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As filed with the Securities and Exchange Commission on April 29, 1999
Registration No. 33-56908
811-06032
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 11 X
and
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 27 X
PFL ENDEAVOR VA SEPARATE ACCOUNT
--------------------------------
(Exact Name of Registrant)
PFL ENDEAVOR VARIABLE ANNUITY ACCOUNT
-------------------------------------
(Former name of Registrant)
PFL LIFE INSURANCE COMPANY
--------------------------
(Name of Depositor)
4333 Edgewood Road, N.E., Cedar Rapids, Iowa 52499
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(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including Area Code
(319) 297-8121
Frank A. Camp, Esquire
PFL Life Insurance Company
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499
(Name and Address of Agent for Service)
Copy to:
Frederick R. Bellamy, Esquire
Sutherland, Asbill & Brennan L.L.P.
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2404
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Title of Securities Being Registered:
Flexible Premium Variable Annuity Policies
It is proposed that this filing will become effective:
___ immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1999 pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(i) of Rule 485
---
___ on ___________ pursuant to paragraph (a)(i) of Rule 485
___ 75 days after filing pursuant to paragraph (a)(ii)
___ on __________ pursuant to paragraph (a)(ii) of Rule 485
If appropriate, check the following box:
this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
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CROSS REFERENCE SHEET
Pursuant to Rule 495
Showing Location in Part A (Prospectus) and
Part B (Statement of Additional Information)
of Registration Statement of Information Required by Form N-4
-------------------------------------------------------------
PART A
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<CAPTION>
Item of Form N-4 Prospectus Caption
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<S> <C>
1. Cover Page........................... Cover Page
2. Definitions.......................... Glossary of Terms
3. Synopsis............................. Summary Fee Table
4. Condensed Financial Information...... Financial Information
5. General
(a) Depositor...................... PFL Life Insurance Company
(b) Registrant..................... The Mutual Fund Account
(c) Portfolio Company.............. The Mutual Fund Account
(d) Fund Prospectus................ The Mutual Fund Account
(e) Voting Rights.................. Voting Rights
6. Deductions and Expenses
(a) General........................ Expenses
(b) Sales Load %................... N/A
(c) Special Purchase Plan.......... N/A
(d) Commissions.................... Distributor of the Policies
(e) Expenses - Registrant.......... N/A
(f) Fund Expenses.................. Portfolio Management Fees
(g) Organizational Expenses........ N/A
7. Policies
(a) Persons with Rights............ The Annuity Policy; Annuity Payments
Annuity Payment Option; Ownership;
Voting Rights
(b) (i) Allocation of Premium
Payments................. Allocation of Premium Payments
(ii) Transfers................ Transfers
(iii) Exchanges................ N/A
(c) Changes........................ Policy Value; Allocation of Premiun
Payments Annuity Payment Ownership
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<TABLE>
<S> <C>
(d) Inquiries....................... Summary
8. Annuity Period....................... Annuity Payments
9. Death Benefit........................ Death Benefit
10. Purchase and Policy Values
(a) Purchases....................... Purchase
(b) Valuation....................... Policy Value;
(c) Daily Calculation............... The Mutual Fund Account Value
(d) Underwriter..................... Distributor of the Policies
11. Redemptions
(a) By Owners....................... Surrenders
By Annuitant.................... N/A
(b) Texas ORP....................... Restrictions Under the Texas
Optional Retirement Program
(c) Check Delay..................... Annuity Payments
(d) Lapse........................... N/A
(e) Free Look....................... Summary
12. Taxes................................ Taxes
13. Legal Proceedings.................... Legal Proceedings
14. Table of Contents for the
Statement of Table of Contents of the Statement
Additional Information............... of Additional Information
<CAPTION>
PART B
------
Item of Form N-4 Statement of Additional
- ---------------- Information Caption
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<S> <C>
15. Cover Page.......................... Cover Page
16. Table of Contents................... Table of Contents
17. General Information
and History......................... (Prospectus) PFL Life Insurance
Company
18. Services............................
(a) Fees and Expenses
of Registrant.................. N/A
(b) Management Policies............ N/A
(c) Custodian...................... Custody of Assets
Independent
Auditors....................... Independent Auditors
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<TABLE>
<S> <C>
(d) Assets of Registrant........... Custody of Assets
(e) Affiliated Person.............. N/A
(f) Principal Underwriter.......... Distribution of the Policies
19. Purchase of Securities
Being Offered....................... Distribution of the Policies
Offering Sales Load................. N/A
20. Underwriters........................ Distribution of the Policies;
(Prospectus) Distributor of the
Policies
21. Calculation of Performance
Data................................ Historical Performance Data
22. Annuity Payments.................... (Prospectus) Election of Annuity
Option; (Prospectus)
Determination of Annuity Payments
23. Financial Statements................ Financial Statements
<CAPTION>
PART C -- OTHER INFORMATION
---------------------------
Item of Form N-4 Part C Caption
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<S> <C>
24. Financial Statements
and Exhibits........................ Financial Statements and Exhibits
(a) Financial Statements........... Financial Statements
(b) Exhibits....................... Exhibits
25. Directors and Officers of Directors and Officers of the
the Depositor....................... Depositor
26. Persons Controlled By or Under Persons Controlled By or Under
Common Control with the Common Control with the
Depositor or Registrant............. Depositor or Registrant
27. Number of Policyowners.............. Number of Policyowners
28. Indemnification..................... Indemnification
29. Principal Underwriters.............. Principal Underwriters
30. Location of Accounts
and Records......................... Location of Accounts and Records
31. Management Services................. Management Services
32. Undertakings........................ Undertakings
Signature Page...................... Signatures
</TABLE>
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THE ENDEAVOR
PLATINUM VARIABLE ANNUITY
Issued Through
PFL ENDEAVOR PLATINUM VARIABLE ANNUITY ACCOUNT
and
PFL ENDEAVOR TARGET ACCOUNT
By
PFL LIFE INSURANCE COMPANY
Prospectus
May 1, 1999
This prospectus and the mutual fund prospectuses give you important information
about the policies and the mutual funds. Please read them carefully before you
invest and keep them for future reference.
If you would like more information about The Endeavor Platinum Variable Annuity
Policy, you can obtain a free copy of the Statement of Additional Information
(SAI) dated May 1, 1999. Please call us at (800) 525-6205 or write us at: PFL
Life Insurance Company, Financial Markets Division, Variable Annuity
Department, 4333 Edgewood Road N.E., Cedar Rapids, Iowa, 52499-0001. A
registration statement, including the SAI, has been filed with the Securities
and Exchange Commission (SEC) and is incorporated herein by reference.
Information about the separate account and the target account can be reviewed
and copied at the SEC's Public Reference Room in Washington, D.C. You may
obtain information about the operation of the public reference room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains a web site
(http://www.sec.gov) that contains the prospectus, the SAI, material
incorporated by reference, and other information. The table of contents of the
SAI is included at the end of this prospectus.
Please note that the policies and the mutual funds:
. are not bank deposits
. are not federally insured
. are not endorsed by any bank or government agency
. are not guaranteed to achieve their goal
. are subject to risks, including loss of premium
The flexible premium deferred annuity policy has many investment choices. There
are two separate accounts: (1) a mutual fund account; and (2) a target account.
The mutual fund subaccounts and the target series subaccounts are listed below.
You bear the entire investment risk for all amounts you put in either separate
account. There is also a fixed account, which offers an interest rate that is
guaranteed by PFL Life Insurance Company (PFL). You can choose any combination
of these investment choices.
ENDEAVOR SERIES TRUST
Subadvised by Morgan Stanley Asset Management Inc.
Endeavor Asset Allocation Portfolio
Endeavor Money Market Portfolio
Subadvised by T. Rowe Price Associates, Inc.
T. Rowe Price Equity Income Portfolio
T. Rowe Price Growth Stock Portfolio
Subadvised by Rowe Price-Fleming International, Inc.
T. Rowe Price International Stock Portfolio
Subadvised by OpCap Advisors
Endeavor Value Equity Portfolio
Endeavor Opportunity Value
Subadvised by J.P. Morgan Investment Management Inc.
Endeavor Enhanced Index Portfolio
Subadvised by The Dreyfus Corporation
Dreyfus U.S. Government Securities Portfolio
Dreyfus Small Cap Value Portfolio
Subadvised by Montgomery Asset Management, LLC
Endeavor Select 50 Portfolio
Subadvised by Massachusetts
Financial Services Company
Endeavor High Yield Portfolio
Subadvised by Janus Capital Corporation
Endeavor Janus Growth Portfolio
THE TARGET ACCOUNT
Subadvised by First Trust Advisors, L.P.
The Dow SM Target 10 (July Series)
The Dow SM Target 5 (July Series)
The Dow SM Target 10 (January Series)
The Dow SM Target 5 (January Series)
The Securities and Exchange Commission has not approved or disapproved these
securities, or passed upon the adequacy of this prospectus. Any representation
to the contrary is a criminal offense.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
GLOSSARY OF TERMS.......................................................... 3
SUMMARY.................................................................... 5
ANNUITY POLICY FEE TABLE................................................... 9
EXAMPLES................................................................... 11
1. THE ANNUITY POLICY...................................................... 13
2. ANNUITY PAYMENTS (THE INCOME PHASE)..................................... 13
Annuity Payment Options.................................................. 13
3. PURCHASE................................................................ 15
Policy Issue Requirements................................................ 15
Premium Payments......................................................... 15
Initial Premium Requirements............................................. 15
Additional Premium Payments.............................................. 15
Maximum Total Premium Payments........................................... 15
Allocation of Premium Payments........................................... 15
Policy Value............................................................. 16
4. INVESTMENT CHOICES...................................................... 16
The Separate Accounts.................................................... 16
The Mutual Fund Account.................................................. 16
The Target Account....................................................... 16
The Fixed Account........................................................ 21
Transfers................................................................ 22
Family Income Protector.................................................. 22
Dollar Cost Averaging Program............................................ 24
Asset Rebalancing........................................................ 25
Telephone Transactions................................................... 25
5. EXPENSES................................................................ 25
Mortality and Expense Risk Fee........................................... 25
Administrative Charges................................................... 25
Distribution Financing Charge............................................ 26
Premium Taxes............................................................ 26
Federal, State and Local Taxes........................................... 26
Transfer Fee............................................................. 26
Family Income Protector.................................................. 26
Portfolio Management Fees................................................ 26
Target Account Fees...................................................... 26
6. TAXES................................................................... 27
Annuity Policies in General.............................................. 27
Qualified and Nonqualified Policies...................................... 27
Withdrawals - Nonqualified Policies...................................... 27
Withdrawals - Qualified Policies......................................... 28
Withdrawals - 403(b) Policies............................................ 28
Tax Status of the Policy................................................. 28
Diversification and Distribution Requirements............................ 29
Taxation of Death Benefit Proceeds....................................... 29
</TABLE>
<TABLE>
<CAPTION>
Page
<S> <C>
Annuity Payments......................................................... 30
Transfers, Assignments or Exchanges of Policies.......................... 30
Possible Tax Law Changes................................................. 30
7. ACCESS TO YOUR MONEY.................................................... 30
Surrenders............................................................... 30
Delay of Payment and Transfers........................................... 31
Excess Interest Adjustment............................................... 31
Systematic Payout Option................................................. 31
Nursing Care and Terminal Condition Withdrawal Option.................... 31
8. PERFORMANCE............................................................. 32
The Mutual Fund Account.................................................. 32
The Target Account....................................................... 32
9. DEATH BENEFIT........................................................... 32
When We Pay A Death Benefit.............................................. 32
When We Do Not Pay A Death Benefit....................................... 33
Amount of Death Benefit.................................................. 33
Guaranteed Minimum Death Benefit......................................... 33
Adjusted Partial Withdrawal.............................................. 34
10. OTHER INFORMATION...................................................... 34
Ownership................................................................ 34
Assignment............................................................... 34
PFL Life Insurance Company............................................... 34
The Mutual Fund Account.................................................. 35
The Target Account....................................................... 35
Mixed and Shared Funding................................................. 35
Reinstatements........................................................... 36
Voting Rights............................................................ 36
Distributor of the Policies.............................................. 36
Non-participating Policy................................................. 36
Variations in Policy Provisions.......................................... 36
Year 2000 Matters........................................................ 37
IMSA..................................................................... 37
Legal Proceedings........................................................ 37
Financial Statements..................................................... 37
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............... 38
APPENDIX A
Condensed Financial Information
The Mutual Fund Account.................................................. 39
Condensed Financial Information
The Target Account....................................................... 42
APPENDIX B
Historical Performance Data
The Mutual Fund Account.................................................. 44
Historical Performance Data
The Target Account....................................................... 49
APPENDIX C
Policy Variations.......................................................... 54
</TABLE>
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GLOSSARY OF TERMS
Accumulation Unit--An accounting unit of measure used in calculating the policy
value in the mutual fund account and the target account before the annuity
commencement date.
Annual Stock Selection Date--The last business day of a specified 12-month
period.
Annuitant--The person entitled to receive annuity payments after the annuity
commencement date and during whose life any annuity payments involving life
contingencies will continue.
Annuity Commencement Date--The date upon which annuity payments are to
commence. This date may be any date at least thirty days after the policy date
and may not be later than the last day of the policy month starting after the
annuitant attains age 85, except as expressly allowed by PFL. In no event will
this date be later than the last day of the month following the month in which
the annuitant attains age 95.
Annuity Payment Option--A method of receiving a stream of annuity payments
selected by the owner.
Cash Value--The policy value increased or decreased by an excess interest
adjustment.
Distribution Financing Charge--A daily charge for the first ten policy years
equal to an effective annual rate of 0.25% of the mutual fund account's and the
target account's net assets. This charge is not deducted after the annuity
commencement date.
DJIA--The Dow Jones Industrial AverageSM. Thirty stocks chosen by the editors
of The Wall Street Journal as representative of the broad market and of
American industry.
Excess Interest Adjustment--A positive or negative adjustment to amounts
withdrawn upon partial withdrawals, full surrenders, transfers, or to amounts
applied to annuity payment options, from the guaranteed period options. The
adjustment reflects changes in the interest rates declared by PFL since the
date any payment was received by, or an amount was transferred to, the
guaranteed period option. The excess interest adjustment can either decrease or
increase the amount to be received by the owner upon full surrender or
commencement of annuity payments, depending upon whether there has been an
increase or decrease in interest rates, respectively.
Fixed Account--One or more investment choices under the policy that are part of
the general assets of PFL and are not in the mutual fund account or target
account.
Guaranteed Period Options--The various guaranteed interest rate periods of the
fixed account which may be offered by PFL and into which premium payments may
be paid or amounts transferred.
Initial Stock Selection Date--The date is June 30, 1998 for the July Series.
The date is December 31, 1998 for the January Series.
Mutual Fund Account--A separate account established and registered as a unit
investment trust under the Investment Company Act of 1940, as amended, to which
premium payments under the policies may be allocated and which invests in
designated portfolios of the Endeavor Series Trust and such other mutual funds
as PFL may determine from time to time.
Mutual Fund Subaccount--A subdivision within the mutual fund account, the
assets of which are invested in a specified portfolio of the Endeavor Series
Trust.
Owner or Owners--The person who may exercise all rights and privileges under
the policy. The owner during the lifetime of the annuitant and prior to the
annuity commencement date is the person designated as the owner or a successor
owner in the information that we require to issue a policy.
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Policy Value--On or before the annuity commencement date, the policy value is
equal to the owner's:
. premium payments; minus
. partial withdrawals (including any applicable excess interest adjustments on
such withdrawals); plus
. interest credited in the fixed account; plus
. accumulated gains or losses in the mutual fund account and the target
account; minus
. service charges, premium taxes, and transfer fees, if any.
Target Account--A separate account established and registered as a management
investment company under the 1940 Act to which premium payments under the
policies may be allocated.
Target Series Subaccount--A subdivision within the target account, the assets
of which are invested in common stocks selected according to a specified
investment strategy, with a specific stock selection date.
(Note: The Statement of Additional Information contains a more extensive
Glossary.)
4
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SUMMARY
The sections in this summary correspond to sections in this prospectus, which
discuss the topics in more detail. Words printed in italics in this prospectus
are defined in the Glossary.
1. THE ANNUITY POLICY
The Flexible Premium Variable Annuity Policy offered by PFL Life Insurance
Company (PFL, we, us or our) is a policy between you, as the owner, and PFL, an
insurance company. The policy provides a way to invest on a tax-deferred basis
in the following investment choices: thirteen subaccounts of the mutual fund
account, four subaccounts of the target account, and a fixed account of PFL.
The policy is intended to accumulate money for retirement or other long-term
investment purposes.
This policy offers seventeen subaccounts in both the mutual fund account and
the target account that are listed in Section 4. Each mutual fund subaccount
invests exclusively in shares of one of the portfolios of the Endeavor Series
Trust. Each target series subaccount invests directly in individual stocks
according to its specific investment strategy. The policy value may depend on
the investment experience of the selected subaccounts. Therefore, you bear the
entire investment risk with respect to all policy value in any subaccount. You
could lose the amount that you invest.
The fixed account offers an interest rate that is guaranteed by PFL. We
guarantee to return your investment with interest credited for all amounts
allocated to the fixed account.
You can transfer money between any of the investment choices. We reserve the
right to impose a $10 fee for each transfer in excess of 12 transfers per
policy year.
The policy, like all deferred annuity policies, has two phases: the
"accumulation phase" and the "income phase." During the accumulation phase,
earnings accumulate on a tax-deferred basis and are taxed as income when you
take them out of the policy. The income phase occurs when you begin receiving
regular payments from your policy. The money you can accumulate during the
accumulation phase will largely determine the income payments you receive
during the income phase.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
The policy allows you to receive income under one of five annuity payment
options. You may choose from fixed payment options, variable payment options,
or a combination of both. If you select a variable payment option, the dollar
amount of your payments may go up or down.
3. PURCHASE
You can buy a nonqualified policy with $5,000 or more, and a qualified policy
with $1,000 or more, under most circumstances. You can add as little as $50 at
any time during the accumulation phase.
4. INVESTMENT CHOICES
You can allocate your premium payments to one or more of the investment choices
listed below.
The following thirteen mutual fund portfolios are described in the Endeavor
Series Trust prospectus:
SUBADVISED BY MORGAN STANLEY ASSET MANAGEMENT INC.
Endeavor Asset Allocation
Endeavor Money Market
SUBADVISED BY T. ROWE PRICE ASSOCIATES, INC.
T. Rowe Price Equity Income
T. Rowe Price Growth Stock
SUBADVISED BY ROWE PRICE-FLEMING INTERNATIONAL, INC.
T. Rowe Price International Stock
SUBADVISED BY OPCAP ADVISORS
Endeavor Value Equity
Endeavor Opportunity Value
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SUBADVISED BY J.P. MORGAN INVESTMENT MANAGEMENT INC.
Endeavor Enhanced Index
SUBADVISED BY THE DREYFUS CORPORATION
Dreyfus U.S. Government Securities
Dreyfus Small Cap Value
SUBADVISED BY MONTGOMERY ASSET MANAGEMENT, LLC
Endeavor Select 50
SUBADVISED BY MASSACHUSETTS FINANCIAL SERVICES COMPANY
Endeavor High Yield
SUBADVISED BY JANUS CAPITAL CORPORATION
Endeavor Janus Growth Portfolio
The following four target series subaccounts are described later in this
prospectus.
SUBADVISED BY FIRST TRUST ADVISORS L.P.
The DowSM Target 10 (July Series)
The DowSM Target 5 (July Series)
The DowSM Target 10 (January Series)
The DowSM Target 5 (January Series)
Depending upon their investment performance, you can make or lose money in any
of the mutual fund subaccounts or target series subaccounts.
You can also allocate your premium payments to the fixed account.
5. EXPENSES
No deductions are made from premium payments at the time you buy the policy so
that the full amount of each premium payment is invested in one or more of your
investment choices.
Full surrenders, partial withdrawals and transfers from a guaranteed period
option of the fixed account may also be subject to an excess interest
adjustment, which may increase or decrease the amount you receive. This
adjustment may also apply to amounts applied to an annuity payment option from
a guaranteed period option of the fixed account.
We deduct daily mortality and expense risk fees and administrative charges of
1.25% to 1.40% per year from the assets in each mutual fund subaccount and
target series subaccount.
During the accumulation phase, we deduct an annual service charge of no more
than $35 from the policy value on each policy anniversary and at the time of
surrender. The charge is waived if either the policy value or the sum of all
premium payments, minus all partial withdrawals, is at least $50,000.
To help with the cost of distributing the policies, we also deduct a daily
distribution financing charge equal to an effective annual rate of 0.25%,
during the first ten years of the accumulation phase.
We will deduct state premium taxes, which currently range from 0% to 3.50%,
upon total surrender, payment of a death benefit, or when annuity payments
begin.
If you elect the "family income protector", then there is an annual fee during
the accumulation phase of 0.30% of the minimum annuitization value. If you
annuitize under the rider then there is a stabilized payment fee at an annual
rate of 1.25% of the daily net asset value in the separate account.
The value of the net assets of the mutual fund subaccounts will reflect the
investment advisory fee and other expenses incurred by the underlying
portfolios. Those fees and expenses are detailed in the Endeavor Series Trust
prospectus that is attached to this prospectus. The value of the net assets of
the target series subaccounts will reflect the investment advisory fee and
other expenses incurred by the manager in operating each target series
subaccount.
6. TAXES
Your earnings, if any, are not taxed until you take them out. If you take money
out during the accumulation phase earnings come out first for federal tax
purposes, and are taxed as income. If you are younger than 59 1/2 when you take
money out, you may be charged a 10% federal penalty tax on the earnings.
Payments
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during the income phase may be considered partly a return of your original
investment so that part of each payment would not be taxable as income.
7. ACCESS TO YOUR MONEY
You can take out $500 or more anytime during the accumulation phase. After one
year, you may take out up to 10% of the policy value free of excess interest
adjustments each policy year. Amounts withdrawn in the first year in excess of
10% of the policy value may be subject to an excess interest adjustment. You
may also have to pay income tax and a tax penalty on any money you take out.
8. PERFORMANCE
The value of the policy will vary up or down depending upon the investment
performance of the mutual fund subaccounts or target series subaccounts you
choose. We provide performance information in Appendix B and in the Statement
of Additional Information. This data is not intended to indicate future
performance.
9. DEATH BENEFIT
If you are both the owner and the annuitant and you die before the income phase
begins, then your beneficiary will receive a death benefit. Naming different
persons as owner and annuitant can affect whether the death benefit is payable
and to whom amounts will be paid. Use care when naming owners, annuitants and
beneficiaries, and consult your agent if you have questions.
You may generally choose one of the following guaranteed minimum death
benefits:
. 5% Annually Compounding
. Double Enhanced
. Return of Premium
These choices are restricted for annuitants and owners over age 74.
10. OTHER INFORMATION
Right to Cancel Period. You may return your policy for a refund. The amount of
time you have to return the policy will depend on the state where the policy
was issued. It is generally only 10 days. The amount of the refund will
generally be the policy value. We will pay the refund within 7 days after we
receive written notice of cancellation and the returned policy. The policy will
then be deemed void. In some states you may have more than 10 days to return a
policy, or receive a refund of more (or less) than the policy value.
No Probate. Usually when you die the person you choose as your beneficiary will
receive the death benefit under this policy without going through probate.
State laws vary on how the amount that may be paid is treated for estate tax
purposes.
Who should purchase the Policy? This policy is designed for people seeking
long-term tax-deferred accumulation of assets, generally for retirement or
other long-term purposes; and for persons who have maximized their use of other
retirement savings methods, such as 401(k) plans and individual retirement
accounts. The tax-deferred feature is most attractive to people in high federal
and state tax brackets. You should not buy this policy if you are looking for a
short-term investment or if you cannot take the risk of losing the money that
you put in.
Financial Statements. Financial Statements for PFL, the mutual fund subaccounts
and target series subaccounts are in the Statement of Additional Information.
Additional Features. This policy has additional features that might interest
you. These include the following:
. You can arrange to have money automatically sent to you monthly, quarterly,
semi-annually or annually while your policy is in the accumulation phase.
This feature is referred to as the "systematic payout option." Amounts you
receive may be included in your gross income, and in certain circumstances,
may be subject to penalty taxes.
. You can arrange to have a certain amount of money automatically
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transferred from the fixed account, either monthly or quarterly, into your
choice of mutual fund subaccounts or target series subaccounts. This feature
is called "dollar cost averaging."
. You can elect an optional rider that guarantees you a minimum annuitization
value. This feature is called the "family income protector."
. We will, upon your request, automatically transfer amounts among the mutual
fund subaccounts or target series subaccounts on a regular basis to maintain
a desired allocation of the policy value among the various mutual fund
subaccounts or target series subaccounts. This feature is called "asset
rebalancing."
. Under certain medically related circumstances, we will allow you to surrender
or partially withdraw your policy value without an excess interest
adjustment. This feature is called the "nursing care and terminal condition
withdrawal option." You may make transfers and/or change the allocation of
additional premium payments by telephone.
The dollar cost averaging and asset rebalancing features are inconsistent with
the target series subaccounts' investment strategy.
These features are not available in all states and may not be suitable for your
particular situation.
11. INQUIRIES
If you need more information, please contact us at:
Administrative and Service Office
Financial Markets Division
Variable Annuity Department
PFL Life Insurance Company
4333 Edgewood Road N.E.
P.O. Box 3183
Cedar Rapids, IA 52406-3183
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ANNUITY POLICY FEE TABLE
- ----------------------------------------------------------------------------
Policy Owner Transaction Expenses
Separate Account Annual Expenses
(as a percentage of average account value)
- ----------------------------------------------------------------------------
Sales Load On Purchase Payments... 0 Mortality and Expense Risk
Surrender Fees.................... 0 Fee(/3/)...................... 1.25%
Annual Service Charge(/1/). __35$Per Administrative Charge......... 0.15%
Policy Distribution Financing
Transfer Fee(/1/).. Currently No Fee Charge........................ 0.25%
Family Income Protector
(optional)(/2/) Rider Fee..... 0.30% TOTAL SEPARATE ACCOUNT
ANNUAL EXPENSES............... 1.65%
- ----------------------------------------------------------------------------
Portfolio Annual Expenses(/4/)
(as a percentage of average net assets and after expense reimbursements)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Total Total
Portfolio Account
Management Other Rule 12b-1 Annual and Portfolio
Fees Expenses Fees(/5/) Expenses(/6/) Expenses
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Endeavor Asset Allocation....... 0.75% 0.03% 0.02% 0.80% 2.45%
Endeavor Money Market........... 0.50% 0.10% -- 0.60% 2.25%
T. Rowe Price Equity Income..... 0.80% 0.05% -- 0.85% 2.50%
T. Rowe Price Growth Stock...... 0.80% 0.07% -- 0.87% 2.52%
T. Rowe Price International
Stock(/7/)..................... 0.90% 0.08% -- 0.98% 2.63%
Endeavor Value Equity........... 0.80% 0.04% 0.01% 0.85% 2.50%
Endeavor Opportunity Value(/8/). 0.80% 0.18% 0.01% 0.99% 2.64%
Endeavor Enhanced Index......... 0.75% 0.35% -- 1.10% 2.75%
Dreyfus U.S. Government
Securities(/9/)................ 0.60% 0.12% -- 0.72% 2.37%
Dreyfus Small Cap Value......... 0.80% 0.06% 0.08% 0.94% 2.59%
Endeavor Select 50(/10/)........ 1.10% 0.39% -- 1.49% 3.14%
Endeavor High Yield(/11/)....... 0.775% 0.525% -- 1.30% 2.95%
Endeavor Janus Growth(/12/)..... 0.775% 0.095% 0.095% 0.87% 2.52%
The Dow SM Target 10
(July)(/13/)(/14/)(/15/)....... 0.75% 0.55% -- 1.30% 2.95%
The Dow SM Target 5
(July)(/13/)(/14/)(/15/)....... 0.75% 0.55% -- 1.30% 2.95%
The Dow SM Target 10
(January)(/13/)(/14/)(/15/).... 0.75% 0.55% -- 1.30% 2.95%
The Dow SM Target 5
(January)(/13/)(/14/)(/15/).... 0.75% 0.55% -- 1.30% 2.95%
</TABLE>
(/1/The)transfer fee, if any is imposed, apply to each policy, regardless of
how policy value is allocated among the mutual fund account, the target
account and the fixed account. The service charge applies to the fixed
account, the mutual fund account, and the target account, and is assessed
on a pro rata basis relative to each account's policy value as a
percentage of the policy's total policy value. The service charge is
deducted on each policy anniversary and at the time of surrender, if
surrender occurs during a policy
year. There is no fee for the first 12 transfers per year. For additional
transfers, PFL may charge a fee of $10 per transfer, but currently does not
charge for any transfers.
(/2/The)annual rider fee is currently equal to 0.30% of the minimum
annuitization value on the previous policy anniversary; PFL may at its
discretion change the rate in the future, but the rate will never be
greater than 0.50% per year. The stabilized payment fee is only charged if
you annuitize under the Family Income Protector
9
<PAGE>
rider, and then only after annuitization. This fee is reflected in the
amount of the variable payments. The stabilized payment fee is currently
equal to an effective annual rate of 1.25% of the daily net asset value
in the variable investment options; PFL may at its discretion change the
rate in the future, but the rate will never be greater than 2.25% per
year. Once the Family Income Protector rider is added to your policy,
neither the rider fee nor the stabilized payment fee that is in effect at
that time will change during the life of that Family Income Protector
rider.
(/3/) Mortality and expense risk fees shown (1.25%) include the "5% Annually
Compounding Death Benefit" and the "Double Enhanced Death Benefit." The
corresponding fees for the "Return of Premium Death Benefit" are 1.10%
for each Subaccount.
(/4/) The fee table information relating to the Endeavor Series Trust was
provided to PFL by Endeavor Management Co., and PFL has not independently
verified such information. Actual future expenses of the portfolios may
be greater or less than those shown in the Table.
(/5/) The Board of Trustees of Endeavor Series 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 will use the
"recaptured commission" 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 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
Owner. Endeavor Series Trust, based on advice of counsel, does not
believe that recaptured brokerage commissions should be treated as 12b-1
fees. For more information on the Trust's Brokerage Enhancement Plan, see
the Trust's prospectus accompanying this Prospectus.
(/6/) Endeavor Management Co. has agreed, until further notice, to assume
expenses of the Portfolios that exceed the following rates: Endeavor
Money Market--0.99%; Endeavor Asset Allocation--1.25%; T. Rowe Price
International Stock--1.53%; Endeavor Value Equity--1.30%; Dreyfus Small
Cap Value--1.30%; Dreyfus U.S. Government Securities--1.00%; T. Rowe
Price Equity Income--1.30%; T. Rowe Price Growth Stock--1.30%; Endeavor
Opportunity Value--1.30%; Endeavor Enhanced Index--1.30%; Endeavor Select
50--1.50%; Endeavor High Yield--1.30%. Endeavor Management Co. has agreed
for a period of at least one year to assume the expenses of the Endeavor
Janus Growth Portfolio that exceed 0.87%. Expenses shown for the Endeavor
Janus Growth Portfolio are estimated for 1999. Expenses shown for the
Endeavor Select 50 and Endeavor High Yield Portfolios are annualized.
(/7/) Total Portfolio Annual Expenses for the T. Rowe Price International Stock
Portfolio before credits allowed by the custodian for the period ended
December 31, 1998 were 1.10%.
(/8/) Total Portfolio Annual Expenses for the Endeavor Opportunity Value
Portfolio before waivers/ reimbursement and credits allowed by the
custodian for the period ended December 31, 1998 were 1.00%.
(/9/) Total Portfolio Annual Expenses for the Dreyfus U.S. Government
Securities Portfolio before waiver/ reimbursements and credits allowed by
the custodian for the period ended December 31, 1998 were 0.73%.
(/10/) Total Portfolio Annual Expenses for the Endeavor Select 50 Portfolio
before waivers/reimbursement and credit allowed by the custodian for the
period ended December 31, 1998 were 1.55% annualized.
(/11/) Total Portfolio Annual Expenses for the Endeavor High Yield Portfolio
before waivers/reimbursement and credits allowed to the custodian for
the period ended December 31, 1998 were 1.58% annualized.
(/12/) The Endeavor Janus Growth Portfolio is new, so the Total Portfolio Annual
Expenses before waivers/reimbursement for the period ending December 31,
1999 are estimated to be 0.895%.
(/13/) For the target account, the distribution financing charge included under
"Total Separate Account Annual Expenses" in this table is deducted
pursuant to a 12b-1 plan.
(/14/) The manager is paid a fee of 0.75% of the average daily net assets of
each target series subaccount. For its services to the target account,
the manager pays the adviser a fee equal to 0.35% of the average daily
net assets of each target series subaccount.
(/15/) In addition to the management fees, the target account pays all expenses
not assumed by the manager. The manager has agreed to limit each target
subaccount's management fee and operating expenses during its first year
of operations to an annual rate of 1.30% of the target subaccount's
average net assets. (This limit does not include other fees and
deductions such as the mortality and expense risk fee, administrative
charge, and distribution financing charge.) (See the Statement of
Additional Information for more details.) Without this limitation, the
management fee and operating expenses for the 5% Annually Compounding and
Double Enhanced Death Benefits are expected to be 1.79% for The Dow SM
Target 10 and 1.66% for The Dow SM Target 5. Without this limitation, the
management fee and operating expenses for the Return of Premium Death
Benefit are expected to be 1.72% for The Dow SM Target 10 and 1.59% for
The Dow SM Target 5.
10
<PAGE>
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming a
hypothetical 5% annual return on assets, and assuming the entire policy value
is in the applicable mutual fund subaccount or target series subaccount, and
assuming the family income protector benefit has been selected:
The expenses reflect different mortality and expense risk fees depending on
which death benefit you select:
A = Return of Premium Death Benefit (1.10% charge)
B = 5% Annually Compounding Death Benefit or the Double Enhanced Death Benefit
(1.25% charge)
<TABLE>
<CAPTION>
1 3 5 10
Subaccounts Year Years Years Years
- ---------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Endeavor Asset Allocation A $26 $81 $139 $295
B $28 $86 $146 $310
- ---------------------------------------------------------
Endeavor Money Market A $24 $75 $129 $275
B $26 $80 $136 $290
- ---------------------------------------------------------
T. Rowe Price Equity Income A $27 $83 $141 $300
B $28 $87 $149 $314
- ---------------------------------------------------------
T. Rowe Price Growth Stock A $27 $83 $142 $302
B $29 $88 $150 $316
- ---------------------------------------------------------
T. Rowe Price International A $28 $87 $148 $312
Stock B $30 $91 $155 $327
- ---------------------------------------------------------
Endeavor Value Equity A $27 $83 $141 $300
B $28 $87 $149 $314
- ---------------------------------------------------------
Endeavor Opportunity Value A $28 $87 $148 $313
B $30 $91 $156 $328
- ---------------------------------------------------------
Endeavor Enhanced Index A $29 $90 $154 $324
B $31 $95 $161 $338
- ---------------------------------------------------------
Dreyfus U.S. Government A $26 $79 $135 $287
Securities B $27 $83 $142 $302
- ---------------------------------------------------------
Dreyfus Small Cap Value A $28 $86 $146 $309
B $29 $90 $153 $323
- ---------------------------------------------------------
Endeavor Select 50 A $33 $102 $172 $360
B $35 $106 $180 $374
- ---------------------------------------------------------
Endeavor High Yield A $31 $96 $163 $343
B $33 $101 $171 $356
- ---------------------------------------------------------
Endeavor Janus Growth A $27 $83 $142 $302
B $29 $88 $150 $316
- ---------------------------------------------------------
The Dow SM Target 10 A $31 $96 $163 $343
(July Series) B $33 $101 $171 $356
- ---------------------------------------------------------
The Dow SM Target 5 A $31 $96 $163 $343
(July Series) B $33 $101 $171 $356
- ---------------------------------------------------------
The Dow SM Target 10 A $31 $96 $163 $343
(January Series) B $33 $101 $171 $356
- ---------------------------------------------------------
The Dow SM Target 5 A $31 $96 $163 $343
(January Series) B $33 $101 $171 $356
</TABLE>
11
<PAGE>
The above tables will assist you in understanding the costs and expenses that
you will bear, directly or indirectly. These include the 1998 expenses of the
underlying portfolios, except for the Endeavor Janus Growth subaccount (where
expenses listed above are estimates for the first full year of operations.) In
addition to the expenses listed above, premium taxes may be applicable.
These examples should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. The
assumed 5% annual return
is hypothetical and should not be considered a representation of past or future
annual returns, which may be greater or less than the assumed rate.
In the examples, the $35 annual service charge is reflected as a charge of
0.0159% based on average policy value of $220,315.
These examples reflect the annual fee of 0.30% for the family income protector
rider. Expenses would be lower if you do not elect that rider.
Financial Information. Condensed financial information for the mutual fund
subaccounts and target series subaccounts are in Appendix A to this prospectus.
12
<PAGE>
1. THE ANNUITY POLICY
This prospectus describes The Endeavor Platinum Variable Annuity Policy offered
by PFL Life Insurance Company.
An annuity is a policy between you, the owner, and an insurance company (in
this case PFL), where the insurance company promises to pay you an income in
the form of annuity payments. These payments begin on a designated date,
referred to as the annuity commencement date. Until the annuity commencement
date, your annuity is in the accumulation phase and the earnings are tax
deferred. Tax deferral means you generally are not taxed on your annuity until
you take money out of your annuity. After the annuity commencement date, your
annuity switches to the income phase.
The policy is a flexible premium variable annuity. You can use the policy to
accumulate funds for retirement or other long-term financial planning purposes.
It is a "flexible premium" policy because after you purchase it, you can
generally make additional investments of any amount of $50 or more, until the
annuity commencement date. But you are not required to make any additional
investments.
The policy is a "variable" annuity because the value of your investments can go
up or down based on the performance of your investment choices. If you select
the variable annuity portion of the policy, the amount of money you are able to
accumulate in your policy during the accumulation phase depends upon the
performance of your investment choices. The amount of annuity payments you
receive during the income phase from the variable annuity portion of your
policy also depends upon the investment performance of your investment choices
for the income phase.
The policy also contains a fixed account. The fixed account offers an interest
rate that is guaranteed by PFL and which will not change during the selected
guaranteed period. There may be different interest rates for each different
guaranteed period that you select.
2. ANNUITY PAYMENTS (THE INCOME PHASE)
You choose the annuity commencement date. You can change this date by giving us
30 days written notice before the current annuity commencement date. The new
annuity commencement date must be at least 30 days after we receive the change.
The latest annuity commencement date cannot be after the policy month following
the month in which the annuitant attains age 95.
Election of Annuity Payment Option. Before the annuity commencement date, if
the annuitant is alive, you may choose an annuity payment option or change your
election. If the annuitant dies before the annuity commencement date, the
beneficiary may elect to receive the death benefit in a lump sum or under one
of the annuity payment options.
Unless you specify otherwise, the annuitant will receive the annuity payments.
After the annuitant's death, the beneficiary will receive any remaining
guaranteed payments.
Annuity Payment Options
The policy provides five annuity payment options that are described below. You
may chose any combination of annuity payment options. We will use your
"adjusted policy value" to provide these annuity payments. The adjusted policy
value is the policy value increased or decreased by any applicable excess
interest adjustment. If the adjusted policy value on the annuity commencement
date is less than $2,000, PFL reserves the right to pay it in one lump sum in
lieu of applying it under an annuity payment option. You can receive annuity
payments monthly, quarterly, semi-annually, or annually.
Unless you choose to receive variable payments under annuity payment options 3
or 5, the amount of each payment will be set on the annuity commencement date
and will not change. You may, however, choose to receive variable payments
under payment options 3 and 5. The dollar amount of the first variable payment
will
13
<PAGE>
be determined in accordance with the annuity payment rates set forth in the
applicable table contained in the policy. The dollar amount of additional
variable payments will vary based on the investment performance of the mutual
fund subaccount(s) and/or target series subaccount(s). The dollar amount of
each variable payment after the first may increase, decrease, or remain
constant. If the actual investment performance exactly matched the assumed
investment return of 5% at all times, the amount of each variable annuity
payment would remain equal. If actual investment performance exceeds the
assumed investment return, the amount of the variable annuity payments would
increase. Conversely, if actual investment performance is lower than the
assumed investment return, the amount of the variable annuity payments would
decrease.
A charge for premium taxes and an excess interest adjustment may be made when
annuity payments begin.
The annuity payment options are explained below. Options 1, 2, and 4 are fixed
only. Options 3 and 5 can be fixed or variable.
Payment Option 1--Interest Payments. We will pay the interest on the amount we
use to provide annuity payments in equal payments, or this amount may be left
to accumulate for a period of time you and PFL agree to. You and PFL will
agree on withdrawal rights when you elect this option.
Payment Option 2--Income for a Specified Period. We will make level payments
only for the fixed period you choose. No funds will remain at the end.
Payment Option 3--Life Income. You may choose between:
Fixed Payments
. No Period Certain--We will make level payments only during the annuitant's
lifetime.
. 10 Years Certain--We will make level payments for the longer of the
annuitant's lifetime or ten years.
. Guaranteed Return of Policy Proceeds--We will make level payments for the
longer of the annuitant's lifetime or until the total dollar amount of
payments we made to you equals the amount applied to this option.
Variable Payments
. No Period Certain--Payments will be made only during the lifetime of the
annuitant.
. 10 Years Certain--Payments will be made for the longer of the annuitant's
lifetime or ten years.
Payment Option 4--Income of a Specified Amount. Payments are made for any
specified amount until the amount applied to this option, with interest, is
exhausted. This will be a series of level payments followed by a smaller final
payment.
Payment Option 5--Joint and Survivor Annuity. You may choose between:
Fixed Payments
. Payments are made during the joint lifetime of the payee and a joint payee
of your selection. Payments will be made as long as either person is
living.
Variable Payments
. Payments are made as long as either the payee or the joint payee is
living.
Other annuity payment options may be arranged by agreement with PFL. Certain
annuity payment options may not be available in all states.
NOTE CAREFULLY:
IF:
. you choose Life Income with No Period Certain or a Joint and Survivor
Annuity; and
. the annuitant(s) dies before the due date of the second annuity payment;
THEN:
. we may make only one annuity payment.
IF:
. you choose Income for a Specified Period, Life Income with 10 years
Certain, Life Income with Guaranteed Return of Policy Proceeds, or Income
of a Specified Amount; and
14
<PAGE>
. the person receiving payments dies prior to the end of the guaranteed
period;
THEN:
. the remaining guaranteed payments will be continued to that person's
beneficiary, or their present value may be paid in a single sum.
We will not pay interest on amounts represented by uncashed annuity payment
checks if the postal or other delivery service is unable to deliver checks to
the payee's address of record. The payee is responsible to keep PFL informed of
the payee's current address of record.
3. PURCHASE
Policy Issue Requirements
PFL will issue a policy IF:
. PFL receives all information needed to issue the policy;
. PFL receives a minimum initial premium payment; and
. You (annuitant and any joint owner) are age 84 or younger.
Premium Payments
You should make checks for premium payments payable only to PFL Life Insurance
Company and send them to the administrative and service office. Your check must
be honored in order for PFL to pay any associated payments and benefits due
under the policy.
Initial Premium Requirements
The initial premium payment for nonqualified policies must be at least $5,000,
and at least $1,000 for qualified policies. There is no minimum initial premium
payment for policies issued under section 403(b) of the Internal Revenue Code;
however, your premium must be received within 90 days of the policy date or
your policy will be canceled. We will credit your initial premium payment to
your policy within two business days after the day we receive it and your
complete policy information. If we are unable to credit your initial premium
payment, we will contact you within five business days and explain why. We will
also return your initial premium payment at that time unless you tell us to
keep it and credit it as soon as possible.
The date on which we credit your initial premium payment to your policy is the
policy date. The policy date is used to determine policy years, policy months
and policy anniversaries.
Additional Premium Payments
You are not required to make any additional premium payments. However, you can
make additional premium payments as often as you like during the lifetime of
the annuitant and prior to the accumulation phase. Additional premium payments
must be at least $50. We will credit additional premium payments to your policy
as of the business day we receive your premium and required information.
