<PAGE>
- --------------------------------------------------------------------------------
ENDEAVOR PLATINUM
VARIABLE ANNUITY
The PFL Endeavor Platinum
Variable Annuity Account
Annual Report
December 31, 1996
[LOGO OF PFL ENDEAVOR PLATINUM APPEARS HERE]
<PAGE>
- --------------------------------------------------------------------------------
Dear Valued Policyholder:
We are pleased to present the Annual Report of The PFL Endeavor Platinum
Variable Annuity Account for the period ending December 31, 1996. This report
contains information on the following subaccounts:
TCW Money Market
TCW Managed Asset Allocation
T. Rowe Price International Stock
Value Equity
Dreyfus Small Cap Value
Dreyfus U.S. Government Securities
T. Rowe Price Equity Income
T. Rowe Price Growth Stock
Opportunity Value
Growth
In addition to the variable annuity report, reports of the underlying mutual
fund portfolios are enclosed. These reports give you insight regarding the
underlying investments in your variable annuity policy.
We are pleased that you have chosen the Endeavor Platinum Variable Annuity to
be part of your financial future. We look forward to serving you in the future.
Sincerely,
/s/ William L. Busler
William L. Busler
President
PFL Life Insurance Company
This report may be distributed only to current policyholders or to persons who
have received current prospectuses of the variable annuity and the underlying
funds.
2
<PAGE>
- --------------------------------------------------------------------------------
THE PFL ENDEAVOR PLATINUM VARIABLE ANNUITY ACCOUNT
REPORT OF INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND CONTRACT OWNERS OF
THE PFL ENDEAVOR PLATINUM VARIABLE ANNUITY ACCOUNT,
PFL LIFE INSURANCE COMPANY:
We have audited the accompanying balance sheet of The PFL Endeavor Platinum
Variable Annuity Account (comprising, respectively, the TCW Money Market, TCW
Managed Asset Allocation, T. Rowe Price International Stock, Value Equity,
Dreyfus Small Cap Value, Dreyfus U.S. Government Securities, T. Rowe Price
Equity Income, T. Rowe Price Growth Stock, Opportunity Value and Growth
subaccounts) as of December 31, 1996, and the related statements of operations
and changes in contract owners' equity for the periods indicated therein. These
financial statements are the responsibility of the Variable Account's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of mutual fund shares owned as of December 31,
1996 by correspondence with the mutual funds' transfer agent. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the respective
subaccounts constituting The PFL Endeavor Platinum Variable Annuity Account at
December 31, 1996, and the results of their operations and changes in their
contract owners' equity for the periods indicated therein in conformity with
generally accepted accounting principles.
Ernst & Young LLP
Des Moines, Iowa
January 31, 1997
3
<PAGE>
- --------------------------------------------------------------------------------
THE PFL ENDEAVOR PLATINUM VARIABLE ANNUITY ACCOUNT
BALANCE SHEET
December 31, 1996
<TABLE>
<CAPTION>
TCW
TCW MANAGED
MONEY ASSET
MARKET ALLOCATION
TOTAL SUBACCT. SUBACCT.
----------- ---------- ----------
<S> <C> <C> <C>
ASSETS
Cash........................................ $ 2,065 -- --
Investments in mutual funds, at current
market value (Note 2):
Endeavor Series Trust--TCW Money Market
Portfolio................................. 10,235,948 10,235,948 --
Endeavor Series Trust--TCW Managed Asset
Allocation Portfolio...................... 8,956,773 -- 8,956,773
Endeavor Series Trust--T. Rowe Price
International Stock Portfolio............. 9,990,722 -- --
Endeavor Series Trust--Value Equity
Portfolio................................. 14,734,687 -- --
Endeavor Series Trust--Dreyfus Small Cap
Value Portfolio........................... 7,496,493 -- --
Endeavor Series Trust--Dreyfus U.S.
