As filed with the Securities and Exchange Commission on
November 25, 1998
Securities Act File No. 33-27352
Investment Company Act File No. 811-5780
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
Post-Effective Amendment No. 24 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
Amendment No. 27
ENDEAVOR SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
2101 East Coast Highway, Suite 300
Corona del Mar, California 92625
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Are Code: (800) 854-8393
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Vincent J. McGuinness, Jr.
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President
Endeavor Series Trust
2101 East Coast Highway, Suite 300, Corona del Mar, California 92625
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(Name and Address of Agent for Service)
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Copies to:
Robert N. Hickey, Esq.
Sullivan & Worcester LLP
1025 Connecticut Avenue, N.W. Washington, D.C. 20036
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It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) on ____________
pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1) on ____________
pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2) X on February 16,
1998 pursuant to paragraph (a)(2) of
Rule 485
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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The Registrant hereby declares its intention to register an indefinite number of
shares of beneficial interest of its Endeavor Janus Growth Portfolio. The
Registrant has previously filed a declaration of indefinite registration of
shares of beneficial interest of its Endeavor Money Market Portfolio (formerly,
TCW Money Market Portfolio), Endeavor Asset Allocation Portfolio (formerly, TCW
Managed Asset Allocation Portfolio), T. Rowe Price International Stock Portfolio
(formerly, Global Growth Portfolio), Endeavor Value Equity Portfolio (formerly,
Value Equity Portfolio), Dreyfus Small Cap Value Portfolio (formerly, Quest for
Value Small Cap Portfolio), Dreyfus U.S. Government Securities Portfolio
(formerly, U.S. Government Securities Portfolio), T. Rowe Price Equity Income
Portfolio, T. Rowe Price Growth Stock Portfolio, Endeavor Opportunity Value
Portfolio (formerly, Opportunity Value Portfolio), Endeavor Enhanced Index
Portfolio (formerly, Enhanced Index Portfolio) , Endeavor Select 50 Portfolio
(formerly, Select 50 Portfolio) and Endeavor High Yield Portfolio pursuant to
Rule 24f-2 under the Investment Company Act of 1940, as amended, (the "1940
Act"). Registrant's Rule 24f-2 Notice, on behalf of its Endeavor Money Market
Portfolio, Endeavor Asset Allocation Portfolio, T. Rowe Price International
Stock Portfolio, Endeavor Value Equity Portfolio, Dreyfus Small Cap Value
Portfolio, Dreyfus U.S. Government Securities Portfolio, T. Rowe Price Equity
Income Portfolio, T. Rowe Price Growth Stock Portfolio, Endeavor Opportunity
Value Portfolio and Endeavor Enhanced Index Portfolio for the fiscal year ended
December 31, 1997 was filed on or about March 31, 1998. The Registrant did not
sell shares of beneficial interest for its Endeavor Select 50 Portfolio or
Endeavor High Yield Portfolio during the fiscal year ended December 31, 1997
pursuant to such declaration and, therefore, did not file a Rule 24f-2 Notice
for the fiscal year ended December 31, 1997 pursuant to Rule 24f-2(b) of the
1940 Act.
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ENDEAVOR SERIES TRUST
Cross Reference Sheet
Pursuant to Rule 495(a)
Part A
<TABLE>
<CAPTION>
Item Registration Statement
No. Caption Caption in Prospectus
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Not Applicable
3. Condensed Financial
Information Financial Highlights
4. General Description
of Registrant Cover Page; The Fund;
Investment Objectives and
Policies
5. Management of the Fund The Fund; Management of
the Fund; Additional
Information
5A. Management's Discussion
of Fund Performance Not Applicable
6. Capital Stock and Other
Securities The Fund; Dividends,
Distributions and Taxes;
Organization and
Capitalization of the
Fund; Additional
Information
7. Purchase of Securities
Being Offered Sale and Redemption of
Shares
8. Redemption or Repurchase Sale and Redemption of
Shares
9. Pending Legal Proceedings Not Applicable
PART B
Item Registration Statement Caption in Statement
No. Caption of Additional Information
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10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and
History Organization and
Capitalization of the Fund
13. Investment Objectives and
Policies Investment Objectives and
Policies
14. Management of the Fund Management of the Fund
15. Control Persons and
Principal Holders of
Securities Management of the Fund
16. Investment Advisory and
Other Services Management of the Fund
17. Brokerage Allocation and
Other Practices Portfolio Transactions
18. Capital Stock and Other
Securities Organization and
Capitalization of the Fund
19. Purchase, Redemption and
Pricing of Securities
Being Offered Net Asset Value;
Redemption of Shares
20. Tax Status Taxes
21. Underwriters Management of the Fund
22. Calculation of
Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
PART C
The information required to be included in Part C is set forth
under the appropriate Item, so numbered, in Part C to this Post-Effective
Amendment.
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ENDEAVOR SERIES TRUST
Part A: The Prospectus dated May 1, 1998 is incorporated by reference
to Post-Effective Amendment No. 22 as filed with the Securities and Exchange
Commission (the "SEC") on February 27, 1998 as Accession #0000908737-98-000222.
The Prospectus dated May 15, 1998 is incorporated by reference to
Post-Effective Amendment No. 23 as filed with the SEC on March 18, 1998 as
Accession #0000908737-98-
Part B: The Statement of Additional Information dated May 1, 1998, as
amended May 15, 1998, is incorporated by reference to Post-Effective Amendment
No. 23 as filed with the SEC on March 18, 1998 as Accession #0000908737-98-
000295.
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Prospectus
ENDEAVOR(sm) SERIES TRUST
Endeavor Series Trust (the "Fund") is a diversified, open-end
management investment company that offers a selection of managed investment
portfolios, each with its own investment objective designed to meet different
investment goals. There can be no assurance that these investment objectives
will be achieved.
This Prospectus describes the Endeavor Janus Growth Portfolio offered
by the Fund (the "Portfolio").
This Prospectus sets forth concisely the information about the Fund and
the Portfolio that a prospective investor should know before investing. Please
read the Prospectus and retain it for future reference. Additional information
contained in a Statement of Additional Information dated May 1, 1998, as amended
May 15, 1998 and February 16, 1999 has been filed with the Securities and
Exchange Commission (the "SEC") and is available upon request without charge by
writing or calling the Fund at the address or telephone number set forth on the
back cover of this Prospectus. In addition, the SEC maintains a web site
(http://www.sec.gov) that contains the Statement of Additional Information and
other information regarding the Fund. The Statement of Additional Information is
incorporated by reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 16, 1999.
Endeavor(sm) is a registered service mark of Endeavor Management Co.
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THE FUND
Endeavor Series Trust is a diversified, open-end management investment
company that offers a selection of managed investment portfolios. Each portfolio
constitutes a separate mutual fund with its own investment objective and
policies. The Fund currently issues shares of thirteen portfolios, one of which
is described in this Prospectus. The Trustees of the Fund may establish
additional portfolios at any time.
Shares of the Portfolio are issued and redeemed at their net asset
value without a sales load and currently are offered only to various separate
accounts of PFL Life Insurance Company and certain of its affiliates ("PFL") to
fund various insurance contracts, including variable life insurance policies
(whether scheduled premium, flexible premium or single premium policies) or
variable annuity contracts. These insurance contracts are hereinafter referred
to as the "Contracts." The rights of PFL as the record holder for a separate
account of shares of the Portfolio are different from the rights of the owner of
a Contract. The terms "shareholder" or "shareholders" in this Prospectus refer
to PFL and not to any Contract owner.
The structure of the Fund permits Contract owners, within the
limitations described in the appropriate Contract, to allocate the amounts held
by PFL under the Contracts for investment in the various portfolios of the Fund.
See the prospectus and other material accompanying this Prospectus for a
description of the Contracts, which portfolios of the Fund are available to
Contract owners, and the relationship between increases or decreases in the net
asset value of shares of the portfolios (and any dividends and distributions on
such shares) and the benefits provided under the Contracts.
It is conceivable that in the future it may be disadvantageous for
scheduled premium variable life insurance separate accounts, flexible and single
premium variable life insurance separate accounts, and variable annuity separate
accounts to invest simultaneously in the Fund due to tax or other
considerations. The Trustees of the Fund intend to monitor events for the
existence of any irreconcilable material conflict between or among such
accounts, and PFL will take whatever remedial action may be necessary.
Investment Objective
The investment objective of the Portfolio is to seek growth of capital.
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FINANCIAL HIGHLIGHTS
The offering of shares of the Portfolio is expected to commence on or
about the date of this Prospectus. Accordingly, no financial highlight data is
available for shares of the Portfolio.
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INVESTMENT OBJECTIVE AND POLICIES
The following is a brief description of the investment objective and
policies of the Portfolio. The investment objective and the policies of the
Portfolio other than those listed under the caption "Investment Restrictions" in
the Statement of Additional Information are not fundamental policies and may be
changed by the Trustees of the Fund without the approval of shareholders.
Certain portfolio investments and techniques discussed below are described in
greater detail in the Statement of Additional Information. Due to the
uncertainty inherent in all investments, there can be no assurance that the
Portfolio will be able to achieve its investment objective.
The investment objective of the Portfolio is to seek growth of capital.
The Portfolio seeks to achieve its investment objective by investing
substantially all of its assets in common stocks when the Adviser believes that
the relevant market environment favors profitable investing in those securities.
Common stock investments are selected in industries and companies that the
Adviser believes are experiencing favorable demand for their products and
services, and which operate in a favorable competitive environment and
regulatory climate. The Adviser's analysis and selection process focuses on
stocks issued by companies with earnings growth potential. In particular, the
Portfolio intends to buy stocks with earnings growth potential that may not be
recognized by the market. Securities are selected solely for their growth
potential; investment income is not a consideration.
Although the Portfolio's assets will be invested primarily in common
stocks at most times, the Portfolio may increase its cash position when the
Adviser is unable to locate investment opportunities with desirable risk/reward
characteristics. In such case, the Portfolio may invest in U.S. government
securities, high-grade commercial paper, corporate bonds and debentures,
warrants, preferred stocks or certificates of deposit of commercial banks or
other debt securities.
The Portfolio may also invest up to 25% of its net assets in foreign
securities (which may be purchased through American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") and Global Depositary Receipts
("GDRs"), as well as directly) and up to 5% in high-yield bonds. See "Investment
Strategies - Foreign Investment Risks; Risk Factors Relating to Investing in
High Yield/High Risk Securities."
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The Portfolio may employ certain investment strategies which are
discussed under the caption "Investment Strategies" below and in the Statement
of Additional Information.
Investment Strategies
In addition to making investments directly in securities, the Portfolio
may enter into futures contracts on securities, financial indices and foreign
currencies and options on such contracts ("futures contracts") and may invest in
options on securities, financial indices and foreign currencies ("options"),
forward contracts and interest rate swaps and swap-related products
(collectively "derivative instruments"). The Portfolio intends to use most
derivative instruments primarily to hedge the value of its investments against
potential adverse movements in securities prices, foreign currency markets or
interest rates. To a limited extent, the Portfolio may also use derivative
instruments for non-hedging purposes such as seeking to increase the Portfolio's
income or otherwise seeking to enhance return. The Portfolio may also engage in
foreign currency exchange transactions to protect against changes in future
exchange rates, enter into repurchase agreements, make forward commitments to
purchase securities, lend its portfolio securities and borrow funds under
certain limited circumstances. The investment strategies referred to above and
the risks related to them are summarized below and certain of these strategies
are described in more detail in the Statement of Additional Information.
Futures, Options and Other Derivatives. Subject to certain limitations,
the Portfolio may engage in hedging strategies involving instruments commonly
called "derivatives." "Derivatives" used by the Portfolio include futures
contracts and related options, forward currency contracts, and interest rate
swaps, caps and floors. These instruments are commonly called derivatives
because their price is derived from an underlying index, security or other
measure of value.
The Portfolio may engage in futures contracts and options. The
Portfolio intends to use such derivatives primarily for bona fide hedging
purposes, which seeks to help protect portfolio positions against market,
interest rate or currency fluctuations, to equitize a cash position, for
duration management, or to reduce the risk inherent in the management of the
Portfolio. If used for other purposes as may be permitted under applicable rules
pursuant to which the Portfolio would remain exempt from the definition of a
"commodity pool operator" under the rules of the Commodity Futures Trading
Commission, the aggregate initial margin and premiums required to establish any
non-hedging positions will not exceed 5% of the fair market value of the
Portfolio's net assets.
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Futures contracts are contracts that obligate the buyer to receive and
the seller to deliver an instrument or money at a specified price on a specified
date. The Portfolio may buy and sell futures contracts on foreign currencies,
securities and financial indexes including interest rates or an index of U.S.
government, foreign government, equity or fixed-income securities.
The Portfolio may also buy options on futures contracts. An option on a
futures contract gives the buyer the right, but not the obligation, to buy or
sell a futures contract at a specific price on or before a specified date.
Futures contracts and options on futures are standardized and traded on
designated exchanges.
Forward contracts are contracts to purchase or sell a specified amount
of property for an agreed upon price at a specified time. Forward contracts are
not currently exchange traded and are typically negotiated on an individual
basis. The Portfolio may enter into forward currency contracts to hedge against
declines in the value of non-dollar denominated securities or to reduce the
impact of currency appreciation on purchases of non-dollar denominated
securities. The Portfolio may also enter into forward currency contracts with
respect to ADRs. The Portfolio may also enter into forward contracts to purchase
or sell securities or other financial indices.
Interest rate swaps involve the exchange by two parties of their
respective commitments to pay or receive interest (e.g., an exchange of floating
rate payments for fixed rate payments).
Interest rate futures contracts involve the purchase or sale of
contracts for the future delivery of fixed-income securities at an established
price. The purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually based principal amount from the party
selling the interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually based
principal amount from the party selling the interest rate floor.
Options are the right, but not the obligation, to buy or sell a
specified amount of securities or other assets on or before a fixed date at a
predetermined price. The Portfolio may purchase put and call options on
securities, securities indexes and foreign currencies, subject to its investment
restrictions.
Call options give a buyer the right to purchase a portfolio
security at a designated price until a certain date. The option
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must be "covered" - for example, the seller may own the
securities required to fulfill the contract.
Put options give the buyer the right to sell the security at a
designated price until a certain date. Put options are "covered," for example,
by segregating an amount of cash or securities equal to the exercise price.
Stock index futures obligate the seller to deliver (and the purchaser
to take) an amount of cash equal to a specified dollar amount times the
difference between the value of a specified stock index at the close of the last
trading day of the contract and the price at which the agreement is made. No
physical delivery of the underlying stocks in the index is made.
Options on stock index futures contracts, as contrasted with the direct
investments in such a contract, give the purchaser the right, in return for the
premium paid, to assume a position in a stock index futures contract at a
specified exercise price at any time prior to the expiration date of the option.
Risk factors. There can be no assurance the use of derivatives will
help the Portfolio achieve its investment objective. Derivatives involve special
risks and transaction costs, and draw upon skills and experience which are
different from those needed to choose the other securities or instruments in
which the Portfolio invests. Special risks of these instruments include:
Inaccurate Market Predictions. If interest rates, securities prices or
currency markets do not move in the direction expected by the Adviser who uses
derivatives based on those measures, these instruments may fail in their
intended purpose and result in losses to the Portfolio.
Imperfect Correlation. Derivatives' prices may be imperfectly
correlated with the prices of the securities, interest rates or currencies being
hedged. When this happens, the expected benefits may be diminished and the
Portfolio may incur losses.
Illiquidity. A liquid secondary market may not be available for a
particular instrument at a particular time. The Portfolio may therefore be
unable to control losses by closing out a derivative position.
Tax Considerations. The Portfolio may have to delay closing
out certain derivative positions to avoid adverse tax
consequences.
The risk of loss from investing in derivative instruments is
potentially unlimited.
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Foreign Currency Transactions. The Portfolio may purchase foreign
currency on a spot (or cash) basis, enter into contracts to purchase or sell
foreign currencies at a future date ("forward contracts"), purchase and sell
foreign currency futures contracts, and purchase exchange traded and
over-the-counter call and put options on foreign currency futures contracts and
on foreign currencies. The Adviser to the Portfolio may engage in these
transactions to protect against uncertainty in the level of future exchange
rates in connection with the purchase and sale of portfolio securities
("transaction hedging") and to protect the value of specific portfolio positions
("position hedging").
Hedging transactions involve costs and may result in losses. The
Portfolio may write covered call options on foreign currencies to offset some of
the costs of hedging those currencies. The Portfolio will engage in
over-the-counter transactions only when appropriate exchange traded transactions
are unavailable and when, in the opinion of the Portfolio's Adviser, the pricing
mechanism and liquidity are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. The Portfolio's ability to
engage in hedging and related option transactions may be limited by tax
considerations.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Portfolio owns or intends to
purchase or sell. They simply establish a rate of exchange which one can achieve
at some future point in time. Additionally, although these techniques tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the increase in
the value of such currency.
Reverse Repurchase Agreements. The Portfolio is permitted to enter into
reverse repurchase agreements. In a reverse repurchase agreement, the Portfolio
sells a security and agrees to repurchase it at a mutually agreed upon date and
price, reflecting the interest rate effective for the term of the agreement. For
the purposes of the Investment Company Act of 1940, as amended (the "1940 Act")
it is considered a form of borrowing by the Portfolio and, therefore, is a form
of leverage. Leverage may cause any gains or losses of the Portfolio to be
magnified.
Borrowings. The Portfolio may borrow from banks for temporary or
emergency purposes and enter into reverse repurchase agreements in an amount
equal to up to 25% of the value of its total assets (computed at the time the
loan is made). The purchase of securities while borrowings are outstanding will
have the effect of leveraging the Portfolio. Such leveraging or borrowing
increases the Portfolio's exposure to capital risk and
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borrowed funds are subject to interest costs which will reduce
net income.
Depositary Receipts. The Portfolio may invest in ADRs, EDRs and GDRs or
other securities convertible into securities of corporations in which the
Portfolio is permitted to invest. These securities may not necessarily be
denominated in the same currency into which they may be converted. Depositary
receipts are receipts typically issued by a U.S. or foreign bank or trust
company and evidence ownership of underlying securities issued by a foreign
corporation. Depositary receipts are subject to many of the risks of foreign
securities such as changes in exchange rates and more limited information about
foreign issuers.
Repurchase Agreements. The Portfolio may enter into repurchase
agreements with a bank, broker-dealer or other financial institution as a means
of earning a fixed rate of return on its cash reserves for periods as short as
overnight. A repurchase agreement is a contract pursuant to which the Portfolio,
against receipt of securities of at least equal value including accrued
interest, agrees to advance a specified sum to the financial institution which
agrees to reacquire the securities at a mutually agreed upon time (usually one
day) and price. Each repurchase agreement entered into by the Portfolio will
provide that the value of the collateral underlying the repurchase agreement
will always be at least equal to the repurchase price, including any accrued
interest. The Portfolio's right to liquidate such securities in the event of a
default by the seller could involve certain costs, losses or delays and, to the
extent that proceeds from any sale upon a default of the obligation to
repurchase are less than the repurchase price, the Portfolio could suffer a
loss.
Forward Commitments. The Portfolio may make contracts to purchase
securities for a fixed price at a future date beyond customary settlement time
("forward commitments") if it holds, and maintains until the settlement date in
a segregated account, cash or liquid assets in an amount sufficient to meet the
purchase price, or if it enters into offsetting contracts for the forward sale
of other securities it owns. Forward commitments may be considered securities in
themselves and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Portfolio's other assets. Where such
purchases are made through dealers, the Portfolio relies on the dealer to
consummate the sale. The dealer's failure to do so may result in the loss to the
Portfolio of an advantageous yield or price.
Securities Loans. The Portfolio may seek to obtain additional income by
making secured loans of its portfolio securities with a value up to 33 1/3% of
its total assets. The
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Portfolio does not presently intend to lend securities valued at more than 5% of
its total assets. All securities loans will be made pursuant to agreements
requiring the loans to be continuously secured by collateral in cash or liquid
assets at least equal at all times to the market value of the loaned securities.
The borrower pays to the Portfolio an amount equal to any dividends or interest
received on loaned securities. The Portfolio retains all or a portion of the
interest received on investment of cash collateral or receives a fee from the
borrower. Lending portfolio securities involves risks of delay in recovery of
the loaned securities or in some cases loss of rights in the collateral should
the borrower fail financially.
Fixed-Income Securities - Downgrades. If any security invested in by
the Portfolio loses its rating or has its rating reduced after the Portfolio has
purchased it, unless required by law, the Portfolio is not required to sell or
otherwise dispose of the security, but may consider doing so.
Illiquid Securities. The Portfolio may invest up to 15% of its net
assets in illiquid securities and other securities which are not readily
marketable, including non-negotiable time deposits, certain restricted
securities not deemed by the Fund's Trustees to be liquid and repurchase
agreements with maturities longer than seven days. Securities eligible for
resale pursuant to Rule 144A under the Securities Act of 1933, which have been
determined to be liquid, will not be considered by the Portfolio's Adviser to be
illiquid or not readily marketable and, therefore, are not subject to the
aforementioned 15% limit. The inability of the Portfolio to dispose of illiquid
or not readily marketable investments readily or at a reasonable price could
impair the Portfolio's ability to raise cash for redemptions or other purposes.
The liquidity of securities purchased by the Portfolio which are eligible for
resale pursuant to Rule 144A will be monitored by the Portfolio's Adviser on an
ongoing basis, subject to the oversight of the Trustees. In the event that such
a security is deemed to be no longer liquid, the Portfolio's holdings will be
reviewed to determine what action, if any, is required to ensure that the
retention of such security does not result in the Portfolio having more than 15%
of its assets invested in illiquid or not readily marketable securities.
Short Sales. The Portfolio may sell securities "short against the box."
A short sale is the sale of a security that the Portfolio does not own. A short
sale is "against the box" if at all times when the short position is open, the
Portfolio owns an equal amount of the securities sold short or securities
convertible into, or exchangeable without further consideration for, securities
of the same issue as the securities sold short.
Other Investment Companies. The Portfolio may invest up to 10% of its total
assets, calculated at the time of purchase, in
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the securities of other investment companies. The Portfolio may not invest (i)
more than 5% of its total assets in the securities of any one investment company
or (ii) in more than 3% of the voting securities of any other investment
company. The Portfolio will indirectly bear its proportionate share of any
investment advisory fees and expenses paid by the funds in which it invests, in
addition to the investment advisory fee and expenses paid by the Portfolio.
However, if the Portfolio invests in a Janus money market fund, the Portfolio's
Adviser will remit to the Portfolio the fees it receives from the Janus money
market fund to the extent such fees are based on the Portfolio's assets.
Special Situations. The Portfolio may invest in "special situations"
from time to time. A special situation arises when, in the opinion of the
Adviser, the securities of a particular issuer will be recognized and appreciate
in value due to a specific development with respect to that issuer. Developments
creating a special situation might include, among others, a new product or
process, a management change, a technological breakthrough, or other
extraordinary corporate event, or differences in market supply and demand for
the security.
Investment in special situations may carry an additional risk of loss
in the event that the anticipated development does not occur or does not attract
the expected attention. The impact of this strategy on the Portfolio will depend
on the Portfolio's size and the extent of the holdings of the special situation
issuer relative to its total assets.
Risk Factors Relating to Investing in High Yield/High Risk Securities.
High-yield/high-risk securities (or "junk" bonds) are debt securities rated
below investment grade by the primary rating agencies such as Standard & Poor's
Ratings Services and Moody's Investors Service, Inc. The value of lower quality
securities generally is more dependent on the ability of the issuer to meet
interest and principal payments (i.e., credit risk) than is the case for higher
quality securities. Conversely, the value of higher quality securities may be
more sensitive to interest rate movements than lower quality securities. Issuers
of high yield/high risk securities may not be as strong financially as those
issuing bonds with higher credit ratings. Investments in such companies are
considered to be more speculative than higher quality investments.
Issuers of high yield/high risk securities are vulnerable to real or
perceived economic changes (for instance, an economic downturn or prolonged
period of rising interest rates), political changes or adverse developments
specified to the issuer. The market for lower quality securities is generally
less liquid than the market for higher quality securities. Adverse publicity and
investor perceptions as well as new or proposed laws may also
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have a greater negative impact on the market for lower quality
securities.
Foreign Investment Risks. Foreign investments involve certain risks
that are not present in domestic securities. Because the Portfolio intends to
purchase securities denominated in foreign currencies, a change in the value of
any such currency against the U.S. dollar will result in a change in the U.S.
dollar value of the Portfolio's assets and the Portfolio's income. In addition,
although a portion of the Portfolio's investment income may be received or
realized in such currencies, the Portfolio will be required to compute and
distribute its income in U.S. dollars. Therefore, if the exchange rate for any
such currency declines after the Portfolio's income has been earned and computed
in U.S. dollars but before conversion and payment, the Portfolio could be
required to liquidate portfolio securities to make such distributions.
The values of foreign investments and the investment income derived
from them may also be affected unfavorably by changes in currency exchange
control regulations. Although the Portfolio will invest only in securities
denominated in foreign currencies that are fully exchangeable into U.S. dollars
without legal restriction at the time of investment, there can be no assurance
that currency controls will not be imposed subsequently. In addition, the values
of foreign fixed income investments will fluctuate in response to changes in
U.S. and foreign interest rates.
There may be less information publicly available about a foreign issuer
than about a U.S. issuer, and foreign issuers are not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the United States. Foreign stock markets are generally not as
developed or efficient as, and may be more volatile than, those in the United
States. While growing in volume, they usually have substantially less volume
than U.S. markets and the Portfolio's investment securities may be less liquid
and subject to more rapid and erratic price movements than securities of
comparable U.S. companies. Equity securities may trade at price/earnings
multiples higher than comparable United States securities and such levels may
not be sustainable. There is generally less government supervision and
regulation of foreign stock exchanges, brokers and listed companies than in the
United States. Moreover, settlement practices for transactions in foreign
markets may differ from those in United States markets. Such differences may
include delays beyond periods customary in the United States and practices, such
as delivery of securities prior to receipt of payment, which increase the
likelihood of a "failed settlement." Failed settlements can result in losses to
the Portfolio. In less liquid and well developed stock markets, such as those in
some Asian and Latin American countries, volatility
-15-
<PAGE>
may be heightened by actions of a few major investors. For example, substantial
increases or decreases in cash flows of mutual funds investing in these markets
could significantly affect stock prices and, therefore, share prices.
Foreign brokerage commissions, custodial expenses and other fees are
also generally higher than for securities traded in the United States.
Consequently, the overall expense ratios of international funds are usually
somewhat higher than those of typical domestic funds.
Income received by the Portfolio from sources within foreign countries
may be reduced by withholding and other taxes imposed by such countries. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes. The Portfolio's Adviser will attempt to minimize such
taxes by timing of transactions and other strategies, but there can be no
assurance that such efforts will be successful. Any such taxes paid by the
Portfolio will reduce its net income available for distribution to shareholders.
Emerging Market Risks. Investments in emerging market countries may be
subject to potentially higher risks than investments in developed countries.
These risks include: (i) volatile social, political and economic conditions;
(ii) the small size of the markets for such securities and the currently low or
nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) the existence of national policies which may
restrict the Portfolio's investment opportunities, including restrictions on
investment in issuers or industries deemed sensitive to national interests; (iv)
foreign taxation; (v) the absence of developed structures governing private or
foreign investment or allowing for judicial redress for injury to private
property; (vi) the absence, until recently in certain emerging market countries,
of a capital market structure or market-oriented economy; and (vii) the
possibility that recent favorable economic developments in certain emerging
market countries may be slowed or reversed by unanticipated political or social
events in such countries.
Certain emerging market countries have histories of instability and
upheaval (e.g., Latin America) and internal politics that could cause their
governments to act in a detrimental or hostile manner toward private enterprise
or foreign investment. Any such actions (for example, nationalizing an industry
or company) could have a severe and adverse effect on security prices and impair
the Portfolio's ability to repatriate capital or income. The Portfolio's Adviser
will not invest the Portfolio's assets in countries where it believes such
events are likely to occur.
-16-
<PAGE>
MANAGEMENT OF THE FUND
The Trustees and officers of the Fund provide broad supervision over
the business and affairs of the Portfolio and the Fund.
The Manager
The Fund is managed by Endeavor Management Co. (the "Manager") which,
subject to the supervision and direction of the Trustees of the Fund, has
overall responsibility for the general management and administration of the
Fund. Vincent J. McGuinness, a Trustee of the Fund, together with his family
members and trusts for the benefit of his family members, own all of Endeavor
Management Co.'s outstanding common stock. Mr. McGuinness is Chairman and Chief
Executive Officer of Endeavor Management Co.
The Manager is responsible for providing investment management and
administrative services to the Fund and in the exercise of such responsibility
selects an investment adviser for each of the Fund's portfolios (the "Adviser")
and monitors the Adviser's investment program and results, reviews brokerage
matters, oversees compliance by the Fund with various federal and state
statutes, and carries out the directives of the Trustees. The Manager is
responsible for providing the Fund with office space, office equipment, and
personnel necessary to operate and administer the Fund's business, and also
supervises the provision of services by third parties such as the Fund's
custodian and transfer agent. Pursuant to an administration agreement, First
Data Investor Services Group, Inc. ("Investor Services Group") assists the
Manager in the performance of its administrative responsibilities to the Fund.
As compensation for these services the Fund pays the Manager a monthly
fee based on the annual rate of .80% of the Portfolio's average daily net
assets. From the management fee, the Manager pays the expenses of providing
investment advisory services to the Portfolio, including the fees of the Adviser
of the Portfolio.
The Manager is entitled to be reimbursed for the Portfolio's portion of
the fees and expenses paid by the Manager to Investor Services Group with
respect to the Portfolio. The Manager will pay Investor Services Group an annual
fee equal to $40,000 plus 0.01% of the Portfolio's average daily net assets.
This fee is accrued daily and paid monthly.
In addition to the management fees and allocable administrative fees,
the Fund pays all expenses not assumed by the Manager, including, without
limitation, expenses for legal, accounting and auditing services, interest,
taxes, costs of
-17-
<PAGE>
printing and distributing reports to shareholders, proxy materials and
prospectuses, charges of its custodian, transfer agent and dividend disbursing
agent, registration fees, fees and expenses of the Trustees who are not
interested persons of the Fund, insurance, brokerage costs, litigation, and
other extraordinary or nonrecurring expenses. All general Fund expenses are
allocated among and charged to the assets of the portfolios of the Fund on a
basis that the Trustees deem fair and equitable, which may be on the basis of
relative net assets of each portfolio or the nature of the services performed
and relative applicability to each portfolio.
The Manager has voluntarily undertaken, for a period of at least one
year, to pay expenses on behalf of the Portfolio to the extent normal operating
expenses (including investment advisory fees but excluding interest, taxes,
brokerage fees, commissions and extraordinary charges) exceed, as a percentage
of the Portfolio's average daily net assets, 0.87%. The Manager has voluntarily
undertaken, for a period of at least one year, to waive a portion of the
investment advisory fees payable by the Portfolio such that total investment
advisory fees payable by the Portfolio will equal .775% of the average daily net
assets of the Portfolio.
Year 2000. Like other mutual funds, the Fund and the service providers
for the Fund and each of its portfolios rely heavily on the reasonably
consistent operation of their computer systems. Many software programs and
certain computer hardware in use today, cannot properly process information
after December 31, 1999 because of the method by which dates are encoded and
calculated in such programs and hardware. This problem, commonly referred to as
the "Year 2000 Issue," could, among other things, negatively impact the
processing of trades, the distribution of securities, the pricing of securities
and other investment-related and settlement activities. The Fund is currently
obtaining information with respect to the actions that have been taken and the
actions that are planned to be taken by each of its service providers to prepare
their computer systems for the Year 2000. While the Fund expects that each of
the Fund's service providers will have adapted their computer systems to address
the Year 2000 Issue, there can be no assurance that this will be the case or
that the steps taken by the Fund will be sufficient to avoid any adverse impact
to the Fund and each of its portfolios.
In addition, to the extent the operations of issuers of securities held
by the Portfolio are impaired by date-related problems or prices of securities
decline as a result of real or perceived date-related problems of issuers held
by the Portfolio or generally, the net asset value of the Portfolio will
decline.