Maximum Total Premium Payments
We allow premium payments up to a total of $1,000,000 without prior approval.
Allocation of Premium Payments
When you purchase a policy, we will allocate your premium payment to the
investment choices you select. Your allocation must be in whole percentages and
must total 100%. We will allocate additional premium payments the same way,
unless you request a different allocation.
If you allocate premium payments to the dollar cost averaging fixed account,
you must give us directions regarding the mutual fund subaccount(s) and/or
target series subaccount(s) to which transfers are to be made.
You may change allocations for future additional premium payments by sending us
written instructions or by telephone, subject to the limitations described
under "Telephone Transactions." The allocation change will apply to premium
payments received after the date we receive the change request.
15
<PAGE>
Policy Value
You should expect your policy value to change from valuation period to
valuation period. A valuation period begins at the close of trading on the New
York Stock Exchange on each business day and ends at the close of trading on
the next succeeding business day. A business day is each day that the New York
Stock Exchange is open. The New York Stock Exchange generally closes at 4:00
p.m. eastern time. Holidays are generally not business days.
4. INVESTMENT CHOICES
The Separate Accounts
There are currently seventeen variable subaccounts available under the
policies. There are thirteen subaccounts of the mutual fund account (which is a
portion of the PFL Endeavor VA Separate Account) and four subaccounts of the
target account (the PFL Endeavor Target Account).
The Mutual Fund Account
The mutual fund subaccounts invest in shares of the various portfolios of the
Endeavor Series Trust. The companies that provide investment advice and
administrative services for the underlying portfolios offered through this
policy are listed below. The following mutual fund investment choices are
currently offered through this policy:
Subadvised by Morgan Stanley Asset Management Inc.
Endeavor Asset Allocation Portfolio
Endeavor Money Market Portfolio
Subadvised by T. Rowe Price Associates, Inc.
T. Rowe Price Equity Income Portfolio
T. Rowe Price Growth Stock Portfolio
Subadvised by Rowe Price-Fleming International, Inc.
T. Rowe Price International Stock Portfolio
Subadvised by OpCap Advisors
Endeavor Value Equity Portfolio
Endeavor Opportunity Value
Subadvised by J.P. Morgan Investment Management Inc.
Endeavor Enhanced Index Portfolio
Subadvised by The Dreyfus Corporation
Dreyfus U.S. Government Securities Portfolio
Dreyfus Small Cap Value Portfolio
Subadvised by Montgomery Asset Management, LLC
Endeavor Select 50 Portfolio
Subadvised by Massachusetts Financial Services Company
Endeavor High Yield Portfolio
Subadvised by Janus Capital Corporation
Endeavor Janus Growth Portfolio
The general public may not purchase shares of these underlying portfolios. The
investment objectives and policies may be similar to other portfolios and
mutual funds managed by the same investment adviser or manager that are sold
directly to the public. You should not expect that the investment results of
the other portfolios and mutual funds will be the same as those of the
underlying funds.
More detailed information, including an explanation of the portfolio's
investment objectives, may be found in the current prospectus for the Endeavor
Series Trust, which is attached to this prospectus. You should read the
prospectus for the Endeavor Series Trust carefully before you invest.
We may receive expense reimbursements or other revenues from the Endeavor
Series Trust or its manager. The amount of these reimbursements or revenues, if
any, may be based on the amount of assets that PFL or the mutual fund account
invests in the underlying portfolios.
The Target Account
This section gives information on the target account, including the management
and investment strategies, and policies. The following target account
investment choices are currently offered through this policy:
THE TARGET ACCOUNT
Subadvised by First Trust Advisors, L.P.
The Dow SM Target 10 (July Series)
16
<PAGE>
The Dow SM Target 5 (July Series)
The Dow SM Target 10 (January Series)
The Dow SM Target 5 (January Series)
General. The target account is a managed separate account and is currently
divided into four target series subaccounts. Each Series is a separate
subaccount, so there are currently two Target 10 subaccounts (January and July
Series) and two Target 5 subaccounts (January and July Series). Additional
target series subaccounts may be established in the future at the discretion of
PFL. Each target series subaccount invests according to specific investment
strategies.
Under Iowa law, the assets of the target account are owned by PFL, but they are
held separately from the other assets of PFL. To the extent that these assets
are attributable to the policy value of the policies, these assets are not
chargeable with liabilities incurred in any other business operation of PFL.
Income, gains, and losses incurred on the assets in a target series subaccount
of the target account, whether or not realized, are credited to or charged
against that target series subaccount without regard to other income, gains or
losses of any other account or subaccount of PFL. Each target series subaccount
operates as a separate investment fund. Therefore, the investment performance
of any target series subaccount should be entirely independent of the
investment performance of PFL's general account assets or any other account or
subaccount maintained by PFL.
Management of the Target Account. The investments and administration of each
managed target series subaccount are under the direction of a Board of
Managers. The Board of Managers for each target series subaccount annually
selects an independent public accountant, reviews the terms of the management
and investment advisory agreements, recommends any changes in the fundamental
investment policies, and takes any other actions necessary in connection with
the operation and management of the target series subaccounts.
Endeavor Management Co., an investment adviser registered with the SEC under
the Investment Advisers Act of 1940, is the target account's manager. The
manager performs administerial and managerial functions for the target account.
First Trust Advisors L.P., an Illinois limited partnership formed in 1991 and
an investment adviser registered with the SEC under the Investment Advisers Act
of 1940, is the target account's investment adviser. The adviser is responsible
for selecting the investments of each target series subaccount consistent with
the investment objectives and policies of that target series subaccount, and
will conduct securities trading for the target series subaccount.
Portfolio Manager. There is no one individual primarily responsible for
portfolio management decisions for the target account. Investments are made
according to the prescribed strategy under the direction of a committee.
Investment Strategy. Each of The Dow SM Target 10 Subaccounts will invest in
the common stock of the ten companies in the DJIA that have the highest
dividend yield as of a specified business day and hold those stocks for the
following 12-month period.
Each of The Dow SM Target 5 Subaccounts will invest in the common stock of the
five companies with the lowest per share stock price of the ten companies in
the DJIA that have the highest dividend yield as of a specified business day
and hold those stocks for the following 12-month period.
The objective of each target series subaccount is to provide an above-average
total return through a combination of dividend income and capital appreciation.
Each target series subaccount will function in a similar manner. Each target
series subaccount will initially invest in substantially equal amounts in the
common stock of the companies described above for each target series subaccount
(as held in a target series subaccount, such common stock is referred to as the
common shares) determined as of the initial stock selection date.
17
<PAGE>
Each target series subaccount may have different investment series running
simultaneously for different 12-month periods. For example, within The Dow SM
Target 10 Subaccount there may be more than one series, each with a different
initial stock selection date. At the initial stock selection date, a percentage
relationship among the number of common shares in a series will be established.
When additional funds are deposited into the series, additional common shares
will be purchased in such numbers reflecting as nearly as practicable the
percentage relationship of the number of common shares established at the
initial purchase. Sales of common shares by the series will likewise attempt to
replicate the percentage relationship of common shares. The percentage
relationship among the number of common shares in the series should therefore
remain stable. However, given the fact that the market price of such common
shares will vary throughout the year, the value of the common shares of each of
the companies as compared to the total assets of the series will fluctuate
during the year, above and below the proportion established on a stock
selection date.
As of the annual stock selection date, a new percentage relationship will be
established among the number of common shares described below for each series
on such date. Common shares may be sold or new equity securities bought each
year so that the series is equally invested in the common stock of each company
meeting the series' investment criteria. Thus the series may or may not hold
equity securities of the same companies as the previous year. Any purchase or
sale of additional common shares during the year will duplicate, as nearly as
practicable, the percentage relationship among the number of common shares as
of the annual stock selection date since the relationship among the value of
the common shares on the date of any subsequent transactions may be different
than the original relationship among their value. The adviser may depart from
the specified strategy to meet tax diversification requirements. (See Section
6, "TAXES--Diversification and Distribution Requirements").
As of May 1, 1999, there are four target series subaccounts. There are two "The
DowSM Target 10 Subaccounts," which contain a July Series (a June 30, 1998
initial stock selection date) and a January Series (a December 31, 1998 initial
stock selection date). Similarly, there are two "The Dow SM Target 5
Subaccounts," which contain a July Series (June 30, 1998 initial stock
selection date) and a January Series (December 31, 1998 initial stock selection
date).
The target account may determine to offer additional target series subaccounts
in the future, which may have different selection criteria or stock selection
dates (or both).
The Dow SM Target 10 Subaccounts and The Dow SM Target 5 Subaccounts have not
been designed so that their prices will parallel or correlate with movements in
the DJIA. It is expected that their prices will not do so.
An investment in a target series subaccount involves the purchase of a
portfolio of equity securities with high dividend yields in one convenient
purchase. Investing in the stocks of the DJIA with the highest dividend yields
amounts to a contrarian strategy because these shares are often out of favor.
Such strategy may be effective in achieving a target series subaccount's
investment objectives because regular dividends are common for established
companies and dividends have accounted for a substantial portion of the total
return on stocks of the DJIA as a group. However, there is no guarantee that
either a target series subaccount's objective will be achieved or that a target
series subaccount will provide for capital appreciation in excess of such
target series subaccount's expenses.
Each target series subaccount may also invest in futures and options, hold
warrants, and lend its common shares.
The Dow Jones Industrial Average SM. The DJIA consists of 30 stocks. The stocks
are
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chosen by the editors of The Wall Street Journal as representative of the broad
market and of American industry. The companies are major factors in their
industries and their stocks are widely held by individuals and institutional
investors. Changes in the components of the DJIA are made entirely by the
editors of The Wall Street Journal without consultation with the companies, the
stock exchange or any official agency. For the sake of continuity, changes are
made rarely. Most substitutions have been the result of mergers, but from time
to time, changes may be made. The components of the DJIA may be changed at any
time, for any reason. Any changes in the components of the DJIA made after the
initial stock selection date of any series will not cause a change in the
identity of the common shares included in that series, including any equity
securities deposited in that series, except on an annual stock selection date.
The following is a list of the companies that currently comprise the DJIA as of
May 1, 1999.
AT&T Corporation
Allied Signal
Aluminum Company of America
American Express Company
Boeing Company
Caterpillar Inc.
Chevron Corporation
Coca Cola Company
Walt Disney Company
International Business Machines Corporation
International Paper Company
Johnson & Johnson
McDonald's Corporation
Merck & Company, Inc.
Minnesota Mining & Manufacturing Company
E.I. du Pont de Nemours & Company
Eastman Kodak Company
Exxon Corporation
General Electric Company
General Motors Corporation
Goodyear Tire & Rubber Company
Hewlett Packard Company
J.P. Morgan & Company, Inc.
Philip Morris Companies, Inc.
Procter & Gamble Company
Sears, Roebuck & Company
Travelers Group
Union Carbide Corporation
United Technologies Corporation
Wal Mart Stores Inc.
The target account is not sponsored, endorsed, sold or promoted by Dow Jones.
Dow Jones makes no representation or warranty, express or implied, to the
owners of the target account or any member of the public regarding the
advisability of purchasing the target account. Dow Jones' only relationship to
First Trust Advisors, Endeavor Management Co. (Endeavor) and PFL is the
licensing of certain copyrights, trademarks, service marks and service names of
Dow Jones. Dow Jones has no obligation to take the needs of First Trust
Advisors, Endeavor, PFL or the owners of the target account into consideration
in determining, composing or calculating the Dow Jones Industrial Average SM.
Dow Jones is not responsible for and has not participated in the determination
of the terms and conditions of the target account to be issued, including the
pricing or the amount payable under the policy. Dow Jones has no obligation or
liability in connection with the administration or marketing of the target
account.
Dow Jones does not guarantee the accuracy and/or the completeness of the Dow
Jones Industrial Average SM or any data included therein and Dow Jones shall
have no liability for any errors, omission, or interruptions therein. Dow Jones
makes no warranty, express or implied, as to results to be obtained by First
Trust Advisors, Endeavor, PFL, owners of the target account or any other person
or entity from the use of the Dow Jones Industrial Average SM or any data
included therein. Dow Jones makes no express or implied warranties, and
expressly disclaims all warranties, of merchantability or fitness for a
particular purpose or use with respect to the Dow Jones Industrial Average SM
or any data included therein. Without limiting any of the foregoing, in no
event shall Dow Jones have any liability for any lost
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profits or indirect, punitive, special or consequential damages (including lost
profits), even if notified of the possibility of such damages.
Investment Risks. There is no assurance that any target series subaccount will
achieve its stated objective. More detailed information, including a
description of each target series subaccount's investment objective and
policies and a description of risks involved in investing in each of the target
series subaccounts and of each target series subaccount's fees and expenses is
contained in the Statement of Additional Information. You should read the
Statement of Additional Information carefully before investing in a target
series subaccount.
Each subaccount consists of different issues of equity securities, all of which
are listed on a securities exchange. In addition, each of the companies whose
equity securities are included in a subaccount are actively traded, well-
established corporations.
Common shares may be sold under certain circumstances. Common shares, however,
will not be sold by a target series subaccount to take advantage of market
fluctuations or changes in anticipated rates of appreciation or depreciation,
or if the common shares no longer meet the criteria by which they were
selected. However, common shares will be sold on or about each annual stock
selection date in accordance with the adviser's stock selection strategy.
Whether or not the common shares are listed on a securities exchange, the
principal trading market for the common shares may be in the over-the-counter
market. As a result, the existence of a liquid trading market for the common
shares may depend on whether dealers will make a market in the common shares.
There can be no guarantee that a market will be made for any of the common
shares, that any market for the common shares will be maintained or that there
will be sufficient liquidity of the common shares in any markets made. The
price at which the common shares may be sold to meet transfers, partial
withdrawals or surrenders and the value of a target series subaccount will be
adversely affected if trading markets for the common shares are limited or
absent.
Investors should consider the following before making a decision to invest in a
target series subaccount:
. The value of the common shares will fluctuate over the life of a target
series subaccount and may be more or less than the price at which they were
purchased by such target series subaccount.
. The common shares may appreciate or depreciate in value (or pay dividends)
depending on the full range of economic and market influences affecting
these securities, including the impact of the target series subaccounts'
purchase and sale of the common shares and other factors.
. Transfers between the target account investment portfolios during the 12-
month period from stock selection date to stock selection date run counter
to the investment strategy of the target account investment portfolios,
namely holding the applicable stocks for a 12-month period, and may
adversely impact your investment performance. Similarly, using dollar cost
averaging and asset rebalancing for the target account investment portfolios
also runs counter to their investment strategies.
. The investment policies of each target subaccount are narrow and innovative,
and the Internal Revenue Service has not addressed them. If you are deemed
to have investment control of the assets in a target subaccount, then you
could be treated as the owner of those assets. If so, income and gains from
the subaccounts assets would be includable (pro rata) in your taxable income
each year.
You should understand the risks of investing in common stocks before making an
investment in a target series subaccount. In general, the value of your
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investment will fall if the financial condition of the issuers of the common
stocks becomes impaired or if the general condition of the relevant stock
market worsens. Common stocks are especially susceptible to general stock
market movements and to volatile increases and decreases of value, as market
confidence in and perceptions of the issuers change. These perceptions are
based on unpredictable factors including:
. expectations regarding government;
. economic, monetary and fiscal policies;
. inflation and interest rates;
. economic expansion or contraction; and
. global or regional political, economic or banking crises.
At times, due to the objective nature of the investment selection criteria,
target series subaccounts may be considered concentrated in various industries.
PFL cannot predict the direction or scope of any of these factors. Generally,
common stocks do not receive payments until all obligations of the issuer have
been paid. Unlike debt securities, common stocks do not offer any assurance of
income or provide guaranteed protection of capital.
An investment in The Dow SM Target 5 Subaccount may subject you to greater
market risk than other target series subaccounts that contain a more
diversified portfolio of securities since it contains only five stocks.
Each target series subaccount is not actively managed and common shares will
not be sold to take advantage of market fluctuations or changes in anticipated
rates of appreciation.
Please note that each strategy has previously under-performed the DJIA.
PFL and Endeavor Management Co. shall not be liable in any way for any default,
failure or defect in any common share.
Portfolio Turnover. It is anticipated that each target series subaccount's
annual rate of portfolio turnover normally will not exceed 100%. Portfolio
turnover for each target series subaccount will vary from year to year, and
depending on market conditions, the portfolio turnover rate could be greater in
periods of unusual market movement. A higher turnover rate would result in
heavier brokerage commissions or other transactional expenses which must be
borne, directly or indirectly by each target series subaccount, and ultimately
by you.
The Fixed Account
Premium payments allocated and amounts transferred to the fixed account become
part of the general account of PFL. Interests in the general account have not
been registered under the Securities Act of 1933 (the "1933 Act"), nor is the
general account registered as an investment company under the Investment
Company Act of 1940 (the "1940 Act"). Accordingly, neither the general account
nor any interests therein are generally subject to the provisions of the 1933
or 1940 Acts. PFL has been advised that the staff of the SEC has not reviewed
the disclosures in this prospectus which relate to the fixed account.
We guarantee that the interest credited to the fixed account will not be less
than 3% per year. At the end of the guaranteed period option you selected, the
value in that guaranteed period option will automatically be transferred into a
new guaranteed period option of the same length (or the next shorter period if
the same period is no longer offered) at the current interest rate for that
period. You can transfer to another investment choice by giving us notice
within 30 days before the end of the expiring guaranteed period.
Surrenders or partial withdrawals from a guaranteed period option of the fixed
account are subject to an excess interest adjustment. This adjustment may
increase or decrease the amount of interest credited to your policy. The excess
interest adjustment will not decrease the interest credited to your policy
below 3% per year, however. You bear the risk that we will
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not credit interest greater than 3% per year. We determine credited rates,
which are guaranteed for at least one year, in our sole discretion.
If you select the fixed account, your money will be placed with the other
general assets of PFL. The amount of money you are able to accumulate in the
fixed account during the accumulation phase depends upon the total interest
credited. The amount of annuity payments you receive during the income phase
from the fixed portion of your policy will remain level for the entire income
phase.
Transfers
During the accumulation phase, you may make transfers from any mutual fund
subaccount or target series subaccount as often as you wish within certain
limitations. Transfers from a guaranteed period option of the fixed account are
limited to the following:
. At the end of a guaranteed period option, you must notify us within 30 days
prior to the end of the guaranteed period that you wish to transfer the
amount in that guaranteed period option to another investment choice.
. Transfers of amounts equal to interest credited. This may affect your
overall interest-crediting rate, because transfers are deemed to come from
the oldest premium payment first.
. Other than at the end of a guaranteed period, transfers of amounts from the
guaranteed period option in excess of amounts equal to interest credited are
subject to an excess interest adjustment. If it is a negative adjustment,
the maximum amount you can transfer is 25% of the amount in that guaranteed
period option, less any previous transfer during the current policy year. If
it is a positive adjustment, we do not limit the amount that you can
transfer.
There are no transfers permitted out of the dollar cost averaging fixed account
option except through the dollar cost averaging program.
Each transfer must be at least $500 (or the entire mutual fund subaccount or
target series subaccount value), except for transfers of guaranteed period
option amounts equal to interest credited for which there is a minimum transfer
amount of $50. If less than $500 remains, then we reserve the right to either
deny the transfer or include that amount in the transfer.
During the income phase of your policy, you may transfer values out of any
mutual fund subaccount or target series subaccount up to four times per year.
However, you cannot transfer values out of the fixed account in this phase. The
minimum amount that can be transferred during this phase is the lesser of $10
of monthly income, or the entire monthly income of the annuity units in the
mutual fund subaccount or target series subaccount from which the transfer is
being made.
Transfers may be made by telephone, subject to the limitations described below
under "Telephone Transactions."
Currently, there is no charge for transfers. However, the number of transfers
permitted may be limited in the future and charges per transfer may apply in
the future.
Family Income Protector
The "family income protector" assures you of a minimum level of income in the
future by guaranteeing a minimum annuitization value (discussed below) after 10
years. You may elect to purchase this benefit, which guarantees the total
amount you will have to apply to a family income protector payment option and
which guarantees the amounts of those payments once you begin to receive them.
By electing this benefit, you can participate in the gains of the underlying
variable investment options you select while knowing that you are guaranteed a
minimum level of income in the future, regardless of the performance of the
underlying variable investment options.
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Minimum Annuitization Value. The minimum annuitization value is:
. the policy value on the date the rider is issued,
. plus any additional premium payments,
. minus an adjustment for any withdrawals made after the date the rider is
issued,
. accumulated at the annual growth rate written on page one of the rider,
. minus any premium taxes.
The annual growth rate is currently 6% per year; PFL may, at its discretion,
change the rate in the future, but the rate will never be less than 3% per
year, and once the rider is added to your policy, the annual growth rate will
not vary during the life of that rider. Withdrawals may reduce the minimum
annuitization value on a basis greater than dollar-for-dollar. See the
Statement of Additional Information for more information.
The minimum annuitization value may only be used to annuitize using the family
income protector payment options and may not be used with any of the annuity
payment options listed in section 2. The family income protector payment
options are:
. Life Income--An election may be made for "No Period Certain" or "10 Years
Certain". In the event of the death of the annuitant prior to the end of the
chosen period certain, the remaining period certain payments will be
continued to the beneficiary.
. Joint and Full Survivor--An election may be made for "No Period Certain" or
"10 Years Certain". Payments will be made as long as either the annuitant or
joint annuitant is living. In the event of the death of both the annuitant
and joint annuitant prior to the end of the chosen period certain, the
remaining period certain payments will be continued to the beneficiary.
The minimum annuitization value is used to calculate the family income
protector payment and does not establish or guarantee a policy value or
guarantee performance of any investment option.
Other benefits and fees under the rider (the rider fee, the fee waiver
threshold, the stabilized payment fee, and the waiting period before the family
income protector can be exercised, as well as the annual growth rate) are also
guaranteed not to change after the rider is added. However, all of these
benefit specifications may change if you elect to upgrade the minimum
annuitization value.
Minimum Annuitization Value Upgrade. You can upgrade your minimum annuitization
value to the policy value within 30 days after any policy anniversary before
your 85th birthday (earlier if required by state law). For your convenience, we
will put the last date to upgrade on page one of the rider.
If you upgrade, the current rider will terminate and a new one will be issued
with its own specified guaranteed benefits and fees. Please note that the
benefits and fees under the new rider may differ from your benefits and fees
prior to upgrading.
Conditions of Exercise of the Family Income Protector. You can only annuitize
using the family income protector within the 30 days after the tenth or later
policy anniversary after the family income protector is elected or, in the case
of an upgrade of the minimum annuitization value, the tenth or later policy
anniversary following the upgrade; PFL may, at its discretion, change the
waiting period before the family income protector can be exercised in the
future. You cannot, however, annuitize using the family income protector after
the policy anniversary after your 94th birthday (earlier if required by state
law). For your convenience, we will put the first and last date to annuitize
using the family income protector on page one of the rider.
Note Carefully--If you annuitize at any time other than indicated above, you
cannot use the family income protector.
Guaranteed Minimum Stabilized Payments. Annuity payments under the family
income protector are guaranteed to never be less than the initial annuity
payment. See the Statement of Additional Information for
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information concerning the calculation of the initial payment. The payments
will also be "stabilized" or held constant during each policy year.
Under the family income protector, each annuity payment will be the greater of
the stabilized payment or the payment calculated without regard to the
stabilized payments. During the first policy year after annuitizing using the
family income protector, each stabilized payment will equal the initial
payment. On each policy anniversary thereafter, the stabilized payment will
increase or decrease depending on the performance of the investment options you
selected, and then be held constant at that amount for that policy year. The
stabilized payment on each policy anniversary will equal the greater of the
initial payment or the payment supportable by the annuity units in the selected
investment options. See the Statement of Additional Information for additional
information concerning stabilized payments.
Family Income Protector Rider Fee. A rider fee, currently 0.30% of the minimum
annuitization value on the previous policy anniversary, is charged annually
prior to annuitization. We will also charge this fee if you take a complete
withdrawal. PFL may change the rider fee percentage in the future, but it will
never be greater than 0.50%. The rider fee is deducted from each variable
investment option in proportion to the amount of policy value in each
subaccount.
The rider fee on any given policy anniversary will be waived if the policy
value exceeds the fee waiver threshold. The fee waiver threshold, currently is
two times the minimum annuitization value. PFL may, at its discretion, change
the fee waiver threshold in the future, but it will never be greater than two
and one- half times the minimum annuitization value.
Stabilized Payment Fee. A stabilized payment fee, currently equal to an
effective annual rate of 1.25% of the daily net asset value in the variable
investment options, is reflected in the amount of the variable payments you
receive if you annuitize under the family income protector rider. PFL may
change the stabilized payment fee in the future, but it will never be greater
than 2.25%. The stabilized payment fee is included on page one of the rider.
Termination. The family income protector is irrevocable. You have the option
not to use the benefit but you will not receive a refund of any fees you have
paid. The family income protector will terminate upon the earliest of the
following:
. annuitization (you will still get guaranteed minimum stabilized payments if
you annuitize using the minimum annuitization value under the family income
protector),
. upgrade of the minimum annuitization value (although a new rider will be
issued),
. termination of your policy, or
. 30 days after the policy anniversary after your 94th birthday (earlier if
required by state law).
The family income protector does not establish or guarantee policy value or
guarantee performance of any investment option. Because this benefit is based
on conservative actuarial factors, the level of lifetime income that it
guarantees may be less than the level that would be provided by application of
the policy value at otherwise applicable annuity factors. Therefore, the family
income protector should be regarded as a safety net.
Dollar Cost Averaging Program
During the accumulation phase, you may instruct us to automatically transfer
money from the dollar cost averaging fixed account option, the Endeavor Money
Market Subaccount, or the Dreyfus U.S. Government Securities Subaccount, into
any other mutual fund subaccounts and/or target series subaccounts. You may
specify the dollar amount to be transferred either monthly or quarterly;
however each transfer must be at least $500. A minimum of 6 monthly or 4
quarterly transfers are required and a maximum of 24 months or 8 quarterly
transfers are allowed. Transfers must begin within 30 days. We will make
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the transfers on the 28th day of the applicable month. There is no charge for
this program.
Dollar cost averaging buys more accumulation units when prices are low and
fewer accumulation units when prices are high. It does not guarantee profits or
assure that you will not experience a loss. You should consider your ability to
continue the dollar cost averaging program during all economic conditions.
We may credit different interest rates for dollar cost averaging programs of
varying time periods. If you discontinue the dollar cost averaging program
before its completion, then the interest credited on amounts in the dollar cost
averaging fixed account may be adjusted downward, but not below the minimum
guaranteed effective annual interest rate of 3%.
Asset Rebalancing
During the accumulation phase you can instruct us to automatically rebalance
the amounts in your mutual fund subaccounts or target series subaccounts to
maintain your desired asset allocation. This feature is called asset
rebalancing and can be started and stopped at any time free of charge. However,
we will not rebalance if you are in the dollar cost averaging program or if any
other transfer is requested. Asset rebalancing ignores amounts in the fixed
account. You can choose to rebalance monthly, quarterly, semi-annually, or
annually.
Telephone Transactions
You may make transfers and change the allocation of additional premium payments
by telephone IF:
. you select the "Telephone Transfer/Reallocation Authorization" box in the
policy application or enrollment information; or
. you later make this request in writing.
You will be required to provide certain information for identification purposes
when requesting a transaction by telephone. We may also require written
confirmation of your request. We will not be liable for following telephone
requests that we believe are genuine.
Telephone requests must be received while the New York Stock Exchange is open
to assure same-day pricing of the transaction. We may discontinue this option
at any time.
5. EXPENSES
There are charges and expenses associated with your policy that reduce the
return on your investment in the policy.
Mortality and Expense Risk Fee
We charge a fee as compensation for bearing certain mortality and expense risks
under the policy. Examples include a guarantee of annuity rates, the death
benefits, certain expenses of the policy, and assuming the risk that the
current charges will be insufficient in the future to cover costs of
administering the policy. For the Return of Premium Death Benefit, the
mortality and expense risk fee is at an annual rate of 1.10% of assets. For the
5% Annually Compounding Death Benefit and the Double Enhanced Death Benefit,
the mortality and expense risk fee is at an annual rate of 1.25% of assets.
This annual fee is assessed daily based on the net asset value of each mutual
fund subaccount and target series subaccount.
If this charge does not cover our actual costs, we absorb the loss. Conversely,
if the charge more than covers actual costs, the excess is added to our
surplus. We expect to profit from this charge. We may use any profit for any
proper purpose, including distribution expenses.
Administrative Charges
We deduct an administrative charge to cover the costs of administering the
policies. This charge is equal to 0.15% per year of the daily net asset value
of the mutual fund account and the target account.
In addition, an annual service charge of $35 (but not more than 2% of the
policy
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value) is charged on each policy anniversary and at surrender. The service
charge is waived if your policy value or the sum of your premiums, less all
partial withdrawals, is at least $50,000.
Distribution Financing Charge
We deduct a distribution financing charge to cover the cost of distributing the
policies for the first ten policy years. This daily charge is equal to an
effective annual rate of 0.25% of the daily net asset value of the mutual fund
account and the target account. This charge is not deducted after the annuity
commencement date. This is deemed to be a deferred sales charge.
Premium Taxes
Some states assess premium taxes on the premium payments you make. We currently
do not deduct for these taxes at the time you make a premium payment. However,
we will deduct the total amount of premium taxes, if any, from the policy value
when:
. you elect to begin receiving annuity payments;
. you surrender the policy; or
. you die and a death benefit is paid (you must also be the annuitant for the
death benefit to be paid).
Generally, premium taxes range from 0% to 3.50%, depending on the state.
Federal, State and Local Taxes
We may in the future deduct charges from the policy for any taxes we incur
because of the policy. However, no deductions are being made at the present
time.
Transfer Fee
You are allowed to make 12 free transfers per year before the annuity
commencement date. If you make more than 12 transfers per year, we reserve the
right to charge $10 for each transfer. Premium payments, asset rebalancing and
dollar cost averaging transfers are not considered transfers. All transfer
requests made at the same time are treated as a single request.
Family Income Protector
If you elect the family income protector, there is an annual rider fee during
the accumulation phase of 0.30% of the minimum annuitization value, and a
stabilized payment fee of 1.25% of the daily net asset value if you annuitize
under the rider. The annual rider fee is also deducted upon a complete
withdrawal. (See Section 4, "INVESTMENT CHOICES--Family Income Protector.")
Portfolio Management Fees
The value of the assets in each mutual fund subaccount will reflect the fees
and expenses paid by the underlying fund. A description of these expenses is
found in the underlying fund's prospectus.
Target Account Fees
For its services to the target account, the manager is paid a fee of 0.75% of
the average daily net assets of each target series subaccount. For the
adviser's services to the target account, the manager pays the adviser a fee
equal to 0.35% of the average daily net assets of each target series
subaccount.
In addition to the management fees, the target account pays all expenses not
assumed by the manager, including, without limitation, the following:
. legal expenses;
. accounting and auditing services;
. interest;
. taxes;
. costs of printing and distributing reports to shareholders;
. proxy materials and prospectuses;
. custodian, transfer agent and dividend disbursing agent charges;
. registration fees;
. fees and expenses of the Board of Managers who are not affiliated persons of
the Manager or an Adviser;
. insurance;
. brokerage costs;
. litigation; and
. other extraordinary or nonrecurring expenses.
All general target account expenses are allocated among and charged to the
assets
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of the target series subaccounts on a basis that the Board of Managers deems
fair and equitable. This may be on the basis of relative net assets of each
target series subaccount or the nature of the services performed and relative
applicability to each target series subaccount.
The manager has agreed to limit each target series subaccount's management fee
and operating expenses during its first year of operations to an annual rate of
1.30% of the subaccount's average net assets. (This limit does not include
other fees and deductions, such as the mortality and expense risk fee,
administrative charge, and distribution financing charge.)
6. TAXES
NOTE: PFL has prepared the following information on federal income taxes as a
general discussion of the subject. It is not intended as tax advice to any
individual. You should consult your own tax adviser about your own
circumstances. PFL has included an additional discussion regarding taxes in the
Statement of Additional Information.
Annuity Policies in General
Deferred annuity policies are a way of setting aside money for future needs
like retirement. Congress recognized how important saving for retirement is and
provided special rules in the Internal Revenue Code for annuities.
Simply stated, these rules provide that generally you will not be taxed on the
earnings, if any, on the money held in your annuity policy until you take the
money out. This is referred to as tax deferral. There are different rules as to
how you will be taxed depending on how you take the money out and the type of
policy-qualified or nonqualified (discussed below).
You will not be taxed on increases in the value of your policy until a
distribution occurs--either as a withdrawal or as annuity payments.
When a non-natural person (e.g., corporation or certain other entities other
than tax-qualified trusts) owns a nonqualified policy, the policy will
generally not be treated as an annuity for tax purposes.
Qualified and Nonqualified Policies
If you purchase the policy under an individual retirement annuity, a pension
plan, or specially sponsored program, your policy is referred to as a qualified
policy.
Qualified policies are issued in connection with the following plans:
. Individual Retirement Annuity (IRA): A traditional IRA allows individuals to
make contributions, which may be deductible, to the Contract. A Roth IRA
also allows individuals to make contributions to the Contract, but it does
not allow a deduction for contributions, and distributions may be tax-free
if the owner meets certain rules.
. Tax-Sheltered Annuity (403(b) Plan): A 403(b) Plan may be made available to
employees of certain public school systems and tax-exempt organizations and
permits contributions to the Contract on a pre-tax basis.
. Corporate Pension and Profit-Sharing and H.R. 10 Plan: Employers and self-
employed individuals can establish pension or profit-sharing plans for their
employees or themselves and make contributions to the Contract on a pre-tax
basis.
. Deferred Compensation Plan (457 Plan): Certain governmental and tax-exempt
organizations can establish a plan to defer compensation on behalf of their
employees through contributions to the Contract.
If you purchase the policy as an individual and not under an individual
retirement annuity, 403(b) plan, 457 plan, or pension or profit sharing plan,
your policy is referred to as a nonqualified policy.
Withdrawals--Nonqualified Policies
If you make a withdrawal from your policy before the annuity commencement date,
the Internal Revenue Code treats that withdrawal as first coming from earnings
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and then from your premium payments. When you make a withdrawal you are taxed
on the amount of the withdrawal that is earnings. (The excess interest
adjustment resulting from the withdrawal may affect the amount on which you are
taxed.) Different rules apply for annuity payments. See "Annuity Payments"
below.
The Internal Revenue Code also provides that withdrawn earnings may be subject
to a penalty. The amount of the penalty is equal to 10% of the amount that is
includable in income. Some withdrawals will be exempt from the penalty. They
include any amounts:
. paid on or after the taxpayer reaches age 59 1/2;
. paid after the taxpayer dies;
. paid if the taxpayer becomes totally disabled (as that term is defined in
the Internal Revenue Code);
. paid in a series of substantially equal payments made annually (or more
frequently) under a lifetime annuity;
. paid under an immediate annuity; or
. which come from premium payments made prior to August 14, 1982.
All deferred non-qualified annuity policies that are issued by AUSA Life (or
its affiliates) to the same owner during any calendar year are treated as one
annuity for purposes of determining the amount includable in the owner's income
when a taxable distributions occurs.
Withdrawals--Qualified Policies
The above information describing the taxation of nonqualified policies does not
apply to qualified policies. There are special rules that govern with respect
to qualified policies. Generally, these rules restrict:
. the amount that can be contributed to the policy during any year; and
. the time when amounts can be paid from the policies.
In addition, a penalty tax may be assessed on amounts withdrawn from the policy
prior to the date you reach age 59 1/2, unless you meet one of the exceptions
to this rule. You may also be required to begin taking minimum distributions
from the policy by a certain rule. The terms of the plan may limit the rights
otherwise available to you under the policies.
We have provided more information in the Statement of Additional Information.
You should consult your legal counsel or tax adviser if you are considering
purchasing a policy for use with any retirement plan.
Withdrawals--403(b) Policies
The Internal Revenue Code limits the withdrawal of premium payments from
certain 403(b) policies. Withdrawals can generally only be made when an owner:
. reaches age 59 1/2;
. leaves his/her job;
. dies;
. becomes disabled (as that term is defined in the Internal Revenue Code); or
. in the case of hardship. However, in the case of hardship, the owner can
only withdraw the premium payments and not any earnings.
Tax Status of the Policy
The following discussion is based on the assumption that the policy qualifies
as an annuity contract for federal income tax purposes.
Diversification Requirements. Section 817(h) of the Code provides that in order
for a variable contract which is based on a segregated asset account to qualify
as an annuity contract under the Code, the investments made by such account
must be "adequately diversified" in accordance with Treasury regulations. The
Treasury regulations issued under Section 817(h) (Treas. Reg. (S)1.817-5) apply
a diversification requirement to each of the mutual fund subaccounts and the
target series subaccounts. The mutual fund account, through its underlying
funds and their portfolios, and the target account, through its subaccounts,
intends to comply with the diversification requirements of the Treasury. PFL
has entered into agreements regarding participation in the Endeavor Series
Trust which requires the portfolios
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to be operated in compliance with the Treasury regulations. PFL has entered
into an agreement with First Trust Advisers, L.P., the adviser of the target
account, which requires the target series subaccounts to be operated in
compliance with the Treasury regulations.
Owner Control. In certain circumstances, owners of variable annuity contracts
may be considered the owners, for federal income tax purposes, of the assets of
the mutual fund account used to support their contracts. In those
circumstances, income and gains from the mutual fund account assets would be
includable in the variable annuity contract owner's gross income. Several years
ago, the IRS stated in published rulings that a variable annuity contract owner
will be considered the owner of mutual fund account assets if the contract
owner possesses incidents of ownership in those assets, such as the ability to
exercise investment control over the assets. More recently, the Treasury
Department announced in connection with the issuance of regulations concerning
investment diversification, that those regulations "do not provide guidance
concerning the circumstances in which investor control of the investments of a
segregated asset account may cause the investor (i.e., you), rather than the
insurance company, to be treated as the owner of the assets in the account."
This announcement also stated that guidance would be issued by way of
regulations or rulings on the "extent to which policyholders may direct their
investments to particular subaccounts without being treated as owners of the
underlying assets."
The ownership rights under the contract are similar to, but different in
certain respects from those described by the IRS in rulings in which it was
determined that contract owners were not owners of mutual fund account assets.
For example, you have the choice of one or more subaccounts in which to
allocate premiums and policy values, and may be able to transfer among these
accounts more frequently than in such rulings. Moreover, the investment
strategies for the target series subaccounts are innovative and have not been
addressed by the IRS. These differences could result in you being treated as
the owner of the assets of the mutual fund account or the target account. In
addition, PFL does not know what standards will be set forth, if any, in the
regulations or rulings that the Treasury Department has stated it expects to
issue. PFL therefore reserves the right to modify the policies as necessary to
attempt to prevent you from being considered the owner of a pro rata share of
the assets of the mutual fund account or the target account.
Diversification and Distribution Requirements
The Internal Revenue Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements in order to
be treated as an annuity policy. The policy must also meet certain distribution
requirements at the death of an owner in order to be treated as an annuity
policy. These diversification and distribution requirements are discussed in
the Statement of Additional Information. PFL may modify the policy to attempt
to maintain favorable tax treatment.
The target account, through the target series subaccounts, intends to comply
with the diversification requirements of the Treasury. PFL has entered into an
agreement with the manager, who in turn, has entered into a contract with the
adviser that requires the target series subaccounts to be operated in
compliance with the Treasury regulations. The adviser reserves the right to
depart from either target subaccount's investment strategy in order to meet
these diversification requirements. See the Statement of Additional Information
for more information concerning diversification requirements.
Taxation of Death Benefit Proceeds
Amounts may be distributed from the policy because of the death of an owner or
the annuitant. Generally, such amounts
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are includable in the income of the recipient:
. if distributed in a lump sum, these amounts are taxed in the same manner as
a full surrender; or
. if distributed under an annuity payment option, these amounts are taxed in
the same manner as annuity payments.
For these purposes, the "investment in the contract" is not affected by the
owner's or annuitant's death. That is, the "investment in the contract" remains
generally the total premium payments, less amounts received, which were not
includable in gross income.
Annuity Payments
Although the tax consequences may vary depending on the annuity payment option
you select, in general, for nonqualified and certain qualified policies, only a
portion of the annuity payments you receive will be includable in your gross
income.
In general, the excludable portion of each annuity payment you receive will be
determined as follows:
. Fixed payments--by dividing the "investment in the contract" on the annuity
commencement date by the total expected value of the annuity payments for
the term of the payments. This is the percentage of each annuity payment
that is excludable.
. Variable payments--by dividing the "investment in the contract" on the
annuity commencement date by the total number of expected periodic payments.
This is the amount of each annuity payment that is excludable.
The remainder of each annuity payment is includable in gross income. Once the
"investment in the contract" has been fully recovered, the full amount of any
additional annuity payments is includable in gross income.
If you select more than one annuity payment option, special rules govern the
allocation of the policy's entire "investment in the contract" to each such
option, for purposes of determining the excludable amount of each payment
received under that option. We advise you to consult a competent tax adviser as
to the potential tax effects of allocating amounts to any particular annuity
payment option.
If, after the annuity commencement date, annuity payments stop because an
annuitant died, the excess (if any) of the "investment in the contract" as of
the annuity commencement date over the aggregate amount of annuity payments
received that was excluded from gross income is generally allowable as a
deduction for your last taxable year.
Transfers, Assignments or Exchanges of Policies
A transfer of ownership or assignment of a policy, the designation of an
annuitant or other beneficiary who is not also the owner, the selection of
certain annuity commencement dates, or a change of annuitant, may result in
certain income or gift tax consequences to the owner that are beyond the scope
of this discussion. An owner contemplating any such transfer, assignment,
selection, or change should contact a competent tax adviser in respect to the
potential tax effects of such a transaction.
Possible Tax Law Changes
Although the likelihood of legislative changes is uncertain, there is always
the possibility that the tax treatment of the policy could change by
legislation or otherwise. You should consult a tax adviser with respect to
legislative developments and their effect on the policy.
7. ACCESS TO YOUR MONEY
Surrenders
During the accumulation phase, you can have access to the money in your policy
in several ways:
. by making a withdrawal (either a complete or partial withdrawal); or
. by taking annuity payments.
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If you want to make a complete withdrawal, you will receive the value of your
policy including any excess interest adjustment, minus:
. premium taxes; and
. service charges.
If you want to take a partial withdrawal, in most cases it must be for at least
$500. Unless you tell us otherwise, we will take the withdrawal from each of
the investment choices in proportion to the policy value.
Remember that any withdrawal you take will reduce the policy value, and might
reduce the amount of the death benefit. See Section 9, Death Benefit, for more
details. Withdrawals from the fixed account may be subject to an excess
interest adjustment.
Income taxes, federal tax penalties and certain restrictions may apply to any
withdrawals you make.
During the income phase, the annuity payment option you select will determine
your access to the money in your policy.
Delay of Payment and Transfers
Payment of any amount due from the mutual fund account or target account for a
surrender, a death benefit, or the death of the owner of a nonqualified policy,
will generally occur within seven business days from the date all required
information is received by PFL. PFL may be permitted to defer such payment from
the mutual fund account and target account if:
. the New York Stock Exchange is closed other than for usual weekends or
holidays or trading on the Exchange is otherwise restricted; or
. an emergency exists as defined by the SEC or the SEC requires that trading
be restricted; or
. the SEC permits a delay for the protection of owners.
In addition, transfers of amounts from the mutual fund subaccounts and target
series subaccounts may be deferred under these circumstances. Pursuant to the
requirements of certain state laws, we reserve the right to defer payment of
the cash value from the fixed account for up to six months.
Excess Interest Adjustment
Money that you withdraw from a guaranteed period option of the fixed account
before the end of its guaranteed period (the number of years you specified the
money would remain in the guaranteed period option) may be subject to an excess
interest adjustment. At the time you request a withdrawal, if interest rates
set by PFL have risen since the date of the initial guarantee, the excess
interest adjustment will result in a lower cash value on surrender. However, if
interest rates have fallen since the date of the initial guarantee, the excess
interest adjustment will result in a higher cash value on surrender.
