As filed with the Securities and Exchange Commission on April 8, 1999
Securities Act File No. 33-27352
Investment Company Act File No. 811-5780
- -----------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment No.
Post-Effective Amendment No. 27 X
--- ---
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
Amendment No. 30
ENDEAVOR SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
2101 East Coast Highway, Suite 300
Corona del Mar, California 92625
------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Are Code: (800) 854-8393
------------------------------------------------------------------
Vincent J. McGuinness, Jr.
-------------------------
President
Endeavor Series Trust
2101 East Coast Highway, Suite 300, Corona del Mar, California 92625
--------------------------------------------------------------------
(Name and Address of Agent for Service)
---------------------------------------
Copies to:
Robert N. Hickey, Esq.
Sullivan & Worcester LLP
1025 Connecticut Avenue, N.W. Washington, D.C. 20036
------------------------------------------------------
It is proposed that this filing will become effective:
X 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)
-1-
<PAGE>
75 days after filing pursuant to paragraph (a)(2)
on ____________ pursuant to paragraph (a)(2) of
Rule 485
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
- -----------------------------------------
The Registrant has previously filed a declaration of indefinite registration of
shares of beneficial interest 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 ,
Endeavor Enhanced Index Portfolio, Endeavor Select 50 Portfolio, Endeavor High
Yield Portfolio and Endeavor Janus Growth 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 , Endeavor
Enhanced Index Portfolio, Endeavor Select 50 Portfolio and Endeavor High Yield
Portfolio for the fiscal year ended December 31, 1998 was filed on or about
March 31, 1999. The Registrant did not sell shares of beneficial interest for
its Endeavor Janus Growth Portfolio during the fiscal year ended December 31,
1998 pursuant to such declaration and, therefore, did not file a Rule 24f-2
Notice for the fiscal year ended December 31, 1998 pursuant to Rule 24f-2(b) of
the 1940 Act.
-2-
<PAGE>
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
-1-
<PAGE>
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
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.
</TABLE>
-2-
<PAGE>
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 #0000908737-98-000295.
-3-
<PAGE>
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 April 7, 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 April 7, 1999.
Endeavor(sm) is a registered service mark of Endeavor Management Co.
-1-
<PAGE>
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
-2-
<PAGE>
The investment objective of the Portfolio is to seek growth of capital.
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.
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
-3-
<PAGE>
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."
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
-4-
<PAGE>
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.
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).
-5-
<PAGE>
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 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:
-6-
<PAGE>
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.
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.
-7-
<PAGE>
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 33 1/3% 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 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
-8-
<PAGE>
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 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
-9-
<PAGE>
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 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.
-10-
<PAGE>
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 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
-11-
<PAGE>
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 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.
-12-
<PAGE>
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.
-13-
<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 and compliance 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.
-14-
<PAGE>
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 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 management fees but excluding interest, taxes, brokerage
fees, commissions (including recaptured commissions which are used to pay for
distribution expenses) 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
management fees payable by the Portfolio such that total management fees payable
by the Portfolio will equal 0.775% of the average daily net assets of the
Portfolio.
The Fund and the Manager have filed an exemptive application requesting
an exemptive order from the Securities and Exchange Commission that will permit
the Manager, subject to certain conditions, and without the approval of
shareholders to: (a) employ a new unaffiliated investment adviser for the
Portfolio pursuant to the terms of a new investment advisory agreement, in each
case either as a replacement for an existing investment adviser or as an
additional investment adviser; (b) change the terms of any investment advisory
agreement; and (c) continue the employment of an existing investment adviser on
the same advisory contract terms where a contract has been assigned because of a
change in control of the investment adviser. In such circumstances, shareholders
would receive notice of such action, including the information concerning the
investment adviser that normally is provided in a proxy statement. The exemptive
order also would permit disclosure of fees paid to unaffiliated investment
advisers on an aggregate basis only. There is no assurance that the Securities
and Exchange Commission will grant the Fund's and the Manager's application.
-15-
<PAGE>
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.
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.
-16-
<PAGE>
Janus Capital Corporation ("Janus"), 100 Fillmore Street, Denver,
Colorado 80206, 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 December 31, 1998, Janus and its advisory affiliates
had approximately $108 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.
The Portfolio is co-managed by Scott W. Schoelzel and Edward Keely. Mr.
Schoelzel has been the portfolio manager for the Growth Portfolio of the WRL
Series Fund, Inc. 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.
Mr. Keely, a Vice President at Janus, currently co-manages the Growth
Portfolio of the WRL Series Fund, Inc. Prior to joining Janus in 1998, Mr. Keely
was Senior Vice President of Investments at Founders Asset Management
("Founders") where he was also the portfolio manager of Founders Growth Fund
from 1994 to 1998. Prior to managing Founders Growth Fund, he was assistant
portfolio manager of both Founders Discover and Frontier Funds. Mr. Keely joined
Founders in 1989 as a financial analyst.
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 Act) of the Fund, the
Manager or Endeavor Group (the "Distributor") (hereinafter referred to as
"Independent Trustees"), have voted pursuant to the substantive provisions of
Rule 12b-1 under the 1940 Act 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. Under the
Plan, the Fund is using recaptured commissions to pay for
-17-
<PAGE>
distribution expenses. However, under the Plan, except for recaptured
commissions, neither the Fund nor any series of the Fund, including the
Portfolio, will incur any additional 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 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
-18-
<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,
-19-
<PAGE>
reference should be made to the prospectus for the Contracts
accompanying this Prospectus.
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 and Good Friday. 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.
-20-
<PAGE>
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 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 Comparable 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 April 30, 1999,
pursuant to an order anticipated to be 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
-21-
<PAGE>
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 Portfolio's predecessor, set forth below is certain performance
information regarding the Growth Portfolio which has been obtained from Janus.
Such information is net of all expenses charged to the Growth Portfolio.
Investors should not rely on the following financial information as an
indication of the future performance of the Portfolio.
