ENDEAVOR SERIES TRUST
4333 Edgewood Road NE
Cedar Rapids, Iowa 52499
Capital Guardian Value Portfolio (formerly Endeavor Value Equity Portfolio)
Jennison Growth Portfolio (formerly Endeavor Opportunity Value Portfolio)
Capital Guardian Global Portfolio (formerly Endeavor Select Portfolio)
INFORMATION STATEMENT
December 8, 2000
We Are Not Asking You For A Proxy And You Are Requested Not To Send Us A Proxy
This statement is for informational purposes only.
This Information Statement is furnished in connection with changes in
the investment advisers for three of the portfolios of Endeavor Series Trust:
Capital Guardian Value Portfolio (formerly Endeavor Value Equity Portfolio),
Jennison Growth Portfolio (formerly Endeavor Opportunity Value Portfolio) and
Capital Guardian Global Portfolio (formerly Endeavor Select Portfolio) (the
"Portfolios"). These changes, together with changes of the names of the
Portfolios, were effective October 9, 2000.
<PAGE>
SUMMARY
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 Endeavor Value Equity Portfolio (now known as Capital
Guardian Value Portfolio), Endeavor Opportunity Value Portfolio (now known as
Jennison Growth Portfolio) and Endeavor Select Portfolio (now known as 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 and expenses of one Portfolio generally
have no effect on the investment performance of any other Portfolio.
Endeavor Management Co. (the "Manager"), located at 4333 Edgewood Road
NE Cedar Rapids, Iowa 52499, has overall supervisory responsibility for the
general management and investment of the Portfolios' assets and for the
general administration and management of the Trust. The Manager selects the
investment adviser for each Portfolio and monitors each investment
adviser's investment program. As authorized by the 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 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. Until
October 9, 2000, OpCap Advisors, a subsidiary of Oppenheimer Capital,
provided investment advisory services to Endeavor Value Equity Portfolio
and Endeavor Opportunity Value Portfolio and Montgomery Asset Management
LLC ("Montgomery") provided investment advisory services to Endeavor Select
Portfolio. The Manager paid each Adviser for its services a portion of the
management fee the Manager receives with respect to the 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 determined to replace the
investment adviser of each Portfolio and retain Capital Guardian Trust Company
as investment adviser to Endeavor Value Equity Portfolio and Endeavor Select
Portfolio, and Jennison Associates LLC as investment adviser to Endeavor
Opportunity Value Portfolio. None of the Advisers is an affiliate of the
Manager.
To obtain these quality investment advisers, the Manager is required to
pay higher investment advisory fees than were being paid to each Portfolio's
prior investment adviser. Therefore, the Manager asked the Trustees for an
increase in the management fee to cover the additional costs. 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 an
amendment to the Management Agreement providing for an increase in management
fees and to recommend that shareholders of each Portfolio approve the increase
in management fees.
At the Special Meeting of Shareholders held on September 25, 2000,
shareholders of each Portfolio approved an increase in management fees paid to
the Manager with respect to each Portfolio.
<PAGE>
Background. Section 15(a) of the Investment Company Act of 1940, as
amended (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. Therefore, shareholder approval was
not required for the change in investment advisers. This information statement
is being provided to you to satisfy one of the conditions of the exemptive
relief order.
In the exercise of its portfolio oversight and management
responsibility, the Manager 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 Endeavor
Value Equity Portfolio and 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 Endeavor Value Equity
Portfolio and Endeavor Opportunity Value Portfolio and Montgomery as Adviser to
Endeavor Select Portfolio. In addition, on July 24, 2000, all of the Trustees
present approved investment advisory agreements between the Manager and Capital
Guardian Trust Company ("Capital Guardian") with respect to Endeavor Value
Equity Portfolio and Endeavor Select Portfolio and an investment advisory
agreement between the Manager and Jennison Associates LLC ("Jennison") with
respect to Endeavor Opportunity Value Portfolio. Information about Capital
Guardian and Jennison is set forth in Appendix B to this Information Statement.
Investment Advisory Agreements. For the reasons herein and based on an
extensive analysis of factors described in this Information Statement, a
majority of the Trustees of the Trust have approved the Manager's execution of
new investment advisory agreements (the "New Agreements") with Capital Guardian
(for the renamed Capital Guardian Value Portfolio and the renamed Capital
Guardian Global Portfolio) and Jennison (for the renamed Jennison Growth
Portfolio). The New Agreements contain substantially the same terms and
conditions as the previous agreements other than: an increase in the amount of
fees paid by the Manager to the Adviser, the name of the Portfolio and the name
of the Adviser. The Manager will pay each Adviser a monthly fee at an annual
rate based on each Portfolio's average daily net assets. The New Agreements
commenced on October 9, 2000 and will continue initially for a two-year period
and continue for successive annual periods thereafter, provided such continuance
is approved at least annually by a majority of the Board of Trustees who are not
interested persons of the Trust (as the term is used in the 1940 Act) and a
majority of the full Board of Trustees or a majority of the outstanding voting
securities of the Portfolio, as defined in the 1940 Act. The New Agreements are
terminable, without penalty, by the Board of Trustees of the Trust, by the
Manager or by vote of holders of a "majority" (as defined in the 1940 Act) of
the Portfolio's Shares upon 60 days' prior written notice to the Adviser or by
the Adviser upon 90 days' written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. These New Agreements shall terminate
automatically and immediately upon termination of the Management Agreement dated
July 22, 1999 between the Manager and the Trust. These New Agreements shall
terminate automatically and immediately in the event of their 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. These
Agreements may be amended at any time by the Adviser and the Manager, subject to
approval by the Trust's Board of Trustees and provided such New Agreements are
done in accordance with the Trust's exemptive relief order. The New Agreements
are included as Appendix C to this statement.
Investment Advisory Fees. The New 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 previously 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
previously paid by the Manager to OpCap Advisors and Montgomery and the fees
that now are payable to Capital Guardian and Jennison.
<TABLE>
<CAPTION>
Advisory Fees
<S> <C> <C>
Portfolio Adviser Fee
Capital Guardian Value OLD - OpCap Advisors 0.40%
Portfolio
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
Jennison Growth Portfolio OLD - OpCap Advisors 0.40%
NEW - Jennison 0.50% up to $300 million;
0.45% in excess of $300 million
Capital Guardian Global OLD - Montgomery 0.60% (prior to May 1, 2000, Montgomery received a
Portfolio 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
</TABLE>
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, as well as the shareholders of each
Portfolio, approved increases in the management fee paid to the Manager with
respect to each Portfolio. Although the new fee schedule increases the
management fee paid by the Portfolios, the new fee schedule at current asset
levels does not increase and, with respect to Capital Guardian Value and
Jennison Growth Portfolios, decreases the amount of the fee retained by the
Manager. The full amount of the fee increases is being passed on to the new
Advisers. Management's primary goal in the new fee schedule is 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
prior level.
Basis for the Board's Action. In evaluating and approving the increase
in management fees and advisory fees, 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 and advisory fees would be in the best interest of each
Portfolio and its shareholders.
In recommending that shareholders approve the increase in management
fees as well as approving the New Agreements, 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 new fee schedule 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 existing investment management fee
schedule and the new investment management fee schedule
(vi) possible economies of scale in managing the Portfolios
In considering an increase in the management fees, the Board concluded
that the management fee schedule (including proposed breakpoints) would: (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.
The Agreements. The 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 Management Agreement 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 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 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. Each Advisory Agreement provides that the Adviser will be paid a fee by
the Manager with respect to the Portfolio's average daily net assets. The amount
of the management fee and advisory fee varies among the Portfolios. Under the
new fee schedule, the amount of the management fee and the advisory fee will
increase. The management fee previously 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, as is
the advisory fee in effect for each Portfolio and the aggregate amount of
compensation paid to the Adviser during the Trust's fiscal year ended December
31, 1999. The new 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, as is
the new advisory fee for each Portfolio and the aggregate amount of compensation
that would have been paid to the Adviser during the Trust's fiscal year ended
December 31, 1999.