Government Securities Portfolio........... 4,235,107 -- --
Endeavor Series Trust--T. Rowe Price Equity
Income Portfolio.......................... 11,226,704 -- --
Endeavor Series Trust--T. Rowe Price Growth
Stock Portfolio........................... 9,452,488 -- --
Endeavor Series Trust--Opportunity Value
Portfolio................................. 206,135 -- --
WRL Series Fund, Inc.--Growth Portfolio.... 18,104,498 -- --
----------- ---------- ---------
Total Investments in Mutual Funds.......... 94,639,555 10,235,948 8,956,773
----------- ---------- ---------
Total Assets............................... $94,641,620 10,235,948 8,956,773
=========== ========== =========
LIABILITIES AND CONTRACT OWNERS' EQUITY
Liabilities:
Contract terminations payable.............. $ 6,970 1,194 997
----------- ---------- ---------
Total Liabilities.......................... 6,970 1,194 997
Contract Owners' Equity:
Deferred annuity contracts terminable by
owners (Notes 3 and 6).................... 94,634,650 10,234,754 8,955,776
----------- ---------- ---------
$94,641,620 10,235,948 8,956,773
=========== ========== =========
</TABLE>
See accompanying Notes to Financial Statements.
4
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
T. ROWE DREYFUS T. ROWE T. ROWE
PRICE DREYFUS U.S. PRICE PRICE
INT'L . VALUE SMALL CAP GOV'T . EQUITY GROWTH OPPORTUNITY
STOCK EQUITY VALUE SECURITIES INCOME STOCK VALUE GROWTH
SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT.
-------- ---------- --------- ---------- ---------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
-- 107 1,958 -- -- -- -- --
-- -- -- -- -- -- -- --
-- -- -- -- -- -- -- --
9,990,722 -- -- -- -- -- -- --
-- 14,734,687 -- -- -- -- -- --
-- -- 7,496,493 -- -- -- -- --
-- -- -- 4,235,107 -- -- -- --
-- -- -- -- 11,226,704 -- -- --
-- -- -- -- -- 9,452,488 -- --
-- -- -- -- -- -- 206,135 --
-- -- -- -- -- -- -- 18,104,498
--------- ---------- --------- --------- ---------- --------- ------- ----------
9,990,722 14,734,687 7,496,493 4,235,107 11,226,704 9,452,488 206,135 18,104,498
--------- ---------- --------- --------- ---------- --------- ------- ----------
9,990,722 14,734,794 7,498,451 4,235,107 11,226,704 9,452,488 206,135 18,104,498
========= ========== ========= ========= ========== ========= ======= ==========
896 -- -- 246 793 984 -- 1,860
--------- ---------- --------- --------- ---------- --------- ------- ----------
896 -- -- 246 793 984 -- 1,860
9,989,826 14,734,794 7,498,451 4,234,861 11,225,911 9,451,504 206,135 18,102,638
--------- ---------- --------- --------- ---------- --------- ------- ----------
9,990,722 14,734,794 7,498,451 4,235,107 11,226,704 9,452,488 206,135 18,104,498
========= ========== ========= ========= ========== ========= ======= ==========
</TABLE>
5
<PAGE>
- --------------------------------------------------------------------------------
THE PFL ENDEAVOR PLATINUM VARIABLE ANNUITY ACCOUNT
STATEMENT OF OPERATIONS
Year Ended December 31, 1996, Except as Noted
<TABLE>
<CAPTION>
TCW
TCW MANAGED
MONEY ASSET
MARKET ALLOCATION
TOTAL SUBACCT. SUBACCT.
----------- --------- ----------
<S> <C> <C> <C>
NET INVESTMENT INCOME (LOSS)
Income:
Dividends.................................... $ 2,267,004 311,800 115,366
Expenses (Note 5):
Administrative fee........................... 13,930 1,008 1,743
Mortality and expense risk charge............ 1,024,752 107,186 116,172
----------- --------- ---------
Net investment income (loss)............... 1,228,322 203,606 (2,549)
----------- --------- ---------
NET REALIZED AND UNREALIZED CAPITAL GAIN
(LOSS) FROM INVESTMENTS
Net realized capital gain from sales of
investments:
Proceeds from sales.......................... 16,017,394 7,220,609 1,690,904
Cost of investments sold..................... 14,537,867 7,220,609 1,296,624
----------- --------- ---------
Net realized capital gain from sales of
investments.................................. 1,479,527 -- 394,280
----------- --------- ---------
Net change in unrealized
appreciation/depreciation of investments:
Beginning of the period...................... 2,391,915 -- 336,197
End of the period............................ 8,279,377 -- 973,369
----------- --------- ---------
Net change in unrealized
appreciation/depreciation of investments.. 5,887,462 -- 637,172
----------- --------- ---------
Net realized and unrealized capital gain
(loss) from investments................... 7,366,989 -- 1,031,452
----------- --------- ---------
INCREASE (DECREASE) FROM OPERATIONS........... $ 8,595,311 203,606 1,028,903
=========== ========= =========
</TABLE>
/1/Period from November 20, 1996 (commencement of operations) to December 31,
1996
See accompanying Notes to Financial Statements.
