SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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(as permitted by Rule 14a-6(e)(2))
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[ ] Soliciting Material Pursuant toss. 240. 14a-12
Endeavor Series Trust
(Name of Registrant as Specified in Its Charter)
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(Name of Person Filing Proxy Statement, if Other Than the Registrant)
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statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE>
ENDEAVOR SERIES TRUST
2101 East Coast Highway
Suite 300
Corona del Mar, California 92625
August 18, 2000
Dear Contract Owner:
As an Owner of a variable annuity contract (the "Contract") issued by
PFL Life Insurance Company or AUSA Life Insurance Company, Inc. (the "Insurance
Companies"), you have the right to instruct the Insurance Companies how to vote
certain shares of the Endeavor Value Equity Portfolio, Endeavor Opportunity
Value Portfolio and Endeavor Select Portfolio (the "Portfolios") of the Endeavor
Series Trust (the "Trust") at a Special Meeting of Shareholders to be held on
September 25, 2000. Although you are not directly a shareholder of the
Portfolios, some or all of your Contract value is invested, as provided by your
Contract, in one or more of these Portfolios. Accordingly, you have the right
under your Contract to instruct the Insurance Companies how to vote each
Portfolio's shares that are attributable to your Contract at the Special
Meeting. Before the Special Meeting, I would like your vote on the important
proposal described in the accompanying Notice of Special Meeting of Shareholders
and Proxy Statement. For each Portfolio, you will be asked to vote on an
Amendment to the Management Agreement. The Amendment will increase the
management fees payable with respect to the Portfolio.
Currently, Endeavor Management Co. (the "Manager") manages each of the
Portfolios under a Management Agreement and receives a management fee from each
Portfolio based on that Portfolio's net assets. Out of the management fee, the
Manager compensates separate investment advisers for each Portfolio. The Manager
has the ability, without shareholder approval, to terminate a Portfolio's
investment adviser and retain a new investment adviser. In the exercise of its
managerial oversight, the Manager has determined to replace the current
investment adviser of each Portfolio and retain Capital Guardian Trust Company
as investment adviser to the Endeavor Value Equity Portfolio and Endeavor Select
Portfolio, and Jennison Associates LLC as investment adviser to the Endeavor
Opportunity Value Portfolio.
To obtain these quality investment advisers, the Manager is required to
pay higher investment advisory fees than are currently being paid to each
Portfolio's current investment adviser. Therefore, the Manager has asked the
Trustees for an increase in the management fee to cover the additional costs.
The Board of Trustees has approved the proposal and recommends that you
vote FOR the proposal.
You may think that your vote is not important, but it is. Please take
the time to familiarize yourself with the proposal and to sign and return your
proxy card(s) in the enclosed postage-paid envelope today. You may receive more
than one proxy card if you own shares in more than one Portfolio. Please sign
and return each card you receive. You may also vote by calling toll-free
1-888-221-0697, or via the Internet at www.proxyweb.com, if eligible.
Instructions on how to complete the proxy card, vote by telephone, or via the
Internet are included immediately after the Notice of Special Meeting.
If you have any questions about the proxy, please call our proxy solicitor,
D.F. King & Co., Inc., at 1- 888-242-8149.
If we do not receive your completed proxy card(s) within several weeks, you
may be contacted by D.F. King & Co., Inc. to remind you to vote your shares.
Thank you for taking the time to participate in these important
matters.
Sincerely,
Vincent J. McGuinness, Jr.
President
<PAGE>
ENDEAVOR SERIES TRUST
2101 East Coast Highway
Suite 300
Corona del Mar, California 92625
Endeavor Value Equity Portfolio
Endeavor Opportunity Value Portfolio
Endeavor Select Portfolio
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To be Held on September 25, 2000
To the Shareholders of Endeavor Series Trust:
NOTICE IS HEREBY GIVEN THAT a Special Meeting of the Shareholders of
the Endeavor Value Equity Portfolio, Endeavor Opportunity Value Portfolio and
Endeavor Select Portfolio of Endeavor Series Trust (the "Trust"), a
Massachusetts business trust, will be held at the offices of PFL Life Insurance
Company, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499 on September 25,
2000 at 10:00 a.m. Central Time and any adjournments thereof (collectively, the
"Special Meeting") for the following purposes:
1. To approve or disapprove an amendment to the management agreement
between the Trust and Endeavor Management Co., the manager of the Trust.
2. To transact such other business as may properly come before the Special
Meeting or any adjournment thereof.
The Board of Trustees has fixed the close of business on July 28, 2000
as the record date for determination of shareholders entitled to notice of and
to vote at the Special Meeting.
By order of the Board of Trustees
Gail Hanson
Secretary
August 18, 2000
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE SPECIAL MEETING ARE REQUESTED TO
COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED
ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES, OR FOLLOW THE
INSTRUCTIONS IN THE MATERIALS RELATING TO TELEPHONIC OR INTERNET VOTING.
INSTRUCTIONS FOR THE PROPER EXECUTION OF THE PROXY CARD ARE SET FORTH ON THE
INSIDE COVER OF THIS NOTICE. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY.
<PAGE>
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of
assistance to you and avoid the time and expense to the Trust involved in
validating your vote if you fail to sign your proxy card properly.
1. Individual Accounts: Sign your name exactly as it appears in the registration
on the proxy card.
2. Joint Accounts: Either party may sign, but the name of the party signing
should conform exactly to the name shown in the registration on the proxy card.
3. All Other Accounts: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of registration. For
example:
Registration Valid Signature
Corporate Accounts
(1) ABC Corp. . . . . . . . . . . . . . . . . . . . . ABC Corp.
(2) ABC Corp. . . . . . . . . . . . . . . . . John Doe, Treasurer
(3) ABC Corp.
c/o John Doe, Treasurer . . . . . . . . . . . . .John Doe
(4) ABC Corp. Profit Sharing Plan . . . . . . . John Doe, Trustee
Trust Accounts
(1) ABC Trust . . . . . . . . . . . . . . . Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee
u/t/d 12/28/78 . . . . . . . . . . . . . . . . Jane B. Doe
Custodial or Estate Accounts
(1) John B. Smith, Cust.
f/b/o John B. Smith, Jr. UGMA . . . . . . . . . John B. Smith
(2) Estate of John B. Smith . . . . .John B. Smith, Jr., Executor
<PAGE>
INSTRUCTIONS FOR TELEPHONE VOTING
To vote your proxy by telephone follow the four easy steps below. Or, if
you prefer, you may send back your signed proxy ballot in the postage
paid envelope provided.
1. Read the accompanying proxy information and ballot.
2. Identify the fourteen-digit "CONTROL NO." in the upper left corner of your
ballot . This control number is the key to casting your vote over the telephone.
3. Dial 1-888-221-0697.
4. Follow the simple recorded instructions.
INSTRUCTIONS FOR VOTING OVER THE INTERNET
To vote your proxy via the Internet follow the four easy steps below.
1. Read the accompanying proxy information and ballot.
2. Go to www.proxyweb.com.
3. Enter the fourteen-digit "CONTROL NO." from the upper left corner of your
proxy card.
4. Follow the simple online instructions.
If you hold your shares through an intermediary, please refer to your proxy card
to determine if the intermediary permits you to vote via another Internet site,
and follow the instructions provided on the proxy card. You do not need to
return your proxy card if you vote via an Internet site.
<PAGE>
ENDEAVOR SERIES TRUST
Endeavor Value Equity Portfolio
Endeavor Opportunity Value Portfolio
Endeavor Select Portfolio
2101 East Coast Highway
Suite 300
Corona del Mar, California 92625
SPECIAL MEETING OF SHAREHOLDERS
September 25, 2000
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Trustees of Endeavor Series Trust (the "Trust") for
each of the Endeavor Value Equity Portfolio, the Endeavor Opportunity Value
Portfolio and the Endeavor Select Portfolio (the "Portfolios") of the Trust, for
use at a Special Meeting of Shareholders of the Portfolios to be held at 10:00
a.m. Central Time on September 25, 2000 at the offices of PFL Life Insurance
Company, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499, and any
adjournments thereof (collectively, the "Special Meeting"). A notice of the
Special Meeting and a proxy card accompany this Proxy Statement. This Proxy
Statement and the accompanying Notice of Special Meeting and proxy card(s) are
first being mailed to shareholders on or about August 18, 2000. In addition to
solicitations of proxies by mail, beginning on or about August 28, 2000, proxy
solicitations may also be made by telephone, e-mail or personal interviews
conducted by officers of the Trust; regular employees of Endeavor Management
Co., the Trust's manager (the "Manager"); PFPC Inc., 101 Federal Street, Boston,
MA 02110, the Trust's transfer agent; D.F. King & Co., Inc., the Trust's proxy
solicitor; or other representatives of the Trust. The Trust has retained D.F.