There will be no excess interest adjustment on any of the following:
. lump sum withdrawals of the free percentage available;
. nursing care and terminal condition withdrawals;
. withdrawals to satisfy any minimum distribution requirements; and
. systematic payout option payments, which do not exceed 10% of the policy
value.
Certain conditions must be satisfied. See the Statement of Additional
Information for more details.
Systematic Payout Option
You can receive regular payments from your policy by using the systematic
payout option. Under this option, you can receive up to 10% (annually) of your
policy's value. Payments can be made monthly, quarterly, semi-annually, or
annually.
Nursing Care and Terminal Condition Withdrawal Option
No excess interest adjustment will apply if you or your spouse has been:
. confined in a hospital or nursing facility for 30 days in a row; or
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. diagnosed with a terminal condition (usually a life expectancy of 12 months
or less).
This benefit is also available to the annuitant or annuitant's spouse if the
owner is not a natural person.
This benefit may not be available in all states. See the policy or endorsement
for details and conditions.
8. PERFORMANCE
The Mutual Fund Account
PFL periodically advertises performance of the various mutual fund subaccounts.
We may disclose at least four different kinds of performance. First, we may
calculate performance by determining the percentage change in the value of an
accumulation unit by dividing the increase (decrease) for that unit by the
value of the accumulation unit at the beginning of the period. This performance
number reflects the deduction of the mortality and expense risk fees and
administrative charges. It does not reflect the deduction of any applicable
premium taxes. The deduction of any applicable premium taxes would reduce the
percentage increase or make greater any percentage decrease.
Second, any advertisement will also include total return figures, which reflect
the deduction of the mortality and expense risk fees and administrative
charges.
Third, for periods starting prior to the date the policies were first offered,
the performance will be based on the historical performance of the
corresponding investment portfolios for the periods commencing from the date on
which the particular investment portfolio was made available through the mutual
fund account.
Fourth, in addition, for certain investment portfolios, performance may be
shown for the period commencing from the inception date of the investment
portfolio. These figures should not be interpreted to reflect actual historical
performance of the mutual fund account.
We also may, from time to time, include in our advertising and sales materials,
tax deferred compounding charts and other hypothetical illustrations, which may
include, comparisons of currently taxable and tax deferred investment programs,
based on selected tax brackets.
Appendix B contains performance information that you may find useful. It is
divided into various parts, depending upon the type of performance information
shown. Future performance will vary and future results will not be the same as
the results shown.
The Target Account
Performance Information regarding the target series subaccount is in Appendix B
and in the Statement of Additional Information.
9. DEATH BENEFIT
We will pay a death benefit to your beneficiary, under certain circumstances,
if the annuitant dies before the accumulation phase and the annuitant was also
an owner. (If the annuitant was not an owner, a death benefit may or may not be
paid. See below). The beneficiary may choose an annuity payment option, or may
choose to receive a lump sum.
When We Pay A Death Benefit
Before the Annuity Commencement Date
We will pay a death benefit to your beneficiary IF:
. you are both the annuitant and an owner of the policy; and
. you die before the annuity commencement date.
If the only beneficiary is your surviving spouse, then he or she may elect to
continue the policy as the new annuitant and owner, instead of receiving the
death benefit.
We will also pay a death benefit to your beneficiary IF:
. you are not the annuitant; and
. the annuitant dies before the annuity commencement date; and
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. you specifically requested that the death benefit be paid upon the
annuitant's death.
Distribution requirements apply to the policy value upon the death of any
owner. These requirements are detailed in the Statement of Additional
Information.
After the Annuity Commencement Date
The death benefit payable, if any, on or after the annuity commencement date
depends on the annuity payment option selected.
IF:
. you are not the annuitant; and
. you die on or after the annuity commencement date; and
. the entire interest in the policy has not been paid to you;
THEN:
. the remaining portion of such interest in the policy will be distributed at
least as rapidly as under the method of distribution being used as of the
date of your death.
When We Do Not Pay A Death Benefit
No death benefit is paid in the following cases:
IF:
. you are not the annuitant; and
. the annuitant dies prior to the annuity commencement date; and
. you did not specifically request that the death benefit be paid upon the
annuitant's death;
THEN:
. you will become the new annuitant and the policy will continue.
IF:
. you are not the annuitant; and
. you die prior to the annuity commencement date;
THEN:
. the new owner must surrender the policy for the policy value increased or
decreased by an excess interest adjustment within five years of your death.
Note carefully. If the owner does not name a contingent owner, the owner's
estate will become the new owner. If no probate estate is opened (because, for
example, the owner has precluded the opening of a probate estate by means of a
trust or other instrument), and PFL has not received written notice of the
trust as a successor owner signed prior to the owner's death, then that trust
may not exercise ownership rights to the policy. It may be necessary to open a
probate estate in order to exercise ownership rights to the policy if no
contingent owner is named in a written notice received by PFL.
Amount of Death Benefit
Death benefit provisions may differ from state to state. The death benefit may
be paid as a lump sum or as annuity payments. The amount of the death benefit
depends on the guaranteed minimum death benefit option you chose when you
bought the policy. The death benefit will be the greatest of:
. policy value on the date we receive the required information; or
. cash value on the date we receive the required information; or
. guaranteed minimum death benefit (discussed below), plus premium payments,
less partial withdrawals from the date of death to the date the death
benefit is paid.
Guaranteed Minimum Death Benefit
On the policy application, you generally may choose one of the three guaranteed
minimum death benefit options listed below.
After the policy is issued, you cannot make an election and the death benefit
cannot be changed.
Return of Premium Death Benefit
Total premium payments, less any adjusted partial withdrawals (discussed below)
as of the date of death.
The Return of Premium Death Benefit will be in effect if you do not choose one
of the options below on the policy application.
5% Annually Compounding Death Benefit
Total premium payments, less any adjusted
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partial withdrawals, plus interest at an effective annual rate of 5% from the
premium payment date or withdrawal date to the earlier of the date of death or
the owner's 81st birthday. There is an extra charge for this death benefit.
The 5% Annually Compounding Death Benefit is not available if the owner or
annuitant is 75 or older on the policy date.
Double Enhanced Death Benefit
The greater of the following:
. 5% Annually Compounding Death Benefit--total premium payments, less any
adjusted partial withdrawals, plus interest at an effective annual rate of
5% from the premium payment date or withdrawal date to the date of death
(but not later than your 81st birthday).
. Step-Up Death Benefit--the largest policy value on the policy date or on any
policy anniversary before you reach age 81; plus any premium payments you
have made since then; minus any adjusted partial withdrawals we have paid to
you since then.
There is an extra charge for this death benefit.
The Double Enhanced Death Benefit is not available if the owner or annuitant is
81 or older on the policy date.
IF, under all three death benefit options:
. the surviving spouse elects to continue the policy instead of receiving the
death benefit; and
. the guaranteed minimum death benefit is greater than the policy value;
THEN:
. we will increase the policy value to be equal to the guaranteed minimum
death benefit. This increase is made only at the time the surviving spouse
elects to continue the policy.
Adjusted Partial Withdrawal
When you request a partial withdrawal, your guaranteed minimum death benefit
will be reduced by an amount called the adjusted partial withdrawal. Under
certain circumstances, the adjusted partial withdrawal may be more than the
amount of your withdrawal request. It is also possible that if a death benefit
is paid after you have made a partial withdrawal, then the total amount paid
could be less than the total premium payments. We have included a detailed
explanation of this adjustment in the Statement of Additional Information.
10. OTHER INFORMATION
Ownership
You, as owner of the policy, exercise all rights under the policy. You can
change the owner at any time by notifying us in writing. An ownership change
may be a taxable event.
Assignment
You can also assign the policy any time during your lifetime. PFL will not be
bound by the assignment until we receive written notice of the assignment. We
will not be liable for any payment or other action we take in accordance with
the policy before we receive notice of the assignment. An assignment may be a
taxable event. There may be limitations on your ability to assign a qualified
policy.
PFL Life Insurance Company
PFL Life Insurance Company was incorporated under the laws of the State of Iowa
on April 19, 1961 as NN Investors Life Insurance Company, Inc. It is engaged in
the sale of life and health insurance and annuity policies. PFL is a wholly-
owned indirect subsidiary of AEGON USA, Inc. which conducts most of its
operations through subsidiary companies engaged in the insurance business or in
providing non-insurance financial services. All of the stock of AEGON USA,
Inc., is indirectly owned by AEGON N.V. of The Netherlands, the securities of
which are publicly traded. AEGON N.V., a holding company, conducts its business
through subsidiary companies engaged primarily in the insurance business. PFL
is licensed in the District of Columbia, Guam, and in all states except New
York.
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All obligations arising under the policies, including the promise to make
annuity payments, are general corporate obligations of PFL.
The Mutual Fund Account
PFL established a mutual fund account, called the PFL Endeavor VA Separate
Account, under the laws of the State of Iowa on January 19, 1990. The mutual
fund account receives and currently invests the premium payments that are
allocated to it for investment in shares of the underlying mutual fund
portfolios.
The mutual fund account is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940. However, the SEC does not supervise
the management, the investment practices, or the policies of the mutual fund
account or PFL. Income, gains and losses, whether or not realized, from assets
allocated to the mutual fund account are, in accordance with the policies,
credited to or charged against the mutual fund account without regard to PFL's
other income, gains or losses.
The assets of the mutual fund account are held in PFL's name on behalf of the
mutual fund account and belong to PFL. However, those assets that underlie the
policies are not chargeable with liabilities arising out of any other business
PFL may conduct. The mutual fund account includes other subaccounts that are
not available under these policies.
Information about the mutual fund account can be reviewed and copied at the
SEC's Public Reference Room in Washington, D.C. You may obtain information
about the operation of the public reference room by calling the SEC at 1-800-
SEC-0330. In addition, the SEC maintains a web site (http://www.sec.gov) that
contains other information regarding the mutual fund account.
The Target Account
PFL established the PFL Endeavor Target Account (the target account) under the
laws of the state of Iowa on September 15, 1997. The target account (its legal
name is the PFL Endeavor Target Account) is registered with the SEC under the
Investment Company Act of 1940, as amended, as an open-end management
investment company and meets the definition of a separate account under federal
securities laws. However, the SEC does not supervise the management or the
investment practices or policies of the target account or PFL.
The two Dow SM Target 10 Subaccounts (January and July Series) and the two
Dow SM Target 5 Subaccounts (January and July Series) are non-diversified
target series subaccounts of the target account.
Legislation. Legislation may be enacted at any time that could negatively
affect the common shares in the target series subaccounts or the issuers of the
common shares. Changing approaches to regulation, particularly with respect to
the environment or with respect to the petroleum industry, may have a negative
impact on certain companies represented in the target series subaccounts. There
can be no assurance that future legislation, regulation or deregulation will
not have a material adverse effect on the target series subaccounts or will not
impair the ability of the issuers of the common shares to achieve their
business goals.
Mixed and Shared Funding
Before making a decision concerning the allocation of premium payments to a
particular mutual fund subaccount, please read the Endeavor Series Trust
prospectus. The Endeavor Series Trust is not limited to selling its shares to
this mutual fund account and can accept investments from any separate account
or qualified retirement plan. Since the portfolios of the underlying funds are
available to registered mutual fund accounts offering variable annuity products
of PFL, as well as variable annuity and variable life products of other
insurance companies, and qualified retirement plans, there is a possibility
that a material conflict may arise between the interests of this mutual fund
account and one or more of the
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mutual fund accounts of another participating insurance company. In the event
of a material conflict, the affected insurance companies, including PFL, agree
to take any necessary steps to resolve the matter. This includes removing their
mutual fund accounts from the underlying funds. See the underlying funds'
prospectuses for more details.
Reinstatements
You may surrender your policy and transfer your money directly to another life
insurance company (sometimes referred to as a 1035 Exchange or a trustee-to-
trustee transfer). You may also request us to reinstate your policy after such
a transfer by returning the same total dollar amount of funds to the applicable
investment choices. The dollar amount will be used to purchase new accumulation
units at the then-current price. Because of changes in market value, your new
accumulation units may be worth more or less than the units you previously
owned. We recommend that you consult a tax professional to explain the possible
tax consequences of exchanges and/or reinstatements.
Voting Rights
Mutual Fund Account. PFL will vote all shares of the Endeavor Series Trust in
accordance with instructions we receive from you and other owners that have
voting interests in the portfolios. We will send you and other owners written
requests for instructions on how to vote those shares. When we receive those
instructions, we will vote all of the shares in proportion to those
instructions. If, however, we determine that we are permitted to vote the
shares in our own right, we may do so.
Each person having a voting interest will receive proxy material, reports, and
other materials relating to the appropriate portfolio.
Target Account. You (or the person receiving annuity payments) can vote on
certain matters with respect to the target series subaccounts you have an
interest in. Such matters include:
. changes in the investment advisory agreement;
. changes in the fundamental investment policies;
. any other matter requiring a vote of persons holding voting interests; and
. matters pursuant to the requirements of Rule 12b-1 and 18f-2 of the
Investment Company Act of 1940.
On certain matters, each target series subaccount may vote separately. Each
person having a voting interest will receive proxy material, reports, and other
materials relating to the appropriate target series subaccount.
Distributor of the Policies
AFSG Securities Corporation is the principal underwriter of the policies. Like
PFL, it is an indirect wholly-owned subsidiary of AEGON USA, Inc. It is located
at 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001. AFSG Securities
Corporation is registered as a broker/dealer under the Securities Exchange Act
of 1934. It is a member of the National Association of Securities Dealers, Inc.
Commissions of up to 6% of premium payments or 5% of premium payments plus an
annual continuing fee based on policy values will be paid to broker/dealers who
sell the policies under agreements with AFSG Securities Corporation. These
commissions are not deducted from premium payments. In addition, certain
production, persistency and managerial bonuses may be paid. PFL may also pay
compensation to financial institutions for their services in connection with
the sale and servicing of the policies.
Non-participating Policy
The policy does not participate or share in the profits or surplus earnings of
PFL. No dividends are payable on the policy.
Variations in Policy Provisions
Certain provisions of the policies may vary from the descriptions in this
prospectus in
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order to comply with different state laws. See your policy for variations since
any such state variations will be included in your policy or in riders or
endorsements attached to your policy.
New Jersey residents: Annuity payments must begin on or before the later of:
(1) the policy anniversary that is closest to the annuitant's 70th birthday or
(2) the 10th policy anniversary. You may not select a guaranteed period option
that would extend beyond that date. Your options at the annuity commencement
date are to elect a lump sum payment, or elect to receive annuity payments
under one of the fixed payment options. New Jersey residents cannot elect
variable payment options. Consult your agent and the policy form itself for
details regarding these and other terms applicable to policies sold in New
Jersey.
Year 2000 Matters
In May 1996, PFL Life Insurance Company (PFL) adopted and presently has in
place a Year 2000 Project Plan (the "Plan") to review and analyze existing
hardware and software systems, as well as voice and data communications
systems, to determine if they are Year 2000 compliant. As of March 1, 1999,
substantially all of PFL's mission-critical systems are Year 2000 compliant.
The Year 2000 Project Plan remains on track as PFL continues with the
validation of its mission-critical and non-mission-critical systems, including
revalidation testing in 1999. In addition, PFL has undertaken aggressive
initiatives to test all systems that interface with any third parties and other
business partners. All of these steps are aimed at allowing current operations
to remain unaffected by the year 2000 date change.
As of the date of this prospectus, PFL has identified and made available what
it believes are the appropriate resources of hardware, people, and dollars,
including the engagement of outside third parties, to ensure that the Plan will
be completed.
The actions taken by management under The Year 2000 Project Plan are intended
to significantly reduce PFL's risk of a material business interruption based on
the Year 2000 issues. It should be noted that the Year 2000 computer problem,
and its resolution, is complex and multifaceted, and any company's success
cannot be conclusively known until the Year 2000 is reached. In spite of its
efforts or results, PFL's ability to function unaffected to and through the
Year 2000 may be adversely affected by actions, or failure to act, of third
parties beyond our knowledge or control.
This statement is a Year 2000 Readiness Disclosure pursuant to Section 3(9) of
the Year 2000 Information and Readiness Disclosure Act, 15 U.S.C. Section 1
(1998).
IMSA
PFL is a member of the Insurance Marketplace Standards Association (IMSA). IMSA
members subscribe to a set of ethical standards involving the sales and service
of individually sold life insurance and annuities. As a member, we may use the
IMSA logo and language in advertisements.
Legal Proceedings
There are no legal proceedings to which the mutual fund account or target
account is a party or to which the assets of the account are subject. PFL, like
other life insurance companies, is involved in lawsuits. In some class action
and other lawsuits involving other insurers, substantial damages have been
sought and/or material settlement payments have been made. Although the outcome
of any litigation cannot be predicted with certainty, PFL believes that at the
present time there are no pending or threatened lawsuits that are reasonably
likely to have a material adverse impact on the mutual fund account, target
account or PFL.
Financial Statements
The financial statements of PFL, the mutual fund account, and the target
account are included in the Statement of Additional Information.
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TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
Glossary of Terms
The Policy--General Provisions
Certain Federal Income Tax Consequences
Investment Experience
Family Income Protector--Hypothetical Illustration
Historical Performance Data
The Target Account
Published Ratings
State Regulation of PFL
Administration
Records and Reports
Distribution of the Policies
Voting Rights
Other Products
Custody of Assets
Legal Matters
Independent Auditors
Other Information
Financial Statements
</TABLE>
38
<PAGE>
APPENDIX A
CONDENSED FINANCIAL INFORMATION
The Mutual Fund Account
The accumulation unit values and the number of accumulation units outstanding
for each mutual fund subaccount from the date of inception are shown in the
following tables.
5% Annually Compounding Death Benefit or Double Enhanced Death Benefit
(Total Mutual Fund Account Annual Expenses: 1.65%)
<TABLE>
<CAPTION>
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation
at Beginning at End Units at End
of Year of Year of Year
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Endeavor Asset Allocation Subaccount
1998................................ $1.622765 $1.890033 13,176,237.016
1997................................ $1.372991 $1.622765 10,247,121.752
1996................................ $1.184740 $1.372991 6,522,822.306
1995................................ $0.979750 $1.184740 3,313,507.707
1994(/1/)........................... $0.974417 $0.979750 1,329,672.671
- -------------------------------------------------------------------------------
Endeavor Money Market Subaccount
1998................................ $1.123834 $1.161504 21,549,058.171
1997................................ $1.086872 $1.123834 11,807,740.323
1996................................ $1.053205 $1.086872 9,416,706.021
1995................................ $1.014839 $1.053205 3,516,158.473
1994(/1/)........................... $1.003677 $1.014839 1,522,675.448
- -------------------------------------------------------------------------------
T. Rowe Price Equity Income
Subaccount
1998................................ $1.910886 $2.045410 17,687,561.131
1997................................ $1.514228 $1.910886 13,838,945.338
1996................................ $1.284124 $1.514228 7,413,620.068
1995(/2/)........................... $0.999237 $1.284124 1,786,079.570
- -------------------------------------------------------------------------------
T. Rowe Price Growth Stock Subaccount
1998................................ $2.028458 $2.567729 12,796,138.800
1997................................ $1.603706 $2.028458 10,504,253.629
1996................................ $1.350045 $1.603706 5,893,560.949
1995(/3/)........................... $0.999910 $1.350045 1,611,995.783
- -------------------------------------------------------------------------------
T. Rowe Price International Stock
Subaccount
1998................................ $1.170007 $1.328767 14,769,680.537
1997................................ $1.159025 $1.170007 13,715,298.844
1996................................ $1.022539 $1.159025 8,619,163.798
1995................................ $0.940071 $1.022539 3,606,823.400
1994(/1/)........................... $0.978667 $0.940071 1,444,711.154
- -------------------------------------------------------------------------------
Endeavor Value Equity Subaccount
1998................................ $1.998321 $2.114561 16.532,987.864
1997................................ $1.627513 $1.998321 15,288,077.864
1996................................ $1.336071 $1.627513 9,053,564.567
1995................................ $1.009026 $1.336071 2,808,066.903
1994(/1/)........................... $0.977843 $1.009026 740,211.153
- -------------------------------------------------------------------------------
Endeavor Opportunity Value Subaccount
1998................................ $1.153823 $1.193867 5,698,749.848
1997................................ $1.004062 $1.153823 3,224,648.503
1996(/4/)........................... $0.999910 $1.004062 205,301.400
- -------------------------------------------------------------------------------
Endeavor Enhanced Index Subaccount
1998................................ $1.215643 $1.571311 9,104,248.582
1997(/5/)........................... $1.000000 $1.215643 2,781,467.718
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation
at Beginning at End Units at End
of Year of Year of Year
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Dreyfus U.S. Government Securities
Subaccount
1998................................ $ 1.205408 $ 1.273389 10,994,883.018
1997................................ $ 1.122583 $ 1.205408 5,825,613.204
1996................................ $ 1.120922 $ 1.122583 3,772,426.054
1995................................ $ 0.985254 $ 1.120922 2,656,099.798
1994(/1/)........................... $ 1.000769 $ 0.985254 450,510.347
- ------------------------------------------------------------------------------
Dreyfus Small Cap Value Subaccount
1998................................ $ 1.720848 $ 1.656056 12,396,813.175
1997................................ $ 1.394113 $ 1.720848 9,576,109.396
1996................................ $ 1.127390 $ 1.394113 5,378,653.976
1995................................ $ 1.004766 $ 1.124390 2,577,504.165
1994(/1/)........................... $ 0.958389 $ 1.004766 673,042.726
- ------------------------------------------------------------------------------
Endeavor Select 50 Subaccount
1998(/7/)........................... $ 1.000000 $ 1.050254 7,586,217.992
- ------------------------------------------------------------------------------
Endeavor High Yield Subaccount
1998(/8/)........................... $ 1.000000 $ 0.959834 1,896,873.105
- ------------------------------------------------------------------------------
Endeavor Janus Growth Subaccount
1998................................ $18.510625 $29.951933 2,161,710.616
1997................................ $16.007469 $18.510625 1,859,927.519
1996................................ $13.795672 $16.007469 1,130,886.988
1995................................ $ 9.531263 $13.795672 442,772.285
1994(/1/)........................... $ 9.418271 $ 9.531263 182,787.313
</TABLE>
Return of Premium Death Benefit
(Total Mutual Fund Account Annual Expenses: 1.50%)
<TABLE>
<CAPTION>
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation
at Beginning at End Units at End
of Year of Year of Year
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Endeavor Asset Allocation Subaccount
1998................................. $1.623829 $1.894059 864,583.172
1997(/6/)............................ $1.619154 $1.623829 265,868.401
- -------------------------------------------------------------------------------
Endeavor Money Market Subaccount
1998................................. $1.124560 $1.163970 3,455,455.634
1997(/6/)............................ $1.107029 $1.124560 1,018,549.909
- -------------------------------------------------------------------------------
T. Rowe Price Equity Income Subaccount
1998................................. $1.912129 $2.049755 1,462,715.818
1997(/6/)............................ $1.776425 $1.912129 392,308.493
- -------------------------------------------------------------------------------
T. Rowe Price Growth Stock Subaccount
1998................................. $2.026778 $2.573188 833,778.344
1997(/6/)............................ $1.957595 $2.029778 184,298.595
- -------------------------------------------------------------------------------
T. Rowe Price International Stock
Subaccount
1998................................. $1.170767 $1.331580 880,651.775
1997(/6/)............................ $1.314403 $1.170767 164,219.793
- -------------------------------------------------------------------------------
Endeavor Value Equity Subaccount
1998................................. $1.999623 $2.119071 854,044.377
1997(/6/)............................ $1.912635 $1.999623 221,576.305
- -------------------------------------------------------------------------------
Endeavor Opportunity Value Subaccount
1998................................. $1.154569 $1.196411 834,616.338
1997(/6/)............................ $1.133494 $1.154569 164,076.542
- -------------------------------------------------------------------------------
Endeavor Enhanced Index Subaccount
1998................................. $1.216436 $1.574648 1,594,101.412
1997(/6/)............................ $1.183597 $1.216436 143,726.569
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Accumulation Accumulation Number of
Unit Value Unit Value Accumulation
at Beginning at End Units at End
of Year of Year of Year
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Dreyfus U.S. Government Securities
Subaccount
1998................................. $ 1.206194 $ 1.276099 1,684,993.398
1997(/6/)............................ $ 1.165042 $ 1.206194 125,603.264
- ------------------------------------------------------------------------------
Dreyfus Small Cap Value Subaccount
1998................................. $ 1.721966 $ 1.659586 916,216.066
1997(/6/)............................ $ 1.680492 $ 1.721966 201,510.890
- ------------------------------------------------------------------------------
Endeavor Select 50 Subaccount
1998(/7/)............................ $ 1.000000 $ 1.051668 592,043.370
- ------------------------------------------------------------------------------
Endeavor High Yield Subaccount
1998(/8/)............................ $ 1.000000 $ 0.960653 586,051.988
- ------------------------------------------------------------------------------
Endeavor Janus Growth Subaccount
1998................................. $18.522685 $30.015641 123,204.749
1997(/6/)............................ $19.289712 $18.522685 25,575.434
</TABLE>
(/1/Period)from July 5, 1994 through December 31, 1994.
(/2/Period)from January 20, 1995 through December 31, 1995.
(/3/Period)from January 5, 1995 through December 31, 1995.
(/4/Period)from November 20, 1996 through December 31, 1996.
(/5/Period)from May 1, 1997 through December 31, 1997.
(/6/Period)from July 23, 1997 through December 31, 1997.
(/7/Period)from February 2, 1998 through December 31, 1998.
(/8/Period)from June 2, 1998 through December 31, 1998.
41
<PAGE>
CONDENSED FINANCIAL INFORMATION
The Target Account
5% Annually Compounding Death Benefit or Double Enhanced Death Benefit
<TABLE>
<CAPTION>
The Dow The Dow
Target 10 Target 5
Subaccount Subaccount
(July Series) (July Series)
- -------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
1998............................................ .0248160 .0320585
- -------------------------------------------------------------------------------
Expenses
1998............................................ <.0235516> <.0139757>
- -------------------------------------------------------------------------------
Net investment income
1998............................................ .0012644 .01808286
- -------------------------------------------------------------------------------
Net realized and unrealized gains (losses) on
securities
1998............................................ .0322216 .1026951
- -------------------------------------------------------------------------------
Net increase (decrease) in accumulation unit
value
1998............................................ .033486 .120778
- -------------------------------------------------------------------------------
Accumulation unit value at beginning of period
1998............................................ 1.000000 1.000000
- -------------------------------------------------------------------------------
Accumulation unit value at end of period
1998............................................ 1.033486 1.120778
- -------------------------------------------------------------------------------
Expenses to average net assets
1998............................................ 1.30% 1.30%
- -------------------------------------------------------------------------------
Portfolio turnover rates
1998............................................ 0% 0%
- -------------------------------------------------------------------------------
Number of accumulation units outstanding at end
of period
1998............................................ 3,299,993 3,672,232
</TABLE>
42
<PAGE>
Return of Premium Death Benefit
<TABLE>
<CAPTION>
The Dow The Dow
Target 10 Target 5
Subaccount Subaccount
(July Series) (July Series)
- -------------------------------------------------------------------------------
<S> <C> <C>
Investment Income
1998............................................ .0043200 .0177564
- -------------------------------------------------------------------------------
Expenses
1998............................................ <.0039100> <.0077407>
- -------------------------------------------------------------------------------
Net investment income
1998............................................ .00040997 .01001566
- -------------------------------------------------------------------------------
Net realized and unrealized gains (losses) on
securities
1998............................................ .0338400 .1115943
- -------------------------------------------------------------------------------
Net increase (decrease) in accumulation unit
value
1998............................................ .034250 .121610
- -------------------------------------------------------------------------------
Accumulation unit value at beginning of period
1998............................................ 1.000000 1.000000
- -------------------------------------------------------------------------------
Accumulation unit value at end of period
1998............................................ 1.034250 1.121610
- -------------------------------------------------------------------------------
Expenses to average net assets
1998............................................ 1.30% 1.30%
- -------------------------------------------------------------------------------
Portfolio turnover rates
1998............................................ 0% 0%
- -------------------------------------------------------------------------------
Number of accumulation units outstanding at end
of period
1998............................................ 626,722 2,070,742
</TABLE>
(/1/Period)from July 1, 1998 through December 31, 1998.
The Dow SM Target 10 (January Series) and The Dow SM Target 5 (January Series)
had not commenced operations as of December 31, 1998. Accordingly, no
comparable data is available for those Subaccounts.
43
<PAGE>
APPENDIX B
HISTORICAL PERFORMANCE DATA
The Mutual Fund Account
Standardized Performance Data
PFL may advertise historical yields and total returns for the subaccounts of
the mutual fund account. In addition, PFL may advertise the effective yield of
the subaccount investing in the Endeavor Money Market Portfolio (the "Endeavor
Money Market Subaccount"). These figures are calculated according to
standardized methods prescribed by the SEC. They are based on historical
earnings and are not intended to indicate future performance.
Endeavor Money Market Subaccount. The yield of the Endeavor Money Market
Subaccount for a policy refers to the annualized income generated by an
investment under a policy in the subaccount over a specified seven-day period.
The yield is calculated by assuming that the income generated for that seven-
day period is generated each seven-day period over a 52-week period and is
shown as a percentage of the investment. The effective yield is calculated
similarly but, when annualized, the income earned by an investment under a
policy in the subaccount is assumed to be reinvested. The effective yield will
be slightly higher than the yield because of the compounding effect of this
assumed reinvestment.
Other Subaccounts. The yield of a mutual fund subaccount (other than the
Endeavor Money Market Subaccount) for a policy refers to the annualized income
generated by an investment under a policy in the subaccount over a specified
thirty-day period. The yield is calculated by assuming that the income
generated by the investment during that thirty-day period is generated each
thirty-day period over a 12-month period and is shown as a percentage of the
investment.
The total return of a subaccount refers to return quotations assuming an
investment under a policy has been held in the subaccount for various periods
of time including a period measured from the date the subaccount commenced
operations. When a subaccount has been in operation for one, five, and ten
years, respectively, the total return for these periods will be provided. The
total return quotations for a subaccount will represent the average annual
compounded rates of return that equate an initial investment of $1,000 in the
subaccount to the redemption value of that investment as of the last day of
each of the periods for which total return quotations are provided.
The yield and total return calculations for a subaccount do not reflect the
effect of any premium taxes that may be applicable to a particular policy, and
they do not reflect the rider charge for the optional family income protector.
To the extent that any or all of a premium tax is applicable to a particular
policy, the yield and/or total return of that policy will be reduced. For
additional information regarding yields and total returns calculated using the
standard formats briefly summarized above, please refer to the Statement of
Additional Information, a copy of which may be obtained from the administrative
and service office upon request.
Based on the method of calculation described in the Statement of Additional
Information, the average annual total returns for periods from inception of the
subaccounts to December 31, 1998, and for the one and five year periods ended
December 31, 1998 are shown in Table 1 below. Total returns shown reflect
deductions for the mortality and expense risk fee, the distribution financing
charge and the administrative charges. Performance figures may reflect the
1.25% mortality and expense risk fee for the 5% Annually Compounding and Double
Enhanced Death Benefits, or the 1.10% mortality and expense risk fee for the
Return of Premium Death Benefit.
44
<PAGE>
TABLE 1
Standard Average Annual Total Returns
- -------------------------------------------------------------------------------
5% Annually Compounding Death Benefit or Double Enhanced Death Benefit
(Total Mutual Fund Account Annual Expenses: 1.65%)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Year 5 Year Inception of the Subaccount
Ended Ended Subaccount Inception
Subaccount 12/31/98 12/31/98 to 12/31/98 Date
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Endeavor Asset Allocation.............. 16.46% N/A 15.88% July 5, 1994
T. Rowe Price Equity Income............ 7.02% N/A 19.88% January 20, 1995
T. Rowe Price Growth Stock............. 26.57% N/A 26.65% January 5, 1995
T. Rowe Price International Stock(/1/). 13.55% N/A 7.03% July 5, 1994
Endeavor Value Equity.................. 5.80% N/A 18.65% July 5, 1994
Endeavor Opportunity Value............. 3.45% N/A 8.74% November 20, 1996
Endeavor Enhanced Index................ 29.24% N/A 31.09% May 1, 1997
Dreyfus U.S. Government Securities..... 5.62% N/A 5.59% August 3, 1994
Dreyfus Small Cap Value(/2/)........... (3.78%) N/A 12.93% July 5, 1994
Endeavor Select 50..................... N/A N/A 5.02% February 2, 1998
Endeavor High Yield.................... N/A N/A (4.03%) June 2, 1998
Endeavor Janus Growth(/3/)............. 61.78% N/A 29.35% July 5, 1994
</TABLE>
- -------------------------------------------------------------------------------
Return of Premium Death Benefit
(Total Mutual Fund Account Annual Expenses: 1.50%)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Year 5 Year Inception of the Subaccount
Ended Ended Subaccount Inception
Subaccount 12/31/98 12/31/98 to 12/31/98 Date
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Endeavor Asset Allocation.............. 16.62% N/A 15.94% July 5, 1994
T. Rowe Price Equity Income............ 7.18% N/A 20.80% January 20, 1995
T. Rowe Price Growth Stock............. 26.75% N/A 28.49% January 5, 1995
T. Rowe Price International Stock(/1/). 13.72% N/A 7.10% July 5, 1994
Endeavor Value Equity.................. 5.96% N/A 18.79% July 5, 1994
Endeavor Opportunity Value............. 3.61% N/A 8.90% November 20, 1996
Endeavor Enhanced Index................ N/A N/A 31.28% May 1, 1997
Dreyfus U.S. Government Securities..... 5.78% N/A 5.75% August 3, 1994
Dreyfus Small Cap Value(/2/)........... (3.64%) N/A 13.06% July 5, 1994
Endeavor Select 50..................... N/A N/A 5.15% February 2, 1998
Endeavor High Yield.................... N/A N/A (3.94%) June 2, 1998
Endeavor Janus Growth(/3/)............. 62.02% N/A 29.47% July 5, 1994
</TABLE>
(/1/Effective)January 1, 1995, Rowe-Price Fleming International, Inc. became
the Adviser to the T. Rowe Price International Stock Portfolio. The
Portfolio's name was changed from the Global Growth Portfolio and the
Portfolio's shareholders approved a change in investment objective from
investments in small capitalization companies on a global basis to
investments in a broad range of companies on an international basis (i.e.,
non-U.S. companies).
(/2/Effective)September 16, 1996, The Dreyfus Corporation became the adviser
to the Dreyfus Small Cap Value Portfolio, formerly known as Quest for
Value Small Cap Portfolio. The portfolio was previously advised by OpCap
Advisors.
(/3/Effective)April 30, 1999, shares of the WRL Growth Portfolio were removed
and replaced with shares of the Endeavor Janus Growth Portfolio.
Performance prior to May 1, 1999 reflects performance of the annuity
subaccount while it was invested in the WRL Growth Portfolio.
The figures for the "five year" and "from inception" periods in the above
tables reflect waiver of advisory fees and reimbursement of other expenses for
all portfolios except the T. Rowe Price Equity Income Portfolio and T. Rowe
Price Growth Stock Portfolio. In the absence of such waivers, the average
annual total return figures above for the from the five year and from
inception periods would have been lower.
45
<PAGE>
Non-Standardized Performance Data
In addition to the standard data discussed above, similar performance data for
other periods may also be shown.
PFL may also advertise or disclose average annual total return or other
performance data in non-standard formats for a subaccount of the mutual fund
account. The non-standard performance data may also make other assumptions,
such as the amount invested in a subaccount, differences in time periods to be
shown, or the effect of partial withdrawals or annuity payments.
All non-standard performance data will be advertised only if the standard
performance data is also disclosed. For additional information regarding the
calculation of other performance data, please refer to the Statement of
Additional Information.
Adjusted Historical Performance Data of the Portfolios. Prior to July 5, 1994,
the subaccounts had not yet commenced operations. The following performance
data for the periods prior to the date the subaccount commenced operations is
based on the performance of the corresponding portfolio and the assumption that
the applicable subaccount was in existence for the same period as the
corresponding portfolio with a level of charges equal to those currently
assessed against the subaccount or against owner's policy values.
In addition, PFL may present historic performance data for the portfolios since
their inception reduced by some or all the fees and charges under the policy.
Such adjusted historic performance includes data that precedes the inception
dates on the subaccounts. This data is designed to show the performance that
would have resulted if the policy had been in existence during that time.
For instance, as shown in Table 2 below, PFL may disclose average annual total
returns for the portfolios reduced by all fees and charges under the policy, as
if the policy had been in existence. Such fees and charges include the
mortality and expense risk fee of either 1.10% or 1.25% (depending on the Death
Benefit Option), an administrative charge of 0.15%, and a distribution
financing charge of 0.25%.
46
<PAGE>
TABLE 2
Adjusted Historical Average Annual Total Returns(/1/)
- -------------------------------------------------------------------------------
5% Annually Compounding Death Benefit or Double Enhanced Death Benefit
(Total Separate Account Annual Expenses: 1.65%)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Corresponding
10 Year Portfolio
Portfolio 1 Year 5 Year or Inception Inception Date
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Endeavor Asset Allocation........ 16.46% 12.42% 12.49% April 8, 1991
T. Rowe Price Equity Income...... 7.02% N/A 19.57% January 3, 1995
T. Rowe Price Growth Stock....... 26.57% N/A 26.57% January 3, 1995
T. Rowe Price International
Stock(/2/)...................... 13.55% 5.52% 5.40% April 8, 1991
Endeavor Value Equity............ 5.80% 16.42% 14.91% May 27, 1993
Endeavor Opportunity Value....... 3.45% N/A 8.71% November 18, 1996
Endeavor Enhanced Index.......... 29.24% N/A 31.09% May 1, 1997
Dreyfus U.S. Government
Securities...................... 5.62% N/A 5.33% May 4, 1994
Dreyfus Small Cap Value(/3/)..... (3.78%) 9.74% 10.49% May 4, 1993
Endeavor Select 50............... N/A N/A 5.02% February 2, 1998
Endeavor High Yield.............. N/A N/A (4.03%) June 2, 1998
Endeavor Janus Growth(/4/)....... 61.78% 23.14% 20.50% October 2, 1986
</TABLE>
- -------------------------------------------------------------------------------
Return of Premium Death Benefit
(Total Separate Account Annual Expenses: 1.50%)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Corresponding
10 Year Portfolio
Portfolio 1 Year 5 Year or Inception Inception Date
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Endeavor Asset Allocation........ 16.62% 12.50% 12.60% April 8, 1991
T. Rowe Price Equity Income...... 7.18% N/A 20.48% January 3, 1995
T. Rowe Price Growth Stock....... 26.75% N/A 28.40% January 3, 1995
T. Rowe Price International
Stock(/2/)...................... 13.72% 5.60% 5.51% April 8, 1991
Endeavor Value Equity............ 5.96% 17.00% 16.67% May 27, 1993
Endeavor Opportunity Value....... 3.61% N/A 8.87% November 18, 1996
Endeavor Enhanced Index.......... N/A N/A 31.28% May 1, 1997
Dreyfus U.S. Government
Securities...................... 5.78% N/A 5.48% May 4, 1994
Dreyfus Small Cap Value(/3/)..... (3.64%) 13.81% 10.63% May 4, 1993
Endeavor Select 50............... N/A N/A 5.15% February 2, 1998
Endeavor High Yield.............. N/A N/A (3.94%) June 2, 1998
Endeavor Janus Growth(/4/)....... 62.02% 23.25% 20.64% October 2, 1986
</TABLE>
- -------------------------------------------------------------------------------
+ Ten Year Date
(/1/) The calculation of total return performance for periods prior to inception
of the subaccounts reflects deductions for the mortality and expense risk
fee and administrative charge on a monthly basis, rather than a daily
basis. The monthly deduction is made at the beginning of each month and
generally approximates the performance that would have resulted if the
subaccounts had actually been in existence since the inception of the
portfolio.
(/2/) This portfolio began operations on April 8, 1991, as the Global Growth
Portfolio. However, effective January 1, 1995, Rowe Price-Fleming
International, Inc. became the new adviser to the Global Growth Portfolio.
The Portfolio's name changed to the T. Rowe Price International Stock
Portfolio and the Portfolio's shareholders approved a change in investment
objective from investments in small capitalization companies on a global
basis to investments in a broad range of companies on an international
basis (that is, non-U.S. companies).
(/3/) Effective September 16, 1996, The Dreyfus Corporation became the adviser
to the Dreyfus Small Cap Value Portfolio, formerly known as Quest for
Value Small Cap Portfolio. The portfolio was previously advised by OpCap
Advisors.
(/4/) Effective April 30, 1999, shares of the WRL Growth Portfolio were removed
and replaced with shares of the Endeavor Janus Growth Portfolio.
Performance prior to May 1, 1999 reflects performance of the annuity
subaccount while it was invested in the WRL Growth Portfolio.
The figures for the "five year" and "from inception" periods in the above
tables reflect waiver of advisory fees and reimbursement of other expenses for
all portfolios except the T. Rowe Price Equity Income Portfolio and the T.
Rowe Price Growth Stock Portfolio. In the absence of such waivers, the average
annual total return figures above from the five year and from inception
periods would have been lower.
47
<PAGE>
Endeavor Select 50 and Endeavor High Yield Portfolios
The Endeavor Select 50 Portfolio and the Endeavor High Yield Portfolio
commenced operations on February 2, 1998 and June 2, 1998, respectively, and
therefore these portfolios do not have significant historical performance data.
However, their investment managers (Montgomery Asset Management, LLC and
Massachusetts Financial Services Company) have experience managing similar
portfolios with substantially the same investment objectives and policies.
Historical performance data showing the results the investment manager achieved
for those other portfolios is in the prospectus for the Endeavor Series Trust,
which accompanies this prospectus. See "Management--The Investment Advisors
Prior Experience with Comparable Fund" in the Endeavor Series Trust's
prospectus. That performance information in the Endeavor Series Trust's
prospectus does not take into account the fees and charges under the policy. If
those fees and charges were reflected, the investment returns would be lower.
48
<PAGE>
HISTORICAL PERFORMANCE DATA
The Target Account
The total return for each target series subaccount will also reflect the
managers fee and other operating expenses.
Target Strategies--Performance Data
Certain aspects of the investment strategies can be demonstrated using
historical data.
The following table contains three columns that show the performance of:
<TABLE>
<S> <C>
Column One: the Ten Highest Dividend Yielding Stocks Strategy for the DJIA;
Column Two: Five Lowest Priced Stocks of the Ten Highest Dividend Yielding
Stocks Strategies in the DJIA; and
Column Three: the performance of the DJIA.
</TABLE>
The returns shown in the following table and graphs are not guarantees of
future performance and should not be used as predictors of returns to be
expected in connection with a target series subaccount. Both stock prices
(which may appreciate or depreciate) and dividends (which may be increased,
reduced or eliminated) will affect the returns. Each strategy under performed
its respective index in certain years. Accordingly, there can be no assurance
that a target series subaccount will outperform its respective index over the
life of a target series subaccount or over consecutive rollover periods, if
available.
An investor in a target series subaccount would not necessarily realize as high
a total return on an investment in the stocks upon which the hypothetical
returns are based for the following reasons: the total return figures shown do
not reflect brokerage commissions, target series subaccount expenses or taxes;
the target series subaccounts are established at different times of the year;
and the target series subaccounts may not be fully invested at all times or
equally weighted in all stocks comprising a strategy. If the above-mentioned
charges were reflected in the hypothetical returns, the returns would be lower
than those presented here.
