<PAGE>
SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. ___)
Filed by the Registrant [X] Filed by a Party other than the Registrant [ ]
Check the Appropriate Box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
PFL Endeavor Target Account
(Name of Registrant as Specified in Its Charter)
N/A
---------------------------------
(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:
N/A
(2) Aggregate number of securities to which transaction applies: N/A
(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):
N/A
(4) Proposed maximum aggregate value of transaction: N/A
(5) Total fee paid: $0
[ ] 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: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
PFL ENDEAVOR TARGET ACCOUNT
2101 East Coast Highway
Suite 300
Corona del Mar, California 92625
August 11, 2000
Dear Policy Owner:
As the owner of an Endeavor 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 Board of
Managers of the Target Account has called a Special Meeting of Policy Owners on
September 25, 2000, at _____ Central Time, and you have the right to vote at
that Special Meeting. Before the Special Meeting, the Board would like your vote
on the important proposal described in the accompanying Notice of Special
Meeting and Proxy Statement. You will be asked to vote on one proposal regarding
the Target Account:
1. To approve or disapprove a change in the Target Account's
investment objective whereby the Target Account will invest
exclusively in shares of the Capital Guardian U.S. Equity
Portfolio of Endeavor Series Trust.
The Board of Managers believes that this change in investment objective is in
Policy Owners' best interests and recommends that the Policy Owners of each
subaccount approve the proposal.
YOUR VOTE IS IMPORTANT! Please take the time to familiarize yourself with the
proposal, 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 Target Series. Please sign and return each card you
receive. You may also vote by calling toll-free 1-888-__________, or via the
Internet at www.proxyweb.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,
[D.F. King & Co., Inc., at 1-800-829-6551]. If we do not receive your completed
proxy card(s) within several weeks, the proxy solicitor may contact you to
remind you to vote.
Thank you for taking the time to participate in these important matters.
Sincerely,
Vincent J. McGuinness, Jr.
President
<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
NOTICE OF SPECIAL MEETING OF POLICY OWNERS
To the Policy Owners of PFL Endeavor Target Account:
The Board of Managers of the PFL Endeavor Target Account (the "Target Account"),
a managed separate account established under Iowa law by the PFL Life Insurance
Company, HEREBY GIVE NOTICE THAT a Special Meeting of the Target Account's
Policy Owners will be held at _______________________________________ on
September 25, 2000 at ________ Central Time and any adjournments thereof
(collectively, the "Special Meeting") for the following purposes:
1. To approve or disapprove a change in the Target Account's
investment objective whereby the Target Account will invest
exclusively in shares of the Capital Guardian U.S. Equity
Portfolio of Endeavor Series Trust.
2. 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 July 28, 2000 as the
record date for determining Policy Owners entitled to notice of and to vote at
the Special Meeting.
YOUR VOTE IS IMPORTANT! Whether you expect to attend the Special Meeting or not,
please complete, sign, date and promptly return the accompanying Proxy Card(s)
in the enclosed envelope, which needs no postage if mailed in the United States,
or follow the instructions in the materials relating to telephone or internet
voting. The following page of this Notice provides instructions on properly
executing the Proxy Card.
By order of the Board of Managers
Gail Hanson
Secretary
August 11, 2000
1
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be helpful to you and
may avoid the time and expense to the Target Account involved in validating your
vote if you fail to execute 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
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 upper portion of your
ballot on the left-hand side. This control number is the key to casting
your vote over the telephone.
3. Dial [1-888-221-0697].
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.proxyweb.com].
3. Enter the fourteen-digit "CONTROL NO." from the upper portion of your
ballot on the left-hand side 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.
2
<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
PROXY STATEMENT
SPECIAL MEETING OF POLICY OWNERS
_______________, 2000
The Board of Managers of the PFL Endeavor Target Account (the "Target Account")
is furnishing this Proxy Statement in connection with the solicitation of
proxies from each of the four Series, or subaccounts (the "Subaccounts") of the
Target Account. The Board of Managers (the "Board") intends to use the proxies
at a Special Meeting of Policy Owners of the Target Account to be held at
_______ Central Time on September 25, 2000 at _______________________________,
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 August 11, 2000.