King & Co., Inc. as the Trust's proxy solicitor for the Special Meeting of
Shareholders. The estimated cost of the proxy solicitation is approximately
$16,000. The costs of solicitation and the expenses incurred in connection with
preparing this Proxy Statement and its enclosures will be paid equally by the
Trust and by Endeavor Management Co. The Trust's most recent annual report is
available upon request without charge by writing or calling the Trust at 2101
East Coast Highway, Suite 300, Corona del Mar, CA 92625 or 1-800-854-8393.
If the enclosed proxy is properly executed and returned in time to be
voted at the Special Meeting, the shares of beneficial interest ("Shares")
represented by the proxy will be voted in accordance with the instructions
marked therein. Unless instructions to the contrary are marked on the proxy, it
will be voted FOR the matters listed in the accompanying Notice of Special
Meeting of Shareholders. Any shareholder who has given a proxy has the right to
revoke it at any time prior to its exercise either by attending the Special
Meeting and voting his or her Shares in person, or by submitting a letter of
revocation or a later-dated proxy to the Trust at the above address prior to the
date of the Special Meeting.
If a quorum with respect to a Portfolio is not present at the Special
Meeting, or if a quorum is present but sufficient votes to approve the proposal
are not received, the persons named as proxies on the enclosed proxy card may
propose one or more adjournments of the Special Meeting to permit further
solicitation of proxies. In determining whether to adjourn the Special Meeting,
the following factors may be considered: the nature of the proposal that is the
subject of the Special Meeting, the percentage of votes actually cast, the
percentage of negative votes actually cast, the nature of any further
solicitation and the information to be provided to shareholders with respect to
the reasons for the solicitation. Any adjournment will require the affirmative
vote of a majority of those Shares represented at the Special Meeting in person
or by proxy. A shareholder vote may be taken on the proposal in this Proxy
Statement for one or more of the Portfolios if sufficient votes have been
received for approval even if a quorum is not present with respect to any other
Portfolio. Under the Trust's Agreement and Declaration of Trust dated November
18, 1988 (the "Declaration of Trust"), a quorum of shareholders is constituted
by the presence in person or by proxy of the holders of a majority of the
outstanding Shares of the Portfolio entitled to vote at the Special Meeting.
The Board of Trustees has fixed the close of business on July 28, 2000
as the record date (the "Record Date") for the determination of shareholders of
the Portfolios entitled to notice of and to vote at the Special Meeting. The
number of shares of each Portfolio outstanding on the Record Date is as follows:
Endeavor Value Equity Portfolio 10,982,209.599
Endeavor Opportunity Value Portfolio 3,596,635.888
Endeavor Select Portfolio 4,197,410.306
PFL Life Insurance Company ("PFL Life") and its affiliate, AUSA Life
Insurance Company, Inc. ("AUSA Life"), are the owners of all of the Shares of
each Portfolio and as such have the right to vote upon certain matters that are
required by the Investment Company Act of 1940, as amended (the "1940 Act"), to
be approved or ratified by the shareholders and to vote upon any other matter
that may be voted upon at a shareholders' meeting. Each of PFL Life and AUSA
Life will vote the Shares of each Portfolio for the owners of the variable
annuities issued by it (the "Contracts") in accordance with instructions
received from the Contract owners. Interests in Contracts for which no timely
instructions are received will be voted in proportion to the instructions which
are received from other Contract owners. PFL Life and AUSA Life will also vote
any shares in separate accounts that they own and which are not attributable to
Contracts in the same proportion. Each full Share is entitled to one vote and
any fractional Share is entitled to a fractional vote.
As of July 31, 2000, the officers and the Trustees of the Trust as a
group beneficially owned less than 1% of the Shares of each Portfolio.
In order that your Shares may be represented at the Special Meeting,
you are requested to:
-- indicate your instructions on the enclosed proxy card;
-- date and sign the proxy card;
-- mail the proxy card promptly in the enclosed envelope, which
requires no postage if mailed in the United States; and
-- allow sufficient time for the proxy card to be received on or
before 10:00 a.m. Central Time on September 25, 2000.
You may also vote by telephone or via the Internet. Instructions for
voting by telephone or via the Internet appear immediately after the Notice of
Special Meeting at the front of this Proxy Statement.
SUMMARY OF THE PROPOSAL
The Manager currently provides investment advisory services to each of
the Portfolios under a management agreement dated July 22, 1999, and amended
April 28, 2000 (as amended, the "Current Management Agreement"). The Manager,
2101 East Coast Highway, Suite 300, Corona del Mar, California 92625, has
overall responsibility for the general management and administration of each
Portfolio. The Manager selects the investment adviser for each Portfolio and
monitors each investment adviser's investment program. Out of the management
fees it receives under the Current Management Agreement, the Manager pays the
fees of the investment advisers.
At the meeting, shareholders of each Portfolio will be asked to approve
an amendment to the Current Management Agreement (the "Amendment") between the
Trust and the Manager with respect to each Portfolio. Under the Amendment, the
Manager would have the same responsibilities as set forth in the Current
Management Agreement but would receive an increased management fee from each
Portfolio.
At a meeting of the Trustees of the Trust held on July 24, 2000, all of
the Trustees present, including a majority of the Trustees who are not
"interested persons" (the "Independent Trustees") of the Trust or the Manager,
voted to approve the Amendment and to recommend that shareholders of each
Portfolio approve the Amendment.
Background
The Trust is a series-type mutual fund that is registered with the
Securities and Exchange Commission as an open-end, diversified management
investment company. As of July 31, 2000, the Trust had fourteen portfolios,
three of which are the Endeavor Value Equity Portfolio, Endeavor Opportunity
Value Portfolio and Endeavor Select Portfolio. As described below with respect
to the change of investment advisers for each of the Portfolios, Endeavor Value
Equity Portfolio will change its name to Capital Guardian Value Portfolio,
Endeavor Opportunity Value Portfolio will change its name to Jennison Growth
Portfolio, and Endeavor Select Portfolio will change its name to Capital
Guardian Global Portfolio. The assets of each Portfolio are held separate from
the assets of the other Portfolios, and each Portfolio has its own distinct
investment objectives and policies. Each Portfolio operates as a separate
investment fund, and the income, losses, or expenses of one Portfolio generally
have no effect on the investment performance of any other Portfolio.
Transamerica Capital, Inc., an affiliate of the Manager, 4600 S. Syracuse
Street, Suite 1180, Denver, Colorado 80237, is the Trust's principal
underwriter.
Under the Current Management Agreement, the Manager has overall
supervisory responsibility for the general management and investment of the
Portfolios' assets and for the general administration and management of the
Trust. As authorized by the Current Management Agreement, the Manager selects
and contracts with an investment adviser (the "Adviser") for investment services
for each of the Portfolios and reviews the Adviser's activities. Currently,
OpCap Advisors, a subsidiary of Oppenheimer Capital, provides investment
advisory services to the Endeavor Value Equity Portfolio and the Endeavor
Opportunity Value Portfolio and Montgomery Asset Management LLC ("Montgomery")
provides investment advisory services to the Endeavor Select Portfolio. The
Manager pays each Adviser for its services a portion of the management fee the
Manager receives with respect to the Portfolio. None of the Advisers is an
affiliate of the Manager.