COMPARISON OF TOTAL RETURN(2)
<TABLE>
<CAPTION>
Index
Strategy Total Returns Total Returns
-------------------------------------------------- -------------
5 Lowest Priced of
10 Highest Dividend the 10 Highest
Year Yielding Stocks(/1/) Dividend Yielding Stocks(/1/) DJIA
- ---- -------------------- ----------------------------- -------------
<S> <C> <C> <C>
1974.......... (1.02)% (5.40)% (23.64)%
1975.......... 56.10% 64.77% 44.46%
1976.......... 35.18% 40.96% 22.80%
1977.......... (1.95)% 5.49% (12.91)%
1978.......... 0.03% 1.23% 2.66%
1979.......... 13.01% 9.84% 10.60%
1980.......... 27.90% 41.69% 21.90%
1981.......... 7.46% 3.19% (3.61)%
1982.......... 27.12% 43.37% 26.85%
1983.......... 39.07% 36.38% 25.82%
1984.......... 6.22% 11.12% 1.29%
1985.......... 29.54% 38.34% 33.28%
1986.......... 35.63% 30.89% 27.00%
1987.......... 5.59% 10.69% 5.66%
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
Index
Strategy Total Returns Total Returns
-------------------------------------------------- -------------
5 Lowest Priced of
10 Highest Dividend the 10 Highest
Year Yielding Stocks(/1/) Dividend Yielding Stocks(/1/) DJIA
- ---- -------------------- ----------------------------- -------------
<S> <C> <C> <C>
1988.......... 24.57% 21.47% 16.03%
1989.......... 26.97% 10.55% 32.09%
1990.......... (7.82)% (15.74)% (0.73)%
1991.......... 34.20% 62.03% 24.19%
1992.......... 7.69% 22.90% 7.39%
1993.......... 27.08% 34.01% 16.87%
1994.......... 4.21% 8.27% 5.03%
1995.......... 36.85% 30.50% 36.67%
1996.......... 28.35% 26.20% 28.71%
1997.......... 21.68% 19.97% 24.82%
1998.......... 10.59% 12.36% 18.03%
</TABLE>
- ----------------------------
(/1/) The Ten Highest Dividend Yielding Stocks and the Five Lowest Priced Stocks
of the Ten Highest Dividend Yielding Stocks in the DJIA for any given
period were selected by ranking the dividend yields for each of the stocks
in the index, as of the beginning of the period, and dividing by the
stock's market value on the first trading day on the exchange where that
stock principally trades in the given period.
(/2/) Total Return represents the sum of the percentage change in market value
of each group of stocks between the first trading day of a period and the
total dividends paid on each group of stocks during the period divided by
the opening market value of each group of stocks as of the first trading
day of a period. Total Return does not take into consideration any sales
charges, commissions, expenses or taxes. Total Return dividends are
reinvested semi-annually and all returns are stated in terms of the United
States dollar. Based on the year-by-year returns contained in the table,
over the twenty-five years listed above, the Ten Highest Dividend Yielding
Stocks in the DJIA achieved an average annual total return of 18.73%,
while the Five Lowest Priced Stocks of the Ten Highest Dividend Yielding
Stocks in the DJIA achieved an average annual total return of 21.07%. In
addition, over this period, the individual strategies achieved a greater
average annual total return than that of the DJIA, which was 14.48%.
Although each target series subaccount seeks to achieve a better
performance than the index as a whole, there can be no assurance that a
target series subaccount will achieve a better performance.
The performance shown for the strategies does not guarantee future success,
nor should it be used as a predictor of returns. The Dow SM Target 5 strategy
and The Dow SM Target 10 strategy under-performed the DJIA in 8 and 9,
respectively, of the 25 years shown. There can be no assurance that the
strategies will outperform a given index over any time period, or that they
will have positive results. They have the potential for loss.
The results of the strategies do not represent actual investment advice of
First Trust Advisors L.P. or any actual trading using client assets. They were
achieved by the retroactive application of a model designed with the benefit
of hindsight and should not be considered indicative of the competence or
skill of First Trust Advisors L.P. In addition, the strategy results do not
reflect the impact material, economic, and market factors might have had on
First Trust Advisors L.P.'s decision making, if First Trust Advisors L.P. had
actually managed client money during the period indicated.
First Trust Advisors L.P. advisory services, though currently offered for the
strategies, were not offered during the entire 25 year period since First
Trust Advisors L.P. was found in 1991, and began supervising unit investment
trusts invested in the strategies in 1994. First Trust Advisors L.P.'s
investment advisory clients have received results different from that set
forth above.
50
<PAGE>
Past Performance of the DJIA
[PERFORMANCE CHART APPEARS HERE]
Date Target 5 Target 10 DJIA
- ---------------------------------------
1973 12,001 10,401 8,680
1974 11,353 10,294 6,629
1975 18,708 16,069 9,576
1976 26,370 21,722 11,759
1977 27,819 21,299 10,242
1978 28,160 21,306 10,514
1979 30,930 24,078 11,629
1980 43,824 30,795 14,175
1981 45,223 33,092 13,663
1982 64,838 42,068 17,332
1983 88,427 58,502 21,808
1984 98,259 62,141 22,090
1985 135,933 80,496 29,442
1986 177,924 109,174 37,391
1987 196,942 115,273 39,508
1988 239,235 143,591 45,843
1989 264,469 182,312 60,554
1990 222,838 168,056 60,019
1991 361,063 225,527 74,647
1992 443,743 242,878 80,160
1993 594,657 308,641 93,681
1994 643,846 321,635 98,395
1995 840,213 440,156 134,480
1996 ######## 564,950 173,089
1997 ######## 687,429 216,049
1998 ######## 760,196 255,003
The chart above represents past performance of the DJIA, the Ten Highest
Dividend Yielding DJIA Stocks and the Five Lowest Priced Stocks of the Ten
Highest Yielding DJIA Stocks (but not The Dow SM Target 10 Subaccount or The
Dow SM Target 5 Subaccount) from January 1, 1974 through December 31, 1998 and
should not be considered indicative of future results. Further, these results
are hypothetical. The chart assumes that all dividends during a year are
reinvested semi-annually and does not reflect sales charges, commissions,
expenses or taxes. There can be no assurance that either The Dow SM Target 10
Subaccount or The Dow SM Target 5 Subaccount will outperform the DJIA.
Investors should not rely on the preceding financial information as an
indication of the past or future performance of the target series subaccounts.
Standardized Performance Data
PFL may advertise historical total returns for the target series subaccounts.
These figures will be calculated according to standardized methods prescribed
by the SEC. They will be based on historical earnings and are not intended to
indicate future performance.
The total return calculations for a target series subaccount do not reflect the
effect of any premium taxes that may be applicable to a particular policy. To
the extent that any or all of a premium tax is applicable to a particular
policy, the total return of that policy will be reduced. For additional
information regarding total returns calculated using the standard formats
briefly summarized above, please refer to the Statement of Additional
Information.
Based on the method of calculation described in the Statement of Additional
Information, the average annual total returns for periods from inception of the
subaccounts to December 31, 1998, and for the one and five year periods ended
December 31, 1998 are shown in Table 1 below. Total returns shown reflect
deductions for the mortality and expense risk fee, the distribution financing
charge and the administrative charges. The total return for each target series
subaccount will also reflect the manager's fee and other operating expenses.
Performance figures may reflect the 1.25% mortality and expense risk fee for
the 5% Annually Compounding and Double Enhanced Death Benefits, or the 1.10%
mortality and expense risk fee for the Return of Premium Death Benefit. Table 1
does not reflect the rider charge for the optional family income protector.
51
<PAGE>
TABLE 1
Standard Average Annual Total Returns
- -------------------------------------------------------------------------------
5% Annually Compounding Death Benefit or Double Enhanced Death Benefit
(Total Mutual Fund Account Annual Expenses: 1.65%)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Year 5 Year Inception of the Subaccount
Ended Ended Subaccount Inception
Subaccount 12/31/98 12/31/98 To 12/31/98 Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Dow SM Target 10 (July Series)......... N/A N/A 3.34% July 1, 1998
The Dow SM Target 5 (July Series).......... N/A N/A 12.07% July 1, 1998
The Dow SM Target 10 (January Series)(/1/). N/A N/A N/A January 4, 1999
The Dow SM Target 5 (January Series)(/1/).. N/A N/A N/A January 4, 1999
- -------------------------------------------------------------------------------------------------
</TABLE>
Return of Premium Death Benefit
(Total Mutual Fund Account Annual Expenses: 1.50%)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 Year 5 Year Inception of the Subaccount
Ended Ended Subaccount Inception
Subaccount 12/31/98 12/31/98 to 12/31/98 Date
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Dow SM Target 10 (July Series)......... N/A N/A 3.42% July 1, 1998
The Dow SM Target 5 (July Series).......... N/A N/A 12.15% July 1, 1998
The Dow SM Target 10 (January Series)(/1/). N/A N/A N/A January 4, 1999
The Dow SM Target 5 (January Series)(/1/).. N/A N/A N/A January 4, 1999
</TABLE>
(/1/) The Dow SM Target 10 Subaccount (January Series) and The Dow SM Target 5
Subaccount (January Series) began operations on January 4, 1999, therefore
comparable information is not available.
Non-Standardized Performance Data
PFL may also advertise or disclose average annual total return or other
performance data in non-standard formats for a target series subaccount. The
non-standard performance data may make other assumptions such as the amount
invested in a target series subaccount, differences in time periods to be
shown, or the effect of partial withdrawals or annuity payments and may also
make other assumptions.
All non-standard performance data will be advertised only if the standard
performance data is also disclosed. For additional information regarding the
calculation of other performance data, please refer to the Statement of
Additional Information.
Adjusted Historical Performance Data of the Portfolios. The following
performance data for the periods prior to the date the subaccount commenced
operations is based on the performance of the corresponding portfolio and the
assumption that the applicable subaccount was in existence for the same period
as the corresponding portfolio with a level of charges equal to those currently
assessed against the subaccount or against owner's policy values.
In addition, PFL may present historic performance data for the portfolios since
their inception reduced by some or all the fees and charges under the policy.
Such adjusted historic performance includes data that precedes the inception
dates on the subaccounts. This data is designed to show the performance that
would have resulted if the policy had been in existence during that time.
For instance, as shown in Table 2 below, PFL may disclose average annual total
returns for the portfolios reduced by all fees and charges under the policy, as
if the policy had been in existence. Such fees and charges include the
mortality and expense risk fee of either 1.10% or 1.25% (depending on the Death
Benefit Option), an administrative charge of 0.15%, and a distribution
financing charge of 0.25%.
52
<PAGE>
TABLE 2
Adjusted Historical Average Annual Total Returns(/1/)
- -------------------------------------------------------------------------------
5% Annually Compounding Death Benefit or Double Enhanced Death Benefit
(Total Mutual Fund Account Annual Expenses: 1.65%)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Corresponding
10 Year Portfolio
Portfolio 1 Year 5 Year or Inception Inception Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Dow SM Target 10 (July
Series).......................... N/A N/A 3.34% July 1, 1998
The Dow SM Target 5 (July Series). N/A N/A 12.07% July 1, 1998
The Dow SM Target 10 (January Se-
ries)(/2/)....................... N/A N/A N/A January 4, 1999
The Dow SM Target 5 (January Se-
ries)(/2/)....................... N/A N/A N/A January 4, 1999
- --------------------------------------------------------------------------------
</TABLE>
Return of Premium Death Benefit
(Total Mutual Fund Account Annual Expenses: 1.50%)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Corresponding
10 Year Portfolio
Portfolio 1 Year 5 Year or Inception Inception Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Dow SM Target 10 (July Se-
ries)............................ N/A N/A 3.42% July 1, 1998
The Dow SM Target 5 (July Series). N/A N/A 12.15% July 1, 1998
The Dow SM Target 10 (January Se-
ries)(/2/)....................... N/A N/A N/A January 4, 1999
The Dow SM Target 5 (January Se-
ries)(/2/)....................... N/A N/A N/A January 4, 1999
</TABLE>
(/1/) The calculation of total return performance for periods prior to inception
of the subaccounts reflects deductions for the mortality and expense risk
fee and administrative charge on a monthly basis, rather than a daily
basis. The monthly deduction is made at the beginning of each month and
generally approximates the performance that would have resulted if the
subaccounts had actually been in existence since the inception of the
portfolio.
(/2/) The Dow SM Target 10 Subaccount (January Series) and The Dow SM Target 5
Subaccount (January Series) began operations on January 4, 1999, therefore
comparable information is not available.
53
<PAGE>
APPENDIX C
POLICY VARIATIONS
The dates shown below are the approximate first issue dates of the various
versions of the Policy. These dates will vary by state in many cases. This
Appendix describes certain of the more significant differences in features of
the various versions of the Policy. There may be additional variations. Please
see your actual policy and any attachments for determining your specific
coverage.
<TABLE>
- --------------------------------------------------------------------------
<S> <C>
Policy Form/Endorsement Approximate First Issue Date
- --------------------------------------------------------------------------
AV212 101 75 1292 (Policy Form) May 1993
- --------------------------------------------------------------------------
V829 & S831 (replacement pages for 1.65 M&E) January 1994
- --------------------------------------------------------------------------
AE872 395 (endorsement) May 1995
- --------------------------------------------------------------------------
AV265 101 89 396 (Policy Form) June 1996
- --------------------------------------------------------------------------
AE900 396 (endorsement) June 1996
- --------------------------------------------------------------------------
AV339 101 101 497 (Policy Form) July 1997
- --------------------------------------------------------------------------
AE957 497 (endorsement) July 1997
- --------------------------------------------------------------------------
AV400 101 107 1197 (Policy Form) May 1998
- --------------------------------------------------------------------------
</TABLE>
54
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Product Feature AV212 101 75 1292 AV212 101 75 AV265 101 89 396 AV339 101 101 497 AV400 101 107 198
1292,V829 and S831 and AE900 396 and AE957 497 with AE957 497
- -------------------------------------------------------------------------------------------------------------------------
Excess Interest N/A N/A Yes Yes Yes
Adjustment
- -------------------------------------------------------------------------------------------------------------------------
Guaranteed Minimum Total Premiums Total Premiums 5% Annually 5% Annually 5% Annually
Death Benefit Paid, less any Paid, less any Compounding (Option Compounding (Option Compounding (Option
Option(s) partial withdrawals partial withdrawals A) or Annual Step- A) or Annual Step- A), Double Enhanced
made before death, made before death, Up (Option B). Up (Option B), or (Option B), or
accumulated at 5% accumulated at 5% Option A is only Return of Premium Return of Premium
to the date we to the date we available if Owner (Option C). Option (Option C). Option
receive due proof receive due proof and Annuitant are A is only available A is only available
of death or the of death or the both under age 75. if Owner and if Owner and
Policy Value on the Policy Value on the Annuitant are both Annuitant are both
date we receive due date we receive due under age 75. under age 75.
proof of death, proof of death, Option B is only Option B is only
which ever is which ever is available if Owner available if Owner
greater greater. and Annuitant are and Annuitant are
under age 81. under age 81.
- -------------------------------------------------------------------------------------------------------------------------
Guaranteed Period N/A N/A 1, 3 and 5 year 1, 3, and 5 year 1, 3, and 5 year
Options (available Guaranteed Periods Guaranteed Periods Guaranteed Periods
in the Fixed available. available. available.
Account)
- -------------------------------------------------------------------------------------------------------------------------
Minimum effective N/A N/A 3% 3% 3%
annual interest
rate applicable to
the fixed account
- -------------------------------------------------------------------------------------------------------------------------
Asset Rebalancing N/A N/A Yes Yes Yes
- -------------------------------------------------------------------------------------------------------------------------
Death Proceeds Greater of 1) the Greater of 1) the Greatest of (a) Greatest of (a) Greatest of (a)
Policy Value on the Policy Value on the Policy Value, (b) Policy Value, (b) Policy Value, (b)
date we receive due date we receive due Cash Value, and (c) Cash Value, and (c) Cash Value, and (c)
proof of death, or proof of death, or Guaranteed Minimum Guaranteed Minimum Guaranteed Minimum
2) the total 2) the total Death Benefit. Death Benefit. Death Benefit.
premiums paid for premiums paid for
this policy, less this policy, less
any partial any partial
withdrawals made withdrawals made
before death, before death,
accumulated at 5% accumulated at 5%
interest per annum interest per annum
to the date we to the date we
receive due proof receive due proof
of death of death.
- -------------------------------------------------------------------------------------------------------------------------
Distribution N/A Applicable Applicable Applicable Applicable
Financing Charge
- -------------------------------------------------------------------------------------------------------------------------
Is Mortality & No No No No Yes 1.10% plus
Expense Risk Fee Administrative
and Administrative Charge, regardless
Charge different of death benefit
after the Annuity chosen prior to the
Commencement Date? Annuity
Commencement Date.
- -------------------------------------------------------------------------------------------------------------------------
Dollar Cost N/A N/A Yes Yes Yes
Averaging Fixed
Account Option
- -------------------------------------------------------------------------------------------------------------------------
Service Charge $35 assessed on $35 assessed on $35 assessed on $35 assessed either $35 assessed either
each Policy each Policy each Policy on a Policy on a Policy
Anniversary. Anniversary. Anniversary; waived Anniversary or on Anniversary or on
if Sum of Premium Surrender; waived Surrender; waived
Payments less if sum of Premium if sum of Premium
partial withdrawals Payments less Payments less
is at least $50,000 partial withdrawals partial withdrawals
on the Policy or the Policy Value or the Policy Value
Anniversary. Not is at least $50,000 is at least $50,000
deducted from the on the Policy on the Policy
Fixed Account. Anniversary or at Anniversary or at
the time of the time of
Surrender. The Surrender. The
Service Charge is Service Charge is
deducted pro-rata deducted pro-rata
from the Investment from the Investment
Options. Options.
- -------------------------------------------------------------------------------------------------------------------------
Nursing Care and N/A N/A Yes Yes Yes
Terminal Condition
Withdrawal Option
</TABLE>
55
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
THE ENDEAVOR PLATINUM VARIABLE ANNUITY
Issued through
PFL ENDEAVOR VARIABLE ANNUITY ACCOUNT
and
PFL ENDEAVOR TARGET ACCOUNT
Offered by
PFL LIFE INSURANCE COMPANY
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499-0001
This Statement of Additional Information expands upon subjects discussed in the
current prospectus for the Endeavor Platinum Variable Annuity offered by PFL
Life Insurance Company. You may obtain a copy of the Prospectus dated May 1,
1999 by calling 1-800- 525-6205, or by writing to the Administrative and
Service Office, Financial Markets Division--Variable Annuity Dept., 4333
Edgewood Road, N.E., Cedar Rapids, Iowa 52499-0001. Terms used in the current
prospectus for the policy are incorporated in this Statement of Additional
Information.
This Statement of Additional Information is not a prospectus and should be read
only in conjunction with the prospectus for the policy and target account and
the Endeavor Series Trust.
Dated: May 1, 1999
-1-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
GLOSSARY OF TERMS.......................................................... 4
THE POLICY--GENERAL PROVISIONS............................................. 7
Owner.................................................................... 7
Entire Policy............................................................ 8
Misstatement of Age or Sex............................................... 8
Addition, Deletion or Substitution of Investments........................ 8
Excess Interest Adjustment............................................... 9
Reallocation of Policy Values After the Annuity Commencement Date........ 13
Annuity Payment Options.................................................. 13
Death Benefit............................................................ 14
Death of Owner........................................................... 16
Assignment............................................................... 17
Evidence of Survival..................................................... 17
Non-Participating........................................................ 17
Amendments............................................................... 17
Employee and Agent Purchases............................................. 17
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... 17
Tax Status of the Policy................................................. 18
Taxation of PFL.......................................................... 21
INVESTMENT EXPERIENCE...................................................... 21
Accumulation Units....................................................... 21
Annuity Unit Value and Annuity Payment Rates............................. 23
FAMILY INCOME PROTECTOR--HYPOTHETICAL ILLUSTRATION......................... 25
HISTORICAL PERFORMANCE DATA................................................ 26
Money Market Yields...................................................... 26
Other Subaccount Yields.................................................. 28
Total Returns............................................................ 28
Other Performance Data................................................... 29
Adjusted Historical Performance Data--The Mutual Fund Account............ 29
THE TARGET ACCOUNT......................................................... 29
What is the Investment Strategy?......................................... 29
Determination of Unit Value; Valuation of Securities..................... 31
The Board of Managers.................................................... 31
The Investment Advisory Services......................................... 34
The Manager.............................................................. 35
Operating Expenses....................................................... 35
Transfer Agent and Custodian............................................. 35
Brokerage Allocation..................................................... 35
Investment Restrictions.................................................. 36
Fundamental Policies..................................................... 36
Operating Policies....................................................... 37
Options and Futures Strategies........................................... 37
Securities Lending....................................................... 39
Tax Limitation........................................................... 39
PUBLISHED RATINGS.......................................................... 40
STATE REGULATION OF PFL.................................................... 40
ADMINISTRATION............................................................. 41
RECORDS AND REPORTS........................................................ 41
DISTRIBUTION OF THE POLICIES............................................... 41
</TABLE>
-2-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
VOTING RIGHTS.............................................................. 41
The Mutual Fund Account.................................................. 41
The Target Account....................................................... 42
OTHER PRODUCTS............................................................. 43
CUSTODY OF ASSETS.......................................................... 43
LEGAL MATTERS.............................................................. 43
INDEPENDENT AUDITORS....................................................... 43
OTHER INFORMATION.......................................................... 44
FINANCIAL STATEMENTS....................................................... 44
</TABLE>
-3-
<PAGE>
GLOSSARY OF TERMS
Accumulation Unit--An accounting unit of measure used in calculating the policy
value in the mutual fund account and the target account before the annuity
commencement date.
Adjusted Policy Value--An amount equal to the policy value increased or
decreased by any excess interest adjustments.
Administrative and Service Office--Financial Markets Division--Variable Annuity
Dept., PFL Life Insurance Company, 4333 Edgewood Road, N.E., Cedar Rapids, Iowa
52499-0001.
Annual Stock Selection Date--The last business day of a specified 12-month
period.
Annuitant--The person entitled to receive annuity payments after the annuity
commencement date and during whose life any annuity payments involving life
contingencies will continue.
Annuity Commencement Date--The date upon which annuity payments are to
commence. This date may be any date at least thirty days after the policy date
and may not be later than the last day of the policy month starting after the
annuitant attains age 85, except as expressly allowed by PFL. In no event will
this date be later than the last day of the month following the month in which
the annuitant attains age 95.
Annuity Payment Option--A method of receiving a stream of annuity payments
selected by the owner.
Annuity Unit--An accounting unit of measure used in the calculation of the
amount of the second and each subsequent variable annuity payment.
Application--A written application, order form, or any other information
received electronically or otherwise upon which the policy is issued and/or is
reflected on the data or specifications page.
Beneficiary--The person who has the right to the death benefit set forth in the
policy.
Business Day--A day when the New York Stock Exchange is open for business.
Cash Value--The policy value increased or decreased by an excess interest
adjustment.
Code--The Internal Revenue Code of 1986, as amended.
DJIA--The Dow Jones Industrial Average SM. Thirty stocks chosen by the editors
of The Wall Street Journal as representative of the broad market and of
American industry.
Due Proof of Death--A certified copy of a death certificate, a certified copy
of a decree of a court of competent jurisdiction as to the finding of death, a
written statement by the attending physician, or any other proof satisfactory
to PFL will constitute due proof of death.
Excess Interest Adjustment--A positive or negative adjustment to amounts
withdrawn upon partial withdrawals or full surrenders or transfers, from the
guaranteed period options, or to amounts applied to annuity payment options.
The adjustment reflects changes in the interest rates declared by PFL since the
date any payment was received by, or an amount was transferred to, the
guaranteed period option. The excess interest adjustment can either decrease or
increase the amount to be received by the owner upon full surrender or
commencement of annuity payments, depending upon whether there has been an
increase or decrease in interest rates, respectively.
-4-
<PAGE>
Fixed Account--One or more investment choices under the policy that are part of
the general assets of PFL and which are not in the separate accounts.
Guaranteed Period Options--The various guaranteed interest rate periods which
may be offered by PFL under the fixed account into which premiums may be paid
or amounts may be transferred.
Initial Stock Selection Date--The date is June 30, 1998 for the July Series.
The date is December 31, 1998 for the January Series.
Investment Choices--Any of the guaranteed period options of the fixed account,
the dollar cost averaging fixed account option, and any of the subaccounts of
the mutual fund account or the target account.
Mutual Fund Account--A separate account established and registered as a unit
investment trust under the Investment Company Act of 1940, as amended, to which
premium payments under the policies may be allocated and which invests in
designated portfolios of the Endeavor Series Trust and such other mutual funds
as PFL may determine from time to time.
Mutual Fund Subaccount--A subdivision within the mutual fund account, the
assets of which are invested in a specified portfolio of the underlying funds.
Nonqualified Policy--A policy other than a qualified policy.
Owner or Owner--The person who may exercise all rights and privileges under the
policy. The owner during the lifetime of the annuitant and prior to the annuity
commencement date is the person designated as the owner or a successor owner in
the application.
Policy Value--On or before the annuity commencement date, the policy value is
equal to the owner's:
. premium payments; minus
. partial withdrawals (including any applicable excess interest adjustments on
such withdrawals); plus
. interest credited in the fixed account; plus
. accumulated gains or losses in the mutual fund account and the target
account; minus
. service charges, premium taxes, and transfer fees, if any.
Policy Year--A policy year begins on the policy date and on each policy
anniversary.
Premium Payment--An amount paid to PFL by the owner or on the owner's behalf as
consideration for the benefits provided by the policy.
Qualified Policy--A policy issued in connection with retirement plans that
qualify for special federal income tax treatment under the Code.
Service Charge--An annual charge on each policy anniversary (and a charge at
the time of surrender during any policy year) for policy maintenance and
related administrative expenses. This annual charge is $35, but will not exceed
2% of the policy value.
Successor Owner--A person appointed by the owner to succeed to ownership of the
policy in the event of the death of the owner who is not the annuitant before
the annuity commencement date.
Target Account--A separate account established and registered as a management
investment company under the Investment Company Act of 1940, as amended, to
which premium payments under the policies may be allocated.
-5-
<PAGE>
Target Series Subaccount--A subdivision within the target account, the assets
of which are invested in common stocks selected according to a specified
investment strategy.
Valuation Period--The period of time from one determination of accumulation
unit values and annuity unit values to the next subsequent determination of
values. Such determination shall be made on each business day.
Variable Annuity Payments--Payments made pursuant to an annuity payment option
which fluctuate as to dollar amount or payment term in relation to the
investment performance of the specified subaccounts within the mutual fund
account or the target account.
Written Notice or Written Request--Written notice, signed by the owner, that
gives PFL the information it requires and is received at the administrative and
service office. For some transactions, PFL may accept an electronic notice such
as telephone instructions. Such electronic notice must meet the requirements
PFL establishes for such notices.
-6-
<PAGE>
In order to supplement the description in the Prospectus, the following
provides additional information about PFL and the policy, which may be of
interest to you. Words printed in italics in this Statement of Additional
Information are defined in the Glossary of Terms, found on page 4.
THE POLICY--GENERAL PROVISIONS
Owner
The policy shall belong to the owner, upon issuance of the policy after
completion of an application and delivery of the initial premium payment. While
the annuitant is living, the owner may: (1) assign the policy; (2) surrender
the policy; (3) amend or modify the policy with PFL's consent; (4) receive
annuity payments or name a payee to receive the payments; and (5) exercise,
receive and enjoy every other right and benefit contained in the policy. The
exercise of these rights may be subject to the consent of any assignee or
irrevocable beneficiary; and of your spouse in a community or marital property
state.
Unless PFL has been notified of a community or marital property interest in the
policy, it will rely on its good faith belief that no such interest exists and
will assume no responsibility for inquiry.
A successor owner can be named in the application, information provided in lieu
thereof, or in a written notice. The successor owner will become the new owner
upon your death, if you predecease the annuitant. If no successor owner
survives you and you predecease the annuitant, your estate will become the
owner.
Note carefully. If the owner does not name a contingent owner, the owner's
estate will become the new owner. If no probate estate is opened because the
owner has precluded the opening of a probate estate by means of a trust or
other instrument, unless PFL has received written notice of the trust as a
successor owner signed prior to the owner's death, that trust may not exercise
ownership rights to the policy. It may be necessary to open a probate estate in
order to exercise ownership rights to the policy if no contingent owner is
named in a written notice received by PFL.
The owner may change the ownership of the policy in a written notice. When this
change takes effect, all rights of ownership in the policy will pass to the new
owner. A change of ownership may have adverse tax consequences.
When there is a change of owner or successor owner, the change will take effect
as of the date the owner signs the written notice, subject to any payment PFL
has made or action PFL has taken before recording the change. Changing the
owner or naming a new successor owner cancels any prior choice of successor
owner, but does not change the designation of the beneficiary or the annuitant.
If ownership is transferred (except to the owner's spouse) because the owner
dies before the annuitant, the cash value generally must be distributed to the
successor owner within five years of the owner's death, or payments must be
made for a period certain or for the successor owner's lifetime so long as any
period certain does not exceed that successor owner's life expectancy, if the
first payment begins within one year of your death.
-7-
<PAGE>
Entire Policy
The policy, any endorsements thereon, and the application or information
provided in lieu thereof, constitute the entire contract between PFL and the
owner. All statements in the application are representations and not
warranties. No statement will cause the policy to be void or to be used in
defense of a claim unless contained in the application or information provided
in lieu thereof.
Misstatement of Age or Sex
If the age or sex of the annuitant or owner has been misstated, PFL will change
the annuity benefit payable to that which the premium payments would have
purchased for the correct age or sex. The dollar amount of any underpayment
made by PFL shall be paid in full with the next payment due such person or the
beneficiary. The dollar amount of any overpayment made by PFL due to any
misstatement shall be deducted from payments subsequently accruing to such
person or beneficiary. Any underpayment or overpayment will include interest at
5% per year, from the date of the wrong payment to the date of the adjustment.
The age of the annuitant or owner may be established at any time by the
submission of proof satisfactory to PFL.
Addition, Deletion, or Substitution of Investments
PFL cannot and does not guarantee that any of the mutual fund subaccounts or
target series subaccounts will always be available for premium payments,
allocations, or transfers. PFL retains the right, subject to any applicable
law, to make certain changes in the mutual fund account and its investments.
PFL reserves the right to eliminate the shares of any portfolio held by a
mutual fund subaccount and to substitute shares of another portfolio of the
underlying funds, or of another registered open-end management investment
company for the shares of any portfolio, if the shares of the portfolio are no
longer available for investment or if, in PFL's judgment, investment in any
portfolio would be inappropriate in view of the purposes of the mutual fund
account. To the extent required by the Investment Company Act of 1940 (the
"1940 Act"), substitutions of shares attributable to your interest in a mutual
fund subaccount will not be made without prior notice to you and the prior
approval of the Securities and Exchange Commission ("SEC"). PFL retains the
right, subject to any applicable law, to make certain changes in the target
account and its investments. PFL reserves the right to eliminate a target
series subaccount if, in PFL's judgment, investment in any target series
subaccount would be inappropriate in view of the purposes of the policy or for
any other reason. Nothing contained herein shall prevent the mutual fund
account from purchasing other securities for other series or classes of
variable annuity policies, or from effecting an exchange between series or
classes of variable annuity policies on the basis of your requests.
New subaccounts may be established when, in the sole discretion of PFL,
marketing, tax, investment or other conditions warrant. Any new subaccounts may
be made available to existing owners on a basis to be determined by PFL. Each
additional subaccount will purchase shares in a mutual fund portfolio, other
investment vehicle, or, in the case of the target account, in shares of common
stock. PFL may also eliminate one or more subaccounts if, in its sole
discretion, marketing, tax, investment or other conditions warrant such change.
In the event any subaccount is eliminated, PFL will notify you and request a
reallocation of the amounts invested in the eliminated subaccount. If no such
reallocation is provided by you, PFL will reinvest the amounts in the
subaccount that invests in the Endeavor Money Market Portfolio (or in a similar
portfolio of money market instruments), in another subaccount, or in the fixed
account, if appropriate.
-8-
<PAGE>
In the event of any such substitution or change, PFL may, by appropriate
endorsement, make such changes in the policies as may be necessary or
appropriate to reflect such substitution or change. Furthermore, if deemed to
be in the best interests of persons having voting rights under the policies,
the mutual fund account may be (i) operated as a management company under the
1940 Act or any other form permitted by law, (ii) deregistered under the 1940
Act in the event such registration is no longer required or (iii) combined with
one or more other mutual fund accounts, and the target account may be
(i) operated in any form permitted by law, (ii) deregistered under the 1940 Act
in the event such registration is no longer required or (iii) combined with one
or more other mutual fund accounts. To the extent permitted by applicable law,
PFL also may transfer the assets of the mutual fund account or the target
account associated with the policies to another account or accounts.
Excess Interest Adjustment
Money that you withdraw from (or transfer out of) a guaranteed period option of
the fixed account before the end of its guaranteed period (the number of years
you specified the money would remain in the guaranteed period option) may be
subject to an excess interest adjustment. At the time you request a withdrawal,
if interest rates set by PFL have risen since the date of the initial
guarantee, the excess interest adjustment will result in a lower cash value.
However, if interest rates have fallen since the date of the initial guarantee,
the excess interest adjustment will result in a higher cash value.
Excess interest adjustments will not reduce the cash value for a guaranteed
period option below the premium payments and transfers to that guaranteed
period option, less any prior partial withdrawals and transfers from the
guaranteed period option, plus interest at the policy's minimum guaranteed
effective annual interest rate of 3%. This is referred to as the EIA floor.
The formula that will be used to determine the excess interest adjustment is:
S*(G-C)* (M/12)
S= Gross amount being withdrawn that is subject to the excess interest
adjustment
G= Guaranteed Interest Rate in effect for the policy
C= Current Guaranteed Interest Rate then being offered on new premiums for the
next longer option period than "M". If this policy form or such an option
period is no longer offered, "C" will be the U.S. Treasury rate for the next
longer maturity (in whole years) than "M" on the 25th day of the previous
calendar month, plus up to 2%.
M= Number of months remaining in the current option period, rounded up to the
next higher whole number of months.
*= multiplication
^= exponentiation
-9-
<PAGE>
Example 1 (Full Surrender, rates increase by 3%):
<TABLE>
<S> <C>
Single Premium: $50,000
- -----------------------------------------------------------------------------------------
Guarantee Period: 5 Years
- -----------------------------------------------------------------------------------------
Guarantee Rate: 5.50% per annum
- -----------------------------------------------------------------------------------------
Surrender: Middle of Contract Year 3
- -----------------------------------------------------------------------------------------
Policy Value at middle of Contract Year 3 = 50,000* (1.055)^ 2.5 = 57,161.18
- -----------------------------------------------------------------------------------------
Adjustment Free Amount at middle of
Contract Year 3 = 57,161.18* .10 = 5,716.12
- -----------------------------------------------------------------------------------------
Amount Subject to EIA = 57,161.18 - 5,716.12 = 51,445.06
- -----------------------------------------------------------------------------------------
EIA Floor = 50,000* (1.03)^ 2.5 = 53,834.80
- -----------------------------------------------------------------------------------------
Excess Interest Adjustment
G = .055
C = .085
M = 30
- -----------------------------------------------------------------------------------------
Excess Interest Adjustment = S* (G - C)* (M/12)
- -----------------------------------------------------------------------------------------
= 51,445.06* (.055 - .085)* (30/12)
- -----------------------------------------------------------------------------------------
= - 3,858.38, but excess interest
adjustment cannot cause the adjusted PV to
fall below the EIA floor, so the adjustment
is limited to 53,834.80 - 57,161.18 = -
3,326.38
- -----------------------------------------------------------------------------------------
Adjusted Policy Value ("APV") = Net Surrender Value
- -----------------------------------------------------------------------------------------
= PV + EIA = 57,161.18 + (-3,326.38)
- -----------------------------------------------------------------------------------------
= 53,834.80
</TABLE>
-10-
<PAGE>
Example 2 (Surrender, rates decrease by 1%):
<TABLE>
<S> <C>
Single Premium: $50,000
- ---------------------------------------------------------------------------------
Guarantee Period: 5 Years
- ---------------------------------------------------------------------------------
Guarantee Rate: 5.50% per annum
- ---------------------------------------------------------------------------------
Surrender: Middle of Contract Year 3
- ---------------------------------------------------------------------------------
Policy Value at middle of Contract Year 3 = 50,000* (1.055)^ 2.5 = 57,161.18
- ---------------------------------------------------------------------------------
Adjustment Free Amount at middle of
Contract Year 3 = 57,161.18* .10 = 5,716.12
- ---------------------------------------------------------------------------------
Amount Subject to EIA = 57,161.18 - 5,716.12 = 51,445.06
- ---------------------------------------------------------------------------------
EIA Floor = 50,000* (1.03)^ 2.5 = 53,834.80
- ---------------------------------------------------------------------------------
Excess Interest Adjustment
G = .055
C =.045
M = 30
- ---------------------------------------------------------------------------------
Excess Interest Adjustment = S* (G - C)* (M/12)
- ---------------------------------------------------------------------------------
= 51,445.06* (.055 - .045)* (30/12)
- ---------------------------------------------------------------------------------
= 1,286.13
- ---------------------------------------------------------------------------------
Adjusted PV = Net Surrender Value
- ---------------------------------------------------------------------------------
= 57,161.18 + 1,286.13 = 58,447.31
</TABLE>
On a partial withdrawal, PFL will pay the policyholder the full amount of
withdrawal requested (as long as the Annuity Purchase Value is sufficient).
Amounts withdrawn will reduce the PV by an amount equal to:
R - E
where:
R= the requested partial withdrawal
E= the excess interest adjustment
-11-
<PAGE>
Example 3 (partial withdrawal, rates increase by 1%):
<TABLE>
<S> <C>
Single Premium: $50,000
- -----------------------------------------------------------------------------------
Guarantee Period: 5 Years
- -----------------------------------------------------------------------------------
Guarantee Rate: 5.50% per annum
- -----------------------------------------------------------------------------------
Partial withdrawal: $20,000; Middle of Contract Year 3
- -----------------------------------------------------------------------------------
Policy Value at middle of Contract Year 3 = 50,000* (1.055)^ 2.5 = 57,161.18
- -----------------------------------------------------------------------------------
Adjustment Free Amount at middle of
Contract Year 3 = 57,161.18* .10 = 5,716.12
- -----------------------------------------------------------------------------------
Excess Interest Adjustment
S= 20,000 - 5,716.12 = 14,283.88
G= .055
C= .065
M= 30
- -----------------------------------------------------------------------------------
Excess Interest Adjustment = S * (G - C) * (M/12)
- -----------------------------------------------------------------------------------
= 14,283.88 * (.055 - .065) * (30/12)
- -----------------------------------------------------------------------------------
= - 357.10
- -----------------------------------------------------------------------------------
Remaining Policy Value at middle of
Contract Year 3 = 57,161.18 - (R - E)
- -----------------------------------------------------------------------------------
= 57,161.18 - (20,000 - ( - 357.10))
- -----------------------------------------------------------------------------------
= 36,804.08
</TABLE>
Example 4 (partial withdrawal, rates decrease by 1%):
<TABLE>
<S> <C>
Single Premium: $50,000
- ------------------------------------------------------------------------------------
Guarantee Period: 5 Years
- ------------------------------------------------------------------------------------
Guarantee Rate: 5.50% per annum
- ------------------------------------------------------------------------------------
Partial Surrender: $20,000; Middle of Contract Year 3
- ------------------------------------------------------------------------------------
Policy Value at middle of Contract Year 3 = 50,000* (1.055)^ 2.5 = 57,161.18
- ------------------------------------------------------------------------------------
Adjustment Free Amount at middle of
Contract Year 3 = 57,161.18* .10 = 5,716.12
- ------------------------------------------------------------------------------------
Excess Interest Adjustment
S= 20,000 - 5,716.12 = 14,283.88
G= .055
C= .045
M= 30
- ------------------------------------------------------------------------------------
Excess Interest Adjustment = 14,283.88 * (.055 - .045) * (30/12)
- ------------------------------------------------------------------------------------
= 357.10
- ------------------------------------------------------------------------------------
Remaining Policy Value at middle of
Contract Year 3 = 57,161.18 - (R - E)
- ------------------------------------------------------------------------------------
= 57,161.18 - (20,000 - 357.10)
- ------------------------------------------------------------------------------------
= 37,518.28
</TABLE>
-12-
<PAGE>
Reallocation of Policy Values After the Annuity Commencement Date
After the annuity commencement date, you may reallocate the value of a
designated number of annuity units of a mutual fund subaccount or of a target
series subaccount then credited to a policy into an equal value of annuity
units of one or more other mutual fund subaccounts or target series
subaccounts. The reallocation shall be based on the relative value of the
annuity units of the account(s) or subaccount(s) at the end of the business
day on the next payment date. The minimum amount which may be reallocated is
the lesser of (1) $10 of monthly income or (2) the entire monthly income of
the annuity units in the account or subaccount from which the transfer is
being made. If the monthly income of the annuity units remaining in an account
or subaccount after a reallocation is less than $10, PFL reserves the right to
include the value of those annuity units as part of the transfer. The request
must be in writing to PFL's administrative and service office. There is no
charge assessed in connection with such reallocation. PFL reserves the right
to limit the number of times a reallocation of annuity units may be made in
any given policy year.
After the annuity commencement date, no transfers may be made from the fixed
account to the mutual fund account.
Annuity Payment Options
During the lifetime of the annuitant and prior to the annuity commencement
date, the owner may choose an annuity payment option or change the election,
but written notice of any election or change of election must be received by
PFL at its administrative and service office at least thirty (30) days prior
to the annuity commencement date. If no election is made prior to the annuity
commencement date, annuity payments will be made under (i) Payment Option 3,
life income with level payments for 10 years certain, using the existing
adjusted policy value of the fixed account, or (ii) under Payment Option 3,
life income with variable payments for 10 years certain using the existing
policy value of the mutual fund account, or (iii) in a combination of (i) and
(ii).
The person who elects an annuity payment option can also name one or more
successor payees to receive any unpaid amount PFL has at the death of a payee.
Naming these payees cancels any prior choice of a successor payee.
A payee who did not elect the annuity payment option does not have the right
to advance or assign payments, take the payments in one sum, or make any other
change. However, the payee may be given the right to do one or more of these
things if the person who elects the option tells PFL in writing and PFL
agrees.
Variable Payment Options. The dollar amount of the first variable annuity
payment will be determined in accordance with the annuity payment rates set
forth in the applicable table contained in the policy. The tables are based on
a 5% effective annual Assumed Investment Return and the "1983 Table a" (male,
female, and unisex if required by law) mortality table improved to the year
2000 with projection Scale G. ("The 1983 Table a" mortality rates are adjusted
based on improvements in mortality since 1983 to more appropriately reflect
increased longevity. This is accomplished using a set of improvement factors
referred to as projection scale G.) The dollar amount of additional variable
annuity payments will vary based on the investment performance of the
subaccount(s) of the mutual fund account selected by the annuitant or
beneficiary.
-13-
<PAGE>
Determination of the First Variable Payment. The amount of the first variable
payment depends upon the sex (if consideration of sex is allowed under state
law) and adjusted age of the annuitant. The adjusted age is the annuitant's
actual age nearest birthday, on the annuity commencement date, adjusted as
follows:
<TABLE>
<CAPTION>
Annuity
Commencement
Date Adjusted Age
------------ --------------------
<S> <C>
Before 2001 Actual Age
2001-2010 Actual Age minus 1
2011-2020 Actual Age minus 2
2021-2030 Actual Age minus 3
2031-2040 Actual Age minus 4
After 2040 As determined by PFL
</TABLE>
This adjustment assumes an increase in life expectancy, and therefore it
results in lower payments than without such an adjustment.
Determination of Additional Variable Payments. All variable annuity payments
other than the first are calculated using annuity units that are credited to
the policy. The number of annuity units to be credited in respect of a
particular subaccount is determined by dividing that portion of the first
variable annuity payment attributable to that subaccount by the annuity unit
value of that subaccount on the annuity commencement date. The number of
annuity units of each particular subaccount credited to the policy then remains
fixed, assuming no transfers to or from that subaccount occur. The dollar value
of variable annuity units in the chosen subaccount will increase or decrease
reflecting the investment experience of the chosen subaccount. The dollar
amount of each variable annuity payment after the first may increase, decrease
or remain constant, and is equal to the sum of the amounts determined by
multiplying the number of annuity units of each particular subaccount credited
to the policy by the annuity unit value for the particular subaccount on the
date the payment is made.