The Board has retained D. F. King as the Target Account's proxy solicitor for
the Special Meeting of Policy Owners. In addition to soliciting proxies by mail,
beginning on or about August 11, 2000 proxy solicitations may also be made by
telephone, e-mail or personal interviews conducted by officers of the Target
Account, regular employees of the Target Account's manager Endeavor Management
Co. (the "Manager"), D. F. King, or other representatives of the Target Account.
The Target Account and the Manager will equally share the proxy solicitation
costs (approximately $20,000), and the expenses incurred for preparing this
Proxy Statement and its enclosures. You can obtain a free copy of the Target
Account's most recent annual and semi-annual report by writing the Target
Account at 2101 East Coast Highway, Suite 300, Corona del Mar, CA 92625, or by
calling 1-800-854-8393.
Your investment in the Target Account is measured by units ("Units"). If you
properly execute and return the enclosed proxy in time to be voted at the
Special Meeting, PFL Life Insurance Company ("PFL Life") will vote the Units
represented by the proxy in accordance with the instructions marked therein.
Unless you mark instructions to the contrary on the proxy, PFL Life will vote
FOR the matter listed in the accompanying Notice of Special Meeting of Policy
Owners.
1
<PAGE>
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 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
the Board does not receive sufficient votes to approve or disapprove the
proposal, 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. Abstentions will not count as votes "FOR" or "AGAINST" the proposal
to be voted on at the Special Meeting; however, abstentions will count in
determining whether a quorum is present at the Special Meeting. The Board may
consider the following factors in determining whether to adjourn the Special
Meeting:
. the nature of the proposal that is 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. 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 set the close of business on July 28, 2000 as the
record date (the "Record Date") for determining Policy Owners of the Target
Account entitled to notice of and to vote at the Special Meeting.
PROPOSAL
To approve or disapprove a change in the Target Account's investment
objective whereby the Target Account will invest exclusively in shares of
the Capital Guardian U.S. Equity Portfolio of Endeavor Series Trust.
The Target Account currently is a managed separate account consisting of four
target series subaccounts. The current investment objective of each target
series subaccount is to provide an above-average total return through a
combination of dividend income and capital appreciation. To pursue this
investment objective:
each of the Dow(SM) Target 10 Subaccounts invests in the common stock of
the 10 companies in the Dow Jones Industrial Average that have the highest
dividend yield as of a specified business day and holds those stocks for
the following 12-month period; and
each of the Dow(SM) Target 5 Subaccounts invests in the common stock of the
five companies with the lowest per share stock price of the 10 companies in
the Dow Jones
2
<PAGE>
Industrial Average that have the highest dividend yield as of a specified
business day and holds those stocks for the following 12-month period.
To date, the investment results of the Target series subaccounts have been very
poor. For the one year ending May 31, 2000, the subaccounts have all lost value
-- from 12% to over 27%, as shown in the following table/1/:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
PFL Endeavor Non Standard Average Annual and Total Return to May 31, 2000
Variable Annuity (1.40%) --------------------------------------------------------------------------------
Performance Values
(Without Surrender charge) Total Return Average Return Total
Return
-------------------------------------------------------------------------------------------------------------
Since Since Portfolio
Year One Portfolio Portfolio Inception
Fund Name: Month Quarter to Date Year Inception Inception Date
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dow Target 5 (July Series) -4.50% 10.32% -0.88% -18.08% -2.31% -4.38% Jul-01-1998
Dow Target 10 (July Series) -0.13% 9.21% -3.37% -12.07% -1.12% -2.14% Jul-01-1998
Dow Target 5 (Jan Series) 4.30% 9.95% -13.81% -27.94% -15.78% -21.45% Jan-04-1999
Dow Target 10 (Jan Series) -0.35% 6.85% -9.84% -19.02% -8.14% -11.25% Jan-04-1999
-------------------------------------------------------------------------------------------------------------
</TABLE>
The Board believes that the Target Account's investment strategy, of investing
in the highest yielding stocks of the Dow Jones Industrial Average, results in
missing some of the best investment opportunities available, perhaps because the
nature and financial behavior of the companies in the Dow Jones Industrial
Average has changed. Many 'new economy' companies, some of which are represented
in the Dow Jones Industrial Average, do not always have the same financial
practices, such a paying regular dividends, as many 'old economy' industrial
companies. Therefore, the Board believes that the Target Account's prospects for
improved investment performance are not good.