Average Annual Total Return of Comparable Fund (1)
<TABLE>
<CAPTION>
For the
For the Period from
For the Five Years For the Ten Inception
Year Ended Ended Years Ended (10/2/86) to
December December December December 31,
31, 1998 31, 1998 31, 1998 1998
---------- ---------- ----------- ----
<S> <C> <C> <C> <C>
Growth
Portfolio 25.20% 22.61% 20.91%
64.47%
- ------------------
</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
-22-
<PAGE>
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.
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.
-23-
<PAGE>
Independent Auditors
Ernst & Young LLP, located at 2 Commerce Square, 2001 Market Street,
Suite 4000, Philadelphia, Pennsylvania 19103, 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.
-24-
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> <C>
The Fund 2 ENDEAVOR SERIES TRUST
Financial Highlights 3
Investment Objective and Policies 3 2101 East Coast Highway,
Investment Strategies 4 Suite 300
Management of the Fund 14 Corona del Mar, California 92625
The Manager 14 (800) 854-8393
The Adviser 16
Brokerage Enhancement Plan 17 Manager
Dividends, Distributions and Taxes 19
Sale and Redemption of Shares 20 Endeavor Management Co.
Performance Information 20 2101 East Coast Highway
Prior Performance of Suite 300
Comparable Fund 21 Corona del Mar, California 92625
Organization and Capitalization
of the Fund 23 Investment Adviser
Additional Information 23
Transfer Agent and Custodian 23 Janus Capital Corporation
Independent Auditors 23 100 Fillmore Street
Denver, Colorado 80206
--------------
Custodian
No person has been authorized to give any
information or to make any representation not Boston Safe Deposit and Trust
contained in this Prospectus and, if given or Company
made, such information or representation must One Boston Place
not be relied upon as having been authorized. Boston, Massachusetts 02108
This Prospectus 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
jurisdiction of the United States or any
country where such offer would be unlawful.
</TABLE>
-25-
<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 April 7, 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.
-1-
<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT
OBJECTIVES AND POLICIES...........................................4
Options and Futures Strategies....................................4
Foreign Currency Transactions....................................10
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 .......................................................25
Non-Standardized Performance....................................27
PORTFOLIO TRANSACTIONS...................................................27
MANAGEMENT OF THE FUND...................................................30
Trustees and Officers
............................................................30
The Manager.....................................................36
The Advisers.... ...............................................37
REDEMPTION OF SHARES.....................................................43
NET ASSET VALUE..........................................................43
TAXES ................................................................45
Federal Income Taxes
...............................................................45
-2-
<PAGE>
ORGANIZATION AND CAPITALIZATION OF THE FUND..............................47
LEGAL MATTERS............................................................49
CUSTODIAN................................................................49
FINANCIAL STATEMENTS.....................................................49
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 April 7, 1999.
-3-
<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 options and futures with respect to stock indices
and U.S.
-4-
<PAGE>
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.
A Portfolio may terminate an option which it has written prior to its
expiration by entering into a closing purchase
-5-
<PAGE>
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.
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
-6-
<PAGE>
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.
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
-7-
<PAGE>
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.
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
-8-
<PAGE>
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 Select 50, Endeavor High Yield and Endeavor
Janus Growth Portfolios)
Foreign Currency Exchange Transactions. A Portfolio may engage in foreign
currency exchange transactions to protect
-9-
<PAGE>
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
over-the-counter markets. In connection with position hedging, a
-10-
<PAGE>
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 banks) and their customers. A forward contract
generally has no
-11-
<PAGE>
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
-12-
<PAGE>
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.
-13-
<PAGE>
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, T. Rowe Price
International Stock, T. Rowe Price Growth Stock, Endeavor Asset Allocation,
Endeavor High Yield and Endeavor Janus
Growth Portfolios)
-14-
<PAGE>
Among the strategic transactions into which the Dreyfus U.S. Government
Securities, T. Rowe Price International Stock, T. Rowe Price Growth Stock,
Endeavor Asset Allocation, 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
-15-
<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 , Endeavor Janus
Growth and T. Rowe Price International Stock Portfolios)
The Dreyfus U.S. Government Securities , Endeavor Janus Growth and T.
Rowe Price International Stock 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.
-16-
<PAGE>
Further, although a Portfolio can estimate the amount of expected principal
prepayment over the term of the dollar roll, a 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, Endeavor Asset Allocation and Endeavor Janus
Growth Portfolio anticipate that portfolio turnover will generally not exceed
100% per year. The Advisers to the Endeavor Select 50 Portfolio, Endeavor Asset
Allocation 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.
For calendar year 1998, the Endeavor Asset Allocation Portfolio's
turnover rate was 262% as compared to 67% for calendar year 1997. A substantial
portion of this increase was due to the changes in the Portfolio's investments
in connection with the change in investment advisers, which was effective May 1,
1998.
For calendar year 1998, the Dreyfus Small Cap Value Portfolio's
turnover rate was 183% as compared to 127% for
-17-
<PAGE>
calendar year 1997. A substantial portion of this increase was due to the market
volatility of small cap stocks in 1998.
For calendar year 1998, the Dreyfus U.S. Government Securities
Portfolio's turnover rate was 615% as compared to 185% for calendar year 1997.
The increase in the Portfolio's turnover rate was due to the financial markets'
extreme volatility in 1998. Changes were made in sector allocations between U.S.
Treasuries, corporate bonds and mortgage-backed securities.
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 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
-18-
<PAGE>
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 to the extent permitted by law.
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.
-19-
<PAGE>
7. Purchase or sell commodities or commodity contracts, except that all
Portfolios other than the Endeavor Money Market
-20-
<PAGE>
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.
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
-21-
<PAGE>
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:
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
-22-
<PAGE>
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 10% of the value of its total assets invested in warrants; 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 , Endeavor
Enhanced Index, Endeavor Select 50 and Endeavor High Yield Portfolios for the
specific periods.
-23-
<PAGE>
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.
-24-
<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)...... 18.39% 14.30%
14.36%/14.15%*
T. Rowe Price
International
Stock(1)........... 15.44% 7.28% 7.16%
Endeavor Value
Equity(2).......... 7.56% 18.41
16.88%/16.79%*
Dreyfus Small
Cap Value(3)....... (2.18)% 11.56%
12.33%/12.27%*
T. Rowe Price
Equity Income(4)... 8.81% N/A 21.59%
T. Rowe Price Growth
Stock(4)............ 28.67% N/A 28.72%
Dreyfus U.S.