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<PAGE>
The Adviser
Pursuant to an investment advisory agreement with the Manager, the
Adviser to the Portfolio furnishes continuously an investment program for the
Portfolio, makes investment decisions on behalf of the Portfolio, places all
orders for the purchase and sale of investments for the Portfolio's account with
brokers or dealers selected by the Adviser and may perform certain limited
related administrative functions in connection therewith. For its services, the
Manager pays the Adviser a fee based on a percentage of the average daily net
assets of the Portfolio. The Adviser may place portfolio securities transactions
with broker-dealers who furnish it with certain services of value in advising
the Portfolio and other clients. In so doing, the Adviser may cause the
Portfolio to pay greater brokerage commissions than it might otherwise pay. In
seeking the most favorable price and execution available, the Adviser may, if
permitted by law, consider sales of the Contracts as a factor in the selection
of broker-dealers. The Adviser may utilize certain brokers affiliated with it in
connection with the execution of transactions for the Portfolio. See the
Statement of Additional Information for a further discussion of Portfolio
trading.
Janus Capital Corporation ("Janus") serves as the Adviser to the Portfolio.
Thomas H. Bailey is the President of Janus Capital Corporation. Kansas City
Southern Industries, Inc. owns 83% of the Adviser. The Adviser provides
investment management and related services to other mutual funds, and
individual, corporate, charitable and retirement accounts. As of October 30,
1998, Janus and its advisory affiliates had approximately $88 billion in assets
under management.
For its services, the Adviser receives monthly compensation from the
Manager at the annual rate of 0.50% of the average daily net assets of the
Portfolio. Janus has voluntarily undertaken to waive a portion of the
sub-advisory fee payable with respect to the Portfolio such that the
sub-advisory fee payable will equal 0.40% of average daily net assets.
Scott W. Schoelzel is the portfolio manager for the Portfolio and has been
the portfolio manager for the WRL Growth Portfolio since January 2, 1996. Mr.
Schoelzel also serves as portfolio manager of other mutual funds, including
Janus Twenty Fund. Mr. Schoelzel is a Vice President of the Adviser, where he
has been employed since 1994. From 1991 to 1993, Mr. Schoelzel was a portfolio
manager with Founders Asset Management, Denver, Colorado.
Brokerage Enhancement Plan
The Board of Trustees of the Fund, including all of the Trustees who are
not "interested persons" (as defined in the 1940
-19-
<PAGE>
Act) of the Fund, the Manager or Endeavor Group (the "Distributor") (hereinafter
referred to as "Independent Trustees"), have voted to adopt a Brokerage
Enhancement Plan (the "Plan") for the purpose of utilizing the Fund's brokerage
commissions, to the extent available, to promote the sale and distribution of
the Fund's shares. Neither the Fund nor any series of the Fund, including the
Portfolio, will incur any new fees or charges. As part of the Plan, the Fund and
the Distributor have entered into a Distribution Agreement. Under the
Distribution Agreement, the Distributor is the principal underwriter of the
Fund, with responsibility for promoting sales of the shares of each series.
The Distributor, however, will not receive any additional compensation
from the Fund for performing this function. Instead, under the Plan, the Manager
is authorized to direct that the adviser of each series effect brokerage
transactions in portfolio securities through certain broker-dealers, consistent
with each adviser's obligations to achieve best price and execution. It is
anticipated that these broker-dealers will agree that a percentage of the
commission will be directed to the Distributor. The Distributor will not make
any profit from the operation of the Plan. The Distributor will use a part of
these directed commissions to defray legal and administrative costs associated
with implementation of the Plan. These expenses are expected to be minimal. The
remainder of the commissions received by the Distributor will be used to finance
activities principally intended to result in the sale of shares of the series.
It is anticipated that these activities will include: holding or participating
in seminars and sales meetings designed to promote the sale of Fund shares;
paying marketing fees requested by broker-dealers who sell Contracts; training
sales personnel; compensating broker-dealers and/or their registered
representatives in connection with the allocation of cash values and premiums of
the Contracts to the Fund; printing and mailing Fund prospectuses, statements of
additional information, and shareholder reports for existing and prospective
Contract holders; and creating and mailing advertising and sales literature.
Both the Plan and the Distribution Agreement provide (A) that they will
be subject to annual approval by the Trustees and the Independent Trustees; (B)
that any person authorized to make payments under the Plan or Distribution
Agreement must provide the Trustees a quarterly written report of payments made
and the purpose of the payments; (C) that the Plan may be terminated at any time
by the vote of a majority of the Independent Trustees; (D) that the Distribution
Agreement may be terminated without penalty at any time by a vote of a majority
of the Independent Trustees or, as to a series, by vote of a majority of the
outstanding securities of a series on not more than 60 days' written notice; and
(E) that the Distribution Agreement
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<PAGE>
terminates if it is assigned. The Plan may not be amended to increase materially
the amount to be spent for distribution without shareholder approval, and all
material Plan amendments must be approved by a vote of the Independent Trustees.
In addition, the selection and nomination of the Independent Trustees must be
committed to the Independent Trustees.
PFL, as the initial shareholder of the Portfolio, has approved the Plan
and the shareholders of the Fund's other series have approved the Plan.
DIVIDENDS, DISTRIBUTIONS AND TAXES
The Portfolio intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code. By so qualifying, the Portfolio will
not be subject to federal income taxes to the extent that its net investment
income and net realized capital gains are distributed to shareholders.
It is the intention of the Portfolio to distribute substantially all
its net investment income. Although the Trustees of the Fund may decide to
declare dividends at other intervals, dividends from investment income of the
Portfolio are expected to be declared annually and will be distributed to the
various separate accounts of PFL and not to Contract owners in the form of
additional full and fractional shares of the Portfolio and not in cash. The
result is that the investment performance of the Portfolio, including the effect
of dividends, is reflected in the cash value of the Contracts. See the
prospectus for the Contracts accompanying this Prospectus.
All net realized long- or short-term capital gains of the Portfolio, if
any, will be declared and distributed at least annually either during or after
the close of the Portfolio's fiscal year and will be reinvested in additional
full and fractional shares of the Portfolio. In certain foreign countries,
interest and dividends are subject to a tax which is withheld by the issuer.
U.S. income tax treaties with certain countries reduce the rates of these
withholding taxes. The Fund intends to provide the documentation necessary to
achieve the lower treaty rate of withholding whenever applicable or to seek
refund of amounts withheld in excess of the treaty rate.
For a discussion of the impact on Contract owners of income taxes PFL
may owe as a result of (i) its ownership of shares of the Portfolio, (ii) its
receipt of dividends and distributions thereon, and (iii) its gains from the
purchase and sale thereof, reference should be made to the prospectus for the
Contracts accompanying this Prospectus.
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<PAGE>
SALE AND REDEMPTION OF SHARES
The Fund continuously offers shares of the Portfolio only to separate
accounts of PFL, but may at any time offer shares to a separate account of any
other insurer approved by the Trustees.
AFSG Securities Corporation ("AFSG Securities"), an affiliate of PFL,
is the principal underwriter and distributor of the Contracts. AFSG Securities
places orders for the purchase or redemption of shares of the Portfolio based
on, among other things, the amount of net Contract premiums or purchase payments
transferred to the separate accounts, transfers to or from a separate account
investment division, policy loans, loan repayments, and benefit payments to be
effected on a given date pursuant to the terms of the Contracts. Such orders are
effected, without sales charge, at the net asset value per share for the
Portfolio determined as of the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m., New York City time), on that same date.
Endeavor Group, an affiliate of the Manager, whose office is located at
2101 East Coast Highway, Suite 300, Corona del Mar, California 92625, serves as
the Distributor for the Fund.
The net asset value of the shares of the Portfolio for the purpose of
pricing orders for the purchase and redemption of shares is determined as of the
close of the New York Stock Exchange, Monday through Friday, exclusive of
national business holidays. Net asset value per share is computed by dividing
the value of all assets of the Portfolio (including accrued interest and
dividends), less all liabilities of the Portfolio (including accrued expenses
and dividends payable), by the number of outstanding shares of the Portfolio.
The assets of the Portfolio are valued on the basis of their market values or,
in the absence of a market value with respect to any portfolio securities, at
fair value as determined by or under the direction of the Fund's Board of
Trustees, including the employment of an independent pricing service, as
described in the Statement of Additional Information.
Shares of the Portfolio may be redeemed on any day on which the Fund is
open for business.
PERFORMANCE INFORMATION
From time to time, the Fund may advertise the "average annual or
cumulative total return" of the Portfolio and may compare the performance of the
Portfolio with that of other mutual funds with similar investment objectives as
listed in rankings prepared by Lipper Analytical Services, Inc., or similar
independent services monitoring mutual fund performance, and with appropriate
securities or other relevant indices. The "average
-22-
<PAGE>
annual total return" of the Portfolio refers to the average annual compounded
rate of return over the stated period that would equate an initial investment in
the Portfolio at the beginning of the period to its ending redeemable value,
assuming reinvestment of all dividends and distributions and deduction of all
recurring charges other than charges and deductions which are, or may be,
imposed under the Contracts. Figures will be given for the recent one, five and
ten year periods and for the life of the Portfolio if it has not been in
existence for any such periods. When considering "average annual total return"
figures for periods longer than one year, it is important to note that the
Portfolio's annual total return for any given year might have been greater or
less than its average for the entire period. "Cumulative total return"
represents the total change in value of an investment in the Portfolio for a
specified period (again reflecting changes in Portfolio share prices and
assuming reinvestment of Portfolio distributions). The methods used to calculate
"average annual and cumulative total return" are described further in the
Statement of Additional Information.
The performance of the Portfolio will vary from time to time in
response to fluctuations in market conditions, interest rates, the composition
of the Portfolio's investments and expenses. Consequently, the Portfolio's
performance figures are historical and should not be considered representative
of the performance of the Portfolio for any future period.
Prior Performance of Predecessor Fund
Janus is the investment adviser of the Growth Portfolio, a series of
WRL Series Fund, Inc. To date, shares of the Growth Portfolio have only been
sold to the separate accounts of PFL and its affiliates to fund benefits under
certain variable life insurance policies and variable annuity contracts
including the Endeavor variable annuity contracts. Effective ______________,
1999, pursuant to an order received from the SEC, a pro-rata portion of the
assets underlying the shares of the Growth Portfolio then held by the WRL Growth
subaccounts of the Endeavor separate accounts of PFL and its affiliate, AUSA
Life Insurance Company, Inc. ("AUSA"), will be transferred to the Portfolio
resulting in the Endeavor separate accounts of PFL and AUSA holding shares of
the Portfolio instead of shares of the Growth Portfolio.
The WRL Growth subaccounts of the PFL and AUSA separate accounts
commenced operations on July 1, 1992 and January 1, 1995, respectively. However,
the Growth Portfolio commenced operations on October 2, 1986. As of December 31,
1998 and as of the date of this Prospectus, the Portfolio had not commenced
operations. The Growth Portfolio and the Portfolio have substantially identical
investment objectives, policies and strategies. Since the Growth Portfolio is,
in effect, the
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<PAGE>
Portfolio's predecessor, set forth below is certain performance information
regarding the Growth Portfolio which has been obtained from Janus. Investors
should not rely on the following financial information as an indication of the
future performance of the Portfolio.
Average Annual Total Return of Predecessor Fund (1)
<TABLE>
<CAPTION>
For the For the
For the Five Years For the Ten Period from
Year Ended Ended Years Ended Inception to
December December December December 31,
31, 1998 31, 1998 31, 1998 1998
---------- ---------- ----------- ----
<S> <C> <C> <C> <C>
Growth
Portfolio
- ------------------
</TABLE>
(1) Reflects waiver of all or a portion of the advisory fees and reimbursements
of other expenses. Without such waivers and reimbursements, the average annual
total return during the periods would have been lower.
------------------------
The calculations of total return assume the reinvestment of all
dividends and capital gain distributions on the reinvestment dates during the
period and the deduction of all recurring expenses that were charged to
shareholder accounts. The above tables do not reflect charges and deductions
which are, or may be, imposed under the Contracts. For a description of such
charges and deductions, see the prospectus accompanying this Prospectus which
describes the Contracts.
ORGANIZATION AND CAPITALIZATION OF THE FUND
The Fund was established in November 1988 as a business trust under
Massachusetts law. The Fund has authorized an unlimited number of shares of
beneficial interest which may, without shareholder approval, be divided into an
unlimited number of series. Shares of the Fund are presently divided into
thirteen series of shares, one for each of the Fund's thirteen portfolios,
including the Portfolio offered by this Prospectus. Shares are freely
transferable, are entitled to dividends as declared by the Trustees, and in
liquidation are entitled to receive the net assets of their respective
portfolios, but not the net assets of the other portfolios.
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<PAGE>
Fund shares are entitled to vote at any meeting of shareholders. The
Fund does not generally hold annual meetings of shareholders and will do so only
when required by law. Matters submitted to a shareholder vote must be approved
by each portfolio of the Fund separately except (i) when required by the 1940
Act, shares will be voted together as a single class and (ii) when the Trustees
have determined that the matter does not affect all portfolios, then only
shareholders of the affected portfolio will be entitled to vote on the matter.
Owners of the Contracts have certain voting interests in respect of
shares of the Portfolio. See "Voting Rights" in the prospectus for the Contracts
accompanying this Prospectus for a description of the rights granted Contract
owners to instruct voting of shares.
ADDITIONAL INFORMATION
Transfer Agent and Custodian
All cash and securities of the Fund are held by Boston Safe Deposit and
Trust Company as custodian. Investor Services Group, located at 4400 Computer
Drive, Westborough, Massachusetts 01581, serves as transfer agent for the Fund.
Independent Auditors
Ernst & Young LLP, located at 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Fund's independent auditors.
Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and, in
each instance, reference is made to the copy of such contract or other document
filed as an exhibit to the registration statement of which this Prospectus forms
a part, each such statement being qualified in all respects by such reference.
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<PAGE>
TABLE OF CONTENTS
Page
<TABLE>
<CAPTION>
<S> <C>
The Fund ENDEAVOR SERIES TRUST
Financial Highlights
Investment Objective and Policies 2101 East Coast Highway,
Investment Strategies Suite 300
Management of the Fund Corona del Mar, California 92625
The Manager (800) 854-8393
The Adviser
Brokerage Enhancement Plan Manager
Dividends, Distributions and Taxes
Sale and Redemption of Shares Endeavor Management Co.
Performance Information 2101 East Coast Highway
Prior Performance of Predecessor Fund Suite 300
Organization and Capitalization Corona del Mar, California 92625
of the Fund
Additional Information Investment Adviser
Transfer Agent and Custodian
Independent Auditors Janus Capital Corporation
100 Fillmore Street
-------------- Denver, Colorado 80206
No person has been authorized to give any Custodian
information or to make any representation not
contained in this Prospectus and, if given or Boston Safe Deposit and Trust
made, such information or representation must Company
not be relied upon as having been authorized. One Boston Place
This Prospectus does not constitute an Boston, Massachusetts 02108
offering of any securities other than the
registered securities to which it relates or
an offer to any person in any state or
jurisdiction of the United States or any
country where such offer would be unlawful.
</TABLE>
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<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ENDEAVORSM SERIES TRUST
This Statement of Additional Information is not a prospectus and should be
read in conjunction with the Prospectus dated May 1, 1998, for the Endeavor
Money Market Portfolio (formerly, TCW Money Market Portfolio), the Endeavor
Asset Allocation Portfolio (formerly, TCW Managed Asset Allocation Portfolio),
the T. Rowe Price International Stock Portfolio, the Endeavor Value Equity
Portfolio (formerly, Value Equity Portfolio), the Dreyfus Small Cap Value
Portfolio (formerly, Value Small Cap Portfolio), the Dreyfus U.S. Government
Securities Portfolio (formerly, U.S. Government Securities Portfolio), the T.
Rowe Price Equity Income Portfolio, the T. Rowe Price Growth Stock Portfolio,
the Endeavor Opportunity Value Portfolio (formerly, Opportunity Value
Portfolio), the Endeavor Enhanced Index Portfolio (formerly, Enhanced Index
Portfolio) and the Endeavor Select 50 Portfolio (formerly, Select 50 Portfolio)
, the Prospectus dated May 15, 1998 for the Endeavor High Yield Portfolio, and
the Prospectus dated February 16, 1999 for the Endeavor Janus Growth Portfolio
of Endeavor Series Trust (the "Fund") (collectively the "Prospectuses"), which
may be obtained by writing the Fund at 2101 East Coast Highway, Suite 300,
Corona del Mar, California 92625 or by telephoning (800) 854-8393. Unless
otherwise defined herein, capitalized terms have the meanings given to them in
the Prospectuses.
EndeavorSM is a registered service mark of Endeavor Management Co.
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<PAGE>
TABLE OF CONTENTS
Page
Investment Objectives and Policies................ 3
Options and Futures Strategies............... 3
Foreign Currency Transactions................ 9
Repurchase Agreements........................ 14
Forward Commitments.......................... 14
Securities Loans............................. 14
Interest Rate Transactions................... 15
Dollar Roll Transactions..................... 16
Portfolio Turnover........................... 17
Investment Restrictions........................... 18
Other Policies............................... 21
Performance Information........................... 23
Total Return................................. 23
Yield........................................ 26
Non-Standardized Performance................. 27
Portfolio Transactions............................ 28
Management of the Fund............................ 31
Trustees and Officers........................ 31
The Manager.................................. 37
The Advisers................................. 39
Redemption of Shares.............................. 44
Net Asset Value................................... 44
Taxes............................................. 47
Federal Income Taxes......................... 47
Organization and Capitalization of the Fund....... 49
Legal Matters..................................... 51
Custodian......................................... 51
Financial Statements.............................. 51
Appendix.......................................... A-1
----------------------
No person has been authorized to give any information or to make any
representation not contained in this Statement of Additional Information or in
the Prospectuses and, if given or made, such information or representation must
not be relied upon as having been authorized. This Statement of Additional
Information does not constitute an offering of any securities other than the
registered securities to which it relates or an offer to any person in any state
or other jurisdiction of the United States or any country where such offer would
be unlawful.
The date of this Statement of Additional Information is May 1, 1998, as
amended May 15, 1998 and February 16, 1999.
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<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The following information supplements the discussion of the investment
objectives and policies of the Portfolios in the Prospectuses of the Fund. The
Fund is managed by Endeavor Management Co. The Manager has selected Morgan
Stanley Asset Management Inc. as investment adviser for the Endeavor Money
Market Portfolio and the Endeavor Asset Allocation Portfolio, Rowe Price-Fleming
International, Inc. as investment adviser for the T. Rowe Price International
Stock Portfolio, OpCap Advisors as investment adviser for the Endeavor Value
Equity Portfolio and Endeavor Opportunity Value Portfolio, The Dreyfus
Corporation as investment adviser for the Dreyfus U.S. Government Securities
Portfolio and the Dreyfus Small Cap Value Portfolio, T. Rowe Price Associates,
Inc. as investment adviser for the T. Rowe Price Equity Income Portfolio and the
T. Rowe Price Growth Stock Portfolio, J.P. Morgan Investment Management Inc. as
investment adviser for the Endeavor Enhanced Index Portfolio, Montgomery Asset
Management, LLC as investment adviser for the Endeavor Select 50 Portfolio ,
Massachusetts Financial Services Company as investment adviser for the Endeavor
High Yield Portfolio and Janus Capital Corporation as investment adviser for the
Endeavor Janus Growth Portfolio.
Options and Futures Strategies (All Portfolios except Endeavor
Money Market Portfolio)
A Portfolio may seek to increase the current return on its investments
by writing covered call or covered put options. In addition, a Portfolio may at
times seek to hedge against either a decline in the value of its portfolio
securities or an increase in the price of securities which its Adviser plans to
purchase through the writing and purchase of options including options on stock
indices and the purchase and sale of futures contracts and related options. A
Portfolio may utilize options or futures contracts and related options for other
than hedging purposes to the extent that the aggregate initial margins and
premiums do not exceed 5% of the Portfolio's net asset value. The Advisers to
the Dreyfus Small Cap Value Portfolio and the Endeavor Asset Allocation
Portfolio do not presently intend to utilize options or futures contracts and
related options but may do so in the future. The Adviser to the Endeavor
Opportunity Value Portfolio does not currently intend to write covered put and
call options or engage in transactions in futures contracts and related options,
but may do so in the future. The Adviser to the Endeavor Select 50 Portfolio
does not currently intend to write covered put and call options, but may do so
in the future. Expenses and losses incurred as a result of such hedging
strategies will reduce a Portfolio's current return.
The ability of a Portfolio to engage in the options and futures
strategies described below will depend on the availability of liquid markets in
such instruments. Markets in
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<PAGE>
options and futures with respect to stock indices and U.S. government securities
are relatively new and still developing. It is impossible to predict the amount
of trading interest that may exist in various types of options or futures.
Therefore no assurance can be given that a Portfolio will be able to utilize
these instruments effectively for the purposes stated below.
Writing Covered Options on Securities. A Portfolio may write covered
call options and covered put options on optionable securities of the types in
which it is permitted to invest from time to time as its Adviser determines is
appropriate in seeking to attain the Portfolio's investment objective. Call
options written by a Portfolio give the holder the right to buy the underlying
security from the Portfolio at a stated exercise price; put options give the
holder the right to sell the underlying security to the Portfolio at a stated
price.
A Portfolio may only write call options on a covered basis or for
cross-hedging purposes and will only write covered put options. A put option
would be considered "covered" if the Portfolio owns an option to sell the
underlying security subject to the option having an exercise price equal to or
greater than the exercise price of the "covered" option at all times while the
put option is outstanding. A call option is covered if the Portfolio owns or has
the right to acquire the underlying securities subject to the call option (or
comparable securities satisfying the cover requirements of securities exchanges)
at all times during the option period. A call option is for cross-hedging
purposes if it is not covered, but is designed to provide a hedge against
another security which the Portfolio owns or has the right to acquire. In the
case of a call written for cross-hedging purposes or a put option, the Portfolio
will maintain in a segregated account at the Fund's custodian bank liquid assets
with a value equal to or greater than the Portfolio's obligation under the
option. A Portfolio may also write combinations of covered puts and covered
calls on the same underlying security.
A Portfolio will receive a premium from writing an option, which
increases the Portfolio's return in the event the option expires unexercised or
is terminated at a profit. The amount of the premium will reflect, among other
things, the relationship of the market price of the underlying security to the
exercise price of the option, the term of the option, and the volatility of the
market price of the underlying security. By writing a call option, a Portfolio
will limit its opportunity to profit from any increase in the market value of
the underlying security above the exercise price of the option. By writing a put
option, a Portfolio will assume the risk that it may be required to purchase the
underlying security for an exercise price higher than its then current market
price, resulting in a potential capital loss if the purchase price exceeds the
market price plus the amount of the premium received.
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A Portfolio may terminate an option which it has written prior to its
expiration by entering into a closing purchase transaction in which it purchases
an option having the same terms as the option written. The Portfolio will
realize a profit (or loss) from such transaction if the cost of such transaction
is less (or more) than the premium received from the writing of the option.
Because increases in the market price of a call option will generally reflect
increases in the market price of the underlying security, any loss resulting
from the repurchase of a call option may be offset in whole or in part by
unrealized appreciation of the underlying security owned by the Portfolio.
Purchasing Put and Call Options on Securities. A Portfolio may purchase
put options to protect its portfolio holdings in an underlying security against
a decline in market value. This protection is provided during the life of the
put option since the Portfolio, as holder of the put, is able to sell the
underlying security at the exercise price regardless of any decline in the
underlying security's market price. For the purchase of a put option to be
profitable, the market price of the underlying security must decline
sufficiently below the exercise price to cover the premium and transaction
costs. By using put options in this manner, any profit which the Portfolio might
otherwise have realized on the underlying security will be reduced by the
premium paid for the put option and by transaction costs.
A Portfolio may also purchase a call option to hedge against an
increase in price of a security that it intends to purchase. This protection is
provided during the life of the call option since the Portfolio, as holder of
the call, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. For the
purchase of a call option to be profitable, the market price of the underlying
security must rise sufficiently above the exercise price to cover the premium
and transaction costs. By using call options in this manner, any profit which
the Portfolio might have realized had it bought the underlying security at the
time it purchased the call option will be reduced by the premium paid for the
call option and by transaction costs.
Except for the Endeavor Janus Growth Portfolio, no Portfolio intends to
purchase put or call options if, as a result of any such transaction, the
aggregate cost of options held by the Portfolio at the time of such transaction
would exceed 5% of its total assets. There are no specific limitations on the
Endeavor Janus Growth Portfolio's purchasing options on securities.
Purchase and Sale of Options and Futures on Stock Indices. A Portfolio
may purchase and sell options on stock indices and stock index futures contracts
either as a hedge against movements in the equity markets or for other
investment purposes.
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Options on stock indices are similar to options on specific securities
except that, rather than the right to take or make delivery of the specific
security at a specific price, an option on a stock index gives the holder the
right to receive, upon exercise of the option, an amount of cash if the closing
level of that stock index is greater than, in the case of a call, or less than,
in the case of a put, the exercise price of the option. This amount of cash is
equal to such difference between the closing price of the index and the exercise
price of the option expressed in dollars times a specified multiple. The writer
of the option is obligated, in return for the premium received, to make delivery
of this amount. Unlike options on specific securities, all settlements of
options on stock indices are in cash and gain or loss depends on general
movements in the stocks included in the index rather than price movements in
particular stocks. Currently options traded include the Standard & Poor's 500
Composite Stock Price Index, the NYSE Composite Index, the AMEX Market Value
Index, the National Over-The-Counter Index, the Nikkei 225 Stock Average Index,
the Financial Times Stock Exchange 100 Index and other standard broadly based
stock market indices. Options are also traded in certain industry or market
segment indices such as the Pharmaceutical Index.
A stock index futures contract is an agreement in which one party
agrees to deliver to the other an amount of cash equal to a specific dollar
amount times the difference between the value of a specific stock index at the
close of the last trading day of the contract and the price at which the
agreement is made. No physical delivery of securities is made.
If a Portfolio's Adviser expects general stock market prices to rise,
it might purchase a call option on a stock index or a futures contract on that
index as a hedge against an increase in prices of particular equity securities
it wants ultimately to buy for the Portfolio. If in fact the stock index does
rise, the price of the particular equity securities intended to be purchased may
also increase, but that increase would be offset in part by the increase in the
value of the Portfolio's index option or futures contract resulting from the
increase in the index. If, on the other hand, the Portfolio's Adviser expects
general stock market prices to decline, it might purchase a put option or sell a
futures contract on the index. If that index does in fact decline, the value of
some or all of the equity securities held by the Portfolio may also be expected
to decline, but that decrease would be offset in part by the increase in the
value of the Portfolio's position in such put option or futures contract.
Purchase and Sale of Interest Rate Futures. A Portfolio may purchase
and sell interest rate futures contracts on fixed income securities or indices
of such securities, including municipal indices and any other indices of fixed
income securities that may become available for trading either for the purpose
of hedging its portfolio securities against the adverse effects of anticipated
movements in interest rates or for other investment purposes.
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A Portfolio may sell interest rate futures contracts in anticipation of
an increase in the general level of interest rates. Generally, as interest rates
rise, the market value of the securities held by a Portfolio will fall, thus
reducing the net asset value of the Portfolio. This interest rate risk can be
reduced without employing futures as a hedge by selling such securities and
either reinvesting the proceeds in securities with shorter maturities or by
holding assets in cash. However, this strategy entails increased transaction
costs in the form of dealer spreads and brokerage commissions and would
typically reduce the Portfolio's average yield as a result of the shortening of
maturities.
The sale of interest rate futures contracts provides a means of hedging
against rising interest rates. As rates increase, the value of a Portfolio's
short position in the futures contracts will also tend to increase thus
offsetting all or a portion of the depreciation in the market value of the
Portfolio's investments that are being hedged. While the Portfolio will incur
commission expenses in selling and closing out futures positions (which is done
by taking an opposite position in the futures contract), commissions on futures
transactions are lower than transaction costs incurred in the purchase and sale
of portfolio securities.
A Portfolio may purchase interest rate futures contracts in
anticipation of a decline in interest rates when it is not fully invested. As
such purchases are made, it is expected that an equivalent amount of futures
contracts will be closed out.
A Portfolio will enter into futures contracts which are traded on
national or foreign futures exchanges, and are standardized as to maturity date
and the underlying financial instrument. Futures exchanges and trading in the
United States are regulated under the Commodity Exchange Act by the Commodity
Futures Trading Commission ("CFTC"). Futures are traded in London at the London
International Financial Futures Exchange, in Paris, at the MATIF, and in Tokyo
at the Tokyo Stock Exchange.
Options on Futures Contracts. A Portfolio may purchase and write call
and put options on stock index and interest rate futures contracts. A Portfolio
may use such options on futures contracts in connection with its hedging
strategies in lieu of purchasing and writing options directly on the underlying
securities or stock indices or purchasing or selling the underlying futures. For
example, a Portfolio may purchase put options or write call options on stock
index futures or interest rate futures, rather than selling futures contracts,
in anticipation of a decline in general stock market prices or rise in interest
rates, respectively, or purchase call options or write put options on stock
index or interest rate futures, rather than purchasing such futures, to hedge
against possible increases in the price of equity securities or debt securities,
respectively, which the Portfolio intends to purchase.
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In connection with transactions in stock index options, stock index
futures, interest rate futures and related options on such futures, a Portfolio
will be required to deposit as "initial margin" an amount of cash and short-term
U.S. government securities. The current initial margin requirement per contract
is approximately 2% of the contract amount. Thereafter, subsequent payments
(referred to as "variation margin") are made to and from the broker to reflect
changes in the value of the futures contract. Brokers may establish deposit
requirements higher than exchange minimums.
Limitations. A Portfolio will not purchase or sell futures contracts or
options on futures contracts or stock indices for non-hedging purposes if, as a
result, the sum of the initial margin deposits on its existing futures contracts
and related options positions and premiums paid for options on futures contracts
or stock indices would exceed 5% of the net assets of the Portfolio unless the
transaction meets certain "bona fide hedging" criteria.
Risks of Options and Futures Strategies. The effective use of options
and futures strategies depends, among other things, on a Portfolio's ability to
terminate options and futures positions at times when its Adviser deems it
desirable to do so. Although a Portfolio will not enter into an option or
futures position unless its Adviser believes that a liquid market exists for
such option or future, there can be no assurance that a Portfolio will be able
to effect closing transactions at any particular time or at an acceptable price.
The Advisers generally expect that options and futures transactions for the
Portfolios will be conducted on recognized exchanges. In certain instances,
however, a Portfolio may purchase and sell options in the over-the-counter
market. The staff of the Securities and Exchange Commission considers
over-the-counter options to be illiquid. A Portfolio's ability to terminate
option positions established in the over-the-counter market may be more limited
than in the case of exchange traded options and may also involve the risk that
securities dealers participating in such transactions would fail to meet their
obligations to the Portfolio.
The use of options and futures involves the risk of imperfect
correlation between movements in options and futures prices and movements in the
price of the securities that are the subject of the hedge. The successful use of
these strategies also depends on the ability of a Portfolio's Adviser to
forecast correctly interest rate movements and general stock market price
movements. This risk increases as the composition of the securities held by the
Portfolio diverges from the composition of the relevant option or futures
contract.
Foreign Currency Transactions (Dreyfus U.S. Government Securities, T. Rowe Price
Equity Income, T. Rowe Price Growth Stock, T. Rowe Price International Stock,
Endeavor Opportunity Value, Endeavor Enhanced Index, Endeavor Select 50 ,
Endeavor High Yield and Endeavor Janus Growth Portfolios)
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Foreign Currency Exchange Transactions. A Portfolio may engage in
foreign currency exchange transactions to protect against uncertainty in the
level of future exchange rates. The Adviser to a Portfolio may engage in foreign
currency exchange transactions in connection with the purchase and sale of
portfolio securities ("transaction hedging"), and to protect the value of
specific portfolio positions ("position hedging").
A Portfolio may engage in "transaction hedging" to protect against a
change in the foreign currency exchange rate between the date on which the
Portfolio contracts to purchase or sell the security and the settlement date, or
to "lock in" the U.S. dollar equivalent of a dividend or interest payment in a
foreign currency. For that purpose, a Portfolio may purchase or sell a foreign
currency on a spot (or cash) basis at the prevailing spot rate in connection
with the settlement of transactions in portfolio securities denominated in or
exposed to that foreign currency.
If conditions warrant, a Portfolio may also enter into contracts to
purchase or sell foreign currencies at a future date ("forward contracts") and
purchase and sell foreign currency futures contracts as a hedge against changes
in foreign currency exchange rates between the trade and settlement dates on
particular transactions and not for speculation. A foreign currency forward
contract is a negotiated agreement to exchange currency at a future time at a
rate or rates that may be higher or lower than the spot rate. Foreign currency
futures contracts are standardized exchange-traded contracts and have margin
requirements.