<TABLE>
<CAPTION>
TABLE 1
<S> <C> <C> <C> <C>
Portfolio Management Fee Aggregate Management Advisory Fee Aggregate Advisory Fee
(as a % of net assets) Fee Paid During (as a % of net assets) Paid During Fiscal
Fiscal Year Ended Year Ended
December 31, 1999 December 31, 1999
----------------- -----------------
Endeavor Value 0.80% $1,856,971 0.40% $928,455
Equity
Endeavor 0.80% $364,453 0.40% $182,333
Opportunity Value
Endeavor Select* 1.10% $291,700 0.60% (prior to May 1, 2000, $186,199
Montgomery received a fee of
0.70% which was voluntarily
reduced to 0.60%)
</TABLE>
*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>
<CAPTION>
TABLE 2
<S> <C> <C> <C> <C>
Portfolio New Management Fee Pro Forma Aggregate New Advisory Fee Pro Forma Aggregate
(as a % of net assets) Management Fee For (as a % of net assets) Advisory Fee For
Fiscal Year Ended Fiscal Year Ended
December 31, 1999 December 31, 1999
----------------- -----------------
Endeavor Value 0.85% up to $300 million; $1,972,966 0.50% up to $150 million; $1,119,512
Equity 0.80% in excess of $300 0.45% in excess of $150
million up to $500 million; million up to $300
0.775% in excess of $500 million;
million. 0.35% in excess of $300
million up to $500
million;
0.30% in excess of $500
million
Endeavor 0.85% $387,457 0.50% up to $300 million; $227,916
Opportunity Value 0.45% in excess of $300
million
Endeavor Select 1.05% up to $150 million; $279,299 0.65% up to $150 million; $172,899
1.00% in excess of $150 0.55% in excess of $150
million up to $300 million; million up to $300
0.95% in excess of $300 million;
million up to $500 million; 0.45% in excess of $300
0.925% in excess of $500 million up to $500 million;
million. 0.40% in excess of $500
million
</TABLE>
Table A in Appendix A to this Information Statement shows the
annualized level of all fees and expenses incurred by each Portfolio during the
year ended December 31, 1999 under the prior 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 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 Management
Agreement and the estimated overall expense levels had the increase in
management fees been in effect for the year ended December 31, 1999.
The 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, (i) the Manager's fees, (ii) legal and
audit expenses, (iii) fees for registration of Trust Shares, (iv) fees of the
Trust's transfer agent, registrar, custodian, dividend disbursing agent, and
shareholder servicing agent, (v) taxes, (vi) brokerage and other transaction
expenses, (vii) interest expenses, (viii) expenses of shareholders' and
Trustees' meetings, (ix) printing of share certificates and prospectuses, (x)
mailing of prospectuses to existing Trust shareholders, (xi) insurance premiums,
(xii) charges of an independent pricing service, (xiii) expenses related to the
purchase and redemption of Trust Shares, (xiv) administrative expenses paid by
the Manager on behalf of the Trust and (xv) nonrecurring expenses, such as the
cost of litigation.
Each Advisory Agreement provides that the Adviser is responsible for
making investment decisions, supplying investment research and portfolio
management services and placing purchase and sales orders for portfolio
transactions. Each Advisory Agreement also provides that the Adviser will bear
all expenses in connection with its performance.
The Management Agreement and each Advisory Agreement provide that the
Manager or Adviser is not liable for its acts or omissions under the agreement,
but that the Manager or Adviser is not protected against liability arising out
of its own willful misfeasance, bad faith, or gross negligence in the
performance of its duties.
The Management Agreement and each Advisory Agreement provide that it
(i) 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, (ii 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, iii) may be terminated by the Manager on 90 days' prior written
notice to the Trust and (iv) will terminate automatically in the event of its
"assignment" as such term is defined in the 1940 Act.
No Trustee of the Trust has any material interest in the new Investment
Advisers.
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 Adviser to Jennison Growth 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
(now known as Capital Guardian Value Portfolio) and Endeavor Opportunity Value
Portfolio (now known as Jennison Growth Portfolio) paid $296,817 and $44,641,
respectively, in brokerage commissions. For the year ended December 31, 1999,
Endeavor Select Portfolio (now known as Capital Guardian Global Portfolio) paid
$156,177 in brokerage commissions of which $33 (0.02%) was paid to Montgomery
Securities, Inc., an affiliate of the Portfolio's former 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 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 variable annuity contracts ("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 Endeavor Value Equity Portfolio (now known as Capital Guardian
Value Portfolio) and $26,151 was attributable to Endeavor Opportunity Value
Portfolio (now known as Jennison Growth 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
AUSA Holding Company ("AUSA"), 4333 Edgewood Road, N.E., Cedar Rapids,
Iowa 52499, an affiliate of PFL Life Insurance Company and AUSA Life Insurance
Company, 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.
Transamerica Capital, Inc., an affiliate of the Manager, 4600 S.
Syracuse Street, Suite 1180, Denver, Colorado 80237, is the Trust's principal
underwriter.
<PAGE>
APPENDIX A
TABLE A
The table below shows (i) the annualized level of all fees and expenses
incurred by each Portfolio under the prior 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>
<S> <C> <C> <C> <C>
Difference between Difference between
Prior and New Prior and New
Prior Aggregate New Aggregate Fees Aggregate Aggregate
Portfolio Fees and Expenses and Expenses Fees and Expenses Fees and Expenses
--------- ----------------- ------------ ----------------- -----------------
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%
</TABLE>
*Effective May 1, 2000, the Manager reduced its management fee by 0.10%, which
reduction is reflected in prior aggregate fees and expenses. Actual 1999 prior
aggregate fees and expenses were 1.49%.
TABLE B
PORTFOLIO BY PORTFOLIO FEE TABLE COMPARISONS
The tables provided below compare the actual overall recurring
portfolio expenses under the Management Agreement for the year ended December
31, 1999 and the estimated overall recurring portfolio expenses under new
management fee schedule had the new schedule 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 prior and new basis. Your actual
costs may be higher or lower.
<PAGE>
ENDEAVOR VALUE EQUITY PORTFOLIO
Prior New
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
Prior New
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
Prior New
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, located at 333 South Hope Street, 55th Floor, Los
Angeles, CA 90071 is a wholly-owned subsidiary of Capital Group International,
Inc., which itself is a wholly-owned subsidiary of The Capital Group Companies,
Inc., located at 333 South Hope Street, 55th Floor, Los Angeles, CA 90071. The
Chairman of Capital Guardian is David I. Fisher. The executive officers and
other directors of Capital Guardian are listed in the table below.
<TABLE>
<S> <C>
Donnalisa Barnum Senior Vice President, Capital Guardian Trust Company; Vice President,
Capital International, Inc. and Capital International Limited.
Andrew F. Barth Director, Capital Guardian Trust
Company and, Capital Research and
Management Company; Director and Research
Director, Capital International Research,
Inc.; President, Capital Guardian
Research Company; Formerly Director and
Executive Vice President, Capital
Guardian Research Company.
Michael D. Beckman Director, Senior Vice President and Treasurer, Capital Guardian Trust
Company; Director, Capital Guardian Trust Company of Nevada; Treasurer,
Capital International Research, Inc. and Capital Guardian Research
Company; Director and Treasurer, Capital Guardian (Canada), Inc.; Formerly
Chairman and Director, Capital International Asia Pacific Management
Company.
Michael A. Burik Senior Counsel, The Capital Group Companies, Inc.; Senior Vice President,
Capital Guardian Trust Company.
Elizabeth A. Burns Senior Vice President, Capital Guardian Trust Company.
Larry P. Clemmensen Director, Capital Guardian
Trust Company and American Funds
Distributors, Inc.; Chairman and
Director, American Funds Service Company;
Director and President, The Capital Group
Companies, Inc. and Capital Management
Services, Inc.; Senior Vice President and
Director, Capital Research and Management
Company, Treasurer, Capital Strategy,
Inc.