Government
Securities(5)...... 7.38% N/A 7.10%/7.03%*
Endeavor Opportunity
Value(6)........... 5.18% N/A 10.52%/10.32%*
Endeavor Enhanced
Index (7).......... 31.39% N/A
33.27%/33.26%*
Endeavor Select
50(8)............. N/A N/A 6.60%/6.55%*
Endeavor High
Yield (9)......... N/A N/A (3.10)%/(3.26)%*
- ------------------------
</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.
-25-
<PAGE>
(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.
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
-26-
<PAGE>
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 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
-27-
<PAGE>
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 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
-28-
<PAGE>
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 Advisers to the Endeavor Money Market, Endeavor Asset Allocation,
T. Rowe Price International Stock, T. Rowe Price Equity Income , T. Rowe Price
Growth Stock,
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
-29-
<PAGE>
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 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 Securities, Ltd., 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 and the Endeavor High Yield Portfolio did not pay any brokerage
commissions while the Endeavor Asset Allocation Portfolio paid $699,420 in
brokerage commissions of which $288 (0.04%) was paid to Morgan Stanley & Co.,
Inc. 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 $121,001, $142,104 and $889,611, respectively, in brokerage
commissions of which $1,917 (1.58%), $10,301 (8.51%) and $759 (0.63%) 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
Securities, Ltd., respectively. For the year ended December 31, 1998, the T.
Rowe Price Equity Income Portfolio and the T. Rowe Price Growth Stock Portfolio
paid $122,431 and $21,866, respectively, in brokerage commissions of which
$2,964 (1.37%) 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
Dreyfus U.S. Government Securities Portfolio, the Endeavor Opportunity Value
Portfolio and the Endeavor Enhanced Index Portfolio paid $67,575, $43,947 and
$46,321, respectively, in
-30-
<PAGE>
brokerage commissions. For the fiscal year ended December 31, 1998, the Endeavor
Select 50 Portfolio paid $177,608 in brokerage commissions of which $1,356
(0.76%) 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."
For the year ended December 31, 1998, the Distributor received an aggregate
of $229,771 pursuant to the Plan, of which $112,862 was attributable to the
Dreyfus Small Cap Portfolio, $4,829 to the Endeavor Opportunity Value Portfolio,
$28,753 to the Endeavor Value Equity Portfolio, $78,788 to the Endeavor Asset
Allocation Portfolio, $1,483 to the T. Rowe Price Equity Income Portfolio and
$3,056 to the T. Rowe Price Growth Stock Portfolio. In 1998, $32,000 was
utilized to pay the costs of seminars and sales meetings and the mailing of
marketing materials.
MANAGEMENT OF THE FUND
The Fund is supervised by a Board of Trustees that is responsible for
representing the interests of shareholders. The Trustees meet periodically
throughout the year to oversee the Portfolios' activities, reviewing, among
other things, each Portfolio's performance and its contractual arrangements with
various service providers.
Trustees and Officers
The Trustees and executive officers of the Fund, their ages and their
principal occupations during the past five years are set forth below. Unless
otherwise indicated, the business address of each is 2101 East Coast Highway,
Suite 300, Corona del Mar, California 92625.
-31-
<PAGE>
<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
(oil
and
gas);
from
May,
1996
to
January,
1997,
Executive
Vice
President
and
Director
of
Sales,
Western
Division
of
Endeavor
-32-
<PAGE>
Principal
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
, 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
1424 Dolphin Terrace
Corona del Mar, California
92625
Vice
President, Plant
Control, Inc.
(landscape contracting
and maintenance).
Thomas J. Hawekotte (63) Trustee President, Thomas J.
6007 North Sheridan Road Hawekotte, P.C. (law
Chicago, Illinois 60660 practice).
-33-
<PAGE>
Principal
Steven L. Klosterman (47)
5973 Avenida Encinas Trustee Since July, 1995,
Suite 300 President of Klosterman
Carlsbad, California 92008 Capital Corporation
(investment adviser);
Investment Counselor,
Robert J. Metcalf &
Associates, Inc.
(investment adviser)
from August, 1990 to
June, 1995.
Trustee President, Lindquist
*Halbert D. Lindquist (52) Stephenson & White,
1650 E. Fort Lowell Road Inc. (investment
Suite 203 adviser) and since
Tucson, Arizona 85719-2324 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.
Keith H. Wood (62) Trustee Since 1972, Chairman
39 Main Street and Chief Executive
Chatham, New Jersey 07928 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 Far March, 1998, President
Posthouse Road of OCC Distributors
Morristown, New Jersey 07960 (broker-dealer), a
subsidiary of
Oppenheimer Capital.
-34-
<PAGE>
Principal
P. Michael Pond (45) Executive Since November 1, 1998,
Vice-President Executive Vice-
- President -
Administration Administration and
and Compliance Compliance of Endeavor
Group and Endeavor
Management Co. and
Chief Investment
Officer of Endeavor
Management Co.; from
November,
1991 to
November,
1996, Chairman and
President of The
Preferred Group of
Mutual Funds; from
October,
1989 to
December,
1996, President of
Caterpillar Securities
Inc. and Caterpillar
Investment Manager Ltd.
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.
</TABLE>
* An "interested person" of the Fund as defined in the 1940 Act.
-35-
<PAGE>
*+ 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.
<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 12,375 13,075
Thomas J. Hawekotte 12,375 13,075
Steven L. Klosterman 12,375 13,075
Halbert D. Lindquist 7,875 8,225
R. Daniel Olmstead* 12,375 13,075
Keith H. Wood 12,375 13,075
Peter F. Muratore 6,000 6,700
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
-36-
<PAGE>
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 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 February 1, 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
-37-
<PAGE>
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, 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.
-38-
<PAGE>
was approved 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 February 1, 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 9, 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 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
-39-
<PAGE>
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.