Section 15(a) of the 1940 Act requires that all agreements under which
persons serve as investment managers or investment advisers to investment
companies be approved by shareholders. The Securities and Exchange Commission
has granted exemptive relief to the Trust and the Manager which generally
permits the Manager, subject to the approval of the Board of Trustees, to: (i)
select Advisers for each of the Trust's Portfolios; (ii) enter into and
materially modify existing investment advisory agreements between the Manager
and the Advisers; and (iii) terminate and replace the Advisers without obtaining
approval of the relevant Portfolio's shareholders.
The Proposed Amendment
In the exercise of its Portfolio oversight and management
responsibility, the Manager has determined to replace OpCap Advisors and
Montgomery as Advisers to the Portfolios. The primary factors considered by the
Manager in reaching this determination were the relatively poor performance of
the Endeavor Value Equity Portfolio and the Endeavor Opportunity Value Portfolio
and the significant change in investment style and portfolio managers at
Montgomery.
After reviewing potential replacement Advisers, the Manager proposed to
the Board of Trustees and, on July 24, 2000, all of the Trustees present
approved the termination of OpCap Advisors as Adviser to the Endeavor Value
Equity Portfolio and the Endeavor Opportunity Value Portfolio and Montgomery as
Adviser to the Endeavor Select Portfolio. Further, on July 24, 2000 all of
Trustees present approved investment advisory agreements between the Manager and
Capital Guardian Trust Company ("Capital Guardian") with respect to the Endeavor
Value Equity Portfolio (to be renamed the Capital Guardian Value Portfolio) and
the Endeavor Select Portfolio (to be renamed the Capital Guardian Global
Portfolio) and an investment advisory agreement between the Manager and Jennison
Associates LLC ("Jennison") with respect to the Endeavor Opportunity Value
Portfolio (to be renamed the Jennison Growth Portfolio). Information about
Capital Guardian and Jennison is set forth in Appendix B to this Proxy
Statement.
The new investment advisory agreements with Capital Guardian and
Jennison provide for payment of investment advisory fees by the Manager to
Capital Guardian and Jennison in amounts greater than the investment advisory
fees currently paid by the Manager to OpCap Advisors and Montgomery. Set forth
below is the schedule of fees as a percentage of average daily net assets paid
by the Manager to OpCap Advisors and Montgomery and the fees that will be
payable to Capital Guardian and Jennison.
Portfolio Adviser/Fee
Endeavor Value Equity OLD - OpCap Advisors - 0.40%
NEW - Capital
Guardian - 0.50% up
to $150 million;
0.45% in excess of
$150 million up to
$300 million; 0.35%
in excess of $300
million up to $500
million; 0.30% in
excess of $500
million
Endeavor Opportunity Value OLD - OpCap Advisors - 0.40%
NEW - Jennison - 0.50% up to
$300 million; 0.45% in
excess of $300 million
Endeavor Select OLD - Montgomery - 0.60%
(prior to May 1,
2000, Montgomery
received a fee of
0.70% which was
voluntarily reduced
to 0.60%)
NEW - Capital
Guardian - 0.65% up
to $150 million;
0.55% in excess of
$150 million up to
$300 million; 0.45%
in excess of $300
million up to $500
million; 0.40% in
excess of $500
million
As a result of the increased investment advisory costs to the Manager
for each Portfolio at current net asset levels, the Manager proposed and all of
the Trustees present at the Board meeting approved, subject to shareholder
approval, increases in the management fee paid to the Manager with respect to
each Portfolio. Although the proposed new fee schedule will increase the
management fee paid by the Portfolios, the new fee schedule at current asset
levels will not increase and, with respect to the Endeavor Value Equity and
Endeavor Opportunity Value Portfolios, will decrease the amount of the fee
retained by the Manager. The full amount of the fee increase will be passed on
to the new Advisers. Management's primary goal in the new fee schedule was to
compensate the new Advisers at competitive levels, while generally maintaining,
if Portfolio assets grow, the amount of the management fee retained by the
Manager at the current level.
Basis for the Board's Recommendation. In evaluating and approving the
Amendment, the Board, including the Independent Trustees, in consultation with
their separate counsel, requested and evaluated information provided by the
Manager which, in its opinion, constituted all the information necessary for the
Board to form a judgment as to whether the new management fees set forth in the
Amendment would be in the best interest of each Portfolio and the shareholders.
In recommending that shareholders approved the Amendment, the Board
considered all factors that it deemed relevant, including:
(i) the investment management fees and other expenses that would be
paid by the Portfolios under the Amendment as compared to those of similar funds
managed by other investment advisers. The Trustees noted in particular that, for
each Portfolio, the new investment management fee would be within the range of
contractual fee rates at similar asset levels for funds within the current
variable insurance marketplace having similar investment focus and asset types,
as indicated in material prepared for the Board by the Manager based on
information contained in publicly available documents and information supplied
by Lipper Analytical Services;
(ii) the impact of the proposed changes in investment management fee rates
on each Portfolio's total expense ratio;
(iii) the historical investment performance of each Portfolio, as well
as each new Adviser's historical performance with comparable mutual funds and
private accounts, portfolio managers and other investment personnel;
(iv) their favorable experience in overseeing, on an on-going basis,
the nature and quality of investment management services provided by the Manager
to the Portfolios;
(v) current and projected profitability and related other benefits to
the Manager in providing investment management services to the Portfolios, both
under the current investment management fee schedule and the proposed new
investment management fee schedule; and
(vi) possible economies of scale in managing the Portfolios.
In considering the Amendment, the Board concluded that the proposed new
management fee schedule (including proposed breakpoints) will: (i) over the
long-term, enable the Manager to continue to provide high-quality investment
management services to the Portfolios at reasonable and competitive fee rates;
and (ii) enable the Manager to provide investment management services to the
Portfolios at levels consistent with the increased demands of the current
variable products marketplace.
For these purposes, in taking into account the Manager's profitability,
the Trustees considered the current and anticipated level of profitability to
the Manager in providing investment management services to the Portfolios and
pro forma information with respect to the total expenses (as a percentage of
average daily net assets of each Portfolio) expected to be borne by each
Portfolio if the Amendment was approved by shareholders of each Portfolio.
Summary of the Current Management Agreement and the Amendment
A copy of the Current Management Agreement and the proposed Amendment
are attached to this Proxy Statement as Exhibit A. The following description of
the Current Management Agreement and the Amendment is only a summary. You should
refer to Exhibit A for the complete Current Management Agreement and the
Amendment.
The Current Management Agreement provides that the Manager has overall
supervisory responsibility for the general management and investment of each
Portfolio's assets and has full investment discretion with respect to the assets
of any Portfolio not then being managed by an Adviser. The Manager is expressly
authorized to delegate day-to-day investment management of a Portfolio's assets
to another investment adviser.
The Current Management Agreement also provides that the Manager is also
responsible for providing the Trust with office space, office equipment, and
personnel necessary to operate and administer the Trust's business. The Manager
also supervises the provision of services by third parties such as the Trust's
custodian and transfer agent. PFPC Inc. assists the Manager in the performance
of its administrative responsibilities to the Trust. The Manager pays the fees
and expenses of PFPC Inc. pursuant to an administration agreement and the
Manager is entitled under the Current Management Agreement to be reimbursed for
each Portfolio's portion of the fees and expenses paid by the Manager to PFPC
Inc. with respect to such Portfolio. For the year ended December 31, 1999, after
waivers, the Manager was reimbursed by the Portfolios for administrative
expenses incurred by the Manager on behalf of the Portfolio as follows:
Endeavor Value Equity Portfolio - $45,114
Endeavor Opportunity Value Portfolio - $2,281
Endeavor Select Portfolio - $39,167
The Current Management Agreement provides that the Manager will be paid
a fee with respect to each Portfolio based on that Portfolio's average daily net
assets. The amount of the management fee varies among the Portfolios. Under the
Amendment, the amount of the management fee will increase. The management fee in
effect for each Portfolio and the aggregate amount of compensation paid to the
Manager by each Portfolio during the Trust's fiscal year ended December 31, 1999
is set forth in Table 1. The proposed management fee for each Portfolio and the
aggregate amount of compensation that would have been paid to the Manager for
each Portfolio during the Trust's fiscal year ended December 31, 1999 is set
forth in Table 2.