6
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
T. ROWE DREYFUS T. ROWE T. ROWE
PRICE DREYFUS U.S. PRICE PRICE
INT'L. VALUE SMALL CAP GOV'T. EQUITY GROWTH OPPORTUNITY
STOCK EQUITY VALUE SECURITIES INCOME STOCK VALUE GROWTH
SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT./1/ SUBACCT.
--------- --------- --------- ---------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
41,629 194,811 207,541 112,934 59,266 96,649 -- 1,127,008
2,059 1,765 1,359 1,002 1,110 794 -- 3,090
109,907 144,632 81,660 64,545 104,495 94,580 171 201,404
--------- --------- --------- --------- --------- --------- ---- ---------
(70,337) 48,414 124,522 47,387 (46,339) 1,275 (171) 922,514
--------- --------- --------- --------- --------- --------- ---- ---------
628,563 952,492 565,981 2,687,562 349,409 704,019 382 1,217,473
580,857 655,099 469,981 2,662,994 257,215 550,331 379 843,778
--------- --------- --------- --------- --------- --------- ---- ---------
47,706 297,393 96,000 24,568 92,194 153,688 3 373,695
--------- --------- --------- --------- --------- --------- ---- ---------
187,288 455,486 220,590 127,706 223,319 178,431 -- 662,898
1,037,159 1,743,569 1,180,923 84,055 1,318,988 1,101,652 (224) 839,886
--------- --------- --------- --------- --------- --------- ---- ---------
849,871 1,288,083 960,333 (43,651) 1,095,669 923,221 (224) 176,988
--------- --------- --------- --------- --------- --------- ---- ---------
897,577 1,585,476 1,056,333 (19,083) 1,187,863 1,076,909 (221) 550,683
--------- --------- --------- --------- --------- --------- ---- ---------
827,240 1,633,890 1,180,855 28,304 1,141,524 1,078,184 (392) 1,473,197
========= ========= ========= ========= ========= ========= ==== =========
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
THE PFL ENDEAVOR PLATINUM VARIABLE ANNUITY ACCOUNT
STATEMENTS OF CHANGES IN CONTRACT OWNERS' EQUITY
Years Ended December 31, 1996 and 1995, Except as Noted
<TABLE>
<CAPTION>
TCW
TCW MANAGED T. ROWE PRICE
MONEY ASSET INTERNATIONAL
MARKET ALLOCATION STOCK
TOTAL SUBACCOUNT SUBACCOUNT SUBACCOUNT
----------------------- ---------------------- -------------------- --------------------
1996 1995 1996 1995 1996 1995 1996 1995
----------- ---------- ---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income
(loss).................. $ 1,228,322 562,183 203,606 91,776 (2,549) (8,359) (70,337) 9,699
Net realized capital gain
(loss).................. 1,479,527 292,937 -- -- 394,280 59,673 47,706 (11,060)
Net change in unrealized
appreciation/depreciation
of investments.......... 5,887,462 2,491,222 -- -- 637,172 346,688 849,871 258,720
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Increase (decrease) from
operations.............. 8,595,311 3,346,342 203,606 91,776 1,028,903 398,002 827,240 257,359
----------- ---------- ---------- ---------- --------- --------- --------- ---------
CONTRACT TRANSACTIONS
Net contract purchase
payments................ 58,144,984 21,662,505 12,486,650 4,526,586 4,146,429 1,883,952 4,419,338 1,936,013
Transfer payments from
(to) other subaccounts
or general account...... 1,107,663 263,239 (4,751,429) (1,773,778) 366,455 444,020 1,658,724 315,158
Contract terminations,
withdrawals, and other
deductions.............. (4,743,373) (1,557,372) (1,407,309) (686,618) (511,656) (103,076) (603,594) (178,543)
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Increase from contract
transactions............ 54,509,274 20,368,372 6,327,912 2,066,190 4,001,228 2,224,896 5,474,468 2,072,628
----------- ---------- ---------- ---------- --------- --------- --------- ---------
Net increase in contract
owners' equity.......... 63,104,585 23,714,714 6,531,518 2,157,966 5,030,131 2,622,898 6,301,708 2,329,987
----------- ---------- ---------- ---------- --------- --------- --------- ---------
CONTRACT OWNERS' EQUITY
Beginning of period...... 31,530,065 7,815,351 3,703,236 1,545,270 3,925,645 1,302,747 3,688,118 1,358,131
----------- ---------- ---------- ---------- --------- --------- --------- ---------
End of period............ $94,634,650 31,530,065 10,234,754 3,703,236 8,955,776 3,925,645 9,989,826 3,688,118
=========== ========== ========== ========== ========= ========= ========= =========
</TABLE>
/1/Period from January 20, 1995 (commencement of operations) to December 31,
1995
/2/Period from January 5, 1995 (commencement of operations) to December 31,
1995
/3/Period from November 20, 1996 (commencement of operations) to December 31,
1996
See accompanying Notes to Financial Statements.