-40-
<PAGE>
<TABLE>
<CAPTION>
1998
Investment
Management Investment Other
Fee Management Expenses
Paid Fee Waived Reimbursed
<S> <C> <C> <C>
Endeavor Money Market
Portfolio......... $ 387,793 $--- $ ---
Endeavor Asset
Allocation
Portfolio......... 2,449,659 --- ---
T. Rowe Price
International
Stock Portfolio... 1,603,389 --- ---
Endeavor Value
Equity Portfolio. 1,901,572 --- ---
Dreyfus Small
Cap Value
Portfolio......... 1,207,117 --- ---
Dreyfus U.S.
Government
Securities
Portfolio......... 419,748 ---
T. Rowe Price
Equity Income
Portfolio......... 1,866,844 --- ---
T. Rowe Price Growth
Stock Portfolio... 1,255,157 --- ---
Endeavor Opportunity
Value Portfolio... 303,103 --- ---
Endeavor Enhanced Index
Portfolio......... 284,833 --- ---
Endeavor Select 50
Portfolio*........ 197,853 9,166
Endeavor High Yield
Portfolio**....... 29,230 5,833
1997
Investment
-41-
<PAGE>
Management Investment Other
Fee Management Expenses
Paid Fee Waived Reimbursed
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 ---
1996
Investment Investment
Management Management Other
Fee Fee Expenses
Paid Waived Reimbursed
Endeavor Money Market
Portfolio.......... $ 165,212 $ -- --
Endeavor Asset
Allocation
Portfolio.......... 1,639,338 -- --
T. Rowe Price
International
Stock Portfolio.... 1,015,179 -- --
Endeavor Value Equity
-42-
<PAGE>
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>
- ---------------
* 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.
---------------------------
For the year ended December 31, 1998, the following Portfolios
reimbursed, after waivers, the Manager, for administrative expenses incurred by
the Manager on behalf of the Portfolios:
Endeavor Select 50 - $25,000
Endeavor High Yield - $17,500
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.
-43-
<PAGE>
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 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
-44-
<PAGE>
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 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
-45-
<PAGE>
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 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.
-46-
<PAGE>
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 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 thirteen series. Each
series
-47-
<PAGE>
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 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 January 31, 1999, the PFL Endeavor Variable Annuity Account owned
of record the following
-48-
<PAGE>
approximate percentages of the outstanding shares of each Portfolio: 69.55% of
the Endeavor Money Market Portfolio; 90.86% of the Endeavor Asset Allocation
Portfolio; 83.65% of the T. Rowe Price International Stock Portfolio; 81.41% of
the Endeavor Value Equity Portfolio; 80.51% of the Dreyfus Small Cap Value
Portfolio; 77.51% of the Dreyfus U.S. Government Securities Portfolio; 80.75% of
the T. Rowe Price Equity Income Portfolio; 76.27% of the T. Rowe Price Growth
Stock Portfolio; 80.78% of the Endeavor Opportunity Value Portfolio; 65.14% of
the Endeavor Enhanced Index Portfolio; 66.14% of the Endeavor Select 50
Portfolio; and 76.26% of the Endeavor High Yield Portfolio. As of January 31,
1999, the PFL Endeavor Platinum Variable Annuity Account owned of record the
following approximate percentages of the outstanding shares of each Portfolio:
29.31% of the Endeavor Money Market Portfolio; 7.52% of the Endeavor Asset
Allocation Portfolio; 11.24% of the T. Rowe Price International Stock Portfolio;
14.89% of the Endeavor Value Equity Portfolio; 13.66% of the Dreyfus Small Cap
Value Portfolio; 19.66% of the Dreyfus U.S. Government Securities Portfolio;
14.84% of the T. Rowe Price Equity Income Portfolio; 18.13% of the T. Rowe Price
Growth Stock Portfolio; 16.68% of the Endeavor Opportunity Value Portfolio;
26.09% of the Endeavor Enhanced Index Portfolio; 33.86% of the Endeavor Select
50 Portfolio; and 23.72% of the Endeavor High Yield Portfolio. As of January 31,
1999, the AUSA Life Insurance Variable Annuity Account owned of record the
following approximate percentages of the outstanding shares of each Portfolio:
1.14% of the Endeavor Money Market Portfolio; 1.62% of the Endeavor Asset
Allocation Portfolio; 4.26% of the T. Rowe Price International Stock Portfolio;
3.34% of the Endeavor Value Equity Portfolio; 3.35% of the Dreyfus Small Cap
Value Portfolio; 2.83% of the Dreyfus U.S. Government Securities Portfolio;
3.05% of the T. Rowe Price Equity Income Portfolio; 3.77% of the T. Rowe Price
Growth Stock Portfolio; 2.54% of the Endeavor Opportunity Value Portfolio; and
3.09% of the Endeavor Enhanced Index Portfolio; As of January 31, 1999, the
People's Benefit Life Insurance Company Separate Account V owned of record the
following approximate percentages of the outstanding shares of each Portfolio:
1.92% of the Dreyfus Small Cap Value Portfolio; 0.83% of the T. Rowe Price
International Stock Portfolio; and 5.60% 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
-49-
<PAGE>
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 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 financial highlights and the
Report of Ernst & Young LLP, Independent Auditors, 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
Report of Independent Auditors) 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
"Prime-1" is the highest commercial paper rating assigned by Moody's,
which uses the numbers "1", "2" and "3" to denote
A-2
<PAGE>
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 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-3
<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
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").
-1-
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibits
<S> <C> <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
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
-2-
<PAGE>
("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
(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.
-3-
<PAGE>
(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").
(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
-4-
<PAGE>
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
incorporated by reference
to Post-Effective
Amendment No. 24 as filed
with the SEC on November
25, 1998 ("Post-
Effective Amendment No.
24").
(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 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-
<PAGE>
(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 incorporated by
reference to Post-Effective
Amendment No. 24.
(5)(a)(8) Transfer and Assumption of
Management Agreement among
Endeavor Investment Advisers,
Endeavor Management Co. and the
Registrant is
incorporated by reference to Post-
Effective Amendment No. 26 as
filed with the SEC on February 22,
1999 ("Post-Effective Amendment
No. 26").
(5)(a)(9) Supplement to Management Agreement
between Registrant and Endeavor
Management Co. with respect to
Endeavor Janus Growth Portfolio is
incorporated by
reference to Post-Effective
Amendment No. 26.