Kevin G. Clifford Director and President, American Funds Distributors, Inc.; Director,
Capital Guardian Trust Company
Roberta A. Conroy Senior Vice President, Director
and Counsel, Capital Guardian Trust
Company; Senior Vice President and
Secretary, Capital International, Inc.;
Assistant General Counsel, The Capital
Group Companies, Inc., Secretary, Capital
Guardian International, Inc.; Formerly,
Secretary, Capital Management Services,
Inc.
Jon B. Emerson Senior Vice President, Capital Guardian Trust Company; Director, Capital
Guardian Trust Company, a Nevada Corporation.
Michael Ericksen Director and Senior Vice President, Capital Guardian Trust Company;
Director and Senior Vice President, Capital International Limited
David I. Fisher Vice Chairman and Director, Capital International, Inc., Capital
International Limited and Capital International K.K.; Chairman and
Director, Capital International S. A. and Capital Guardian Trust Company;
Director and President, Capital International Limited (Bermuda); Director,
The Capital Group Companies, Inc., Capital International Research, Inc.,
Capital Group Research, Inc. and Capital Research and Management Company.
Richard N. Havas Senior Vice President, Capital Guardian Trust Company, Capital
International, Inc. and Capital International Limited; Director and Senior
Vice President, Capital International Research, Inc.; Director and Senior
Vice President Capital Guardian (Canada), Inc.
Frederick M. Hughes, Jr Senior Vice President, Capital Guardian Trust Company.
William H. Hurt Director and Senior Vice
President, Capital Guardian Trust
Company; Chairman and Director, Capital
Guardian Trust Company, a Nevada
Corporation and Capital Strategy
Research, Inc.; Formerly, Director, The
Capital Group Companies, Inc.
Peter C. Kelly Senior Vice President, Capital Guardian Trust Company; Assistant General
Counsel, The Capital Group Companies, Inc.; Director and Senior Vice
President, Capital International, Inc.
Robert G. Kirby Chairman Emeritus, Capital Guardian Trust Company; Senior Partner, The
Capital Group Companies, Inc.
Nancy J. Kyle Director and Senior Vice President, Capital Guardian Trust Company;
President and Director, Capital Guardian (Canada), Inc.
Karin L. Larson Director, The Capital Group
Companies, Inc., Capital Group Research,
Inc., Capital Guardian Trust Company,
Director and Chairman, Capital Guardian
Research Company and Capital
International Research, Inc., Formerly,
Director and Senior Vice President,
Capital Guardian Research Company.
D. James Martin Director, Capital Guardian Trust Company, and Director and Senior Vice
President of Capital International Research Inc.
James R. Mulally Director and Senior Vice
President, Capital Guardian Trust
Company; Senior Vice President, Capital
International Limited; Vice President,
Capital Research Company; Formerly,
Director, Capital Guardian Research
Company.
Shelby Notkin Senior Vice President, Capital Guardian Trust Company; Director, Capital
Guardian Trust Company, a Nevada Corporation.
Mary M. O'Hern Senior Vice President, Capital Guardian Trust Company and Capital
International Limited; Vice President, Capital International, Inc.
Jeffrey C. Paster Senior Vice President, Capital Guardian Trust Company.
Robert V. Pennington Senior Vice President, Capital Guardian Trust Company; President and
Director Capital Guardian Trust Company, a Nevada Corporation Company.
Jason M. Pilalas Director, Capital Guardian
Trust Company; Senior Vice President and
Director, Capital International Research,
Inc.; Formerly, Director and Senior Vice
President, Capital Guardian Research
Company.
George L. Romine, Jr. Senior Vice President, Capital Guardian Trust Company
Robert Ronus Director and President, Capital Guardian Trust Company; Chairman and
Director, Capital Guardian (Canada), Inc., Director, Capital
International, Inc. and Capital Guardian Research Company; Senior Vice
President, Capital International, Inc.; Capital International Limited and
Capital International S.A.; Formerly, Chairman, Capital Guardian
International Research Company and Director, Capital International, Inc.
James F. Rothenberg Director, American Funds Distributors, Inc., American Funds Service
Company, The Capital Group Companies, Inc., Capital Group Research, Inc.,
Capital Guardian Trust Company and Capital Management Services, Inc.;
Director and President, Capital Research and Management, Inc.; Formerly,
Director of Capital Guardian Trust Company, a Nevada Corporation, and
Capital Research Company.
Theodore R. Samuels Director and Senior Vice President, Capital Guardian Trust Company;
Director, Capital International Research, Inc.; Formerly, Director,
Capital Guardian Research Company
Lionel A. Sauvage Director and Senior Vice President, Capital Guardian Trust Company; Vice
President, Capital International Research, Inc.; Formerly, Director,
Capital Guardian Research Company.
John H. Seiter Director and Executive Vice
President, Capital Guardian Trust
Company; Senior Vice President, Capital
Group International, Inc.; and Vice
President, The Capital Group Companies,
Inc.
Eugene P. Stein Director and Executive Vice President, Capital Guardian Trust Company;
Formerly, Director, Capital Guardian Research Company.
Phil A. Swan Senior Vice President, Capital Guardian Trust Company.
Shaw B. Wagener Director, Capital Guardian
Trust Company, Capital International Asia
Pacific Management Company S.A., Capital
Research and Management Company and
Capital International Management Company
S.A.; President and Director, Capital
International, Inc.; Senior Vice
President, Capital Group International,
Inc.
Joanne Weckbacher Senior Vice President, Capital Guardian Trust Company.
Eugene M. Waldron Senior Vice President, Capital Guardian Trust Company.
</TABLE>
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 segments managed by the group of research analysts,
are as follows:
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)
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)
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)
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)
Nancy J. Kyle is a Director and Senior Vice President of Capital Guardian. She
joined the Capital organization in 1991. (Capital Guardian Global Portfolio)
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)
Robert Ronus is a Director and President of Capital Guardian. He joined the
Capital organization in 1972. (Capital Guardian Global Portfolio)
Theodore R. Samuels is a Director and Senior Vice President of Capital Guardian.
He joined the Capital organization in 1981. (Capital Guardian Value Portfolio)
Lionel M. Sauvage is a Director and Senior Vice President of Capital Guardian.
He joined the Capital organization in 1987. (Capital Guardian Global Portfolio)
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)
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)
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)
The table below lists the equity mutual funds with capital appreciation as their
investment objective that are currently advised by Capital Guardian, the size of
each fund, and the rate of compensation received by Capital Guardian for the
investment advisory services it provides for each fund:
<PAGE>
<TABLE>
<CAPTION>
Capital Guardian Trust Company
Schedule of Assets and Fee Schedules
Global Equity and U.S. Equity (40's Act)
(assets as of 9/30/2000)
<S> <C> <C> <C> <C> <C>
U.S. Equity
Equitable Capital Guardian ING CGC Trust - Large
U.S. Equity Portfolio $ Cap Value Series $ 70,988,000.97
124,990,963.25
First $ 0.500% First $ 150,000,000 0.500%
150,000,000
Next 0.450% Next 0.450%
150,000,000 150,000,000
Next 0.350% Next 0.350%
200,000,000 200,000,000
Over 0.300% Over 0.300%
500,000,000 500,000,000
Manufacturers Investment
Vantagepoint Vantagepoint Growth Manulife Trust U.S. Large Cap
& Income Fund $ Value Trust $ 397,412,543.53
100,941,025.23
First $ 0.550% First $ 500,000,000 0.400%
25,000,000
Next 0.400% Over 0.350%
25,000,000 500,000,000
Over 0.225%
50,000,000
Global Equity
ING CGC Trust - Managed Nomura GANT Global Equity
Global Series $ Portfolio 2 $ 38,058,118.30
246,905,029.29
First $ 0.650% First $ 0.750%
150,000,000 25,000,000
Next 0.550% Next 0.600%
150,000,000 25,000,000
Next 0.450% Next 0.425%
200,000,000 200,000,000
Over 0.400% Over 0.375%
500,000,000 250,000,000
Note: In some cases, fees charged to clients will be different due to differing levels of service.