Death Benefit
Adjusted Partial Withdrawal. The amount of your Guaranteed Minimum Death
Benefit is reduced due to a partial withdrawal called the adjusted partial
withdrawal. The reduction amount depends on the relationship between your
Guaranteed Minimum Death Benefit and policy value. The adjusted partial
withdrawal is (1) multiplied by (2), where:
(1) is the gross partial withdrawal, where the gross partial withdrawal =
requested partial withdrawal - excess interest adjustment; and
(2) is the adjustment factor, which = current death benefit prior to the
withdrawal divided by the current policy value prior to the withdrawal.
-14-
<PAGE>
The following examples describe the effect of a withdrawal on the Guaranteed
Minimum Death Benefit and policy value.
EXAMPLE 1
(Assumed Facts for Example)
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
$75,000 current Guaranteed Minimum Death Benefit (GMDB) before withdrawal
- ---------------------------------------------------------------------------
$50,000 current policy value before withdrawal
- ---------------------------------------------------------------------------
$75,000 current death benefit (larger of policy value and GMDB)
- ---------------------------------------------------------------------------
$15,000 requested withdrawal
- ---------------------------------------------------------------------------
$ 5,000 Excess interest adjustment-free amount (assumes 10% penalty free
withdrawal is available)
- ---------------------------------------------------------------------------
$ 100 excess interest adjustment (assumes interest rates have decreased
since initial guarantee)
- ---------------------------------------------------------------------------
$14,900 reduction in policy value = 15000 - 100
- ---------------------------------------------------------------------------
$22,350 adjusted partial withdrawal = 14,900 * (75,000/50,000)
- ---------------------------------------------------------------------------
$52,650 New GMDB (after withdrawal) = 75,000 - 22,350
- ---------------------------------------------------------------------------
$35,100 New policy value (after withdrawal)=50,000 - 14,900
</TABLE>
<TABLE>
<CAPTION>
Summary:
- --------
<S> <C>
Reduction in guaranteed minimum death benefit = $22,350
Reduction in policy value = $14,900
</TABLE>
Note, guaranteed minimum death benefit is reduced more than the policy value
since the guaranteed minimum death benefit was greater than the policy value
just prior to the withdrawal.
EXAMPLE 2
(Assumed Facts for Example)
- --------------------------------------------------------------------------------
<TABLE>
<C> <S>
$50,000 current Guaranteed Minimum Death Benefit (GMDB) before withdrawal
- ---------------------------------------------------------------------------
$75,000 current policy value before withdrawal
- ---------------------------------------------------------------------------
$75,000 current death benefit (larger of policy value and GMDB)
- ---------------------------------------------------------------------------
$15,000 requested withdrawal
- ---------------------------------------------------------------------------
$ 7,550 excess interest adjustment-free amount (assumes 10% penalty free
withdrawal is available)
- ---------------------------------------------------------------------------
$ - 100 excess interest adjustment (assumes interest rates have increased
since initial guarantee)
- ---------------------------------------------------------------------------
$15,100 reduction in policy value = $15,000 - (- 100) = 15,000 + 100
- ---------------------------------------------------------------------------
$15,100 adjusted partial withdrawal = $15,100 * (75,000/75,000)
- ---------------------------------------------------------------------------
$34,900 New GMDB (after withdrawal) = 50,000 - 15,100
- ---------------------------------------------------------------------------
$59,900 New policy value (after withdrawal) = 75,000 - 15,100
</TABLE>
<TABLE>
<CAPTION>
Summary:
- --------
<S> <C>
Reduction in guaranteed minimum death benefit = $15,100
Reduction in policy value = $15,100
</TABLE>
-15-
<PAGE>
Note, guaranteed minimum death benefit and policy value are reduced by the same
amount since the policy value was higher than the guaranteed minimum death
benefit just prior to the withdrawal.
Due proof of death of the annuitant is proof that the annuitant who is the
owner died prior to the commencement of annuity payments. Upon receipt of this
proof and an election of a method of settlement and return of the policy, the
death benefit generally will be paid within seven days, or as soon thereafter
as PFL has sufficient information about the beneficiary to make the payment.
The beneficiary may receive the amount payable in a lump sum cash benefit, or,
subject to any limitation under any state or federal law, rule, or regulation,
under one of the annuity payment options described above, unless a settlement
agreement is effective at the death of the owner preventing such election.
If the annuitant was the owner, and the beneficiary was not the annuitant's
spouse, the death benefit must (1) be distributed within five years of the date
of the deceased owner's death, or (2) payments under an annuity payment option
must begin no later than one year after the deceased owner's death and must be
made for the beneficiary's lifetime or for a period certain (so long as any
certain period does not exceed the beneficiary's life expectancy). Death
proceeds which are not paid to or for the benefit of a natural person must be
distributed within five years of the date of the deceased owner's death. If the
sole beneficiary is the deceased owner's surviving spouse, such spouse may
elect to continue the policy as the new annuitant and owner instead of
receiving the death benefit.
If the annuitant is not the owner, and the owner dies prior to the annuity
commencement date, a successor owner may surrender the policy at any time for
the amount of the adjusted policy value. If the successor owner is not the
deceased owner's spouse, however, the adjusted policy value must be
distributed: (1) within five years after the date of the deceased owner's
death, or (2) payments under an annuity payment option must begin no later than
one year after the deceased owner's death and must be made for the successor
owner's lifetime or for a period certain (so long as any period certain does
not exceed the successor owner's life expectancy).
Beneficiary. The beneficiary designation in the application will remain in
effect until changed. The owner may change the designated beneficiary by
sending written notice to PFL. The beneficiary's consent to such change is not
required unless the beneficiary was irrevocably designated or law requires
consent. (If an irrevocable beneficiary dies, the owner may then designate a
new beneficiary.) The change will take effect as of the date the owner signs
the written notice, whether or not the owner is living when the notice is
received by PFL. PFL will not be liable for any payment made before the written
notice is received. If more than one beneficiary is designated, and the owner
fails to specify their interests, they will share equally.
Death of Owner
Federal tax law requires that if any owner (including any joint owner or any
successor owner who has become a current owner) dies before the annuity
commencement date, then the entire value of the policy must generally be
distributed within five years of the date of death of such owner. Certain rules
apply where (1) the spouse of the deceased owner is the sole beneficiary,
(2) the owner is not a natural person and the primary annuitant dies or is
changed, or (3) any owner dies after the annuity commencement date. See
"Certain Federal Income Tax Consequences" for a detailed description of these
rules. Other rules may apply to qualified policies.
-16-
<PAGE>
Assignment
During the lifetime of the annuitant you may assign any rights or benefits
provided by the policy. An assignment will not be binding on PFL until a copy
has been filed at its administrative and service office. Your rights and
benefits and those of the beneficiary are subject to the rights of the
assignee. PFL assumes no responsibility for the validity or effect of any
assignment. Any claim made under an assignment shall be subject to proof of
interest and the extent of the assignment. An assignment may have tax
consequences.
Unless you so direct by filing written notice with PFL, no beneficiary may
assign any payments under the policy before they are due. To the extent
permitted by law, no payments will be subject to the claims of any
beneficiary's creditors.
Ownership under qualified policies is restricted to comply with the Code.
Evidence of Survival
PFL reserves the right to require satisfactory evidence that a person is alive
if a payment is based on that person being alive. No payment will be made until
PFL receives such evidence.
Non-Participating
The policy will not share in PFL's surplus earnings; no dividends will be paid.
Amendments
No change in the policy is valid unless made in writing by PFL and approved by
one of PFL's officers. No registered representative has authority to change or
waive any provision of the policy.
PFL reserves the right to amend the policies to meet the requirements of the
Code, regulations or published rulings. You can refuse such a change by giving
written notice, but a refusal may result in adverse tax consequences.
Employee and Agent Purchases
The policy may be acquired by an employee or registered representative of any
broker/dealer authorized to sell the policy or their spouse or minor children,
or by an officer, director, trustee or bona-fide full-time employee of PFL or
its affiliated companies or their spouse or minor children. In such a case, PFL
may credit an amount equal to a percentage of each premium payment to the
policy due to lower acquisition costs PFL experiences on those purchases. The
credit will be reported to the Internal Revenue Service as taxable income to
the employee or registered representative. PFL may offer certain employer
sponsored savings plans, in its discretion, reduced fees and charges including,
but not limited to, the mortality and expense risk fee and the administrative
charge for certain sales under circumstances which may result in savings of
certain costs and expenses. In addition, there may be other circumstances of
which PFL is not presently aware which could result in reduced sales or
distribution expenses. Credits to the policy or reductions in these fees and
charges will not be unfairly discriminatory against any owner.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary does not constitute tax advice. It is a general
discussion of certain of the expected federal income tax consequences of
investment in and distributions with respect to a Policy, based on the Code, as
amended, proposed and
-17-
<PAGE>
final Treasury Regulations thereunder, judicial authority, and current
administrative rulings and practice. This summary discusses only certain
federal income tax consequences to "United States Persons," and does not
discuss state, local, or foreign tax consequences. United States Persons means
citizens or residents of the United States, domestic corporations, domestic
partnerships and trusts or estates that are subject to United States federal
income tax regardless of the source of their income.
Tax Status of the Policy
The following discussion is based on the assumption that the policy qualifies
as an annuity contract for federal income tax purposes.
Distribution Requirements. The Code also requires that nonqualified policies
contain specific provisions for distribution of policy proceeds upon the death
of any owner. In order to be treated as an annuity contract for federal income
tax purposes, the Code requires that such policies provide that if any owner
dies on or after the annuity commencement date and before the entire interest
in the policy has been distributed, the remaining portion must be distributed
at least as rapidly as under the method in effect on such owner's death. If any
owner dies before the annuity commencement date, the entire interest in the
policy must generally be distributed within 5 years after such owner's date of
death or be used to purchase an immediate annuity under which payments will
begin within one year of such owner's death and will be made for the life of
the beneficiary or for a period not extending beyond the life expectancy of the
"designated beneficiary" as defined in Section 72(s) of the Code. However, if
upon such owner's death prior to the annuity commencement date, such owner's
surviving spouse becomes the sole new owner under the policy, then the policy
may be continued with the surviving spouse as the new owner. Under the policy,
the beneficiary is the designated beneficiary of an owner/annuitant and the
successor owner is the designated beneficiary of an owner who is not the
annuitant. If any owner is not a natural person, then for purposes of these
distribution requirements, the primary annuitant shall be treated as an owner
and any death or change of such primary annuitant shall be treated as the death
of an owner. The nonqualified policies contain provisions intended to comply
with these requirements of the Code. No regulations interpreting these
requirements of the Code have yet been issued and thus no assurance can be
given that the provisions contained in the policies satisfy all such Code
requirements. The provisions contained in the policies will be reviewed and
modified if necessary to assure that they comply with the Code requirements
when clarified by regulation or otherwise.
Withholding. The portion of any distribution under a policy that is includable
in gross income will be subject to federal income tax withholding unless the
recipient of such distribution elects not to have federal income tax withheld.
Election forms will be provided at the time distributions are requested or
made. For certain qualified policies, certain distributions are subject to
mandatory withholding. The withholding rate varies according to the type of
distribution and the owner's tax status. For qualified policies, "eligible
rollover distributions" from Section 401(a) plans and Section 403(b) tax-
sheltered annuities are subject to a mandatory federal income tax withholding
of 20%. An eligible rollover distribution is the taxable portion of any
distribution from such a plan, except certain distributions such as
distributions required by the Code or distributions in a specified annuity
form. The 20% withholding does not apply, however, if the owner chooses a
"direct rollover" from the plan to another tax-qualified plan or IRA.
Qualified Policies. The qualified policy is designed for use with several types
of tax-qualified retirement plans. The tax rules applicable to participants and
beneficiaries in tax-qualified retirement plans vary according to the type of
plan and the terms and conditions of the plan. Special favorable tax treatment
may be available for certain types of contributions and
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<PAGE>
distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; and in other specified circumstances. Some
retirement plans are subject to distribution and other requirements that are
not incorporated into our policy administration procedures. Owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
policies comply with applicable law.
For qualified plans under Section 401(a), 403(a), 403(b), and 457, the Code
requires that distributions generally must commence no later than the later of
April 1 of the calendar year following the calendar year in which the owner (or
plan participant) (i) reaches age 70 1/2 or (ii) retires, and must be made in a
specified form or manner. If the plan participant is a "5 percent owner" (as
defined in the Code), distributions generally must begin no later than April 1
of the calendar year in which the owner (or plan participant) reaches age 70
1/2. Each owner is responsible for requesting distributions under the policy
that satisfy applicable tax rules.
PFL makes no attempt to provide more than general information about use of the
policy with the various types of retirement plans. Purchasers of policies for
use with any retirement plan should consult their legal counsel and tax adviser
regarding the suitability of the policy.
Individual Retirement Annuities. In order to qualify as a traditional
individual retirement annuity under Section 408(b) of the Code, a policy must
contain certain provisions: (i) the owner must be the annuitant; (ii) the
policy generally is not transferable by the owner, e.g., the owner may not
designate a new owner, designate a contingent owner or assign the policy as
collateral security; (iii) the total premium payments for any calendar year may
not exceed $2,000, except in the case of a rollover amount or contribution
under Section 402(c), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code; (iv)
annuity payments or withdrawals must begin no later than April 1 of the
calendar year following the calendar year in which the annuitant attains age 70
1/2; (v) an annuity payment option with a period certain that will guarantee
annuity payments beyond the life expectancy of the annuitant and the
beneficiary may not be selected; and (vi) certain payments of death benefits
must be made in the event the annuitant dies prior to the distribution of the
policy value. Policies intended to qualify as a traditional individual
retirement annuities under Section 408(b) of the Code contain such provisions.
Amounts in the IRA (other than nondeductible contributions) are taxed when
distributed from the IRA. Distributions prior to age 59 1/2 (unless certain
exceptions apply) are subject to a 10% penalty tax.
Section 408 of the Code also indicates that no part of the funds for a
traditional individual retirement account or annuity should be invested in a
life insurance contract, but the regulations thereunder allow such funds to be
invested in an annuity contract that provides a death benefit that equals the
greater of the premiums paid or the cash value for the contract. The policy
provides an enhanced death benefit that could exceed the amount of such a
permissible death benefit, but it is unclear to what extent such an enhanced
death benefit could disqualify the policy under Section 408 of the Code. The
Internal Revenue Service has not reviewed the policy for qualification as an
IRA, and has not addressed in a ruling of general applicability whether an
enhanced death benefit provision, such as the provision in the policy, comports
with IRA qualification requirements.
Roth Individual Retirement Annuities (Roth IRA). The Roth IRA, under Section
408A of the Code, contains many of the same provisions as a traditional IRA.
However, there are some differences. First, the contributions are not
deductible and must be made in cash or as a rollover or transfer from another
Roth IRA or other IRA. A rollover from or conversion of an IRA to a Roth IRA
may be subject to tax and other special rules may apply. You should consult a
tax adviser before combining any converted amounts with any other Roth IRA
contributions,
-19-
<PAGE>
including any other conversion amounts from other tax years. The Roth IRA is
available to individuals with earned income and whose adjusted gross income is
under $110,000 for single filers, $160,000 for married filing jointly, and
$10,000 for married filing separately. The amount per individual that may be
contributed to all IRAs (Roth and traditional) is $2,000. Secondly, the
distributions are taxed differently. The Roth IRA offers tax-free distributions
when made from assets which have been held in the account for 5 tax years and
are made after attaining age 59 1/2, to pay for qualified first time homebuyer
expenses (lifetime maximum of $10,000) or due to death or disability. All other
distributions are subject to income tax when made from earnings and may be
subject to a premature withdrawal penalty tax unless an exception applies.
Unlike the traditional IRA, there are no minimum required distributions during
the owner's lifetime; however, required distributions at death are the same.
Section 403(b) Plans. Under Section 403(b) of the Code, payments made by public
school systems and certain tax exempt organizations to purchase policies for
their employees are excludable from the gross income of the employee, subject
to certain limitations. However, such payments may be subject to FICA (Social
Security) taxes. The policy includes a death benefit that in some cases may
exceed the greater of the premium payments or the policy value. The death
benefit could be characterized as an incidental benefit, the amount of which is
limited in any tax-sheltered annuity under Section 403(b). Because the death
benefit may exceed this limitation, employers using the policy in connection
with such plans should consult their tax adviser. Additionally, in accordance
with the requirements of the Code, Section 403(b) annuities generally may not
permit distribution of (i) elective contributions made in years beginning after
December 31, 1988, and (ii) earnings on those contributions and (iii) earnings
on amounts attributed to elective contributions held as of the end of the last
year beginning before January 1, 1989. Distributions of such amounts will be
allowed only upon the death of the employee, on or after attainment of age 59
1/2, separation from service, disability, or financial hardship, except that
income attributable to elective contributions may not be distributed in the
case of hardship.
Corporate Pension and Profit-Sharing Plans and H.R. 10 Plans. Sections 401(a)
and 403(a) of the Code permit corporate employers to establish various types of
retirement plans for employees and self-employed individuals to establish
qualified plans for themselves and their employees. Such retirement plans may
permit the purchase of the policies to accumulate retirement savings. Adverse
tax consequences to the plan, the participant or both may result if the policy
is assigned or transferred to any individual as a means to provide benefit
payments. The policy includes a death benefit that in some cases may exceed the
greater of the premium payments or the policy value. The death benefit could be
characterized as an incidental benefit, the amount of which is limited in an
pension or profit sharing plan. Because the death benefit may exceed this
limitation, employers using the policy in connection with such plans should
consult their tax adviser.
Deferred Compensation Plans. Section 457 of the Code, while not actually
providing for a qualified plan as that term is normally used, provides for
certain deferred compensation plans with respect to service for state
governments, local governments, political sub-divisions, agencies,
instrumentalities and certain affiliates of such entities, and tax exempt
organizations. The policies can be used with such plans. Under such plans a
participant may specify the form of investment in which his or her
participation will be made. For non-government Section 457 plans, all such
investments, however, are owned by, and are subject to, the claims of the
general creditors of the sponsoring employer. Depending on the terms of the
particular plan, a non-government employer may be entitled to draw on deferred
amounts for purposes unrelated to its Section 457 plan obligations. In general,
all amounts received under a Section 457 plan are taxable and are subject to
federal income tax withholding as wages.
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<PAGE>
Non-natural Persons. Pursuant to Section 72(u) of the Code, an annuity contract
held by a taxpayer other than a natural person generally will not be treated as
an annuity contract under the Code; accordingly, an owner who is not a natural
person will recognize as ordinary income for a taxable year the excess of (i)
the sum of the policy value as of the close of the taxable year and all
previous distributions under the policy over (ii) the sum of the premium
payments paid for the taxable year and any prior taxable year and the amounts
includable in gross income for any prior taxable year with respect to the
policy. For these purposes, the policy value at year-end may have to be
increased by any positive excess interest adjustment, which could result from a
full surrender at such time. There is, however, no definitive guidance on the
proper tax treatment of excess interest adjustments, and the owner should
contact a competent tax adviser with respect to the potential tax consequences
of an excess interest adjustment. Notwithstanding the preceding sentences in
this paragraph, Section 72(u) of the Code does not apply to (i) a policy the
nominal owner of which is not a natural person but the beneficial owner of
which is a natural person, (ii) a policy acquired by the estate of a decedent
by reason of such decedent's death, (iii) a qualified policy (other than one
qualified under Section 457) or (iv) a single-payment annuity the annuity
commencement date for which is no later than one year from the date of the
single premium payment; instead, such policies are taxed as described above
under the heading "Taxation of Annuities."
Taxation of PFL
PFL at present is taxed as a life insurance company under part I of Subchapter
L of the Code. The mutual fund account and the target account are treated as
part of PFL and, accordingly, will not be taxed separately as "regulated
investment companies" under Subchapter M of the Code. PFL does not expect to
incur any federal income tax liability with respect to investment income and
net capital gains arising from the activities of the mutual fund account or the
target account retained as part of the reserves under the policy. Based on this
expectation, it is anticipated that no charges will be made against the mutual
fund account or the target account for federal income taxes. If, in future
years, any federal income taxes are incurred by PFL with respect to the mutual
fund account or the target account, PFL may make a charge to that account.
INVESTMENT EXPERIENCE
A "net investment factor" is used to determine the value of accumulation units
and annuity units, and to determine annuity payment rates.
Accumulation Units
Allocations of a premium payment directed to a mutual fund or target series
subaccount are credited in the form of accumulation units. Each subaccount has
a distinct accumulation unit value. The number of units credited is determined
by dividing the premium payment or amount transferred to the mutual fund or
target series subaccount by the accumulation unit value of the mutual fund or
target series subaccount as of the end of the valuation period during which the
allocation is made. For each mutual fund or target series subaccount, the
accumulation unit value for a given business day is based on the net asset
value of a share of the corresponding portfolio of the underlying funds less
any applicable charges or fees.
Upon allocation to the selected mutual fund subaccount or target subaccount,
premium payments are converted into accumulation units of the subaccount. The
number of accumulation units to be credited is determined by dividing the
dollar amount allocated to each subaccount by the value of an accumulation unit
for that subaccount as next determined after the premium
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<PAGE>
payment is received at the administrative and service office or, in the case of
the initial premium payment, when the application is completed, whichever is
later. The value of an accumulation unit was arbitrarily established at $1
(except the target series subaccounts which was established at $10) at the
inception of each subaccount. Thereafter, the value of an accumulation unit is
determined as of the close of trading on each day the New York Stock Exchange
is open for trading.
For the mutual fund account, an index, the net investment factor, which
measures the investment performance of a subaccount during a valuation period
is used to determine the value of an accumulation unit for the next subsequent
valuation period. The net investment factor may be greater or less than or
equal to one; therefore, the value of an accumulation unit may increase,
decrease or remain the same from one valuation period to the next. You bear
this investment risk. The net investment performance of a subaccount and
deduction of certain charges affect the accumulation unit value.
The net investment factor for any mutual fund subaccount or target series
subaccount for any valuation period is determined by dividing (a) by (b) and
subtracting (c) from the result, where:
(a) is the net result of:
(1) the net asset value per share of the shares held in the subaccount
determined at the end of the current valuation period, plus
(2) the per share amount of any dividend or capital gain distribution
made with respect to the shares held in the subaccount if the ex-
dividend date occurs during the current valuation period, plus or minus
(3) a per share credit or charge for any taxes determined by PFL to
have resulted during the valuation period from the investment
operations of the subaccount;
(b) is the net result of the net asset value per share of the shares held
in the subaccount determined as of the end of the immediately preceding
valuation period; and
(c) is the charge for mortality and expense risk during the valuation
period, equal on an annual basis to 1.25% (for both the 5% Annually
Compounding Death Benefit and the Double Enhanced Death Benefit) and
1.10% (for the Return of Premium Death Benefit) of the daily net asset
value of the subaccount, plus the .15% administrative charge, plus the
distribution financing charge of .25%. The distribution financing
charge is assessed only during the first ten policy years and prior to
the annuity commencement date.
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<PAGE>
Illustration of Mutual Fund Account and
Target Account Accumulation Unit Value Calculations
Formula and Illustration for Determining the Net Investment Factor
Net Investment Factor = (A + B - C) - E
D
<TABLE>
<C> <S> <C>
Where: A = The net asset value of an underlying fund share as of the end of the
current valuation period.
Assume..................................... A = $11.57
B = The per share amount of any dividend or capital gains distribution
since the end of the immediately preceding valuation period.
Assume.......................................... B = 0
C = The per share charge or credit for any taxes reserved for at the end
of the current valuation period.
Assume.......................................... C = 0
D = The net asset value of an underlying fund share at the end of the
immediately preceding valuation period.
Assume..................................... D = $11.40
E = The daily deduction for the mortality and expense risk fee, the
administrative charge, and the distribution financing charge, which
totals 1.65% on an annual basis for the first ten years and 1.40%
thereafter. On a daily basis, E equals .0000448376 for the first ten
years and .0000380909 thereafter.
</TABLE>
Then, the net investment factor = (11.57 + 0 - 0)
.0000448376 = Z = 1.0148674431
(11.40)
for the first ten years, and (11.57 + 0 - 0) .0000380909 = 1.0148741898
thereafter.
11.40
Formula and Illustration for Determining Accumulation Unit Value
Accumulation Unit Value = A * B
<TABLE>
<C> <S> <C>
Where: A = The accumulation unit value for the immediately preceding valuation
period.
Assume........................................... = $X
B = The net investment factor for the current valuation period.
Assume............................................ = Y
</TABLE>
Then, the accumulation unit value = $X * Y = $Z
Annuity Unit Value And Annuity Payment Rates
For both the mutual fund account and the target account, the amount of variable
annuity payments will vary with annuity unit values. Annuity unit values rise
if the net investment performance of the subaccount exceeds the assumed
interest rate of 5% annually. Conversely, annuity unit values fall if the net
investment performance of the subaccount is less than the assumed rate. The
value of a variable annuity unit in each subaccount was established at $1.00 on
the date operations began for that subaccount. For the mutual fund account, the
value of a variable annuity unit on any subsequent business day is equal to (a)
multiplied by (b) multiplied by (c), where:
(a) is the variable annuity unit value on the immediately preceding
business day;
(b) is the net investment factor for the valuation period; and
(c) is the investment result adjustment factor for the valuation period.
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<PAGE>
The investment result adjustment factor for the valuation period is the product
of discount factors of .99986634 per day to recognize the 5% effective annual
assumed investment return. The valuation period is the period from the close of
the immediately preceding business day to the close of the current business
day.
For the target account, at the end of each valuation period, the annuity unit
value is established by multiplying the value of an annuity unit determined at
the end of the immediately preceding valuation period by the net investment
factor for the current valuation period, and then multiplying that product by
an investment result adjustment factor for the purpose of offsetting the effect
of an assumed investment return of 5.0% per annum which is assumed in the
annuity conversion rates for the contracts. The net investment factor includes
a charge for mortality and expense risks, that is, the mortality and expense
risk fee and administrative charge.
The dollar amount of subsequent variable annuity payments will depend upon
changes in applicable annuity unit values.
The annuity payment rates vary according to the annuity option elected and the
sex and adjusted age of the annuitant at the annuity commencement date. The
policy also contains a table for determining the adjusted age of the annuitant.
Illustration of Calculations for Annuity Unit Value
and Variable Annuity Payments
Formula and Illustration for Determining Annuity Unit Value
Annuity Unit Value = A * B * C
<TABLE>
<C> <S> <C>
Where: A = Annuity unit value for the immediately preceding valuation period.
Assume........................................... = $X
B = Net investment factor for the valuation period for which the
annuity unit value is being calculated.
Assume........................................... = Y
C = A factor to neutralize the assumed interest rate of 5% built into
the annuity tables used.
Assume........................................... = Z
</TABLE>
Then, the annuity unit value is:
$ X * Y * Z = $ Q
Formula and Illustration for Determining
Amount of First Monthly Variable Annuity Payment
First monthly variable annuity payment = A * B
$1,000
<TABLE>
<C> <S> <C>
Where: A = The adjusted policy value as of the annuity commencement date.
Assume........................................... = $X
B = The annuity purchase rate per $1,000 of adjusted policy value based
upon the option selected, the sex and adjusted age of the annuitant
according to the tables contained in the policy.
Assume........................................... = $Y
</TABLE>
Then, the first monthly variable annuity payment = $X * $Y = $Z
1,000
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<PAGE>
Formula and Illustration for Determining the Number of Annuity Units
Represented by Each Monthly Variable Annuity Payment
Number of annuity units = A
B
<TABLE>
<C> <S> <C>
Where: A = The dollar amount of the first monthly variable annuity payment.
Assume.......................................... = $X
B = The annuity unit value for the valuation date on which the first
monthly payment is due.
Assume.......................................... = $Y
</TABLE>
Then, the number of annuity units $X = Z
$Y
FAMILY INCOME PROTECTOR--HYPOTHETICAL ILLUSTRATION
The amounts shown below are hypothetical guaranteed minimum monthly payment
amounts under the "family income protector" for a $100,000 premium when annuity
payments do not begin until the rider anniversary indicated in the left-hand
column. These figures assume that there were no subsequent premium payments, or
withdrawals, that there were no premium taxes and that the $100,000 premium is
subject to the family income protector. Six different annuity payment options
are illustrated: a male annuitant, a female annuitant and a joint and survivor
annuity, each on a Life Only and a Life with 10 Year Certain basis. These
hypothetical illustrations assume that the annuitant is (or both annuitants
are) 60 years old when the rider is issued, that the annual growth rate is 6.0%
(once established an annual growth rate will not change during the life of the
family income protector rider), and that there was no upgrade of the minimum
annuitization value. The figures below, which are the amount of the first
monthly payment, are based on an assumed investment return of 3%. Subsequent
payments will never be less than the amount of the first payment (although
subsequent payments are calculated using a 5% assumed investment return).
Illustrations of guaranteed minimum payments based on other assumptions will be
provided upon request.
Life Only = Life Annuity with No Period Certai___nLife 10 = Life Annuity with 10
Years Certain
<TABLE>
<CAPTION>
Rider Anniversary at
Exercise Date Male Female Joint & Survivor
- ------------------------------------------------------------------------------
Life Only Life 10 Life Only Life 10 Life Only Life 10
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10 (age 70) $1,135 $1,067 $ 976 $ 949 $ 854 $ 852
- ------------------------------------------------------------------------------
15 1,833 1,634 1,562 1,469 1,332 1,318
- ------------------------------------------------------------------------------
20 (age 80) 3,049 2,479 2,597 2,286 2,145 2,078
</TABLE>
This hypothetical illustration should not be deemed representative of past or
future performance of any underlying variable investment option.
Withdrawals will affect the minimum annuitization value as follows: Each policy
year, withdrawals up to the limit of the total free amount (the minimum
annuitization value on the last policy anniversary multiplied by the annual
growth rate) reduce the minimum annuitization value on a dollar-for-dollar
basis. Withdrawals over this free amount will reduce the minimum
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<PAGE>
annuitization value on a pro rata basis by an amount equal to the minimum
annuitization value immediately prior to the excess withdrawal multiplied by
the percentage reduction in the policy value resulting from the excess
withdrawal. The free amount will always be a relatively small fraction of the
minimum annuitization value.
The amount of the first payment provided by the family income protector will be
determined by multiplying each $1,000 of minimum annuitization value by the
applicable annuity factor shown on Schedule I of the family income protector
rider. The applicable annuity factor depends upon the annuitant's (and joint
annuitant's, if any) sex (or without regard to gender if required by law), age,
and the family income protector payment option selected and is based on a
guaranteed interest rate of 3% and the "1983 Table a" mortality table improved
to the year 2000 with projection Scale G. Subsequent payments will be
calculated as described in the family income protector rider using a 5% assumed
investment return. Subsequent payments may fluctuate annually in accordance
with the investment performance of the annuity subaccounts. However, subsequent
payments are guaranteed to never be less than the initial payment.
The stabilized payment on each subsequent policy anniversary after
annuitization using the family income protector will equal the greater of the
initial payment or the payment supportable by the annuity units in the selected
subaccounts. The supportable payment is equal to the number of variable annuity
units in the selected subaccounts multiplied by the variable annuity unit
values in those subaccounts on the date the payment is made. The variable
annuity unit values used to calculate the supportable payment will assume a 5%
assumed investment return. If the supportable payment at any payment date
during a policy year is greater than the stabilized payment for that policy
year, the excess will be used to purchase additional annuity units. Conversely,
if the supportable payment at any payment date during a policy year is less
than the stabilized payment for that policy year, there will be a reduction in
the number of annuity units credited to the policy to fund the deficiency. In
the case of a reduction, you will not participate as fully in the future
investment performance of the subaccounts you selected since fewer annuity
units are credited to your policy. Purchases and reductions will be allocated
to each subaccount on a proportionate basis.
PFL bears the risk that it will need to make payments if all annuity units have
been used in an attempt to maintain the stabilized payment at the initial
payment level. In such an event, PFL will make all future payments equal to the
initial payment. Once all the annuity units have been used, the amount of your
payment will not increase or decrease and will not depend upon the performance
of any subaccounts. To compensate PFL for this risk, a stabilized payment fee
will be deducted.
HISTORICAL PERFORMANCE DATA
Money Market Yields
PFL may from time to time disclose the current annualized yield of the Endeavor
Money Market Subaccount, which invests in the Endeavor Money Market Portfolio,
for a 7-day period in a manner which does not take into consideration any
realized or unrealized gains or losses on shares of the Endeavor Money Market
Portfolio or on its portfolio securities. This current annualized yield is
computed by determining the net change (exclusive of realized gains and losses
on the sale of securities and unrealized appreciation and depreciation and
income other than investment income) at the end of the 7-day period in the
value of a hypothetical account having a balance of 1 unit of the Endeavor
Money Market Subaccount at the beginning of the 7-day period, dividing such net
change in account value by the value of the account at the beginning of the
period to determine the base period return, and annualizing this quotient on a
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<PAGE>
365-day basis. The net change in account value reflects (i) net income from the
portfolio attributable to the hypothetical account; and (ii) charges and
deductions imposed under a policy that are attributable to the hypothetical
account. The charges and deductions include the per unit charges for the
hypothetical account for (i) the administrative charges; (ii) the mortality and
expense risk fee, and (iii) the distribution financing charge. Current yield
will be calculated according to the following formula:
Current Yield = ((NCS - ES)/UV) * (365/7))
Where:
NCS=
The net change in the value of the portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment
income) for the 7-day period attributable to a hypothetical account
having a balance of 1 subaccount unit.
ES= Per unit expenses of the subaccount for the 7-day period.
UV= The unit value on the first day of the 7-day period.
Because of the charges and deductions imposed under a policy, the yield for the
Endeavor Money Market Subaccount will be lower than the yield for the Endeavor
Money Market Portfolio. The yield calculations do not reflect the effect of any
premium taxes that may be applicable to a particular policy.
PFL may also disclose the effective yield of the Endeavor Money Market
Subaccount for the same 7-day period, determined on a compounded basis. The
effective yield is calculated by compounding the base period return according
to the following formula:
Effective Yield = (1 + ((NCS--ES)/UV))/365///7/ - 1
Where:
NCS=
The net change in the value of the portfolio (exclusive of realized
gains and losses on the sale of securities and unrealized
appreciation and depreciation and income other than investment
income) for the 7-day period attributable to a hypothetical account
having a balance of 1 subaccount unit.
ES=
Per unit expenses of the subaccount for the 7-day period.
UV= The unit value on the first day of the 7-day period.
The yield on amounts held in the Endeavor Money Market Subaccount normally will
fluctuate on a daily basis. Therefore, the disclosed yield for any given past
period is not an indication or representation of future yields or rates of
return. The Endeavor Money Market Subaccount's actual yield is affected by
changes in interest rates on money market securities, average portfolio
maturity of the Endeavor Money Market Portfolio, the types and quality of
portfolio securities held by the Endeavor Money Market Portfolio and its
operating expenses. For the seven days ended December 31, 1998, the yield of
the Endeavor Money Market Subaccount was 3.015%, and the effective yield was
3.060% for the 5% Annually Compounding Death Benefit and
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<PAGE>
the Double Enhanced Death Benefit. For the seven days ended December 31, 1998,
the yield of the Endeavor Money Market Subaccount was 3.157%, and the effective
yield was 3.206% for the Return of Premium Death Benefit.
Other Subaccount Yields
PFL may from time to time advertise or disclose the current annualized yield of
one or more of the mutual fund subaccounts and the target subaccounts (except
the Endeavor Money Market Subaccount) for 30-day periods. The annualized yield
of a subaccount refers to income generated by the subaccount over a specific
30-day period. Because the yield is annualized, the yield generated by a
subaccount during the 30-day period is assumed to be generated each 30-day
period over a 12-month period. The yield is computed by: (i) dividing the net
investment income of the subaccount less subaccount expenses for the period, by
(ii) the maximum offering price per unit on the last day of the period times
the daily average number of units outstanding for the period, (iii) compounding
that yield for a 6-month period, and (iv) multiplying that result by 2.
Expenses attributable to the subaccount include (i) the administrative charges;
(ii) the mortality and expense risk fee; and (iii) the distribution financing
charge. The 30-day yield is calculated according to the following formula:
Yield = 2 x ((((NI - ES)/(U x UV)) + 1)/6/ - 1)
Where:
NI=
Net investment income of the subaccount for the 30-day period
attributable to the subaccount's unit.
ES=
Expenses of the subaccount for the 30-day period.
U= The average number of units outstanding.
UV= The unit value at the close (highest) of the last day in the 30-day
period.
Because of the charges and deductions imposed by the mutual fund account, the
yield for a mutual fund subaccount will be lower than the yield for its
corresponding portfolio. The yield calculations do not reflect the effect of
any premium taxes that may be applicable to a particular policy.
The yield on amounts held in the mutual fund subaccounts and the target
subaccounts units normally will fluctuate over time. Therefore, the disclosed
yield for any given past period is not an indication or representation of
future yields or rates of return. The types and quality of its investments and
its operating expenses affect a subaccount's actual yield.
Total Returns
PFL may from time to time also advertise or disclose total returns for one or
more of the mutual fund subaccounts or the target subaccounts for various
periods of time. One of the periods of time will include the period measured
from the date the subaccount commenced operations. When a subaccount has been
in operation for 1, 5 and 10 years, respectively, the total return for these
periods will be provided. Total returns for other periods of time may from time
to time also be disclosed. Total returns represent the average annual
compounded rates of return that would equate an initial investment of $1,000 to
the redemption value of that investment as of the last day of each of the
periods. The ending date for each period for which total return quotations are
provided will be for the most recent month end practicable, considering the
type and media of the communication and will be stated in the communication.
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<PAGE>
Total returns will be calculated using subaccount unit values which PFL
calculates on each business day based on the performance of the mutual fund
account's underlying portfolio, and the target subaccount's common shares, and
the deductions for the mortality and expense risk fee, the distribution
financing charges, and the administrative charges. The total return for each
target subaccount will also reflect the manager's fee and other operating
expenses. The total return will then be calculated according to the following
formula:
P (1 + T)n = ERV
Where:
T=
The average annual total return net of subaccount recurring charges.
ERV= The ending redeemable value of the hypothetical account at the end of
the period.
P= A hypothetical initial payment of $1,000.
N= The number of years in the period.
Other Performance Data
PFL may from time to time also disclose average annual total returns in a non-
standard format in conjunction with the standard format described above.
PFL may from time to time also disclose cumulative total returns in conjunction
with the standard format described above. The cumulative returns will be
calculated using the following formula.
CTR = (ERV / P) - 1
Where:
CTR=
The cumulative total return net of subaccount recurring charges for
the period.
ERV= The ending redeemable value of the hypothetical investment at the end
of the period.
P= A hypothetical initial payment of $1,000.
All non-standard performance data will only be advertised if the standard
performance data for the same period, as well as for the required period, is
also disclosed.
Adjusted Historical Performance Data--The Mutual Fund Account
From time to time, sales literature or advertisements may quote average annual
total returns for periods prior to the date a particular mutual fund subaccount
commenced operations. Such performance information for the mutual fund
subaccounts will be calculated based on the performance of the various
portfolios and the assumption that the mutual fund subaccounts were in
existence for the same periods as those indicated for the portfolios, with the
level of policy charges that are currently in effect.
THE TARGET ACCOUNT
What is the Investment Strategy?
The objective of each of the target subaccounts is to provide an above-average
total return through a combination of dividend income and capital appreciation.
While the objectives of the target subaccounts are the same, each target
subaccount follows a different investment strategy (set forth below) in order
to achieve its stated objective.
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<PAGE>
Each target subaccount will initially invest in equal amounts in the common
stock described below for each target subaccount (common shares) determined as
of a specified business day (initial stock selection date). The Dow SM Target
10 Subaccount will invest in the common stock of the ten companies in the DJIA
that have the highest dividend yield. The Dow SM Target 5 Subaccount will
invest in the common stock of the five companies with the lowest per share
stock price of the ten companies in The Dow SM Target 10 Subaccount. These
stocks will be held for approximately one year.
At the initial stock selection date, a percentage relationship among the number
of common shares in a target subaccount will be established. When additional
funds are deposited into the target subaccount, additional common shares will
be purchased in such numbers reflecting as nearly as practicable the percentage
relationship of the number of common shares established at the initial
purchase. Sales of common shares by the target subaccount will likewise attempt
to replicate the percentage relationship of common shares. The percentage
relationship among the number of common shares in the target subaccount should
therefore remain stable. However, given the fact that the market price of such
common shares will vary throughout the year, the value of the common shares of
each of the companies as compared to the total assets of the target subaccount
will fluctuate during the year, above and below the proportion established on a
stock selection date. On the last business day of the 12-month period following
the preceding stock selection date (annual stock selection date), a new
percentage relationship will be established among the number of common shares
described above for each target subaccount on such date. Common shares may be
sold or new equity securities bought so that the target subaccount is equally
invested in the common stock of each company meeting the target subaccount's
investment criteria. Thus the target subaccount may or may not hold equity
securities of the same companies as the previous year. Any purchase or sale of
additional common shares during the year will duplicate, as nearly as
practicable, the percentage relationship among the number of common shares as
of the annual stock selection date since the relationship among the value of
the common shares on the date of any subsequent transactions may be different
than the original relationship among their value.
The yield for each equity security listed on the DJIA is calculated by
annualizing the last quarterly or semi-annual ordinary dividend declared and
dividing the result by the market value of such equity security as of the close
of business on the stock selection date.
The publishers of the DJIA are not affiliated with PFL, Endeavor Management
Co., or First Trust Advisers L.P. and have not participated in the creation of
the target subaccounts or the selection of the equity securities included
therein. Any changes in the components of any of the respective indices made
after a stock selection date will not cause a change in the identity of the
common shares included in a target subaccount, including any additional common
shares purchased thereafter, until the next annual stock selection date.
Investors should note that the above criteria were applied and will in the
future be applied to the common shares selected for inclusion in the target
subaccounts as of the respective stock selection date. Additional common shares
which were originally selected through this process may be purchased throughout
the year, as investors may continue to invest in the target subaccounts, even
though the yields on these common shares may have changed subsequent to the
previous stock selection date. These common shares may no longer be included in
the index, or may not meet a target subaccount's selection criteria at that
time, and therefore, such common shares would no longer be chosen for inclusion
in the target subaccounts if the selection process were to be performed again
at that time. The equity securities selected as common shares and the
percentage relationship among the number of shares will not change for purchase
or sales by a target subaccount until the next annual stock selection date.
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<PAGE>
Determination of Unit Value; Valuation of Securities
PFL determines the unit value of each target subaccount each business day. This
daily determination of unit value is made by dividing the total assets of a
target series subaccount, less all of its liabilities, by the total number of
units outstanding at the time the determination is made. This is made as of the
close of regular trading on the New York Stock Exchange, currently 4:00 p.m.
New York time unless the Exchange closes earlier. Purchases and redemptions
will be effected at the time of determination of unit value next following the
receipt of any purchase or redemption order deemed to be in good order.
Equity securities are valued at the last sale price on the exchange on which
they are primarily traded or at the ask price on the NASDAQ system for unlisted
national market issues, or at the last quoted bid price for securities in which
there were no sales during the day or for unlisted securities not reported on
the NASDAQ system. Short-term obligations which mature in 60 days or less are
valued at amortized cost, which approximates fair value as determined by the
Board of Managers. Futures and option contracts that are traded on commodities
or securities exchanges are normally valued at the settlement price on the
exchange on which they are traded. Securities (other than short-term
obligations) for which there are no such quotations or valuations are valued at
fair value as determined in good faith by or at the direction of the Board of
Managers of the target subaccounts.
The Board of Managers
The members of the Board of Managers of the target account, and their principal
occupations during the past five years are set forth below. Their titles may
have varied during that period. Unless otherwise indicated, the address of each
member is 2101 East Coast Highway, Suite 300, Corona del Mar, California 92625.
<TABLE>
<CAPTION>
Name, Age and Address Held With Registrant During Past 5 Years
--------------------- -------------------- -------------------
<S> <C> <C>
*+Vincent J. McGuinness, Jr.