(5)(b) Deleted
-6-
<PAGE>
(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
incorporated by reference
to Post- Effective
Amendment No. 24.
(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,
International, Inc. and Endeavor
Investment Advisers with respect
to the Global Growth Portfolio is
-7-
<PAGE>
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
incorporated by
reference to Post-Effective
Amendment No. 24.
(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 incorporated by
reference to Post-Effective
Amendment No. 24.
(5)(p) Investment Advisory Agreement
between Morgan Stanley Asset
Management Inc. and Endeavor
Investment Advisers with respect
to Endeavor Asset Allocation
Portfolio is
incorporated by reference to Post-
Effective Amendment No. 24.
-8-
<PAGE>
(5)(q) Investment Advisory Agreement
between Massachusetts Financial
Services Company and Endeavor
Investment Advisers with respect
to Endeavor High Yield Portfolio
is incorporated by
reference to Post-Effective
Amendment No. 24.
(5)(r) Investment Advisory Agreement
between Janus Capital Corporation
and Endeavor Management Co. with
respect to Endeavor Janus Growth
Portfolio is
incorporated by reference to Post-
Effective Amendment No. 26.
(5)(s) Form of Transfer and Assumption of
Investment Advisory Agreement is
incorporated by reference to Post-
Effective Amendment No. 24..
(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
-9-
<PAGE>
reference to Post-Effective
Amendment No. 14.
(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
incorporated by reference
to Post-Effective
Amendment No.
24.
(8)(g) Supplement to Custody Agreement
between Registrant and Boston Safe
Deposit and Trust Company with
respect to Endeavor High Yield
Portfolio is
incorporated by reference to Post-
Effective Amendment No. 24.
(8)(h) Supplement to Custody Agreement
between Registrant and Boston Safe
Deposit and Trust Company with
respect to Endeavor Janus Growth
Portfolio is
incorporated by reference to Post-
Effective Amendment No. 26.
(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.
-10-
<PAGE>
(9)(b) License Agreement between Endeavor
Management Co. and Registrant is
incorporated by reference to Post-
Effective Amendment No. 14.
(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
-11-
<PAGE>
Services Group, Inc.) 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)(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.
-12-
<PAGE>
(9)(c)(10) Supplement dated January
28, 1998 to
Administration Agreement
between Endeavor
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
incorporated by
reference to Post-Effective
Amendment No. 24.
(9)(c)(13) Amendment No. 2 to Amended and
Restated Administration Agreement
dated as of February 1, 1999 with
respect to Endeavor Janus Growth
Portfolio is
incorporated by reference to Post-
Effective Amendment No. 26.
(10) Not Applicable.
(11) Consent of Independent Auditors
is filed
herein.
(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.
-13-
<PAGE>
(15)(a) Brokerage Enhancement Plan
incorporated by reference to Post-
Effective Amendment No. 21.
(15)(b) Distribution Agreement between the
Registrant and Endeavor Group is
incorporated by
reference to Post-Effective
Amendment No. 24.
(16) Not Applicable.
(17) Not Applicable.
(18) Financial Data
Schedules are filed herein.
(19) Powers of Attorney are
incorporated by reference to Post-
Effective Amendment Nos. 14, 16,
18, 20 , 22 and
24.
</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 People's Benefit Life Insurance Company's separate
accounts, People's Benefit Life Insurance Company Separate Account V, 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, and People's Benefit Life Insurance Company, a stock life
insurance company organized under the laws of Missouri, 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.
-14-
<PAGE>
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.
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
-15-
<PAGE>
Endeavor Janus Growth Portfolio..................................... 1
Item 27. INDEMNIFICATION
Reference is made to the following documents:
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.
-16-
<PAGE>
Item 28. (a) Business and Other Connections of the Investment
Adviser
Investment Adviser - Endeavor Management Co.
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
-17-
<PAGE>
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).
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
-18-
<PAGE>
regional investment offices in New York, London, Zurich, Geneva,
Tokyo, Hong Kong, Manila, Kuala Lumpur, Seoul, Teipi, Bombay,
Jakarta, Singapore, Bankok and Johannesburg.
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
-------
-19-
<PAGE>
Investment Adviser - Massachusetts Financial Services
Company
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>
Vincent J. McGuinness,
Jr. Chief Operating President,
Officer, Chief Chief
Financial Officer, Financial
Director Officer,
Trustee
Executive Vice Executive Vice
P. Michael Pond President - President -
Administration and Administration
Compliance, Chief and Compliance
Investment Officer
Pamela A. Shelton Secretary Secretary
George F. Veazey, III President, National
Distribution
---
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>
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 8th day
of April, 1999.