Upon further review, the Board believes that current and future owners of
interests in the Target Account would be better served if the Target Account
changed its investment objective. The Board proposes that instead of functioning
as a management investment company comprising four subaccounts investing in
individual companies according to the "target" strategies, the Target Account
should become a unit investment trust investment company with one subaccount
investing exclusively in shares of a single portfolio of Endeavor Series Trust
-- the Capital Guardian U.S. Equity Portfolio (the "Portfolio").
The Portfolio is a newly established portfolio of Endeavor Series Trust. The
Portfolio's investment objective is to provide long-term growth of capital.
Capital Guardian Trust Company
-------------------
/1/ These figures are for the Endeavor Variable Annuity, with the Return
of Premium death benefit, and do not reflect the surrender charge. The
performance figures would be even worse for other death benefits, and
if the surrender charge was reflected. The figures are nearly the same
for the Endeavor ML Variable Annuity and the Endeavor Platinum
Variable Annuity.
3
<PAGE>
("Capital Guardian"), 333 South Hope Street, Los Angeles, CA 90071, will serve
as the Portfolio's investment adviser. Capital Guardian will make the day-to-day
investment decisions, arrange for the execution of portfolio transactions, and
generally manage the Portfolio's investments. Capital Guardian is an indirect
subsidiary of the Capital Group Companies, Inc. Capital Guardian has been
providing investment management services since 1968 and managed approximately
$123 billion in investments as of December 31, 1999.
The Portfolio will invest primarily in common stocks (or securities convertible
or exchangeable into common stocks) and preferred stocks of U.S. companies and
securities whose principal markets are in the U.S. (including American
Depositary Receipts), and other U.S. registered foreign securities, with market
capitalization greater than $1 billion at the time of purchase. The Portfolio
may invest up to 15% of its total assets in securities of issuers domiciled
outside the U.S. and not included in the Standard & Poor's 500 Composite Stock
Price Index (the "S&P 500 Index"). In selecting investments, greater
consideration is given to potential appreciation and future dividends than to
current income. A prospectus describing the Portfolio is provided in Appendix A.
Based on the research carried out by Capital Guardian's analysts, portfolio
managers look across industry sectors in selecting stocks for the Portfolio.
With a long-term perspective, portfolio managers look for quality companies at
attractive prices that will outperform their peers over time. The Portfolio may
purchase both "value" and "growth" stocks. In keeping with the Capital
Guardian's bottom-up philosophy, the weighting for any given sector reflects the
portfolio managers' and analysts' assessments and outlooks for individual
companies within that sector. Weightings are arrived at through individual stock
selection rather than through top-down judgments.
To meet redemption requests or pending investment of its assets or during
unusual market conditions, the Portfolio may invest all or a portion of its
assets in preferred stocks, bonds, cash and cash equivalents. The investment
adviser's judgment regarding the current investment outlook will determine the
relative amounts to be invested in these different asset classes.
The Target Account's Board of Managers consists mostly of the same people as the
Board of Trustees of the Endeavor Series Trust. In addition, the Target
Account's Manager, Endeavor Management Co. (an affiliate of PFL Life), is also
the Manager of the Endeavor Series Trust. As such, the Manager has overall
responsibility for the general management and administration of the Portfolio.
The Manager monitors Capital Guardian's investment program and pays Capital
Guardian's fee. The annual management fee, as a percentage of the Portfolio's
average daily net assets, that the Manager will receive from the Portfolio for
its services is 0.90% of the first $150 million of net assets; 0.875% of net
assets over $150 million up to $300 million; 0.825% of net assets over $300
million up to $500 million; 0.80% of net assets over $500 million. The Manager
then pays Capital Guardian a fee as a percentage of the Portfolio's average
daily net assets as follows: 0.50% of the first $150 million of net assets;
0.45% of net assets over $150 million up to $300 million; 0.35% of net assets
over $300 million up to $500 million; 0.30% of net assets over $500 million. It
is estimated that the operating expenses for the first year of operations for
the Portfolio would be ___% of the Portfolio's average daily net assets.
4
<PAGE>
Currently, each Target Sub-Account pays the Manager a management fee of 0.75%
per year of average net assets; operating expenses for 1999 ranged from 0.32% to
0.52% of average net assets. Current and pro forma fee tables and expense
examples are in Appendix B hereto.