(34)....................... President, Chief Financial From February, 1997 to December
Officer (Treasurer), and 1997, Executive Vice-President,
Manager Chief of Operations, since March
1997, Director, since December,
1997, Chief Operating Officer and
since June, 1998, Chief Financial
Officer of Endeavor Group; from
September, 1996 to June, 1997,
and since June 1998, Chief
Financial Officer, since May,
1996, Director, and from June,
1997 to October, 1998, Executive
Vice President--Administration
and since October 1998, President
of Endeavor Management Co.; since
August, 1996, Chief Financial
Officer of VJM Corporation; from
May, 1996 to January 1997,
Executive Vice President and
Director of Sales, Western
Division of Endeavor Group; since
May, 1996, Chief Financial
Officer of McGuinness &
Associates; from July, 1993 to
August, 1995 Rocky
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name, Age and Address Held With Registrant During Past 5 Years
--------------------- -------------------- -------------------
<S> <C> <C>
Mountain Regional Marketing
Director for Endeavor Group;
President, Chief Financial
Officer, and Trustee of Endeavor
Series Trust.
*Vincent J. McGuinness Manager Chairman, Chief Executive Officer
(64)....................... and Director of McGuinness &
Associates, Endeavor Group, VJM
Corporation (oil and gas), until
July, 1996 McGuinness Group
(insurance marketing) and until
January, 1994 Swift Energy
Marketing Company and since
September, 1988 Endeavor
Management Co.; President of VJM
Corporation and until October,
1998, Endeavor Management Co.
and, since February, 1996,
McGuinness & Associates; Trustee,
Endeavor Series Trust.
Timothy A. Devine (64)...... Manager Vice President, Plant Control,
1424 Dolphin Terrace Inc. (landscape contracting and
Corona del Mar, California maintenance); Trustee, Endeavor
92625 Series Trust.
Thomas J. Hawekotte (64).... Manager President, Thomas Hawekotte, P.C.
6007 North Sheridan Road (law practice); Trustee, Endeavor
Chicago, Illinois 60660 Series Trust.
Halbert D. Lindquist (53)... Manager President, Lindquist, Stephenson
1650 E. Fort Lowell Road & White (investment adviser) and
Suite 203 since December, 1987 Tucson Asset
Tucson, Arizona 85719-2324 Management Inc. (commodity
trading advisor), and since
November, 1987, Presidio
Government Securities,
Incorporated (broker-dealer);
since January 1998, Chief
Investment Officer, Blackstone
Alternative Asset Management,
Trustee, Endeavor Series Trust.
Steven L. Klosterman (47)... Manager Since July, 1995, President of
5973 Avenida Encinas, #300 Klosterman Capital Corporation
Carlsbad, California 92008 (investment adviser); Investment
Counselor, Robert J. Metcalf &
Associates, Inc. (investment
adviser)
from August, 1990 to June, 1995;
Trustee, Endeavor Series Trust.
Keith H. Wood (63).......... Manager Since 1972, Chairman and Chief
Executive Officer of Jamison,
Eaton
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Name, Age and Address Held With Registrant During Past 5 Years
--------------------- -------------------- -------------------
<S> <C> <C>
& Wood (investment adviser) and
since 1978 to December 1997,
President of Ivory & Sime
International, Inc. (investment
adviser); Trustee, Endeavor
Series Trust.
Peter F. Muratore (67)...... Manager From June, 1989 to March 1998,
Too Far Posthouse Road President of OCC Distributors
Morristown, NJ 07960 (broker/dealer), a subsidiary of
Oppenheimer Capital.
*William. L. Busler (56).... Manager President, PFL Life Insurance
4333 Edgewood Road N.E. Company; Trustee, Endeavor Series
Cedar Rapids, Iowa Trust.
52499-0001
Michael Pond (45)........... Executive Vice Since November 1, 1998, Executive
President-- Vice President--Administrator and
Administration and Compliance of Endeavor Group and
Compliance Endeavor Management Co. and Chief
Investment Officer of Endeavor
Management Co. From November 1991
to November, 1996, Chairman and
President, the Preferred Group of
Mutual Funds; from October, 1989
to November, 1996, President of
Caterpillar Securities, Inc. and
Caterpillar Investment Manager,
Ltd.
Pamela A. Shelton (50)...... Secretary Since October, 1993, Executive
Secretary to Chairman of the
Board and Chief Executive Officer
of, and since April, 1996,
Secretary of McGuinness &
Associates, Endeavor Group, VJM
Corporation, McGuinness Group
(until July, 1996) and Endeavor
Management Co.; Secretary,
Endeavor Series Trust.
</TABLE>
- -------------------------
* An "interested person" of the target account as defined in the 1940 Act.
+ Vincent J. McGuinness, Jr. is the son of Vincent J. McGuinness.
The "rules and regulations" of the target account provide that the target
account will indemnify its Board of Managers and officers against liabilities
and expenses incurred in connection with litigation in which they may be
involved because of their offices with the target account, except if it is
determined in the manner specified in the Rules and Regulations that they have
not acted in good faith in the reasonable belief that their actions were in the
best interests of the target account or that such indemnification would relieve
any officer or member of the Board of Managers of any liability to the target
account or its shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of his duties. The target account, at its
expense, provides liability insurance for the benefit of its Board of Managers
and officers.
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<PAGE>
Compensation. For the period ended December 31, 1998, the following
compensation was paid to members of the Board of Managers:
<TABLE>
<CAPTION>
Total Compensation
Aggregate From Account
Compensation and Fund Complex
Name of Person From Account Paid to Managers
-------------- ------------ ------------------
<S> <C> <C>
Vincent J. McGuinness.......................... -0- -0-
Timothy A. Devine.............................. $700.00 $13,075.00
Thomas J. Hawekotte............................ $700.00 $13,075.00
Steven L. Klosterman........................... $700.00 $13,075.00
Halbert D. Lindquist........................... $350.00 $ 8,225.00
R. Daniel Olmstead (retired as of 12/31/98).... $700.00 $13,075.00
Keith H. Wood.................................. $700.00 $13,075.00
Vincent J. McGuinness, Jr...................... -0- -0-
William L. Busler.............................. -0- -0-
Peter F. Muratore.............................. $700.00 $ 6,700.00
</TABLE>
The Investment Advisory Services
First Trust Advisors L.P. (the "adviser") is the target account's investment
adviser. The adviser manages the assets of each target subaccount, consistent
with the investment objective and policies described herein and in the
prospectus, pursuant to an investment advisory agreement (the "advisory
agreement") with Endeavor Management Co., the target account's manager.
The adviser's address is 1001 Warrenville Road, Lisle, Illinois 60532. First
Trust Advisers L.P. is a limited partnership with one limited partner, Grace
Partners of Dupage L.P., and one general partner, Nike Securities Corporation.
Grace Partners of Dupage L.P. is a limited partnership with one general
partner, Nike Securities Corporation, and a number of limited partners. Nike
Securities Corporation is an Illinois corporation controlled by Robert Donald
Van Kampen.
Under the advisory agreement, the adviser provides each target subaccount with
discretionary investment services. Specifically, the adviser is responsible for
supervising and directing the investments of each target subaccount in
accordance with each target subaccount's investment objective, program, and
restrictions as provided in the prospectus and this Statement of Additional
Information. The adviser is also responsible for effecting all security
transactions on behalf of each target subaccount.
As compensation for its services, the adviser receives a fee of 0.35% of the
average daily net assets of each target subaccount, which is paid by the
manager. Each target subaccount's advisory agreement also provides that the
adviser, its directors, officers, employees, and certain other persons
performing specific functions for the target subaccounts will only be liable to
the target subaccount for losses resulting from willful misfeasance, bad faith,
gross negligence, or reckless disregard of duty. The amount that Endeavor
Management Co. paid to the adviser during 1998 was $19,594.
The adviser is also the portfolio supervisor of certain unit investment trusts
sponsored by Nike Securities L.P. ("Nike Securities") which are substantially
similar to the target series subaccounts in that they have the same investment
objectives as the target series subaccounts but have a life of approximately
one year. Nike Securities specializes in the underwriting, trading and
distribution of unit investment trusts and other securities. Nike Securities,
an Illinois limited partnership formed in 1991, acts as sponsor for successive
series of The First Trust Combined Series, The First Trust Special Situations
Trust, the First Trust Insured Corporate Trust, The First Trust of Insured
Municipal Bonds and the First Trust GNMA. First Trust introduced the first
insured unit investment trust in 1974 and to date more than $11 billion in
First Trust unit investment trusts have been deposited.
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<PAGE>
The Manager
The target account is managed by Endeavor Management Co. ("the manager") which,
subject to the supervision and direction of the target account's Board of
Managers, has overall responsibility for the general management and
administration of the target account. Vincent J. McGuinness, a member of the
Board of Managers of the target account, together with his family members and
trusts for the benefit of his family members, own all of Endeavor Management
Co.'s outstanding common stock. Mr. McGuinness is Chairman and Chief Executive
Officer of Endeavor Management Co.
The manager is responsible for providing investment management to the target
account and in the exercise of such responsibility selects an investment
adviser for each of the target subaccounts (the "adviser") and monitors the
adviser's investment program and results, reviews brokerage matters, oversees
compliance by the target account with various federal and state statutes, and
carries out the directives of the Board of Managers. The manager is responsible
for providing the target account with office space, office equipment, and
personnel necessary to operate and administer the target account's business,
and also supervises the provision of services by third parties such as the
target account's custodian, transfer agent, and administrator. Pursuant to an
administration agreement, First Data Investor Services Group, Inc. assists the
manager in the performance of its administrative responsibilities to the target
account. For its administrative responsibilities the target account pays First
Data Investor Services Group a flat fee of $10,000 per annum per subaccount and
all out-of-pocket fees and expenses.
As compensation for its services, the manager receives a fee equal to 0.75% of
the average daily net assets of each target subaccount. The amount that the
target account paid the manager during 1998 was $38,590.
Operating Expenses
In addition to the management fees, the target account pays all expenses not
assumed by the manager, including, without limitation, expenses for legal,
accounting and auditing services, interest, taxes, costs of printing and
distributing reports to shareholders, proxy materials and prospectuses, charges
of its custodian, transfer agent and dividend disbursing agent, registration
fees, fees and expenses of the Board of Managers who are not affiliated persons
of the manager or an adviser, insurance, brokerage costs, litigation, and other
extraordinary or nonrecurring expenses. All general target account expenses are
allocated among and charged to the assets of the target series subaccounts on a
basis that the Board of Managers deems fair and equitable, which may be on the
basis of relative net assets of each target series subaccount or the nature of
the services performed and relative applicability to each target series
subaccount. The manager has agreed to limit each target series subaccount's
management fee and operating expenses during its first year of operations to an
annual rate of 1.30% of the target series subaccount's average net assets.
(This limit does not include other fees and deductions such as the mortality
and expense risk fee, administrative charge, and distribution financing
charge.)
Transfer Agent and Custodian
Boston Safe Deposit and Trust Company holds all cash and securities of each
target series subaccount as custodian. First Data Investor Services Group,
located at 4400 Computer Drive, Westborough, Massachusetts 01581, serves as
transfer agent for the target account.
Brokerage Allocation
The adviser invests all assets of the target series subaccounts in common stock
and incurs brokerage costs in connection therewith.
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<PAGE>
Allocations of transactions by the target series subaccounts, including their
frequency, to various dealers is determined by the adviser in its best judgment
and in a manner deemed to be in the best interest of the investors in the
target series subaccount rather than by any formula. The primary consideration
is prompt execution of orders in an effective manner at the most favorable
price. Purchases and sales of securities may be principal transactions; that
is, securities may be purchased directly from the issuer or from an underwriter
or market maker for the securities. Any transactions for which the target
series subaccounts pays a brokerage commission will be effected at the best
price and execution available. Purchases from underwriters of securities
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers serving as market makers include the spread between the
bid and the asked price. Brokerage may be allocated based on the sale of
policies by dealers or activities in support of sales of the policies. The
target account has adopted a Brokerage Enhancement Plan, whereby all or a
portion of certain brokerage commissions paid by the target series subaccounts
may be allocated or credited to the distributor or other entities marketing the
policies, to help finance sales activities.
The target account did not pay compensation to any affiliated broker of
Endeavor Management Co. or First Trust Advisors L.P. during 1998.
Investment Restrictions
Fundamental policies of the target series subaccounts may not be changed
without the approval of the lesser of (1) 67% of the persons holding voting
interests (generally policy owners) present at a meeting if the holders of more
than 50% are present in person or by proxy or (2) more than 50% of the persons
holding voting interests. Other restrictions, in the form of operating
policies, are subject to change by the Board of Managers without the approval
of persons holding a voting interest. Any investment restriction which involves
a maximum percentage of securities or assets shall not be considered to be
violated unless an excess over the percentage occurs immediately after, and is
caused by, an acquisition of securities or assets of, or borrowings by, a
target series subaccount.
Fundamental Policies
As a matter of fundamental policy, each target series subaccount may not:
(1) Borrowing. Borrow money, except each target series subaccount may
borrow as a temporary measure for extraordinary or emergency purposes, and
then only in amounts not exceeding 30% of its total assets valued at
market. Each target series subaccount will not borrow in order to increase
income (leveraging), but only to facilitate redemption requests which might
otherwise require untimely investment liquidations;
(2) Loans. Make loans, although the target series subaccounts may purchase
money market securities and enter into repurchase agreements; and they may
lend their common shares.
(3) Margin. Purchase securities on margin;
(4) Mortgaging. Mortgage, pledge, hypothecate or, in any manner, transfer
any security owned by the target series subaccounts as security for
indebtedness except as may be necessary in connection with permissible
borrowings, in which event such mortgaging, pledging, or hypothecating may
not exceed 30% of each target series subaccount's total assets, valued at
market;
(5) Real Estate. Purchase or sell real estate;
(6) Senior Securities. Issue senior securities (except permitted
borrowings);
(7) Short Sales. Effect short sales of securities; or
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<PAGE>
(8) Underwriting. Underwrite securities issued by other persons, except to
the extent the target series subaccounts may be deemed to be underwriters
within the meaning of the Securities Act of 1933 in connection with the
purchase and sale of their portfolio securities in the ordinary course of
pursuing their investment programs.
In addition, as a matter of fundamental policy, each target series subaccount
may engage in futures and options transactions and hold warrants.
The investment objective of each target series subaccount is also a fundamental
policy and may not be changed without the necessary approval described above.
Operating Policies
As a matter of operating policy, each target series subaccount may not:
(1) Control of Companies. Invest in companies for the purpose of exercising
management or control;
(2) Illiquid Securities. Purchase a security if, as a result of such
purchase, more than 15% of the value of each target series subaccount's net
assets would be invested in illiquid securities or other securities that
are not readily marketable.
(3) Oil and Gas Programs. Purchase participations or other direct interests
or enter into leases with respect to, oil, gas, other mineral exploration
or development program.
Options and Futures Strategies
A subaccount may at times seek to hedge against either a decline in the value
of its portfolio securities or an increase in the price of securities which the
adviser plans to purchase through the writing and purchase of options and the
purchase or sale of future contracts and related options. Expenses and losses
incurred as a result of such hedging strategies will reduce a subaccount's
current return.
The ability of a subaccount to engage in the options and futures strategies
described below will depend on the availability of liquid markets in such
instruments. It is impossible to predict the amount of trading interest that
may exist in various types of options or futures. Therefore no assurance can be
given that a subaccount will be able to utilize these instruments effectively
for the purposes stated below.
Writing Covered Options on Securities. A subaccount may write covered call
options and covered put options on optionable securities of the types in which
it is permitted to invest from time to time as the Adviser determines is
appropriate in seeking to attain the subaccount's investment objective. Call
options written by a subaccount give the holder the right to buy the underlying
security from the subaccount at a stated exercise price; put options give the
holder the right to sell the underlying security to the subaccount at a stated
price.
A subaccount may only write call options on a covered basis or for cross-
hedging purposes and will only write covered put options. A put option would be
considered "covered" if the subaccount owns an option to sell the underlying
security subject to the option having an exercise price equal to or greater
than the exercise price of the "covered" option at all times while the put
option is outstanding. A call option is covered if the subaccount owns or has
the right to acquire the underlying securities subject to the call option (or
comparable securities satisfying the cover requirements of securities
exchanges) at all times during the option period. A call option is for cross-
hedging purposes if it is not covered, but is designed to provide a hedge
against another security which the subaccount owns or has the right to acquire.
In the case of a call written for
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<PAGE>
cross-hedging purposes or a put option, the subaccount will maintain in a
segregated account at the subaccount's custodian bank cash or short-term U.S.
government securities with a value equal to or greater than the subaccount's
obligation under the option. A subaccount may also write combinations of
covered puts and covered calls on the same underlying security.
A subaccount will receive a premium from writing an option, which increases the
subaccount's return in the event the option expires unexercised or is
terminated at a profit. The amount of the premium will reflect, among other
things, the relationship of the market price of the underlying security to the
exercise price of the option, the term of the option, and the volatility of the
market price of the underlying security. By writing a call option, a subaccount
will limit its opportunity to profit from any increase in the market value of
the underlying security above the exercise price of the option. By writing a
put option, a subaccount will assume the risk that it may be required to
purchase the underlying security for an exercise price higher than its then
current market price, resulting in a potential capital loss if the purchase
price exceeds the market price plus the amount of the premium received.
A subaccount may terminate an option which it has written prior to its
expiration by entering into a closing purchase transaction in which it
purchases an option having the same terms as the option written. The subaccount
will realize a profit (or loss) from such transaction if the cost of such
transaction is less (or more) than the premium received from the writing of the
option. Because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the repurchase of a call option may be offset in whole or in
part by unrealized appreciation of the underlying security owned by the
subaccount.
Purchasing Put and Call Options on Securities. A subaccount may purchase put
options to protect its portfolio holdings in an underlying security against a
decline in market value. This protection is provided during the life of the put
option since the subaccount, as holder of the put, is able to sell the
underlying security at the exercise price regardless of any decline in the
underlying security's market price. For the purchase of a put option to be
profitable, the market price of the underlying security must decline
sufficiently below the exercise price to cover the premium and transaction
costs. By using put options in this manner, any profit which the subaccount
might otherwise have realized on the underlying security will be reduced by the
premium paid for the put option and by transaction costs.
A subaccount may also purchase a call option to hedge against an increase in
price of a security that it intends to purchase. This protection is provided
during the life of the call option since the subaccount, as holder of the call,
is able to buy the underlying security at the exercise price regardless of any
increase in the underlying security's market price. For the purchase of a call
option to be profitable, the market price of the underlying security must rise
sufficiently above the exercise price to cover the premium and transaction
costs. By using call options in this matter, any profit which the subaccount
might have realized had it brought the underlying security at the time it
purchased the call option will be reduced by the premium paid for the call
option and by transaction costs.
No subaccount intends to purchase put or call options if, as a result of any
such transaction, the aggregate cost of options held by the subaccount at the
time of such transaction would exceed 5% of its total assets.
Limitations. A subaccount will not purchase or sell futures contracts or
options on futures contracts for non-hedging purposes if, as a result, the sum
of the initial margin deposits on its existing futures contracts and related
options positions and premiums paid for options on futures contracts would
exceed 5% of the net assets of the subaccount unless the transaction meets
certain "bona fide hedging" criteria.
-38-
<PAGE>
Risks of Options and Futures Strategies. The effective use of options and
futures strategies depends, among other things, on a subaccount's ability to
terminate options and futures positions at times when the adviser deems it
desirable to do so. Although a subaccount will not enter into an option or
futures position unless the adviser believes that a liquid market exists for
such option or future, there can be no assurance that a subaccount will be able
to effect closing transactions at any particular time or at an acceptable
price. The adviser generally expects that options and futures transactions for
the subaccounts will be conducted on recognized exchanges. In certain
instances, however, a subaccount may purchase and sell options in the over-the-
counter market. The staff of the SEC considers over-the-counter options to be
illiquid. A subaccount's ability to terminate option positions established in
the over-the-counter market may be more limited than in the case of exchange
traded options and may also involve the risk that securities dealers
participating in such transactions would fail to meet their obligations to the
subaccount.
The use of options and futures involves the risk of imperfect correlation
between movements in options and futures prices and movements in the price of
the securities that are the subject of the hedge. The successful use of these
strategies also depends on the ability of the subaccounts' adviser to forecast
correctly interest rate movements and general stock market price movements. The
risk increases as the composition of the securities held by the subaccount
diverges from the composition of the relevant option or futures contract.
Securities Lending
Each target subaccount may also lend common shares to broker-dealers and
financial institutions to realize additional income. As an operating policy,
the target subaccounts will not lend common shares or other assets, if as a
result, more than 33% of each subaccount's total assets would be lent to other
parties. Under applicable regulatory requirements (which are subject to
change), the following conditions apply to securities loans: (a) the loan must
be continuously secured by liquid assets maintained on a current basis in an
amount at least equal to the market value of the securities loaned; (b) each
target subaccount must receive any dividends or interest paid by the issuer on
such securities; (c) each target subaccount must have the right to call the
loan and obtain the securities loaned at any time upon notice of not more than
five business days, including the right to call the loan to permit voting of
the securities; and (d) each target subaccount must receive either interest
from the investment of collateral or a fixed fee from the borrower.
Securities loaned by a target subaccount remain subject to fluctuations in
market value. A target subaccount may pay reasonable finders, custodian and
administrative fees in connection with a loan. Securities lending, as with
other extensions of credit, involves the risk that the borrower may default.
Although securities loans will be fully collateralized at all times, a target
subaccount may experience delays in, or be prevented from, recovering the
collateral. During the period that the target subaccount seeks to enforce its
rights against the borrower, the collateral and the securities loaned remain
subject to fluctuations in market value. The target subaccount do not have the
right to vote securities on loan, but would terminate the loan and regain the
right to vote if it were considered important with respect to the investment. A
target subaccounts may also incur expenses in enforcing its rights. If a target
subaccount has sold a loaned security, it may not be able to settle the sale of
the security and may incur potential liability to the buyer of the security on
loan for its costs to cover the purchase.
Tax Limitation.
Section 817(h) of the Code provides that in order for a variable contract which
is based on a segregated asset account to qualify as an annuity contract under
the Code, the investments
-39-
<PAGE>
made by such account must be "adequately diversified" in accordance with
Treasury regulations. The Treasury regulations issued under Section 817(h)
(Treas. Reg.(S)1.817-5) apply a diversification requirement to each of the
subaccounts of the target account. To qualify as "adequately diversified," each
subaccount may have:
. No more than 55% of the value of its total assets represented by any one
investment;
. No more than 70% of the value of its total assets represented by any two
investments;
. No more than 80% of the value of its total assets represented by any
three investments; and
. No more than 90% of the value of its total assets represented by any
four investments.
The target account, through the target series subaccounts, intends to comply
with the section 817(h) diversification requirements. AUSA Life has entered
into an agreement with the manager, who in turn, has entered into a contract
with the adviser, that requires the target series subaccounts be operated in
compliance with Treasury regulations. Therefore, each target series subaccount
may deviate from its stated strategy to the extent necessary to comply with
these requirements.
PUBLISHED RATINGS
PFL may from time to time publish in advertisements, sales literature and
reports to owners, the ratings and other information assigned to it by one or
more independent rating organizations such as A.M. Best Company, Standard &
Poor's Insurance Ratings Services, Moody's Investors Service and Duff & Phelps
Credit Rating Co. The purpose of the ratings is to reflect the financial
strength and/or claims-paying ability of PFL. The ratings should not be
considered as bearing on the investment performance of assets held in the
mutual fund account or the target account or of the safety or riskiness of an
investment in the mutual fund account or the target account. Each year the A.M.
Best Company reviews the financial status of thousands of insurers, culminating
in the assignment of Best's Ratings. These ratings reflect their current
opinion of the relative financial strength and operating performance of an
insurance company in comparison to the norms of the life/health insurance
industry. In addition, the claims-paying ability of PFL as measured by Standard
& Poor's Insurance Ratings Services, Moody's Investors Service or Duff & Phelps
Credit Rating Co. may be referred to in advertisements or sales literature or
in reports to owners. These ratings are opinions of an operating insurance
company's financial capacity to meet the obligations of its insurance policies
in accordance with their terms. Claims-paying ability ratings do not refer to
an insurer's ability to meet non-policy obligations (i.e., debt/commercial
paper).
STATE REGULATION OF PFL
PFL is subject to the laws of Iowa governing insurance companies and to
regulation by the Iowa Division of Insurance. An annual statement in a
prescribed form is filed with the Division of Insurance each year covering the
operation of PFL for the preceding year and its financial condition as of the
end of such year. Regulation by the Division of Insurance includes periodic
examination to determine PFL's contract liabilities and reserves so that the
Division may determine the items are correct. PFL's books and accounts are
subject to review by the Division of Insurance at all times and a full
examination of its operations is conducted periodically by the National
Association of Insurance Commissioners. In addition, PFL is subject to
regulation under the insurance laws of other jurisdictions in which it may
operate.
-40-
<PAGE>
ADMINISTRATION
PFL performs administrative services for the policies. These services include
issuance of the policies, maintenance of records concerning the policies, and
certain valuation services.
RECORDS AND REPORTS
All records and accounts relating to the mutual fund account and the target
account will be maintained by PFL. As presently required by the 1940 Act, as
amended, and regulations promulgated thereunder, PFL will mail to all owners at
their last known address of record, at least annually, reports containing such
information as may be required under that Act or by any other applicable law or
regulation. Owners will also receive confirmation of each financial transaction
and any other reports required by law or regulation.
DISTRIBUTION OF THE POLICIES
The policies are offered to the public through brokers licensed under the
federal securities laws and state insurance laws. The offering of the policies
is continuous and PFL does not anticipate discontinuing the offering of the
policies. However, PFL reserves the right to discontinue the offering of the
policies.
AFSG Securities Corporation, an affiliate of PFL, is the principal underwriter
of the policies and may enter into agreements with broker-dealers for the
distribution of the policies. Prior to April 30, 1998, AEGON USA Securities,
Inc. (also an affiliate of PFL) was the principal underwriter. During 1998,
1997, and 1996, the amount paid to AEGON USA Securities, Inc. and/or the
broker-dealers for their services was $1,962,658.71, $3,281,871, and
$3,124,677, respectively. During 1998 the amount paid to AFSG Securities
Corporation was $4,066,996.67.
The target account has adopted a distribution plan in accordance with Rule 12b-
1 under the 1940 Act for the distribution financing charge (the "distribution
plan"). The distribution plan has been approved by a majority of the
disinterested members of the Board of Managers of the target account. The
distribution plan is designed to partially compensate PFL for the cost of
distributing the policies. Charges under the distribution plan will be used to
support marketing efforts, training of representatives and reimbursement of
expenses incurred by broker/dealers who sell the policies, and will be based on
a percentage of the daily net assets of the target account. The distribution
plan may be terminated at any time by a vote of a majority of the disinterested
members of the target account's Board of Managers, or by a vote of the majority
of its outstanding shares.
VOTING RIGHTS
The Mutual Fund Account
To the extent required by law, PFL will vote the Underlying Funds' shares held
by the mutual fund account at regular and special shareholder meetings of the
Underlying Funds in accordance with instructions received from persons having
voting interests in the portfolios, although the Endeavor Series Trust does not
hold regular annual shareholder meetings. If, however, the 1940 Act or any
regulation thereunder should be amended or if the present interpretation
thereof should change, and as a result PFL determines that it is permitted to
vote the Endeavor Series Trust shares in its own right, it may elect to do so.
-41-
<PAGE>
Before the annuity commencement date, you hold the voting interest in the
selected Portfolios. The number of votes that you have the right to instruct
will be calculated separately for each Subaccount. The number of votes that you
have the right to instruct for a particular Subaccount will be determined by
dividing your policy value in the Subaccount by the net asset value per share
of the corresponding Portfolio in which the Subaccount invests. Fractional
shares will be counted.
After the annuity commencement date, the person receiving annuity payments has
the voting interest, and the number of votes decreases as annuity payments are
made and as the reserves for the policy decrease. The person's number of votes
will be determined by dividing the reserve for the policy allocated to the
applicable Subaccount by the net asset value per share of the corresponding
Portfolio. Fractional shares will be counted.
The number of votes that you or the person receiving income payments has the
right to instruct will be determined as of the date established by the
Underlying Fund for determining shareholders eligible to vote at the meeting of
the Underlying Fund. PFL will solicit voting instructions by sending you, or
other persons entitled to vote, written requests for instructions prior to that
meeting in accordance with procedures established by the Underlying Fund.
Portfolio shares as to which no timely instructions are received and shares
held by PFL in which you, or other persons entitled to vote, have no beneficial
interest will be voted in proportion to the voting instructions that are
received with respect to all Policies participating in the same Subaccount.
Each person having a voting interest in a Subaccount will receive proxy
material, reports, and other materials relating to the appropriate Portfolio.
The Target Account
The target account is the legal owner of the common stock held in the
subaccounts and as such has the right to vote upon any matter that may be voted
by shareholders. However, you or persons receiving income payments may vote on
certain aspects of the governance of the subaccounts. Matters on which persons
holding voting interests may vote include the following: (1) approval of any
change in the investment advisory agreement corresponding to a subaccount; (2)
any change in the fundamental investment policies of a subaccount; or (3) any
other matter requiring a vote of persons holding voting interests in the
subaccount. With respect to approval of the investment advisory agreements or
any change in a fundamental investment policy, owners participating in that
subaccount will vote separately on the matter pursuant to the requirements of
Rule 18f-2 under the 1940 Act.
Before the annuity commencement date, you hold the voting interest in the
selected subaccounts. The number of votes that you have will be calculated
separately for each subaccount. The number of votes that you have for a
subaccount will be determined by dividing your policy value in the subaccount
into the total assets of the subaccount and multiplying this by the total
number of votes.
After the annuity commencement date, the person receiving annuity payments has
the voting interest, and the number of votes decreases as annuity payments are
made and as the reserves for the policy decrease. The person's number of votes
will be determined by dividing the reserve for the policy allocated to the
applicable subaccount into the total assets of the subaccount and multiplying
this by the total number of votes.
PFL does not intend to hold annual or other periodic meetings of owners. PFL
will solicit proxies by sending you or other persons entitled to vote written
requests for proxies prior to the vote.
-42-
<PAGE>
Where timely proxies are not received, the voting interests will be voted in
proportion to the proxies that are received with respect to all policies
participating in the same subaccount.
PFL may, if required by state insurance officials, disregard proxies which
would require voting to cause a change in the subclassification or investment
objectives or policies of one or more of the Subaccounts, or to approve or
disapprove an investment adviser or principal underwriter for one or more of
the Subaccounts. In addition, PFL may disregard proxies that would require
changes in the investment objectives or policies of any Subaccount or in an
investment adviser or principal underwriter, if PFL reasonably disapproves
those changes in accordance with applicable federal regulations. If PFL
disregards proxies, it will advise those persons who may give proxies of that
action and its reasons for the action in the next semiannual report.
OTHER PRODUCTS
PFL makes other variable annuity policies available that may also be funded
through the mutual fund acccount and/or the target account. These variable
annuity policies may have different features, such as different investment
options or charges.
CUSTODY OF ASSETS
The assets of each of the mutual fund subaccounts and the target subaccounts
are held by PFL. The assets of each of the subaccounts are segregated and held
separate and apart from the assets of the other subaccounts and from PFL's
general account assets. PFL maintains records of all purchases and redemptions
of shares of the underlying funds held by each of the mutual fund subaccounts,
and of all purchases and sales of common stock held by each of the target
subaccounts. Additional protection for the assets of the mutual fund account
and the target account is afforded by PFL's fidelity bond, presently in the
amount of $5,000,000, covering the acts of officers and employees of PFL.
LEGAL MATTERS
Sutherland Asbill & Brennan LLP, of Washington D.C. has provided legal advice
to PFL relating to certain matters under the federal securities laws applicable
to the issue and sale of the policies to PFL.
INDEPENDENT AUDITORS
The statutory-basis financial statements and schedules of PFL as of December
31, 1998 and 1997, and for each of the three years in the period ended December
31, 1998, and the financial statements of certain subaccounts of The PFL
Endeavor VA Separate Account, which are available for investment by The
Endeavor Platinum Variable Annuity contract owners at December 31, 1998 and for
each of the two years in the period then ended, included in this Statement of
Additional Information have been audited by Ernst & Young LLP, Independent
Auditors, 801 Grand Avenue, Suite 3400, Des Moines, Iowa 50309.
The financial statements of the PFL Endeavor Target Account at December 31,
1998, and for the period then ended included in this Statement of Additional
Information have been audited by Ernst & Young, LLP.
-43-
<PAGE>
OTHER INFORMATION
A Registration Statement has been filed with the Securities and Exchange
Commission, under the Securities Act of 1933 as amended, with respect to the
policies discussed in this Statement of Additional Information. Not all of the
information set forth in the Registration Statement, amendments and exhibits
thereto has been included in the prospectus or this Statement of Additional
Information. Statements contained in the prospectus and this Statement of
Additional Information concerning the content of the policies and other legal
instruments are intended to be summaries. For a complete statement of the terms
of these documents, reference should be made to the instruments filed with the
Securities and Exchange Commission.
FINANCIAL STATEMENTS
The values of your interest in the mutual fund account or the target account
will be affected solely by the investment results of the selected
subaccount(s). Financial statements of certain subaccounts of The PFL Endeavor
VA Separate Account, which are available for investment by the PFL Endeavor
Platinum Variable Annuity contract owners, and the financial statements of The
PFL Endeavor Target Account are contained herein. The statutory-basis financial
statements of PFL, which are included in this Statement of Additional
Information, should be considered only as bearing on the ability of PFL to meet
its obligations under the policies. They should not be considered as bearing on
the investment performance of the assets held in the mutual fund account or the
target account.
-44-
<PAGE>
FINANCIAL STATEMENTS--STATUTORY BASIS
PFL LIFE INSURANCE COMPANY
Years ended December 31, 1998, 1997 and 1996
with Report of Independent Auditors
<PAGE>
PFL LIFE INSURANCE COMPANY
FINANCIAL STATEMENTS--STATUTORY BASIS
Years ended December 31, 1998, 1997 and 1996
Contents
<TABLE>
<S> <C>
Report of Independent Auditors.............................................. 1
Audited Financial Statements
Balance Sheets--Statutory Basis........................................... 2
Statements of Operations--Statutory Basis................................. 3
Statements of Changes in Capital and Surplus--Statutory Basis............. 4
Statements of Cash Flows--Statutory Basis................................. 5
Notes to Financial Statements--Statutory Basis............................ 6
Statutory-Basis Financial Statement Schedules
Summary of Investments--Other Than Investments in Related Parties......... 24
Supplementary Insurance Information....................................... 25
Reinsurance............................................................... 26
</TABLE>
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP APPEARS HERE]
Report of Independent Auditors
The Board of Directors
PFL Life Insurance Company
We have audited the accompanying statutory-basis balance sheets of PFL Life
Insurance Company as of December 31, 1998 and 1997, and the related statutory-
basis statements of operations, changes in capital and surplus, and cash flows
for each of the three years in the period ended December 31, 1998. Our audits
also included the accompanying statutory-basis financial statement schedules
required by Article 7 of Regulation S-X. These financial statements and
schedules are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules 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. 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.
As described in Note 1 to the financial statements, the Company presents its
financial statements in conformity with accounting practices prescribed or
permitted by the Insurance Division, Department of Commerce, of the State of
Iowa, which practices differ from generally accepted accounting principles.
The variances between such practices and generally accepted accounting
principles also are described in Note 1. The effects on the financial
statements of these variances are not reasonably determinable but are presumed
to be material.
In our opinion, because of the effects of the matters described in the
preceding paragraph, the financial statements referred to above do not present
fairly, in conformity with generally accepted accounting principles, the
financial position of PFL Life Insurance Company at December 31, 1998 and
1997, or the results of its operations or its cash flows for each of the three
years in the period ended December 31, 1998.
However, in our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of PFL Life Insurance
Company at December 31, 1998 and 1997, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
1998 in conformity with accounting practices prescribed or permitted by the
Insurance Division, Department of Commerce, of the State of Iowa. Also, in our
opinion, the related financial statement schedules, when considered in
relation to the basic statutory-basis financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Des Moines, Iowa
February 19, 1999
1
<PAGE>
PFL LIFE INSURANCE COMPANY
BALANCE SHEETS--STATUTORY BASIS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31
---------------------
1998 1997
---------- ----------
ADMITTED ASSETS
---------------
<S> <C> <C>
Cash and invested assets:
Cash and short-term investments............................ $ 83,289 $ 23,939
Bonds...................................................... 4,822,442 4,913,144
Stocks:
Preferred................................................ 14,754 2,750
Common (cost: 1998--$34,731; 1997--$33,058).............. 49,448 42,345
Affiliated entities (cost: 1998--$8,060; 1997--$10,798).. 5,613 8,031
Mortgage loans on real estate.............................. 1,012,433 935,207
Real estate, at cost less accumulated depreciation ($9,500
in 1998; $8,655 in 1997):
Home office properties................................... 8,056 8,283
Properties acquired in satisfaction of debt.............. 11,778 11,814
Investment properties.................................... 44,325 36,416
Policy loans............................................... 60,058 57,136
Other invested assets...................................... 76,482 29,864
---------- ----------
Total cash and invested assets......................... 6,188,678 6,068,929
Premiums deferred and uncollected........................... 15,318 16,101
Accrued investment income................................... 65,308 69,662
Receivable from affiliate................................... 643 --
Federal income taxes recoverable............................ 639 --
Transfers from separate accounts............................ 70,866 60,193
Other assets................................................ 29,511 37,624
Separate account assets..................................... 3,348,611 2,517,365
---------- ----------
Total admitted assets.................................. $9,719,574 $8,769,874
========== ==========
<CAPTION>
LIABILITIES AND CAPITAL AND SURPLUS
-----------------------------------
<S> <C> <C>
Liabilities:
Aggregate reserves for policies and contracts:
Life..................................................... $1,357,175 $ 884,018
Annuity.................................................. 3,925,293 4,204,125
Accident and health...................................... 205,736 169,328
Policy and contract claim reserves:
Life..................................................... 9,101 8,635
Accident and health...................................... 48,906 57,713
Other policyholders' funds................................. 162,266 143,831
Remittances and items not allocated........................ 19,690 153,745
Asset valuation reserve.................................... 91,588 69,825
Interest maintenance reserve............................... 50,575 30,287
Federal income taxes payable............................... -- 1,889
Short-term notes payable to affiliates..................... 9,421 16,400
Other liabilities.......................................... 76,766 75,070
Payable for securities..................................... 57,645 --
Payable to affiliates...................................... -- 13,240
Separate account liabilities............................... 3,342,884 2,512,406
---------- ----------
Total liabilities...................................... 9,357,046 8,340,512
Commitments and contingencies
Capital and surplus:
Common stock, $10 par value, 500 shares authorized, 266
issued and outstanding.................................... 2,660 2,660
Paid-in surplus............................................ 154,282 154,282
Unassigned surplus......................................... 205,586 272,420
---------- ----------
Total capital and surplus.............................. 362,528 429,362
---------- ----------
Total liabilities and capital and surplus.............. $9,719,574 $8,769,874
========== ==========
</TABLE>
See accompanying notes.
2
<PAGE>
PFL LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS--STATUTORY BASIS
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Revenues:
Premiums and other considerations, net
of reinsurance:
Life.................................. $ 516,111 $ 202,435 $ 204,872
Annuity............................... 667,920 657,695 725,966
Accident and health................... 178,593 207,982 227,862
Net investment income................... 446,984 446,424 428,337
Amortization of interest maintenance re-
serve.................................. 8,656 3,645 2,434
Commissions and expense allowances on
reinsurance ceded...................... 32,781 49,859 73,931
---------- ---------- ----------
1,851,045 1,568,040 1,663,402
Benefits and expenses:
Benefits paid or provided for:
Life and accident and health bene-
fits................................. 135,184 146,583 147,024
Surrender benefits.................... 732,796 658,071 512,810
Other benefits........................ 152,209 126,495 101,288
Increase (decrease) in aggregate
reserves for policies and contracts:
Life.................................. 473,158 149,575 140,126
Annuity............................... (278,665) (203,139) 188,002
Accident and health................... 36,407 30,059 26,790
Other................................. 17,550 16,998 19,969
---------- ---------- ----------
1,268,639 924,642 1,136,009
Insurance expenses:
Commissions............................. 136,569 157,300 177,466
General insurance expenses.............. 48,018 57,571 57,282
Taxes, licenses and fees................ 19,166 8,715 13,889
Net transfers to separate accounts...... 265,702 297,480 171,785
Other expenses.......................... 1,016 119 526
---------- ---------- ----------
470,471 521,185 420,948
---------- ---------- ----------
1,739,110 1,445,827 1,556,957
---------- ---------- ----------
Gain from operations before federal income
tax expense and net realized capital
gains (losses) on investments............ 111,935 122,213 106,445
Federal income tax expense................ 49,835 43,381 41,177
---------- ---------- ----------
Gain from operations before net realized
capital gains (losses) on investments.... 62,100 78,832 65,268
Net realized capital gains (losses) on
investments (net of related federal
income taxes and amounts transferred to
interest maintenance reserve)............ 3,398 7,159 (3,503)
---------- ---------- ----------
Net income................................ $ 65,498 $ 85,991 $ 61,765
========== ========== ==========
</TABLE>
See accompanying notes.
3
<PAGE>
PFL LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS--STATUTORY BASIS
(Dollars in thousands)
<TABLE>
<CAPTION>
Total
Capital
Common Paid-in Unassigned and
Stock Surplus Surplus Surplus
------ -------- ---------- ---------
<S> <C> <C> <C> <C>
Balance at January 1, 1996............... $2,660 $154,129 $ 220,739 $ 377,528
Net income............................. -- -- 61,765 61,765
Change in net unrealized capital
gains................................. -- -- 2,351 2,351
Change in non-admitted assets.......... -- -- (148) (148)
Change in asset valuation reserve...... -- -- (10,930) (10,930)
Dividend to stockholder................ -- -- (20,000) (20,000)
Prior period adjustment................ -- -- 5,025 5,025
Surplus effect of sales of divisions... -- -- (384) (384)
Surplus effect of ceding commissions
associated with the sale of a
division.............................. -- -- 29 29
Amendment of reinsurance agreement..... -- -- 421 421
Change in liability for reinsurance in
unauthorized companies................ -- -- 2,690 2,690
------ -------- --------- ---------
Balance at December 31, 1996............. 2,660 154,129 261,558 418,347
Capital contribution................... -- 153 -- 153
Net income............................. -- -- 85,991 85,991
Change in net unrealized capital
gains................................. -- -- 3,592 3,592
Change in non-admitted assets.......... -- -- (481) (481)
Change in asset valuation reserve...... -- -- (14,974) (14,974)
Dividend to stockholder................ -- -- (62,000) (62,000)
Surplus effect of sale of a division... -- -- (161) (161)
Surplus effect of ceding commissions
associated with the sale of a
division.............................. -- -- 5 5
Amendment of reinsurance agreement..... -- -- 389 389
Surplus effect of reinsurance
agreement............................. -- -- 402 402
Change in liability for reinsurance in
unauthorized companies................ -- -- (1,901) (1,901)
------ -------- --------- ---------
Balance at December 31, 1997............. 2,660 154,282 272,420 429,362
Net income............................. -- -- 65,498 65,498
Change in net unrealized capital
gains................................. -- -- 4,504 4,504
Change in non-admitted assets.......... -- -- (260) (260)
Change in asset valuation reserve...... -- -- (21,763) (21,763)
Dividend to stockholder................ -- -- (120,000) (120,000)
Increase in liability for reinsurance
in unauthorized companies............. -- -- 2,036 2,036
Tax benefit on stock options
exercised............................. -- -- 2,476 2,476
Change in surplus in separate
accounts.............................. -- -- 675 675
------ -------- --------- ---------
Balance at December 31, 1998............. $2,660 $154,282 $ 205,586 $ 362,528
====== ======== ========= =========
</TABLE>
See accompanying notes.