For transaction hedging purposes, a Portfolio may also purchase
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies. A put option on a futures contract
gives a Portfolio the right to assume a short position in the futures contract
until expiration of the option. A put option on currency gives a Portfolio the
right to sell a currency at an exercise price until the expiration of the
option. A call option on a futures contract gives a Portfolio the right to
assume a long position in the futures contract until the expiration of the
option. A call option on currency gives a Portfolio the right to purchase a
currency at the exercise price until the expiration of the option.
A Portfolio may engage in "position hedging" to protect against a
decline in the value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated , quoted or exposed (or an increase in the
value of currency for securities which the Portfolio intends to buy, when it
holds cash reserves and short-term investments). For position hedging purposes,
a Portfolio may purchase or sell foreign currency futures contracts and foreign
currency forward contracts, and may purchase put or call options on foreign
currency futures contracts and on foreign currencies on exchanges or
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over-the-counter markets. In connection with position hedging, a Portfolio may
also purchase or sell foreign currency on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Portfolio to purchase
additional foreign currency on the spot market (and bear the expense of such
purchase) if the market value of the security or securities being hedged is less
than the amount of foreign currency the Portfolio is obligated to deliver and if
a decision is made to sell the security or securities and make delivery of the
foreign currency. Conversely, it may be necessary to sell on the spot market
some of the foreign currency received upon the sale of the portfolio security or
securities if the market value of such security or securities exceeds the amount
of foreign currency the Portfolio is obligated to deliver.
Hedging transactions involve costs and may result in losses. A
Portfolio may write covered call options on foreign currencies to offset some of
the costs of hedging those currencies. A Portfolio will engage in
over-the-counter transactions only when appropriate exchange-traded transactions
are unavailable and when, in the opinion of the Portfolio's Adviser, the pricing
mechanism and liquidity are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. A Portfolio's ability to
engage in hedging and related option transactions may be limited by tax
considerations.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Portfolio owns or intends to
purchase or sell. They simply establish a rate of exchange which one can achieve
at some future point in time. Additionally, although these techniques tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
they tend to limit any potential gain which might result from the increase in
the value of such currency.
Currency Forward and Futures Contracts. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the contract.
In the case of a cancelable forward contract, the holder has the unilateral
right to cancel the contract at maturity by paying a specified fee. The
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial
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banks) and their customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades. A foreign
currency futures contract is a standardized contract for the future delivery of
a specified amount of a foreign currency at a future date at a price set at the
time of the contract. Foreign currency futures contracts traded in the United
States are designed by and traded on exchanges regulated by the CFTC, such as
the New York Mercantile Exchange. A Portfolio would enter into foreign currency
futures contracts solely for hedging or other appropriate investment purposes as
defined in CFTC regulations.
Forward foreign currency exchange contracts differ from foreign
currency futures contracts in certain respects. For example, the maturity date
of a forward contract may be any fixed number of days from the date of the
contract agreed upon by the parties, rather than a predetermined date in any
given month. Forward contracts may be in any amounts agreed upon by the parties
rather than predetermined amounts. Also, forward foreign exchange contracts are
traded directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Portfolio may
either accept or make delivery of the currency specified in the contract, or at
or prior to maturity enter into a closing transaction involving the purchase or
sale of an offsetting contract. Closing transactions with respect to forward
contracts are usually effected with the currency trader who is a party to the
original forward contract. Closing transactions with respect to futures
contracts are effected on a commodities exchange; a clearing corporation
associated with the exchange assumes responsibility for closing out such
contracts.
Positions in foreign currency futures contracts may be closed out only
on an exchange or board of trade which provides a secondary market in such
contracts. Although a Portfolio intends to purchase or sell foreign currency
futures contracts only on exchanges or boards of trade where there appears to be
an active secondary market, there can be no assurance that a secondary market on
an exchange or board of trade will exist for any particular contract or at any
particular time. In such event, it may not be possible to close a futures
position and, in the event of adverse price movements, a Portfolio would
continue to be required to make daily cash payments of variation margin.
Foreign Currency Options. Options on foreign currencies operate
similarly to options on securities, and are traded primarily in the
over-the-counter market, although options on foreign currencies have recently
been listed on several exchanges. Such options will be purchased or written only
when a Portfolio's Adviser believes that a liquid secondary market exists for
such options. There can be no assurance that a liquid secondary market will
exist for a particular option at any specific time. Options on foreign
currencies are affected by all
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of those factors which influence foreign exchange rates and
investments generally.
The value of a foreign currency option is dependent upon the value of
the foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the options markets.
Foreign Currency Conversion. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency to a
Portfolio at one rate, while offering a lesser rate of exchange should a
Portfolio desire to resell that currency to the dealer.
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Repurchase Agreements (All Portfolios)
Each of the Portfolios may enter into repurchase agreements with a
bank, broker-dealer, or other financial institution but no Portfolio may invest
more than 15% (10% with respect to each of the Endeavor Money Market and Dreyfus
U.S. Government Securities Portfolios) of its net assets in repurchase
agreements having maturities of greater than seven days. A Portfolio may enter
into repurchase agreements, provided the Fund's custodian or sub-custodian
always has possession of securities serving as collateral whose market value at
least equals the amount of the repurchase obligation. To minimize the risk of
loss a Portfolio will enter into repurchase agreements only with financial
institutions which are considered by its Adviser to be creditworthy under
guidelines adopted by the Trustees of the Fund. If an institution enters an
insolvency proceeding, the resulting delay in liquidation of the securities
serving as collateral could cause a Portfolio some loss, as well as legal
expense, if the value of the securities declines prior to liquidation.
Forward Commitments (All Portfolios)
Each of the Portfolios may enter into forward commitments to purchase
securities. An amount of cash or other liquid assets equal to the Portfolio's
commitment will be deposited in a segregated account at the Fund's custodian
bank to secure the Portfolio's obligation. Although a Portfolio will generally
enter into forward commitments to purchase securities with the intention of
actually acquiring the securities for its portfolio (or for delivery pursuant to
options contracts it has entered into), the Portfolio may dispose of a security
prior to settlement if its Adviser deems it advisable to do so. The Portfolio
may realize short-term gains or losses in connection with such sales.
Securities Loans (All Portfolios)
Each of the Portfolios may pay reasonable finders', administrative and
custodial fees in connection with loans of its portfolio securities. Although
voting rights or the right to consent accompanying loaned securities pass to the
borrower, a Portfolio retains the right to call the loan at any time on
reasonable notice, and will do so in order that the securities may be voted by
the Portfolio with respect to matters materially affecting the investment. A
Portfolio may also call a loan in order to sell the securities involved. Loans
of portfolio securities will only be made to borrowers considered by a
Portfolio's Adviser to be creditworthy under guidelines adopted by the Trustees
of the Fund.
Interest Rate Transactions (Dreyfus U.S. Government Securities , Endeavor High
Yield and Endeavor Janus Growth Portfolios)
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Among the strategic transactions into which the Dreyfus U.S. Government
Securities , Endeavor High Yield and Endeavor Janus Growth Portfolios may enter
are interest rate swaps and the purchase or sale of related caps and floors. A
Portfolio expects to enter into these transactions primarily to preserve a
return or spread on a particular investment or portion of its portfolio, to
protect against currency fluctuations, as a duration management technique or to
protect against any increase in the price of securities the Portfolio
anticipates purchasing at a later date. A Portfolio intends to use these
transactions as hedges and not as speculative investments and will not sell
interest rate caps or floors where it does not own securities or other
instruments providing the income stream the Portfolio may be obligated to pay.
Interest rate swaps involve the exchange by a Portfolio with another party of
their respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments with respect to a notional amount
of principal. A currency swap is an agreement to exchange cash flows on a
notional amount of two or more currencies based on the relative value
differential among them and an index swap is an agreement to swap cash flows on
a notional amount based on changes in the values of the reference indices. The
purchase of a cap entitles the purchaser, to the extent that a specific index
exceeds a predetermined interest rate, to receive payments of interest on a
notional principal amount from the party selling such cap. The purchase of a
floor entitles the purchaser to receive payments on a notional principal amount
from the party selling such floor to the extent that a specified index falls
below a predetermined interest rate or amount.
A Portfolio will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or dates
specified in the instrument, with the Portfolio receiving or paying, as the case
may be, only the net amount of the two payments. Inasmuch as these swaps, caps
and floors are entered into for good faith hedging purposes, the Advisers to the
Portfolios and the Fund believe such obligations do not constitute senior
securities under the Investment Company Act of 1940 (the "1940 Act") and,
accordingly, will not treat them as being subject to its borrowing restrictions.
A Portfolio will not enter into any swap, cap and floor transaction unless, at
the time of entering into such transaction, the unsecured long-term debt of the
counterparty, combined with any credit enhancements, is rated at least "A" by
Standard & Poor's Ratings Services ("Standard & Poor's") or Moody's Investors
Service Inc. ("Moody's") or has an equivalent rating from a nationally
recognized statistical rating organization ("NRSRO") or is determined to be of
equivalent credit quality by the Adviser. For a description of the NRSROs and
their ratings, see the Appendix. If there is a default by the counterparty, a
Portfolio may have contractual remedies pursuant to the agreements related to
the transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals and
as agents utilizing
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<PAGE>
standardized swap documentation. As a result, the swap market has become
relatively liquid. Caps and floors are more recent innovations for which
standardized documentation has not yet been fully developed and, accordingly,
they are less liquid than swaps.
With respect to swaps, a Portfolio will accrue the net amount of the
excess, if any, of its obligations over its entitlements with respect to each
swap on a daily basis and will segregate an amount of cash or liquid high grade
securities having a value equal to the accrued excess. Caps and floors require
segregation of assets with a value equal to the Portfolio's net obligations, if
any.
Dollar Roll Transactions (Dreyfus U.S. Government Securities and Endeavor High
Yield Portfolios)
The Dreyfus U.S. Government Securities and Endeavor High Yield
Portfolios may enter into "dollar roll" transactions, which consist of the sale
by the Portfolio to a bank or broker-dealer (the "counterparty") of Government
National Mortgage Association certificates or other mortgage-backed securities
together with a commitment to purchase from the counterparty similar, but not
identical, securities at a future date. The counterparty receives all principal
and interest payments, including prepayments, made on the security while it is
the holder. A Portfolio receives a fee from the counterparty as consideration
for entering into the commitment to purchase. Dollar rolls may be renewed over a
period of several months with a different repurchase price and a cash settlement
made at each renewal without physical delivery of securities. Moreover, the
transaction may be preceded by a firm commitment agreement pursuant to which a
Portfolio agrees to buy a security on a future date.
A Portfolio will not use such transactions for leveraging purposes and,
accordingly, will segregate cash, U.S. government securities or other liquid
assets in an amount sufficient to meet its purchase obligations under the
transactions. The Dreyfus U.S. Government Securities Portfolio will also
maintain asset coverage of at least 300% for all outstanding firm commitments,
dollar rolls and other borrowings.
Dollar rolls are treated for purposes of the 1940 Act as borrowings of
a Portfolio because they involve the sale of a security coupled with an
agreement to repurchase. Like all borrowings, a dollar roll involves costs to a
Portfolio. For example, while a Portfolio receives a fee as consideration for
agreeing to repurchase the security, the Portfolio forgoes the right to receive
all principal and interest payments while the counterparty holds the security.
These payments to the counterparty may exceed the fee received by a Portfolio,
thereby effectively charging the Portfolio interest on its borrowing. Further,
although a Portfolio can estimate the amount of expected principal prepayment
over the term of the dollar roll, a
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variation in the actual amount of prepayment could increase or decrease the cost
of the Portfolio's borrowing.
The entry into dollar rolls involves potential risks of loss that are
different from those related to the securities underlying the transactions. For
example, if the counterparty becomes insolvent, a Portfolio's right to purchase
from the counterparty might be restricted. Additionally, the value of such
securities may change adversely before a Portfolio is able to purchase them.
Similarly, the Portfolio may be required to purchase securities in connection
with a dollar roll at a higher price than may otherwise be available on the open
market. Since, as noted above, the counterparty is required to deliver a
similar, but not identical, security to a Portfolio, the security that the
Portfolio is required to buy under the dollar roll may be worth less than an
identical security. Finally, there can be no assurance that a Portfolio's use of
the cash that it receives from a dollar roll will provide a return that exceeds
borrowing costs.
Portfolio Turnover
While it is impossible to predict portfolio turnover rates, the
Advisers to the Portfolios other than the Dreyfus U.S. Government Securities
Portfolio, Dreyfus Small Cap Value Portfolio, Endeavor Select 50 Portfolio ,
Endeavor Money Market Portfolio and Endeavor Janus Growth Portfolio anticipate
that portfolio turnover will generally not exceed 100% per year. The Advisers to
the Endeavor Select 50 Portfolio and Endeavor Janus Growth Portfolio anticipate
that portfolio turnover will generally not exceed 150% per year. The Adviser to
the Dreyfus U.S. Government Securities Portfolio anticipates that portfolio
turnover may exceed 200% per year, exclusive of dollar roll transactions. The
Adviser to the Dreyfus Small Cap Value Portfolio anticipates that the
Portfolio's portfolio turnover rate will generally not exceed 175%. With respect
to the Endeavor Money Market Portfolio, although the Portfolio intends normally
to hold its investments to maturity, the short maturities of these investments
are expected by the Portfolio's Adviser to result in a relatively high rate of
portfolio turnover. Higher portfolio turnover rates usually generate additional
brokerage commissions and expenses.
INVESTMENT RESTRICTIONS
Except for restriction numbers 2, 3, 4, 11 and 12 with respect to the
T. Rowe Price Equity Income, T. Rowe Price Growth Stock, Endeavor Opportunity
Value, Endeavor Enhanced Index, Endeavor Select 50 , Endeavor High Yield and
Endeavor Janus Growth Portfolios and restriction number 11 with respect to the
T. Rowe Price International Stock, Endeavor Asset Allocation and Dreyfus Small
Cap Value Portfolios (which restrictions are not fundamental policies), the
following investment restrictions (numbers 1 through 12) are fundamental
policies, which may not be changed without the approval of a majority of the
outstanding
-16-
<PAGE>
shares of the Portfolio, and apply to each of the Portfolios except as otherwise
indicated. As provided in the 1940 Act, a vote of a majority of the outstanding
shares necessary to amend a fundamental policy means the affirmative vote of the
lesser of (1) 67% or more of the shares present at a meeting, if the holders of
more than 50% of the outstanding shares of the Portfolio are present or
represented by proxy, or (2) more than 50% of the outstanding shares of the
Portfolio.
A Portfolio may not:
1. Borrow money or issue senior securities (as defined in the 1940 Act),
provided that a Portfolio may borrow amounts not exceeding 5% of the value of
its total assets (not including the amount borrowed) for temporary purposes;
except that the Dreyfus U.S. Government Securities Portfolio may borrow from
banks or through reverse repurchase agreements or dollar roll transactions in an
amount equal to up to 33 1/3% of the value of its total assets (calculated when
the loan is made) for temporary, extraordinary or emergency purposes and to take
advantage of investment opportunities and may pledge up to 33 1/3% of the value
of its total assets to secure those borrowings; except that the T. Rowe Price
Equity Income Portfolio, the T. Rowe Price Growth Stock Portfolio and T. Rowe
Price International Stock Portfolio may (i) borrow for non-leveraging, temporary
or emergency purposes and (ii) engage in reverse repurchase agreements and make
other investments or engage in other transactions, which may involve a
borrowing, in a manner consistent with each Portfolio's investment objective and
program, provided that the combination of (i) and (ii) shall not exceed 33 1/3%
of the value of each Portfolios's total assets (including the amount borrowed)
less liabilities (other than borrowings) and may pledge up to 33 1/3% of the
value of its total assets to secure those borrowings; except that the Endeavor
Opportunity Value Portfolio and the Endeavor Enhanced Index Portfolio may borrow
money from banks or through reverse repurchase agreements for temporary or
emergency purposes in amounts up to 10% of each Portfolio's total assets; except
that the Endeavor Select 50 Portfolio may borrow money from banks for temporary
or emergency purposes or pursuant to reverse repurchase agreements in an amount
up to 33 1/3% of the value of its total assets, provided that immediately after
such borrowings there is asset coverage of at least 300% of all borrowings;
except that the Endeavor High Yield Portfolio may borrow money from banks for
temporary or emergency purposes or pursuant to reverse repurchase agreements in
an amount up to 33 1/3% of the value of its total assets, provided that
immediately after such borrowings there is asset coverage of at least 300% of
all borrowings and the Endeavor High Yield Portfolio may engage in dollar rolls
transactions; and except that the Endeavor Janus Growth Portfolio may borrow
money from banks for temporary or emergency purposes or pursuant to reverse
repurchase agreements in an amount up to 25% of the value of its total assets.
-17-
<PAGE>
2. Pledge, hypothecate, mortgage or otherwise encumber its assets, except to
secure borrowings permitted by restriction 1 above. Collateral arrangements with
respect to margin for futures contracts and options are not deemed to be pledges
or other encumbrances for purposes of this restriction.
3. Purchase securities on margin, except a Portfolio may obtain such
short-term credits as may be necessary for the clearance of securities
transactions and may make margin deposits in connection with transactions in
options, futures contracts and options on such contracts.
4. Make short sales of securities or maintain a short position for the account
of the Portfolio, unless at all times when a short position is open the
Portfolio owns an equal amount of such securities or owns securities which,
without payment of any further consideration, are convertible or exchangeable
for securities of the same issue as, and in equal amounts to, the securities
sold short.
5. Underwrite securities issued by other persons, except to the extent that in
connection with the disposition of its portfolio investments it may be deemed to
be an underwriter under federal securities laws.
6. Purchase or sell real estate, although a Portfolio may purchase securities
of issuers which deal in real estate, securities which are secured by interests
in real estate and securities representing interests in real estate; provided,
however, that the Endeavor High Yield Portfolio may hold and sell real estate
acquired as a result of the ownership of securities.
7. Purchase or sell commodities or commodity contracts, except that all
Portfolios other than the Endeavor Money Market Portfolio may purchase or sell
financial futures contracts and related options. For purposes of this
restriction, currency contracts or hybrid investments shall not be considered
commodities.
8. Make loans, except by purchase of debt obligations in which the Portfolio
may invest consistently with its investment policies, by entering into
repurchase agreements or through the lending of its portfolio securities.
9. Invest in the securities of any issuer if, immediately after such
investment, more than 5% of the total assets of the Portfolio (taken at current
value) would be invested in the securities of such issuer or acquire more than
10% of the outstanding voting securities of any issuer, provided that this
limitation does not apply to obligations issued or guaranteed as to principal
and interest by the U.S. government or its agencies and instrumentalities or to
repurchase agreements secured by such obligations and that up to 25% of the
Portfolio's total assets (taken at current value) may be invested without regard
to this limitation.
-18-
<PAGE>
10. Invest more than 25% of the value of its total assets in any one industry,
provided that this limitation does not apply to obligations issued or guaranteed
as to interest and principal by the U.S. government, its agencies and
instrumentalities, and repurchase agreements secured by such obligations, and in
the case of the Endeavor Money Market Portfolio obligations of domestic branches
of United States banks.
11. Invest more than 15% (10% with respect to the Endeavor Money Market
Portfolio and Dreyfus U.S. Government Securities Portfolio) of its net assets
(taken at current value at the time of each purchase) in illiquid securities
including repurchase agreements maturing in more than seven days.
12. Purchase securities of any issuer for the purpose of exercising control or
management.
All percentage limitations on investments will apply at the time of the
making of an investment and shall not be considered violated unless an excess or
deficiency occurs or exists immediately after and partially or completely as a
result of such investment.
Other Policies
The Endeavor Money Market Portfolio may not invest in the securities of
any one issuer if, immediately after such investment, more than 5% of the total
assets of the Portfolio (taken at current value) would be invested in the
securities of such issuer, provided that this limitation does not apply to
obligations issued or guaranteed as to principal and interest by the U.S.
government or its agencies and instrumentalities or to repurchase agreements
secured by such obligations and that with respect to 25% of the Portfolio's
total assets more than 5% may be invested in securities of any one issuer for
three business days after the purchase thereof if the securities have been
assigned the highest quality rating by NRSROs, or if not rated, have been
determined to be of comparable quality. These limitations apply to time
deposits, including certificates of deposit, bankers' acceptances, letters of
credit and similar instruments; they do not apply to demand deposit accounts.
For a description of the NRSROs' ratings, see the Appendix.
In addition, the Endeavor Money Market Portfolio may not purchase any
security that matures more than thirteen months (397 days) from the date of
purchase or which has an implied maturity of more than thirteen months (397
days) except as provided in (1) below. For the purposes of satisfying this
requirement, the maturity of a portfolio instrument shall be deemed to be the
period remaining until the date noted on the face of the instrument as the date
on which the principal amount must be paid, or in the case of an instrument
called for redemption, the date on which the redemption payment must be made,
except that:
-19-
<PAGE>
1. An instrument that is issued or guaranteed by the U.S. government or any
agency thereof which has a variable rate of interest readjusted no less
frequently than every 25 months (762 days) may be deemed to have a maturity
equal to the period remaining until the next readjustment of the interest rate.
2. A variable rate instrument, the principal amount of which is scheduled on
the face of the instrument to be paid in thirteen months (397 days) or less, may
be deemed to have a maturity equal to the period remaining until the next
readjustment of the interest rate.
3. A variable rate instrument that is subject to a demand feature may be
deemed to have a maturity equal to the longer of the period remaining until the
next readjustment of the interest rate or the period remaining until the
principal amount can be recovered through demand.
4. A floating rate instrument that is subject to a demand feature may be
deemed to have a maturity equal to the period remaining until the principal
amount can be recovered through demand.
5. A repurchase agreement may be deemed to have a maturity equal to the period
remaining until the date on which the repurchase of the underlying securities is
scheduled to occur, or where no date is specified, but the agreement is subject
to demand, the notice period applicable to a demand for the repurchase of the
securities.
6. A portfolio lending agreement may be treated as having a maturity equal to
the period remaining until the date on which the loaned securities are scheduled
to be returned, or where no date is specified, but the agreement is subject to
demand, the notice period applicable to a demand for the return of the loaned
securities.
Each of the Endeavor Value Equity and Dreyfus Small Cap Value
Portfolios may not invest more than 5% of the value of its total assets in
warrants not listed on either the New York or American Stock Exchange. Each of
the Endeavor Opportunity Value and Endeavor Enhanced Index Portfolios will not
invest in warrants if, as a result thereof, more than 2% of the value of the
total assets of the Portfolio would be invested in warrants which are not listed
on the New York Stock Exchange, the American Stock Exchange, or a recognized
foreign exchange, or more than 5% of the value of the total assets of the
Portfolio would be invested in warrants whether or not so listed. However, the
acquisition of warrants attached to other securities is not subject to this
restriction. Each of the T. Rowe Price Equity Income, T. Rowe Price Growth
Stock, T. Rowe Price International Stock and Endeavor Select 50 Portfolios will
not invest in warrants if, as a result thereof, the Portfolio will have more
than 5% of the value of its total assets invested in warrants;
-20-
<PAGE>
provided that this restriction does not apply to warrants acquired as a result
of the purchase of another security.
PERFORMANCE INFORMATION
Total return and yield will be computed as described below.
Total Return
Each Portfolio's "average annual total return" figures described and
shown in the Prospectuses are computed according to a formula prescribed by the
Securities and Exchange Commission. The formula can be expressed as follows:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1000
T = average annual total return
n = number of years
ERV = Ending Redeemable Value of a hypothetical $1000 payment
made at the beginning of the 1, 5, or 10 years (or other) periods at the end of
the 1, 5, or 10 years (or other) periods (or fractional portion thereof)
The table below shows the average annual total return for the Endeavor
Asset Allocation, T. Rowe Price International Stock, Endeavor Value Equity,
Dreyfus Small Cap Value, Dreyfus U.S. Government Securities, T. Rowe Price
Equity Income, T. Rowe Price Growth Stock, Endeavor Opportunity Value and
Endeavor Enhanced Index Portfolios for the specific periods.
With respect to the T. Rowe Price International Stock Portfolio which
commenced operation April 8, 1991, effective January 1, 1995, the Portfolio's
Adviser was changed to Rowe Price-Fleming International, Inc. ("Price-Fleming").
Prior to March 24, 1995, the Portfolio was known as the Global Growth Portfolio.
Subsequent to such time, the Portfolio's investment objective was changed from
investments in small capitalization companies on a global basis to investments
in a broad range of established companies on an international basis (i.e.,
non-U.S. companies). Average annual total return information for the period from
January 1, 1995 to December 31, 1998 is available upon written request to the
Fund.
-21-
<PAGE>
<TABLE>
<CAPTION>
For the One For the Five For Period From
Year Period Year Period Inception to
Ended December Ended December December 31, 1998
31, 1998 31, 1998
<S> <C> <C> <C>
Endeavor Asset
Allocation(1)...... % % %/ %
T. Rowe Price
International
Stock % % %
(1)...........
Endeavor Value
% N/A
Equity(2).......... %/ %*
Dreyfus Small
Cap N/A
Value(3)....... % %/ %*
T. Rowe Price
Equity % N/A %
Income(4)...
T. Rowe Price Growth
N/A
Stock(4)............ %
%
Dreyfus U.S.
Government
N/A
Securities(5)...... % %/ %*
Endeavor Opportunity
N/A
Value(6)........... % %*
Endeavor Enhanced
Index % N/A %/ %*
(7)..........
-22-
<PAGE>
Endeavor Select
50(8)............. N/A %/ %*
N/A
Endeavor High
Yield (9)......... N/A N/A %/ %*
</TABLE>
- ------------------------
* The figure shows what the Portfolio's performance would have been in
the absence of fee waivers and/or reimbursement of other expenses, if
any.
(1)
The Portfolio commenced operations on April 8, 1991.
(2) The Portfolio commenced operations on May 27, 1993.
(3) The Portfolio commenced operations on May 4, 1993.
(4) The Portfolio commenced operations on January 3, 1995.
(5) The Portfolio commenced operations on May 13, 1994.
(6) The Portfolio commenced operations on November 18,
1996.
(7) The Portfolio commenced operations on May 2, 1997.
(8) The Portfolio commenced operations on February 3, 1998.
(9) The Portfolio commenced operations on June 1, 1998.
The calculations of total return assume the reinvestment of all
dividends and capital gain distributions on the reinvestment dates during the
period and the deduction of all recurring expenses that were charged to
shareholders' accounts. The above table does not reflect charges and deductions
which are, or may be, imposed under the Contracts.
The performance of each Portfolio will vary from time to time in
response to fluctuations in market conditions, interest rates, the composition
of the Portfolio's investments and expenses. Consequently, a Portfolio's
performance figures are historical and should not be considered representative
of the performance of the Portfolio for any future period.
-23-
<PAGE>
Yield
From time to time, the Fund may quote the Endeavor Money Market
Portfolio's, the Dreyfus U.S. Government Securities Portfolio's and the Endeavor
High Yield Portfolio's yield and effective yield in advertisements or in reports
or other communications to shareholders. Yield quotations are expressed in
annualized terms and may be quoted on a compounded basis.
The annualized current yield for the Endeavor Money Market Portfolio is
computed by: (a) determining the net change in the value of a hypothetical
pre-existing account in the Portfolio having a balance of one share at the
beginning of a seven calendar day period for which yield is to be quoted; (b)
dividing the net change by the value of the account at the beginning of the
period to obtain the base period return; and (c) annualizing the results (i.e.,
multiplying the base period return by 365/7). The net change in the value of the
account reflects the value of additional shares purchased with dividends
declared on the original share and any such additional shares, but does not
include realized gains and losses or unrealized appreciation and depreciation.
In addition, the Endeavor Money Market Portfolio may calculate a compound
effective annualized yield by adding 1 to the base period return (calculated as
described above), raising the sum to a power equal to 365/7 and subtracting 1.
The Dreyfus U.S. Government Securities Portfolio's and the Endeavor
High Yield Portfolio's 30-day yield will be calculated according to a formula
prescribed by the Securities and Exchange Commission. The formula can be
expressed as follows:
YIELD = 2[(a-b+1)6-1]
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period (net of
reimbursement)
c = the average daily number of shares outstanding
during the period that were entitled to receive
dividends
d = the net asset value per share on the last day of
the period
For the purpose of determining the interest earned (variable "a" in the formula)
on debt obligations that were purchased by the Portfolio at a discount or
premium, the formula generally calls for amortization of the discount or
premium; the amortization schedule will be adjusted monthly to reflect changes
in the market values of the debt obligations.
Yield information is useful in reviewing a Portfolio's performance, but
because yields fluctuate, such information
-24-
<PAGE>
cannot necessarily be used to compare an investment in a Portfolio's shares with
bank deposits, savings accounts and similar investment alternatives which often
provide an agreed or guaranteed fixed yield for a stated period of time.
Shareholders should remember that yield is a function of the kind and quality of
the instruments in the Portfolios' investment portfolios, portfolio maturity,
operating expenses and market conditions.
It should be recognized that in periods of declining interest rates the
yields will tend to be somewhat higher than prevailing market rates, and in
periods of rising interest rates the yields will tend to be somewhat lower.
Also, when interest rates are falling, the inflow of net new money to a
Portfolio from the continuous sale of its shares will likely be invested in
instruments producing lower yields than the balance of the Portfolio's
investments, thereby reducing the current yield of the Portfolio. In periods of
rising interest rates, the opposite can be expected to occur.
Non-Standardized Performance
In addition to the performance information described above, the Fund
may provide total return information with respect to the Portfolios for
designated periods, such as for the most recent six months or most recent twelve
months. This total return information is computed as described under "Total
Return" above except that no annualization is made.
PORTFOLIO TRANSACTIONS
Subject to the supervision and control of the Manager and the Trustees
of the Fund, each Portfolio's Adviser is responsible for decisions to buy and
sell securities for its account and for the placement of its portfolio business
and the negotiation of commissions, if any, paid on such transactions. Brokerage
commissions are paid on transactions in equity securities traded on a securities
exchange and on options, futures contracts and options thereon. Fixed income
securities and certain equity securities in which the Portfolios invest are
traded in the over-the-counter market. These securities are generally traded on
a net basis with dealers acting as principal for their own account without a
stated commission, although prices of such securities usually include a profit
to the dealer. In over-the-counter transactions, orders are placed directly with
a principal market maker unless a better price and execution can be obtained by
using a broker. In underwritten offerings, securities are usually purchased at a
fixed price which includes an amount of compensation to the underwriter
generally referred to as the underwriter's concession or discount. Certain money
market securities may be purchased directly from an issuer, in which case no
commissions or discounts are paid. U.S. government securities are generally
purchased from underwriters or dealers, although certain newly-issued U.S.
government securities may be purchased directly from the U.S. Treasury or from
the issuing agency or instrumentality. Each Portfolio's Adviser is
-25-
<PAGE>
responsible for effecting its portfolio transactions and will do so in a manner
deemed fair and reasonable to the Portfolio and not according to any formula.
The primary consideration in all portfolio transactions will be prompt execution
of orders in an efficient manner at a favorable price. In selecting
broker-dealers and negotiating commissions, an Adviser considers the firm's
reliability, the quality of its execution services on a continuing basis and its
financial condition. When more than one firm is believed to meet these criteria,
preference may be given to brokers that provide the Portfolios or their Advisers
with brokerage and research services within the meaning of Section 28(e) of the
Securities Exchange Act of 1934. Each Portfolio's Adviser is of the opinion
that, because this material must be analyzed and reviewed, its receipt and use
does not tend to reduce expenses but may benefit the Portfolio by supplementing
the Adviser's research. In seeking the most favorable price and execution
available, an Adviser may, if permitted by law, consider sales of the Contracts
as described in the Prospectuses a factor in the selection of broker-dealers.
An Adviser may effect portfolio transactions for other investment
companies and advisory accounts. Research services furnished by broker-dealers
through which a Portfolio effects its securities transactions may be used by the
Portfolio's Adviser in servicing all of its accounts; not all such services may
be used in connection with the Portfolio. In the opinion of each Adviser, it is
not possible to measure separately the benefits from research services to each
of its accounts, including a Portfolio. Whenever concurrent decisions are made
to purchase or sell securities by a Portfolio and another account, the
Portfolio's Adviser will attempt to allocate equitably portfolio transactions
among the Portfolio and other accounts. In making such allocations between the
Portfolio and other accounts, the main factors to be considered are the
respective investment objectives, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for investment, the size
of investment commitments generally held, and the opinions of the persons
responsible for recommending investments to the Portfolio and the other
accounts. In some cases this procedure could have an adverse effect on a
Portfolio. In the opinion of each Adviser, however, the results of such
procedures will, on the whole, be in the best interest of each of the accounts.