<TABLE>
<CAPTION>
TABLE 1
-------------------------- ----------------------------------- --------------------------------------------
Portfolio Management Fee Aggregate Management Fee Paid During
---------
(as a % of net assets) Fiscal Year Ended December 31, 1999
<S> <C> <C>
-------------------------- ----------------------------------- --------------------------------------------
-------------------------- ----------------------------------- --------------------------------------------
Endeavor Value Equity 0.80% $1,856,971
-------------------------- ----------------------------------- --------------------------------------------
-------------------------- ----------------------------------- --------------------------------------------
Endeavor Opportunity 0.80% $364,453
Value
-------------------------- ----------------------------------- --------------------------------------------
-------------------------- ----------------------------------- --------------------------------------------
Endeavor Select* 1.10% $291,700
-------------------------- ----------------------------------- --------------------------------------------
*The Manager waived $834 in management fees. Effective May 1, 2000, the Manager
reduced its management fee to 1.00% as a result of a reduction in the Adviser's
fee from 0.70% to 0.60%. If the 1.00% management fee had been in effect for all
of 1999, the aggregate management fee paid would have been $265,999.
TABLE 2
-------------------------- ----------------------------------- --------------------------------------------
Portfolio Proposed Management Fee Pro Forma Management Fee Paid During
---------
(as a % of net assets) Fiscal Year Ended December 31, 1999
-------------------------- ----------------------------------- --------------------------------------------
-------------------------- ----------------------------------- --------------------------------------------
Endeavor Value Equity 0.85% up to $300 million; 0.80%
$1,972,966 in excess of $300 million up to $500
million; 0.775% in excess of $500 million.
-------------------------- ----------------------------------- --------------------------------------------
-------------------------- ----------------------------------- --------------------------------------------
Endeavor Opportunity 0.85% $387,457
Value
-------------------------- ----------------------------------- --------------------------------------------
-------------------------- ----------------------------------- --------------------------------------------
Endeavor Select 1.05% up to $150 million; 1.00% $279,299
in excess of $150 million up to
$300 million; 0.95% in excess of
$300 million up to $500 million;
0.925% in excess of $500 million.
-------------------------- ----------------------------------- --------------------------------------------
</TABLE>
Table A in Appendix A to this Proxy Statement shows: the annualized
level of all fees and expenses incurred by each Portfolio during the year ended
December 31, 1999 under the current investment management fee schedule; the
annualized level of all fees and expenses that would have been incurred by each
Portfolio during the year ended December 31, 1999 under the proposed new
investment management fee schedule; and the dollar and percentage differences
between the two.
Table B in Appendix A also contains a fee table for each Portfolio
showing the actual level of all recurring expenses under the Current Management
Agreement and the estimated overall expense levels under the Amendment if the
Amendment had been in effect for the year ended December 31, 1999.
The Current Management Agreement provides that the Trust is responsible
for all expenses other than those expressly assumed by the Manager. The Trust is
responsible for, among other things, (1) the Manager's fees; (2) legal and audit
expenses; (3) fees for registration of Trust Shares; (4) fees of the Trust's
transfer agent, registrar, custodian, dividend disbursing agent, and shareholder
servicing agent; (5) taxes; (6) brokerage and other transaction expenses; (7)
interest expenses; (8) expenses of shareholders' and Trustees' meetings; (9)
printing of share certificates and prospectuses; (10) mailing of prospectuses to
existing Trust shareholders; (11) insurance premiums; (12) charges of an
independent pricing service; (13) expenses related to the purchase and
redemption of Trust Shares; (14) administrative expenses paid by the Manager on
behalf of the Trust; and (15) nonrecurring expenses, such as the cost of
litigation.
The Current Management Agreement provides that the Manager is not
liable for its acts or omissions under the agreement, but that the Manager is
not protected against liability arising out of its own willful misfeasance, bad
faith, or gross negligence in the performance of its duties.
The Current Management Agreement provides (1) that it will continue in
effect with respect to each Portfolio for a period of two years from its
effective date and thereafter from year to year if approved at least annually by
a majority vote of the shares of the Portfolio or a majority of the Trustees and
by a majority of the Independent Trustees; (2) that it may be terminated as to
any Portfolio, without penalty, by the Trustees or by the vote of a majority of
the outstanding shares of a Portfolio upon 60 days' prior written notice; (3)
that it may be terminated by the Manager on 90 days' prior written notice to the
Trust; and (4) that it will terminate automatically in the event of its
"assignment" as such term is defined in the 1940 Act.
Portfolio Transactions
Subject to the supervision and control of the Manager and the Trustees
of the Trust, 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
a factor in the selection of broker-dealers, as described in the Trust's
prospectus.
An Adviser may effect portfolio transactions for other investment
companies and advisory accounts. Research services furnished by broker-dealers
through which a Portfolio effects its securities transactions may be used by the
Portfolio's Adviser in servicing all of its accounts; not all such services may
be used in connection with the Portfolio. In the opinion of each Adviser, it is
not possible to measure separately the benefits from research services to each
of its accounts, including a Portfolio. Whenever concurrent decisions are made
to purchase or sell securities by a Portfolio and another account, the
Portfolio's Adviser will attempt to allocate equitably portfolio transactions
among the Portfolio and other accounts. In making such allocations between the
Portfolio and other accounts, the main factors to be considered are the
respective investment objectives, the relative size of portfolio holdings of the
same or comparable securities, the availability of cash for investment, the size
of investment commitments generally held, and the opinions of the persons
responsible for recommending investments to the Portfolio and the other
accounts. In some cases this procedure could have an adverse effect on a
Portfolio. In the opinion of each Adviser, however, the results of such
procedures will, on the whole, be in the best interest of each of the accounts.
The new Adviser to the Endeavor Opportunity Value Portfolio may execute
portfolio transactions through certain of its affiliated brokers, acting as
agent in accordance with procedures established by the Trust's Board of
Trustees, but will not purchase any securities from or sell any securities to
any such affiliate acting as principal for its own account.
For the year ended December 31, 1999, Endeavor Value Equity Portfolio
and Endeavor Opportunity Value Portfolio paid $296,817 and $44,641,
respectively, in brokerage commissions. For the year ended December 31, 1999,
Endeavor Select Portfolio paid $156,177 in brokerage commissions of which $33
(0.02%) was paid to Montgomery Securities, Inc., an affiliate of the Portfolio's
current Adviser.
Brokerage Enhancement Plan
The Trust has adopted, in accordance with the substantive provisions of
Rule 12b-1 under the 1940 Act, a Brokerage Enhancement Plan (the "Plan") for
each of its Portfolios. The Plan uses available brokerage commissions to promote
the sale and distribution of each Portfolio's shares. Under the Plan, the Trust
uses recaptured commissions to pay for distribution expenses. Except for
recaptured commissions, unlike asset based charges imposed by many mutual funds
for sales expenses, neither the Trust nor any Portfolio of the Trust will incur
any additional fees or charges to pay distribution expenses.
Under the Plan, the Manager is authorized to direct investment advisers
to use certain broker-dealers for securities transactions. (The duty of best
price and execution still applies to these transactions.) These broker-dealers
have agreed to give a percentage of their commission from the sale and purchase
of securities to Transamerica Capital, Inc., the distributor of the Trust's
shares.
Transamerica Capital, Inc. does not make any profit from participating
in the Plan. It is obligated to use any money given to it under the Plan for
distribution expenses (other than a minimal amount to defray its legal and
administrative costs). The rest will be spent on activities that are meant to
result in the sale of the Portfolios' shares, including:
- holding or participating in seminars and sales meetings promoting the
sale of the Portfolios' shares
- paying marketing fees requested by broker-dealers who sell Contracts
- training sales personnel
- compensating broker-dealers and/or registered representatives in
connection with the allocation of cash values and premiums of the Contracts to
the Trust
- printing and mailing Trust prospectuses, statements of additional
information and shareholder reports to prospective Contract holders
- creating and mailing advertising and sales literature.
For the year ended December 31, 1999, Transamerica Capital, Inc.
received an aggregate of $829,876 pursuant to the Plan, of which $175,545 was
attributable to the Endeavor Value Equity Portfolio and $26,151 was attributable
to the Endeavor Opportunity Value Portfolio. In 1999, $888,475 generated under
the Plan (including amounts generated in prior years) was utilized to pay the
costs of seminars and sales meetings.