4
<PAGE>
PFL LIFE INSURANCE COMPANY
STATEMENTS OF CASH FLOWS--STATUTORY BASIS
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Operating Activities
Premiums and other considerations, net
of reinsurance......................... $ 1,396,428 $ 1,119,936 $ 1,240,748
Net investment income................... 469,246 452,091 431,456
Life and accident and health claims..... (138,249) (154,383) (147,556)
Surrender benefits and other fund
withdrawals............................ (732,796) (658,071) (512,810)
Other benefits to policyholders......... (152,167) (126,462) (101,254)
Commissions, other expenses and other
taxes.................................. (197,135) (225,042) (248,321)
Net transfers to separate accounts...... (276,375) (319,146) (210,312)
Federal income taxes.................... (72,176) (47,909) (35,551)
Cash paid in conjunction with an
amendment of a reinsurance agreement... -- (4,826) (5,812)
Cash received in connection with a
reinsurance agreement.................. -- 1,477 --
Other, net.............................. (93,095) 89,693 (41,677)
Net cash provided by operating
activities............................. 203,681 127,358 368,911
Investing Activities
Proceeds from investments sold, matured
or repaid:
Bonds and preferred stocks............ 3,347,174 3,284,095 2,112,831
Common stocks......................... 34,564 34,004 27,214
Mortgage loans on real estate......... 192,210 138,162 74,351
Real estate........................... 5,624 6,897 18,077
Cash received from ceding commissions
associated with the sale of a
division............................. -- 8 45
Other................................. 7,210 57,683 22,568
----------- ----------- -----------
3,586,782 3,520,849 2,255,086
Cost of investments acquired:
Bonds and preferred stocks............ (3,251,822) (3,411,442) (2,270,105)
Common stocks......................... (36,379) (37,339) (29,799)
Mortgage loans on real estate......... (257,039) (159,577) (324,381)
Real estate........................... (11,458) (2,013) (222)
Policy loans.......................... (2,922) (2,922) (1,539)
Cash paid in association with the sale
of a division........................ -- (591) (662)
Other................................. (44,514) (15,674) (6,404)
----------- ----------- -----------
(3,604,134) (3,629,558) (2,633,112)
----------- ----------- -----------
Net cash used in investing activities... (17,352) (108,709) (378,026)
Financing Activities
Issuance (repayment) of short-term
intercompany notes payable............. $ (6,979) $ 16,400 $ --
Capital contribution.................... -- 153 --
Dividends to stockholder................ (120,000) (62,000) (20,000)
----------- ----------- -----------
Net cash used in financing activities... (126,979) (45,447) (20,000)
----------- ----------- -----------
Increase (decrease) in cash and short-
term investments....................... 59,350 (26,798) (29,115)
Cash and short-term investments at
beginning of year...................... 23,939 50,737 79,852
----------- ----------- -----------
Cash and short-term investments at end
of year................................ $ 83,289 $ 23,939 $ 50,737
=========== =========== ===========
</TABLE>
See accompanying notes.
5
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS
(Dollars in thousands)
December 31, 1998
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
PFL Life Insurance Company ("the Company") is a stock life insurance company
and is a wholly-owned subsidiary of First AUSA Life Insurance Company ("First
AUSA"), which, in turn, is a wholly-owned subsidiary of AEGON USA, Inc.
("AEGON"). AEGON is an indirect wholly-owned subsidiary of AEGON N.V., a
holding company organized under the laws of The Netherlands.
In connection with the sale of certain affiliated business units, the
Company has assumed various blocks of business from these former affiliates
through mergers. In addition, the Company has canceled or entered into several
coinsurance and reinsurance agreements with affiliates and non-affiliates. The
following is a description of those transactions:
. During 1996, the Company sold its North Richland Hills, Texas health
administrative operations known as The Insurance Center. The transaction
resulted in the transfer of substantially all employees and office
facilities to United Insurance Companies, Inc. ("UICI"). All inforce
business will continue to be shared by UICI and the Company and its
affiliates through the existing coinsurance agreements. After a short
transition period, all new business produced by United Group Association,
an independent insurance agency, will be written by the insurance
subsidiaries of UICI and will not be shared with the Company and its
affiliates through coinsurance arrangements. As a result of the sale,
during 1996 the Company transferred $123 in assets, substantially all of
which was cash, and $70 of liabilities. The difference between the assets
and liabilities of $(53) plus a tax credit of $19 was charged directly to
unassigned surplus. During 1997, the Company transferred $591 in assets,
substantially all of which was cash and $343 of liabilities. The difference
between the assets and liabilities of $(248) net of a tax credit of $87 was
charged directly to unassigned surplus.
. On January 1, 1994, the Company entered into an agreement with a non-
affiliate reinsurer to annually increase reinsurance ceded (primarily group
health business) by 2 1/2% through 1997. As a result, during 1996, the
Company transferred $5,991 in assets, including $5,812 of cash and short-
term investments and liabilities of $6,146. The difference between the
assets and liabilities of $155, plus a tax credit of $266 was credited
directly to unassigned surplus. During 1997, the Company transferred $5,045
in assets, including $4,826 of cash and short-term investments, and
liabilities of $5,164. The difference between the assets and liabilities of
$119 plus a tax credit of $270 was credited directly to unassigned surplus.
. During 1993, the Company sold the Oakbrook Division (primarily group health
business). The initial transfer of risk occurred through an indemnity
reinsurance agreement. The policies will then be assumed by the reinsurer
by novation as state regulatory and policyholder approvals are received.
During 1996, the Company paid $539 in association with this sale; the
payment, net of a tax credit of $189, was charged directly to unassigned
surplus. In addition, the Company received from the third party
administrator a ceding commission of one percent of the premiums collected
between January 1, 1994 and December 31, 1996. As a result of the sale, in
1996, the Company received $45 for ceding commissions; the commissions net
of the related tax effect of $(16) were charged directly to unassigned
surplus. Also, during 1996, the Company paid $539 in association with this
sale; this payment, net of a tax credit of $189, was charged directly to
unassigned surplus. In 1997,
6
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
the Company received $8 for ceding commissions; the commissions net of the
related tax effect of $3 were credited directly to unassigned surplus.
. During 1997, the Company entered into a reinsurance agreement with a non-
affiliate. As a result of the agreement, the Company received $1,480 of
assets, including $1,477 of cash and short-term securities, and $861 of
liabilities. The difference between the assets and liabilities of $619, net
of a tax effect of $217 was credited directly to unassigned surplus.
Nature of Business
The Company sells individual non-participating whole life, endowment and
term contracts, as well as a broad line of single fixed and flexible premium
annuity products. In addition, the Company offers group life, universal life,
and individual and specialty health coverages. The Company is licensed in 49
states and the District of Columbia. Sales of the Company's products are
primarily through the Company's agents and financial institutions.
Basis of Presentation
The preparation of financial statements of insurance companies requires
management to make estimates and assumptions that affect amounts reported in
the financial statements and accompanying notes. Actual results could differ
from those estimates.
Significant estimates and assumptions are utilized in the calculation of
aggregate policy reserves, policy and contract claim reserves, guaranty fund
assessment accruals and valuation allowances on investments. It is reasonably
possible that actual experience could differ from the estimates and
assumptions utilized which could have a material impact on the financial
statements.
The accompanying financial statements have been prepared on the basis of
accounting practices prescribed or permitted by the Insurance Division,
Department of Commerce, of the State of Iowa ("Insurance Department"), which
practices differ in some respects from generally accepted accounting
principles. The more significant of these differences are as follows: (a)
bonds are generally reported at amortized cost rather than segregating the
portfolio into held-to-maturity (reported at amortized cost), available-for-
sale (reported at fair value), and trading (reported at fair value)
classifications; (b) acquisition costs of acquiring new business are charged
to current operations as incurred rather than deferred and amortized over the
life of the policies; (c) policy reserves on traditional life products are
based on statutory mortality rates and interest which may differ from reserves
based on reasonable assumptions of expected mortality, interest, and
withdrawals which include a provision for possible unfavorable deviation from
such assumptions; (d) policy reserves on certain investment products use
discounting methodologies based on statutory interest rates rather than full
account values; (e) reinsurance amounts are netted against the corresponding
asset or liability rather than shown as gross amounts on the balance sheet;
(f) deferred income taxes are not provided for the difference between the
financial statement and income tax bases of assets and liabilities; (g) net
realized gains or losses attributed to changes in the level of interest rates
in the market are deferred and amortized over the remaining life of the bond
or mortgage loan, rather than recognized as gains or losses in the statement
of operations when the sale is completed; (h) potential declines in the
estimated realizable value of investments are provided for through the
establishment of a formula-determined statutory investment reserve (reported
as a liability), changes to which are charged directly to surplus, rather than
through recognition in the statement of operations for declines in value, when
such declines are judged to be other than temporary; (i) certain assets
designated as "non-admitted assets" have been charged to surplus rather than
being reported as assets; (j) revenues for universal life and investment
products
7
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
consist of premiums received rather than policy charges for the cost of
insurance, policy administration charges, amortization of policy initiation
fees and surrender charges assessed; (k) pension expense is recorded as
amounts are paid; (l) adjustments to federal income taxes of prior years are
charged or credited directly to unassigned surplus, rather than reported as a
component of expense in the statement of operations; (m) gains or losses on
dispositions of business are charged or credited directly to unassigned
surplus rather than being reported in the statement of operations; and (n) a
liability is established for "unauthorized reinsurers" and changes in this
liability are charged or credited directly to unassigned surplus. The effects
of these variances have not been determined by the Company but are presumed to
be material.
In 1998, the National Association of Insurance Commissioners ("NAIC")
adopted codified statutory accounting principles ("Codification").
Codification will likely change, to some extent, prescribed statutory
accounting practices and may result in changes to the accounting practices
that the Company uses to prepare its statutory-basis financial statements.
Codification will require adoption by the various states before it becomes the
prescribed statutory basis of accounting for insurance companies domesticated
within those states. Accordingly, before Codification becomes effective for
the Company, the State of Iowa must adopt Codification as the prescribed basis
of accounting on which domestic insurers must report their statutory-basis
results to the Insurance Department. At this time, it is unclear whether the
State of Iowa will adopt Codification. However, based on current guidance,
management believes that the impact of Codification will not be material to
the Company's statutory-basis financial statements.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company considers all
highly liquid investments with remaining maturity of one year or less when
purchased to be cash equivalents.
Investments
Investments in bonds (except those to which the Securities Valuation Office
of the NAIC has ascribed a value), mortgage loans on real estate and short-
term investments are reported at cost adjusted for amortization of premiums
and accrual of discounts. Amortization is computed using methods which result
in a level yield over the expected life of the investment. The Company reviews
its prepayment assumptions on mortgage and other asset-backed securities at
regular intervals and adjusts amortization rates retrospectively when such
assumptions are changed due to experience and/or expected future patterns.
Investments in preferred stocks in good standing are reported at cost.
Investments in preferred stocks not in good standing are reported at the lower
of cost or market. Common stocks of unaffiliated and affiliated companies,
which includes shares of mutual funds and real estate investment trusts, are
carried at market value. Real estate is reported at cost less allowances for
depreciation. Depreciation is computed principally by the straight-line
method. Policy loans are reported at unpaid principal. Other invested assets
consist principally of investments in various joint ventures and are recorded
at equity in underlying net assets. Other "admitted assets" are valued,
principally at cost, as required or permitted by Iowa Insurance Laws.
Net realized capital gains and losses are determined on the basis of
specific identification and are recorded net of related federal income taxes.
The Asset Valuation Reserve ("AVR") is established by the Company to provide
for potential losses in the event of default by issuers of certain invested
assets. These amounts are determined using a formula prescribed by the NAIC
and are reported as a liability. The formula for the AVR provides for a
corresponding adjustment for realized gains and losses. Under
8
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
a formula prescribed by the NAIC, the Company defers, in the Interest
Maintenance Reserve ("IMR"), the portion of realized gains and losses on sales
of fixed income investments, principally bonds and mortgage loans,
attributable to changes in the general level of interest rates and amortizes
those deferrals over the remaining period to maturity of the security.
Interest income is recognized on an accrual basis. The Company does not
accrue income on bonds in default, mortgage loans on real estate in default
and/or foreclosure or which are delinquent more than twelve months, or on real
estate where rent is in arrears for more than three months. Further, income is
not accrued when collection is uncertain. At December 31, 1998, 1997 and 1996,
the Company excluded investment income due and accrued of $102, $177 and
$1,541, respectively, with respect to such practices.
The Company uses interest rate swaps and caps as part of its overall
interest rate risk management strategy for certain life insurance and annuity
products. The Company entered into several interest rate swap contracts to
modify the interest rate characteristics of the underlying liabilities. The
net interest effect of such swap transactions is reported as an adjustment of
interest income from the hedged items as incurred.
The Company has entered into an interest rate cap agreement to hedge the
exposure of changing interest rates. The cash flows from the interest rate cap
will help offset losses that might occur from changes in interest rates. The
cost of such agreement is included in interest expense ratably during the life
of the agreement. Income received as a result of the cap agreement will be
recognized in investment income as earned. Unamortized cost of the agreements
is included in other invested assets.
Aggregate Policy Reserves
Life, annuity and accident and health benefit reserves are developed by
actuarial methods and are determined based on published tables based on
statutorily specified interest rates and valuation methods that will provide,
in the aggregate, reserves that are greater than or equal to the minimum
required by law.
The aggregate policy reserves for life insurance policies are based
principally upon the 1941, 1958 and 1980 Commissioners' Standard Ordinary
Mortality and American Experience Mortality Tables. The reserves are
calculated using interest rates ranging from 2.00 to 6.00 percent and are
computed principally on the Net Level Premium Valuation and the Commissioners'
Reserve Valuation Methods. Reserves for universal life policies are based on
account balances adjusted for the Commissioners' Reserve Valuation Method.
Deferred annuity reserves are calculated according to the Commissioners'
Annuity Reserve Valuation Method including excess interest reserves to cover
situations where the future interest guarantees plus the decrease in surrender
charges are in excess of the maximum valuation rates of interest. Reserves for
immediate annuities and supplementary contracts with life contingencies are
equal to the present value of future payments assuming interest rates ranging
from 2.50 to 11.25 percent and mortality rates, where appropriate, from a
variety of tables.
Accident and health policy reserves are equal to the greater of the gross
unearned premiums or any required midterminal reserves plus net unearned
premiums and the present value of amounts not yet due on both reported and
unreported claims.
9
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
Policy and Contract Claim Reserves
Claim reserves represent the estimated accrued liability for claims reported
to the Company and claims incurred but not yet reported through the statement
date. These reserves are estimated using either individual case-basis
valuations or statistical analysis techniques. These estimates are subject to
the effects of trends in claim severity and frequency. The estimates are
continually reviewed and adjusted as necessary as experience develops or new
information becomes available.
Separate Accounts
Assets held in trust for purchases of variable annuity contracts and the
Company's corresponding obligation to the contract owners are shown separately
in the balance sheets. The assets in the separate accounts are valued at
market. Income and gains and losses with respect to the assets in the separate
accounts accrue to the benefit of the policyholders and, accordingly, the
operations of the separate accounts are not included in the accompanying
financial statements. The separate accounts do not have any minimum guarantees
and the investment risks associated with market value changes are borne
entirely by the policyholders. The Company received variable contract premiums
of $345,319, $281,095 and $227,864 in 1998, 1997 and 1996, respectively. All
variable account contracts are subject to discretionary withdrawal by the
policyholder at the market value of the underlying assets less the current
surrender charge.
Stock Option Plan
AEGON N.V. sponsors a stock option plan for eligible employees of the
Company. Under this plan, certain employees have indicated a preference to
immediately sell shares received as a result of their exercise of the stock
options; in these situations, AEGON N.V. has settled such options in cash
rather than issuing stock to these employees. These cash settlements are paid
by the Company, and AEGON N.V. subsequently reimburses the Company for such
payments. Under statutory accounting principles, the Company does not record
any expense related to this plan, as the expense is recognized by AEGON N.V.
However, the Company is allowed to record a deduction in the consolidated tax
return filed by the Company and certain affiliates. The tax benefit of this
deduction has been credited directly to surplus.
Reclassifications
Certain reclassifications have been made to the 1997 and 1996 financial
statements to conform to the 1998 presentation.
2. FAIR VALUES OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standard ("SFAS") No. 107, Disclosures
about Fair Value of Financial Instruments, requires disclosure of fair value
information about financial instruments, whether or not recognized in the
statutory-basis balance sheet, for which it is practicable to estimate that
value. SFAS No. 119, Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments, requires additional disclosure about
derivatives. In cases where quoted market prices are not available, fair
values are based on estimates using present value or other valuation
techniques. Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash flows. In that
regard, the derived fair value estimates cannot be substantiated by
comparisons to independent markets and, in many cases, could not be realized
in immediate settlement of the instrument. SFAS No. 107 and No. 119 exclude
certain financial instruments and all nonfinancial instruments from their
disclosure requirements and allow companies to forego the
10
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
disclosures when those estimates can only be made at excessive cost.
Accordingly, the aggregate fair value amounts presented do not represent the
underlying value of the Company.
The following methods and assumptions were used by the Company in estimating
its fair value disclosures for financial instruments:
Cash and short-term investments: The carrying amounts reported in the
balance sheet for these instruments approximate their fair values.
Investment securities: Fair values for fixed maturity securities
(including redeemable preferred stocks) are based on quoted market prices,
where available. For fixed maturity securities not actively traded, fair
values are estimated using values obtained from independent pricing
services or, in the case of private placements, are estimated by
discounting expected future cash flows using a current market rate
applicable to the yield, credit quality, and maturity of the investments.
The fair values for equity securities, including affiliated mutual funds
and real estate investment trusts, are based on quoted market prices.
Mortgage loans and policy loans: The fair values for mortgage loans are
estimated utilizing discounted cash flow analyses, using interest rates
reflective of current market conditions and the risk characteristics of the
loans. The fair value of policy loans is assumed to equal their carrying
value.
Investment contracts: Fair values for the Company's liabilities under
investment-type insurance contracts are estimated using discounted cash
flow calculations, based on interest rates currently being offered for
similar contracts with maturities consistent with those remaining for the
contracts being valued.
Interest rate cap and interest rate swaps: Estimated fair value of the
interest rate cap is based upon the latest quoted market price. Estimated
fair value of interest rate swaps are based upon the pricing differential
for similar swap agreements.
Fair values for the Company's insurance contracts other than investment
contracts are not required to be disclosed. However, the fair values of
liabilities under all insurance contracts are taken into consideration in the
Company's overall management of interest rate risk, which minimizes exposure
to changing interest rates through the matching of investment maturities with
amounts due under insurance contracts.
11
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
The following sets forth a comparison of the fair values and carrying values
of the Company's financial instruments subject to the provisions of SFAS No.
107 and No. 119:
<TABLE>
<CAPTION>
December 31
-------------------------------------------
1998 1997
--------------------- ---------------------
Carrying Carrying
Value Fair Value Value Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Admitted Assets
Cash and short-term investments.... $ 83,289 $ 83,289 $ 23,939 $ 23,939
Bonds.............................. 4,822,442 4,900,516 4,913,144 5,046,527
Preferred stocks................... 14,754 14,738 2,750 8,029
Common stocks...................... 49,448 49,448 42,345 42,345
Affiliated common stock............ 5,613 5,613 8,031 8,031
Mortgage loans on real estate...... 1,012,433 1,089,315 935,207 983,720
Policy loans....................... 60,058 60,058 57,136 57,136
Interest rate cap.................. 4,445 725 5,618 1,513
Interest rate swaps................ 1,916 6,667 -- 2,546
Separate account assets............ 3,348,611 3,348,611 2,517,365 2,517,365
Liabilities
Investment contract liabilities.... 4,084,683 4,017,509 4,345,181 4,283,461
Separate account liabilities....... 3,271,005 3,213,251 2,452,205 2,452,205
</TABLE>
3. INVESTMENTS
The carrying value and estimated fair value of investments in debt securities
were as follows:
<TABLE>
<CAPTION>
Gross Gross
Carrying Unrealized Unrealized Estimated
Value Gains Losses Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1998
Bonds:
United States Government and
agencies........................ $ 150,085 $ 2,841 $ 321 $ 152,605
State, municipal and other
government...................... 62,948 918 1,651 62,215
Public utilities................. 139,732 5,053 2,555 142,230
Industrial and miscellaneous..... 2,068,086 78,141 34,493 2,111,734
Mortgage and other asset-backed
securities...................... 2,401,591 45,185 15,044 2,431,732
---------- -------- ------- ----------
4,822,442 132,138 54,064 4,900,516
Preferred stocks................... 14,754 75 91 14,738
---------- -------- ------- ----------
$4,837,196 $132,213 $54,155 $4,915,254
========== ======== ======= ==========
</TABLE>
12
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
<TABLE>
<CAPTION>
Gross Gross
Carrying Unrealized Unrealized Estimated
Value Gains Losses Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
December 31, 1997
Bonds:
United States Government and
agencies........................ $ 188,241 $ 2,562 $ 21 $ 190,782
State, municipal and other
government...................... 61,532 2,584 1,774 62,342
Public utilities................. 121,582 5,384 2,952 124,014
Industrial and miscellaneous..... 1,955,587 85,233 7,752 2,033,068
Mortgage and other asset-backed
securities...................... 2,586,202 55,382 5,263 2,636,321
---------- -------- ------- ----------
4,913,144 151,145 17,762 5,046,527
Preferred stocks................... 2,750 5,279 -- 8,029
---------- -------- ------- ----------
$4,915,894 $156,424 $17,762 $5,054,556
========== ======== ======= ==========
</TABLE>
The carrying value and estimated fair value of bonds at December 31, 1998,
by contractual maturity, are shown below. Expected maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Carrying Estimated
Value Fair Value
---------- ----------
<S> <C> <C>
Due in one year or less............................... $ 151,747 $ 148,410
Due after one year through five years................. 1,211,064 1,232,329
Due after five years through ten years................ 753,543 761,787
Due after ten years................................... 304,497 326,258
---------- ----------
2,420,851 2,468,784
Mortgage and other asset-backed securities............ 2,401,591 2,431,732
---------- ----------
$4,822,442 $4,900,516
========== ==========
</TABLE>
A detail of net investment income is presented below:
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Interest on bonds and notes......................... $374,478 $373,496 $364,356
Dividends on equity investments..................... 1,357 1,460 1,436
Interest on mortgage loans.......................... 77,960 80,266 69,418
Rental income on real estate........................ 6,553 7,501 9,526
Interest on policy loans............................ 4,080 3,400 3,273
Other investment income............................. 2,576 613 1,799
-------- -------- --------
Gross investment income............................. 467,004 466,736 449,808
Investment expenses................................. 20,020 20,312 21,471
-------- -------- --------
Net investment income............................... $446,984 $446,424 $428,337
======== ======== ========
</TABLE>
13
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
Proceeds from sales and maturities of debt securities and related gross
realized gains and losses were as follows:
<TABLE>
<CAPTION>
Year Ended December 31
----------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Proceeds.................................... $3,347,174 $3,284,095 $2,112,831
========== ========== ==========
Gross realized gains........................ $ 48,760 $ 30,094 $ 19,876
Gross realized losses....................... (8,072) (17,265) (19,634)
---------- ---------- ----------
Net realized gains.......................... $ 40,688 $ 12,829 $ 242
========== ========== ==========
</TABLE>
At December 31, 1998, investments with an aggregate carrying value of
$5,935,160 were on deposit with regulatory authorities or were restrictively
held in bank custodial accounts for the benefit of such regulatory authorities
as required by statute.
Realized investment gains (losses) and changes in unrealized gains (losses)
for investments are summarized below:
<TABLE>
<CAPTION>
Realized
---------------------------
Year Ended December 31
---------------------------
1998 1997 1996
-------- -------- -------
<S> <C> <C> <C>
Debt securities................................... $ 40,688 $ 12,829 $ 242
Short-term investments............................ 1,533 (19) (197)
Equity securities................................. (879) 6,972 1,798
Mortgage loans on real estate..................... 12,637 2,252 (5,530)
Real estate....................................... 3,176 4,252 1,210
Other invested assets............................. (2,523) 1,632 12
-------- -------- -------
54,632 27,918 (2,465)
Tax effect........................................ (22,290) (10,572) (1,235)
Transfer to interest maintenance reserve.......... (28,944) (10,187) 197
-------- -------- -------
Net realized gains (losses)....................... $ 3,398 $ 7,159 $(3,503)
======== ======== =======
</TABLE>
<TABLE>
<CAPTION>
Change in Unrealized
---------------------------
Year Ended December 31
---------------------------
1998 1997 1996
-------- ------- ---------
<S> <C> <C> <C>
Debt securities.................................. $(60,604) $40,289 $(115,867)
Equity securities................................ 5,750 5,653 2,929
-------- ------- ---------
Change in unrealized appreciation
(depreciation).................................. $(54,854) $45,942 $(112,938)
======== ======= =========
</TABLE>
Gross unrealized gains and gross unrealized losses on equity securities were
as follows:
<TABLE>
<CAPTION>
December 31
-------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Unrealized gains..................................... $15,980 $10,356 $ 9,590
Unrealized losses.................................... (3,710) (3,836) (8,723)
------- ------- -------
Net unrealized gains................................. $12,270 $ 6,520 $ 867
======= ======= =======
</TABLE>
14
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
During 1998, the Company issued mortgage loans with interest rates ranging
from 5.88% to 7.86%. The maximum percentage of any one mortgage loan to the
value of the underlying real estate at origination was 90% for commercial
loans and 95% for residential loans. Mortgage loans with a carrying value of
$245 were non-income producing for the previous twelve months. Accrued
interest of $89 related to these mortgage loans was excluded from investment
income. The Company requires all mortgaged properties to carry fire insurance
equal to the value of the underlying property.
At December 31, 1998 and 1997, the Company held a mortgage loan loss reserve
in the asset valuation reserve of $16,104 and $11,985, respectively. The
mortgage loan portfolio is diversified by geographic region and specific
collateral property type as follows:
Geographic Distribution
<TABLE>
<CAPTION>
December 31
-------------
1998 1997
----- -----
<S> <C> <C>
South Atlantic............................ 32% 29%
E. North Central.......................... 16 12
Pacific................................... 15 15
Mountain.................................. 10 10
Middle Atlantic........................... 10 7
W. South Central.......................... 6 9
W. North Central.......................... 5 6
E. South Central.......................... 3 8
New England............................... 3 4
</TABLE>
Property Type Distribution
<TABLE>
<CAPTION>
December 31
-------------
1998 1997
----- -----
<S> <C> <C>
Retail.................................... 35% 35%
Office.................................... 30 31
Industrial................................ 21 6
Apartment................................. 12 14
Other..................................... 2 14
</TABLE>
At December 31, 1998, the Company had no investments (excluding U.S.
Government guaranteed or insured issues) which individually represented more
than ten percent of capital and surplus and the asset valuation reserve.
The Company utilizes a variety of off-balance sheet financial instruments as
part of its efforts to hedge and manage fluctuations in the market value of
its investment portfolio attributable to changes in general interest rate
levels and to manage duration mismatch of assets and liabilities. These
instruments include interest rate exchange agreements (swaps and caps),
options, and commitments to extend credit and all involve elements of credit
and market risks in excess of the amounts recognized in the accompanying
financial statements at a given point in time. The contract or notional
amounts of those instruments reflect the extent of involvement in the various
types of financial instruments.
The Company's exposure to credit risk is the risk of loss from a
counterparty failing to perform according to the terms of the contract. That
exposure includes settlement risk (i.e., the risk that the
15
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
counterparty defaults after the Company has delivered funds or securities
under terms of the contract) that would result in an accounting loss and
replacement cost risk (i.e., the cost to replace the contract at current
market rates should the counterparty default prior to settlement date). Credit
loss exposure resulting from nonperformance by a counterparty for commitments
to extend credit is represented by the contractual amounts of the instruments.
At December 31, 1998 and 1997, the Company's outstanding financial
instruments with on and off-balance sheet risks, shown in notional amounts,
are summarized as follows:
<TABLE>
<CAPTION>
Notional Amount
-----------------
1998 1997
-------- --------
<S> <C> <C>
Derivative securities:
Interest rate swaps:
Receive fixed--pay floating............................... $100,000 $100,000
Receive floating (uncapped)--pay floating (capped)........ 53,011 67,229
Receive floating (LIBOR)--pay floating (S&P).............. 60,000 --
Interest rate cap agreements................................ 500,000 500,000
</TABLE>
4. REINSURANCE
The Company reinsures portions of risk on certain insurance policies which
exceed its established limits, thereby providing a greater diversification of
risk and minimizing exposure on larger risks. The Company remains contingently
liable with respect to any insurance ceded, and this would become an actual
liability in the event that the assuming insurance company became unable to
meet its obligation under the reinsurance treaty.
Reinsurance assumption and cession treaties are transacted primarily with
affiliates. Premiums earned reflect the following reinsurance assumed and
ceded amounts:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Direct premiums............................. $1,533,822 $1,312,446 $1,457,450
Reinsurance assumed......................... 2,366 2,038 1,796
Reinsurance ceded........................... (173,564) (246,372) (300,546)
---------- ---------- ----------
Net premiums earned......................... $1,362,624 $1,068,112 $1,158,700
========== ========== ==========
</TABLE>
The Company received reinsurance recoveries in the amount of $173,297,
$183,638 and $168,155 during 1998, 1997 and 1996, respectively. At December
31, 1998 and 1997, estimated amounts recoverable from reinsurers that have
been deducted from policy and contract claim reserves totaled $47,956 and
$60,437, respectively. The aggregate reserves for policies and contracts were
reduced for reserve credits for reinsurance ceded at December 31, 1998 and
1997 of $2,163,905 and $2,434,130, respectively.
At December 31, 1998, amounts recoverable from unauthorized reinsurers of
$55,379 (1997--$73,080) and reserve credits for reinsurance ceded of $49,835
(1997--$78,838) were associated with a single reinsurer and its affiliates.
The Company holds collateral under these reinsurance agreements in the form of
trust agreements totaling $106,226 at December 31, 1998 that can be drawn on
for amounts that remain unpaid for more than 120 days.
16
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
5. INCOME TAXES
For federal income tax purposes, the Company joins in a consolidated tax
return filing with certain affiliated companies. Under the terms of a tax-
sharing agreement between the Company and its affiliates, the Company computes
federal income tax expense as if it were filing a separate income tax return,
except that tax credits and net operating loss carryforwards are determined on
the basis of the consolidated group. Additionally, the alternative minimum tax
is computed for the consolidated group and the resulting tax, if any, is
allocated back to the separate companies on the basis of the separate
companies' alternative minimum taxable income.
Federal income tax expense differs from the amount computed by applying the
statutory federal income tax rate to gain from operations before federal
income tax expense and net realized capital gains (losses) on investments for
the following reasons:
<TABLE>
<CAPTION>
Year Ended December 31
-------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Computed tax at federal statutory rate (35%)......... $39,177 $42,775 $37,256
Tax reserve adjustment............................... 607 2,004 2,211
Excess tax depreciation.............................. (223) (392) (384)
Deferred acquisition costs--tax basis................ 11,827 4,308 5,583
Prior year under (over) accrual...................... 1,750 (1,016) (499)
Dividend received deduction.......................... (1,053) (941) (454)
Charitable contribution.............................. -- (848) --
Other items--net..................................... (2,250) (2,509) (2,536)
------- ------- -------
Federal income tax expense........................... $49,835 $43,381 $41,177
======= ======= =======
</TABLE>
Prior to 1984, as provided for under the Life Insurance Company Tax Act of
1959, a portion of statutory income was not subject to current taxation but
was accumulated for income tax purposes in a memorandum account referred to as
the policyholders' surplus account. No federal income taxes have been provided
for in the financial statements on income deferred in the policyholders'
surplus account ($20,387 at December 31, 1998). To the extent dividends are
paid from the amount accumulated in the policyholders' surplus account, net
earnings would be reduced by the amount of tax required to be paid. Should the
entire amount in the policyholders' surplus account become taxable, the tax
thereon computed at current rates would amount to approximately $7,135.
The Company's federal income tax returns have been examined and closing
agreements have been executed with the Internal Revenue Service through 1987.
During 1996, there was a $5,025 prior period adjustment to the tax accrual.
This included a $2,100 writeoff of an intangible asset for tax purposes, and a
federal income tax refund of $1,829 for tax years 1984 through 1986 and
related interest of $1,686, net of a tax effect of $590. An examination is
underway for years 1993 through 1995.
6. POLICY AND CONTRACT ATTRIBUTES
A portion of the Company's policy reserves and other policyholders' funds
(including separate account liabilities) relates to liabilities established on
a variety of the Company's products that are not subject to significant
mortality or morbidity risk; however, there may be certain restrictions placed
upon
17
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
the amount of funds that can be withdrawn without penalty. The amount of
reserves on these products, by withdrawal characteristics, are summarized as
follows:
<TABLE>
<CAPTION>
December 31
-------------------------------------
1998 1997
------------------ ------------------
Percent Percent
of of
Amount Total Amount Total
---------- ------- ---------- -------
<S> <C> <C> <C> <C>
Subject to discretionary withdrawal with
market value adjustment................. $ 82,048 1% $ 8,912 0%
Subject to discretionary withdrawal at
book value less surrender charge........ 515,778 5 755,300 8
Subject to discretionary withdrawal at
market value............................ 3,211,896 34 2,454,845 27
Subject to discretionary withdrawal at
book value (minimal or no charges or
adjustments)............................ 5,519,265 58 5,821,049 63
Not subject to discretionary withdrawal
provision............................... 228,030 2 203,522 2
---------- --- ---------- ---
9,557,017 100% 9,243,628 100%
Less reinsurance ceded................... 2,124,769 2,372,495
---------- ----------
Total policy reserves on annuities and
deposit fund liabilities................ $7,432,248 $6,871,134
========== ==========
</TABLE>
A reconciliation of the amounts transferred to and from the separate accounts
is presented below:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Transfers as reported in the summary of operations
of the separate accounts statement:
Transfers to separate accounts.................... $345,319 $281,095 $227,864
Transfers from separate accounts.................. 79,808 9,819 75,172
-------- -------- --------
Net transfers to separate accounts.................. 265,511 271,276 152,692
Reconciling adjustments--charges for investment
management, administration fees and contract
guarantees......................................... 191 26,204 19,093
-------- -------- --------
Transfers as reported in the summary of operations
of the life, accident and health annual statement.. $265,702 $297,480 $171,785
======== ======== ========
</TABLE>
18
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
Reserves on the Company's traditional life products are computed using mean
reserving methodologies. These methodologies result in the establishment of
assets for the amount of the net valuation premiums that are anticipated to be
received between the policy's paid-through date to the policy's next
anniversary date. At December 31, 1998 and 1997, these assets (which are
reported as premiums deferred and uncollected) and the amounts of the related
gross premiums and loadings, are as follows:
<TABLE>
<CAPTION>
Gross Loading Net
------- ------- -------
<S> <C> <C> <C>
December 31, 1998
Life and annuity:
Ordinary direct first year business................ $ 3,346 $2,500 $ 846
Ordinary direct renewal business................... 21,435 6,365 15,070
Group life direct business......................... 1,171 536 635
Reinsurance ceded.................................. (1,367) (44) (1,323)
------- ------ -------
24,585 9,357 15,228
Accident and health:
Direct............................................. 108 -- 108
Reinsurance ceded.................................. (18) -- (18)
------- ------ -------
Total accident and health............................ 90 -- 90
------- ------ -------
$24,675 $9,357 $15,318
======= ====== =======
December 31, 1997
Life and annuity:
Ordinary direct first year business................ $ 2,316 $1,698 $ 618
Ordinary direct renewal business................... 22,724 6,834 15,890
Group life direct business......................... 1,523 646 877
Reinsurance ceded.................................. (1,464) (81) (1,383)
------- ------ -------
25,099 9,097 16,002
Accident and health:
Direct............................................. 148 -- 148
Reinsurance ceded.................................. (49) -- (49)
------- ------ -------
Total accident and health............................ 99 -- 99
------- ------ -------
$25,198 $9,097 $16,101
======= ====== =======
</TABLE>
At December 31, 1998 and 1997, the Company had insurance in force
aggregating $44,233 and $69,271, respectively, in which the gross premiums are
less than the net premiums required by the standard valuation standards
established by the Insurance Division, Department of Commerce, of the State of
Iowa. The Company established policy reserves of $998 and $1,128 to cover
these deficiencies at December 31, 1998 and 1997, respectively.
7. DIVIDEND RESTRICTIONS
The Company is subject to limitations, imposed by the State of Iowa, on the
payment of dividends to its parent company. Generally, dividends during any
twelve-month period may not be paid, without prior regulatory approval, in
excess of the greater of (a) 10 percent of statutory capital and surplus as of
the preceding December 31, or (b) statutory gain from operations for the
preceding year. Subject to
19
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
the availability of unassigned surplus at the time of such dividend, the
maximum payment which may be made in 1999, without the prior approval of
insurance regulatory authorities, is $62,100.
The Company paid dividends to its parent of $120,000, $62,000 and $20,000 in
1998, 1997 and 1996, respectively.
8. RETIREMENT AND COMPENSATION PLANS
The Company's employees participate in a qualified benefit pension plan
sponsored by AEGON. The Company has no legal obligation for the plan. The
Company recognizes pension expense equal to its allocation from AEGON. The
pension expense is allocated among the participating companies based on the
FASB No. 87 expense as a percent of salaries. The benefits are based on years
of service and the employee's compensation during the highest five consecutive
years of employment. Pension expense aggregated $380, $422 and $1,056 for the
years ended December 31, 1998, 1997 and 1996, respectively. The plan is
subject to the reporting and disclosure requirements of the Employee
Retirement and Income Security Act of 1974.
The Company's employees also participate in a contributory defined
contribution plan sponsored by AEGON which is qualified under Section 401(k)
of the Internal Revenue Service Code. Employees of the Company who customarily
work at least 1,000 hours during each calendar year and meet the other
eligibility requirements, are participants of the plan. Participants may elect
to contribute up to fifteen percent of their salary to the plan. The Company
will match an amount up to three percent of the participant's salary.
Participants may direct all of their contributions and plan balances to be
invested in a variety of investment options. The plan is subject to the
reporting and disclosure requirements of the Employee Retirement and Income
Security Act of 1974. Expense related to this plan was $233, $226 and $297 for
the years ended December 31, 1998, 1997 and 1996, respectively.
AEGON sponsors supplemental retirement plans to provide the Company's senior
management with benefits in excess of normal pension benefits. The plans are
noncontributory, and benefits are based on years of service and the employee's
compensation level. The plans are unfunded and nonqualified under the Internal
Revenue Service Code. In addition, AEGON has established incentive deferred
compensation plans for certain key employees of the Company. AEGON also
sponsors an employee stock option plan for individuals employed at least three
years and a stock purchase plan for its producers, with the participating
affiliated companies establishing their own eligibility criteria, producer
contribution limits and company matching formula. These plans have been
accrued or funded as deemed appropriate by management of AEGON and the
Company.
In addition to pension benefits, the Company participates in plans sponsored
by AEGON that provide postretirement medical, dental and life insurance
benefits to employees meeting certain eligibility requirements. Portions of
the medical and dental plans are contributory. The expenses of the
postretirement plans calculated on the pay-as-you-go basis are charged to
affiliates in accordance with an intercompany cost sharing arrangement. The
Company expensed $62, $62 and $184 for the years ended December 31, 1998, 1997
and 1996, respectively.
9. RELATED PARTY TRANSACTIONS
The Company shares certain offices, employees and general expenses with
affiliated companies.
The Company receives data processing, investment advisory and management,
marketing and administration services from certain affiliates. During 1998,
1997 and 1996, the Company paid $18,706, $18,705 and $17,028, respectively,
for these services, which approximates their costs to the affiliates.
20
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
Payables to affiliates bear interest at the thirty-day commercial paper rate
of 4.95% at December 31, 1998. During 1998, 1997 and 1996, the Company paid
net interest of $1,491, $1,188 and $174, respectively, to affiliates.
During 1997, the Company received a capital contribution of $153 in cash
from its parent.
At December 31, 1998 and 1997, the Company has short-term notes payable to
an affiliate of $9,421 and $16,400, respectively. Interest on these notes
accrues at rates ranging from 5.13% to 5.52% at December 31, 1998 and at 5.60%
at December 31, 1997.
During 1998, the Company issued life insurance policies to certain
affiliated companies, covering the lives of certain employees of those
affiliates. Premiums of $174,000 related to these policies were recognized
during the year, and aggregate reserves for policies and contracts are
$181,720 at December 31, 1998.
10. COMMITMENTS AND CONTINGENCIES
The Company is a party to legal proceedings incidental to its business.
Although such litigation sometimes includes substantial demands for
compensatory and punitive damages, in addition to contract liability, it is
management's opinion, after consultation with counsel and a review of
available facts, that damages arising from such demands will not be material
to the Company's financial position.
The Company is subject to insurance guaranty laws in the states in which it
writes business. These laws provide for assessments against insurance
companies for the benefit of policyholders and claimants in the event of
insolvency of other insurance companies. Assessments are charged to operations
when received by the Company except where right of offset against other taxes
paid is allowed by law; amounts available for future offsets are recorded as
an asset on the Company's balance sheet. Potential future obligations for
unknown insolvencies are not determinable by the Company. The future
obligation has been based on the most recent information available from the
National Organization of Life and Health Insurance Guaranty Associations. The
Company has established a reserve of $17,901 and $17,700 and an offsetting
premium tax benefit of $7,631 and $7,984 at December 31, 1998 and 1997,
respectively, for its estimated share of future guaranty fund assessments
related to several major insurer insolvencies. The guaranty fund expense
(benefit) was $1,985, $(975) and $2,617 for December 31, 1998, 1997 and 1996,
respectively.
11. YEAR 2000 (UNAUDITED)
The term Year 2000 issue generally refers to the improper processing of
dates and incorrect date calculations that might occur in computer software
and hardware and embedded systems as the Year 2000 is approached. The use of
computer programs that rely on two-digit date fields to perform computations
and decision-making functions may cause systems to malfunction when processing
information involving dates after 1999. For example, any computer software
that has date-sensitive coding might recognize a code of 00 as the year 1900
rather than the year 2000.
The Company has developed a Year 2000 Project Plan (the "Plan") to address
the Year 2000 issue as it affects the Company's internal IT ("Information
Technology") and non-IT systems, and to assess Year 2000 issues relating to
third parties with whom the Company has critical relationships.
The Plan for addressing internal systems generally includes an assessment of
internal IT and non-IT systems and equipment affected by the Year 2000 issue;
definition of strategies to address affected
21
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
systems and equipment; remediation of identified systems and equipment;
internal testing and certification that each internal system is Year 2000
compliant; and a review of existing and revised business resumption and
contingency plans to address potential Year 2000 issues. The Company has
remediated and tested substantially all of its mission-critical internal IT
systems as of December 31, 1998. The Company continues to remediate and test
certain non-critical internal IT systems, internal non-IT systems and will
continue with a revalidation testing program throughout 1999.
The Company's Year 2000 issues are more complex because a number of its
systems interface with other systems not under the Company's control. The
Company's most significant interfaces and uses of third-party vendor systems
are in the bank, financial services and trust areas. The Company utilizes
various banks to handle numerous types of financial and sales transactions.
Several of these banks also provide trustee and custodial services for the
Company's investment holdings and transactions. These services are critical to
a financial services company such as the Company as its business centers
around cash receipts and disbursements to policyholders and the investment of
policyholder funds. The Company has received written confirmation from its
vendor banks regarding their status on Year 2000. The banks indicate their
dedication to resolving any Year 2000 issues related to their systems and
services prior to December 31, 1999. The Company anticipates that a
considerable effort will be necessary to ensure that its corrected or new
systems can properly interface with those business partners with whom it
transmits and receives data and other information (external systems). The
Company has undertaken specific testing regimes with these third-party
business partners and expects to continue working with its business partners
on any interfacing of systems. However, the timing of external system
compliance cannot currently be predicted with accuracy because the
implementation of Year 2000 readiness will vary from one company to another.
The Company does have some exposure to date-sensitive embedded technology
such as micro-controllers, but the Company views this exposure as minimal.