8
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DREYFUS
DREYFUS U.S. T. ROWE PRICE T. ROWE PRICE
VALUE SMALL CAP GOVERNMENT EQUITY GROWTH OPPORTUNITY
EQUITY VALUE SECURITIES INCOME STOCK VALUE
SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT
- --------------------- -------------------- --------------------- --------------------- -------------------- -----------
1996 1995 1996 1995 1996 1995 1996 1995/1/ 1996 1995/2/ 1996/3/
- ---------- --------- --------- --------- ---------- --------- ---------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
48,414 (17,648) 124,522 4,619 47,387 (15,291) (46,339) (11,349) 1,275 (10,228) (171)
297,393 42,935 96,000 7,989 24,568 86,546 92,194 6,240 153,688 13,014 3
1,288,083 455,646 960,333 210,301 (43,651) 128,530 1,095,669 223,319 923,221 178,431 (224)
- ---------- --------- --------- --------- ---------- --------- ---------- --------- --------- --------- -------
1,633,890 480,933 1,180,855 222,909 28,304 199,785 1,141,524 218,210 1,078,184 181,217 (392)
- ---------- --------- --------- --------- ---------- --------- ---------- --------- --------- --------- -------
8,377,444 1,938,053 2,938,609 1,954,060 3,807,839 3,283,653 6,076,641 1,621,945 5,785,559 1,584,777 170,126
1,260,305 735,365 695,054 135,312 (2,205,589) (883,538) 1,983,341 459,377 629,037 444,858 36,401
(288,622) (149,466) (221,919) (82,679) (372,974) (66,486) (269,143) (5,984) (217,543) (34,585) --
- ---------- --------- --------- --------- ---------- --------- ---------- --------- --------- --------- -------
9,349,127 2,523,952 3,411,744 2,006,693 1,229,276 2,333,629 7,790,839 2,075,338 6,197,053 1,995,050 206,527
- ---------- --------- --------- --------- ---------- --------- ---------- --------- --------- --------- -------
10,983,017 3,004,885 4,592,599 2,229,602 1,257,580 2,533,414 8,932,363 2,293,548 7,275,237 2,176,267 206,135
- ---------- --------- --------- --------- ---------- --------- ---------- --------- --------- --------- -------
3,751,777 746,892 2,905,852 676,250 2,977,281 443,867 2,293,548 -- 2,176,267 -- --
- ---------- --------- --------- --------- ---------- --------- ---------- --------- --------- --------- -------
14,734,794 3,751,777 7,498,451 2,905,852 4,234,861 2,977,281 11,225,911 2,293,548 9,451,504 2,176,267 206,135
========== ========= ========= ========= ========== ========= ========== ========= ========= ========= =======
<CAPTION>
GROWTH
SUBACCOUNT
- ----------------------
1996 1995
- ----------- ----------
<C> <C>
922,514 518,964
373,695 87,600
176,988 689,587
- ----------- ----------
1,473,197 1,296,151
- ----------- ----------
9,936,349 2,933,466
1,435,364 386,465
(850,613) (249,935)
- ----------- ----------
10,521,100 3,069,996
- ----------- ----------
11,994,297 4,366,147
- ----------- ----------
6,108,341 1,742,194
- ----------- ----------
18,102,638 6,108,341
=========== ==========
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
THE PFL ENDEAVOR PLATINUM VARIABLE ANNUITY ACCOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization -- The PFL Endeavor Platinum Variable Annuity Account ("Mutual
Fund Account") is a segregated investment account of PFL Life Insurance Company
("PFL Life"), an indirect, wholly-owned subsidiary of AEGON USA, Inc. ("AUSA"),
a holding company. AUSA is an indirect, wholly-owned subsidiary of AEGON nv, a
holding company organized under the laws of The Netherlands.