The Adviser to the T. Rowe Price International Stock, T. Rowe Price
Equity Income and T. Rowe Price Growth Stock Portfolios may execute portfolio
transactions through certain affiliates of Robert Fleming Holdings Limited and
Jardine Fleming Group Limited, persons indirectly related to the Adviser, acting
as agent in accordance with procedures established by the Fund's Board of
Trustees, but will not purchase any securities from or sell any securities to
any such affiliate acting as principal for its own account.
-26-
<PAGE>
The Advisers to the Endeavor Enhanced Index , Endeavor Select 50 and
Endeavor Janus Growth Portfolios may execute portfolio transactions through
certain of their affiliated brokers, acting as agent in accordance with the
procedures established by the Fund's Board of Trustees, but will not purchase
any securities from or sell any securities to such affiliate acting as principal
for its own account.
For the year ended December 31, 1996, the Dreyfus U.S. Government
Securities Portfolio did not pay any brokerage commissions, while the Endeavor
Money Market Portfolio and the Endeavor Asset Allocation Portfolio paid $2,724
and $93,009 in brokerage commissions, respectively. For the year ended December
31, 1996, the T. Rowe Price International Stock Portfolio, the Endeavor Value
Equity Portfolio and the Dreyfus Small Cap Value Portfolio paid $136,536,
$90,589 and $398,554, respectively, in brokerage commissions of which $4,462
(3.27%) and $2,908 (2.13%) with respect to the T. Rowe Price International Stock
Portfolio was paid to Robert Fleming Holdings Limited and Jardine Fleming Group
Limited, and Ord Minnett, respectively. For the year ended December 31, 1996,
the T. Rowe Price Equity Income Portfolio and the T. Rowe Price Growth Stock
Portfolio paid $55,261 and $69,409, respectively, in brokerage commissions of
which $3,037 (4.38%) with respect to the T. Rowe Price Growth Stock Portfolio
was paid to Robert Flemings Holdings Limited. For the fiscal period ended
December 31, 1996, the Endeavor Opportunity Value Portfolio paid $291 in
brokerage commissions.
For the year ended December 31, 1997, the Endeavor Money Market
Portfolio and the Dreyfus U.S. Government Securities Portfolio did not pay any
brokerage commissions, while the Endeavor Asset Allocation Portfolio paid
$214,145 in brokerage commissions. For the year ended December 31, 1997, the T.
Rowe Price International Stock Portfolio, the Endeavor Value Equity Portfolio
and the Dreyfus Small Cap Value Portfolio paid $205,850, $75,870 and $525,982,
respectively, in brokerage
-27-
<PAGE>
commissions of which $14,665 (7.13%) and $608 (.30%) with respect to the T. Rowe
Price International Stock Portfolio was paid to Robert Fleming Holdings Limited
and Jardine Fleming Group Limited, and Ord Minnett, respectively. For the year
ended December 31, 1997, the T. Rowe Price Equity Income Portfolio and the T.
Rowe Price Growth Stock Portfolio paid $117,830 and $87,464, respectively, in
brokerage commissions of which $74 (.06%) with respect to the T. Rowe Price
Equity Income Portfolio was paid to Robert Flemings Holdings Limited and $2,663
(3.04%) with respect to the T. Rowe Price Growth Stock Portfolio was paid to
Robert Flemings Holdings Limited. For the fiscal year ended December 31, 1997,
the Endeavor Opportunity Value Portfolio paid $23,636 in brokerage commissions
and for the fiscal period ended December 31, 1997, the Endeavor Enhanced Index
Portfolio paid $9,494 in brokerage commissions.
For the year ended December 31, 1998, the Endeavor Money Market
Portfolio, the Dreyfus U.S. Government Securities Portfolio and the Endeavor
High Yield Portfolio did not pay any brokerage commissions while the Endeavor
Asset Allocation Portfolio paid $______ in brokerage commissions of which
$_______ (___%) was paid to ___________________. For the year ended December 31,
1998, the T. Rowe Price International Stock Portfolio, the Endeavor Value Equity
Portfolio and the Dreyfus Small Cap Value Portfolio paid $________, $_______ and
$_______, respectively, in brokerage commissions of which $______ (___%) and
$________ (___%) with respect to the T. Rowe Price International Stock Portfolio
was paid to Robert Flemings Holdings Limited and Jardine Fleming Group Limited,
and Ord Minnett, respectively. For the year ended December 31, 1998, the T. Rowe
Price Equity Income Portfolio and the T. Rowe Price Growth Stock Portfolio paid
$_______ and $_______, respectively, in brokerage commissions of which $______
(___%) with respect to the T. Rowe Price Equity Income Portfolio was paid to
Robert Flemings Holdings Limited and $_______ (___%) with respect to the T. Rowe
price Growth Stock Portfolio was paid to Robert Flemings Holdings Limited. For
the year ended December 31, 1998, the Endeavor Opportunity Value Portfolio and
the Endeavor Enhanced Index Portfolio paid $_______ and $________, respectively,
in brokerage commissions. For the fiscal year ended December 31, 1998, the
Endeavor Select 50 Portfolio paid $________ in brokerage commissions of which
$______ (___%) was paid to Montgomery Securities, Inc.
For a discussion regarding the use of the Fund's brokerage commissions
to promote the distribution of the Fund's shares, see the section of the
Prospectuses titled "Management of the Fund -Brokerage Enhancement Plan."
MANAGEMENT OF THE FUND
Trustees and Officers
The Trustees and executive officers of the Trust, their ages and their
principal occupations during the past five years are
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<PAGE>
set forth below. Unless otherwise indicated, the business address of each is
2101 East Coast Highway, Suite 300, Corona del Mar, California 92625.
<TABLE>
<CAPTION>
Principal
Position(s) Occupation(s)
Held with During Past
Name, Age and Address Registrant 5 Years
<S> <C> <C>
*+Vincent J. McGuinness, Jr. President, From July, 1997 to
(34) Chief November, 1997,
Financial Executive Vice
Officer President -
(Treasurer), Administration of
Trustee Registrant; from
September,
1996
to
June,
1997,
Chief
Financial
Officer
(Treasurer)
of
Registrant;
from
February,
1997
to
December,
1997,
Executive
Vice-
President,
Chief
of
Operations
,
since
March,
1997,
Director,
since
December,
1997,
Chief
Operating
Officer,
and
since
June,
1998,
Chief
Financial
Officer
of
Endeavor
Group;
from
September,
1996
to
June,
1997,
and
since
June,
1998,
Chief
Financial
Officer,
since
May,
1996,
Director
and
from
June,
1997
to
October,
1998,
Executive
Vice
President
Administration,
and
since
October,
1998,
President
of
Endeavor
Management
Co.;
since
August,
1996,
Chief
Financial
Officer
of
VJM
Corporation;
from
May,
1996
to
January,
1997,
Executive
Vice
President
and
Director
of
Sales,
Western
Division
of
Endeavor
-29-
<PAGE>
Principal
Position(s) Occupation(s)
Held with During Past
Name, Age and Address Registrant 5 Years
- --------------------- ----------- -------
Group; since May, 1996,
Chief Financial Officer
of McGuinness &
Associates; from July,
1993 to August, 1995,
Rocky Mountain Regional
Marketing Director for
Endeavor Group.
*Vincent J. McGuinness (64) Trustee Chairman, Chief
Executive Officer and
Director of McGuinness
& Associates, Endeavor
Group, VJM Corporation
(oil and gas), until
July, 1996, McGuinness
Group (insurance
marketing) and
since
September, 1988,
Endeavor Management
Co.; President of VJM
Corporation and until
October, 1998, Endeavor
Management Co. and,
since February, 1996,
McGuinness &
Associates.
Timothy A. Devine (63) Trustee Prior to September,
1424 Dolphin Terrace 1993, President and
Corona del Mar, California Chief Executive
92625 Officer, Devine
Properties, Inc. Since
September, 1993, Vice
President, Plant
Control, Inc.
(landscape contracting
and maintenance).
-30-
<PAGE>
Principal
Position(s) Occupation(s)
Held with During Past
Name, Age and Address Registrant 5 Years
Trustee President, Thomas J.
Thomas J. Hawekotte (63) Hawekotte, P.C. (law
6007 practice).
North Sheridan Road
Chicago, Illinois
60660
Steven L. Klosterman (47) Trustee Since July, 1995,
5973 Avenida Encinas President of Klosterman
Suite 300 Capital Corporation
Carlsbad, California 92008 (investment adviser);
Investment Counselor,
Robert J. Metcalf &
Associates, Inc.
(investment adviser)
from August, 1990 to
June, 1995.
*Halbert D. Lindquist (52) Trustee President, Lindquist
1650 E. Fort Lowell Road Stephenson
Suite 203 & White, Inc.
Tucson, Arizona 85719-2324
(investment
adviser)
and
since
December,
1987
Tucson
Asset
Management,
Inc.
(commodity
trading
adviser),
and
since
November,
1987,
Presidio
Government
Securities,
Incorporated
(broker-dealer)
,
and since
January,
1998,
Chief
Investment
Officer
of
Blackstone
Alternative
Asset
Management.
-31-
<PAGE>
Principal
Position(s) Occupation(s)
Held with During Past
Name, Age and Address Registrant 5 Years
Keith H. Wood (62)
39 Main Street Trustee Since 1972, Chairman
Chatham, New Jersey 07928 and Chief Executive
Officer
of
Jamison,
Eaton
&
Wood
(investment
adviser)
and
from
1978
to
December,
1997,
President
of
Ivory
&
Sime
International,
Inc.
(investment
adviser).
Peter F. Muratore (66) Trustee From June, 1989 to
Too March, 1998, President
Far
Posthouse Road
of OCC Distributors
(broker-dealer), a
Morristown, New Jersey 07960 subsidiary of
Oppenheimer Capital.
-32-
<PAGE>
Principal
Position(s) Occupation(s)
Held with During Past
Name, Age and Address Registrant 5 Years
P. Michael Since
Pond (45)
November 1, 1998,
Executive Vice-
Executive President -
Vice-President Administration and
- Compliance of Endeavor
Administration Group and Endeavor
and Compliance Management Co. and
Chief
Investment
Officer
of
Endeavor
Management
Co.;
from
___________,
1991
to
___________,
1996,
Chairman
and
President
of
The
Preferred
Group
of
Mutual
Funds;
from
___________,
1989
to
___________,
1996,
President
of
Caterpillar
Securities
Inc.
and
Caterpillar
Investment
Manager
Ltd.
-33-
<PAGE>
Principal
Position(s) Occupation(s)
Held with During Past
Name, Age and Address Registrant 5 Years
Pamela A. Shelton (49) Secretary Since October, 1993,
Executive Secretary to
Chairman of the Board
and Chief Executive
Officer of, and since
April, 1996, Secretary
of McGuinness &
Associates, Endeavor
Group, VJM Corporation,
McGuinness Group (until
July, 1996) and
Endeavor Management
Co.; from July, 1992 to
October, 1993,
Administrative
Secretary, Mayor and
City Council, City of
Laguna Niguel,
California.
</TABLE>
* An "interested person" of the Fund as defined in the 1940 Act.
*+ Vincent J. McGuinness, Jr. is the son of Vincent J.
McGuinness.
No remuneration will be paid by the Fund to any Trustee or officer of
the Fund who is affiliated with the Manager or the Advisers. Each Trustee who is
not an affiliated person of the Manager or the Advisers will be reimbursed for
out-of-pocket expenses and currently receives an annual fee of $10,000 and $500
for attendance at each Trustees' Board or committee meeting. Set forth below for
each of the Trustees of the Fund is the aggregate compensation paid to such
Trustees for the fiscal year ended December 31, 1998.
-34-
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
Total
Compensation
From Fund
Aggregate and Fund
Name of Compensation Complex
Person From Fund Paid to Trustees
<S> <C> <C>
Vincent J. McGuinness $ - $ -
Timothy A. Devine
Thomas J. Hawekotte
Steven L. Klosterman
Halbert D. Lindquist
R. Daniel Olmstead *
Keith H. Wood
Peter F. Muratore
Vincent J. McGuinness, Jr. - -
- ---------------
</TABLE>
* Former Trustee - retired as of December 31, 1998.
The Agreement and Declaration of Trust of the Fund provides that the
Fund will indemnify its Trustees and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved because of
their offices with the Fund, except if it is determined in the manner specified
in the Agreement and Declaration of Trust that they have not acted in good faith
in the reasonable belief that their actions were in the best interests of the
Fund or that such indemnification would relieve any officer or Trustee of any
liability to the Fund or its shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of his duties. The Fund, at its
expense, provides liability insurance for the benefit of its Trustees and
officers.
As of the date of this Statement of Additional Information, the
officers and Trustees of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
The Manager
Prior to January 1, 1999, Endeavor Investment Advisers ("EIA") managed
the Fund. Effective January 1, 1999, the Management Agreement between the Fund
and EIA was transferred to the Manager. The Management Agreement between the
Fund and the Manager with respect to the Endeavor Money Market, Endeavor Asset
Allocation and T. Rowe Price International Stock Portfolios was approved by the
Trustees of the Fund (including all of the Trustees who are not "interested
persons" as defined in the 1940 Act of the Manager ["Independent Trustees"]) on
July 20, 1992, and by the shareholders of the Fund on November 23, 1992. With
respect to the Endeavor Value Equity and Dreyfus Small Cap Value Portfolios, the
Management Agreement was approved by the Trustees of the Fund (including all of
the
-35-
<PAGE>
Independent Trustees) on April 19, 1993 and by PFL Life Insurance Company, the
sole shareholder of the Endeavor Value Equity and Dreyfus Small Cap Value
Portfolios, on April 19, 1993. With respect to the Dreyfus U.S. Government
Securities Portfolio, the Management Agreement was approved by the Trustees of
the Fund (including all of the Independent Trustees) on January 24, 1994 and by
PFL Life Insurance Company, the sole shareholder of the Dreyfus U.S. Government
Securities Portfolio, on March 7, 1994. With respect to the T. Rowe Price Equity
Income and T. Rowe Price Growth Stock Portfolios, the Management Agreement was
approved by the Trustees of the Fund (including all of the Independent Trustees)
on October 24, 1994 and by PFL Life Insurance Company, the sole shareholder of
the T. Rowe Price Equity Income and T. Rowe Price Growth Stock Portfolios, on
November 1, 1994. With respect to the Endeavor Opportunity Value and Endeavor
Enhanced Index Portfolios, the Management Agreement was approved by the Trustees
of the Fund (including all of the Independent Trustees) on August 13, 1996 and
by PFL Life Insurance Company, the sole shareholder of the Endeavor Opportunity
Value and Endeavor Enhanced Index Portfolios, on August 26, 1996. With respect
to the Endeavor Select 50 Portfolio, the Management Agreement, as amended, was
approved by the Trustees of the Fund (including all of the Independent Trustees)
at meetings held on August 4, 1997 and January 12, 1998 and by PFL Life
Insurance Company, the sole shareholder of the Endeavor Select 50 Portfolio, on
January 18, 1998. With respect to the Endeavor High Yield Portfolio, the
Management Agreement, as amended, was approved by the Trustees of the Fund
(including all of the Independent Trustees) on May 11, 1998 and by PFL Life
Insurance Company, the sole shareholder of the Endeavor High Yield Portfolio, on
May 11, 1998. With respect to the Endeavor Janus Growth Portfolio, the
Management Agreement, as amended, was approved by the Trustees of the Fund
(including all of the Independent Trustees) on November 17, 1998 and by PFL Life
Insurance Company, the sole shareholder of the Endeavor Janus Growth Portfolio,
on _________, 1999. See "Organization and Capitalization of the Fund."
The Management Agreement will continue in force for two years from its
date, November 23, 1992 with respect to the Endeavor Money Market, Endeavor
Asset Allocation and T. Rowe Price International Stock Portfolios, April 19,
1993 with respect to the Endeavor Value Equity and Dreyfus Small Cap Value
Portfolios, March 25, 1994 with respect to the Dreyfus U.S. Government
Securities Portfolio, December 28, 1994 with respect to the T. Rowe Price Equity
Income and T. Rowe Price Growth Stock Portfolios, August 26, 1996 with respect
to the Endeavor Opportunity Value and Endeavor Enhanced Index Portfolios,
January 30, 1998 with respect to the Endeavor Select 50 Portfolio, May 15, 1998
with respect to the Endeavor High Yield Portfolio,
-36-
<PAGE>
February 1, 1999 with respect to the Endeavor Janus Growth Portfolio, and from
year to year thereafter, but only so long as its continuation as to each
Portfolio is specifically approved at least annually (i) by the Trustees or by
the vote of a majority of the outstanding voting securities of the Portfolio,
and (ii) by the vote of a majority of the Independent Trustees, by votes cast in
person at a meeting called for the purpose of voting on such approval. The
Management Agreement provides that it shall terminate automatically if assigned,
and that it may be terminated as to any Portfolio without penalty by the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio upon 60 days' prior written notice to the Manager,
or by the Manager upon 90 days' prior written notice to the Fund, or upon such
shorter notice as may be mutually agreed upon. In the event the Manager ceases
to be the Manager of the Fund, the right of the Fund to use the identifying name
of "Endeavor" may be withdrawn.
The Advisers
Effective May 1, 1998, Morgan Stanley Asset Management Inc. became the
Adviser of the Endeavor Money Market Portfolio and Endeavor Asset Allocation
Portfolio. The Investment Advisory Agreements between the Manager and Morgan
Stanley Asset Management Inc. were approved by the Trustees of the Fund
(including all the Independent Trustees) on February 23, 1998, and by the
shareholders of the Fund on April 21, 1998. The Investment Advisory Agreements
between the Manager and OpCap Advisors were last approved by the Trustees of the
Fund (including all of the Independent Trustees) on April 8, 1997 with respect
to the Endeavor Value Equity Portfolio and the Endeavor Opportunity Value
Portfolio and by the shareholders of each Portfolio on June 18, 1997.
The Investment Advisory Agreement between the Manager and The Boston
Company Asset Management, Inc. was approved by the Trustees of the Fund
(including all of the Independent Trustees) on January 24, 1994 and by PFL Life
Insurance Company as sole shareholder of the Dreyfus U.S. Government Securities
Portfolio on March 7, 1994. The Investment Advisory Agreement was transferred to
The Dreyfus Corporation effective May 1, 1996. The Investment Advisory
Agreements between the Manager and T. Rowe Price Associates, Inc. were approved
by the Trustees of the Fund (including all of the Independent Trustees) on
October 24, 1994 and by PFL Life Insurance Company as sole shareholder of the T.
Rowe Price Equity Income and T. Rowe Price Growth Stock Portfolios on November
1, 1994. The Investment Advisory Agreement between the Manager and J.P. Morgan
Investment Management Inc. was approved
-37-
<PAGE>
by the Trustees of the Fund (including all of the Independent Trustees) on
August 13, 1996 and by PFL Life Insurance Company as sole shareholder of the
Endeavor Enhanced Index Portfolio on August 26, 1996. The Investment Advisory
Agreement between the Manager and Montgomery Asset Management, LLC was approved
by the Trustees of the Fund (including all of the Independent Trustees) on
August 4, 1997 and by PFL Life Insurance Company as sole shareholder of the
Endeavor Select 50 Portfolio on January 18, 1998. Effective January 1, 1995,
Price-Fleming became the Adviser of the T. Rowe Price International Stock
Portfolio. The Investment Advisory Agreement with Price-Fleming for the T. Rowe
Price International Stock Portfolio was approved by the Trustees of the Fund
(including all of the Independent Trustees) on December 19, 1994 and by
shareholders of the Portfolio on March 24, 1995. Effective September 16, 1996,
The Dreyfus Corporation became the Adviser of the Dreyfus Small Cap Value
Portfolio. The Investment Advisory Agreement with The Dreyfus Corporation was
approved by the Trustees of the Fund (including all of the Independent Trustees)
on August 13, 1996 and by the shareholders of the Portfolio on October 29, 1996.
The Investment Advisory Agreement between the Manager and Massachusetts
Financial Services Company was approved by the Trustees of the Fund (including
all of the Independent Trustees) on May 11, 1998 and by PFL Life Insurance
Company as sole shareholder of the Endeavor High Yield Portfolio on May 11,
1998. The Investment Advisory Agreement between the Manager and Janus Capital
Corporation was approved by the Trustees of the Fund (including a majority of
the Independent Trustees) on November 17, 1998 and by PFL Life Insurance Company
as sole shareholder of the Endeavor Janus Growth Portfolio on ____________,
1999. See "Organization and Capitalization of the Fund."
Each agreement will continue in force for two years from its date,
April 30, 1998 with respect to the Endeavor Money Market and Endeavor Asset
Allocation Portfolios, April 19, 1993 with respect to the Endeavor Value Equity
Portfolio, March 25, 1994 with respect to the Dreyfus U.S. Government Securities
Portfolio, December 28, 1994 with respect to the T. Rowe Price Equity Income and
T. Rowe Price Growth Stock Portfolios, January 1, 1995 with respect to the T.
Rowe Price International Stock Portfolio, September 16, 1996 with respect to the
Dreyfus Small Cap Value Portfolio, November 4, 1996 with respect to the Endeavor
Opportunity Value Portfolio, April 30, 1997 with respect to the Endeavor
Enhanced Index Portfolio, January 30, 1998 with respect to the Endeavor Select
50 Portfolio , May 15, 1998 with respect to the Endeavor High Yield Portfolio,
and February __, 1999 with respect to the Endeavor Janus Growth Portfolio, and
from year to year thereafter, but only so long as its continuation as to a
Portfolio is specifically approved at least
-38-
<PAGE>
annually (i) by the Trustees or by the vote of a majority of the outstanding
voting securities of the Portfolio, and (ii) by the vote of a majority of the
Independent Trustees by votes cast in person at a meeting called for the purpose
of voting on such approval. Each Investment Advisory Agreement provides that it
shall terminate automatically if assigned or if the Management Agreement with
respect to the related Portfolio terminates, and that it may be terminated as to
a Portfolio without penalty by the Manager, by the Trustees of the Fund or by
vote of a majority of the outstanding voting securities of the Portfolio on not
less than 60 days' prior written notice to the Adviser or by the Adviser on not
less than 150 days' (90 days' with respect to the Endeavor Money Market,
Endeavor Asset Allocation, Endeavor Enhanced Index, Endeavor Select 50 ,
Endeavor High Yield and Endeavor Janus Growth Portfolios) prior written notice
to the Manager, or upon such shorter notice as may be mutually agreed upon.
The following table shows the fees paid by each of the Portfolios and
any fee waivers or reimbursements during the fiscal years ended December 31,
1996, December 31, 1997 and December 31, 1998.
-39-
<PAGE>
1998
<TABLE>
<CAPTION>
Investment
Management Investment Other
Fee Management Expenses
Paid Fee Waived Reimbursed
<S> <C> <C> <C>
Endeavor Money Market
Portfolio......... $ $--- $ ---
Endeavor Asset
Allocation
Portfolio......... --- ---
T. Rowe Price
International
Stock Portfolio... --- ---
Endeavor Value
Equity Portfolio. --- ---
Dreyfus Small
Cap Value
Portfolio......... --- ---
Dreyfus U.S.
Government
Securities
Portfolio......... --- ---
T. Rowe Price
Equity Income
Portfolio......... --- ---
T. Rowe Price Growth
Stock Portfolio... --- ---
Endeavor Opportunity
Value Portfolio... --- ---
Endeavor Enhanced Index
Portfolio......... --- ---
Endeavor Select 50 Portfolio*........
Endeavor High Yield
Portfolio**.......
</TABLE>
1997
-40-
<PAGE>
<TABLE>
<CAPTION>
Investment
Management Investment Other
Fee Management Expenses
Paid Fee Waived Reimbursed
<S> <C> <C> <C>
Endeavor Money Market
Portfolio......... $ 258,744 $--- $ ---
Endeavor Asset
Allocation
Portfolio......... 2,057,590 --- ---
T. Rowe Price
International
Stock Portfolio... 1,404,553 --- ---
Endeavor Value
Equity Portfolio. 1,367,432 --- ---
Dreyfus Small
Cap Value
Portfolio......... 920,244 --- ---
Dreyfus U.S.
Government
Securities
Portfolio......... 227,037 --- ---
T. Rowe Price
Equity Income
Portfolio......... 1,073,258 --- ---
T. Rowe Price Growth
Stock Portfolio.... 710,554 --- ---
Endeavor Opportunity
Value Portfolio.... 97,611 --- ---
Endeavor Enhanced
Index
Portfolio***. 50,159 17,349 ---
</TABLE>
<TABLE>
<CAPTION>
1996
Investment Investment
Management Management Other
Fee Fee Expenses
Paid Waived Reimbursed
<S> <C> <C> <C>
Endeavor Money Market
Portfolio.......... $ 165,212 $ -- --
Endeavor Asset
Allocation
Portfolio.......... 1,639,338 -- --
T. Rowe Price
-41-
<PAGE>
International
Stock Portfolio.... 1,015,179 -- --
Endeavor Value Equity
Portfolio.......... 768,579 -- --
Dreyfus Small
Cap Value
Portfolio.......... 535,895 -- --
Dreyfus U.S.
Government
Securities
Portfolio.......... 122,058 -- --
T. Rowe Price
Equity Income
Portfolio.......... 369,356 -- --
T. Rowe Price
Growth Stock
Portfolio.......... 313,356 -- --
Endeavor Opportunity
Value Portfolio****
197 -- 2,802
</TABLE>
- ---------------
-42-
<PAGE>
* The information presented with respect to the Endeavor Select 50
Portfolio is for the period from February 3, 1998 (commencement of
operations) to December 31, 1998.
** The information presented with respect to the Endeavor High Yield
Portfolio is for the period from June 1, 1998 (commencement of
operations) to December 31, 1998.
*** The information presented with respect to the Endeavor Enhanced Index
Portfolio is for the period from May 2, 1997 (commencement of
operations) to December 31, 1997.
**** The information presented with respect to the Endeavor Opportunity
Value Portfolio is for the period from November 18, 1996 (commencement
of operations) to December 31, 1996.
---------------------------
Each Investment Advisory Agreement provides that the Adviser shall not
be subject to any liability to the Fund or the Manager for any act or omission
in the course of or connected with rendering services thereunder in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties on the part of the Adviser.
REDEMPTION OF SHARES
The Fund may suspend redemption privileges or postpone the date of
payment on shares of the Portfolios for more than seven days during any period
(1) when the New York Stock Exchange is closed or trading on the Exchange is
restricted as determined by the Securities and Exchange Commission, (2) when an
emergency exists, as defined by the Securities and Exchange Commission, which
makes it not reasonably practicable for a Portfolio to dispose of securities
owned by it or fairly to determine the value of its assets, or (3) as the
Securities and Exchange Commission may otherwise permit.
The value of the shares on redemption may be more or less than the
shareholder's cost, depending upon the market value of the portfolio securities
at the time of redemption.
NET ASSET VALUE
The net asset value per share of each Portfolio is determined as of the
close of regular trading of the New York Stock Exchange (currently 4:00 p.m.,
New York City time), Monday through Friday, exclusive of national business
holidays. The Fund will be closed on the following national business holidays:
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
-43-
<PAGE>
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. Portfolio securities for which the primary market is on a
domestic or foreign exchange or which are traded over-the-counter and quoted on
the NASDAQ System will be valued at the last sale price on the day of valuation
or, if there was no sale that day, at the last reported bid price, using prices
as of the close of trading. Portfolio securities not quoted on the NASDAQ System
that are actively traded in the over-the-counter market, including listed
securities for which the primary market is believed to be over-the-counter, will
be valued at the most recently quoted bid price provided by the principal market
makers.
In the case of any securities which are not actively traded, reliable
market quotations may not be considered to be readily available. These
investments are stated at fair value as determined under the direction of the
Trustees. Such fair value is expected to be determined by utilizing information
furnished by a pricing service which determines valuations for normal,
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships between
securities which are generally recognized by institutional traders.
If any securities held by a Portfolio are restricted as to resale,
their fair value will be determined following procedures approved by the
Trustees. The fair value of such securities is generally determined as the
amount which the Portfolio could reasonably expect to realize from an orderly
disposition of such securities over a reasonable period of time. The valuation
procedures applied in any specific instance are likely to vary from case to
case. However, consideration is generally given to the financial position of the
issuer and other fundamental analytical data relating to the investment and to
the nature of the restrictions on disposition of the securities (including any
registration expenses that might be borne by the Portfolio in connection with
such disposition). In addition, specific factors are also generally considered,
such as the cost of the investment, the market value of any unrestricted
securities of the same class (both at the time of purchase and at the time of
valuation), the size of the holding, the prices of any recent transactions or
offers with respect to such securities and any available analysts' reports
regarding the issuer.
Notwithstanding the foregoing, short-term debt securities with
maturities of 60 days or less will be valued at amortized cost.
The Endeavor Money Market Portfolio's investment policies and method of
securities valuation are intended to permit the Portfolio generally to maintain
a constant net asset value of $1.00 per share by computing the net asset value
per share to the nearest $.01 per share. The Portfolio is permitted to use the
amortized cost method of valuation for its portfolio securities pursuant to
regulations of the Securities and Exchange
-44-
<PAGE>
Commission. This method may result in periods during which value, as determined
by amortized cost, is higher or lower than the price the Portfolio would receive
if it sold the instrument. The net asset value per share would be subject to
fluctuation upon any significant changes in the value of the Portfolio's
securities. The value of debt securities, such as those in the Portfolio,
usually reflects yields generally available on securities of similar yield,
quality and duration. When such yields decline, the value of a portfolio holding
such securities can be expected to decline. Although the Portfolio seeks to
maintain the net asset value per share of the Portfolio at $1.00, there can be
no assurance that net asset value will not vary.
The Trustees of the Fund have undertaken to establish procedures
reasonably designed, taking into account current market conditions and the
Portfolio's investment objective, to stabilize the net asset value per share for
purposes of sales and redemptions at $1.00. These procedures include the
determination, at such intervals as the Trustees deem appropriate, of the
extent, if any, to which the net asset value per share calculated by using
available market quotations deviates from $1.00 per share. In the event such
deviation exceeds one half of one percent, the Trustees are required to promptly
consider what action, if any, should be initiated.
With respect to the Portfolios other than the Endeavor Money Market
Portfolio, foreign securities traded outside the United States are generally
valued as of the time their trading is complete, which is usually different from
the close of the New York Stock Exchange. Occasionally, events affecting the
value of such securities may occur between such times and the close of the New
York Stock Exchange that will not be reflected in the computation of the
Portfolio's net asset value. If events materially affecting the value of such
securities occur during such period, these securities will be valued at their
fair value according to procedures decided upon in good faith by the Fund's
Board of Trustees. All securities and other assets of a Portfolio initially
expressed in foreign currencies will be converted to U.S. dollar values at the
mean of the bid and offer prices of such currencies against U.S. dollars last
quoted on a valuation date by any recognized dealer.
TAXES
Federal Income Taxes
Each Portfolio intends to qualify each year as a "regulated investment
company" under the Internal Revenue Code of 1986, as amended (the "Code"). By so
qualifying, a Portfolio will not be subject to federal income taxes to the
extent that its net investment income and net realized capital gains are
distributed.
In order to so qualify, a Portfolio must, among other things, (1)
derive at least 90% of its gross income in each taxable year from dividends,
interest, payments with respect to
-45-
<PAGE>
securities loans, gains from the sale or other disposition of stocks or
securities or foreign currencies, or other income (including but not limited to
gains from options, futures or forward contracts) derived with respect to its
business of investing in such stocks or securities; and (2) diversify its
holdings so that, at the end of each quarter of the Portfolio's taxable year,
(a) at least 50% of the market value of the Portfolio's assets is represented by
cash, government securities and other securities limited in respect of any one
issuer to 5% of the value of the Portfolio's assets and to not more than 10% of
the voting securities of such issuer, and (b) not more than 25% of the value of
its assets is invested in securities of any one issuer (other than government
securities).
