $(3,621,626) $(3,161,891)
Dow Target 10--July Series
Subaccount 985,324 (1,822,702) (837,378)
Dow Target 5--January Series
Subaccount 126,429 (1,440,555) (1,314,126)
Dow Target 10--January Series
Subaccount 316,006 (1,014,029) (698,023)
</TABLE>
4.Contract Owners' Equity
A summary of deferred annuity contracts terminable by owners at December 31,
1999 follows:
<TABLE>
<CAPTION>
5% Annually Compounding Death Benefit
Return of Premium Death Benefit or Annual Step-Up Death Benefit
------------------------------------------ -----------------------------------------
Accumulation Accumulation Total Accumulation Accumulation Total
Units Owned Unit Value Contract Value Units Owned Unit Value Contract Value
--------------------------- -------------- ------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Dow Target 5 July Series Subaccount:
PFL Endeavor Variable
Annuity 3,560,121.053 $0.964682 $3,434,385 6,044,673.955 $0.9625370 $ 5,818,222
PFL ML Endeavor
Variable Annuity 316,390.762 0.964682 305,216 1,693,185.989 0.9625370 1,629,754
Platinum Endeavor
Variable Annuity 2,408,403.037 0.963257 2,319,911 3,743,680.459 0.9611240 3,598,141
---------- -----------
$6,059,512 $11,046,117
========== ===========
Dow Target 10 July Series Subaccount:
PFL Endeavor Variable
Annuity 2,604,042.102 $1.012659 $2,637,007 3,802,468.359 $1.0104070 $ 3,842,041
PFL ML Endeavor
Variable Annuity 687,276.775 1.012659 695,977 3,364,745.488 1.0104070 3,399,762
Platinum Endeavor
Variable Annuity 674,029.923 1.011156 681,549 5,174,488.123 1.0089090 5,220,588
---------- -----------
$4,014,533 $12,462,391
========== ===========
Dow Target 5 January Series
Subaccount:
PFL Endeavor Variable
Annuity 2,262,326.395 $0.911385 $2,061,850 2,552,038.211 $0.9100510 $ 2,322,485
PFL ML Endeavor
Variable Annuity 46,507.851 0.911385 42,387 1,633,364.991 0.9100510 1,486,445
Platinum Endeavor
Variable Annuity 712,871.386 0.910498 649,068 1,837,280.736 0.9091680 1,670,397
---------- -----------
$2,753,305 $ 5,479,327
========== ===========
Dow Target 10 January Series
Subaccount:
PFL Endeavor Variable
Annuity 1,479,044.370 $0.984382 $1,455,945 2,676,674.440 $0.9829410 $ 2,631,013
PFL ML Endeavor
Variable Annuity 343,714.780 0.984382 338,347 2,389,259.511 0.9829410 2,348,501
Platinum Endeavor
Variable Annuity 352,436.88 0.983416 346,592 3,491,645.413 0.9819800 3,428,726
---------- -----------
$2,140,884 $ 8,408,240
========== ===========
</TABLE>
-13-
<PAGE>
Notes to Financial Statements
PFL Endeavor Target Account
December 31, 1999
4.Contract Owners' Equity (continued)
A summary of changes in contract owners' account units follows:
<TABLE>
<CAPTION>
Dow Target 5 Dow Target 10 Dow Target 5 Dow Target 10
July Series July Series January Series January Series
Subaccount Subaccount Subaccount Subaccount
------------ ------------- -------------- --------------
<S> <C> <C> <C> <C>
Units outstanding--July
1, 1998 -- -- -- --
Units purchased 9,327,979 7,452,618 -- --
Units redeemed and
transferred 3,385,907 2,438,951 -- --
---------- ---------- --------- ----------
Units outstanding Decem-
ber 31, 1998 12,713,886 9,891,569 -- --
Units purchased 5,700,605 5,395,473 6,590,696 7,280,357
Units redeemed and
transferred (648,036) 1,020,008 2,453,693 3,452,418
---------- ---------- --------- ----------
Units outstanding Decem-
ber 31, 1999 17,766,455 16,307,050 9,044,389 10,732,775
========== ========== ========= ==========
</TABLE>
-14-
<PAGE>
Report of Ernst & Young, LLP, Independent Auditors
The Board of Directors and Contract Owners
of the PFL Endeavor Target Account
We have audited the accompanying statements of assets and liabilities,
including the schedule of investments, of PFL Endeavor Target Account
(comprised of the Dow Target 5 July Series, Dow Target 10 July Series, Dow
Target 5 January Series, Dow Target 10 January Series subaccounts), as of
December 31, 1999, and the related statements of operations for the period
indicated thereon and changes in contract owners' equity for the periods
indicated thereon. These financial statements are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and schedules of investments referred
to above present fairly, in all material respects, the financial position of
each of the respective subaccounts constituting the PFL Endeavor Target Account
at December 31, 1999, and the results of their operations for the period
indicated thereon and changes in their contract owners' equity for the periods
indicated thereon in conformity with accounting principles generally accepted
in the United States.
/s/ Ernst & Young LLP
Des Moines, Iowa
February 4, 2000
-15-