</TABLE>
<PAGE>
INFORMATION CONCERNING JENNISON ASSOCIATES LLC ("JENNISON")
Jennison, located at 466 Lexington Avenue, New York, NY 10017, is a wholly-owned
subsidiary of Prudential Investment Corporation ("PIC"). 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. PIC is a
wholly-owned subsidiary of Prudential Asset Management Holding Company (PAMHCo),
which is a wholly-owned subsidiary of Prudential. The address for PIC and PAMHCo
is Gateway Center Three, 100 Mulberry Street, Newark, NJ 07102. Jennison has
provided investment advisory services to registered investment companies since
1990.
The table below lists the name and principal occupation of the principal
executive officers and each director of Jennison. The address of each person is
466 Lexington Avenue, New York, NY 10017.
Name Principal Occupation
Michael A. Del Balso Director since 1998, Executive Vice
President, Jennison, since 1998; prior to 1998,
various positions to Senior Vice President,
Jennison Associates Capital Corp.
Mary-Jane Flaherty Director since 2000. Managing Director,
Strategic Initiatives, PIC, since December 1998;
prior to December 1998, various positions to Chief
Financial Officer, PIC, and various positions to
Vice President, Prudential.
John H. Hobbs Chairman since 1998. Chief Executive
Officer, Jennison, since 1998; prior to 1998,
various positions to Chairman and Chief Executive
Officer, Jennison Associates Capital Corp.
Karen E. Kohler Director since 1998. Executive Vice
President, Jennison, since 2000. Treasurer,
Jennison, since 1999. Chief Compliance Officer and
Director, Jennison, since 1998; prior to 1998,
various positions to Senior Vice President, Chief
Compliance Officer, Jennison Associates Capital
Corp.
Kathleen A. McCarragher Director since 1998. Executive Vice President,
Jennison, since 1998. 1992-1998,
Managing Director, Weis, Peck & Greer LLC.
Philip N. Russo Director since 2000. Vice President and
Director, PIC, since 1999; Vice President,
Prudential, since 1997; prior to 1997, Managing
Director, Bankers Trust Company.
Spiros Segalas Director since 1998. President and Chief
Investment Officer, Jennison, since 1998.
Prior to 1998, various positions to President and
Chief Investment Officer, Jennison
Associates Capital Corp.
Victor Sim Director since 2000. Vice President, Prudential,
since 1997.
John R. Strangfeld Director since 2000. Chief Executive
Officer of Prudential Securities since October
2000, Executive Vice President since February 1998
of Prudential; Chief Executive Officer, Chairman,
President and Director since January 1999 of PIC;
Chairman since August 1989 of Pricoa Capital
Group; prior to 1998, various positions to Chief
Executive Officer, Private Asset Management Group
of Prudential.
Keven C. Uebelein Director since 2000. Senior Managing
Director, Mergers & Acquisitions, PIC, since 2000;
prior to 2000, various positions to Managing
Director, New Products, Private Asset Management
Group, Prudential.
Bernard B. Winograd - Director since 2000. Chief Executive
Officer, Prudential Real Estate Investors, since
December 1986; Senior Vice President and Director,
PIC, since December 1996; prior to December 1996,
The Taubman Company LLC.
The table below lists the equity mutual funds with capital appreciation as their
investment objective that are currently advised by Jennison, the size of each
fund, and the rate of compensation received by Jennison for the investment
advisory services it provides for each fund:
<TABLE>
<S> <C> <C>
Fund Net Assets Fee Paid to Jennison
Fund as of 9-30-00 (% of average daily net
assets)
Growth - Prudential Investment Portfolios, Inc. - Prudential $7,261,778,258 0.30% to $300
Jennison Growth Fund million
0.25% over $300 million
Prudential Diversified Funds - Prudential Diversified $ 74,772,996 0.30% to $300
Conservative Growth (Growth Segment) million
0.25% over $300 million
Prudential Diversified Funds - Prudential Diversified $ 191,302,761 0.30% to $300
Moderate Growth (Growth Segment) million
0.25% over $300 million
Prudential Diversified Funds - Prudential Diversified High $ 158,801,150 0.30% to $300
Growth (Growth Segment) million
0.25% over $300 million
Harbor Fund - Harbor Capital Appreciation Fund $9,514,000,000 0.75% to $10
million
0.50% next $30
million
0.35% next $25
million
0.25% next $335
million
0.22% next $600
million
0.20% over $1
billion
0.25% over $5 billion
SunAmerica Style Select Series, Inc. - Large-Cap Growth $ 43,548,000 0.30% to $300 million
Portfolio (1)
0.25% over $300 million
The Hirtle Callaghan Trust - The Growth Equity Portfolio (1) $ 176,981,000 0.30%
The Preferred Group of Mutual Funds - Preferred Growth Fund $ 804,265,000 0.75% first $10
million
0.50% next $30
million
0.35% next $25
million
0.25% next $335
million
0.22% next $600
million
0.20% over $1 billion
EQ Advisors Trust - EQ/Balanced Portfolio (1) $ 239,592,000 0.35%
</TABLE>
(1) Jennison provides subadvisory services for only one segment of this fund.
Fund net asset figures identify only the portion of total fund net assets for
which Jennison provides subadvisory services.
<PAGE>
APPENDIX C
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 9th day of October, 2000, by and between Jennison
Associates LLC, a New York limited liability company ("Jennison") (the
"Adviser"), and Endeavor Management Co., a California corporation (the
"Manager").
WHEREAS, the Manager has been organized to serve as investment manager
of Endeavor Series Trust (the "Trust"), a Massachusetts business trust which has
filed a registration statement under the Investment Company Act of 1940, as
amended (the "1940 Act") and the Securities Act of 1933 (the "Registration
Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Jennison Growth Portfolio (the "Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser to
assist the Manager in performing investment advisory services for the Portfolio;
and
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), and is engaged in the business of
rendering investment advisory services to investment companies and other
institutional clients and desires to provide such services to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way. The Adviser may execute account documentation,
agreements, contracts and other documents requested by brokers, dealers,
counterparties and other persons in connection with its management of the assets
of the Portfolio, provided the Adviser receives the express agreement and
consent of the Manager and/or the Trust's Board of Trustees to execute such
documentation, agreements, contracts and other documents, which consent shall
not be unreasonably withheld. In such respect, and only for this limited
purpose, the Adviser shall act as the Manager's and the Trust's agent and
attorney-in-fact.
Copies of the Trust's Registration Statement, as it relates to the
Portfolio (the "Registration Statement"), and the Trust's Declaration of Trust
and Bylaws (collectively, the "Charter Documents"), each as currently in effect,
have been delivered to the Adviser. The Manager agrees, on an ongoing basis, to
notify the Adviser of each change in the fundamental and non-fundamental
investment policies and restrictions of the Portfolio before they become
effective and to provide to the Adviser as promptly as practicable copies of all
amendments and supplements to the Registration Statement before filing with the
Securities and Exchange Commission ("SEC") and amendments to the Charter
Documents. The Manager will promptly provide the Adviser with any procedures
applicable to the Adviser adopted from time to time by the Trust's Board of
Trustees and agrees to promptly provide the Adviser copies of all amendments
thereto. The Adviser will not be bound to follow any change in the investment
policies, restrictions or procedures of the Portfolio or Trust, however, until
it has received written notice of any such change from the Manager.
The Manager shall timely furnish the Adviser with such additional
information as may be reasonably necessary for or requested by the Adviser to
perform its responsibilities pursuant to this Agreement. The Manager shall
cooperate with the Adviser in setting up and maintaining brokerage accounts and
other accounts the Adviser deems advisable to allow for the purchase or sale of
various forms of securities pursuant to this Agreement.