Other Information
The Current Management Agreement with respect to the Portfolios was
approved by the Trustees of the Trust (including all of the Independent
Trustees) on March 1, 1999, and by the shareholders of the each Portfolio on
July 2, 1999 in connection with the acquisition of the Manager by AUSA Holding
Company ("AUSA").
AUSA, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499, an affiliate
of PFL Life and AUSA Life, owns all of the Manager's outstanding common stock.
AUSA is an indirect wholly-owned subsidiary of AEGON USA, Inc., a financial
services holding company whose primary emphasis is on life and health insurance
and annuity and investment products. AEGON USA, Inc. is an indirect wholly-owned
subsidiary of AEGON N.V., a Netherlands corporation which is a publicly traded
international insurance group. The directors and principal executive officers of
the Manager, along with the principal occupation of each, are set forth in
Exhibit B.
In July 1999, Vincent J. McGuinness, members of his immediate family
including Vincent J. McGuinness, Jr., and certain family trusts sold all of the
outstanding common stock of the Manager to AUSA. Vincent J. McGuinness and
Vincent J. McGuinness, Jr. are Trustees of the Trust and Mr. McGuinness, Jr. is
the Trust's President. In connection with this transaction, amounts in excess of
the original purchase price are payable in the future depending upon certain
increases in the Trust's total assets.
REQUIRED VOTE
Approval of the Amendment to the Current Management Agreement with
respect to a Portfolio requires the affirmative vote of a majority of the
outstanding voting securities of the Portfolio. Under the 1940 Act, a majority
of a Portfolio's outstanding voting securities is defined as the lesser of (1)
67% of the outstanding shares represented at a meeting at which more than 50% of
the Portfolio's outstanding shares are present in person or represented by proxy
or (2) more than 50% of the Portfolio's outstanding voting securities (a
"Majority Vote"). If the Amendment is not approved by the shareholders of any
one of the Portfolios, Endeavor Management Co. would continue as Manager of that
Portfolio under the terms of the Current Management Agreement without such
Amendment.
OTHER MATTERS
Submission of Shareholder Proposals
The Trust is not generally required to hold annual or special meetings
of shareholders. Shareholders wishing to submit proposals for inclusion in a
proxy statement for a subsequent shareholders' meeting should send their written
proposals to the Assistant Secretary of the Endeavor Series Trust, c/o PFPC
Inc., Mail Zone BOS610, 101 Federal Street, Boston, MA 02110.
Shareholders' Request for Special Meeting
Shareholders holding at least 10% of the Trust's outstanding voting
securities (as defined in the 1940 Act) may require the calling of a meeting of
the Trust's shareholders for the purpose of voting on the removal of any Board
member. Meetings of the Trust's shareholders for any other purpose will also be
called by the Board when requested in writing by shareholders holding at least
10% of the Shares then outstanding or, if the Board members shall fail to call
or give notice of any meeting of shareholders for a period of 30 days after such
application, shareholders holding at least 10% of the Shares then outstanding
may call and give notice of such meeting.
Other Matters to Come Before the Meeting
The Board does not intend to present any other business at the Special
Meeting other than as described in this Proxy Statement, nor is the Board aware
that any shareholder intends to do so. If, however, any other matters are
properly brought before the Special Meeting, the persons named in the
accompanying proxy card will vote thereon in accordance with their judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE MEETING ARE THEREFORE URGED TO COMPLETE, SIGN, DATE, AND
RETURN THE PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE PAID ENVELOPE.
August 18, 2000
<PAGE>
APPENDIX A
TABLE A
The table below shows (i) the annualized level of all fees and expenses
incurred by each Portfolio under the current investment management fee schedule
during the year ended December 31, 1999, (ii) the annualized level of all fees
and expenses that would have been incurred by each Portfolio under the amended
management fee schedule during the year ended December 31, 1999, and (iii) the
dollar difference and percentage differences between the two.
<TABLE>
<CAPTION>
----------------------------- ----------------------- -------------------- ----------------------- ----------------------
% Difference Between
Difference Between Current and Pro
Pro Forma Current And Pro Forma Forma Aggregate Fees
Current Aggregate Aggregate Fees and Aggregate Fees and and Expenses
Fees and Expenses Expenses Expenses
Portfolio
<S> <C> <C> <C> <C>
----------------------------- ----------------------- -------------------- ----------------------- ----------------------
----------------------------- ----------------------- -------------------- ----------------------- ----------------------
Endeavor Value Equity 0.95% 1.00% $116,057 5.3%
----------------------------- ----------------------- -------------------- ----------------------- ----------------------
----------------------------- ----------------------- -------------------- ----------------------- ----------------------
Endeavor Opportunity Value 0.91% 0.96% $22,792 5.5%
----------------------------- ----------------------- -------------------- ----------------------- ----------------------
----------------------------- ----------------------- -------------------- ----------------------- ----------------------
Endeavor Select 1.39%* 1.44% $13,300 3.6%
----------------------------- ----------------------- -------------------- ----------------------- ----------------------
*Effective May 1, 2000, the Manager reduced its management fee by
0.10%, which reduction is reflected in current aggregate fees and expenses.
Actual 1999 current aggregate fees and expenses were 1.49%.
</TABLE>
<PAGE>
TABLE B
PORTFOLIO BY PORTFOLIO FEE TABLE COMPARISONS
The tables provided below compare the actual overall recurring
Portfolio expenses under the Current Management Agreement for the year ended
December 31, 1999 and the estimated overall recurring Portfolio expenses under
the proposed Amendment if the Amendment had been in effect for the year ended
December 31, 1999. The tables and examples do not reflect separate account
expenses, including sales loads. Each table reflects the annual Portfolio
operating expenses calculated as a percentage of average daily net assets.
The Examples are to help you compare the cost of investing in the
Portfolios with the cost of investing in other funds. They assume that you
invest $10,000 in each Portfolio for the time periods indicated and then you
redeem all of your shares at the end of those periods. The Examples also assume
that (i) your investment has a 5% return each year, (ii) the Portfolio's
operating expenses stay the same, and (iii) all dividends and distributions are
reinvested. The Examples are presented on a current and pro-forma basis. Your
actual costs may be higher or lower.
ENDEAVOR VALUE EQUITY PORTFOLIO
Current Pro Forma
Management Fee 0.80% 0.85%
12b-1 Fees (1) 0.08% 0.08%
Other Expenses 0.07% 0.07%
----- -----
Total Portfolio Operating Expenses 0.95% 1.00%
Example: After 1 year $97 $102
After 3 years $303 $318
After 5 years $525 $552
After 10 years $1,166 $1,225
ENDEAVOR OPPORTUNITY VALUE PORTFOLIO
Current Pro Forma
Management Fee 0.80% 0.85%
12b-1 Fees (1) 0.06% 0.06%
Other Expenses 0.05% 0.05%
----- -----
Total Portfolio Operating Expenses 0.91% 0.96%
Example: After 1 year $93 $98
After 3 years $290 $306
After 5 years $504 $531
After 10 years $1,120 $1,178
ENDEAVOR SELECT PORTFOLIO
Current Pro Forma
Management Fee 1.00% 1.05%
12b-1 Fees --- ---
Other Expenses 0.39% 0.39%
----- -----
Total Portfolio Operating Expenses 1.39% 1.44%
Example: After 1 year $142 $147
After 3 years $440 $456
After 5 years $761 $787
After 10 years $1,669 $1,724
(1) The Board of Trustees of the Trust has authorized an arrangement
whereby, subject to best price and execution, executing brokers will
share commissions with the Trust's affiliated broker. Under supervision
of the Trustees, the affiliated broker uses the "recaptured
commissions" to promote marketing of the Trust's shares. The staff of
the Securities and Exchange Commission believes that, through the use
of these recaptured commissions, the Trust is indirectly paying for
distribution expenses and that such amounts must be shown as 12b-1 fees
in the above table. The use of recaptured commissions to promote the
sale of the Trust's shares involves no additional costs to the Trust or
any Contract owner. The Trust, based on advice of counsel, believes
that recaptured brokerage commissions should not be treated as 12b-1
fees. The amounts shown as 12b-1 fees for 1999 reflect the actual 12b-1
fees for 1999. Because the 12b-1 fees reflect recaptured commissions,
rather than a fee charged as a percentage of assets, the actual amount
of 12b-1 fees treated as expenses will vary from year to year and may
be higher or lower than the 12b-1 fees incurred in 1999.