As a regulated investment company, a Portfolio will not be subject to
federal income tax on net investment income and capital gains (short- and
long-term), if any, that it distributes to its shareholders if at least 90% of
its net investment income and net short-term capital gains for the taxable year
are distributed, but will be subject to tax at regular corporate rates on any
income or gains that are not distributed. In general, dividends will be treated
as paid when actually distributed, except that dividends declared in October,
November or December and made payable to shareholders of record in such a month
will be treated as having been paid by the Portfolio (and received by
shareholders) on December 31, provided the dividend is paid in the following
January. Each Portfolio intends to satisfy the distribution requirement in each
taxable year.
The Portfolios will not be subject to the 4% federal excise tax imposed
on registered investment companies that do not distribute all of their income
and gains each calendar year because such tax does not apply to a registered
investment company whose only shareholders are segregated asset accounts of life
insurance companies held in connection with variable annuity and/or variable
life insurance policies.
The Fund intends to comply with section 817(h) of the Code and the
regulations issued thereunder. As required by regulations under that section,
the only shareholders of the Fund and its Portfolios will be life insurance
company segregated asset accounts (also referred to as separate accounts) that
fund variable life insurance or annuity contracts and the general account of PFL
Life Insurance Company which provided the initial capital for the Portfolios of
the Fund. See the prospectus or other material for the Contracts for additional
discussion of the taxation of segregated asset accounts and of the owner of the
particular Contract described therein.
Section 817(h) of the Code and Treasury Department regulations
thereunder impose certain diversification requirements on the segregated asset
accounts investing in the Portfolios of the Fund. These requirements, which are
in addition to the diversification requirements applicable to the Fund under the
1940 Act and under the regulated investment company
-46-
<PAGE>
provisions of the Code, may limit the types and amounts of securities in which
the Portfolios may invest. Failure to meet the requirements of section 817(h)
could result in current taxation of the owner of the Contract on the income of
the Contract.
The Fund may therefore find it necessary to take action to ensure that
a Contract continues to qualify as a Contract under federal tax laws. The Fund,
for example, may be required to alter the investment objectives of a Portfolio
or substitute the shares of one Portfolio for those of another. No such change
of investment objectives or substitution of securities will take place without
notice to the shareholders of the affected Portfolio and the approval of a
majority of such shareholders and without prior approval of the Securities and
Exchange Commission, to the extent legally required.
ORGANIZATION AND CAPITALIZATION OF THE FUND
The Fund is a Massachusetts business trust organized on November 18,
1988. A copy of the Fund's Agreement and Declaration of Trust, as amended, which
is governed by Massachusetts law, is on file with the Secretary of State of The
Commonwealth of Massachusetts.
The Trustees of the Fund have authority to issue an unlimited number of
shares of beneficial interest without par value of one or more series.
Currently, the Trustees have established and designated twelve series. Each
series of shares represents the beneficial interest in a separate Portfolio of
assets of the Fund, which is separately managed and has its own investment
objective and policies. The Trustees of the Fund have authority, without the
necessity of a shareholder vote, to establish additional portfolios and series
of shares. The shares outstanding are, and those offered hereby when issued will
be, fully paid and nonassessable by the Fund. The shares have no preemptive,
conversion or subscription rights and are fully transferable.
The assets received from the sale of shares of a Portfolio, and all
income, earnings, profits and proceeds thereof, subject only to the rights of
creditors, constitute the underlying assets of the Portfolio. The underlying
assets of a Portfolio are required to be segregated on the Fund's books of
account and are to be charged with the expenses with respect to that Portfolio.
Any general expenses of the Fund not readily attributable to a Portfolio will be
allocated by or under the direction of the Trustees in such manner as the
Trustees determine to be fair and equitable, taking into consideration, among
other things, the nature and type of expense and the relative sizes of the
Portfolio and the other Portfolios.
Each share has one vote, with fractional shares voting proportionately.
Shareholders of a Portfolio are not entitled to vote on any matter that requires
a separate vote of the shares of
-47-
<PAGE>
another Portfolio but which does not affect the Portfolio. The Agreement and
Declaration of Trust does not require the Fund to hold annual meetings of
shareholders. Thus, there will ordinarily be no annual shareholder meetings,
unless otherwise required by the 1940 Act. The Trustees of the Fund may appoint
their successors until fewer than a majority of the Trustees have been elected
by shareholders, at which time a meeting of shareholders will be called to elect
Trustees. Under the Agreement and Declaration of Trust, any Trustee may be
removed by vote of two-thirds of the outstanding shares of the Fund, and holders
of 10% or more of the outstanding shares can require the Trustees to call a
meeting of shareholders for the purpose of voting on the removal of one or more
Trustees. If ten or more shareholders who have been such for at least six months
and who hold in the aggregate shares with a net asset value of at least $25,000
inform the Trustees that they wish to communicate with other shareholders, the
Trustees either will give such shareholders access to the shareholder lists or
will inform them of the cost involved if the Fund forwards materials to the
shareholders on their behalf. If the Trustees object to mailing such materials,
they must inform the Securities and Exchange Commission and thereafter comply
with the requirements of the 1940 Act.
PFL will vote shares of the Fund as described under the caption "Voting
Rights" in the prospectus or other material for the Contracts which accompanies
the Prospectuses.
As of October 31, 1998, the PFL Endeavor Variable Annuity Account owned
of record the following approximate percentages of the outstanding shares of
each Portfolio: ____% of the Endeavor Money Market Portfolio; _____% of the
Endeavor Asset Allocation Portfolio; _____% of the T. Rowe Price International
Stock Portfolio; _____% of the Endeavor Value Equity Portfolio; ____% of the
Dreyfus Small Cap Value Portfolio; _____% of the Dreyfus U.S. Government
Securities Portfolio; _____% of the T. Rowe Price Equity Income Portfolio;
_____% of the T. Rowe Price Growth Stock Portfolio; ______% of the Endeavor
Opportunity Value Portfolio; _____% of the Endeavor Enhanced Index Portfolio;
_____% of the Endeavor Select 50 Portfolio; and _____% of the Endeavor High
Yield Portfolio. As of October 31, 1998, the PFL Endeavor Platinum Variable
Annuity Account owned of record the following approximate percentages of the
outstanding shares of each Portfolio: _____% of the Endeavor Money Market
Portfolio; ____% of the Endeavor Asset Allocation Portfolio; _____% of the T.
Rowe Price International Stock Portfolio; ______% of the Endeavor Value Equity
Portfolio; _____% of the Dreyfus Small Cap Value Portfolio; ______% of the
Dreyfus U.S. Government Securities Portfolio; ______% of the T. Rowe Price
Equity Income Portfolio; ______% of the T. Rowe Price Growth Stock Portfolio;
______% of the Endeavor Opportunity Value Portfolio; ______% of the Endeavor
Enhanced Index Portfolio; _____% of the Endeavor Select 50 Portfolio; and ____%
of the Endeavor High Yield Portfolio. As of October 31, 1998,
-48-
<PAGE>
the AUSA Endeavor Variable Annuity Account owned of record the following
approximate percentages of the outstanding shares of each Portfolio: ______% of
the Endeavor Money Market Portfolio; ______% of the Endeavor Asset Allocation
Portfolio; ______% of the T. Rowe Price International Stock Portfolio; ______%
of the Endeavor Value Equity Portfolio; _____% of the Dreyfus Small Cap Value
Portfolio; _____% of the Dreyfus U.S. Government Securities Portfolio; ____% of
the T. Rowe Price Equity Income Portfolio; ______% of the T. Rowe Price Growth
Stock Portfolio; _____% of the Endeavor Opportunity Value Portfolio; ______% of
the Endeavor Enhanced Index Portfolio; ____% of the Endeavor Select 50
Portfolio; and ____% of the Endeavor High Yield Portfolio; ____% of the Endeavor
Select 50 Portfolio; and _____% of the Endeavor High Yield Portfolio. As of
October 31, 1998, the Providian Life and Health Insurance Company Separate
Account V owned of record the following approximate percentages of the
outstanding shares of each Portfolio: _______% of the Dreyfus Small Cap Value
Portfolio; _______% of the T. Rowe Price International Stock Portfolio; and
______% of the Endeavor Enhanced Index Portfolio.
Under Massachusetts law, shareholders could, under certain
circumstances, be held personally liable for the obligations of the Fund.
However, the Agreement and Declaration of Trust disclaims shareholder liability
for acts and obligations of the Fund and requires that notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
the Fund or the Trustees. The Agreement and Declaration of Trust provides for
indemnification out of Fund property for all loss and expense of any
shareholders held personally liable for obligations of the Fund. Thus, the risk
of a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Fund would be unable to meet its
obligations. The likelihood of such circumstances is remote.
LEGAL MATTERS
Certain legal matters are passed on for the Fund by Sullivan &
Worcester LLP of Washington, D.C.
CUSTODIAN
Boston Safe Deposit and Trust Company, located at One Boston Place,
Boston, Massachusetts 02108, serves as the custodian of the Fund. Under the
Custody Agreement, Boston Safe holds the Portfolios' securities and keeps all
necessary records and documents.
FINANCIAL STATEMENTS
The financial statements of the Endeavor Money Market Portfolio, Endeavor
Asset Allocation Portfolio, T. Rowe Price
-49-
<PAGE>
International Stock Portfolio, Endeavor Value Equity Portfolio, Dreyfus Small
Cap Value Portfolio, Dreyfus U.S. Government Securities Portfolio, T. Rowe Price
Equity Income Portfolio, T. Rowe Price Growth Stock Portfolio, Endeavor
Opportunity Value Portfolio , Endeavor Enhanced Index Portfolio, Endeavor Select
50 Portfolio and Endeavor High Yield Portfolio for the fiscal year ended
December 31, 1998, including notes to the financial statements and supplementary
information and the Independent Auditors' Report are included in the Fund's
Annual Report to Shareholders. A copy of the Annual Report accompanies this
Statement of Additional Information. The financial statements (including the
Independent Auditors' Report) included in the Annual Report are incorporated
herein by reference.
-50-
<PAGE>
APPENDIX
SECURITIES RATINGS
Standard & Poor's Bond Ratings
A Standard & Poor's corporate debt rating is a current assessment of
the creditworthiness of an obligor with respect to a specific obligation. Debt
rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity to
pay interest and repay principal is extremely strong. Debt rated "AA" has a very
strong capacity to pay interest and to repay principal and differs from the
highest rated issues only in small degree. Debt rated "A" has a strong capacity
to pay interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes in circumstances and economic conditions than
debt of a higher rated category. Debt rated "BBB" is regarded as having an
adequate capacity to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest and
to repay principal for debt in this category than for higher rated categories.
Bonds rated "BB", "B", "CCC" and "CC" are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CC" the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. The rating "C" is reserved for income bonds on which no interest is
being paid. Debt rated "D" is in default, and payment of interest and/or
repayment of principal is in arrears. The ratings from "AA" to "B" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
Moody's Bond Ratings
Bonds which are rated "Aaa" are judged to be the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues. Bonds which are rated
"Aa" are judged to be of high quality by all standards. Together with the Aaa
group they comprise what are generally known as high grade bonds. They are rated
lower than the best bonds because margins of protection may not be as large as
in Aaa securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present which make the long-term risks
appear somewhat larger than in Aaa securities. Moody's applies numerical
modifiers 1, 2 and 3 in the Aa and A rating categories. The modifier 1 indicates
that the security ranks at a higher end of the rating category, modifier 2
indicates a mid-range rating and
A-1
<PAGE>
the modifier 3 indicates that the issue ranks at the lower end of the rating
category. Bonds which are rated "A" possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Bonds which are rated "Baa" are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well. Bonds which are rated "Ba" are
judged to have speculative elements; their future cannot be considered as well
assured. Often the protection of interest and principal payments may be very
moderate, and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this class. Bonds
which are rated "B" generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small. Bonds
which are rated "Caa" are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
Bonds which are rated "Ca" represent obligations which are speculative in a high
degree. Such issues are often in default or have other marked shortcomings.
Bonds which are rated "C" are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Standard & Poor's Commercial Paper Ratings
"A" is the highest commercial paper rating category utilized by
Standard & Poor's, which uses the numbers "1+", "1", "2" and "3" to denote
relative strength within its "A" classification. Commercial paper issuers rated
"A" by Standard & Poor's have the following characteristics. Liquidity ratios
are better than industry average. Long-term debt rating is "A" or better. The
issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow are in an upward trend. Typically, the issuer is a strong
company in a well-established industry and has superior management. Issues rated
"B" are regarded as having only an adequate capacity for timely payment.
However, such capacity may be damaged by changing conditions or short-term
adversities. The rating "C" is assigned to short-term debt obligations with a
doubtful capacity for repayment. An issue rated "D" is either in default or is
expected to be in default upon maturity.
Moody's Commercial Paper Ratings
A-2
<PAGE>
"Prime-1" is the highest commercial paper rating assigned by Moody's,
which uses the numbers "1", "2" and "3" to denote relative strength within its
highest classification of Prime. Commercial paper issuers rated Prime by Moody's
have the following characteristics. Their short-term debt obligations carry the
smallest degree of investment risk. Margins of support for current indebtedness
are large or stable with cash flow and asset protection well assured. Current
liquidity provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available. While protective
elements may change over the intermediate or longer terms, such changes are most
unlikely to impair the fundamentally strong position of short-term obligations.
Fitch IBCA, Inc. Commercial Paper Ratings. Fitch Investors Service L.P. employs
the rating F-1+ to indicate issues regarded as having the strongest degree of
assurance for timely payment. The rating F-1 reflects an assurance of timely
payment only slightly less in degree than issues rated F-1+, while the rating
F-2 indicates a satisfactory degree of assurance for timely payment, although
the margin of safety is not as great as indicated by the F-1+ and F-1
categories.
Duff & Phelps Inc. Commercial Paper Ratings. Duff & Phelps Inc. employs the
designation of Duff 1 with respect to top grade commercial paper and bank money
instruments. Duff 1+ indicates the highest certainty of timely payment:
short-term liquidity is clearly outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations. Duff 1- indicates high certainty of timely
payment. Duff 2 indicates good certainty of timely payment: liquidity factors
and company fundamentals are sound.
Thomson BankWatch, Inc. ("BankWatch") Commercial Paper Ratings. BankWatch will
assign both short-term debt ratings and issuer ratings to the issuers it rates.
BankWatch will assign a short-term rating ("TBW-1", "TBW-2", "TBW-3", or
"TBW-4") to each class of debt (e.g., commercial paper or non-convertible debt),
having a maturity of one-year or less, issued by a holding company structure or
an entity within the holding company structure that is rated by BankWatch.
Additionally, BankWatch will assign an issuer rating ("A", "A/B", "B", "B/C",
"C", "C/D", "D", "D/E", and "E") to each issuer that it rates.
Various of the NRSROs utilize rankings within rating categories indicated
by a + or -. The Portfolios, in accordance
A-3
<PAGE>
with industry practice, recognize such rankings within categories as
graduations, viewing for example Standard & Poor's rating of A-1+ and A-1 as
being in Standard & Poor's highest rating category.
A-4
<PAGE>
ENDEAVOR SERIES TRUST
PART C
Other Information
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
Incorporated by reference in Part A:
None
Incorporated by reference in Part B:
The following audited Financial
Statements for the Endeavor Money
Market Portfolio, Endeavor Asset
Allocation Portfolio, Endeavor Value
Equity Portfolio, Dreyfus Small Cap
Value Portfolio, Dreyfus U.S.
Government Securities Portfolio, T.
Rowe Price International Stock
Portfolio, T. Rowe Price Equity
Income Portfolio, T. Rowe Price
Growth Stock Portfolio, Endeavor
Opportunity Value Portfolio ,
Endeavor Enhanced Index Portfolio,
Endeavor Select 50 Portfolio and
Endeavor High Yield Portfolio for
the period ended December 31, 1998
are incorporated by reference:
Portfolio of Investments
-1-
<PAGE>
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Notes to Financial Statements
Incorporated by reference in Part C:
Consent of Independent Auditors.
(b) Exhibits:
All references are to the Registrant's
registration statement on Form N-1A as filed
with the SEC on March 7, 1989, File Nos. 33-
27352 and 811-5780 (the "Registration
Statement").
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
<S> <C>
(1)(a) Agreement and Declaration
of Trust is incorporated
by reference to
Post-Effective Amendment
No. 14 to the
Registration Statement as
filed with the SEC on
April 29, 1996
("Post-Effective
Amendment No. 14").
(1)(b) Amendment No. 1 to Agreement and
Declaration of Trust is
incorporated by reference to Post-
Effective Amendment No. 14.
(1)(c) Amendment No. 2 to Agreement and
Declaration of Trust is
incorporated by reference to Post-
Effective Amendment No. 14.
(1)(d) Amendment No. 3 to Agreement and
Declaration of Trust is
incorporated by reference to Post-
Effective Amendment No. 14.
(1)(e) Amendment No. 4 to Agreement and
Declaration of Trust is
incorporated by reference to Post-
Effective Amendment No. 14
(1)(f) Amendment No. 5 to Agreement and
Declaration of Trust is
incorporated by reference to Post-
Effective Amendment No. 14.
(1)(g) Amendment No. 6 to Agreement and
Declaration of Trust is
-2-
<PAGE>
incorporated by reference to Post-
Effective Amendment No. 14.
(1)(h) Amendment No. 7 to Agreement and
Declaration of Trust is
incorporated by reference to Post-
Effective Amendment No. 16 to the
Registration Statement as filed
with the SEC on February 14, 1997
("Post-Effective Amendment No.
16").
(1)(i) Amendment No. 8 to Agreement and
Declaration of Trust is
incorporated by reference to Post-
Effective Amendment No. 21 to the
Registration Statement as filed
with the SEC on December 19, 1997
("Post-Effective Amendment
No. 21").
(1)(j) Amendment No. 9 to Agreement and
Declaration of Trust is
incorporated by reference to Post-
Effective Amendment No. 22 to the
Registration Statement as filed
with the SEC on February 27, 1998
("Post-Effective Amendment No.
22").
(2) Amended and Restated By-Laws are
incorporated by reference to Post-
Effective Amendment No. 14.
(3) Not Applicable.
(4)(a) Specimen certificate for
shares of beneficial
interest of the Domestic
Money Market Portfolio
(now known as Endeavor
Money Market Portfolio)
is incorporated by
reference to
Post-Effective Amendment
No. 14.
(4)(b) Deleted
(4)(c) Specimen certificate for
shares of beneficial
interest of the Domestic
Managed Asset Allocation
Portfolio (now known as
Endeavor Asset Allocation
Portfolio) is
incorporated by reference
to Post- Effective
Amendment No. 14.
(4)(d) Deleted
-3-
<PAGE>
(4)(e) Specimen certificate for
shares of beneficial
interest of the Global
Growth Portfolio (now
known as T. Rowe Price
International Stock
Portfolio) is
incorporated by reference
to Post-Effective
Amendment No. 14.
(4)(f) Specimen certificate for
shares of beneficial
interest of the Quest for
Value Equity Portfolio
(now known as Endeavor
Value Equity Portfolio)
is incorporated by
reference to
Post-Effective Amendment
No. 14.
(4)(g) Specimen certificate for
shares of beneficial
interest of the Quest for
Value Small Cap Portfolio
(now known as Dreyfus
Small Cap Value
Portfolio) is
incorporated by reference
to Post-Effective
Amendment No. 14.
(4)(h) Specimen certificate for
shares of beneficial
interest of the U.S.
Government Securities
Portfolio (now known as
Dreyfus U.S. Government
Securities Portfolio) is
incorporated by reference
to Post-Effective
Amendment No. 14.
(4)(i) Specimen certificate for shares of
beneficial interest of the T. Rowe
Price Equity Income Portfolio is
incorporated by reference to Post-
Effective Amendment No. 14.
(4)(j) Specimen certificate for shares of
beneficial interest of the T. Rowe
Price Growth Stock Portfolio is
incorporated by reference to Post-
Effective Amendment No. 14.
(4)(k) Specimen certificate for
shares of beneficial
interest of the
Opportunity Value
Portfolio (now known as
Endeavor Opportunity
Value Portfolio) is
incorporated by reference
to Post-Effective
Amendment No. 15 to the
Registration Statement as
filed with the SEC on
August 21, 1996
("Post-Effective
Amendment No.
15").
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<PAGE>
(4)(l) Specimen certificate for
shares of beneficial
interest of the Enhanced
Index Portfolio (now
known as Endeavor
Enhanced Index
Portfolio)is incorporated
by reference to
Post-Effective Amendment
No. 15.
(4)(m) Specimen certificate for
shares of beneficial
interest of the Select 50
Portfolio (now known as
Endeavor Select 50
Portfolio) is
incorporated by reference
to Post- Effective
Amendment No. 18 to the
Registration Statement as
filed with the SEC on
July 18, 1997
("Post-Effective
Amendment No.
18").
(4)(n) Specimen certificate for
shares of beneficial
interest of the Endeavor
High Yield Portfolio is
incorporated by reference
to Post-Effective
Amendment No. 23 as filed
with the SEC on March 18,
1998 ("Post-Effective
Amendment No. 23").
(4)(o) Specimen certificate for shares of
beneficial interest of the
Endeavor Janus Growth Portfolio is
filed herein.
(5)(a) Management Agreement
dated November 23, 1992
between Registrant and
Endeavor Investment
Advisers is incorporated
by reference to
Post-Effective Amendment
No. 14.
(5)(a)(1) Supplement dated April
19, 1993 to Management
Agreement between
Registrant and Endeavor
Investment Advisers with
respect to Quest for
Value Equity Portfolio
and Quest for Value Small
Cap Portfolio is
incorporated by reference
to Post- Effective
Amendment No. 14.
(5)(a)(2) Supplement dated March 25, 1994 to
Management Agreement between
Registrant and Endeavor Investment
Advisers with respect to
U.S.
Government Securities Portfolio is
-5-
<PAGE>
incorporated by reference to Post-
Effective Amendment No. 14.
(5)(a)(3) Supplement dated December
28, 1994 to Management
Agreement between
Registrant and Endeavor
Investment Advisers with
respect to the T. Rowe
Price Equity Income
Portfolio and T. Rowe
Price Growth Stock
Portfolio is incorporated
by reference to
Post-Effective Amendment
No. 14.
(5)(a)(4) Supplement to Management
Agreement between
Registrant and Endeavor
Investment Advisers with
respect to Opportunity
Value Portfolio and
Enhanced Index Portfolio
is incorporated by
reference to Post-
Effective Amendment No.
16.
(5)(a)(5) Supplement to Management
Agreement between
Registrant and Endeavor
Investment Advisers with
respect to Endeavor
Select 50 Portfolio
(formerly known as Select
50 Portfolio) is
incorporated by reference
to Post-Effective
Amendment No. 22.
(5)(a)(6) Amendment dated January
28, 1998 to Management
Agreement between
Registrant and Endeavor
Investment Advisers is
incorporated by reference
to Post-Effective
Amendment No. 22.
(5)(a)(7) Supplement to Management
Agreement between
Registrant and Endeavor
Investment Advisers with
respect to Endeavor High
Yield Portfolio is filed
herein.
(5)(a)(8) Form of Transfer and Assumption of
Management Agreement among
Endeavor Investment Advisers,
Endeavor Management Co. and the
Registrant is filed herein.
(5)(a)(9) Form of Supplement to Management
Agreement between Registrant and
Endeavor Management Co. with
respect to Endeavor Janus Growth
Portfolio is filed herein.
-6-
<PAGE>
(5)(b) Deleted
(5)(c) Deleted
(5)(d) Deleted
(5)(e) Deleted
(5)(f) Investment Advisory
Agreement between OpCap
Advisors and Endeavor
Investment Advisers with
respect to the Value
Equity Portfolio is filed
herein.
(5)(g) Investment Advisory Agreement
between The Boston Company Asset
Management, Inc. and Endeavor
Investment Advisers with respect
to the U.S. Government Securities
Portfolio is incorporated by
reference to Post-Effective
Amendment No. 14.
(5)(g)(1) Transfer and Assumption
of Investment Advisory
Agreement among The
Boston Company Asset
Management, Inc., The
Dreyfus Corporation,
Endeavor Investment
Advisers and Registrant
with respect to the
Dreyfus U.S. Government
Securities Portfolio is
incorporated by reference
to Post- Effective
Amendment No. 14.
(5)(h) Investment Advisory Agreement
between T. Rowe Price Associates,
Inc. and Endeavor Investment
Advisers with respect to the T.
Rowe Price Equity Income Portfolio
is incorporated by reference to
Post-Effective Amendment No. 14.
(5)(i) Investment Advisory Agreement
between T. Rowe Price Associates,
Inc. and Endeavor Investment
Advisers with respect to the T.
Rowe Price Growth Stock Portfolio
is incorporated by reference to
Post-Effective Amendment No. 14.
(5)(j) Investment Advisory Agreement
between Rowe Price-Fleming,
-7-
<PAGE>
International, Inc. and Endeavor
Investment Advisers with respect
to the Global Growth Portfolio is
incorporated by reference to Post-
Effective Amendment No. 14.
(5)(k) Investment Advisory
Agreement between The
Dreyfus Corporation and
Endeavor Investment
Advisers with respect to
the Dreyfus Small Cap
Value Portfolio is
incorporated by reference
to Post- Effective
Amendment No. 16.
(5)(l) Investment Advisory
Agreement between OpCap
Advisors and Endeavor
Investment Advisers with
respect to the
Opportunity Value
Portfolio is incorporated
by reference to
Post-Effective Amendment
No. 16.
(5)(m) Investment Advisory Agreement
between J.P. Morgan Investment
Management Inc. and Endeavor
Investment Advisers with respect
to the Enhanced Index Portfolio is
filed herein.
(5)(n) Investment Advisory
Agreement between
Montgomery Asset
Management, LLC and
Endeavor Investment
Advisers with respect to
the Select 50 Portfolio
(now known as Endeavor
Select 50 Portfolio) is
incorporated by reference
to Post-Effective
Amendment No. 22.
(5)(o) Investment Advisory
Agreement between Morgan Stanley
Asset Management Inc. and Endeavor
Investment Advisers with respect
to Endeavor Money Market Portfolio
is
filed herein.
(5)(p) Investment Advisory Agreement
between Morgan Stanley Asset
Management Inc. and Endeavor
Investment Advisers with respect
to Endeavor Asset Allocation
Portfolio is
-8-
<PAGE>
filed herein.
(5)(q) Investment Advisory
Agreement between
Massachusetts Financial
Services Company and
Endeavor Investment
Advisers with respect to
Endeavor High Yield
Portfolio is filed
herein.
(5)(r) Form of Investment Advisory
Agreement between Janus Capital
Corporation and Endeavor
Management Co. with respect to
Endeavor Janus Growth Portfolio is
filed herein.
(5)(s) Form of Transfer and Assumption of
Investment Advisory Agreement.
(6) Participation Agreement between
Registrant, Endeavor Management
Co. and PFL Life Insurance Company
is incorporated by reference to
Post-Effective Amendment No. 14.
(7) Not Applicable.
(8)(a) Custody Agreement between
Registrant and Boston Safe Deposit
and Trust Company is incorporated
by reference to Post-Effective
Amendment No. 14.
(8)(b) Supplement dated April
19, 1993 to Custody
Agreement between
Registrant and Boston
Safe Deposit and Trust
Company with respect to
the Quest for Value
Equity Portfolio and
Quest for Value Small Cap
Portfolio is incorporated
by reference to Post-
Effective Amendment No.
14.
(8)(c) Supplement dated December
30, 1994 to Custody
Agreement between
Registrant and Boston
Safe Deposit and Trust
Company with respect to
the T. Rowe Price Equity
Income Portfolio and T.
Rowe Price Growth Stock
Portfolio is incorporated
by reference to
Post-Effective Amendment
No. 14.
-9-
<PAGE>
(8)(d) Supplement dated March
25, 1994 to Custody
Agreement between
Registrant and Boston
Safe Deposit and Trust
Company with respect to
the U.S. Government
Securities Portfolio is
incorporated by reference
to Post-Effective
Amendment No. 14.
(8)(e) Supplement dated November
4, 1996 to Custody
Agreement between
Registrant and Boston
Safe Deposit and Trust
Company with respect to
the Opportunity Value
Portfolio and Enhanced
Index Portfolio is
incorporated by reference
to Post- Effective
Amendment No. 16.
(8)(f) Supplement to Custody
Agreement between
Registrant and Boston
Safe Deposit and Trust
Company with respect to
the Select 50 Portfolio
(formerly known as
Montgomery Select 50
Portfolio) is filed
herein.
(8)(g) Supplement to Custody
Agreement between
Registrant and Boston
Safe Deposit and Trust
Company with respect to
Endeavor High Yield
Portfolio is filed
herein.
(8)(h) Form of Supplement to
Custody Agreement between
Registrant and Boston
Safe Deposit and Trust
Company with respect to
Endeavor Janus Growth
Portfolio is filed
herein.
(9)(a) Transfer Agency and Registrar
Agreement between Registrant and
The Shareholder Services Group,
Inc. (now known as First Data
Investor Services Group, Inc.) is
incorporated by reference to Post-
Effective Amendment No. 14.
(9)(b) License Agreement between Endeavor
Management Co. and Registrant is
incorporated by reference to Post-
Effective Amendment No. 14.
-10-
<PAGE>
(9)(b)(1) Amendment to License Agreement
between Endeavor Management Co.
and Registrant is incorporated by
reference to Post-Effective
Amendment No. 14.
(9)(c) Administration Agreement between
Endeavor Management Co. and The
Boston Company Advisors, Inc. is
incorporated by reference to Post-
Effective Amendment No. 14.
(9)(c)(1) Supplement dated April
19, 1993 to
Administration Agreement
between Endeavor
Investment Advisers and
The Boston Company
Advisors, Inc., with
respect to the Quest for
Value Equity Portfolio
and Quest for Value Small
Cap Portfolio is
incorporated by reference
to Post- Effective
Amendment No. 14.
(9)(c)(2) Amendment No. 2 dated April 1,
1994 to Administration Agreement
between Endeavor Investment
Advisers and The Boston Company
Advisors, Inc. is incorporated by
reference to Post-Effective
Amendment No. 22.
(9)(c)(3) Consent to Assignment of
Administration Agreement dated May
4, 1994 between Endeavor
Investment Advisers and The Boston
Company Advisors, Inc. to The
Shareholder Services Group, Inc.
(currently known as First Data
Investor Services Group, Inc.) is
incorporated by reference to Post-
Effective Amendment No. 14
(9)(c)(4) Supplement dated October 24, 1994
to Administration Agreement
between Endeavor Investment
Advisers and The Shareholder
Services Group, Inc. (currently
known as First Data Investor
Services Group, Inc.) with respect
to the T. Rowe Price Equity Income
Portfolio and T. Rowe Price Growth
Stock Portfolio is incorporated by
-11-
<PAGE>
reference to Post-Effective
Amendment No. 14.
(9)(c)(5) Supplement dated March 25, 1994 to
Administration Agreement between
Endeavor Investment Advisers and
The Boston Company Advisors, Inc.
(currently known as First Data
Investor Services Group, Inc.)
with respect to the U.S.
Government Securities Portfolio is
incorporated by reference to Post-
Effective Amendment No. 14.
(9)(c)(6) Amendment No. 3 dated July 1, 1996
to Administration Agreement
between Endeavor Investment
Advisers and First Data Investor
Services Group, Inc. is
incorporated by reference to Post-
Effective Amendment No. 16.
(9)(c)(7) Supplement dated November
4, 1996 to Administration
Agreement between
Endeavor Investment
Advisers and First Data
Investor Services Group,
Inc. with respect to
Opportunity Value
Portfolio and Enhanced
Index Portfolio is
incorporated by reference
to Post- Effective
Amendment No. 22.
(9)(c)(8) Amendment No. 4 dated July 1, 1997
to Administration Agreement
between Endeavor Investment
Advisers and First Data Investor
Services Group, Inc. is
incorporated by reference to Post-
Effective Amendment No. 22.
(9)(c)(9) Amended and Restated
Administration Agreement dated as
of July 1, 1997 between Endeavor
Investment Advisers and First Data
Investor Services Group, Inc. is
incorporated by reference to Post-
Effective Amendment No. 22.
(9)(c)(10) Supplement dated
January 28, 1998 to Administration
Agreement between Endeavor
-12-
<PAGE>
Investment Advisers and First Data
Investor Services Group, Inc. with
respect to Endeavor Select 50
Portfolio is incorporated by
reference to Post-Effective
Amendment No. 22.
(9)(c)(11) Amendment No. 5 to Administration
Agreement dated January 28, 1998
between Endeavor Investment
Advisers and First Data Investor
Services Group, Inc. is
incorporated by reference to Post-
Effective Amendment No. 22.