The Opportunity Value Subaccount commenced operations on November 20, 1996. The
T. Rowe Price Equity Income Subaccount commenced operations on January 20,
1995. The T. Rowe Price Growth Stock Subaccount commenced operations on January
5, 1995. Effective May 1, 1996, the names of the Money Market, Managed Asset
Allocation, Quest for Value Equity, Quest for Value Small Cap and U.S.
Government Securities Portfolios and Subaccounts were changed to TCW Money
Market, TCW Managed Asset Allocation, Value Equity, Value Small Cap and Dreyfus
U.S. Government Securities Portfolios and Subaccounts, respectively. Effective
October 29, 1996, the names of the Value Small Cap Portfolio and Subaccount
were changed to Dreyfus Small Cap Value Portfolio and Subaccount, respectively.
Effective March 24, 1995, the names of the Global Growth Portfolio and
Subaccount were changed to T. Rowe Price International Stock Portfolio and
Subaccount, respectively. The investment objective of the portfolio was changed
from an investment on a global basis to an investment on an international basis
(i.e. non-U.S. companies). The investment advisor of the Endeavor Series Trust
is Endeavor Investment Advisors, a general partnership between Endeavor
Management Co. and AUSA Financial Markets, Inc., an affiliate of PFL Life. The
investment advisor for the WRL Series Fund, Inc. is Western Reserve Life
Assurance Co. of Ohio, an affiliate of PFL Life.
The Mutual Fund Account is registered with the Securities and Exchange
Commission as a Unit Investment Trust pursuant to provisions of the Investment
Company Act of 1940.
Investments -- Net purchase payments received by the Mutual Fund Account are
invested in the portfolios of the Endeavor Series Trust, and the Growth
Portfolio of the WRL Series Fund, Inc. (collectively the "Series Funds"), as
selected by the contract owner. Investments are stated at the closing net asset
values per share on December 31, 1996.
Realized capital gains and losses from sale of shares in the Series Funds are
determined on the first-in, first-out basis. Investment transactions are
accounted for on the trade date (date the order to buy or sell is executed) and
dividend income is recorded on the ex-dividend date. Unrealized gains or losses
from investments in the Series Funds are credited or charged to contract
owners' equity.
Dividend Income -- Dividends received from the Series Funds investments are
reinvested to purchase additional mutual fund shares.
10
<PAGE>
- --------------------------------------------------------------------------------
2. INVESTMENTS
A summary of the mutual fund investment at December 31, 1996 follows:
<TABLE>
<CAPTION>
NUMBER NET ASSET
OF SHARES VALUE MARKET
HELD PER SHARE VALUE COST
-------------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Endeavor Series Trust
TCW Money Market Portfolio.. 10,235,948.440 $ 1.00 $10,235,948 $10,235,948
TCW Managed Asset Allocation
Portfolio.................. 475,412.589 18.84 8,956,773 7,983,404
T. Rowe Price International
Stock Portfolio............ 716,180.828 13.95 9,990,722 8,953,563
Value Equity Portfolio...... 856,170.090 17.21 14,734,687 12,991,118
Dreyfus Small Cap Value
Portfolio.................. 509,965.489 14.70 7,496,493 6,315,570
Dreyfus U.S. Government
Securities Portfolio....... 377,124.404 11.23 4,235,107 4,151,052
T. Rowe Price Equity Income
Portfolio.................. 724,771.104 15.49 11,226,704 9,907,716
T. Rowe Price Growth Stock
Portfolio.................. 580,263.203 16.29 9,452,488 8,350,836
Opportunity Value
Portfolio.................. 20,490.582 10.06 206,135 206,359
WRL Series Fund, Inc.