Restructuring the Target Account
Currently, the Target Account is an actively managed fund (a management
investment company) investing directly in a portfolio of securities. If Policy
Owners in each subaccount of the Target Account approve the proposed change in
investment objective, then the Target Account will be restructured into a
passive account (a unit investment trust investment company) that no longer
holds a portfolio of securities directly, but will hold securities indirectly
through the intermediate vehicle of the Endeavor Series Trust. The restructuring
will involve:
. selling the assets in each of the four Target Account subaccounts;
. using the cash proceeds to purchase an equivalent amount of shares of
the Portfolio;
. combining the four subaccounts into a single subaccount; and
. designating that subaccount as a subaccount of the PFL Endeavor VA
Separate Account.
Following the restructuring, the net asset value per share of the Portfolio will
determine the value of a unit in the subaccount of the Target Account. The total
value of a Policy Owner's interests in the Target Account immediately before the
restructuring will be the same as the value of such interests immediately after
the restructuring. [PFL will pay any brokerage commissions related to the
liquidation of the Target Account's assets.] These changes will not create any
tax consequences to Policy Owners
It is anticipated that the restructuring will occur on October 2, 2000, or as
soon thereafter as practicable following Policy Owner approval.
Consideration by the Board of Managers
The Board believes that changing the Target Account's investment objective will
benefit Policy Owners. On July 24, 2000, the Board, including the members who
are not "interested" persons of the Target Account, the Endeavor Series Trust,
or Capital Guardian, voted to approve the restructuring and change in investment
objective. Before deciding on investing in the Portfolio, the Board considered
such information as they deemed reasonably necessary to enable them to evaluate
Capital Guardian's capabilities.
The material factors the Board considered included:
1. the prior performance of the Target Account;
2. the nature and quality of services to be rendered by Capital Guardian;
3. Capital Guardian's prior experience managing other registered
investment companies and institutional private accounts that have
investment objectives, policies, strategies and risks substantially
similar to those of the Portfolio;
4. the fee to be paid to Capital Guardian.
5
<PAGE>
The Board was satisfied that Capital Guardian (1) was knowledgeable and
experienced in the operations of the relevant financial markets and in the laws
that are applicable to such operations, and (2) had the personnel, financial
resources and standing in the financial community to enable it to manage the
Portfolio adequately.
After careful consideration, the Board believes that changing the Target
Account's investment objective and restructuring the Target Account is in the
best interests of Policy Owners.
Required Vote
Approval of the proposal 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:
. 67% or more of the voting Units present at the Special Meeting, if
more than 50% of the outstanding Units are present or represented by
proxy; or
. more than 50% of the total outstanding Units.
If the Policy Owners in all subaccounts do not approve the proposal, the Board
will consider other possible courses of action which are in the best interests
of Policy Owners.
The Board of Managers recommends that the Policy Owners of each Subaccount vote
"FOR" the proposal.
OTHER INFORMATION
As of the Record Date, the following number of Units of each Subaccount were
outstanding:
. Dow(SM) Target 10 (July Series) Subaccount: ____________________
. Dow(SM) Target 5 (July Series) Subaccount: ____________________
. Dow(SM) Target 10 (January Series) Subaccount: ______________________
. Dow(SM) Target 5 (January Series) Subaccount: _____________________
Each full Unit is entitled to one full vote and each fractional unit is entitled
to a proportionate share of one vote.
As of the Record Date, the following Policy Owners were known to the Target
Account to beneficially own more than 5% of the Units of each Subaccount:
6
<PAGE>
----------------------------------------------------------
Subaccount Name Units Percentage
----------------------------------------------------------
Dow(SM) Target 10 (July Series)
-----------------------
----------------------------------------------------------
Dow(SM) Target 5 (July Series)
-----------------------
----------------------------------------------------------
Dow(SM) Target 10 (January Series)
-----------------------
----------------------------------------------------------
Dow(SM) Target 5 (January Series)
-----------------------
----------------------------------------------------------
As of the Record Date, the officers and the members of the Board 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, the Board
requests that you:
. indicate your instructions on the enclosed proxy card(s);
. date and sign the proxy card(s);
. mail the proxy card(s) promptly in the enclosed envelope, which
requires no postage if mailed in the United States; and
. allow sufficient time for the proxy card(s) to be received on or
before _______ Central Time on September 22, 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>
AFSG Securities Corporation, 4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001,
is the underwriter of the Units of each Subaccount. PFL Life Insurance Company,
4333 Edgewood Road NE, Cedar Rapids, IA 52499-0001, has responsibility for the
administration of the policies and the Target Account. PFL Life Insurance
Company has contracted with PFPC Inc., Mail Zone BOS610, 101 Federal Street,
Boston, MA 02110, to provide administrative services with respect to the
operations and investments of the Target Account.