(9)(c)(12) Amendment No. 1 to
Amended and Restated
Administration Agreement
dated June 1, 1998 with
respect to Endeavor
Select 50 Portfolio and
Endeavor High Yield
Portfolio is filed
herein.
(9)(c)(13) Form of Amendment No. 2 to
Amended and Restated
Administration Agreement dated as
of February 1, 1999 with
respect to Endeavor
Janus Growth Portfolio is filed
herein.
(10) Not Applicable.
(11) Consent of Independent Auditors
(to be
filed by amendment).
(12) Not Applicable.
(13) Subscription Agreement between
Registrant and PFL Life Insurance
Company is incorporated by
reference to Post-Effective
Amendment No. 14.
(14) Not Applicable.
(15)(a) Brokerage Enhancement Plan
incorporated by reference to Post-
Effective Amendment No. 21.
-13-
<PAGE>
(15)(b) Distribution Agreement
between the Registrant
and Endeavor Group is
filed herein.
(16) Not Applicable.
(17) Not Applicable.
(18) Financial Data Schedule is
incorporated by reference to Post-
Effective Amendment No. 22.
(19) Powers of Attorney are
incorporated by reference
to Post- Effective
Amendment Nos. 14, 16,
18, 20 and 22 and is
filed herein.
</TABLE>
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
REGISTRANT
As of the effective date of this Post-Effective Amendment, PFL Life
Insurance Company's separate accounts, PFL Endeavor Variable Annuity Account,
PFL Endeavor Platinum Variable Annuity Account and PFL Variable Annuity Account
A, AUSA Life Insurance Company's separate account, AUSA Endeavor Variable
Annuity Account, one of Providian Life and Health Insurance Company's separate
accounts, Providian Life and Health Insurance Company Separate Account V, and
one of First Providian Life and Health Insurance Company's separate accounts,
First Providian Life and Health Insurance Company Separate Account C, held all
the outstanding shares of the Registrant. PFL Life Insurance Company, a stock
life insurance company organized under the laws of the State of Iowa, AUSA Life
Insurance Company, a stock life insurance company organized under the laws of
the State of New York, Providian Life and Health Insurance Company, a stock life
insurance company organized under the laws of Missouri, and First Providian Life
and Health Insurance Company, a stock life insurance company organized under the
laws of New York, are each wholly-owned indirect subsidiaries of AEGON USA,
Inc., an Iowa corporation. All of the stock of AEGON USA, Inc. is indirectly
owned by AEGON n.v. of The Netherlands.
Item 26. NUMBER OF HOLDERS OF SECURITIES
Set forth below are the number of record holders, as of October 31,
1998, of the shares of beneficial interest of the Registrant.
-14-
<PAGE>
Number of
Record
Title of Class Holders
Shares of Beneficial Interest of the
Endeavor Money Market Portfolio.................................... 4
Shares of Beneficial Interest of the
Endeavor Asset Allocation
Portfolio.......................................................... 4
Shares of Beneficial Interest of the
Endeavor Value Equity Portfolio.................................... 5
Shares of Beneficial Interest of the
Dreyfus Small Cap Value Portfolio.................................. 7
Shares of Beneficial Interest of the
Dreyfus U.S. Government Securities
Portfolio.......................................................... 4
Shares of Beneficial Interest of the
T. Rowe Price International Stock
Portfolio.......................................................... 6
Shares of Beneficial Interest of the
T. Rowe Price Equity Income Portfolio.............................. 5
Shares of Beneficial Interest of the
T. Rowe Price Growth Stock Portfolio............................... 5
Shares of Beneficial Interest of the
Endeavor Opportunity Value Portfolio............................... 4
Shares of Beneficial Interest of the
Endeavor Enhanced Index Portfolio. . . . . 6
Shares of Beneficial Interest of the
Endeavor Select 50 Portfolio....................................... 3
Shares of Beneficial Interest of the
Endeavor High Yield Portfolio...................................... 4
Shares of Beneficial Interest of the
Endeavor Janus Growth Portfolio....................................0
Item 27. INDEMNIFICATION
Reference is made to the following documents:
-15-
<PAGE>
Agreement and Declaration of Trust, as amended, as
filed as Exhibits 1(a) - 1(j) hereto;
Amended and Restated By-Laws as filed as Exhibit 2
hereto; and
Participation Agreement between Registrant, Endeavor
Management Co. and PFL Life Insurance Company as filed
as Exhibit 6 hereto.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to Trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by any such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification is against public policy
as expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrant, its Trustees and officers, Endeavor Management Co. (the
"Manager"), and persons affiliated with them are insured under a policy of
insurance maintained by the Registrant and the Manager within the limits and
subject to the limitations of the policy, against certain expenses in connection
with the defense of actions suits or proceedings, and certain liabilities that
might me imposed as a result of such actions, suits or proceedings, to which
they are parties by reason of being or having been such Trustees or officers.
The policy expressly excludes coverage for any Trustee or officer whose personal
dishonesty, fraudulent breach of trust, lack of good faith, or intention to
deceive or defraud has been finally adjudicated or may be established or who
willfully fails to act prudently.
Item 28. (a) Business and Other Connections of the Investment
Adviser
Investment Adviser - Endeavor
Management Co.
-16-
<PAGE>
The Manager is a registered investment adviser providing
investment management and administrative services to the Registrant.
The list required by this Item 28 of officers and directors of
the Manager together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedule A
and D of Form ADV filed by the Manager pursuant to the Investment Advisers Act
of 1940 (SEC File No. 801- 34064).
Item 28. (a) Business and Other Connections of Investment
Adviser
Investment Adviser - Morgan Stanley Asset Management Inc.
Morgan Stanley Asset Management Inc. ("Morgan Stanley") is a wholly-owned
subsidiary of Morgan Stanley, Dean Witter, Discover and Co. Morgan Stanley
provides a broad range of portfolio management services to customers in the
United States and abroad.
The list required by this Item 28 of officers and directors of
Morgan Stanley, together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Morgan Stanley pursuant to the Investment Advisers
Act of 1940 (SEC file No. 801-15757).
Item 28 (a) Business and Other Connections of Investment
--------------------------------------------
Adviser
-------
Investment Adviser - OpCap Advisors
OpCap Advisors ("OpCap") is an indirect subsidiary of PIMCO
Advisors L.P., a registered investment adviser, which provides a variety of
investment management services for clients. OpCap manages registered investment
companies other than certain Portfolios of the Registrant.
The list required by this Item 28 of the officers and
directors of OpCap, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference to
Schedules D and F of Form ADV filed by OpCap pursuant to the Investment Advisers
Act of 1940 (SEC file No. 801-27180).
-17-
<PAGE>
Item 28 (a) Business and Other Connections of Investment
--------------------------------------------
Adviser
-------
Investment Adviser - The Dreyfus Corporation
The Dreyfus Corporation ("Dreyfus") is a wholly owned
subsidiary of Mellon Bank, N.A. Dreyfus is a registered investment adviser
founded in 1947 providing a variety of investment management services for
clients.
The list required by this Item 28 of the officers and
directors of Dreyfus, together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated by reference to
Schedules A and D of Form ADV filed by Dreyfus pursuant to the Investment
Advisers Act of 1940 (SEC file No. 801-8147).
Item 28 (a) Business and Other Connections of Investment
--------------------------------------------
Adviser
-------
Investment Adviser - T. Rowe Price Associates, Inc.
T. Rowe Price Associates, Inc. ("T. Rowe Price") serves as investment
manager to a variety of individual and institutional investors, including
limited and real estate partnerships and other mutual funds.
The list required by this Item 28 of officers and directors of
T. Rowe Price together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by T. Rowe Price pursuant to the Investment Advisers Act
of 1940 (SEC file No. 801-856).
Item 28 (a) Business and Other Connections of Investment
--------------------------------------------
Adviser
-------
Investment Adviser - Rowe Price-Fleming International,
Inc.
Rowe Price-Fleming International, Inc. ("Price- Fleming") is a
joint venture between T. Rowe Price and Robert Fleming Holdings Limited
("Flemings"). Flemings is a diversified investment organization which
participates in a global network of regional investment offices in New York,
London, Zurich, Geneva, Tokyo, Hong Kong, Manila, Kuala Lumpur, Seoul, Teipi,
Bombay, Jakarta, Singapore, Bankok and Johannesburg.
-18-
<PAGE>
The list required by this Item 28 of officers and directors of
Price-Fleming, together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules A
and D of Form ADV filed by Price-Fleming pursuant to the Investment Advisers Act
of 1940 (SEC file No. 801-14714).
Item 28 (a) Business and Other Connections of Investment
--------------------------------------------
Adviser
-------
Investment Adviser - J.P. Morgan Investment Management
Inc.
J.P. Morgan Investment Management Inc. ("Morgan") manages employee benefit
funds of corporations, labor unions and state and local governments and the
accounts of other institutional investors, including investment companies.
The list required by this Item 28 of officers and directors of
Morgan, together with information as to any other business, profession, vocation
or employment of a substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedules A and D of
Form ADV filed by Morgan pursuant to the Investment Advisers Act of 1940 (SEC
file No. 801-21011).
Item 28 (a) Business and Other Connections of Investment
--------------------------------------------
Adviser
-------
Investment Adviser - Montgomery Asset Management, LLC
Montgomery Asset Management, LLC ("Montgomery") serves as
investment manager to a variety of individual and institutional investors,
including limited partnerships and other mutual funds.
The list required by this Item 28 of officers and directors of
Montgomery together with information as to any other business, profession,
vocation or employment of a substantial nature engaged in by such officers and
directors during the past two years is incorporated by reference to Schedules B
and D of Form ADV filed by Montgomery pursuant to the Investment Advisers Act of
1940 (SEC file No. 801-36790).
Item 28 (a) Business and Other Connections of Investment
--------------------------------------------
Adviser
-------
Investment Adviser - Massachusetts Financial Services
Company
-19-
<PAGE>
Massachusetts Financial Services Company ("MFS") serves as
investment manager to a variety of individual and institutional investors,
including other mutual funds.
The list required by this Item 28 of officers and directors of
MFS together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedules A and D of
Form ADV filed by MFS pursuant to the Investment Advisers Act of 1940 (SEC file
No. 801-17352).
Item 28. (a) Business and Other Connections of Investment
Adviser
Investment Adviser - Janus Capital Corporation
Janus Capital Corporation ("Janus") is a majority-owned
subsidiary of Kansas City Southern Industries, Inc. Janus provides investment
management and related services to mutual funds, individual, corporate,
charitable and retirement accounts.
The list required by this Item 28 of officers and directors of
Janus, together with information as to any other business, profession, vocation
or employment of a substantial nature engaged in by such officers and directors
during the past two years is incorporated by reference to Schedules A and D of
Form ADV filed by Janus pursuant to the Investment Advisers Act of 1940 (SEC
file No. 801-13991).
Item 29 Principal Underwriter
(a) Inapplicable
(b) Officers and Directors of Endeavor Group
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices With Offices with
Business Address Underwriter Registrant
<S> <C> <C>
Vincent J. McGuinness Chairman, Chief Trustee
Executive Officer,
Director
-20-
<PAGE>
Positions and Positions and
Name and Principal Offices With Offices with
Business Address Underwriter Registrant
Vincent J. McGuinness, Chief Operating President,
Jr. Officer, Chief
Financial Officer,
Director
Chief
Financial
Officer,
Trustee
P. Michael Pond Executive Vice
President - Executive Vice
Administration and President -
Compliance, Chief Administration
and Compliance
Investment Officer
Pamela A. Shelton Secretary Secretary
George F. Veazey, III President, National ---
Distribution
Stephen Clifford Executive Vice ---
President, Director
of Sales - Eastern
Division
Ernst Bergman Senior Vice ---
President, Western
Division
Gullermo Nodarse Senior Vice ---
President, Director
- National Partner
Companies
Joel Z. Horsager Vice President, ---
Chief Marketing
Officer
-21-
<PAGE>
Positions and Positions and
Name and Principal Offices With Offices with
Business Address Underwriter Registrant
Roseann Morrison Vice President, ---
National Accounts
Coordinator
Kevin J. Grant Vice President and ---
Chief Information
Officer
</TABLE>
The principal business address of each officer and director is 2101
East Coast Highway, Suite 300, Corona del Mar, California
92625.
(c) Inapplicable
Item 30 Location of Accounts and Records
--------------------------------
The Registrant maintains the records required by Section 31(a)
of the 1940 Act and Rules 31a-1 to 31a-3 inclusive thereunder at its principal
office, located at 2101 East Coast Highway, Suite 300, Corona del Mar,
California 92625 as well as at the offices of its investment advisers and
administrator: Morgan Stanley Asset Management Inc., 1999 Avenue of the Stars,
Los Angeles, California 90067; OpCap Advisors, c/o Oppenheimer Capital, One
World Financial Center, New York, New York 10281; The Dreyfus Corporation, 200
Park Avenue, New York, New York 10166; T. Rowe Price Associates, Inc., 100 East
Pratt Street, Baltimore, Maryland 21202; Rowe Price-Fleming International, Inc.,
100 East Pratt Street, Baltimore, Maryland 21202; J.P. Morgan Investment
Management Inc., 522 Fifth Avenue, New York, New York 10036; Montgomery Asset
Management, LLC, 101 California Street, San Francisco, California 94111;
Massachusetts Financial Services Company, 500 Boylston Street, Boston,
Massachusetts 02116; Janus Capital Corporation, 100 Fillmore Street, Denver, CO
80206; and First Data Investor Services Group, Inc. ("Investor Services Group")
(formerly, The Shareholder Services Group, Inc.), a subsidiary of First Data
Corporation, located at 53 State Street, One Exchange Place, Boston,
Massachusetts 02109. Certain records, including records relating to the
Registrant's shareholders and the physical possession of its securities, may be
maintained pursuant to Rule 31a-3 at the main office of the Registrant's
transfer agent and dividend disbursing agent, Investor Services Group and the
Registrant's custodian, Boston Safe Deposit and Trust Company, located at One
Boston Place, Boston, Massachusetts 02108.
-22-
<PAGE>
Item 31 Management Services
None
Item 32 Undertakings
(a) Inapplicable
(b)
Inapplicable
(c) The Registrant will furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
-23-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, as amended, the Registrant, ENDEAVOR SERIES
TRUST, has duly caused this Post-Effective Amendment to its Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in this City of Corona del Mar, State of California on the 24th day
of November, 1998.
ENDEAVOR SERIES TRUST
Registrant
By: /s/Vincent J. McGuinness, Jr.*
Vincent J. McGuinness, Jr.
President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to its Registration Statement has been signed below by
the following persons in the capacities and on the date(s) indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/Vincent J. McGuinness, Jr.* President November 24, 1998
- ------------------------------
Vincent J. McGuinness, Jr. (principal
executive officer),
Chief Financial
Officer (Treasurer)
(principal
financial and
accounting officer)
, Trustee
/s/Vincent J. McGuinness* Trustee November 24, 1998
Vincent J. McGuinness
/s/Timothy A. Devine* Trustee November 24, 1998
Timothy A. Devine
/s/Thomas J. Hawekotte* Trustee November 24, 1998
Thomas J. Hawekotte
-24-
<PAGE>
Signature Title Date
/s/Steven L. Klosterman* Trustee November 24, 1998
Steven L. Klosterman
/s/Halbert D. Lindquist* Trustee November 24, 1998
Halbert D. Lindquist
/s/R. Daniel Olmstead* Trustee November 24, 1998
R. Daniel Olmstead
/s/Keith H. Wood* Trustee November 24, 1998
Keith H. Wood
/s/Peter Trustee November 24, 1998
F. Muratore*
Peter F.
Muratore
</TABLE>
* By: /s/Robert N. Hickey
Robert N. Hickey
Attorney-in-fact
-25-
<PAGE>
This Specimen Certificate is in landscape
position.
NUMBER SHARES The Commonwealth of Massachusetts
-0- -0- (There is a picture of the Capitol
and an eagle between two pillars here)
ENDEAVOR SERIES TRUST
Endeavor Janus Growth Portfolio
no par value
This Certifies that -Specimen- of is the owner of
-0- Shares in the Endeavor Janus Growth Portfolio of Endeavor Series Trust,
created by a Declaration of Trust dated November 18, 1988 and recorded with the
Secretary of State of The Commonwealth of Massachusetts which shares are fully
paid and non-assessable, and subject to the provisions of this Trust, are
transferable by assignment endorsed thereon, and, the surrender of this
certificate.
IN WITNESS WHEREOF, the Trustees hereunto set their hands and have caused their
seal to be affixed hereto this day of A.D. 19 .
President (There is a Seal Here) Chief Financial Officer
(Treasurer)
<PAGE>
This Side of The Certificate is in Landscape Position.
ENDEAVOR SERIES ST
Endeavor Janus Growth
Portfolio
(There is a Torch of
Fire Here)
Certificate
for
-0-
ISSUED TO
Specimen
DATED
(The following Text is Enclosed in the Border
to the Left of the Above Text Reading
in the Opposite Direction)
For Value Received, hereby sell, assign and transfer unto
Shares of the Capital represented by the
within Certificate, and do hereby irrevocably constitute and appoint
Attorney to transfer the said Shares on the books of the within named
Organization with full power of substitution in the premises.
Dated 19 .
In presence of
<PAGE>
SUPPLEMENT TO MANAGEMENT AGREEMENT
ENDEAVOR HIGH YIELD PORTFOLIO
Date: May 15, 1998
Endeavor Management Co.
Managing Partner
Endeavor Investment Advisers
Suite 300
2101 East Coast Highway
Corona del Mar, California 92625
Ladies and Gentlemen:
Endeavor Series Trust (the "Trust"), a Massachusetts business trust
created pursuant to an Agreement and Declaration of Trust filed with the
Secretary of State of The Commonwealth of Massachusetts, herewith supplements
its Management Agreement (the "Agreement") dated November 23, 1992, as amended
on January 28, 1998 with Endeavor Investment Advisers, a California general
partnership (the "Manager"), as follows:
1. Investment Description; Appointment. Pursuant to Section 1 of the
Agreement the Trust hereby notifies the Manager that it has established one
additional investment portfolio (the "New Investment Portfolio"), namely the
ENDEAVOR HIGH YIELD PORTFOLIO and that the New Investment Portfolio should be
included as "Portfolios" as that term is defined in the Agreement.
2. Limitation of Liability. A copy of the Declaration of Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this Agreement is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
Agreement are not binding upon the Trustees or holders of shares of the Trust
individually but are binding only upon the assets and property of the Trust.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
<PAGE>
ENDEAVOR SERIES TRUST
By: /s/Vincent J. McGuinness, Jr.
-----------------------------
Authorized Officer
Accepted:
ENDEAVOR INVESTMENT ADVISERS
By: Endeavor Management Co.,
Managing Partner
By: /s/Vincent J. McGuinness
-------------------------
Authorized Officer
<PAGE>
AMENDMENT TO
SCHEDULE A
ENDEAVOR HIGH YIELD PORTFOLIO .775% of average daily net
assets
ENDEAVOR INVESTMENT ADVISERS ENDEAVOR SERIES TRUST
By: Endeavor Management Co.,
Managing Partner
By: /s/Vincent J. McGuinness By: /s/Vincent J. McGuinness, Jr.
------------------------ -----------------------------
Chairman President
Date: May 15, 1998 Date: May 15, 1998
<PAGE>
TRANSFER AND ASSUMPTION
OF
MANAGEMENT AGREEMENT
REGARDING
ENDEAVOR SERIES TRUST
TRANSFER AND ASSUMPTION OF MANAGEMENT AGREEMENT, made as of
December 31, 1998, by and among Endeavor Series Trust, a Massachusetts business
trust (the "Trust"), Endeavor Investment Advisers, a California general
partnership ("EIA"), and Endeavor Management Co., a California corporation
("EMC").
RECITALS
The Trust is registered with the Securities and Exchange Commission as
an open-end management investment company under the Investment Company Act of
1940, as amended (the "Act").
The Trust consists of several distinct investment portfolios listed on
Schedule A hereto (the "Funds").
EMC holds a 50.01% interest in EIA and, as the managing partner of EIA,
is responsible for its control and management, and EMC is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.
EIA entered into a Management Agreement with the Trust dated November
23, 1992, as amended and supplemented (the "Management Agreement"), under which
EIA serves as the investment manager (the "Manager") for the Funds.
EIA and the Trust desire that EIA's interest, rights, responsibilities
and obligations in and under the Management Agreement be transferred to EMC, and
EMC desires to assume EIA's interest, rights, responsibilities and obligations
in and under the Management Agreement.
This Agreement does not result in a change of actual control or
management of the Manager for the Funds and, therefore, is neither an
"assignment" as defined in Section 2(a)(4) of the Act nor an "assignment" for
purposes of Section 15(a)(4) of the Act, and does not constitute a termination
of the Management Agreement.
AGREEMENTS
In consideration of the mutual covenants set forth in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
1. Transfer. Effective as of December 31, 1998 (the "Effective Date"),
EIA hereby transfers to EMC all of EIA's interest, rights, responsibilities and
obligations in and under the Management Agreement.
-1-
<PAGE>
2. Assumption and Performance of Duties. As of the Effective Date, EMC
hereby accepts all of EIA's interest and rights, and assumes and agrees to
perform all of EIA's responsibilities and obligations in and under the
Management Agreement; EMC agrees to be subject to all of the terms and
conditions of said Agreement.
3. Consent. The Trust hereby consents to this transfer by EIA to EMC of
EIA's interest, rights, responsibilities and obligations in and under the
Management Agreement and to the acceptance and assumption by EMC of the same.
The Trust agrees, subject to the terms and conditions of said Agreement, to look
solely to EMC for the performance of the Manager's responsibilities and
obligations under said Agreement from and after the Effective Date, and to
recognize as inuring solely to EMC the interest and rights heretofore held by
EIA thereunder.
4. Limitation of Liability of Trustees, Officers and Shareholders. It
is expressly agreed that the obligations of the Trust hereunder shall not be
binding upon any of the Trustees, shareholders, nominees, officers, agents or
employees of the Trust, personally, but shall bind only the trust property of
the Trust, as provided in the Agreement and Declaration of Trust of the Trust.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and this Agreement has been executed by the President of
the Trust, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
but shall bind only the trust property of the Trust as provided in its Agreement
and Declaration of Trust.
5. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers hereunto as of the date first above
written.
ENDEAVOR SERIES TRUST
By: _______________________
Title:
ENDEAVOR INVESTMENT ADVISERS
By: Endeavor Management Co.,
Managing Partner
By: _______________________
Title:
ENDEAVOR MANAGEMENT CO.
By: _______________________
Title:
-3-
<PAGE>
SCHEDULE A
PORTFOLIOS OF ENDEAVOR SERIES TRUST
AS OF DECEMBER 31, 1998
Endeavor Money Market Portfolio
Endeavor Asset Allocation Portfolio
T. Rowe Price International Stock Portfolio
Endeavor Value Equity Portfolio
Dreyfus Small Cap Value Portfolio
Dreyfus U.S. Government Securities Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Growth Stock Portfolio
Endeavor Opportunity Value Portfolio
Endeavor Enhanced Index Portfolio
Endeavor Select 50 Portfolio
Endeavor High Yield Portfolio
-4-
<PAGE>
SUPPLEMENT TO MANAGEMENT AGREEMENT
ENDEAVOR JANUS GROWTH PORTFOLIO
Date: February 1, 1999
Endeavor Management Co.
Suite 300
2101 East Coast Highway
Corona del Mar, California 92625
Ladies and Gentlemen:
Endeavor Series Trust (the "Trust"), a Massachusetts business trust
created pursuant to an Agreement and Declaration of Trust filed with the
Secretary of State of The Commonwealth of Massachusetts, herewith supplements
its Management Agreement (the "Agreement") dated November 23, 1992, as amended
on January 28, 1998 with Endeavor Investment Advisers (which Agreement was
transferred, effective January 1, 1999, to Endeavor Management Co., a California
corporation (the "Manager"), as follows:
1. Investment Description; Appointment. Pursuant to Section 1 of the
Agreement the Trust hereby notifies the Manager that it has established one
additional investment portfolio (the "New Investment Portfolio"), namely the
ENDEAVOR JANUS GROWTH PORTFOLIO and that the New Investment Portfolio should be
included as "Portfolios" as that term is defined in the Agreement.
2. Limitation of Liability. A copy of the Declaration of Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts and notice
is hereby given that this Agreement is executed on behalf of the Trustees of the
Trust as trustees and not individually and that the obligations of this
Agreement are not binding upon the Trustees or holders of shares of the Trust
individually but are binding only upon the assets and property of the Trust.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
<PAGE>
Endeavor Management Co.
Page 2
Very truly yours,
ENDEAVOR SERIES TRUST
By:
---------------------
Authorized Officer
Accepted:
ENDEAVOR MANAGEMENT CO.
By:
-----------------------------
Authorized Officer
<PAGE>
AMENDMENT TO
SCHEDULE A
ENDEAVOR JANUS GROWTH PORTFOLIO .80% of average daily net
assets
ENDEAVOR MANAGEMENT CO. ENDEAVOR SERIES TRUST
By: By:
------------------------- ---------------------
Chairman President
Date: February 1, 1999 Date: February 1, 1999
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 5th day of November, 1997, by and between OpCap
Advisors, a Delaware general partnership (the "Adviser"), and Endeavor
Investment Advisers, a California general partnership (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager and
administrator of Endeavor Series Trust (the "Trust"), a Massachusetts business
trust, which has filed a registration statement under the Investment Company Act
of 1940, as amended (the "1940 Act") and the Securities Act of 1933, as amended
(the "Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment portfolios,
one of which is the Value Equity Portfolio (the "Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services, information,
advice, assistance and facilities of an investment adviser to assist the Manager
in performing services for the Portfolio; and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended, and is engaged in the business of rendering investment
advisory services to investment companies and other institutional clients and
desires to provide such services to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way.
2. Obligations of and Services to be Provided by the Adviser. The Adviser
undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of
the portfolio assets of the Portfolio, all without prior consultation
with the Manager, subject to and in accordance with the respective
investment objectives and policies of the Portfolio set forth in the
Trust's Registration Statement, as such Registration Statement may be
amended from time to time, and any written instructions which the
Manager or the Trust's Board of Trustees may issue from time-to-time in
accordance therewith. In pursuance of the foregoing, the Adviser shall
make all determinations with respect to the purchase and sale of
portfolio securities and shall take such action necessary to implement
the same. The Adviser shall render regular reports to the Trust's Board
of Trustees and the Manager concerning the investment activities of the
Portfolio.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to
time, the Adviser shall, in the name of the Portfolio, place orders for
the execution of portfolio transactions with or through such brokers,
dealers or banks as it may select including affiliates of the Adviser
and, complying with Section 28(e) of the Securities Exchange Act of
1934, may pay a commission on transactions in excess of the amount of
commission another broker-dealer would have charged.
<PAGE>
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser
shall create and maintain all necessary records pertaining to the
purchase and sale of securities by the Adviser on behalf of the
Portfolio in accordance with all applicable laws, rules and
regulations, including but not limited to records required by Section
31(a) of the 1940 Act. All records shall be the property of the Trust
and shall be available for inspection and use by the Securities and
Exchange Commission ("SEC"), the Trust, the Manager or any person
retained by the Trust. Where applicable, such records shall be
maintained by the Adviser for the periods and in the places required by
Rule 31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are not
to be deemed exclusive, and the Adviser shall be free to render similar services
to others and to engage in other activities, so long as the services rendered
hereunder are not impaired.
5. Use of Names. The Manager shall not use the name of the Adviser or its
parent in any prospectus, sales literature or other material relating to the
Trust in any manner not approved prior thereto by the Adviser; provided,
however, that the Adviser shall approve all uses of its name and that of its
parent which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and, provided,
further, that in no event shall such approval be unreasonably withheld. The
Adviser shall not use the name of the Trust or the Manager in any material
relating to the Adviser in any manner not approved prior thereto by the Manager;
provided, however, that the Manager shall approve all uses of its or the Trust's
name which merely refer in accurate terms to the appointment of the Adviser
hereunder or which are required by the SEC or a state securities commission;
and, provided further, that in no event shall such approval be unreasonably
withheld.
6. Liability of the Adviser. Absent willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Adviser, the Adviser shall not be liable for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
7. Limitation of Trust's Liability. The Adviser acknowledges that it has
received notice of and accepts the limitations upon the Trust's liability set
forth in its Agreement and Declaration of Trust. The Adviser agrees that any of
the Trust's obligations shall be limited to the assets of the Portfolio and that
the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees'; and
further provided that such continuance is also approved annually by the vote of
a majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 150 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the
<PAGE>
Management Agreement dated November 23, 1992 between the Manager and the Trust.
This Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meaning set forth for such terms in the 1940
Act. This Agreement may be amended at any time by the Adviser and the Manager,
subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of a majority of the Portfolio's
outstanding voting securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties except as required by law.
10. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
11. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
ENDEAVOR INVESTMENT ADVISERS
BY: Endeavor Management Co.,
Managing Partner
BY: /S/VINCENT J. MCGUINNESS
---------------------------
Authorized Officer
OPCAP ADVISORS
BY: /s/Bernard H. Garil
----------------------------
Authorized Officer
<PAGE>
SCHEDULE A
Value Equity .40% of average daily net assets
Portfolio
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 30th day of April, 1997, by and between J.P. Morgan
Investment Management Inc., a Delaware corporation (the "Adviser"), and Endeavor
Investment Advisers, a California general partnership (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager
and administrator of Endeavor Series Trust (the "Trust"), a Massachusetts
business trust which has filed a registration statement under the Investment
Company Act of 1940, as amended (the "1940 Act") and the Securities Act of 1933
(the "Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Enhanced Index Portfolio (the "Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services of an
investment adviser to assist the Manager in performing services for the
Portfolio; and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended, and is engaged in the business of rendering investment
advisory services to investment companies and desires to provide such services
to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way.
2. Obligations of and Services to be Provided by the Adviser. The
Adviser undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of
the portfolio assets of the Portfolio, all without prior consultation with the
Manager, subject to and in accordance with the respective investment objectives
and policies of the Portfolio set forth in the Trust's Registration Statement,
as such Registration Statement may be amended from time to time, and any written
instructions which the Manager or the Trust's Board of Trustees may issue from
time-to-time in
<PAGE>
-2-
accordance therewith. The Manager has delivered copies of the Trust's
Declaration of Trust, as amended to date (the "Charter Document") to the
Adviser. The Manager agrees, on an ongoing basis, to provide the Adviser as
promptly as practicable copies of all amendments to the Registration Statement
and Charter Document and supplements to the Prospectus. In pursuance of the
foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render regular reports to the Trust's
Board of Trustees and the Manager concerning the investment activities of the
Portfolio. The Manager agrees to cause to be delivered to a person designated in
writing for such purpose by the Adviser within three days after the end of each
month a written report dated the date of its delivery (the "Report") with
respect to the Portfolio's compliance for its current fiscal year wth the short-
three test set forth in Section 851(b)(3) of the Internal Revenue Code of 1986,
as amended (the "Code")(the "short-three test"). The Report shall include in
chart form the Portfolio's gross income (within the meaning of Section 851 of
the Code) from the beginning of the current fiscal year to the date of the
Report and its cumulative income and gains described in Section 851(b(3) of the
Code for such period. If the Report is not timely delivered, the Adviser shall
be permitted to rely on the most recent Report delivered to it. The Manager
agrees that its Adviser may rely on the Report without independent verification
of its accuracy.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio, place orders for the execution of
portfolio transactions with or through such brokers, dealers or banks as it may
select including affiliates of the Adviser and, complying with Section 28(e) of
the Securities Exchange Act of 1934, may pay a commission on transactions in
excess of the amount of commission another broker-dealer would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the Securities and
Exchange Commission ("SEC"), the Trust, the Manager or any person retained by
the Trust. Where applicable, such records shall be maintained by the Adviser for
the periods and in the places required by Rule 31a-2 under the 1940 Act.