Growth Portfolio............ 517,252.436 35.001280 18,104,498 17,264,612
----------- -----------
$94,639,555 $86,360,178
=========== ===========
</TABLE>
3. CONTRACT OWNERS' EQUITY
A summary of deferred annuity contracts terminable by owners at December 31,
1996 follows:
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION TOTAL
SUBACCOUNT UNITS OWNED UNIT VALUE CONTRACT VALUE
---------- ------------- ------------ --------------
<S> <C> <C> <C>
TCW Money Market..................... 9,416,706.021 $ 1.086872 $10,234,754
TCW Managed Asset Allocation......... 6,522,822.306 1.372991 8,955,776
T. Rowe Price International Stock.... 8,619,163.798 1.159025 9,989,826
Value Equity......................... 9,053,564.567 1.627513 14,734,794
Dreyfus Small Cap Value.............. 5,378,653.976 1.394113 7,498,451
Dreyfus U.S. Government Securities... 3,772,426.054 1.122583 4,234,861
T. Rowe Price Equity Income.......... 7,413,620.068 1.514228 11,225,911
T. Rowe Price Growth Stock........... 5,893,560.949 1.603700 9,451,504
Opportunity Value.................... 205,301.400 1.004062 206,135
Growth............................... 1,130,886.988 16.007469 18,102,638
-----------
$94,634,650
===========
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
A summary of changes in contract owners' account units follows:
<TABLE>
<CAPTION>
TCW T. ROWE DREYFUS DREYFUS T. ROWE T. ROWE
TCW MANAGED PRICE SMALL U.S. PRICE PRICE
MONEY ASSET INT'L. VALUE CAP GOV'T. EQUITY GROWTH OPPORTUNITY
MARKET ALLOCATION STOCK EQUITY VALUE SECURITIES INCOME STOCK VALUE GROWTH
SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT.
---------- ---------- --------- --------- --------- ---------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Units
outstanding
at 1/1/95...... 1,522,675 1,329,673 1,444,711 740,211 673,043 450,510 -- -- -- 182,787
Units
purchased...... 4,371,335 1,693,308 2,026,680 1,603,267 1,864,220 3,076,825 1,404,730 1,288,344 -- 250,284
Units redeemed
and
transferred.... (2,377,852) 290,527 135,432 464,589 40,241 (871,235) 381,350 323,652 -- 9,701
---------- --------- --------- --------- --------- ---------- --------- --------- ------- ---------
Units
outstanding
at 12/31/95.... 3,516,158 3,313,508 3,606,823 2,808,067 2,577,504 2,656,100 1,786,080 1,611,996 -- 442,772
Units
purchased...... 11,639,898 3,329,342 4,053,495 5,604,895 2,428,344 3,476,212 4,402,218 4,001,244 168,864 650,022
Units redeemed
and
transferred.... (5,739,350) (120,028) 958,846 640,603 372,806 (2,359,886) 1,225,322 280,321 36,437 38,093
---------- --------- --------- --------- --------- ---------- --------- --------- ------- ---------
Units
outstanding
at 12/31/96.... 9,416,706 6,522,822 8,619,164 9,053,565 5,378,654 3,772,426 7,413,620 5,893,561 205,301 1,130,887
========== ========= ========= ========= ========= ========== ========= ========= ======= =========
</TABLE>
4. TAXES
Operations of the Mutual Fund Account form a part of PFL Life, which is taxed
as a life insurance company under Subchapter L of the Internal Revenue Code of
1986, as amended (the "Code"). The operations of the Mutual Fund Account are
accounted for separately from other operations of PFL Life for purposes of
federal income taxation. The Mutual Fund Account is not separately taxable as a
regulated investment company under Subchapter M of the Code and is not
otherwise taxable as an entity separate from PFL Life. Under existing federal
income tax laws, the income of the Mutual Fund Account, to the extent applied
to increase reserves under the variable annuity contracts, is not taxable to
PFL Life.
5. ADMINISTRATIVE, MORTALITY AND EXPENSE RISK CHARGES
Administrative charges include an annual charge of the lesser of 2% of the
policy value or $35 per contract which will commence on the first policy
anniversary of each contract owner's account. For policies issued on or after
May 1, 1995, the fee is waived if the sum of the premium payments less the sum
of all partial withdrawals is at least $50,000 on the policy anniversary.