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. Any such proposal must be
received a reasonable time before a solicitation of proxies is made for such
meeting.
Policy Owners' Request for Special Meeting
Policy Owners holding at least 10% of the Target Account's outstanding voting
securities (as defined in the Investment Company Act of 1940) 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 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 does not intend to present any other business at the Meeting other
than as described in this Proxy Statement, nor is the Board aware that any
Policy Owner intends to do so. If, however, any other matters are properly
brought before the Meeting, the persons named in the accompanying proxy card
will vote thereon in accordance with their judgment.
It is important that Policy Owners promptly return proxies. 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.
8
<PAGE>
APPENDIX B
Fee Table and Expense Example Comparisons
The following tables show the fees and expenses for the Endeavor Variable
Annuity Target Account as they now are, and what the combined fees and expenses
of both the Account and the Capital Guardian U.S. Equity Portfolio are projected
to be if the Proposal is approved and implemented ("pro forma"). There are two
sets of the tables, for different versions of the Endeavor Variable annuity (one
for Endeavor and Endeavor ML versions, and one set for the Endeavor Platinum).
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
CURRENT ANNUITY POLICY FEE TABLE-Endeavor Platinum
---------------------------------------------------------------------------------------------
Policy Owner Transaction Expenses Separate Account Annual Expenses
(as a percentage of average account
value)
---------------------------------------------------------------------------------------------
<S> <C>
Sales Load on Purchase Payments ...... 0 Mortality and Expense Risk Fee/**/ ... 1.25%
Annual Service Charge ... $35 Per Policy Administrative Charge ................ 0.15%
Transfer Fee .......... Currently No Fee Distribution Financing Charge ........ 0.25%
TOTAL SEPARATE ACCOUNT ANNUAL
EXPENSES ............................ 1.65%
=============================================================================================
Portfolio Annual Expenses
(as a percentage of average net assets and after expense reimbursements)
<CAPTION>
---------------------------------------------------------------------------------------------
Total
Rule Portfolio
Management Other 12b-1 Annual
Fees Expenses Fees Expenses
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Dow(SM) Target 10
(January) 0.69% 0.51% -- 1.20%
The Dow(SM) Target 5 (January) 0.69% 0.52% -- 1.21%
The Dow(SM) Target 10 (July) 0.75% 0.38% -- 1.13%
The Dow(SM) Target 5 (July) 0.75% 0.32% -- 1.07%
---------------------------------------------------------------------------------------------
</TABLE>
/**/ This fee is 1.10% for the Return of Premium Death Benefit.
B-1
<PAGE>
EXAMPLES - Current (Endeavor Platinum)
You would pay the following expenses on a $1,000 investment, assuming a
hypothetical 5% annual return on assets, and assuming the entire policy value is
in the applicable target series subaccount, and assuming the family income
protector benefit has not been selected:
The expenses reflect different mortality and expense risk fees depending on
which death benefit you select:
A = Return of Premium Death Benefit (1.10% charge)
B = 5% Annually Compounding Death Benefit or the Double Enhanced Death
Benefit (1.25% charge)
---------------------------------------------------------------------------
1 3 5 10
Subaccounts Year Years Years Years
---------------------------------------------------------------------------
The Dow(SM) Target 10 (January Series) A $27 $84 $144 $305
----------------------------------
B $29 $89 $151 $319
---------------------------------------------------------------------------
The Dow(SM) Target 5 (January Series) A $28 $85 $144 $306
----------------------------------
B $29 $89 $152 $320
---------------------------------------------------------------------------
The Dow(SM) Target 10 (July Series) A $27 $82 $140 $298
----------------------------------
B $28 $87 $148 $313
---------------------------------------------------------------------------
The Dow(SM) Target 5 (July Series) A $26 $80 $137 $292
----------------------------------
B $28 $85 $145 $307
---------------------------------------------------------------------------
These examples should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. The
assumed 5% annual return is hypothetical and should not be considered a
representation of past or future annual returns, which may be greater or less
than the assumed rate.