<PAGE>
APPENDIX B
INFORMATION CONCERNING CAPITAL GUARDIAN TRUST COMPANY ("CAPITAL GUARDIAN")
Capital Guardian is a wholly-owned subsidiary of Capital Group
International, Inc., which itself is a wholly-owned subsidiary of The Capital
Group Companies, Inc. The Chairman of Capital Guardian is David I. Fisher. The
other directors of Capital Guardian are Timothy D. Armour, Andrew F. Barth,
Michael D. Beckman, Larry P. Clemmensen, Kevin G. Clifford, Roberta A. Conroy,
Michael Ericksen, William H. Hurt, Nancy J. Kyle, Karin L. Larson, D. James
Martin, James R. Mullaly, Jason M. Pilalas, Robert Ronus, James F. Rothenberg,
Theodore R. Samuels, Lionel M. Sauvage, John H. Seiter, Eugene P. Stein and Shaw
B. Wagener. =
Capital Guardian has been providing investment management services
since 1968 and managed approximately $123 billion in assets as of December 31,
1999.
Capital Guardian uses a multiple portfolio manager system under which
each Portfolio is divided into several segments. Each segment is individually
managed with the portfolio manager free to decide on company and industry
selections as well as valuation and transaction assessment. An additional
portion of each Portfolio is managed by a group of investment research analysts.
The individual portfolio managers, as applicable, of each segment of
each Portfolio, other than that managed by the group of research analysts, would
be as follows:
o Donnalisa P. Barnum is a Senior Vice President and a portfolio manager of
Capital Guardian. She joined the Capital organization in 1986. (Capital Guardian
Value Portfolio)
o Michael R. Erickson is a Director, Senior Vice President and portfolio manager
of Capital Guardian. He joined the Capital organization in 1987. (Capital
Guardian Global Portfolio)
o David I. Fisher is Chairman of the Board and a Director of Capital Guardian.
He joined the Capital organization in 1969. (Capital Guardian Global Portfolio)
o Richard N. Haves is a Senior Vice President of Capital Guardian and a
portfolio manager with research responsibilities for Capital Guardian. He joined
the Capital organization in 1986. (Capital Guardian Global Portfolio)
o Nancy J. Kyle is a Director and Senior Vice President of Capital Guardian. She
joined the Capital organization in 1991. (Capital Guardian Global Portfolio)
o Christopher A. Reed is a Vice President of Capital International Research,
Inc. with portfolio management responsibilities for Capital Guardian. He joined
the Capital organization in 1994. (Capital Guardian Global Portfolio)
o Robert Ronus is a Director and President of Capital Guardian. He joined the
Capital organization in 1972. (Capital Guardian Global Portfolio)
o Theodore R. Samuels is a Director and Senior Vice President of Capital
Guardian. He joined the Capital organization in 1981. (Capital Guardian Value
Portfolio)
o Lionel M. Sauvage is a Director and Senior Vice President of Capital Guardian.
He joined the Capital organization in 1987. (Capital Guardian Global Portfolio)
o Nilly Sikorsky is President and Managing Director of Capital International
S.A. with portfolio management responsibilities for Capital Guardian. She joined
the Capital organization in 1962. (Capital Guardian Global Portfolio)
o Rudolf M. Staehelin is a Senior Vice President and Director of Capital
International Research, Inc. with portfolio management responsibilities for
Capital Guardian. He joined the Capital organization in 1981. (Capital Guardian
Global Portfolio)
o Eugene P. Stein is Director, Executive Vice President, and Chairman of the
Investment Committee of Capital Guardian with portfolio management
responsibilities. He joined the Capital organization in 1972.
(Capital Guardian Value Portfolio)
INFORMATION CONCERNING JENNISON ASSOCIATES LLC ("JENNISON")
Jennison is a wholly-owned subsidiary of The Prudential Insurance
Company of America. Jennison has served as an investment adviser to investment
companies since 1990 and managed approximately $59.1 billion in assets as of
December 31, 1999.
The day-to-day investment management decisions for the Portfolio are
made by:
o Kathleen McCarragher - an Executive Vice President of
Jennison, is also Jennison's Growth Equity Investment
Strategist. Ms. McCarragher joined Jennison in 1998 after a 17
year investment career, including positions at Weiss, Peck &
Greer (1992 to 1998) as a portfolio manager and State Street
Research and Management Co., where she was a member of the
Investment Committee.
o Michael A. Del Balso - an Executive Vice President of
Jennison, where he has been part of the investment team since
1972, is also Jennison's Director of Equity Research.
<PAGE>
A-1-6
EXHIBIT A-1
MANAGEMENT AGREEMENT
July 22, 1999
Endeavor Management Co.
Suite 300
2101 East Coast Highway
Corona del Mar, CA 92625
Dear Sirs:
Endeavor Series Trust (the "Trust"), a Massachusetts business trust
created pursuant to an Agreement and Declaration of Trust filed with the
Secretary of State of The Commonwealth of Massachusetts, herewith confirms its
agreement with Endeavor Management Co., a California corporation, (the
"Manager") as follows:
1. Investment Description; Appointment
The Trust desires to employ its capital by investing and reinvesting in
investments of the kind and in accordance with the limitations specified in its
Agreement and Declaration of Trust, as amended from time to time, and in its
registration statement filed with the Securities and Exchange Commission ("SEC")
on Form N-1A, as amended from time to time (the "Registration Statement"), and
in such manner and to such extent as may from time to time be approved by the
Board of Trustees. The Trust has designated the separate investment portfolios
set forth in Schedule A. The Trust may in the future designate additional
separate investment portfolios. Such existing and future portfolios are
hereinafter referred to as the "Portfolios." Copies of the Registration
Statement and the Trust's Agreement and Declaration of Trust, as amended, have
been or will be submitted to the Manager. The Trust desires to employ the
Manager to act as its investment manager and administrator. The Trust
acknowledges and agrees that the Manager intends to appoint a person to act as
investment adviser ("Adviser") to render investment advice to each of the
Portfolios. Such Adviser shall make all determinations with respect to the
Portfolio's assets for which it has responsibility. The Manager accepts this
appointment and agrees to furnish the services for the compensation set forth
below.
2. Services as Investment Manager and Administrator
(a) Subject to the supervision and direction of the Board of Trustees
of the Trust, the Manager will have (i) overall supervisory responsibility for
the general management and investment of the Portfolios' assets, and (ii) full
investment discretion to make all determinations with respect to the investment
of a Portfolio's assets not then managed by an investment adviser. In connection
with its responsibilities set forth under (i) above, Trust acknowledges and
agrees that the Manager will select a person to act as investment adviser (an
"Adviser") to render investment advice to each of the Portfolios. Each such
Adviser shall make all determinations with respect to the Portfolio's assets for
which it has responsibility. In addition, the Manager will conduct a program of
evaluations of the Advisers' performance, review the activities of the Advisers
for compliance with the Portfolios' investment objectives and policies and will
keep the Trust informed of developments materially affecting the Portfolios and
shall, on its own initiative, furnish to the Trust from time to time whatever
information the Manager believes appropriate for this purpose.
(b) Subject to the supervision and direction of the Board of Trustees
of the Trust, the Manager will also (1) supply the Trust with office facilities
(which may be in Manager's own offices), statistical and research data, data
processing services, clerical, accounting and bookkeeping services, including,
but not limited to, the calculation of the net asset value of shares of the
Trust, internal auditing and legal services, internal executive and
administrative services, and stationery and office supplies; and (2) prepare
reports to shareholders of the Trust, tax returns, and reports to and filings
with the SEC and state blue sky authorities. The Manager may contract with any
other person or persons to provide to the Trust any of the services contemplated
in this paragraph under such terms as it deems reasonable and shall have the
authority to direct the activities of such other person or persons in the manner
it deems appropriate. In connection with such administrative services, the
Manager shall be responsible for creating and maintaining all necessary
administrative records of the Trust in accordance with all applicable laws,
rules and regulations, including but not limited to records required by Section
31(a) of the Investment Company Act of 1940 (the "1940 Act"). All records shall
be the property of the Trust and shall be available for inspection and use by
the SEC, the Trust or any person retained by the Trust. Where applicable, such
records shall be maintained by the Manager for the periods and in the places
required by Rule 31a-2 under the 1940 Act.