<PAGE>
-3-
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement. The Adviser will not bear any other expenses in the
operation of the Portfolio.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
5. Use of Names. The Manager shall not use the name of the Adviser or
its parent, J.P. Morgan & Co., Incorporated, in any prospectus, sales literature
or other material relating to the Trust in any manner not approved prior thereto
by the Adviser; provided, however, that the Adviser shall approve all uses of
its name which merely refer in accurate terms to its appointment hereunder with
no more prominence than other relationships described in the materials and all
uses of its name and that of its parent which are required by the SEC or a state
securities commission. The Adviser shall not use the name of the Trust or the
Manager in any material relating to the Adviser in any manner not approved prior
thereto by the Manager; provided, however, that the Manager shall approve all
uses of its or the Trust's name which merely refer in accurate terms to the
appointment of the Adviser hereunder or which are required by the SEC or a state
securities commission; and, provided further, that in no event shall such
approval be unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "J.P. Morgan" as part of their name, and that the Adviser or
its affiliates may enter into investment advisory, administration or other
agreements with such other entities.
6. Liability of the Adviser; Indemnification of the Adviser. Absent
willful misfeasance, bad faith, gross negligence, or reckless disregard of
obligations or duties hereunder on the part
<PAGE>
-4-
of the Adviser (each such act or omission shall be referred to as "Disqualifying
Conduct"), the Adviser shall not be liable for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security. Nothing herein
shall constitute a waiver of any rights or remedies which the Trust may have
under any federal or state securities laws.
The Manager agrees to indemnify and hold harmless the Adviser from
and against any and all claims, losses, liabilities or damages (including
reasonable attorneys' fees and other related expenses), howsoever arising, from
or in connection with this Agreement or the performance by the Adviser of its
duties hereunder; provided, however, that nothing contained herein shall require
that the Adviser be indemnified for Disqualifying Conduct.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the Trust's obligations shall be limited to the assets of the Portfolio and
that the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 90 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
November 23, 1992 between the Manager and the Trust, provided that the Adviser
receives prior written notice of the termination of the Management Agreement.
This Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and "vote of a majority of
<PAGE>
-5-
the outstanding voting securities" shall have the meaning set forth for such
terms in the 1940 Act. This Agreement may be amended at any time by the Adviser
and the Manager, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of a majority of the
Portfolio's outstanding voting securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties except as required by law.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR INVESTMENT ADVISERS
BY: Endeavor Management Co.,
Managing Partner
BY: /s/Vincent J. McGuinness
Authorized Officer
J.P. MORGAN INVESTMENT MANAGEMENT INC.
BY: /s/Diane J. Minardi
Authorized Officer
<PAGE>
-7-
SCHEDULE A
Enhanced Index
Portfolio .35% of average daily net
assets
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of May, 1998, by and between Morgan Stanley
Asset Management Inc., a Delaware corporation (the "Adviser"), and Endeavor
Investment Advisers, a California general partnership (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager
and administrator of Endeavor Series Trust (the "Trust"), a Massachusetts
business trust which has filed a registration statement under the Investment
Company Act of 1940, as amended (the "1940 Act") and the Securities Act of 1933
(the "Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Endeavor Money Market Portfolio (the
"Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser to
assist the Manager in performing services for the Portfolio; and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended, and is engaged in the business of rendering investment
advisory services to investment companies and other institutional clients and
desires to provide such services to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way.
2. Obligations of and Services to be Provided by the Adviser. The
Adviser undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and
reinvestment of the portfolio assets of the Portfolio, all
<PAGE>
-2-
without prior consultation with the Manager, subject to and in accordance with
the investment objective and policies of the Portfolio set forth in the Trust's
Registration Statement, as such Registration Statement may be amended from time
to time, and any written instructions which the Manager or the Trust's Board of
Trustees may issue from time-to-time in accordance therewith. In pursuance of
the foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render regular reports to the Trust's
Board of Trustees and the Manager concerning the investment activities of the
Portfolio.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio, place orders for the execution of
portfolio transactions with or through such brokers, dealers or banks as it may
select including affiliates of the Adviser and, complying with Section 28(e) of
the Securities Exchange Act of 1934, may pay a commission on transactions in
excess of the amount of commission another broker-dealer would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the Securities and
Exchange Commission ("SEC"), the Trust, the Manager or any person retained by
the Trust at all reasonable times. Where applicable, such records shall be
maintained by the Adviser for the periods and in the places required by Rule
31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in
<PAGE>
-3-
other activities, so long as the services rendered hereunder are
not impaired.
5. Use of Names. The Manager shall not use the name of the Adviser or
any of its affiliates in any prospectus, sales literature or other material
relating to the Trust in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its name and that
of its affiliates which merely refer in accurate terms to its appointment
hereunder or which are required by the SEC or a state securities commission;
and, provided, further, that in no event shall such approval be unreasonably
withheld. The Adviser shall not use the name of the Trust or the Manager in any
material relating to the Adviser in any manner not approved prior thereto by the
Manager; provided, however, that the Manager shall approve all uses of its or
the Trust's name which merely refer in accurate terms to the appointment of the
Adviser hereunder or which are required by the SEC or a state securities
commission; and, provided further, that in no event shall such approval be
unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Morgan Stanley" as part of their name, and that the Adviser or
its affiliates may enter into investment advisory, administration or other
agreements with such other entities.
6. Liability of the Adviser. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Adviser, the Adviser shall not be liable for any act or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security.
Nothing herein shall constitute a waiver of any rights or remedies which the
Trust may have under any federal or state securities laws.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the Trust's obligations shall be limited to the assets of the Portfolio and
that the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
<PAGE>
-4-
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 90 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
November 23, 1992, as amended, between the Manager and the Trust. This Agreement
shall terminate automatically and immediately in the event of its assignment.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meaning set forth for such terms in the 1940 Act.
This Agreement may be amended at any time by the Adviser and the Manager,
subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of a majority of the Portfolio's
outstanding voting securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation.
The Manager hereby consents to the disclosure to third parties of (i)
investment results and other data of the Manager or the Portfolio (other than
the identity of the Manager or the Trust) in connection with providing composite
investment results of the Adviser and (ii) investments and transactions of the
Manager or the Portfolio (other than the identify of the Manager or the Trust)
in connection with providing composite information of clients of the Adviser.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Information. The Manager hereby acknowledges that it and the
Trustees of the Trust have been provided with all information necessary in
connection with the services to be provided by the Adviser hereunder, including
a copy of Part II of the Adviser's Form ADV at least 48 hours prior to the
Manager's execution of this Agreement, and any other information that the
Manager or the Trustees deem necessary.
<PAGE>
-5-
12. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR INVESTMENT ADVISERS
BY: Endeavor Management Co.,
Managing Partner
BY: /s/Vincent J. McGuinness
-------------------------------
Authorized Officer
MORGAN STANLEY ASSET MANAGEMENT INC.
BY: /s/Jeffrey Margolis
-------------------------------
Authorized Officer
<PAGE>
SCHEDULE A
Endeavor Money Market .25% of average daily net
Portfolio assets
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of May, 1998, by and between Morgan Stanley
Asset Management Inc., a Delaware corporation (the "Adviser"), and Endeavor
Investment Advisers, a California general partnership (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager
and administrator of Endeavor Series Trust (the "Trust"), a Massachusetts
business trust which has filed a registration statement under the Investment
Company Act of 1940, as amended (the "1940 Act") and the Securities Act of 1933
(the "Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Endeavor Asset Allocation Portfolio (the
"Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser to
assist the Manager in performing services for the Portfolio; and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended, and is engaged in the business of rendering investment
advisory services to investment companies and other institutional clients and
desires to provide such services to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way.
2. Obligations of and Services to be Provided by the Adviser. The
Adviser undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and
reinvestment of the portfolio assets of the Portfolio, all
<PAGE>
-2-
without prior consultation with the Manager, subject to and in accordance with
the investment objective and policies of the Portfolio set forth in the Trust's
Registration Statement, as such Registration Statement may be amended from time
to time, and any written instructions which the Manager or the Trust's Board of
Trustees may issue from time-to-time in accordance therewith. In pursuance of
the foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render regular reports to the Trust's
Board of Trustees and the Manager concerning the investment activities of the
Portfolio.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio, place orders for the execution of
portfolio transactions with or through such brokers, dealers or banks as it may
select including affiliates of the Adviser and, complying with Section 28(e) of
the Securities Exchange Act of 1934, may pay a commission on transactions in
excess of the amount of commission another broker-dealer would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the Securities and
Exchange Commission ("SEC"), the Trust, the Manager or any person retained by
the Trust at all reasonable times. Where applicable, such records shall be
maintained by the Adviser for the periods and in the places required by Rule
31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in
<PAGE>
-3-
other activities, so long as the services rendered hereunder are
not impaired.
5. Use of Names. The Manager shall not use the name of the Adviser or
any of its affiliates in any prospectus, sales literature or other material
relating to the Trust in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its name and that
of its affiliates which merely refer in accurate terms to its appointment
hereunder or which are required by the SEC or a state securities commission;
and, provided, further, that in no event shall such approval be unreasonably
withheld. The Adviser shall not use the name of the Trust or the Manager in any
material relating to the Adviser in any manner not approved prior thereto by the
Manager; provided, however, that the Manager shall approve all uses of its or
the Trust's name which merely refer in accurate terms to the appointment of the
Adviser hereunder or which are required by the SEC or a state securities
commission; and, provided further, that in no event shall such approval be
unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Morgan Stanley" as part of their name, and that the Adviser or
its affiliates may enter into investment advisory, administration or other
agreements with such other entities.
6. Liability of the Adviser. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Adviser, the Adviser shall not be liable for any act or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security.
Nothing herein shall constitute a waiver of any rights or remedies which the
Trust may have under any federal or state securities laws.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the Trust's obligations shall be limited to the assets of the Portfolio and
that the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
<PAGE>
-4-
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 90 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
November 23, 1992, as amended, between the Manager and the Trust. This Agreement
shall terminate automatically and immediately in the event of its assignment.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meaning set forth for such terms in the 1940 Act.
This Agreement may be amended at any time by the Adviser and the Manager,
subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of a majority of the Portfolio's
outstanding voting securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation.
The Manager hereby consents to the disclosure to third parties of (i)
investment results and other data of the Manager or the Portfolio (other than
the identity of the Manager or the Trust) in connection with providing composite
investment results of the Adviser and (ii) investments and transactions of the
Manager or the Portfolio (other than the identify of the Manager or the Trust)
in connection with providing composite information of clients of the Adviser.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Information. The Manager hereby acknowledges that it and the
Trustees of the Trust have been provided with all information necessary in
connection with the services to be provided by the Adviser hereunder, including
a copy of Part II of the Adviser's Form ADV at least 48 hours prior to the
Manager's execution of this Agreement, and any other information that the
Manager or the Trustees deem necessary.
<PAGE>
-5-
12. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
<PAGE>
-6-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR INVESTMENT ADVISERS
BY: Endeavor Management Co.,
Managing Partner
BY: /s/Vincent J. McGuinness
-------------------------------
Authorized Officer
MORGAN STANLEY ASSET MANAGEMENT INC.
BY: /s/Jeffrey Kugler
-------------------------------
Authorized Officer
<PAGE>
SCHEDULE A
Endeavor Asset Allocation .30% of average daily net
Portfolio assets
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 15th day of May, 1998, by and between Massachusetts
Financial Services Company, a Delaware corporation (the "Adviser"), and Endeavor
Investment Advisers, a California general partnership (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager
and administrator of Endeavor Series Trust (the "Trust"), a Massachusetts
business trust which has filed a registration statement under the Investment
Company Act of 1940, as amended (the "1940 Act") and the Securities Act of 1933
(the "Registration Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Endeavor High Yield Portfolio (the "Portfolio");
and
WHEREAS, the Manager desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser to
assist the Manager in performing investment advisory services for the Portfolio;
and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), and is engaged in the business of
rendering investment advisory services to investment companies and other
institutional clients and desires to provide such services to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way. The Adviser may execute account documentation,
agreements, contracts and other documents requested by brokers, dealers,
counterparties and other persons in connection with its management of the assets
of the Portfolio, provided the Adviser receives the express agreement and
consent of the Manager and/or the Trust's Board of Trustees to execute such
documentation, agreements, contracts and other documents. In such respect, and
only for this limited purpose,
<PAGE>
-2-
the Adviser shall act as the Manager's and the Trust's agent and
attorney-in-fact.
Copies of the Trust's Registration Statement, as it relates to the
Portfolio (the "Registration Statement"), and the Trust's Declaration of Trust
and Bylaws (collectively, the "Charter Documents"), each as currently in effect,
have been delivered to the Adviser. The Manager agrees, on an ongoing basis, to
notify the Adviser of each change in the fundamental and non-fundamental
investment policies and restrictions of the Portfolio and to provide to the
Adviser as promptly as practicable copies of all amendments and supplements to
the Registration Statement and amendments to the Charter Documents. The Manager
will promptly provide the Adviser with any procedures applicable to the Adviser
adopted from time to time by the Trust's Board of Trustees and agrees to
promptly provide the Adviser copies of all amendments thereto. The Adviser will
not be bound to follow any change in the investment policies, restrictions or
procedures of the Portfolio or Trust, however, until it has received written
notice of any such change from the Manager.
2. Obligations of and Services to be Provided by the Adviser. The
Adviser undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of
the portfolio assets of the Portfolio, all without prior consultation with the
Manager, subject to and in accordance with the investment objective and policies
of the Portfolio set forth in the Trust's Registration Statement and the Charter
Documents, as such Registration Statement and Charter Documents may be amended
from time to time, in compliance with the requirements applicable to registered
investment companies under applicable laws and those requirements applicable to
both regulated investment companies and segregated asset accounts under
Subchapters M and L of the Internal Revenue Code of 1986, as amended (the
"Code") and any written instructions which the Manager or the Trust's Board of
Trustees may issue from time-to-time in accordance therewith. In pursuance of
the foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render such reports to the Trust's
Board of Trustees and the Manager as they may reasonably request concerning the
investment activities of the Portfolio. Unless the Manager gives the Adviser
written instructions to the contrary, the Adviser shall, in good faith and in a
manner which it reasonably believes best serves the interests of the Portfolio's
shareholders, direct the Portfolio's custodian as to how to vote such proxies as
may be necessary or advisable in connection with any matters submitted to a vote
of shareholders of securities held by the Portfolio.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio,
<PAGE>
-3-
place orders for the execution of portfolio transactions with or through such
brokers, dealers or other financial institutions as it may select including
affiliates of the Adviser and, complying with Section 28(e) of the Securities
Exchange Act of 1934, may pay a commission on transactions in excess of the
amount of commission another broker-dealer would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the Securities and
Exchange Commission ("SEC"), the Trust, the Manager or any person retained by
the Trust at all reasonable times. Where applicable, such records shall be
maintained by the Adviser for the periods and in the places required by Rule
31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement.
e. The Adviser and the Manager acknowledge that the Adviser is
not the compliance agent for the Portfolio or for the Manager, and does not have
access to all of the Portfolio's books and records necessary to perform certain
compliance testing. To the extent that the Adviser has agreed to perform the
services specified in this Section 2 in accordance with the Trust's Registration
Statement and Charter Documents, written instructions of the Manager and any
policies adopted by the Trust's Board of Trustees applicable to the Portfolio
(collectively, the "Charter Requirements"), and in accordance with applicable
law (including sub-chapters M and L of the Code, the Investment Company Act and
the Advisers Act ("Applicable Law")), the Adviser shall perform such services
based upon its books and records with respect to the Portfolio (as specified in
Section 2.c. hereof), which comprise a portion of each Portfolio's books and
records, and upon information and written instructions received from the Trust,
the Manager or the Trust's administrator, and shall not be held responsible
under this Agreement so long as it performs such services in accordance with
this Agreement, the Charter Requirements and Applicable Law based upon such
books and records and such information and instructions provided by the Trust,
the Manager or the Trust's administrator.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining
<PAGE>
-4-
fees payable to the Adviser, the value of the Portfolio's net assets shall be
computed at the times and in the manner specified in the Trust's Registration
Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
5. Use of Names. The Manager shall not use the name of the Adviser or
any of its affiliates in any prospectus, sales literature or other material
relating to the Trust in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its name and that
of its affiliates which merely refer in accurate terms to its appointment
hereunder. The Adviser shall not use the name of the Trust or the Manager in any
material relating to the Adviser in any manner not approved prior thereto by the
Manager; provided, however, that the Manager shall approve all uses of its or
the Trust's name which merely refer in accurate terms to the appointment of the
Adviser hereunder.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Massachusetts Financial Services" or any derivative or
abbreviation thereof as part of their name, and that the Adviser or its
affiliates may enter into investment advisory, administration or other
agreements with such other entities.
6. Liability of the Adviser. Absent willful misfeasance, bad faith,
gross negligence, or reckless disregard of obligations or duties hereunder on
the part of the Adviser, the Adviser shall not be liable for any act or omission
in the course of, or connected with, rendering services hereunder or for any
losses that may be sustained in the purchase, holding or sale of any security.
Nothing herein shall constitute a waiver of any rights or remedies which the
Trust may have under any federal or state securities laws.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the Trust's obligations shall be limited to the assets of the Portfolio and
that the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and
<PAGE>
-5-
shall continue in full force and effect for successive periods of one year
thereafter, but only so long as each such continuance as to the Portfolio is
specifically approved at least annually by vote of the holders of a majority of
the outstanding voting securities of the Portfolio or by vote of a majority of
the Trust's Board of Trustees; and further provided that such continuance is
also approved annually by the vote of a majority of the Trustees who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement may be terminated as to the Portfolio at any time, without payment of
any penalty, by the Trust's Board of Trustees, by the Manager, or by a vote of
the majority of the outstanding voting securities of the Portfolio upon 60 days'
prior written notice to the Adviser, or by the Adviser upon 90 days' prior
written notice to the Manager, or upon such shorter notice as may be mutually
agreed upon. This Agreement shall terminate automatically and immediately upon
termination of the Management Agreement dated November 23, 1992, as amended,
between the Manager and the Trust. This Agreement shall terminate automatically
and immediately in the event of its assignment. The terms "assignment" and "vote
of a majority of the outstanding voting securities" shall have the meaning set
forth for such terms in the 1940 Act. This Agreement may be amended at any time
by the Adviser and the Manager, subject to approval by the Trust's Board of
Trustees and, if required by applicable SEC rules and regulations, a vote of a
majority of the Portfolio's outstanding voting securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation.
The Manager hereby consents to the disclosure to third parties of (i)
investment results and other data of the Manager or the Portfolio (other than
the identity of the Manager or the Trust) in connection with providing composite
investment results of the Adviser and (ii) investments and transactions of the
Manager or the Portfolio (other than the identify of the Manager or the Trust)
in connection with providing composite information of clients of the Adviser.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Information. The Manager hereby acknowledges that it and the
Trustees of the Trust have been provided with all information necessary in
connection with the services to be provided by the Adviser hereunder, including
a copy of Part II of the Adviser's Form ADV at least 48 hours prior to the
Manager's
<PAGE>
-6-
execution of this Agreement, and any other information that the Manager or the
Trustees deem necessary.
12. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the
Commonwealth of Massachusetts. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed in
several counterparts, all of which together shall for all purposes constitute
one Agreement, binding on all the parties.
<PAGE>
-7-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR INVESTMENT ADVISERS
BY: Endeavor Management Co.,
Managing Partner
BY: /s/Vincent J. McGuinness
-------------------------------
Authorized Officer
MASSACHUSETTS FINANCIAL SERVICES COMPANY
BY: /s/Arnold D. Scott
-------------------------------
Authorized Officer
Senior Executive Vice President
<PAGE>
SCHEDULE A
Endeavor High Yield .375% of average daily
Portfolio net assets
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this _____ day of ________, 1999, by and between Janus
Capital Corporation, a Colorado corporation (the "Adviser"), and Endeavor
Management Co., a California corporation (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager
of Endeavor Series Trust (the "Trust"), a Massachusetts business trust which has
filed a registration statement under the Investment Company Act of 1940, as
amended (the "1940 Act") and the Securities Act of 1933 (the "Registration
Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Endeavor Janus Growth Portfolio (the
"Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser to
assist the Manager in performing investment advisory services for the Portfolio;
and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), and is engaged in the business of
rendering investment advisory services to investment companies and other
institutional clients and desires to provide such services to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way. The Adviser may execute account documentation,
agreements, contracts and other documents requested by brokers, dealers,
counterparties and other persons in connection with its management of the assets
of the Portfolio, provided the Adviser receives the express agreement and
consent of the Manager and/or the Trust's Board of Trustees to execute such
documentation, agreements, contracts and other documents, which consent shall
not be unreasonably withheld. In
<PAGE>
-2-
such respect, and only for this limited purpose, the Adviser shall act as the
Manager's and the Trust's agent and attorney-in-fact.
Copies of the Trust's Registration Statement, as it relates to the
Portfolio (the "Registration Statement"), and the Trust's Declaration of Trust
and Bylaws (collectively, the "Charter Documents"), each as currently in effect,
have been delivered to the Adviser. The Manager agrees, on an ongoing basis, to
notify the Adviser of each change in the fundamental and non-fundamental
investment policies and restrictions of the Portfolio before they become
effective and to provide to the Adviser as promptly as practicable copies of all
amendments and supplements to the Registration Statement before filing with the
Securities and Exchange Commission ("SEC") and amendments to the Charter
Documents. The Manager will promptly provide the Adviser with any procedures
applicable to the Adviser adopted from time to time by the Trust's Board of
Trustees and agrees to promptly provide the Adviser copies of all amendments
thereto. The Adviser will not be bound to follow any change in the investment
policies, restrictions or procedures of the Portfolio or Trust, however, until
it has received written notice of any such change from the Manager.
The Manager shall timely furnish the Adviser with such additional
information as may be reasonably necessary for or requested by the Adviser to
perform its responsibilities pursuant to this Agreement. The Manager shall
cooperate with the Adviser in setting up and maintaining brokerage accounts and
other accounts the Adviser deems advisable to allow for the purchase or sale of
various forms of securities pursuant to this Agreement.
2. Obligations of and Services to be Provided by the Adviser. The
Adviser undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of
the portfolio assets of the Portfolio, all without prior consultation with the
Manager, subject to and in accordance with the investment objective and policies
of the Portfolio set forth in the Trust's Registration Statement and the Charter
Documents, as such Registration Statement and Charter Documents may be amended
from time to time, in compliance with the requirements applicable to registered
investment companies under applicable laws and those requirements applicable to
both regulated investment companies and segregated asset accounts under
Subchapters M and L of the Internal Revenue Code of 1986, as amended (the
"Code") and any written instructions which the Manager or the Trust's Board of
Trustees may issue from time-to-time in accordance therewith. In pursuance of
the foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render such reports to the Trust's
Board of Trustees and the Manager as they may reasonably request concerning the
investment
<PAGE>
-3-
activities of the Portfolio, provided that the Adviser shall not be responsible
for Portfolio accounting. Unless the Manager gives the Adviser written
instructions to the contrary, the Adviser shall, in good faith and in a manner
which it reasonably believes best serves the interests of the Portfolio's
shareholders, direct the Portfolio's custodian as to how to vote such proxies as
may be necessary or advisable in connection with any matters submitted to a vote
of shareholders of securities held by the Portfolio.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio, place orders for the execution of
portfolio transactions with or through such brokers, dealers or other financial
institutions as it may select including affiliates of the Adviser and, complying
with Section 28(e) of the Securities Exchange Act of 1934, may pay a commission
on transactions in excess of the amount of commission another broker-dealer
would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the SEC, the Trust,
the Manager or any person retained by the Trust at all reasonable times. Where
applicable, such records shall be maintained by the Adviser for the periods and
in the places required by Rule 31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement, but shall not be obligated to pay any expenses of
the Manager, the Trust, or the Portfolio, including without limitation: (a)
interest and taxes; (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments for the
Portfolio; and (c) custodian fees and expenses. Any reimbursement of fees paid
to the Manager required by any expense limitation provision and any liability
arising out of a violation of Section 36(b) of the 1940 Act shall be the sole
responsibility of the Manager.
e. The Adviser and the Manager acknowledge that the Adviser is
not the compliance agent for the Portfolio or for the Manager, and does not have
access to all of the Portfolio's books and records necessary to perform certain
compliance testing. To the extent that the Adviser has agreed to perform the
services specified in this Section 2 in accordance with the Trust's Registration
Statement and Charter Documents, written instructions of the Manager and any
policies adopted by the Trust's Board of Trustees applicable to the Portfolio
(collectively, the "Charter Requirements"), and in accordance
<PAGE>
-4-
with applicable law (including sub-chapters M and L of the Code, the Investment
Company Act and the Advisers Act ("Applicable Law")), the Adviser shall perform
such services based upon its books and records with respect to the Portfolio (as
specified in Section 2.c. hereof), which comprise a portion of the Portfolio's
books and records, and upon information and written instructions received from
the Trust, the Manager or the Trust's administrator, and shall not be held
responsible under this Agreement so long as it performs such services in
accordance with this Agreement, the Charter Requirements and Applicable Law
based upon such books and records and such information and instructions provided
by the Trust, the Manager or the Trust's administrator. The Adviser shall have
no responsibility to monitor certain limitations or restrictions for which the
Adviser has not been provided sufficient information in accordance with Section
1 of this Agreement or otherwise. All such monitoring shall be the
responsibility of the Manager.
f. The Adviser makes no representation or warranty, express or
implied, that any level of performance or investment results will be achieved by
the Portfolio or that the Portfolio will perform comparably with any standard or
index, including other clients of the Adviser, whether public or private.
g. The Adviser shall be responsible for the preparation and
filing of Schedule 13G and Form 13F on behalf of the Portfolio. The Adviser
shall not be responsible for the preparation or filing of any other reports
required of the Portfolio by any governmental or regulatory agency, except as
expressly agreed to in writing.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
The Adviser shall be subject to a written code of ethics adopted by it
pursuant to Rule 17j-1(b) of the 1940 Act, and shall not be subject to any other
code of ethics, including the Manager's code of ethics, unless specifically
adopted by the Adviser.
<PAGE>
-5-
5. Use of Names. The Adviser hereby consents to the Portfolio being
named the Endeavor Janus Growth Portfolio. The Manager shall not use the name or
mark "Janus" or disclose information related to the business of the Adviser or
any of its affiliates in any prospectus, sales literature or other material
relating to the Trust in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its name and that
of its affiliates which merely refer in accurate terms to its appointment
hereunder or which are required by the SEC or a state securities commission; and
provided, further, that in no event shall such approval be unreasonably
withheld. The Adviser shall not use the name of the Trust or the Manager in any
material relating to the Adviser in any manner not approved prior thereto by the
Manager; provided, however, that the Manager shall approve all uses of its or
the Trust's name which merely refer in accurate terms to the appointment of the
Adviser hereunder or which are required by the SEC or a state securities
commission; and, provided, further, that in no event shall such approval be
unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Janus" or any derivative or abbreviation thereof as part of
their name, and that the Adviser or its affiliates may enter into investment
advisory, administration or other agreements with such other entities.
Upon termination of this Agreement for any reason, the Manager shall
immediately cease and cause the Portfolio to immediately cease all use of the
name and mark "Janus."
6. Liability. Except as may otherwise be provided by the 1940 Act, or
other federal securities laws, neither the Adviser nor any of its affiliates,
officers, directors, shareholders, employees, or agents shall be liable for any
loss, liability, cost, damage, or expense (including reasonable attorneys' fees
and costs) (collectively referred to in this Agreement as "Losses"), except for
Losses resulting from the Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The Manager shall hold harmless and indemnify the Adviser, its
affiliates, directors, officers, shareholders, employees or agents for any Loss
not resulting from the Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The obligations contained in this Section 6 shall survive termination
of this Agreement.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the
<PAGE>
-6-
Trust's obligations shall be limited to the assets of the Portfolio and that the
Adviser shall not seek satisfaction of any such obligation from the shareholders
of the Trust nor from any Trust officer, employee or agent of the Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 90 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
November 23, 1992, as amended, between the Manager and the Trust. This Agreement
shall terminate automatically and immediately in the event of its assignment.
The terms "assignment" and "vote of a majority of the outstanding voting
securities" shall have the meaning set forth for such terms in the 1940 Act.
This Agreement may be amended at any time by the Adviser and the Manager,
subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of a majority of the Portfolio's
outstanding voting securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation.
The Manager hereby consents to the disclosure to third parties of (i)
investment results and other data of the Manager or the Portfolio in connection
with providing composite investment results of the Adviser and (ii) investments
and transactions of the Manager or the Portfolio in connection with providing
composite information of clients of the Adviser.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
<PAGE>
-7-
11. Custodian. The Portfolio assets shall be maintained in the custody
of its custodian. Any assets added to the Portfolio shall be delivered directly
to such custodian. The Adviser shall have no liability for the acts or omissions
of any custodian of the Portfolio's assets. The Adviser shall have no
responsibility for the segregation requirement of the 1940 Act or other
applicable law other than to notify the custodian of investments that require
segregation and appropriate assets for segregation.
12. Representations and Warranties.
The Manager represents and warrants the following:
(i) The Manager has been duly incorporated and is
validly existing and in good standing as a
corporation under the laws of the state of
California.
(ii) The Manager has all requisite corporate power and
authority under the laws of California and federal
securities laws to execute, deliver and to perform
this Agreement.
(iii) All necessary corporate proceedings of the Manager
have been duly taken to authorize the execution,
delivery and performance of this Agreement by the
Manager.
(iv) The Manager is a registered investment adviser
under the Advisers Act and is in compliance with
all other registrations required.
(v) The Manager has complied, in all material respects,
with all registrations required by, and will
comply, in all material respects, with all
applicable rules and regulations of, the SEC.
(vi) The Manager has authority under the Management
Agreement to execute, deliver and perform this
Agreement.
13. Information. The Manager hereby acknowledges that it and the
Trustees of the Trust have been provided with all information necessary in
connection with the services to be provided by the Adviser hereunder, including
a copy of Part II of the Adviser's Form ADV at least 48 hours prior to the
Manager's execution of this Agreement, and any other information that the
Manager or the Trustees deem necessary.
14. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
<PAGE>
-8-
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in
<PAGE>
-9-
several counterparts, all of which together shall for all purposes constitute
one Agreement, binding on all the parties.
<PAGE>
-10-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR MANAGEMENT CO.
BY:
-------------------------------
Authorized Officer
JANUS CAPITAL CORPORATION
BY:
-------------------------------
Authorized Officer
<PAGE>
SCHEDULE A
Endeavor Janus Growth 0.50% of average daily net
Portfolio assets
<PAGE>
TRANSFER AND ASSUMPTION
OF
INVESTMENT ADVISORY AGREEMENT
FOR
___________________ PORTFOLIO
OF ENDEAVOR SERIES TRUST
TRANSFER AND ASSUMPTION OF INVESTMENT ADVISORY AGREEMENT, made as of
December 31, 1998, by and among _______________, a __________ corporation (the
"Adviser"), Endeavor Investment Advisers, a California general partnership
("EIA"), and Endeavor Management Co., a California corporation ("EMC").
RECITALS
EIA is the Manager of Endeavor Series Trust (the "Trust"), a
Massachusetts business trust registered with the Securities and Exchange
Commission as an open-end management investment company under the Investment
Company Act of 1940, as amended (the "Act"), pursuant to a Management Agreement
dated November 23, 1992 between EIA and the Trust (the "Management Agreement").
The Trust consists of several distinct investment portfolios including
the ____________________ Portfolio (the "Fund").
EIA as Manager of the Trust entered into an Investment Advisory
Agreement with the Adviser as of ___________ (the "Advisory Agreement"), under
which the Adviser serves as the investment adviser for the Fund.
EIA, EMC and the Trust have entered into a Transfer and Assumption of
Management Agreement effective as of December 31, 1998, pursuant to which EIA
has transferred to EMC, and EMC has assumed, all of EIA's interest, rights,
responsibilities and obligations under the Management Agreement, and the
Transfer and Assumption of Management Agreement does not constitute a
termination of the Management Agreement.
EIA desires that its interest, rights, responsibilities and obligations
in and under the Advisory Agreement likewise be transferred to EMC, and EMC
desires to assume EIA's interest, rights, responsibilities and obligations in
and under the Advisory Agreement.
This Agreement does not result in a change of actual control or
management of the Manager for the Fund and, therefore, is neither an
"assignment" as defined in Section 2(a)(4) of the Act nor an "assignment" for
purposes of Section 15(a)(4) of the Act.
AGREEMENTS
In consideration of the mutual covenants set forth in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
-1-
<PAGE>
1. Transfer. Effective as of December 31, 1998 (the "Effective Date"),
EIA hereby transfers to EMC all of EIA's interest, rights, responsibilities and
obligations in and under the Advisory Agreement.