In the examples, the $35 annual service charge is reflected as a charge of
0.0181% based on average policy value of $193,841.00.
These examples do not reflect the annual fee of 0.30% of the minimum
annuitization value for the family income protector rider. The above expense
figures would be approximately $3 per year higher if you elected that rider.
B-2
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
CURRENT ANNUITY POLICY FEE TABLE-Endeavor and Endeavor ML Policies
-----------------------------------------------------------------------------------------
Policy Owner Transaction Expenses Separate Account Annual Expenses
(as a percentage of average account
value)
-----------------------------------------------------------------------------------------
<S> <C>
Sales Load on Purchase Payments ..... 0 Mortality and Expense Risk Fee/***/ ... 1.40%
Maximum Surrender Charge (as a % of Administrative Charge .................. 0.15%
Premium Payments Surrendered) ..... 7%
Annual Service Charge .. $35 Per Policy
Transfer Fee ......... Currently No Fee TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES.. 1.55%
=========================================================================================
<CAPTION>
Portfolio Annual Expenses
(as a percentage of average net assets and after expense reimbursements)
-----------------------------------------------------------------------------------------
Total
Rule Portfolio
Management Other 12b-1 Annual
Fees Expenses Fees Expenses
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Dow(SM) Target 10
(January) 0.69% 0.51% -- 1.20%
The Dow(SM) Target 5 (January) 0.69% 0.52% -- 1.21%
The Dow(SM) Target 10 (July) 0.75% 0.38% -- 1.13%
The Dow(SM) Target 5 (July) 0.75% 0.32% -- 1.07%
-----------------------------------------------------------------------------------------
</TABLE>
/***/ This fee is 1.25% for the Return of Premium Death Benefit.
B-3
<PAGE>
EXAMPLES - Current (Endeavor and Endeavor ML)
You would pay the following expenses on a $1,000 investment, assuming a
hypothetical 5% annual return on assets, and assuming the entire policy value is
in the applicable subaccount, and assuming the family income protector benefit
has not been selected:
The expenses reflect different mortality and expense risk fees depending on
which death benefit you select:
A = Return of Premium Death Benefit (1.25%)
B = 5% Annually Compounding Death Benefit, Greater of 5% Annually Compounding
through age 80 Death Benefit or Annual Step-Up through age 80 Death Benefit,
or Monthly Step-Up through age 80 Death Benefit (1.40%)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
If the Policy is If the Policy is annuitized at
surrendered at the end the end of the applicable time
of the applicable time period or if the Policy is simply
period. in the annuitization phase.
------------------------------------------------------------------
1 3 5 10 1 3 5 10
Subaccounts Year Years Years Years Year Years Years Years
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
The Dow(SM) Target 10 (January A $97 $135 $184 $296 $27 $82 $140 $296
Series) ---------------------------------------------------------------------
B $98 $140 $191 $311 $28 $86 $147 $311
------------------------------------------------------------------------------------------------------------
The Dow(SM) Target 5 (January A $97 $136 $184 $297 $27 $82 $140 $297
Series) ---------------------------------------------------------------------
B $98 $140 $192 $312 $28 $87 $147 $312
------------------------------------------------------------------------------------------------------------
The Dow(SM) Target 10 (July A $96 $133 $180 $290 $26 $80 $136 $290
Series) ---------------------------------------------------------------------
B $97 $138 $188 $304 $27 $84 $144 $304
------------------------------------------------------------------------------------------------------------
The Dow(SM) Target 5 (July A $95 $131 $177 $284 $25 $78 $133 $284
Series) ---------------------------------------------------------------------
B $97 $136 $185 $298 $27 $82 $141 $298
------------------------------------------------------------------------------------------------------------
</TABLE>
These examples should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. The
assumed 5% annual return is hypothetical and should not be considered a
representation of past or future annual returns, which may be greater or less
than the assumed rate.
In the examples, the $35 annual service charge is reflected as a charge of
0.0299% based on average policy value of $116,930.00.