Charges for administrative fees to the variable annuity contracts are an
expense of the Mutual Fund Account.
PFL Life deducts a daily charge equal to an annual rate of 1.25% of the value
of the contract owners' individual account as a charge for assuming certain
mortality and expense risks. PFL Life also deducts a daily charge equal to an
annual rate of .15% of the contract owners' account for administrative
expenses. In addition, during the first ten policy years PFL Life imposes a
daily distribution financing charge equal to an annual rate of .25% of the
value of the contract owners' account.
12
<PAGE>
- --------------------------------------------------------------------------------
6. NET ASSETS
At December 31, 1996 contract owners' equity was comprised of:
<TABLE>
<CAPTION>
TCW T. ROWE DREYFUS DREYFUS T. ROWE T. ROWE
TCW MANAGED PRICE SMALL U.S. PRICE PRICE
MONEY ASSET INT'L. VALUE CAP GOV'T. EQUITY GROWTH OPPORTUNITY
MARKET ALLOCATION STOCK EQUITY VALUE SECURITIES INCOME STOCK VALUE
TOTAL SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT. SUBACCT.
----------- ---------- ---------- --------- ---------- --------- ---------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit
transactions,
accumulated net
investment
income and
realized
capital gains.. $86,355,273 10,234,754 7,982,407 8,952,667 12,991,225 6,317,528 4,150,806 9,906,923 8,349,852 206,359
Adjustment for
appreciation/
depreciation to
market value... 8,279,377 -- 973,369 1,037,159 1,743,569 1,180,923 84,055 1,318,988 1,101,652 (224)
----------- ---------- --------- --------- ---------- --------- --------- ---------- --------- -------
Total Contract
Owners'
Equity......... $94,634,650 10,234,754 8,955,776 9,989,826 14,734,794 7,498,451 4,234,861 11,225,911 9,451,504 206,135
=========== ========== ========= ========= ========== ========= ========= ========== ========= =======
<CAPTION>
GROWTH
SUBACCT.
----------
<S> <C>
Unit
transactions,
accumulated net
investment
income and
realized
capital gains.. 17,262,752
Adjustment for
appreciation/
depreciation to
market value... 839,886
----------
Total Contract
Owners'
Equity......... 18,102,638
==========
</TABLE>
7. PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments were as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 OR
COMMENCEMENT OF OPERATIONS TO DECEMBER 31
-------------------------------------------
1996 1995
---------------------- --------------------
PURCHASES SALES PURCHASES SALES
----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Endeavor Series Trust
TCW Money Market Portfolio........ $13,753,260 7,220,609 4,608,764 2,453,849
TCW Managed Asset Allocation Port-
folio............................ 5,690,383 1,690,904 2,731,032 515,801
T. Rowe Price International Stock
Portfolio........................ 6,033,498 628,563 2,367,406 284,815
Value Equity Portfolio............ 10,349,805 952,492 2,736,494 231,712
Dreyfus Small Cap Value Portfo-
lio.............................. 4,100,163 565,981 2,238,358 226,676
Dreyfus U.S. Government Securities
Portfolio........................ 3,964,363 2,687,562 3,503,308 1,185,517
T. Rowe Price Equity Income Port-
folio............................ 8,094,607 349,409 2,117,452 53,368
T. Rowe Price Growth Stock Portfo-
lio.............................. 6,903,228 704,019 2,057,525 72,600
Opportunity Value Portfolio....... 206,738 382 -- --
WRL Series Fund, Inc.
Growth Portfolio.................. 12,662,274 1,217,473 4,030,195 438,948
----------- ---------- ---------- ---------
$71,758,319 16,017,394 26,390,534 5,463,286
=========== ========== ========== =========
</TABLE>
13
<PAGE>
- --------------------------------------------------------------------------------
THIS PAGE LEFT BLANK INTENTIONALLY
14
<PAGE>
- --------------------------------------------------------------------------------
THIS PAGE LEFT BLANK INTENTIONALLY
15
<PAGE>
- --------------------------------------------------------------------------------
THIS PAGE LEFT BLANK INTENTIONALLY
16