2. Obligations of and Services to be Provided by the Adviser. The
Adviser undertake to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of
the portfolio assets of the Portfolio, all without prior consultation with the
Manager, subject to and in accordance with the investment objective and policies
of the Portfolio set forth in the Trust's Registration Statement and the Charter
Documents, as such Registration Statement and Charter Documents may be amended
from time to time, in compliance with the requirements applicable to registered
investment companies under applicable laws and those requirements applicable to
both regulated investment companies and segregated asset accounts under
Subchapters M and L of the Internal Revenue Code of 1986, as amended (the
"Code") and any written instructions which the Manager or the Trust's Board of
Trustees may issue from time-to-time in accordance therewith. In pursuance of
the foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render such reports to the Trust's
Board of Trustees and the Manager as they may reasonably request concerning the
investment activities of the Portfolio, provided that the Adviser shall not be
responsible for Portfolio accounting. Unless the Manager gives the Adviser
written instructions to the contrary, the Adviser shall, in good faith and in a
manner which it reasonably believes best serves the interests of the Portfolio's
shareholders, direct the Portfolio's custodian as to how to vote such proxies as
may be necessary or advisable in connection with any matters submitted to a vote
of shareholders of securities held by the Portfolio.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio, place orders for the execution of
portfolio transactions with or through such brokers, dealers or other financial
institutions as it may select including affiliates of the Adviser and, complying
with Section 28(e) of the Securities Exchange Act of 1934, may pay a commission
on transactions in excess of the amount of commission another broker-dealer
would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the SEC, the Trust,
the Manager or any person retained by the Trust at all reasonable times. Where
applicable, such records shall be maintained by the Adviser for the periods and
in the places required by Rule 31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement, but shall not be obligated to pay any expenses of
the Manager, the Trust, or the Portfolio, including without limitation: (a)
interest and taxes; (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments for the
Portfolio; and (c) custodian fees and expenses. Any reimbursement of fees paid
to the Manager required by any expense limitation provision and any liability
arising out of a violation of Section 36(b) of the 1940 Act shall be the sole
responsibility of the Manager.
e. The Adviser and the Manager acknowledge that the Adviser is
not the compliance agent for the Portfolio or for the Manager, and does not have
access to all of the Portfolio's books and records necessary to perform certain
compliance testing. To the extent that the Adviser has agreed to perform the
services specified in this Section 2 in accordance with the Trust's Registration
Statement and Charter Documents, written instructions of the Manager and any
policies adopted by the Trust's Board of Trustees applicable to the Portfolio
(collectively, the "Charter Requirements"), and in accordance with applicable
law (including sub-chapters M and L of the Code, the Investment Company Act and
the Advisers Act ("Applicable Law")), the Adviser shall perform such services
based upon its books and records with respect to the Portfolio (as specified in
Section 2.c. hereof), which comprise a portion of the Portfolio's books and
records, and upon information and written instructions received from the Trust,
the Manager or the Trust's administrator, and shall not be held responsible
under this Agreement so long as it performs such services in accordance with
this Agreement, the Charter Requirements and Applicable Law based upon such
books and records and such information and instructions provided by the Trust,
the Manager or the Trust's administrator. The Adviser shall have no
responsibility to monitor certain limitations or restrictions for which the
Adviser has not been provided sufficient information in accordance with Section
1 of this Agreement or otherwise. All such monitoring shall be the
responsibility of the Manager.
f. The Adviser makes no representation or warranty, express or
implied, that any level of performance or investment results will be achieved by
the Portfolio or that the Portfolio will perform comparably with any standard or
index, including other clients of the Adviser, whether public or private.
g. The Adviser shall be responsible for the preparation and
filing of Schedule 13G and Form 13F on behalf of the Portfolio. The Adviser
shall not be responsible for the preparation or filing of any other reports
required of the Portfolio by any governmental or regulatory agency, except as
expressly agreed to in writing.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
The Adviser shall be subject to a written code of ethics adopted by it
pursuant to Rule 17j-1(b) of the 1940 Act, and shall not be subject to any other
code of ethics, including the Manager's code of ethics, unless specifically
adopted by the Adviser.
5. Use of Names. The Adviser hereby consents to the Portfolio being
named the Jennison Growth Portfolio. The Manager shall not use the name or mark
"Jennison" or disclose information related to the business of the Adviser or any
of their affiliates in any prospectus, sales literature or other material
relating to the Trust in any manner not approved prior thereto by the Adviser;
provided, however, that the Adviser shall approve all uses of its name and that
of its affiliates which merely refer in accurate terms to its appointment
hereunder or which are required by the SEC or a state securities commission; and
provided, further, that in no event shall such approval be unreasonably
withheld. The Adviser shall not use the name of the Trust or the Manager in any
material relating to the Adviser in any manner not approved prior thereto by the
Manager; provided, however, that the Manager shall approve all uses of its or
the Trust's name which merely refer in accurate terms to the appointment of the
Adviser hereunder or which are required by the SEC or a state securities
commission; and, provided, further, that in no event shall such approval be
unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Jennison" or any derivative or abbreviation thereof as part of
their name, and that the Adviser or its affiliates may enter into investment
advisory, administration or other agreements with such other entities.
Upon termination of this Agreement for any reason, the Manager shall
immediately cease and cause the Portfolio to immediately cease all use of the
name and mark "Jennison."
6. Liability. Except as may otherwise be provided by the 1940 Act, or
other federal securities laws, neither the Adviser nor any of its affiliates,
officers, directors, shareholders, employees, or agents shall be liable for any
loss, liability, cost, damage, or expense (including reasonable attorneys' fees
and costs) (collectively referred to in this Agreement as "Losses"), except for
Losses resulting from the Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of their obligations and duties under this
Agreement. The Manager shall hold harmless and indemnify the Adviser, its
affiliates, directors, officers, shareholders, employees or agents for any Loss
not resulting from the Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The obligations contained in this Section 6 shall survive termination
of this Agreement.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the Trust's obligations shall be limited to the assets of the Portfolio and
that the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 90 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
July 22, 1999 between the Manager and the Trust. This Agreement shall terminate
automatically and immediately in the event of its assignment. The terms
"assignment" and "vote of a majority of the outstanding voting securities" shall
have the meaning set forth for such terms in the 1940 Act. This Agreement may be
amended at any time by the Adviser and the Manager, subject to approval by the
Trust's Board of Trustees and, if required by applicable SEC rules and
regulations, a vote of a majority of the Portfolio's outstanding voting
securities.
9. Confidential Relationship. Any information and advice furnished by
any party to this Agreement to the other party or parties shall be treated as
confidential and shall not be disclosed to third parties without the consent of
the other party hereto except as required by law, rule or regulation.
The Manager hereby consents to the disclosure to third parties of (i)
investment results and other data of the Manager or the Portfolio in connection
with providing composite investment results of the Adviser and (ii) investments
and transactions of the Manager or the Portfolio in connection with providing
composite information of clients of the Adviser.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Custodian. The Portfolio assets shall be maintained in the custody
of its custodian. Any assets added to the Portfolio shall be delivered directly
to such custodian. The Adviser shall have no liability for the acts or omissions
of any custodian of the Portfolio's assets. The Adviser shall have no
responsibility for the segregation requirement of the 1940 Act or other
applicable law other than to notify the custodian of investments that require
segregation and appropriate assets for segregation.
12. Information. The Manager hereby acknowledges that it and the
Trustees of the Trust have been provided with all information necessary in
connection with the services to be provided by the Adviser hereunder, including
a copy of Part II of the Adviser's Form ADV at least 48 hours prior to the
Manager's execution of this Agreement, and any other information that the
Manager or the Trustees deem necessary.
13. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR MANAGEMENT CO.
BY: /s/P. Michael Pond
Authorized Officer
JENNISON ASSOCIATES LLC
BY:
Authorized Officer
<PAGE>
SCHEDULE A
Jennison Growth Portfolio
.55% of first
$300 million of
average daily
net assets; .50%
of average daily
net assets over
$300 million
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 9th day of October, 2000, by and between Capital
Guardian Trust Company, a California corporation (the "Adviser"), and Endeavor
Management Co., a California corporation (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager
of Endeavor Series Trust (the "Trust"), a Massachusetts business trust which has
filed a registration statement under the Investment Company Act of 1940, as
amended (the "1940 Act") and the Securities Act of 1933 (the "Registration
Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Capital Guardian Global Portfolio (the
"Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser to
assist the Manager in performing investment advisory services for the Portfolio;
and
WHEREAS, the Adviser is a bank not required to be registered under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is engaged
in the business of rendering investment advisory services to investment
companies and other institutional clients and desires to provide such services
to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way. The Adviser may execute account documentation,
agreements, contracts and other documents requested by brokers, dealers,
counterparties and other persons in connection with its management of the assets
of the Portfolio, provided the Adviser receives the express agreement and
consent of the Manager and/or the Trust's Board of Trustees to execute such
documentation, agreements, contracts and other documents, which consent shall
not be unreasonably withheld. In such respect, and only for this limited
purpose, the Adviser shall act as the Manager's and the Trust's agent and
attorney-in-fact.