These examples do not reflect the annual fee of 0.30% of the minimum
annuitization value for the family income protector rider. The above expense
figures would be approximately $3 per year higher if you elected that rider.
B-4
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
PRO FORMA ANNUITY POLICY FEE TABLE-Endeavor Platinum
---------------------------------------------------------------------------------------
Policy Owner Transaction Expenses Separate Account Annual Expenses
(as a percentage of average account value)
---------------------------------------------------------------------------------------
<S> <C>
Sales Load on Purchase Payments ..... 0 Mortality and Expense Risk Fee/****/ .. 1.25%
Annual Service Charge .. $35 Per Policy Administrative Charge ................. 0.15%
Transfer Fee ......... Currently No Fee Distribution Financing Charge ......... 0.25%
TOTAL SEPARATE ACCOUNT ANNUAL
EXPENSES ............................. 1.65%
=======================================================================================
Portfolio Annual Expenses
(as a percentage of average net assets and after expense reimbursements)
---------------------------------------------------------------------------------------
<CAPTION>
Total
Rule Portfolio
Management Other 12b-1 Annual
Fees Expenses Fees Expenses
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Guardian U.S. Equity 0.90%* ___% -- ____%
---------------------------------------------------------------------------------------
</TABLE>
"Other Expenses" are estimated for the first year of operations and are net of
any expense reimbursements.
* As noted in the proxy statement, there are breakpoints, or reductions, in this
fee when the assets in the portfolio reach $90 million. Currently, the assets in
the Target Account are approximately $40 million.
/****/ This fee is 1.10% for the Return of Premium Death Benefit.
B-5
<PAGE>
EXAMPLES -Pro Forma (Endeavor Platinum)
You would pay the following expenses on a $1,000 investment, assuming a
hypothetical 5% annual return on assets, and assuming the entire policy value is
in the applicable target series subaccount, and assuming the family income
protector benefit has not been selected:
The expenses reflect different mortality and expense risk fees depending on
which death benefit you select:
A = Return of Premium Death Benefit (1.10% charge)
B = 5% Annually Compounding Death Benefit or the Double Enhanced Death Benefit
(1.25% charge)
----------------------------------------------------------------
1 3 5 10
Subaccounts Year Years Years Years
----------------------------------------------------------------
Capital Guardian U.S. Equity A $ $ $ $
---------------------------------
B $ $ $ $
----------------------------------------------------------------
These examples should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. The
assumed 5% annual return is hypothetical and should not be considered a
representation of past or future annual returns, which may be greater or less
than the assumed rate.
In the examples, the $35 annual service charge is reflected as a charge of
0.0181% based on average policy value of $193,841.00.
These examples do not reflect the annual fee of 0.30% of the minimum
annuitization value for the family income protector rider. The above expense
figures would be approximately $3 per year higher if you elected that rider.
B-6
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------
PRO FORMA ANNUITY POLICY FEE TABLE-Endeavor and Endeavor ML Policies
---------------------------------------------------------------------------------------
Policy Owner Transaction Expenses Separate Account Annual Expenses
(as a percentage of average account value)
---------------------------------------------------------------------------------------
<S> <C>
Sales Load on Purchase Payments .... 0 Mortality and Expense Risk Fee/****/ . 1.40%
Maximum Surrender Charge (as a % of Administrative Charge ................ 0.15%
Premium Payments Surrendered) ..... 7%
Annual Service Charge .. $35 Per Policy TOTAL SEPARATE ACCOUNT ANNUAL
Transfer Fee ......... Currently No Fee EXPENSES ............................ 1.55%
=======================================================================================
Portfolio Annual Expenses
(as a percentage of average net assets and after expense reimbursements)
---------------------------------------------------------------------------------------
<CAPTION>
Total
Rule Portfolio
Management Other 12b-1 Annual
Fees Expenses Fees Expenses
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Capital Guardian U.S. Equity 0.90%* ____% -- ____%
---------------------------------------------------------------------------------------
</TABLE>
"Other Expenses" are estimated for the first year of operations and are net of
any expense reimbursements.
* As noted in the proxy statement, there are breakpoints, or reductions, in this
fee when the assets in the portfolio reach $90 million. Currently, the assets in
the Target Account are approximately $40 million.