2. Assumption and Performance of Duties. As of the Effective Date, EMC
hereby accepts all of EIA's interest and rights, and assumes and agrees to
perform all of EIA's responsibilities and obligations in and under the Advisory
Agreement; EMC agrees to be subject to all of the terms and conditions of said
Agreement.
3. Representations of EMC. EMC represents and warrants that (1) it is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended; and (2) it holds a 50.01% interest in EIA and, as the managing
partner of EIA, is responsible for its control and management.
4. Consent. The Adviser hereby consents to this transfer by EIA to EMC
of EIA's interest, rights, responsibilities and obligations in and under the
Advisory Agreement and to the acceptance and assumption by EMC of the same. The
Adviser agrees, subject to the terms and conditions of said Advisory Agreement,
to look solely to EMC for the performance of the Manager's responsibilities and
obligations under said Advisory Agreement from and after the effective Date, and
to recognize as inuring solely to EMC the interest and rights heretofore held by
EIA thereunder.
5. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers hereunto as of the date first above
written.
-----------------------------
By: _______________________
Title:
ENDEAVOR INVESTMENT ADVISERS
By: Endeavor Management Co.,
Managing Partner
By: _______________________
Title:
ENDEAVOR MANAGEMENT CO.
By: _______________________
Title:
-3-
<PAGE>
SUPPLEMENT TO CUSTODY AGREEMENT
Date: January 28, 1998
Boston Safe Deposit and Trust Company
One Boston Place
Boston, Massachusetts 02108
Ladies and Gentlemen:
ENDEAVOR SERIES TRUST, an unincorporated business trust organized under
the laws of the Commonwealth of Massachusetts (the "Trust"), hereby supplements
its agreement with BOSTON SAFE DEPOSIT AND TRUST COMPANY, a trust company
organized under the laws of the Commonwealth of Massachusetts (the "Custodian"),
as follows:
1. Compensation. Pursuant to Section 3(b) of the Custody Agreement
dated March 28, 1991 (the "Agreement"), the Trust and the Custodian hereby agree
that the SELECT 50 PORTFOLIO (the "Portfolio"), a new series of the Trust,
created and designated in accordance with the Trust's Master Trust Agreement,
shall be, considered a Portfolio of the Trust under the terms of the Agreement,
and that the Domestic and Global Fee Schedules currently in effect, and as may
be amended from time to time, under the Agreement shall apply to the Portfolio,
as of the date and year first written above.
2. Limitation of Liability. The term "Endeavor Series Trust" means and
refers to the Trustees from time to time serving under the Agreement and
Declaration of Trust dated November 18, 1988, as the same may subsequently
thereto have been, or subsequently hereto be, amended. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust, as provided in the
Agreement and Declaration of Trust. The execution and delivery of this Agreement
have been authorized by the Trustees of the Trust and signed by an authorized
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally,
<PAGE>
but shall bind only the trust property of the Trust as provided in its Agreement
and Declaration of Trust.
If the foregoing is acceptable to you, kindly indicate your acceptance
by signing and returning the enclosed copy of this Supplement.
Very truly yours,
ENDEAVOR SERIES TRUST
By: /s/Vincent J. McGuinness, Jr.
-----------------------------
Title: President
Accepted and Agreed to:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/Christopher Healy
-------------------------------
Vice President
<PAGE>
APPENDIX A
I, Ronna Rowe, Secretary of the ENDEAVOR SERIES TRUST, a Massachusetts
business trust (the "Trust"), do hereby certify that:
The following individuals have been duly authorized as Authorized
Persons to give Oral Instructions and Written Instructions on behalf of the
Trust and the signatures set forth opposite their respective names are their
true and correct signatures:
Name Signature
Chris Healy
Craig Labrecques
Ronald Reed
Doreen L. Rock
Tanya Vecchi
David DeSantis
<PAGE>
APPENDIX A
I, Pamela Shelton, Secretary of the ENDEAVOR SERIES TRUST, a
Massachusetts business trust (the "Trust"), do hereby certify that:
The following individuals serve in the following positions with the
Trust and each individual has been duly elected or appointed to each such
position and qualified therefor in conformity with the Trust's Declaration of
Trust and the signatures set forth opposite their respective names are their
true and correct signatures:
Name Position Signature
James R. McInnis President
Norman Ridley Vice President
Ronald E. Robison Vice President
James M. Goldberg Vice President
Keith H. Wood Vice President
Richard D. Muckart Vice President
Eileen Rominger Vice President
Eric V. Retzlaff Chief Financial Officer
Pamela Shelton Secretary
Patricia L. Bickimer Assistant Secretary
Scott C. Blair Assistant Treasurer
<PAGE>
FEE SCHEDULE
SCHEDULE A
ENDEAVOR SERIES TRUST
1. Safekeeping
A. Domestic Assets Annual Fee
All domestic assets .02 of 1%
B. International Assets Annual Fee
All international assets .15 of 1%
2. Portfolio Transactions
Type Per Transaction
---- ---------------
DTC/Fed Book Entry $ 12
Repurchase Agreement - depository eligible 12
GNMA Paydown 12
Repurchase Agreement - non-depository 17
Options/Futures 25
Physical Settlement 30
Commercial Paper 30
Euro CD's (London) 30
Foreign Securities 40
<PAGE>
CUSTODY AGREEMENT
OUT-OF-POCKET EXPENSES
SCHEDULE B
Reimbursable out-of-pocket expenses will be added to each monthly
invoice and will include, but are not limited to, such customary items as
telephone, wire charge ($5.50 per wire), postage, insurance, pricing services,
courier services and duplicating charges.
<PAGE>
SUPPLEMENT TO CUSTODY AGREEMENT
Date: July 1, 1998
Boston Safe Deposit and Trust Company
One Boston Place
Boston, Massachusetts 02108
Ladies and Gentlemen:
ENDEAVOR SERIES TRUST, an unincorporated business trust organized under
the laws of the Commonwealth of Massachusetts (the "Trust"), hereby supplements
its agreement with BOSTON SAFE DEPOSIT AND TRUST COMPANY, a trust company
organized under the laws of the Commonwealth of Massachusetts (the "Custodian"),
as follows:
1. Compensation. Pursuant to Section 3(b) of the Custody Agreement
dated March 28, 1991 (the "Agreement"), the Trust and the Custodian hereby agree
that the ENDEAVOR HIGH YIELD PORTFOLIO (the "Portfolio"), a new series of the
Trust, created and designated in accordance with the Trust's Master Trust
Agreement, shall be, considered a Portfolio of the Trust under the terms of the
Agreement, and that the Domestic and Global Fee Schedules currently in effect,
and as may be amended from time to time, under the Agreement shall apply to the
Portfolio, as of the date and year first written above.
2. Limitation of Liability. The term "Endeavor Series Trust" means and
refers to the Trustees from time to time serving under the Agreement and
Declaration of Trust dated November 18, 1988, as the same may subsequently
thereto have been, or subsequently hereto be, amended. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust, as provided in the
Agreement and Declaration of Trust. The execution and delivery of this Agreement
have been authorized by the Trustees of the Trust and signed by an authorized
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution and delivery by such officer shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
its Agreement and Declaration of Trust.
<PAGE>
If the foregoing is acceptable to you, kindly indicate your acceptance
by signing and returning the enclosed copy of this Supplement.
Very truly yours,
ENDEAVOR SERIES TRUST
By: /s/Vincent J. McGuinness, Jr.
-----------------------------
Title: President
Accepted and Agreed to:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By: /s/Christopher Healy
----------------------------------
Vice President
<PAGE>
SUPPLEMENT TO CUSTODY AGREEMENT
February 1, 1999
Boston Safe Deposit and Trust Company
One Boston Place
Boston, Massachusetts 02108
Ladies and Gentlemen:
ENDEAVOR SERIES TRUST, an unincorporated business trust organized under
the laws of the Commonwealth of Massachusetts (the "Trust"), hereby supplements
its agreement with BOSTON SAFE DEPOSIT AND TRUST COMPANY, a trust company
organized under the laws of the Commonwealth of Massachusetts (the "Custodian"),
as follows:
1. Compensation. Pursuant to Section 3(b) of the Custody Agreement
dated March 28, 1991 (the "Agreement"), the Trust and the Custodian hereby agree
that the Endeavor Janus Growth Portfolio (the "Portfolio"), a new portfolio
series of the Trust, created and designated in accordance with the Trust's
Agreement and Declaration of Trust, shall be, considered Portfolios of the Trust
under the terms of the Agreement, and that the Domestic and Global Fee Schedules
currently in effect, and as may be amended from time to time, under the
Agreement shall apply to the Portfolios, as of the date and year first written
above.
2. Limitation of Liability. The term "Endeavor Series Trust" means and
refers to the Trustees from time to time serving under the Agreement and
Declaration of Trust dated November 18, 1988, as the same may subsequently
thereto have been, or subsequently hereto be, amended. It is expressly agreed
that the obligations of the Trust hereunder shall not be binding upon any of the
Trustees, shareholders, nominees, officers, agents or employees of the Trust,
personally, but bind only the trust property of the Trust, as provided in the
Agreement and Declaration of Trust. The execution and delivery of this Agreement
have been authorized by the Trustees of the Trust and signed by an authorized
officer of the Trust, acting as such, and neither such authorization by such
Trustees nor such execution
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and delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the trust property of the Trust as provided in its Agreement and
Declaration of Trust.
If the foregoing is acceptable to you, kindly indicate your acceptance
by signing and returning the enclosed copy of this Supplement.
Very truly yours,
ENDEAVOR SERIES TRUST
By:
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Vincent J. McGuinness, Jr.
Title: President
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Accepted and Agreed to:
BOSTON SAFE DEPOSIT AND TRUST COMPANY
By:
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Title: Senior Vice President
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AMENDMENT NO. 1 TO
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
This Amendment No. 1 dated as of June 1, 1998, is entered into by ENDEAVOR
INVESTMENT ADVISERS (the "Company") and FIRST DATA INVESTOR SERVICES GROUP, INC.
("Investor Services Group").
WHEREAS, the Company and Investor Services Group entered into an
Amended and Restated Administration Agreement dated as of July 1, 1997 (the
"Agreement");
WHEREAS, the Company and Investor Services Group wish to amend the
Agreement to revise certain Schedules to the Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, hereby agree as follows:
I. Schedule A to the Agreement shall be deleted in its
entirety and :replaced with the attached Schedule A.
II. Schedule B to the Agreement shall be deleted in its entirety and
:replaced with the attached Schedule B.
III. Except to the extent amended hereby, the Agreement shall remain
unchanged and in full force and effect and is hereby ratified and confirmed in
all respects as amended hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first written above.
ENDEAVOR INVESTMENT ADVISERS
By: /s/Vincent J. McGuinness, Jr.
FIRST DATA INVESTOR SERVICES
GROUP, INC.
By:/s/James L. Fox
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SCHEDULE A
Endeavor Money Market Portfolio
Endeavor Managed Asset Allocation Portfolio
T. Rowe Price International Stock Portfolio
Endeavor Value Equity Portfolio
Dreyfus Small Value Cap Portfolio
Dreyfus U.S. Government Securities Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Growth Stock Portfolio
Endeavor Opportunity Value Portfolio
Endeavor Enhanced Index Portfolio
Endeavor Select 50 Portfolio
Endeavor High Yield Portfolio
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SCHEDULE B
FEE SCHEDULE
The Company shall pay Investor Services Group the following fees for servicing
the Existing Portfolios (as hereinafter defined):
o a flat fee of $650,000 per annum, provided that the aggregate net
assets of the Existing Portfolios do not exceed $1 billion.
o if the aggregate net assets of the Existing Portfolios exceed $1
billion, Investor Services Group shall also be entitled to receive a
fee of .01% of any net assets in excess of $1 billion in addition to
the flat fee of $650,000.
o if the aggregate net assets of the Existing Portfolios fall below $850
million, the foregoing fees will be subject to renegotiation.
The "Existing Portfolios" shall consist of Endeavor Money Market Portfolio,
Endeavor Managed Asset Allocation Portfolio, T. Rowe Price International Stock
Portfolio, Endeavor Value Equity Portfolio, Dreyfus Small Cap Value Portfolio,
Dreyfus U.S. Government Securities Portfolio, T. Rowe Price Equity Income
Portfolio, T. Rowe Price Growth Stock Portfolio, Endeavor Opportunity Value
Portfolio and Endeavor Enhanced Index Portfolio.
In addition the Company shall pay Investor Services Group the following fees for
servicing the Endeavor Select 50 Portfolio and the Endeavor High Yield
Portfolio:
Flat fee :
$40,000 per fund per annum which will be added to the flat fee of
$650,000 per annum
First year flat fee will be reduced by $10,000 per annum (with respect
to the Endeavor Select 50 Portfolio only).
Asset Based Fee:
An additional fee of .01% on the net assets of the Endeavor Select 50
Portfolio and the Endeavor High Yield Portfolio will be charged.
1. Investor Services Group shall be entitled to collect all out-of-pocket fees
described in Schedule C to the Agreement.
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AMENDMENT NO. 2 TO
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
This Amendment No. 2 dated as of February 1, 1999, is entered into by
ENDEAVOR MANAGEMENT CO. (the "Company") and FIRST DATA INVESTOR SERVICES GROUP,
INC. ("Investor Services Group").
WHEREAS, Endeavor Investment Advisers ("EIA") and Investor Services
Group entered into an Amended and Restated Administration Agreement dated as of
July 1, 1997 (the "Agreement");
WHEREAS, EIA, effective January 1, 1999, assigned all of its rights and
obligations under the Agreement to the Company;
WHEREAS, the Company and Investor Services Group wish to amend the
Agreement to revise certain Schedules to the Agreement;
NOW, THEREFORE, the parties hereto, intending to be legally bound
hereby, hereby agree as follows:
I. Schedule A to the Agreement shall be deleted in its entirety and
:replaced with the attached Schedule A.
II. Schedule B to the Agreement shall be deleted in its entirety and
:replaced with the attached Schedule B.
III. Except to the extent amended hereby, the Agreement shall remain
unchanged and in full force and effect and is hereby ratified and confirmed in
all respects as amended hereby.
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date and year first written above.
ENDEAVOR MANAGEMENT CO.
By: __________________________
FIRST DATA INVESTOR SERVICES
GROUP, INC.
By: __________________________
<PAGE>
SCHEDULE A
Endeavor Money Market Portfolio
Endeavor Asset Allocation Portfolio
T. Rowe Price International Stock Portfolio
Endeavor Value Equity Portfolio
Dreyfus Small Value Cap Portfolio
Dreyfus U.S. Government Securities Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Growth Stock Portfolio
Endeavor Opportunity Value Portfolio
Endeavor Enhanced Index Portfolio
Endeavor Select 50 Portfolio
Endeavor High Yield Portfolio
Endeavor Janus Growth Portfolio
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SCHEDULE B
FEE SCHEDULE
The Company shall pay Investor Services Group the following fees for servicing
the Existing Portfolios (as hereinafter defined):
o a flat fee of $650,000 per annum, provided that the aggregate net
assets of the Existing Portfolios do not exceed $1 billion.
o if the aggregate net assets of the Existing Portfolios exceed $1
billion, Investor Services Group shall also be entitled to receive a
fee of .01% of any net assets in excess of $1 billion in addition to
the flat fee of $650,000.
o if the aggregate net assets of the Existing Portfolios fall below $850
million, the foregoing fees will be subject to renegotiation.
The "Existing Portfolios" shall consist of Endeavor Money Market Portfolio,
Endeavor Asset Allocation Portfolio, T. Rowe Price International Stock
Portfolio, Endeavor Value Equity Portfolio, Dreyfus Small Cap Value Portfolio,
Dreyfus U.S. Government Securities Portfolio, T. Rowe Price Equity Income
Portfolio, T. Rowe Price Growth Stock Portfolio, Endeavor Opportunity Value
Portfolio and Endeavor Enhanced Index Portfolio.
In addition the Company shall pay Investor Services Group the following fees for
servicing the Endeavor Select 50 Portfolio, the Endeavor High Yield Portfolio
and the Endeavor Janus Growth Portfolio:
Flat fee:
$40,000 per fund per annum which will be added to the flat fee
of $650,000 per annum
First year flat fee will be reduced by $10,000 per annum (with
respect to the Endeavor Select 50 Portfolio only).
Asset Based Fee:
An additional fee of .01% on the net assets of the Endeavor
Select 50 Portfolio, the Endeavor High Yield Portfolio and the Endeavor Janus
Growth Portfolio will be charged.
o Investor Services Group shall be entitled to collect all out-of-pocket
fees described in Schedule C to the Agreement.
<PAGE>
DISTRIBUTION AGREEMENT
AGREEMENT made this 1st day of May, 1998, between Endeavor Series
Trust, a Massachusetts business trust, (the "Trust"), and Endeavor Group, a
California corporation (the "Distributor") each with offices at 2101 East Coast
Highway, Suite 300, Corona del Mar, California 92625.
WHEREAS, the Trust is a registered open-end management investment
company, which currently offers shares of its common stock in eleven series,
each as set forth on Schedule A hereto (the "Existing Funds"), and the Trust may
offer shares of one or more additional Funds in the future;
WHEREAS, the Trust was originally organized to act as the funding
vehicle for certain individual variable life insurance policies and individual
and group variable annuity contracts offered by PFL Life Insurance Company
("PFL") or life insurance companies affiliated with PFL through separate
accounts of such life insurance companies; and
WHEREAS, in the future, the Trust may also offer its shares to life
insurance companies unaffiliated with PFL (together with PFL and its affiliated
life insurance companies, the "Life Companies") as a funding vehicle for
variable life insurance policies and variable annuity contracts (together with
the variable life insurance policies and variable annuity contracts offered by
PFL and its affiliated life insurance companies, (collectively referred to
herein as "Variable Contracts"), and/or to qualified pension and retirement
plans (the "Qualified Plans"); and
WHEREAS, from time to time, the Trust may enter into sales agreements
with Life Companies that have or will establish one or more separate accounts to
offer Variable Contracts, pursuant to which one or more Funds of the Trust
serves as the underlying funding vehicle for such Variable Contracts; and, under
certain circumstances, may enter into sales agreements with the Qualified Plans;
and
WHEREAS, it is contemplated that, in addition to entering into sales
agreements with Life Companies and/or Qualified Plans, the Distributor shall
engage in certain promotional and sales efforts on behalf of the Trust, as
described in the Brokerage Enhancement Plan pursuant to Rule 12b-1 adopted by
the Trust.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties agree as follows:
1. (a) The Trust proposes to issue and sell shares of common stock of
the Fund (the "Shares") to separate accounts of Life Companies and to the
Qualified Plans as may be permitted by applicable law and subject to the Trust's
obtaining any necessary regulatory approvals. The Trust hereby appoints the
Distributor as agent to sell the Shares and the Distributor hereby accepts such
appointment. The Shares will
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be distributed under such terms as are set by the Trust and will be sold to the
separate accounts and the Qualified Plans permitted to buy the Shares as
specified by the Trust's Board of Trustees.
(b) In the event that the Trust from time to time designates
one or more Funds in addition to the Existing Funds ("Additional Funds"), it
shall notify the Distributor. If the Distributor is willing to perform services
hereunder for the Additional Funds, it shall so notify the Trust. Thereafter,
the Trust and the Distributor shall mutually agree to amend Schedule A to this
Agreement in writing to add the Additional Funds and the Additional Funds shall
be subject to this Agreement, subject to the approval of the Board of Trustees
as set forth in Section 7.(a) below.
2. (a) The Distributor agrees that (i) all Shares sold by the
Distributor shall be sold at the net asset value as described in the Trust's
prospectus, and (ii) the Trust shall receive 100% of such net asset value.
(b) The Shares will be sold in accordance with any sales
agreements between the Trust and Life Companies and, where applicable, the Trust
and Qualified Plans. The Existing Funds and all Additional Funds subject to this
Agreement are referred to collectively as "Funds."
3. (a) All sales literature and advertisements used by the Distributor
in connection with sales of Shares shall be subject to approval by the Trust.
The Trust authorizes the Distributor, in connection with the sales or arranging
for the sale of Shares, to provide only such information and to make only such
statements or representations as are contained in the Trust's then-current
Prospectus or in sales literature or advertisements approved by the Trust or in
such financial and other statements which are furnished in writing to the
Distributor pursuant to the next paragraph. The Trust shall not be responsible
in any way for any information provided or statements or representations made by
the Distributor or its representatives or agents other than the information,
statements and representations described in the preceding sentence. The
Distributor shall review all materials submitted to it by Life Companies and
Qualified Plans that describe the Trust, the Shares or the Trust's investment
manager and investment advisers. The Distributor shall not be responsible for
any information provided or statements or representations made by Life Companies
or Qualified Plans, representatives or agents of Life Companies or Qualified
Plans, or any other persons or entities other than the Distributor's
representatives or agents.
(b) The Trust shall keep the Distributor fully informed with
regard to its affairs, shall furnish the Distributor with a certified copy of
all financial statements and a signed copy of each report prepared by its
independent certified public accountants, and shall cooperate fully in the
efforts of the Distributor to sell the Shares and in the performance by the
Distributor of all its duties under this Agreement.
4. (a) The Trust will pay or cause to be paid:
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(i) registration fees for registering its shares
under the Securities Act of 1933 (the "1933 Act") as
required;
(ii) the expenses, including counsel fees, of
preparing registration statements and such other
documents as the Trust believes are necessary for
registering the Shares with the Securities and
Exchange Commission (the "SEC") and such states as
are deemed necessary or appropriate;
(iii) expenses incident to preparing amendments to
registration statements of the Trust under the 1933
Act and the Investment Company Act of 1940, as
amended (the "1940 Act");
(iv) expenses for preparing and setting in type all
prospectuses and the expense of supplying them to the
then existing shareholders or beneficial owners of
Shares (including owners of Variable Contracts whose
Contracts use one or more Funds as their funding
vehicle); and
(v) expenses incident to the issuance of its Shares
such as the cost of stock certificates, if any, taxes
and fees of the transfer agent for establishing
shareholder record accounts and confirmations.
(b) The Distributor shall pay all of its own costs and
expenses connected with the offer and sale of Shares
("Distribution Expenses"), except that certain
Distribution Expenses may be reimbursed to the
Distributor as provided in Section 5 hereof.
5. (a) Pursuant to a Brokerage Enhancement Plan (the "Plan") adopted by
the Board of Trustees of the Trust in accordance with Section 12(b) of the 1940
Act, Rule 12b-1 and other rules and regulations promulgated thereunder, as the
same may be, from time to time, issued or amended, the Trust, on behalf of a
Fund that has approved the Plan pursuant to Section 5 thereof, may reimburse the
Distributor, for Distribution Expenses as described in Section 5(b) hereof.
Reimbursements shall be payable only from brokerage commissions paid by the Fund
in connection with its portfolio transactions which have been made available for
use by the Fund as described in the Plan. Reimbursements to the Distributor
shall be payable on a monthly basis. Such reimbursement may be made only for the
one year period commencing on the date hereof and for each twelve month period
(or portion thereof) thereafter, in which the Plan is in effect for that Fund.
(b) Distribution Expenses reimbursable hereunder shall
include, but not necessarily be limited to, the following costs:
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(i) printing and mailing of Trust prospectuses,
statements of additional information, any supplements
thereto and shareholder reports for existing and
prospective Variable Contract owners;
(ii) development, preparation, printing and mailing
of Trust advertisements, sale literature and other
promotional materials describing and/or relating to
the Funds and including materials intended for use
within the Life Company, or for broker-dealer only
use or retail use;
(iii) holding or participating in seminars and sales
meetings designed to promote the distribution of
Trust Shares;
(iv) marketing fees requested by broker-dealers who
sell Variable Contracts;
(v) obtaining information and providing explanations
to Variable Contract owners regarding Trust
investment objectives and policies and other
information about the Trust and the Funds, including
the performance of the Funds;
(vi) training sales personnel regarding sales of
Variable Contracts and underlying Shares of the
Trust;
(vii) compensating broker-dealers and/or their
registered representatives in connection with the
allocation of cash values and premiums of the
Variable Contracts to the Trust;
(viii) personal service and/or maintenance of
Variable Contract owner accounts with respect to
Trust Shares attributable to such accounts; and
(ix) financing any other activity that the Trust's
Board of Trustees determines is primarily intended to
result in the sale of Shares.
(c) The Distributor shall submit annual reimbursable
Distribution Expense budgets to the Board of Trustees of the Trust. As soon as
practicable after the end of each calendar quarter, the Distributor shall submit
to the Board of Trustees for ratification reports of Distribution Expenses
reimbursed as to each Fund for that quarter. The Board of Trustees will consider
each report at its next regular meeting after such report is submitted, and the
Distributor shall only retain those reimbursements that are approved by the
Board of Trustees, including a majority of the "Disinterested Trustees" (as that
term is defined in Section 7 hereof).
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6. (a) The Trust shall maintain a currently effective Registration
Statement on Form N-1A and shall file with the SEC such reports and other
documents as may be required under the 1933 Act and the 1940 Act or by the rule
and regulations of the SEC thereunder.
(b) The Trust represents and warrants that its Registration
Statement, post-effective amendments, Prospectus and Statement of Additional
Information (excluding statements based upon written information furnished by
the Distributor expressly for inclusion therein) shall not contain any untrue
statement of material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that all statements or information furnished to the Distributor, pursuant to
Section 3(b) hereof shall be true and correct in all material respects.
7. (a) This Agreement shall take effect on the date set forth above,
provided it has been approved by a vote of the majority of Trustees of the Trust
and those Trustees of the Trust who are not "interested persons" of the Trust
and who have no direct or indirect financial interest in the operation of the
Plan or this Agreement (the "Disinterested Trustees"), cast in person at a
meeting called for the purpose of voting on this Agreement. This Agreement shall
remain in full force and effect until May 1, 1999, and may be continued for
twelve month periods (or portions thereof) thereafter; provided that such
continuance shall be specifically approved annually by a majority of the Board
of Trustees of the Trust and by a majority of the Disinterested Trustees. This
Agreement may be amended, with respect to any Fund, with the approval of a
majority of the Board of Trustees and by a majority of the Disinterested
Trustees.
(b) This Agreement, with respect to any Fund, may be
terminated, at any time without payment of any penalty, by vote of a majority of
the Disinterested Trustees or by vote of a majority of the outstanding voting
securities of that Fund, or may be terminated by the Distributor, in either case
on not more than 60 days' written notice delivered personally by registered
mail, postage prepaid, to the other party.
(c) This Agreement shall automatically terminate in the event
of its assignment.
(d) The terms "interested persons," "assignment" and "vote of
a majority of the outstanding voting securities" as used herein shall have the
meanings given to them in the 1940 Act.
8. In the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties ("disabling conduct") hereunder
on the part of the Distributor (and its officers, directors, agents, employees,
controlling persons, shareholders and any other person or entity affiliated with
the Distributor or retained by it to perform or assist in the performance of its
obligations under this Agreement) the Distributor shall not be subject to
liability to the Trust or to any shareholder of the Funds
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of the Trust for any act or omission in the course of, or connected with,
rendering services hereunder, or for any loss suffered by any of them in
connection with the matters to which this Agreement relates.
9. (a) The Trust shall indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor within the meaning of Section
15 of the Securities Act against any loss, liability, claim, damage or expense
(including the reasonable cost of investigating or defending any alleged loss,
liability, claim, damage or expense and reasonable counsel fees incurred in
connection therewith), which the Distributor or such controlling person may
incur under the Securities Act or under common law or otherwise, arising out of
or based upon any untrue statement, or alleged untrue statement, of a material
fact contained in the Registration Statement, as from time to time amended or
supplemented, any prospectus or annual or interim report to shareholders of the
Trust, or arising out of or based upon any omission, or alleged omission, to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished to the Trust in
connection therewith by or on behalf of the Distributor; provided, however, that
in no case (i) is the indemnity of the Trust in favor of the Distributor and any
such controlling persons to be deemed to protect such Distributor or any such
controlling persons thereof against any liability to the Trust or its security
holders to which the Distributor or any such controlling persons would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of their duties or by reason of the reckless disregard of their
obligations and duties under this Agreement; or (ii) is the Trust to be liable
under its indemnity agreement contained in this paragraph with respect to any
claim made against the Distributor or any such controlling persons, unless the
Distributor or such controlling persons, as the case may be, shall have notified
the Trust in writing within a reasonable time after the summons or other first
legal process giving information of the nature of the claim shall have been
served upon the Distributor or such controlling persons (or after the
Distributor or such controlling persons shall have received notice of such
service on any designated agent), but failure to notify the Trust of any such
claim shall not relieve it from any liability which it may have to the person
against whom such action is brought otherwise than on account of its indemnity
agreement contained in this paragraph. The Trust will be entitled to participate
at its own expense in the defense, or, if it so elects, to assume the defense of
any suit brought to enforce any such liability, but if the Trust elects to
assume the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Distributor or such controlling person or persons, defendant
or defendants in the suit. In the event the Trust elects to assume the defense
of any such suit and retain such counsel, the Distributor or such controlling
person or persons, defendant or defendants in the suit, shall bear the fees and
expenses of any additional counsel retained by them, but, in case the Trust does
not elect to assume the defense of any such suit, it will reimburse the
Distributor or such controlling person or persons, defendant or defendants in
the suit, for the reasonable fees and expenses of any counsel retained by them.
The Trust shall
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promptly notify the Distributor of the commencement of any litigation or
proceeding against it or any of its officers or directors in connection with the
issuance or sale of any of the Shares.
(b) The Distributor shall indemnify and hold harmless the
Trust and each of its trustees and officers and each person, if any, who
controls the Trust against any loss, liability, claim, damage or expense
described in the foregoing indemnity contained in paragraph 4.1, but only with
respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Trust in writing by or on behalf of the
Distributor for use in connection with the Registration Statement, as from time
to time amended, or the annual or interim reports to shareholders. In case any
action shall be brought against the Trust or any persons so indemnified, in
respect of which indemnity may be sought against the Distributor, the
Distributor shall have the rights and duties given to the Trust, and the Trust
and each person so indemnified shall have the rights and duties given to the
Distributor by the provisions of paragraph 4.1.
10. This Agreement is made by the Trust, on behalf of each Fund,
pursuant to authority granted by the Board of Trustees, and the obligations
created hereby are not binding on any of the Trustees or shareholders of the
Trust individually, but bind only the property of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed by their duly authorized officers and under their respective
seals on the day and year first above written.
ENDEAVOR SERIES TRUST
Attest:
By:
Secretary Vincent J. McGuinness, Jr., President
ENDEAVOR GROUP
Attest:
By:
Secretary Vincent J. McGuinness,
Chief Executive Officer
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AMENDMENT NO. 1 TO
SCHEDULE A OF THE
DISTRIBUTION AGREEMENT
As of February 1, 1999, the Distributor shall act as distributor for shares of
the following Funds of Endeavor Series Trust:
Endeavor Money Market Portfolio
Endeavor Asset Allocation Portfolio
T. Rowe Price International Stock Portfolio
T. Rowe Price Equity Income Portfolio
T. Rowe Price Growth Stock Portfolio
Dreyfus Small Cap Value Portfolio
Dreyfus U.S. Government Securities Portfolio
Endeavor Value Equity Portfolio
Endeavor Opportunity Value Portfolio
Endeavor Enhanced Index Portfolio
Endeavor Select 50 Portfolio
Endeavor High Yield Portfolio
Endeavor Janus Growth Portfolio
Agreed to and accepted as of the date set forth above.
ENDEAVOR GROUP ENDEAVOR SERIES TRUST
By: _________________________ By: _______________________
Vincent J. McGuinness, Vincent J. McGuinness, Jr.
Chief Executive Officer President
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POWER OF ATTORNEY
I, the undersigned, hereby constitute and appoint Robert N. Hickey,
David M. Leahy and David C. Mahaffey, each of them singly, my true and lawful
attorneys and agents, with full power to them and each of them to sign for me
and in my name and in my capacity as an officer or Trustee of Endeavor Series
Trust, any and all Registration Statements on Form N-1A of Endeavor Series
Trust, and any and all amendments thereto, and to file the same, with all
exhibits thereto and other documents in connection thereunder with the
Securities and Exchange Commission, granting unto said attorney and agent full
power and authority to do and perform each and every act and thing requisite or
necessary to be done in connection therewith as fully to all intents and
purposes as I might or could do in person, with full power of substitution and
revocation; and I do hereby ratify and confirm all that said attorneys and
agents may lawfully do or cause to be done by virtue of this power of attorney.
WITNESS my hand as of the 5th day of November, 1998.
/s/Peter F. Muratore
Peter F. Muratore
<PAGE>