Copies of the Trust's Registration Statement, as it relates to the
Portfolio (the "Registration Statement"), and the Trust's Declaration of Trust
and Bylaws (collectively, the "Charter Documents"), each as currently in effect,
have been delivered to the Adviser. The Manager agrees, on an ongoing basis, to
notify the Adviser of each change in the fundamental and non-fundamental
investment policies and restrictions of the Portfolio before they become
effective and to provide to the Adviser as promptly as practicable copies of all
amendments and supplements to the Registration Statement before filing with the
Securities and Exchange Commission ("SEC") and amendments to the Charter
Documents. The Manager will promptly provide the Adviser with any procedures
applicable to the Adviser adopted from time to time by the Trust's Board of
Trustees and agrees to promptly provide the Adviser copies of all amendments
thereto. The Adviser will not be bound to follow any change in the investment
policies, restrictions or procedures of the Portfolio or Trust, however, until
it has received written notice of any such change from the Manager.
The Manager shall timely furnish the Adviser with such additional
information as may be reasonably necessary for or requested by the Adviser to
perform its responsibilities pursuant to this Agreement. The Manager shall
cooperate with the Adviser in setting up and maintaining brokerage accounts and
other accounts the Adviser deems advisable to allow for the purchase or sale of
various forms of securities pursuant to this Agreement.
2. Obligations of and Services to be Provided by the Adviser. The
Adviser undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of
the portfolio assets of the Portfolio, all without prior consultation with the
Manager, subject to and in accordance with the investment objective and policies
of the Portfolio set forth in the Trust's Registration Statement and the Charter
Documents, as such Registration Statement and Charter Documents may be amended
from time to time, in compliance with the requirements applicable to registered
investment companies under applicable laws and those requirements applicable to
both regulated investment companies and segregated asset accounts under
Subchapters M and L of the Internal Revenue Code of 1986, as amended (the
"Code") and any written instructions which the Manager or the Trust's Board of
Trustees may issue from time-to-time in accordance therewith. In pursuance of
the foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render such reports to the Trust's
Board of Trustees and the Manager as they may reasonably request concerning the
investment activities of the Portfolio, provided that the Adviser shall not be
responsible for Portfolio accounting. Unless the Manager gives the Adviser
written instructions to the contrary, the Adviser shall, in good faith and in a
manner which it reasonably believes best serves the interests of the Portfolio's
shareholders, direct the Portfolio's custodian as to how to vote such proxies as
may be necessary or advisable in connection with any matters submitted to a vote
of shareholders of securities held by the Portfolio.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio, place orders for the execution of
portfolio transactions with or through such brokers, dealers or other financial
institutions as it may select including affiliates of the Adviser and, complying
with Section 28(e) of the Securities Exchange Act of 1934, may pay a commission
on transactions in excess of the amount of commission another broker-dealer
would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the SEC, the Trust,
the Manager or any person retained by the Trust at all reasonable times. Where
applicable, such records shall be maintained by the Adviser for the periods and
in the places required by Rule 31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement, but shall not be obligated to pay any expenses of
the Manager, the Trust, or the Portfolio, including without limitation: (a)
interest and taxes; (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments for the
Portfolio; and (c) custodian fees and expenses. Any reimbursement of fees paid
to the Manager required by any expense limitation provision and any liability
arising out of a violation of Section 36(b) of the 1940 Act shall be the sole
responsibility of the Manager.
e. The Adviser and the Manager acknowledge that the Adviser is
not the compliance agent for the Portfolio or for the Manager, and does not have
access to all of the Portfolio's books and records necessary to perform certain
compliance testing. To the extent that the Adviser has agreed to perform the
services specified in this Section 2 in accordance with the Trust's Registration
Statement and Charter Documents, written instructions of the Manager and any
policies adopted by the Trust's Board of Trustees applicable to the Portfolio
(collectively, the "Charter Requirements"), and in accordance with applicable
law (including sub-chapters M and L of the Code, the Investment Company Act and
the Advisers Act ("Applicable Law")), the Adviser shall perform such services
based upon its books and records with respect to the Portfolio (as specified in
Section 2.c. hereof), which comprise a portion of the Portfolio's books and
records, and upon information and written instructions received from the Trust,
the Manager or the Trust's administrator, and shall not be held responsible
under this Agreement so long as it performs such services in accordance with
this Agreement, the Charter Requirements and Applicable Law based upon such
books and records and such information and instructions provided by the Trust,
the Manager or the Trust's administrator. The Adviser shall have no
responsibility to monitor certain limitations or restrictions for which the
Adviser has not been provided sufficient information in accordance with Section
1 of this Agreement or otherwise. All such monitoring shall be the
responsibility of the Manager.
f. The Adviser makes no representation or warranty, express or
implied, that any level of performance or investment results will be achieved by
the Portfolio or that the Portfolio will perform comparably with any standard or
index, including other clients of the Adviser, whether public or private.
g. The Adviser shall be responsible for the preparation and
filing of Schedule 13G and Form 13F on behalf of the Portfolio. The Adviser
shall not be responsible for the preparation or filing of any other reports
required of the Portfolio by any governmental or regulatory agency, except as
expressly agreed to in writing.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
The Adviser shall be subject to a written code of ethics adopted by it
pursuant to Rule 17j-1(b) of the 1940 Act, and shall not be subject to any other
code of ethics, including the Manager's code of ethics, unless specifically
adopted by the Adviser.
5. Use of Names. The Adviser hereby consents to the Portfolio being
named the Capital Guardian Global Portfolio. The Manager shall not use the name
or mark "Capital Guardian Trust Company" or disclose information related to the
business of the Adviser or any of its affiliates in any prospectus, sales
literature or other material relating to the Trust in any manner not approved
prior thereto by the Adviser; provided, however, that the Adviser shall approve
all uses of its name and that of its affiliates which merely refer in accurate
terms to its appointment hereunder or which are required by the SEC or a state
securities commission; and provided, further, that in no event shall such
approval be unreasonably withheld. The Adviser shall not use the name of the
Trust or the Manager in any material relating to the Adviser in any manner not
approved prior thereto by the Manager; provided, however, that the Manager shall
approve all uses of its or the Trust's name which merely refer in accurate terms
to the appointment of the Adviser hereunder or which are required by the SEC or
a state securities commission; and, provided, further, that in no event shall
such approval be unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Capital Guardian Trust Company" or any derivative or
abbreviation thereof as part of their name, and that the Adviser or its
affiliates may enter into investment advisory, administration or other
agreements with such other entities.
Upon termination of this Agreement for any reason, the Manager shall
immediately cease and cause the Portfolio to immediately cease all use of the
name and mark "Capital Guardian Trust Company."
6. Liability. Except as may otherwise be provided by the 1940 Act, or
other federal securities laws, neither the Adviser nor any of its affiliates,
officers, directors, shareholders, employees, or agents shall be liable for any
loss, liability, cost, damage, or expense (including reasonable attorneys' fees
and costs) (collectively referred to in this Agreement as "Losses"), except for
Losses resulting from the Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The Manager shall hold harmless and indemnify the Adviser, its
affiliates, directors, officers, shareholders, employees or agents for any Loss
not resulting from the Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The obligations contained in this Section 6 shall survive termination
of this Agreement.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the Trust's obligations shall be limited to the assets of the Portfolio and
that the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 90 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
July 22, 1999 between the Manager and the Trust. This Agreement shall terminate
automatically and immediately in the event of its assignment. The terms
"assignment" and "vote of a majority of the outstanding voting securities" shall
have the meaning set forth for such terms in the 1940 Act. This Agreement may be
amended at any time by the Adviser and the Manager, subject to approval by the
Trust's Board of Trustees and, if required by applicable SEC rules and
regulations, a vote of a majority of the Portfolio's outstanding voting
securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation.