---------------------------
***** This fee is 1.25% for the Return of Premium Death Benefit.
B-7
<PAGE>
EXAMPLES -Pro Forma (Endeavor and Endeavor ML)
You would pay the following expenses on a $1,000 investment, assuming a
hypothetical 5% annual return on assets, and assuming the entire policy value is
in the applicable subaccount, and assuming the family income protector benefit
has not been selected:
The expenses reflect different mortality and expense risk fees depending on
which death benefit you select:
A = Return of Premium Death Benefit (1.25%)
B = 5% Annually Compounding Death Benefit, Greater of 5% Annually Compounding
through age 80 Death Benefit or Annual Step-Up through age 80 Death Benefit,
or Monthly Step-Up through age 80 Death Benefit (1.40%)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
If the Policy is If the Policy is annuitized at
surrendered at the end the end of the applicable time
of the applicable time period or if the Policy is simply
period. in the annuitization phase.
------------------------------------------------------------------
1 3 5 10 1 3 5 10
Subaccounts Year Years Years Years Year Years Years Years
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Guardian U.S. Equity A $ $ $ $ $ $ $ $
-----------------------------------------------------------------
B $ $ $ $ $ $ $ $
--------------------------------------------------------------------------------------------------------
</TABLE>
These examples should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. The
assumed 5% annual return is hypothetical and should not be considered a
representation of past or future annual returns, which may be greater or less
than the assumed rate.
In the examples, the $35 annual service charge is reflected as a charge of
0.0299% based on average policy value of $116,930.00.
These examples do not reflect the annual fee of 0.30% of the minimum
annuitization value for the family income protector rider. The above expense
figures would be approximately $3 per year higher if you elected that rider.
B-8
<PAGE>
PFL ENDEAVOR TARGET ACCOUNT
--------------------------------------------------------------------------------
The Dow(SM) Target 10 (January Series) The Dow(SM) Target 10 (July Series)
The Dow(SM) Target 5 (January Series) The Dow(SM) Target 5 (July Series)
--------------------------------------------------------------------------------
2101 East Coast Highway
Suite 300
Corona del Mar, California 92625
Proxy solicited by the Board of Managers for a Special Meeting of Policy Owners
of PFL Endeavor Target Account to be held on _____________________, 2000.
[Policy Owner] Proxy Number: __________________
[Address] Policy Number: __________________
[City, State, Zip Code] Units: ___________________
The undersigned Policy Owner, annuitant or participant of PFL Endeavor Target
Account, having received Notice of the Special Meeting of Policy Owners of the
Target Account and the Proxy Statement accompanying such Notice, each dated
___________________, 2000, hereby constitutes and appoints PFL Life Insurance
Company as true and lawful attorneys of the undersigned, with full powers of
substitution and revocation, to attend and to cast all votes entitled to be cast
by the undersigned, for and in the name, place and stead of the undersigned, at
the Special Meeting of Target Account Policy Owners to be held on
___________________, 2000 at ______ Central Time, at 4225 Edgewood Road NE,
Cedar Rapids, Iowa 52499-0001, and at any and all adjournments thereof, with all
powers the undersigned would possess if personally present.
All previous proxies given with respect to all votes entitled to be cast by the
undersigned at the Special Meeting are hereby revoked. The proxies will vote in
the manner directed herein, or, if no direction has been indicated, "FOR" the
proposal. The Board of Managers recommends that this proxy be marked "FOR" the
proposal. This proxy may be revoked at any time prior to the Special Meeting by
executing a subsequent proxy, or by notifying the Secretary of the Target
Account in writing, or by voting in person at the Special Meeting.
Please mark, sign, date, and return all proxy forms promptly in the enclosed
envelope. Please sign exactly as your name appears on this form. To vote on the
proposal, using blue or black ink, indicate your choice by marking an "X" in the
appropriate box as follows: [X]
The proxy form must be signed and dated for your vote to be counted.
--------------------------------------------------------------------------------
For Against Abstain
--------------------------------------------------------------------------------
To approve or disapprove a change in the Target [_] [_] [_]
Account's investment objective whereby the Target
Account will invest exclusively in shares of the
Capital Guardian U.S. Equity Portfolio of Endeavor
Series Trust.
--------------------------------------------------------------------------------
Signature: __________________________ Signature: ____________________________
Dated: ________________, 2000