The services of the Manager to the Trust hereunder are not to be deemed
exclusive, and the Manager shall be free to render similar services to others
and to engage in other activities, so long as the services rendered to the Trust
are not impaired.
3. Compensation
In consideration of services rendered pursuant to this Agreement, the
Trust will pay the Manager a fee at the respective annual rates of the value of
each Portfolio's average daily net asset set forth in Schedule A hereto as such
schedule may be amended from time to time. Such fees shall be accrued daily and
paid monthly as soon as practicable after the end of each month. If the Manager
shall serve for less than the whole of any month, the foregoing compensation
shall be prorated. For the purpose of determining fees payable to the Manager,
the value of the Portfolios' net assets shall be computed at the times and in
the manner specified in the Registration Statement.
Each Portfolio shall reimburse the Manager for such Portfolio's
allocable share of third party, administration expenses incurred pursuant to an
administration agreement between the Manager and a third party administrator.
4. Expenses
The Trust shall pay all expenses other than those expressly assumed by
the Manager herein, which expenses payable by the Trust shall include, but are
not limited to:
a. Fees to the Manager;
b. Legal and audit expenses;
c. Fees and expenses related to the registration and qualification of the
Trust and its shares for distribution under federal and state securities laws;
d. Expenses of the Trust's transfer agent, registrar, custodian, dividend
disbursing agent and shareholder servicing agent;
e. Salaries, fees and expenses of Trustees and executive officers of the
Trust who are not "affiliated persons" of the Manager or the Advisers within the
meaning of the 1940 Act;
f. Taxes (including the expenses related to preparation of tax returns) and
corporate or other fees levied against the Trust;
g. Brokerage commissions and other expenses associated with the purchase
and sale of portfolio securities for the Trust;
h. Expenses, including interest, of borrowing money;
i. Expenses incidental to meetings of the Trust's shareholders, Board of
Trustees and the maintenance of the Trust's organizational existence;
j. Expenses of printing certificates representing shares of the Trust and
expenses of preparing, printing and mailing notices, proxy material, reports to
regulatory bodies and reports to shareholders of the Trust;
k. Expenses of preparing and typesetting of prospectuses of the Trust;
l. Expenses of printing and distributing prospectuses to shareholders of
the Trust;
m. Association membership dues;
n. Premiums for fidelity insurance, directors and officers liability
insurance and other coverage;
o. Charges of an independent pricing service to value the Portfolio's
assets;
p. Expenses related to the purchase or redemption of the Trust's shares;
and
q. Such nonrecurring expenses as may arise, including those associated
with actions, suits, or proceedings to which the Trust is a party and arising
from any legal obligation which the Trust may have to indemnify its officers and
Trustees with respect thereto.
5. Reduction of Fee or Reimbursement to the Trust
If in any fiscal year the aggregate expenses of any Portfolio of the
Trust (including fees pursuant to this Agreement but excluding interest, taxes,
brokerage, distribution fees and extraordinary expenses) exceed the expense
limitations of any state having jurisdiction over the Trust, the Manager will
reduce its fees or reimburse the Portfolio for the amount of such excess,
limited to the amount of its fees hereunder. Such reduction in fees or expense
reimbursement, if any, will be estimated, reconciled and paid, in the case of
reimbursement, on a monthly basis.
6. Standard of Care
The Manager shall exercise its best judgment in rendering the services
hereunder. The Manager shall not be liable for any error of judgment or mistake
of law or for any loss suffered by the Trust in connection with the matters to
which this Agreement relates, provided that nothing herein shall be deemed to
protect or purport to protect the Manager against liability to the Trust or to
the shareholders of the Trust to which the Manager would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties or by reason of the Manager's reckless disregard of
its obligations and duties under this Agreement. Any person, even though an
officer, director, employee or agent of the Manager, who may be or become an
officer, Trustee, employee or agent of the Trust, shall be deemed, when
rendering services to the Trust or when acting on any business of the Trust, to
be rendering such services to or to be acting solely for the Trust and not as an
officer, director, employee or agent, or one under the control or direction of
the Manager, even though paid by it.
7. Term
This Agreement shall continue in effect, unless sooner terminated as
hereinafter provided, for a period of two years from the date hereof and
indefinitely thereafter provided that its continuance after such two year period
as to each Portfolio shall be specifically approved at least annually by vote of
a majority of the outstanding voting securities of such Portfolio or by vote of
a majority of the Trust's Board of Trustees; and further provided that such
continuance is also approved annually by the vote of a majority of the Trustees
who are not parties to this Agreement or interested persons of the Trust or the
Manager, cast in person at a meeting called for the purpose of voting on such
approval. This Agreement may be terminated as to any Portfolio at any time,
without payment of any penalty, by the Trust's Board of Trustees or by a vote of
a majority of the outstanding voting securities of such Portfolio upon 60 days'
prior written notice to the Manager, or by the Manager upon 90 days' prior
written notice to the Trust, or upon such shorter notice as may be mutually
agreed upon. This Agreement may be amended at any time by the Manager and the
Trust, subject to approval by the Trust's Board of Trustees and, if required by
applicable SEC rules and regulations, a vote of a majority of the Trust's
outstanding voting securities. This Agreement shall terminate automatically and
immediately in the event of its assignment. The terms "assignment" and "vote of
a majority of the outstanding voting securities" shall have the meaning set
forth for such terms in the 1940 Act.
8. Limitation of Trust's Liability
The Manager acknowledges that it has received notice of and accepts the
limitations upon the Trust's liability set forth in its Agreement and
Declaration of Trust. The Manager agrees that the Trust's obligations hereunder
in any case shall be limited to the Trust and to its assets and that the Manager
shall not seek satisfaction of any such obligation from the shareholders of the
Trust nor from any Trustee, officer, employee or agent of the Trust.
9. Force Majeure
The Manager shall not be liable for delays or errors occurring by
reason of circumstances beyond its control, including but not limited to acts of
civil or military authority, national emergencies, work stoppages, fire, flood,
catastrophe, acts of God, insurrection, war, riot, or failure of communication
or power supply. In the event of equipment breakdowns beyond its control, the
Manager shall take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto.
10. Severability
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby.
11. Miscellaneous
This Agreement constitutes the full and complete agreement of the
parties hereto with respect to the subject matter hereof. Each party agrees to
perform such further actions and execute such further documents as are necessary
to effectuate the purposes hereof. This Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of California.
The captions in this Agreement are included for convenience only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all the parties.
12. Limitation of Liability
A copy of the Declaration of Trust is on file with the Secretary of
State of The Commonwealth of Massachusetts and notice is hereby given that this
Agreement is executed on behalf of the Trustees of the Trust as trustees and not
individually and that the obligations of this Agreement are not binding upon the
Trustees or holders of shares of the Trust individually but are binding only
upon the assets and property of the Trust.
If the foregoing is in accordance with your understanding, kindly
indicate your acceptance hereof by signing and returning to us the enclosed copy
hereof.
Very truly yours,
ENDEAVOR SERIES TRUST
By: /s/ Vincent J. McGuinness Jr.
-----------------------------
Accepted:
ENDEAVOR MANAGEMENT CO.