The Manager hereby consents to the disclosure to third parties of (i)
investment results and other data of the Manager or the Portfolio in connection
with providing composite investment results of the Adviser and (ii) investments
and transactions of the Manager or the Portfolio in connection with providing
composite information of clients of the Adviser.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Custodian. The Portfolio assets shall be maintained in the custody
of its custodian. Any assets added to the Portfolio shall be delivered directly
to such custodian. The Adviser shall have no liability for the acts or omissions
of any custodian of the Portfolio's assets. The Adviser shall have no
responsibility for the segregation requirement of the 1940 Act or other
applicable law other than to notify the custodian of investments that require
segregation and appropriate assets for segregation.
12. Information. The Manager hereby acknowledges that it and the
Trustees of the Trust have been provided with all information necessary in
connection with the services to be provided by the Adviser hereunder and any
other information that the Manager or the Trustees deem necessary.
13. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR MANAGEMENT CO.
BY: /s/P. Michael Pond
Authorized Officer
CAPITAL GUARDIAN TRUST COMPANY
BY: /s/
Authorized Officer
<PAGE>
SCHEDULE A
Capital Guardian Global
Portfolio .65%
of first $150
million of
average daily
net assets; .55%
of average daily
net assets over
$150 million up
to $300 million;
.45% of average
daily net assets
over $300
million up to
$500 million;
.40% of average
daily net assets
over $500
million
<PAGE>
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 9th day of October, 2000, by and between Capital
Guardian Trust Company, a California corporation (the "Adviser"), and Endeavor
Management Co., a California corporation (the "Manager").
WHEREAS, the Manager has been organized to serve as investment manager
of Endeavor Series Trust (the "Trust"), a Massachusetts business trust which has
filed a registration statement under the Investment Company Act of 1940, as
amended (the "1940 Act") and the Securities Act of 1933 (the "Registration
Statement"); and
WHEREAS, the Trust is comprised of several separate investment
portfolios, one of which is the Capital Guardian Value Portfolio (the
"Portfolio"); and
WHEREAS, the Manager desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser to
assist the Manager in performing investment advisory services for the Portfolio;
and
WHEREAS, the Adviser is a bank not required to be registered under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and is engaged
in the business of rendering investment advisory services to investment
companies and other institutional clients and desires to provide such services
to the Manager;
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
1. Employment of the Adviser. The Manager hereby employs the Adviser to
manage the investment and reinvestment of the assets of the Portfolio, subject
to the control and direction of the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The Adviser hereby accepts such
employment and agrees during such period to render the services and to assume
the obligations herein set forth for the compensation herein provided. The
Adviser shall for all purposes herein be deemed to be an independent contractor
and shall, except as expressly provided or authorized (whether herein or
otherwise), have no authority to act for or represent the Manager, the Portfolio
or the Trust in any way. The Adviser may execute account documentation,
agreements, contracts and other documents requested by brokers, dealers,
counterparties and other persons in connection with its management of the assets
of the Portfolio, provided the Adviser receives the express agreement and
consent of the Manager and/or the Trust's Board of Trustees to execute such
documentation, agreements, contracts and other documents, which consent shall
not be unreasonably withheld. In such respect, and only for this limited
purpose, the Adviser shall act as the Manager's and the Trust's agent and
attorney-in-fact.
Copies of the Trust's Registration Statement, as it relates to the
Portfolio (the "Registration Statement"), and the Trust's Declaration of Trust
and Bylaws (collectively, the "Charter Documents"), each as currently in effect,
have been delivered to the Adviser. The Manager agrees, on an ongoing basis, to
notify the Adviser of each change in the fundamental and non-fundamental
investment policies and restrictions of the Portfolio before they become
effective and to provide to the Adviser as promptly as practicable copies of all
amendments and supplements to the Registration Statement before filing with the
Securities and Exchange Commission ("SEC") and amendments to the Charter
Documents. The Manager will promptly provide the Adviser with any procedures
applicable to the Adviser adopted from time to time by the Trust's Board of
Trustees and agrees to promptly provide the Adviser copies of all amendments
thereto. The Adviser will not be bound to follow any change in the investment
policies, restrictions or procedures of the Portfolio or Trust, however, until
it has received written notice of any such change from the Manager.
The Manager shall timely furnish the Adviser with such additional
information as may be reasonably necessary for or requested by the Adviser to
perform its responsibilities pursuant to this Agreement. The Manager shall
cooperate with the Adviser in setting up and maintaining brokerage accounts and
other accounts the Adviser deems advisable to allow for the purchase or sale of
various forms of securities pursuant to this Agreement.
2. Obligations of and Services to be Provided by the Adviser. The
Adviser undertakes to provide the following services and to assume the following
obligations:
a. The Adviser shall manage the investment and reinvestment of
the portfolio assets of the Portfolio, all without prior consultation with the
Manager, subject to and in accordance with the investment objective and policies
of the Portfolio set forth in the Trust's Registration Statement and the Charter
Documents, as such Registration Statement and Charter Documents may be amended
from time to time, in compliance with the requirements applicable to registered
investment companies under applicable laws and those requirements applicable to
both regulated investment companies and segregated asset accounts under
Subchapters M and L of the Internal Revenue Code of 1986, as amended (the
"Code") and any written instructions which the Manager or the Trust's Board of
Trustees may issue from time-to-time in accordance therewith. In pursuance of
the foregoing, the Adviser shall make all determinations with respect to the
purchase and sale of portfolio securities and shall take such action necessary
to implement the same. The Adviser shall render such reports to the Trust's
Board of Trustees and the Manager as they may reasonably request concerning the
investment activities of the Portfolio, provided that the Adviser shall not be
responsible for Portfolio accounting. Unless the Manager gives the Adviser
written instructions to the contrary, the Adviser shall, in good faith and in a
manner which it reasonably believes best serves the interests of the Portfolio's
shareholders, direct the Portfolio's custodian as to how to vote such proxies as
may be necessary or advisable in connection with any matters submitted to a vote
of shareholders of securities held by the Portfolio.
b. To the extent provided in the Trust's Registration
Statement, as such Registration Statement may be amended from time to time, the
Adviser shall, in the name of the Portfolio, place orders for the execution of
portfolio transactions with or through such brokers, dealers or other financial
institutions as it may select including affiliates of the Adviser and, complying
with Section 28(e) of the Securities Exchange Act of 1934, may pay a commission
on transactions in excess of the amount of commission another broker-dealer
would have charged.
c. In connection with the placement of orders for the
execution of the portfolio transactions of the Portfolio, the Adviser shall
create and maintain all necessary records pertaining to the purchase and sale of
securities by the Adviser on behalf of the Portfolio in accordance with all
applicable laws, rules and regulations, including but not limited to records
required by Section 31(a) of the 1940 Act. All records shall be the property of
the Trust and shall be available for inspection and use by the SEC, the Trust,
the Manager or any person retained by the Trust at all reasonable times. Where
applicable, such records shall be maintained by the Adviser for the periods and
in the places required by Rule 31a-2 under the 1940 Act.
d. The Adviser shall bear its expenses of providing services
pursuant to this Agreement, but shall not be obligated to pay any expenses of
the Manager, the Trust, or the Portfolio, including without limitation: (a)
interest and taxes; (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments for the
Portfolio; and (c) custodian fees and expenses. Any reimbursement of fees paid
to the Manager required by any expense limitation provision and any liability
arising out of a violation of Section 36(b) of the 1940 Act shall be the sole
responsibility of the Manager.