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 (principal
Vincent J. McGuinness, Jr. executive officer), April 8, 1999
Chief Financial
Officer (Treasurer)
(principal financial
and accounting
officer), Trustee
/s/Vincent J. McGuinness* Trustee
Vincent J. McGuinness April 8, 1999
/s/Timothy A. Devine* Trustee
Timothy A. Devine April 8, 1999
/s/Thomas J. Hawekotte* Trustee
Thomas J. Hawekotte April 8, 1999
/s/Steven L. Klosterman* Trustee
Steven L. Klosterman April 8, 1999
-24-
<PAGE>
Signature Title Date
/s/Halbert D. Lindquist* Trustee April 8, 1999
Halbert D. Lindquist
/s/Keith H. Wood* Trustee
Keith H. Wood April 8, 1999
/s/Peter F. Muratore* Trustee
Peter F. Muratore April 8, 1999
* By: /s/Robert N. Hickey
Robert N. Hickey
Attorney-in-fact
</TABLE>
-25-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 2
<NAME> ASSET ALLOCATION
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 363924836
<INVESTMENTS-AT-VALUE> 408749428
<RECEIVABLES> 9516668
<ASSETS-OTHER> (329505)
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 417936591
<PAYABLE-FOR-SECURITIES> 64673170
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 262610
<TOTAL-LIABILITIES> 64935780
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 221565520
<SHARES-COMMON-STOCK> 14778847
<SHARES-COMMON-PRIOR> 13567600
<ACCUMULATED-NII-CURRENT> 6126905
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 80487761
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 44820625
<NET-ASSETS> 353000811
<DIVIDEND-INCOME> 2044493
<INTEREST-INCOME> 6926733
<OTHER-INCOME> 0
<EXPENSES-NET> 2539511
<NET-INVESTMENT-INCOME> 6431715
<REALIZED-GAINS-CURRENT> 80203003
<APPREC-INCREASE-CURRENT> (31774719)
<NET-CHANGE-FROM-OPS> 54859999
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4399126
<DISTRIBUTIONS-OF-GAINS> 28024060
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1760590
<NUMBER-OF-SHARES-REDEEMED> 2003298
<SHARES-REINVESTED> 1453955
<NET-CHANGE-IN-ASSETS> 49898663
<ACCUMULATED-NII-PRIOR> 4396467
<ACCUMULATED-GAINS-PRIOR> 28006667
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2449659
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2626764
<AVERAGE-NET-ASSETS> 326618794
<PER-SHARE-NAV-BEGIN> 22.34
<PER-SHARE-NII> .43
<PER-SHARE-GAIN-APPREC> 3.50
<PER-SHARE-DIVIDEND> .32
<PER-SHARE-DISTRIBUTIONS> 2.06
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.89
<EXPENSE-RATIO> 0.78
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 7
<NAME> DREYFUS U.S. GOVERNMENT
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 85341166
<INVESTMENTS-AT-VALUE> 86258690
<RECEIVABLES> 951871
<ASSETS-OTHER> 1723
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 87212284
<PAYABLE-FOR-SECURITIES> 4260382
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62943
<TOTAL-LIABILITIES> 4323325
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 77075070
<SHARES-COMMON-STOCK> 6726487
<SHARES-COMMON-PRIOR> 3919711
<ACCUMULATED-NII-CURRENT> 3356679
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1480481
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 976729
<NET-ASSETS> 82888959
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 3861269
<OTHER-INCOME> 0
<EXPENSES-NET> 468776
<NET-INVESTMENT-INCOME> 3392493
<REALIZED-GAINS-CURRENT> 1454088
<APPREC-INCREASE-CURRENT> (259787)
<NET-CHANGE-FROM-OPS> 4586794
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1993080
<DISTRIBUTIONS-OF-GAINS> 14764
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3690177
<NUMBER-OF-SHARES-REDEEMED> 1053685
<SHARES-REINVESTED> 170284
<NET-CHANGE-IN-ASSETS> 36346978
<ACCUMULATED-NII-PRIOR> 1990775
<ACCUMULATED-GAINS-PRIOR> 7648
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 419748
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 474484
<AVERAGE-NET-ASSETS> 65071261
<PER-SHARE-NAV-BEGIN> 11.87
<PER-SHARE-NII> .40
<PER-SHARE-GAIN-APPREC> .46
<PER-SHARE-DIVIDEND> .41
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.32
<EXPENSE-RATIO> 0.72
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 8
<NAME> T.ROWE PRICE EQUITY INCOME
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 232692293
<INVESTMENTS-AT-VALUE> 264236047
<RECEIVABLES> 574090
<ASSETS-OTHER> (78792)
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 264731345
<PAYABLE-FOR-SECURITIES> 2147107
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 256028
<TOTAL-LIABILITIES> 2403135
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 213843014
<SHARES-COMMON-STOCK> 13088883
<SHARES-COMMON-PRIOR> 10199760
<ACCUMULATED-NII-CURRENT> 5103379
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 11837876
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 31543941
<NET-ASSETS> 262328210
<DIVIDEND-INCOME> 6140961
<INTEREST-INCOME> 918248
<OTHER-INCOME> 0
<EXPENSES-NET> 1972101
<NET-INVESTMENT-INCOME> 5087108
<REALIZED-GAINS-CURRENT> 11839723
<APPREC-INCREASE-CURRENT> 2101927
<NET-CHANGE-FROM-OPS> 19028758
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3237538
<DISTRIBUTIONS-OF-GAINS> 8216569
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3467152
<NUMBER-OF-SHARES-REDEEMED> 1163019
<SHARES-REINVESTED> 584990
<NET-CHANGE-IN-ASSETS> 65100111
<ACCUMULATED-NII-PRIOR> 3262979
<ACCUMULATED-GAINS-PRIOR> 8203212
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1866844
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1975345
<AVERAGE-NET-ASSETS> 233355445
<PER-SHARE-NAV-BEGIN> 19.34
<PER-SHARE-NII> .35
<PER-SHARE-GAIN-APPREC> 1.33
<PER-SHARE-DIVIDEND> .28
<PER-SHARE-DISTRIBUTIONS> .70
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.04
<EXPENSE-RATIO> 0.85
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 11
<NAME> ENHANCED INDEX
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 57382406
<INVESTMENTS-AT-VALUE> 65322002
<RECEIVABLES> 317249
<ASSETS-OTHER> (814244)
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 64825007
<PAYABLE-FOR-SECURITIES> 610313
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 156986
<TOTAL-LIABILITIES> 767299
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 51962181
<SHARES-COMMON-STOCK> 3983565
<SHARES-COMMON-PRIOR> 1611913
<ACCUMULATED-NII-CURRENT> 185177
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3974313
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 7936037
<NET-ASSETS> 64057708
<DIVIDEND-INCOME> 545539
<INTEREST-INCOME> 54865
<OTHER-INCOME> 0
<EXPENSES-NET> 419203
<NET-INVESTMENT-INCOME> 181201
<REALIZED-GAINS-CURRENT> 3975442
<APPREC-INCREASE-CURRENT> 6695474
<NET-CHANGE-FROM-OPS> 10852117