By: /s/ Vincent J. McGuinness
<PAGE>
SCHEDULE A
Percentage of daily net assets
Portfolio
Endeavor Money Market Portfolio .50% of average
daily net assets
Endeavor Asset Allocation Portfolio .75% of average
daily net assets
T. Rowe Price International Stock Portfolio .90% of average
daily net assets
Endeavor Value Equity Portfolio .80% of average
daily net assets
Dreyfus Small Cap Portfolio .80% of average
daily net assets
Dreyfus U.S. Government Securities Portfolio .65% of average
daily net assets
T. Rowe Price Equity Income Portfolio .80% of average
daily net assets
T. Rowe Price Growth Stock Portfolio .80% of average
daily net assets
Endeavor Opportunity Value Portfolio .80% of average
daily net assets
Endeavor Enhanced Index Portfolio .75% of average
daily net assets
Endeavor Select 50 Portfolio 1.10% of average
daily net assets
Endeavor High Yield Portfolio .775% of average
daily net assets
Endeavor Janus Growth Portfolio 0.80% of average
daily net assets
<PAGE>
EXHIBIT A-2
AMENDMENT NO. 1 TO MANAGEMENT AGREEMENT
This Amendment No. 1 to the Management Agreement (the "Agreement") dated
July 22, 1999, by and between Endeavor Series Trust and Endeavor Management Co.
(the "Manager"), is entered into effective the 28th day of April, 2000.
WHEREAS the Agreement provides for the Manager to provide certain
services to the Trust for which the Manager is to receive agreed upon fees; and
WHEREAS the Manager and the Trust desire to make certain changes to the
Agreement;
NOW, THEREFORE, the Manager and the Trust hereby agree that the
Agreement is amended as follows:
1. Schedule A of the Agreement regarding management fees is amended as
follows, to be effective as of May 1, 2000:
Portfolio Percentage of daily net assets
--------- ------------------------------
Endeavor Select Portfolio 1.00%
2. All other terms and conditions of the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the 28th day of April, 2000.
ENDEAVOR SERIES TRUST
By:/s/Michael Pond
Name: Michael Pond
Title: Executive Vice President
ENDEAVOR MANAGEMENT CO.
By:/s/Michael Pond
Name: Michael Pond
Title: President
<PAGE>
A-3-2
EXHIBIT A-3
AMENDMENT NO. 2 TO MANAGEMENT AGREEMENT
This Amendment No. 2 to the Management Agreement (the "Agreement") dated
July 22, 1999, as amended on April 28, 2000, by and between Endeavor Series
Trust (the "Trust") and Endeavor Management Co. (the "Manager"), is entered into
effective October 9, 2000.
1. Investment Description; Appointment. Pursuant to Section 1 of the
Agreement the Trust hereby notifies the Manager that it has established one
additional investment portfolio (the "New Investment Portfolio"), namely the
CAPITAL GUARDIAN U.S. EQUITY PORTFOLIO and that the New Investment Portfolio
should be included as "Portfolios" as that term is defined in the Agreement.
2. Management Fees. Schedule A to the Agreement attached hereto is
hereby amended to reflect the management fee payable with respect to the Capital
Guardian U.S. Equity Portfolio as well as revisions to the management fees
payable with respect to the Capital Guardian Value Portfolio (formerly the
Endeavor Value Equity Portfolio), Jennison Growth Portfolio (formerly the
Endeavor Opportunity Value Portfolio) and Capital Guardian Global Portfolio
(formerly the Endeavor Select Portfolio).
3. Miscellaneous. All other terms and conditions of the Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the day of September, 2000.
ENDEAVOR SERIES TRUST
By:
-===========================
Authorized Officer
ENDEAVOR MANAGEMENT CO.
By:
==========================
Authorized Officer
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE A
Portfolio Percentage of daily net assets
--------- ------------------------------
<S> <C>
Endeavor Money Market Portfolio .50% of average daily net assets
Endeavor Asset Allocation Portfolio .75% of average daily net assets
T. Rowe Price International Stock Portfolio .90% of average daily net assets
Capital Guardian U.S. Equity Portfolio .85% of first $300 million of average daily net
assets; .80% of average daily net assets over $300
million up to $500 million; .775% of average daily net
assets over $500 million
Dreyfus Small Cap Value Portfolio .80% of average daily net assets
Dreyfus U.S. Government Securities Portfolio .65% of average daily net assets
T. Rowe Price Equity Income Portfolio .80% of average daily net assets
T. Rowe Price Growth Stock Portfolio .80% of average daily net assets
Jennison Growth Portfolio .85% of average daily net assets
Endeavor Enhanced Index Portfolio .75% of average daily net assets
Capital Guardian GlobalPortfolio 1.05% of
first $150 million
of average daily net
assets; 1.00% of
average daily net
assets over $150
million up to $300
million; .95% of
average daily net
assets over $300
million up to $500
million; .925% of
average daily net
assets over $500
million
Endeavor High Yield Portfolio .775% of average daily net assets
Endeavor Janus Growth Portfolio .80% of average daily net assets
Capital Guardian Value Portfolio .85% of
first $300 million
of average daily net
assets; .80% of
average daily net
assets over $300
million up to $500
million; .775% of
average daily net
assets over $500
million
</TABLE>
<PAGE>
B-1
EXHIBIT B
DIRECTORS AND OFFICERS OF ENDEAVOR MANAGEMENT CO.
P. Michael Pond President, Chief Executive Officer
2101 East Coast Highway
Suite 300
Corona del Mar, CA 92625
Frank A. Camp Secretary
Vice President and Division General Counsel
PFL Life Insurance Company
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499
Stephen E. Price Chief Financial Officer (Treasurer)
Treasurer
AEGON Financial Services Group, Inc.
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499
Larry N. Norman Director
President
PFL Life Insurance Company
4333 Edgewood Road N.E.
Cedar Rapids, Iowa 52499
Bart Herbert, Jr. Director
Chief Marketing Officer
AEGON USA, Inc.
111 N. Charles St.
Baltimore, Maryland 21201
David Bullock Director
President
Transamerica Capital, Inc.
4600 S. Syracuse Street
Suite 1180
Denver, Colorado 80237
<PAGE>
<TABLE>
<CAPTION>
[PFL LIFE VOTE TODAY BY MAIL,
INSURANCE COMPANY] TOUCH-TONE PHONE OR THE INTERNET
[AUSA LIFE CALL TOLL-FREE 1-888-221-0697
INSURANCE COMPANY, INC.] OR LOG ON TO WWW.PROXYWEB.COM
<S> <C>
CONTROL NUMBER: Please fold and detach card at perforation before
mailing
ENDEAVOR SERIES TRUST THIS SOLICITATION IS BEING MADE ON BEHALF OF THE
[ENDEAVOR VALUE EQUITY PORTFOLIO] BOARD OF TRUSTEES.
[ENDEAVOR OPPORTUNITY VALUE PORTFOLIO]
[ENDEAVOR SELECT PORTFOLIO]
</TABLE>
The undersigned contract owner, annuitant or participant, by completing this
form does hereby appoint [PFL Life Insurance Company] [AUSA Life Insurance
Company, Inc.] attorneys and proxies for the undersigned, with full powers of
substitution and revocation, to represent the undersigned and to vote on behalf
of the undersigned all shares of beneficial interest which the undersigned is
entitled to vote at a Special Meeting of Shareholders to be held at 10:00 a.m.
Central Time on September 25, 2000, at the offices of PFL Life Insurance
Company, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499, and at any
adjournments thereof.
The undersigned, by completing this form, does hereby request that the proxy be
authorized to exercise its discretion in voting upon such other business as may
properly come before the meeting. The undersigned hereby acknowledges receipt of
the Notice of Special Meeting and Proxy Statement, and revokes any proxy
heretofore given with respect to the votes covered by this proxy.
TOTAL VOTES (EQUIVALENT SHARES) AS SHOWN BELOW
PLEASE VOTE, DATE, SIGN EXACTLY AS
YOUR NAME APPEARS AT LEFT AND
RETURN THIS FORM IN THE ENCLOSED
SELF-ADDRESSED ENVELOPE.
Dated , 2000
-----------------------------
-------------------------------
(Signature)
<PAGE>
Please fold and detach card at perforation before mailing
The interest represented by this proxy will be voted as directed below, or if no
direction is indicated, will be voted FOR the proposal. If a proxy is not
received from a particular contract owner, participant or annuitant, then votes
attributable to his interest will be allocated in the same ratio as votes for
which instructions have been received.
Please vote by filling in the appropriate box below.
FOR AGAINST ABSTAIN
1. To approve an amendment to the management agreement
between the Trust and Endeavor Management Co., the
manager of the Trust