e. The Adviser and the Manager acknowledge that the Adviser is
not the compliance agent for the Portfolio or for the Manager, and does not have
access to all of the Portfolio's books and records necessary to perform certain
compliance testing. To the extent that the Adviser has agreed to perform the
services specified in this Section 2 in accordance with the Trust's Registration
Statement and Charter Documents, written instructions of the Manager and any
policies adopted by the Trust's Board of Trustees applicable to the Portfolio
(collectively, the "Charter Requirements"), and in accordance with applicable
law (including sub-chapters M and L of the Code, the Investment Company Act and
the Advisers Act ("Applicable Law")), the Adviser shall perform such services
based upon its books and records with respect to the Portfolio (as specified in
Section 2.c. hereof), which comprise a portion of the Portfolio's books and
records, and upon information and written instructions received from the Trust,
the Manager or the Trust's administrator, and shall not be held responsible
under this Agreement so long as it performs such services in accordance with
this Agreement, the Charter Requirements and Applicable Law based upon such
books and records and such information and instructions provided by the Trust,
the Manager or the Trust's administrator. The Adviser shall have no
responsibility to monitor certain limitations or restrictions for which the
Adviser has not been provided sufficient information in accordance with Section
1 of this Agreement or otherwise. All such monitoring shall be the
responsibility of the Manager.
f. The Adviser makes no representation or warranty, express or
implied, that any level of performance or investment results will be achieved by
the Portfolio or that the Portfolio will perform comparably with any standard or
index, including other clients of the Adviser, whether public or private.
g. The Adviser shall be responsible for the preparation and
filing of Schedule 13G and Form 13F on behalf of the Portfolio. The Adviser
shall not be responsible for the preparation or filing of any other reports
required of the Portfolio by any governmental or regulatory agency, except as
expressly agreed to in writing.
3. Compensation of the Adviser. In consideration of services rendered
pursuant to this Agreement, the Manager will pay the Adviser a fee at the annual
rate of the value of the Portfolio's average daily net assets set forth in
Schedule A hereto. Such fee shall be accrued daily and paid monthly as soon as
practicable after the end of each month. If the Adviser shall serve for less
than the whole of any month, the foregoing compensation shall be prorated. For
the purpose of determining fees payable to the Adviser, the value of the
Portfolio's net assets shall be computed at the times and in the manner
specified in the Trust's Registration Statement.
4. Activities of the Adviser. The services of the Adviser hereunder are
not to be deemed exclusive, and the Adviser shall be free to render similar
services to others and to engage in other activities, so long as the services
rendered hereunder are not impaired.
The Adviser shall be subject to a written code of ethics adopted by it
pursuant to Rule 17j-1(b) of the 1940 Act, and shall not be subject to any other
code of ethics, including the Manager's code of ethics, unless specifically
adopted by the Adviser.
5. Use of Names. The Adviser hereby consents to the Portfolio being
named the Capital Guardian Value Portfolio. The Manager shall not use the name
or mark "Capital Guardian Trust Company" or disclose information related to the
business of the Adviser or any of its affiliates in any prospectus, sales
literature or other material relating to the Trust in any manner not approved
prior thereto by the Adviser; provided, however, that the Adviser shall approve
all uses of its name and that of its affiliates which merely refer in accurate
terms to its appointment hereunder or which are required by the SEC or a state
securities commission; and provided, further, that in no event shall such
approval be unreasonably withheld. The Adviser shall not use the name of the
Trust or the Manager in any material relating to the Adviser in any manner not
approved prior thereto by the Manager; provided, however, that the Manager shall
approve all uses of its or the Trust's name which merely refer in accurate terms
to the appointment of the Adviser hereunder or which are required by the SEC or
a state securities commission; and, provided, further, that in no event shall
such approval be unreasonably withheld.
The Manager recognizes that from time to time directors, officers and
employees of the Adviser may serve as directors, trustees, partners, officers
and employees of other corporations, business trusts, partnerships or other
entities (including other investment companies) and that such other entities may
include the name "Capital Guardian Trust Company" or any derivative or
abbreviation thereof as part of their name, and that the Adviser or its
affiliates may enter into investment advisory, administration or other
agreements with such other entities.
Upon termination of this Agreement for any reason, the Manager shall
immediately cease and cause the Portfolio to immediately cease all use of the
name and mark "Capital Guardian Trust Company."
6. Liability. Except as may otherwise be provided by the 1940 Act, or
other federal securities laws, neither the Adviser nor any of its affiliates,
officers, directors, shareholders, employees, or agents shall be liable for any
loss, liability, cost, damage, or expense (including reasonable attorneys' fees
and costs) (collectively referred to in this Agreement as "Losses"), except for
Losses resulting from the Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The Manager shall hold harmless and indemnify the Adviser, its
affiliates, directors, officers, shareholders, employees or agents for any Loss
not resulting from the Adviser's gross negligence, bad faith, or willful
misconduct or reckless disregard of its obligations and duties under this
Agreement. The obligations contained in this Section 6 shall survive termination
of this Agreement.
7. Limitation of Trust's Liability. The Adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Adviser agrees that any
of the Trust's obligations shall be limited to the assets of the Portfolio and
that the Adviser shall not seek satisfaction of any such obligation from the
shareholders of the Trust nor from any Trust officer, employee or agent of the
Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, for a period of two
years from the date hereof and shall continue in full force and effect for
successive periods of one year thereafter, but only so long as each such
continuance as to the Portfolio is specifically approved at least annually by
vote of the holders of a majority of the outstanding voting securities of the
Portfolio or by vote of a majority of the Trust's Board of Trustees; and further
provided that such continuance is also approved annually by the vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval. This Agreement may be terminated as to the Portfolio at
any time, without payment of any penalty, by the Trust's Board of Trustees, by
the Manager, or by a vote of the majority of the outstanding voting securities
of the Portfolio upon 60 days' prior written notice to the Adviser, or by the
Adviser upon 90 days' prior written notice to the Manager, or upon such shorter
notice as may be mutually agreed upon. This Agreement shall terminate
automatically and immediately upon termination of the Management Agreement dated
July 22, 1999 between the Manager and the Trust. This Agreement shall terminate
automatically and immediately in the event of its assignment. The terms
"assignment" and "vote of a majority of the outstanding voting securities" shall
have the meaning set forth for such terms in the 1940 Act. This Agreement may be
amended at any time by the Adviser and the Manager, subject to approval by the
Trust's Board of Trustees and, if required by applicable SEC rules and
regulations, a vote of a majority of the Portfolio's outstanding voting
securities.
9. Confidential Relationship. Any information and advice furnished by
either party to this Agreement to the other shall be treated as confidential and
shall not be disclosed to third parties without the consent of the other party
hereto except as required by law, rule or regulation.
The Manager hereby consents to the disclosure to third parties of (i)
investment results and other data of the Manager or the Portfolio in connection
with providing composite investment results of the Adviser and (ii) investments
and transactions of the Manager or the Portfolio in connection with providing
composite information of clients of the Adviser.
10. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
11. Custodian. The Portfolio assets shall be maintained in the custody
of its custodian. Any assets added to the Portfolio shall be delivered directly
to such custodian. The Adviser shall have no liability for the acts or omissions
of any custodian of the Portfolio's assets. The Adviser shall have no
responsibility for the segregation requirement of the 1940 Act or other
applicable law other than to notify the custodian of investments that require
segregation and appropriate assets for segregation.
12. Information. The Manager hereby acknowledges that it and the
Trustees of the Trust have been provided with all information necessary in
connection with the services to be provided by the Adviser hereunder and any
other information that the Manager or the Trustees deem necessary.
13. Miscellaneous. This Agreement constitutes the full and complete
agreement of the parties hereto with respect to the subject matter hereof. Each
party agrees to perform such further actions and execute such further documents
as are necessary to effectuate the purposes hereof. This Agreement shall be
construed and enforced in accordance with and governed by the laws of the State
of California. The captions in this Agreement are included for convenience only
and in no way define or delimit any of the provisions hereof or otherwise affect
their construction or effect. This Agreement may be executed in several
counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
ENDEAVOR MANAGEMENT CO.
BY: /s/P. Michael Pond
Authorized Officer
CAPITAL GUARDIAN TRUST COMPANY
BY:
Authorized Officer
<PAGE>
SCHEDULE A
Capital Guardian Value
Portfolio .50%
of first $150
million of
average daily
net assets; .45%
of average daily
net assets over
$150 million up
to $300 million;
.35% of average
daily net assets
over $300
million up to
$500 million;
.30% of average
daily net assets
over $500
million