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 41306
<DISTRIBUTIONS-OF-GAINS> 94085
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4215132
<NUMBER-OF-SHARES-REDEEMED> 1853116
<SHARES-REINVESTED> 9636
<NET-CHANGE-IN-ASSETS> 44246422
<ACCUMULATED-NII-PRIOR> 40282
<ACCUMULATED-GAINS-PRIOR> 92956
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 284833
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 419631
<AVERAGE-NET-ASSETS> 37977685
<PER-SHARE-NAV-BEGIN> 12.29
<PER-SHARE-NII> .04
<PER-SHARE-GAIN-APPREC> 3.81
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> .04
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.08
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 9
<NAME> T. ROWE PRICE GROWTH STOCK
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 149558464
<INVESTMENTS-AT-VALUE> 196070701
<RECEIVABLES> 959990
<ASSETS-OTHER> 161788
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 197192479
<PAYABLE-FOR-SECURITIES> 2687651
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 203500
<TOTAL-LIABILITIES> 2891151
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 130821457
<SHARES-COMMON-STOCK> 7590722
<SHARES-COMMON-PRIOR> 5930419
<ACCUMULATED-NII-CURRENT> 507841
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16460593
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 46511438
<NET-ASSETS> 194301329
<DIVIDEND-INCOME> 1589255
<INTEREST-INCOME> 455145
<OTHER-INCOME> 0
<EXPENSES-NET> 1364107
<NET-INVESTMENT-INCOME> 680293
<REALIZED-GAINS-CURRENT> 16344563
<APPREC-INCREASE-CURRENT> 22323987
<NET-CHANGE-FROM-OPS> 39348843
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 304122
<DISTRIBUTIONS-OF-GAINS> 6475158
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2192769
<NUMBER-OF-SHARES-REDEEMED> 833503
<SHARES-REINVESTED> 301037
<NET-CHANGE-IN-ASSETS> 71071814
<ACCUMULATED-NII-PRIOR> 301437
<ACCUMULATED-GAINS-PRIOR> 6419081
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1255157
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1368088
<AVERAGE-NET-ASSETS> 156894638
<PER-SHARE-NAV-BEGIN> 20.78
<PER-SHARE-NII> .06
<PER-SHARE-GAIN-APPREC> 5.76
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> .95
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 25.60
<EXPENSE-RATIO> 0.87
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 13
<NAME> HIGH YIELD
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 9909184
<INVESTMENTS-AT-VALUE> 9651778
<RECEIVABLES> 175290
<ASSETS-OTHER> 22986
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9850054
<PAYABLE-FOR-SECURITIES> 25000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5733
<TOTAL-LIABILITIES> 30733
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9909360
<SHARES-COMMON-STOCK> 1013492
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 252079
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (84712)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (257406)
<NET-ASSETS> 9819321
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 299887
<OTHER-INCOME> 0
<EXPENSES-NET> 50500
<NET-INVESTMENT-INCOME> 249387
<REALIZED-GAINS-CURRENT> (84649)
<APPREC-INCREASE-CURRENT> (257406)
<NET-CHANGE-FROM-OPS> (92668)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1070942
<NUMBER-OF-SHARES-REDEEMED> 57450
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9819321
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 29230
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 61412
<AVERAGE-NET-ASSETS> 6618654
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> (.56)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.69
<EXPENSE-RATIO> 1.30
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 4
<NAME> T. ROWE PRICE INTERNATIONAL
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 135934852
<INVESTMENTS-AT-VALUE> 177247481
<RECEIVABLES> 256972
<ASSETS-OTHER> 7699114
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 185173567
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 317217
<TOTAL-LIABILITIES> 317217
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 141221735
<SHARES-COMMON-STOCK> 11416738
<SHARES-COMMON-PRIOR> 11582604
<ACCUMULATED-NII-CURRENT> 1612898
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 714958
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 41306759
<NET-ASSETS> 184856350
<DIVIDEND-INCOME> 3075890
<INTEREST-INCOME> 35823
<OTHER-INCOME> 0
<EXPENSES-NET> 1754811
<NET-INVESTMENT-INCOME> 1356902
<REALIZED-GAINS-CURRENT> 1625036
<APPREC-INCREASE-CURRENT> 21852242
<NET-CHANGE-FROM-OPS> 24834180
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1283067
<DISTRIBUTIONS-OF-GAINS> 1306396
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1639660
<NUMBER-OF-SHARES-REDEEMED> 1968079
<SHARES-REINVESTED> 162553
<NET-CHANGE-IN-ASSETS> 20296126
<ACCUMULATED-NII-PRIOR> 697873
<ACCUMULATED-GAINS-PRIOR> 1237508
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1603389
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1951606
<AVERAGE-NET-ASSETS> 178154309
<PER-SHARE-NAV-BEGIN> 14.21
<PER-SHARE-NII> .12
<PER-SHARE-GAIN-APPREC> 2.08
<PER-SHARE-DIVIDEND> .11
<PER-SHARE-DISTRIBUTIONS> .11
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.19
<EXPENSE-RATIO> 0.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 1
<NAME> MONEY MARKET
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 100340545
<INVESTMENTS-AT-VALUE> 100340545
<RECEIVABLES> 590848
<ASSETS-OTHER> 104400
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 101035793
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 103970
<TOTAL-LIABILITIES> 103970
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100931886
<SHARES-COMMON-STOCK> 100931823
<SHARES-COMMON-PRIOR> 51162734
<ACCUMULATED-NII-CURRENT> 41
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (104)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100931823
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4277948
<OTHER-INCOME> 0
<EXPENSES-NET> 463366
<NET-INVESTMENT-INCOME> 3814582
<REALIZED-GAINS-CURRENT> 1020
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 3815602
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3814561
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 125313555
<NUMBER-OF-SHARES-REDEEMED> 78716738
<SHARES-REINVESTED> 3172335
<NET-CHANGE-IN-ASSETS> 49770193
<ACCUMULATED-NII-PRIOR> 20
<ACCUMULATED-GAINS-PRIOR> (1124)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 387793
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 465522
<AVERAGE-NET-ASSETS> 77558576
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 10
<NAME> OPPORTUNITY VALUE
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 43703874
<INVESTMENTS-AT-VALUE> 45463344
<RECEIVABLES> 131181
<ASSETS-OTHER> 41710
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 45636235
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 129948
<TOTAL-LIABILITIES> 129948
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 42860761
<SHARES-COMMON-STOCK> 3723147
<SHARES-COMMON-PRIOR> 2280049
<ACCUMULATED-NII-CURRENT> 467076
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 418980
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1759470
<NET-ASSETS> 45506287
<DIVIDEND-INCOME> 451436
<INTEREST-INCOME> 384244
<OTHER-INCOME> 0
<EXPENSES-NET> 373059
<NET-INVESTMENT-INCOME> 462621
<REALIZED-GAINS-CURRENT> 418980
<APPREC-INCREASE-CURRENT> 547081
<NET-CHANGE-FROM-OPS> 1428682
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 168154
<DISTRIBUTIONS-OF-GAINS> 273333
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1806222
<NUMBER-OF-SHARES-REDEEMED> 398330
<SHARES-REINVESTED> 35206
<NET-CHANGE-IN-ASSETS> 18704317
<ACCUMULATED-NII-PRIOR> 167809
<ACCUMULATED-GAINS-PRIOR> 273333
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 303103
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 379102
<AVERAGE-NET-ASSETS> 37887876
<PER-SHARE-NAV-BEGIN> 11.75
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> .50
<PER-SHARE-DIVIDEND> .05
<PER-SHARE-DISTRIBUTIONS> .09
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.22
<EXPENSE-RATIO> 0.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 6
<NAME> SMALL CAP VALUE
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 165313639
<INVESTMENTS-AT-VALUE> 157121841
<RECEIVABLES> 3841861
<ASSETS-OTHER> (60852)
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 160902850
<PAYABLE-FOR-SECURITIES> 2105812
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 135040
<TOTAL-LIABILITIES> 2240852
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 152460283
<SHARES-COMMON-STOCK> 11220934
<SHARES-COMMON-PRIOR> 8909917
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14393513
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (8191798)
<NET-ASSETS> 158661998
<DIVIDEND-INCOME> 781887
<INTEREST-INCOME> 168527
<OTHER-INCOME> 0
<EXPENSES-NET> 1303098
<NET-INVESTMENT-INCOME> (352684)
<REALIZED-GAINS-CURRENT> 14911403
<APPREC-INCREASE-CURRENT> (18149967)
<NET-CHANGE-FROM-OPS> (3591248)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 227013
<DISTRIBUTIONS-OF-GAINS> 19963527
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2899864
<NUMBER-OF-SHARES-REDEEMED> 1883943
<SHARES-REINVESTED> 1295096
<NET-CHANGE-IN-ASSETS> 12466877
<ACCUMULATED-NII-PRIOR> 227013
<ACCUMULATED-GAINS-PRIOR> 19797837
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1207117
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1418014
<AVERAGE-NET-ASSETS> 150889678
<PER-SHARE-NAV-BEGIN> 16.41
<PER-SHARE-NII> (.03)
<PER-SHARE-GAIN-APPREC> (.13)
<PER-SHARE-DIVIDEND> .02
<PER-SHARE-DISTRIBUTIONS> 2.09
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.14
<EXPENSE-RATIO> 0.86
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 12
<NAME> SELECT 50
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 22067242
<INVESTMENTS-AT-VALUE> 24796290
<RECEIVABLES> 55365
<ASSETS-OTHER> 663905
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25515560
<PAYABLE-FOR-SECURITIES> 623437
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 27338
<TOTAL-LIABILITIES> 650775
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 23861539
<SHARES-COMMON-STOCK> 2331807
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (1832716)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2835962
<NET-ASSETS> 24864785
<DIVIDEND-INCOME> 271877
<INTEREST-INCOME> 130229
<OTHER-INCOME> 0
<EXPENSES-NET> 267506
<NET-INVESTMENT-INCOME> 134600
<REALIZED-GAINS-CURRENT> (2285879)
<APPREC-INCREASE-CURRENT> 2835962
<NET-CHANGE-FROM-OPS> 684683
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2611380
<NUMBER-OF-SHARES-REDEEMED> 279573
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24864785
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 197853
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 278024
<AVERAGE-NET-ASSETS> 19774505
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .07
<PER-SHARE-GAIN-APPREC> .59
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.66
<EXPENSE-RATIO> 1.49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000847254
<NAME> ENDEAVOR SERIES TRUST
<SERIES>
<NUMBER> 5
<NAME> VALUE EQUITY
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 185022199
<INVESTMENTS-AT-VALUE> 246313450
<RECEIVABLES> 1505970
<ASSETS-OTHER> (85726)
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 247733694
<PAYABLE-FOR-SECURITIES> 1423750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 208080
<TOTAL-LIABILITIES> 1631830
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 172707677
<SHARES-COMMON-STOCK> 11351092
<SHARES-COMMON-PRIOR> 10434879
<ACCUMULATED-NII-CURRENT> 2612240
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9490546
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 61291401
<NET-ASSETS> 246101864
<DIVIDEND-INCOME> 3103283
<INTEREST-INCOME> 1510274
<OTHER-INCOME> 0
<EXPENSES-NET> 1990734
<NET-INVESTMENT-INCOME> 2622823
<REALIZED-GAINS-CURRENT> 9505824
<APPREC-INCREASE-CURRENT> 4084777
<NET-CHANGE-FROM-OPS> 16213424
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2379221
<DISTRIBUTIONS-OF-GAINS> 4227268
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1927902
<NUMBER-OF-SHARES-REDEEMED> 1309035
<SHARES-REINVESTED> 297346
<NET-CHANGE-IN-ASSETS> 30063286
<ACCUMULATED-NII-PRIOR> 2368638
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1901572
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2021892
<AVERAGE-NET-ASSETS> 237678891
<PER-SHARE-NAV-BEGIN> 20.70
<PER-SHARE-NII> .22
<PER-SHARE-GAIN-APPREC> 1.36
<PER-SHARE-DIVIDEND> .22
<PER-SHARE-DISTRIBUTIONS> .38
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.68
<EXPENSE-RATIO> 0.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Financial Statements"
in the Statement of Additional Information and to the incorporation by reference
in this Post-Effective Amendment No. 27 to the Registration Statement on Form
N-1A (No. 33-27352) of Endeavor Series Trust of our report dated February 15,
1999 included in the December 31, 1998 Annual Report to Shareholders of Endeavor
Series Trust.
/s/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
April 6, 1999
<PAGE>