Unlike other industries that may be equipment intensive, like manufacturing,
the Company is a life insurance, and financial services organization providing
insurance annuities and pension products to its customers. As such, the
primary equipment and electronic devices in use are computers and telephone-
related equipment. This type of hardware can have date-sensitive embedded
technology which could have Year 2000 problems. Because of this exposure, the
Company has reviewed its computer hardware and telephone systems, with
assistance from the applicable vendors, and has upgraded, or replaced, or is
in the process of replacing any equipment that will not properly process date-
sensitive data in the Year 2000 or beyond.
For the Company, a reasonably likely worst case scenario might include one
or more of the Company's significant policyholder systems being non-compliant.
Such an event could result in a material disruption of the Company's
operations. Specifically, a number of the Company's operations could
experience an interruption in the ability to collect and process premiums or
deposits, process claim payments, accurately maintain policyholder
information, accurately maintain accounting records, and/or perform adequate
customer service. Should the worst case scenario occur, it could, dependent
upon its duration, have a material impact on the Company's business and
financial condition. Simple failures can be repaired and returned to
production within a matter of hours with no material impact. Unanticipated
failures with a longer service disruption period could have a more serious
impact. For this reason, the Company is placing significant emphasis on risk
management and Year 2000 business resumption contingency planning in 1999 by
modifying its existing business resumption and disaster recovery plans to
address potential Year 2000 issues.
The actions taken by management under the Year 2000 Project Plans are
intended to significantly reduce the Company's risk of a material business
interruption based on the Year 2000 issues. It should
22
<PAGE>
PFL LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--STATUTORY BASIS--(Continued)
be noted that the Year 2000 computer problem, and its resolution, is complex
and multifaceted, and any company's success cannot be conclusively known until
the Year 2000 is reached. In spite of its efforts or results, the Company's
ability to function unaffected to and through the Year 2000 may be adversely
affected by actions (or failure to act) of third parties beyond our knowledge
or control. It is anticipated that there may be problems that will have to be
resolved in the ordinary course of business on and after the Year 2000.
However, the Company does not believe that the problems will have a material
adverse affect on the Company's operations or financial condition.
23
<PAGE>
PFL LIFE INSURANCE COMPANY
SUMMARY OF INVESTMENTS--OTHER THAN
INVESTMENTS IN RELATED PARTIES
December 31, 1998
(Dollars in thousands)
SCHEDULE I
<TABLE>
<CAPTION>
Amount at Which
Market Shown in the
Type of Investment Cost(1) Value Balance Sheet
------------------ ---------- ---------- ---------------
<S> <C> <C> <C>
Fixed Maturities
Bonds:
United States Government and government
agencies and authorities.............. $ 926,370 $ 943,313 $ 926,370
States, municipalities and political
subdivisions.......................... 107,975 114,146 107,975
Foreign governments.................... 54,670 53,950 54,670
Public utilities....................... 139,732 142,230 139,732
All other corporate bonds.............. 3,593,695 3,646,877 3,593,695
Redeemable preferred stock............... 14,754 14,738 14,754
---------- ---------- ----------
Total fixed maturities................... 4,837,196 4,915,254 4,837,196
Equity Securities
Common stocks:
Affiliated entities.................... 8,060 5,613 5,613
Banks, trust and insurance............. 5,935 7,193 7,193
Industrial, miscellaneous and all
other................................. 28,796 42,255 42,255
---------- ---------- ----------
Total equity securities.................. 42,791 55,061 55,061
Mortgage loans on real estate............ 1,012,433 1,012,433
Real estate.............................. 52,381 52,381
Real estate acquired in satisfaction of
debt.................................... 11,778 11,778
Policy loans............................. 60,058 60,058
Other long-term investments.............. 76,482 76,482
Cash and short-term investments.......... 83,289 83,289
---------- ----------
Total investments........................ $6,176,408 $6,188,678
========== ==========
</TABLE>
- -------------------------
(1) Original cost of equity securities and, as to fixed maturities, original
cost reduced by repayments and adjusted for amortization of premiums or
accrual of discounts.
24
<PAGE>
PFL LIFE INSURANCE COMPANY
SUPPLEMENTARY INSURANCE INFORMATION
(Dollars in thousands)
SCHEDULE III
<TABLE>
<CAPTION>
Future Benefits,
Policy Claims
Benefits Policy and Net Losses and Other
and Unearned Contract Premium Investment Settlement Operating Premiums
Expenses Premiums Liabilities Revenue Income* Expenses Expenses* Written
---------- -------- ----------- ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Year Ended December 31,
1998
Individual life......... $1,355,283 $ -- $ 8,976 $ 514,194 $ 85,258 $ 545,720 $ 87,455 --
Individual health....... 94,294 9,631 12,123 68,963 8,004 48,144 30,442 $ 68,745
Group life and health... 93,405 10,298 36,908 111,547 11,426 82,690 54,352 108,769
Annuity................. 3,925,293 -- -- 667,920 342,296 592,085 298,222 --
---------- ------- ------- ---------- -------- ---------- --------
$5,468,275 $19,929 $58,007 $1,362,624 $446,984 $1,268,639 $470,471
========== ======= ======= ========== ======== ========== ========
Year Ended December 31,
1997
Individual life......... $ 882,003 $ -- $ 8,550 $ 200,175 $ 75,914 $ 211,921 $ 36,185 --
Individual health....... 62,033 9,207 12,821 63,548 5,934 37,706 29,216 $ 63,383
Group life and health... 88,211 11,892 44,977 146,694 11,888 103,581 91,568 143,580
Annuity................. 4,204,125 -- -- 657,695 352,688 571,434 364,216 --
---------- ------- ------- ---------- -------- ---------- --------
$5,236,372 $21,099 $66,348 $1,068,112 $446,424 $ 924,642 $521,185
========== ======= ======= ========== ======== ========== ========
Year Ended December 31,
1996
Individual life......... $ 734,350 $ -- $ 7,240 $ 202,082 $ 66,538 $ 197,526 $ 38,067 --
Individual health....... 39,219 8,680 13,631 55,871 5,263 32,903 29,511 $ 55,678
Group life and health... 78,418 14,702 53,486 174,781 12,877 105,459 122,953 171,320
Annuity................. 4,408,419 -- -- 725,966 343,659 800,121 230,417 --
---------- ------- ------- ---------- -------- ---------- --------
$5,260,406 $23,382 $74,357 $1,158,700 $428,337 $1,136,009 $420,948
========== ======= ======= ========== ======== ========== ========
</TABLE>
- -------------
* Allocations of net investment income and other operating expenses are based
on a number of assumptions and estimates, and the results would change if
different methods were applied.
25
<PAGE>
PFL LIFE INSURANCE COMPANY
REINSURANCE
(Dollars in thousands)
SCHEDULE IV
<TABLE>
<CAPTION>
Assumed Percentage
Ceded to From of Amount
Gross Other Other Net Assumed
Amount Companies Companies Amount to Net
---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1998
Life insurance in force.. $6,384,095 $438,590 $39,116 $5,984,621 .6%
========== ======== ======= ========== ===
Premiums:
Individual life........ $ 515,164 $ 3,692 $ 2,366 $ 513,838 .5%
Individual health...... 76,438 7,475 -- 68,963 --
Group life and health.. 255,848 144,301 -- 111,547 --
Annuity................ 686,372 18,096 -- 668,276 --
---------- -------- ------- ---------- ---
$1,533,822 $173,564 $ 2,366 $1,362,624 .2%
========== ======== ======= ========== ===
Year Ended December 31,
1997
Life insurance in force.. $5,025,027 $420,519 $35,486 $4,639,994 .8%
========== ======== ======= ========== ===
Premiums:
Individual life........ $ 201,691 $ 3,554 $ 2,038 $ 200,175 1.0%
Individual health...... 73,593 10,045 -- 63,548 --
Group life and health.. 339,269 192,575 -- 146,694 --
Annuity................ 697,893 40,198 -- 657,695 --
---------- -------- ------- ---------- ---
$1,312,446 $246,372 $ 2,038 $1,068,112 .2%
========== ======== ======= ========== ===
Year Ended December 31,
1996
Life insurance in force.. $4,863,416 $477,112 $30,685 $4,416,989 .7%
========== ======== ======= ========== ===
Premiums:
Individual life........ $ 204,144 $ 3,858 $ 1,796 $ 202,082 .9%
Individual health...... 68,699 12,828 -- 55,871 --
Group life and health.. 390,296 215,515 -- 174,781 --
Annuity................ 794,311 68,345 -- 725,966 --
---------- -------- ------- ---------- ---
$1,457,450 $300,546 $ 1,796 $1,158,700 .2%
========== ======== ======= ========== ===
</TABLE>
26
<PAGE>
Financial Statements
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Year ended December 31, 1998
with Report of Independent Auditors
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Financial Statements
Year ended December 31, 1998
Contents
Report of Independent Auditors............................................. 1
Financial Statements
Balance Sheet.............................................................. 2
Statement of Operations.................................................... 6
Statements of Changes in Contract Owners' Equity........................... 10
Notes to Financial Statements.............................................. 14
<PAGE>
Report of Independent Auditors
The Board of Directors and Contract Owners
of The Endeavor Platinum Variable Annuity,
PFL Life Insurance Company
We have audited the accompanying balance sheet of certain subaccounts of PFL
Endeavor VA Separate Account, which are available for investment by The Endeavor
Platinum Variable Annuity contract owners, as of December 31, 1998, and the
related statements of operations for the year then ended and changes in contract
owners' equity for each of the two years in the period then ended. 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, 1998 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 certain subaccounts of the PFL
Endeavor VA Separate Account, which are available for investment by The Endeavor
Platinum Annuity contract owners, at December 31, 1998, and the results of their
operations for the year then ended and changes in their contract owners' equity
for each of the two years in the period then ended, in conformity with generally
accepted accounting principles.
Des Moines, Iowa
January 29, 1999
1
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Balance Sheet
December 31, 1998
Total
------------
Assets
Cash $ 3
Investments in mutual funds, at current market value:
Endeavor Series Trust:
Endeavor Money Market Portfolio 29,051,553
Endeavor Asset Allocation Portfolio 26,541,105
T. Rowe Price International Stock Portfolio 20,798,134
Endeavor Value Equity Portfolio 36,769,808
Dreyfus Small Cap Value Portfolio 22,050,362
Dreyfus U. S. Government Securities Portfolio 16,150,988
T. Rowe Price Equity Income Portfolio 39,176,539
T. Rowe Price Growth Stock Portfolio 35,002,493
Endeavor Opportunity Value Portfolio 7,802,091
Endeavor Enhanced Index Portfolio 16,815,754
Endeavor Select 50 Portfolio 8,590,302
Endeavor High Yield Portfolio 2,383,678
WRL Series Fund, Inc.:
Growth Portfolio 68,445,498
--------------
Total investments in mutual funds 329,578,305
--------------
Total assets $329,578,308
==============
Liabilities and contract owners' equity
Liabilities:
Contract terminations payable $ 507
--------------
Total liabilities 507
Contract owners' equity:
Deferred annuity contracts terminable by owners 329,577,801
--------------
Total liabilities and contract owners' equity $329,578,308
==============
See accompanying notes.
2
<PAGE>
<TABLE>
<CAPTION>
Endeavor Endeavor T. Rowe Price
Money Asset International Endeavor
Market Allocation Stock Value Equity
Subaccount Subaccount Subaccount Subaccount
-------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Cash $ -- $ -- $ -- $ --
Investments in mutual funds, at current market value:
Endeavor Series Trust:
Endeavor Money Market Portfolio 29,051,553 -- -- --
Endeavor Asset Allocation Portfolio -- 26,541,105 -- --
T. Rowe Price International Stock Portfolio -- -- 20,798,134 --
Endeavor Value Equity Portfolio -- -- -- 36,769,808
Dreyfus Small Cap Value Portfolio -- -- -- --
Dreyfus U. S. Government Securities Portfolio -- -- -- --
T. Rowe Price Equity Income Portfolio -- -- -- --
T. Rowe Price Growth Stock Portfolio -- -- -- --
Endeavor Opportunity Value Portfolio -- -- -- --
Endeavor Enhanced Index Portfolio -- -- -- --
Endeavor Select 50 Portfolio -- -- -- --
Endeavor High Yield Portfolio -- -- -- --
WRL Series Fund, Inc.:
Growth Portfolio -- -- -- --
---------------------------------------------------------
Total investments in mutual funds 29,051,553 26,541,105 20,798,134 36,769,808
---------------------------------------------------------
Total assets $29,051,553 $26,541,105 $20,798,134 $36,769,808
=========================================================
Liabilities and contract owners' equity
Liabilities:
Contract terminations payable $ 201 $ 10 $ 12 $ 16
---------------------------------------------------------
Total liabilities 201 10 12 16
Contract owners' equity:
Deferred annuity contracts terminable by owners 29,051,352 26,541,095 20,798,122 36,769,792
---------------------------------------------------------
Total liabilities and contract owners' equity $29,051,553 $26,541,105 $20,798,134 $36,769,808
=========================================================
<CAPTION>
Dreyfus U. S.
Dreyfus Small Government
Cap Value Securities
Subaccount Subaccount
-----------------------------
<S> <C> <C>
Assets
Cash $ -- $ --
Investments in mutual funds, at current market value:
Endeavor Series Trust:
Endeavor Money Market Portfolio -- --
Endeavor Asset Allocation Portfolio -- --
T. Rowe Price International Stock Portfolio -- --
Endeavor Value Equity Portfolio -- --
Dreyfus Small Cap Value Portfolio 22,050,362 --
Dreyfus U. S. Government Securities Portfolio -- 16,150,988
T. Rowe Price Equity Income Portfolio -- --
T. Rowe Price Growth Stock Portfolio -- --
Endeavor Opportunity Value Portfolio -- --
Endeavor Enhanced Index Portfolio -- --
Endeavor Select 50 Portfolio -- --
Endeavor High Yield Portfolio -- --
WRL Series Fund, Inc.:
Growth Portfolio -- --
-----------------------------
Total investments in mutual funds 22,050,362 16,150,988
-----------------------------
Total assets $22,050,362 $16,150,988
=============================
Liabilities and contract owners' equity
Liabilities:
Contract terminations payable $ 6 $ 7
-----------------------------
Total liabilities 6 7
Contract owners' equity:
Deferred annuity contracts terminable by owners 22,050,356 16,150,981
-----------------------------
Total liabilities and contract owners' equity $22,050,362 $16,150,988
=============================
</TABLE>
3
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Balance Sheet (continued)
T. Rowe Price
Equity Income
Subaccount
-----------------
Assets
Cash $ --
Investments in mutual funds, at current market value:
Endeavor Series Trust:
Endeavor Money Market Portfolio --
Endeavor Asset Allocation Portfolio --
T. Rowe Price International Stock Portfolio --
Endeavor Value Equity Portfolio --
Dreyfus Small Cap Value Portfolio --
Dreyfus U. S. Government Securities Portfolio --
T. Rowe Price Equity Income Portfolio 39,176,539
T. Rowe Price Growth Stock Portfolio --
Endeavor Opportunity Value Portfolio --
Endeavor Enhanced Index Portfolio --
Endeavor Select 50 Portfolio --
Endeavor High Yield Portfolio --
WRL Series Fund, Inc.:
Growth Portfolio --
-------------
Total investments in mutual funds 39,176,539
-------------
Total assets $39,176,539
=============
Liabilities and contract owners' equity
Liabilities:
Contract terminations payable $ 16
-------------
Total liabilities 16
Contract owners' equity:
Deferred annuity contracts terminable by owners 39,176,523
-------------
Total liabilities and contract owners' equity $39,176,539
=============
See accompanying notes.
4
<PAGE>
<TABLE>
<CAPTION>
Endeavor Endeavor
T. Rowe Price Opportunity Enhanced Endeavor
Growth Stock Value Index Select 50
Subaccount Subaccount Subaccount Subaccount
-------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Cash $ -- $ 2 $ 1 $ --
Investments in mutual funds, at current market value:
Endeavor Series Trust:
Endeavor Money Market Portfolio -- -- -- --
Endeavor Asset Allocation Portfolio -- -- -- --
T. Rowe Price International Stock Portfolio -- -- -- --
Endeavor Value Equity Portfolio -- -- -- --
Dreyfus Small Cap Value Portfolio -- -- -- --
Dreyfus U. S. Government Securities Portfolio 35,002,493 -- -- --
T. Rowe Price Equity Income Portfolio -- 7,802,091 -- --
T. Rowe Price Growth Stock Portfolio -- -- 16,815,754 --
Endeavor Opportunity Value Portfolio -- -- -- 8,590,302
Endeavor Enhanced Index Portfolio -- -- -- --
Endeavor Select 50 Portfolio -- -- -- --
Endeavor High Yield Portfolio -- -- -- --
WRL Series Fund, Inc.:
Growth Portfolio -- -- -- --
-------------------------------------------------------
Total investments in mutual funds 35,002,493 7,802,091 16,815,754 8,590,302
-------------------------------------------------------
Total assets $35,002,493 $ 7,802,093 $16,815,755 $ 8,590,302
=======================================================
Liabilities and contract owners' equity
Liabilities:
Contract terminations payable $ 8 $ -- $ -- $ 213
-------------------------------------------------------
Total liabilities 8 -- -- 213
Contract owners' equity:
Deferred annuity contracts terminable by owners 35,002,485 7,802,093 16,815,755 8,590,089
-------------------------------------------------------
Total liabilities and contract owners' equity $35,002,493 $ 7,802,093 $16,815,755 $ 8,590,302
=======================================================
<CAPTION>
Endeavor
High Yield Growth
Subaccount Subaccount
----------------------------
<S> <C> <C>
Assets
Cash $ -- $ --
Investments in mutual funds, at current market value:
Endeavor Series Trust:
Endeavor Money Market Portfolio -- --
Endeavor Asset Allocation Portfolio -- --
T. Rowe Price International Stock Portfolio -- --
Endeavor Value Equity Portfolio -- --
Dreyfus Small Cap Value Portfolio -- --
Dreyfus U. S. Government Securities Portfolio -- --
T. Rowe Price Equity Income Portfolio -- --
T. Rowe Price Growth Stock Portfolio -- --
Endeavor Opportunity Value Portfolio -- --
Endeavor Enhanced Index Portfolio 2,383,678 --
Endeavor Select 50 Portfolio -- --
Endeavor High Yield Portfolio -- --
WRL Series Fund, Inc.:
Growth Portfolio -- 68,445,498
---------------------------
Total investments in mutual funds 2,383,678 68,445,498
---------------------------
Total assets $ 2,383,678 $68,445,498
===========================
Liabilities and contract owners' equity
Liabilities:
Contract terminations payable $ 2 $ 16
---------------------------
Total liabilities 2 16
Contract owners' equity:
Deferred annuity contracts terminable by owners 2,383,676 68,445,482
---------------------------
Total liabilities and contract owners' equity $ 2,383,678 $68,445,498
===========================
</TABLE>
5
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Statement of Operations
Year ended December 31, 1998, except as noted
Total
-------------
Net investment income (loss)
Income:
Dividends $11,043,944
Expenses:
Administration fee 41,586
Mortality and expense risk charge 4,304,075
-------------
Net investment income (loss) 6,698,283
Net realized and unrealized capital gain (loss) from investments
Net realized capital gain (loss) from sales of investments:
Proceeds from sales 74,273,502
Cost of investments sold 64,743,477
-------------
Net realized capital gain (loss) from sales of investments 9,530,025
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period 19,089,859
End of the period 45,127,289
-------------
Net change in unrealized appreciation (depreciation) of investments 26,037,430
-------------
Net realized and unrealized capital gain (loss) from investments 35,567,455
-------------
Increase (decrease) from operations $42,265,738
=============
(1) Commencement of operations, February 2, 1998.
(2) Commencement of operations, June 2, 1998.
See accompanying notes.
6
<PAGE>
<TABLE>
<CAPTION>
Endeavor Endeavor T. Rowe Price
Money Asset International Endeavor
Market Allocation Stock Value Equity
Subaccount Subaccount Subaccount Subaccount
---------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income (loss)
Income:
Dividends $ 1,086,700 $ 2,140,007 $ 275,827 $ 990,332
Expenses:
Administration fee 1,473 3,643 4,610 5,616
Mortality and expense risk charge 359,336 358,345 310,844 574,962
---------------------------------------------------------
Net investment income (loss) 725,891 1,778,019 (39,627) 409,754
Net realized and unrealized capital gain (loss) from investments
Net realized capital gain (loss) from sales of investments:
Proceeds from sales 27,455,766 3,534,051 4,177,468 5,622,527
Cost of investments sold 27,455,766 2,758,567 3,389,412 3,918,333
---------------------------------------------------------
Net realized capital gain (loss) from sales of investments -- 775,484 788,056 1,704,194
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period -- 2,339,216 749,648 5,086,737
End of the period -- 2,887,285 2,132,478 4,719,210
---------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments -- 548,069 1,382,830 (367,527)
---------------------------------------------------------
Net realized and unrealized capital gain (loss) from investments -- 1,323,553 2,170,886 1,336,667
---------------------------------------------------------
Increase (decrease) from operations $ 725,891 $ 3,101,572 $ 2,131,259 $ 1,746,421
=========================================================
<CAPTION>
Dreyfus Dreyfus U. S.
Small Cap Government
Value Securities
Subaccount Subaccount
-----------------------------
<S> <C> <C>
Net investment income (loss)
Income:
Dividends $ 2,608,558 $ 378,815
Expenses:
Administration fee 3,787 1,751
Mortality and expense risk charge 315,454 197,485
----------------------------
Net investment income (loss) 2,289,317 179,579
Net realized and unrealized capital gain (loss) from investments
Net realized capital gain (loss) from sales of investments:
Proceeds from sales 5,429,288 3,337,050
Cost of investments sold 5,209,847 3,013,035
----------------------------
Net realized capital gain (loss) from sales of investments 219,441 324,015
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period 1,600,120 398,168
End of the period (1,865,079) 538,279
----------------------------
Net change in unrealized appreciation (depreciation) of investments (3,465,199) 140,111
----------------------------
Net realized and unrealized capital gain (loss) from investments (3,245,758) 464,126
----------------------------
Increase (decrease) from operations $ (956,441) $ 643,705
============================
</TABLE>
7
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Statement of Operations (continued)
T. Rowe Price
Equity Income
Subaccount
-------------
Net investment income (loss)
Income:
Dividends $ 1,692,046
Expenses:
Administration fee 6,123
Mortality and expense risk charge 558,721
-------------
Net investment income (loss) 1,127,202
Net realized and unrealized capital gain (loss) from investments
Net realized capital gain (loss) from sales of investments:
Proceeds from sales 5,031,745
Cost of investments sold 3,677,889
-------------
Net realized capital gain (loss) from sales of investments 1,353,856
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period 4,652,163
End of the period 4,218,057
-------------
Net change in unrealized appreciation (depreciation) of investments (434,106)
-------------
Net realized and unrealized capital gain (loss) from investments 919,750
-------------
Increase (decrease) from operations $ 2,046,952
=============
(1) Commencement of operations, February 2, 1998.
(2) Commencement of operations, June 2, 1998.
See accompanying notes.
8
<PAGE>
<TABLE>
<CAPTION>
Endeavor Endeavor
T. Rowe Price Opportunity Enhanced Endeavor
Growth Stock Value Index Select 50
Subaccount Subaccount Subaccount Subaccount(1)
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Net investment income (loss)
Income:
Dividends $1,231,895 $ 74,143 $ 34,262 $ --
Expenses:
Administration fee 3,783 1,203 1,019 247
Mortality and expense risk charge 459,524 103,883 154,041 106,606
-------------------------------------------------------------
Net investment income (loss) 768,588 (30,943) (120,798) (106,853)
Net realized and unrealized capital gain (loss) from investments
Net realized capital gain (loss) from sales of investments:
Proceeds from sales 4,826,332 1,181,189 4,125,122 1,427,490
Cost of investments sold 3,153,262 1,036,677 3,600,614 1,380,637
-------------------------------------------------------------
Net realized capital gain (loss) from sales of investments 1,673,070 144,512 524,508 46,853
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period 4,142,993 172,610 53,243 --
End of the period 8,125,061 152,193 2,062,467 188,366
-------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 3,982,068 (20,417) 2,009,224 188,366
-------------------------------------------------------------
Net realized and unrealized capital gain (loss) from investments 5,655,138 124,095 2,533,732 235,219
-------------------------------------------------------------
Increase (decrease) from operations $6,423,726 $ 93,152 $ 2,412,934 $ 128,366
=============================================================
<CAPTION>
Endeavor High
Yield Growth
Subaccount(2) Subaccount
------------------------------
<S> <C> <C>
Net investment income (loss)
Income:
Dividends $ -- $ 531,359
Expenses:
Administration fee 14 8,317
Mortality and expense risk charge 9,968 794,906
------------------------------
Net investment income (loss) (9,982) (271,864)
Net realized and unrealized capital gain (loss) from investments
Net realized capital gain (loss) from sales of investments:
Proceeds from sales 309,615 7,815,859
Cost of investments sold 315,163 5,834,275
------------------------------
Net realized capital gain (loss) from sales of investments (5,548) 1,981,584
Net change in unrealized appreciation (depreciation) of investments:
Beginning of the period -- (105,039)
End of the period 14,411 21,954,561
------------------------------
Net change in unrealized appreciation (depreciation) of investments 14,411 22,059,600
------------------------------
Net realized and unrealized capital gain (loss) from investments 8,863 24,041,184
------------------------------
Increase (decrease) from operations $ (1,119) $23,769,320
==============================
</TABLE>
9
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Statements of Changes in Contract Owners' Equity
Years ended December 31, 1998 and 1997, except as noted
<TABLE>
<CAPTION>
Endeavor Money Market Endeavor Asset Allocation
Total Subaccount Subaccount
---------------------------- ---------------------------- ----------------------------
1998 1997 1998 1997 1998 1997
---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 6,698,283 $ 4,702,745 $ 725,891 $ 447,498 $ 1,778,019 $ (57,572)
Net realized capital gain (loss) 9,530,025 5,034,485 -- -- 775,484 705,371
Net change in unrealized
appreciation (depreciation)
of investments 26,037,430 10,810,482 -- -- 548,069 1,365,847
---------------------------- ---------------------------- ----------------------------
Increase (decrease) from operations 42,265,738 20,547,712 725,891 447,498 3,101,572 2,013,646
Contract transactions:
Net contract purchase payments 104,227,316 85,196,664 13,984,572 13,365,650 6,322,863 6,262,225
Transfer payments from (to)
other subaccounts or
general account 12,326,922 9,518,240 6,105,400 (6,085,181) 1,665,332 1,561,645
Contract terminations,
with-drawals and
other deductions (23,195,191) (15,944,250) (6,179,871) (3,547,361) (1,609,068) (1,732,896)
---------------------------- ---------------------------- ----------------------------
Increase from contract
transactions 93,359,047 78,770,654 13,910,101 3,733,108 6,379,127 6,090,974
---------------------------- ---------------------------- ----------------------------
Net increase in contract
owners' equity 135,624,785 99,318,366 14,635,992 4,180,606 9,480,699 8,104,620
Contract owners' equity:
Beginning of the period 193,953,016 94,634,650 14,415,360 10,234,754 17,060,396 8,955,776
---------------------------- ---------------------------- ----------------------------
End of the period $ 329,577,801 $ 193,953,016 $ 29,051,352 $ 14,415,360 $ 26,541,095 $ 17,060,396
============================ ============================ ============================
</TABLE>
(1) Commencement of operations, May 1, 1997.
(2) Commencement of operations, February 2, 1998.
(2) Commencement of operations, June 2, 1998.
See accompanying notes.
10
<PAGE>
<TABLE>
<CAPTION>
T. Rowe Price International Endeavor Value Equity
Stock Subaccount Subaccount
----------------------------- -----------------------------
1998 1997 1998 1997
----------------------------- -----------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (39,627) $ (135,576) $ 409,754 $ 376,102
Net realized capital gain (loss) 788,056 407,581 1,704,194 673,215
Net change in unrealized
appreciation (depreciation)
of investments 1,382,830 (287,511) (367,527) 3,343,168
----------------------------- -----------------------------
Increase (decrease) from operations 2,131,259 (15,506) 1,746,421 4,392,485
Contract transactions:
Net contract purchase payments 4,524,725 6,338,649 9,463,567 11,356,968
Transfer payments from (to)
other subaccounts or
general account (458,818) 1,639,647 (2,760,522) 2,516,131
Contract terminations,
with-drawals and
other deductions (1,638,303) (1,713,357) (2,673,230) (2,006,822)
----------------------------- -----------------------------
Increase from contract
transactions 2,427,604 6,264,939 4,029,815 11,866,277
----------------------------- -----------------------------
Net increase in contract
owners' equity 4,558,863 6,249,433 5,776,236 16,258,762
Contract owners' equity:
Beginning of the period 16,239,259 9,989,826 30,993,556 14,734,794
----------------------------- -----------------------------
End of the period $ 20,798,122 $ 16,239,259 $ 36,769,792 $ 30,993,556
============================= =============================
<CAPTION>
Dreyfus Small Cap Dreyfus U. S. Government
Value Subaccount Securities Subaccount
---------------------------- ----------------------------
1998 1997 1998 1997
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 2,289,317 $ 923,544 $ 179,579 $ 53,302
Net realized capital gain (loss) 219,441 677,390 324,015 12,635
Net change in unrealized
appreciation (depreciation)
of investments (3,465,199) 419,197 140,111 314,113
---------------------------- ----------------------------
Increase (decrease) from operations (956,441) 2,020,131 643,705 380,050
Contract transactions:
Net contract purchase payments 7,328,731 5,754,117 9,791,715 3,626,801
Transfer payments from (to)
other subaccounts or
general account (1,085) 2,585,134 (464,028) (467,135)
Contract terminations,
with-drawals and
other deductions (1,146,873) (1,031,809) (994,154) (600,834)
---------------------------- ----------------------------
Increase from contract
transactions 6,180,773 7,307,442 8,333,533 2,558,832
---------------------------- ----------------------------
Net increase in contract
owners' equity 5,224,332 9,327,573 8,977,238 2,938,882
Contract owners' equity:
Beginning of the period 16,826,024 7,498,451 7,173,743 4,234,861
---------------------------- ----------------------------
End of the period $ 22,050,356 $ 16,826,024 $ 16,150,981 $ 7,173,743
============================ ============================
</TABLE>
11
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Statements of Changes in Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
T. Rowe Price Equity T. Rowe Price Growth Endeavor Opportunity
Income Subaccount Stock Subaccount Value Subaccount
---------------------------- ---------------------------- ----------------------------
1998 1997 1998 1997 1998 1997
---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 1,127,202 $ 120,492 $ 768,588 $ (139,638) $ (30,943) $ (27,907)
Net realized capital gain (loss) 1,353,856 741,343 1,673,070 522,873 144,512 60,490
Net change in unrealized
appreciation (depreciation)
of investments (434,106) 3,333,175 3,982,068 3,041,341 (20,417) 172,834
---------------------------- ---------------------------- ----------------------------
Increase (decrease) from operations 2,046,952 4,195,010 6,423,726 3,424,576 93,152 205,417
Contract transactions:
Net contract purchase payments 12,359,064 11,210,133 8,617,223 7,990,069 3,797,167 2,999,004
Transfer payments from (to)
other subaccounts or
general account 134,392 2,706,836 (30,420) 1,513,846 420,857 530,367
Contract terminations,
with-drawals and
other deductions (2,558,676) (2,143,099) (1,689,566) (698,473) (419,195) (30,811)
---------------------------- ---------------------------- ----------------------------
Increase from contract transactions 9,934,780 11,773,870 6,897,237 8,805,442 3,798,829 3,498,560
---------------------------- ---------------------------- ----------------------------
Net increase in contract owners'
equity 11,981,732 15,968,880 13,320,963 12,230,018 3,891,981 3,703,977
Contract owners' equity:
Beginning of the period 27,194,791 11,225,911 21,681,522 9,451,504 3,910,112 206,135
---------------------------- ---------------------------- ----------------------------
End of the period $ 39,176,523 $ 27,194,791 $ 35,002,485 $ 21,681,522 $ 7,802,093 $ 3,910,112
============================ ============================ ============================
</TABLE>
(1) Commencement of operations, May 1, 1997.
(2) Commencement of operations, February 2, 1998.
(3) Commencement of operations, June 2, 1998.
See accompanying notes.
12
<PAGE>
<TABLE>
<CAPTION>
Endeavor Endeavor
Endeavor Enhanced Select 50 High Yield
Index Subaccount Subaccount Subaccount Growth Subaccount
--------------------------------------------------------------------------------------------
1998 1997(1) 1998(2) 1998(3) 1998 1997
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ (120,798) $ (12,131) $ (106,853) $ (9,982) $ (271,864) $ 3,154,631
Net realized capital gain (loss) 524,508 27,599 46,853 (5,548) 1,981,584 1,205,988
Net change in unrealized
appreciation (depreciation)
of investments 2,009,224 53,243 188,366 14,411 22,059,600 (944,925)
---------------------------- ------------ ------------ ----------------------------
Increase (decrease) from operations 2,412,934 68,711 128,366 (1,119) 23,769,320 3,415,694
Contract transactions:
Net contract purchase payments 8,795,952 3,132,922 5,538,695 1,264,085 12,438,957 13,160,126
Transfer payments from (to)
other subaccounts or
general account 2,408,070 414,356 3,150,217 1,238,821 918,706 2,602,594
Contract terminations,
with-drawals and
other deductions (357,307) (59,883) (227,189) (118,111) (3,583,648) (2,378,905)
---------------------------- ------------ ------------ ----------------------------
Increase from contract transactions 10,846,715 3,487,395 8,461,723 2,384,795 9,774,015 13,383,815
---------------------------- ------------ ------------ ----------------------------
Net increase in contract owners'
equity 13,259,649 3,556,106 8,590,089 2,383,676 33,543,335 16,799,509
Contract owners' equity:
Beginning of the period 3,556,106 -- -- -- 34,902,147 18,102,638
---------------------------- ------------ ------------ ----------------------------
End of the period $ 16,815,755 $ 3,556,106 $ 8,590,089 $ 2,383,676 $ 68,445,482 $ 34,902,147
============================ ============ ============ ============================
</TABLE>
13
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements
December 31, 1998
1. Organization and Summary of Significant Accounting Policies
Organization
The PFL Endeavor VA Separate Account (the "Mutual Fund Account") is a segregated
investment account of PFL Life Insurance Company ("PFL Life"), an indirect,
wholly-owned subsidiary of AEGON N.V., a holding company organized under the
laws of The Netherlands.
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. The Mutual Fund Account consists of sixteen investment
subaccounts, twelve of which are invested in specified portfolios of the
Endeavor Series Trust, and one of which is invested in the Growth Portfolio of
the WRL Series Fund, Inc. Activity in these thirteen investment subaccounts is
available to contract owners of The Endeavor Platinum Variable Annuity and The
Endeavor Variable Annuity, also issued by PFL Life. The remaining three
investment subaccounts (not included herein), which are invested in the Merrill
Lynch Variable Series Funds, Inc., are available to the contract owners of The
Endeavor ML Variable Annuity.
The Endeavor Select 50 Subaccount and the Endeavor High Yield Subaccount
commenced operations on February 2, 1998 and June 2, 1998, respectively. The
Endeavor Enhanced Index Subaccount commenced operations on May 1, 1997.
Effective May 1, 1998, the names of the TCW Money Market, TCW Managed Asset
Allocation, Value Equity, Opportunity Value, and Enhanced Index portfolios and
subaccounts were changed to Endeavor Money Market, Endeavor Asset Allocation,
Endeavor Value Equity, Endeavor Opportunity Value, and Endeavor Enhanced Index
portfolios and subaccounts, respectively. The investment advisor of the Endeavor
Series Trust is Endeavor Management Co. The investment advisor of the WRL Series
Fund, Inc. is WRL Investment Management, Inc., a subsidiary of Western Reserve
Life Assurance Co. of Ohio, an affiliate of PFL Life.
Investments
Net purchase payments received by the Mutual Fund Account for The Endeavor
Platinum Variable Annuity 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, 1998.
14
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
1. Organization and Summary of Significant Accounting Policies (continued)
Realized capital gain and losses from sales 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.
2. Investments
A summary of the mutual fund investments at December 31, 1998 follows:
<TABLE>
<CAPTION>
Net Asset
Number of Value Per Market
Shares Held Share Value Cost
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Endeavor Series Trust:
Endeavor Money Market Portfolio 29,051,553.110 $ 1.00 $ 29,051,553 $ 29,051,553
Endeavor Asset Allocation Portfolio 1,110,971.322 23.89 26,541,105 23,653,820
T. Rowe Price International Stock Portfolio 1,284,628.406 16.19 20,798,134 18,665,656
Endeavor Value Equity Portfolio 1,696,024.352 21.68 36,769,808 32,050,598
Dreyfus Small Cap Value Portfolio 1,559,431.527 14.14 22,050,362 23,915,441
Dreyfus U. S. Government Securities Portfolio 1,310,956.804 12.32 16,150,988 15,612,709
T. Rowe Price Equity Income Portfolio 1,954,917.109 20.04 39,176,539 34,958,482
T. Rowe Price Growth Stock Portfolio 1,367,284.866 25.60 35,002,493 26,877,432
Endeavor Opportunity Value Portfolio 638,469.011 12.22 7,802,091 7,649,898
Endeavor Enhanced Index Portfolio 1,045,755.861 16.08 16,815,754 14,753,287
Endeavor Select 50 Portfolio 805,844.485 10.66 8,590,302 8,401,936
Endeavor High Yield Portfolio 245,993.618 9.69 2,383,678 2,369,267
WRL Series Fund, Inc.:
Growth Portfolio 1,141,915.084 59.939219 68,445,498 46,490,937
-----------------------------
$329,578,305 $284,451,016
=============================
</TABLE>
15
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
2. Investments (continued)
The aggregate cost of purchases and proceeds from sales of investments were as
follows:
<TABLE>
<CAPTION>
Period ended December 31
1998 1997
------------------------------------ ------------------------------------
Purchases Sales Purchases Sales
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
Endeavor Series Trust:
Endeavor Money Market Portfolio $ 42,092,297 $ 27,455,766 $ 23,410,619 $ 19,231,545
Endeavor Asset Allocation Portfolio 11,690,785 3,534,051 8,980,068 2,947,241
T. Rowe Price International Stock Portfolio 6,565,083 4,177,468 7,842,428 1,713,587
Endeavor Value Equity Portfolio 10,061,100 5,622,527 14,168,271 1,924,773
Dreyfus Small Cap Value Portfolio 13,898,791 5,429,288 10,460,038 2,226,501
Dreyfus U. S. Government Securities Portfolio 11,850,173 3,337,050 4,059,532 1,447,648
T. Rowe Price Equity Income Portfolio 16,092,948 5,031,745 14,444,600 2,550,236
T. Rowe Price Growth Stock Portfolio 12,491,263 4,826,332 10,457,758 1,792,036
Endeavor Opportunity Value Portfolio 4,948,985 1,181,189 4,188,998 718,257
Endeavor Enhanced Index Portfolio 14,850,925 4,125,122 4,109,122 633,745
Endeavor Select 50 Portfolio 9,782,573 1,427,490 -- --
Endeavor High Yield Portfolio 2,684,430 309,615 -- --
WRL Series Fund, Inc.:
Growth Portfolio 17,316,520 7,815,859 20,317,846 3,779,754
---------------------------------------------------------------------
$174,325,873 $ 74,273,502 $122,439,280 $ 38,965,323
=====================================================================
</TABLE>
16
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
3. Contract Owners' Equity
A summary of deferred annuity contracts terminable by owners at December 31,
1998 follows:
<TABLE>
<CAPTION>
Return of Premium Death Benefit
------------------------------------------------------
Accumulation Accumulation Total Contract
Subaccount Units Owned Unit Value Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Endeavor Money Market 3,455,445.634 1.163970 $ 4,022,035
Endeavor Asset Allocation 864,583.172 1.894059 1,637,572
T. Rowe Price International Stock 880,651.775 1.331580 1,172,658
Endeavor Value Equity 854,044.377 2.119071 1,809,781
Dreyfus Small Cap Value 916,216.066 1.659586 1,520,539
Dreyfus U. S. Government Securities 1,684,993.398 1.276099 2,150,218
T. Rowe Price Equity Income 1,462,715.818 2.049755 2,998,209
T. Rowe Price Growth Stock 833,778.344 2.573188 2,145,468
Endeavor Opportunity Value 834,616.338 1.196411 998,544
Endeavor Enhanced Index 1,594,161.412 1.579648 2,510,149
Endeavor Select 50 592,043.370 1.051668 622,633
Endeavor High Yield 586,051.988 0.960653 562,993
Growth 123,204.749 30.015641 3,698,070
-----------
$25,848,869
===========
</TABLE>
<TABLE>
<CAPTION>
5% Annually Compounding Death Benefit and Double
Enhanced Death Benefit
---------------------------------------------------------
Accumulation Accumulation Total Contract
Subaccount Units Owned Unit Value Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Endeavor Money Market 21,549,058.171 1.161504 $ 25,029,317
Endeavor Asset Allocation 13,176,237.016 1.890033 24,903,523
T. Rowe Price International Stock 14,769,680.537 1.328767 19,625,464
Endeavor Value Equity 16,532,987.864 2.114561 34,960,011
Dreyfus Small Cap Value 12,396,813.175 1.656056 20,529,817
Dreyfus U. S. Government Securities 10,994,883.018 1.273389 14,000,763
T. Rowe Price Equity Income 17,687,561.131 2.045410 36,178,314
T. Rowe Price Growth Stock 12,796,138.800 2.567729 32,857,017
Endeavor Opportunity Value 5,698,749.848 1.193867 6,803,549
Endeavor Enhanced Index 9,104,248.582 1.571311 14,305,606
Endeavor Select 50 7,586,217.992 1.050254 7,967,456
Endeavor High Yield 1,896,873.105 0.959834 1,820,683
Growth 2,161,710.616 29.951933 64,747,412
------------
$303,728,932
============
</TABLE>
17
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
3. Contract Owners' Equity (continued)
At December 31, 1998 contract owners' equity was comprised of:
<TABLE>
<CAPTION>
Endeavor Money Endeavor Asset T. Rowe Price
Market Allocation International
Total Subaccount Subaccount Stock Subaccount
------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unit transactions, accumulated net
investment income and realized
capital gains $284,450,512 $ 29,051,352 $ 23,653,810 $ 18,665,644
Adjustment for appreciation
(depreciation) to market value 45,127,289 -- 2,887,285 2,132,478
------------------------------------------------------------------
Total contract owners' equity $329,577,801 $ 29,051,352 $ 26,541,095 $ 20,798,122
==================================================================
</TABLE>
<TABLE>
<CAPTION>
Endeavor Dreyfus U. S.
Value Dreyfus Small Government T. Rowe Price
Equity Cap Value Securities Equity Income
Subaccount Subaccount Subaccount Subaccount
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Unit transactions, accumulated net
investment income and realized
capital gains $ 32,050,582 $ 23,915,435 $ 15,612,702 $ 34,958,466
Adjustment for appreciation
(depreciation) to market value 4,719,210 (1,865,079) 538,279 4,218,057
---------------------------------------------------------------------
Total contract owners' equity $ 36,769,792 $ 22,050,356 $ 16,150,981 $ 39,176,523
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
T. Rowe Price Endeavor Endeavor
Growth Stock Opportunity Enhanced Index
Subaccount Value Subaccount Subaccount
---------------------------------------------------
<S> <C> <C> <C>
Unit transactions, accumulated net
investment income and realized
capital gains $26,877,424 $ 7,649,900 $14,753,288
Adjustment for appreciation
(depreciation) to market value 8,125,061 152,193 2,062,467
---------------------------------------------------
Total contract owners' equity $35,002,485 $ 7,802,093 $16,815,755
===================================================
</TABLE>
<TABLE>
<CAPTION>
Endeavor Select Endeavor High Growth
50 Portfolio Yield Portfolio Subaccount
--------------------------------------------------
<S> <C> <C> <C>
Unit transactions, accumulated net
investment income and realized
capital gains $ 8,401,723 $ 2,369,265 $46,490,921
Adjustment for appreciation
(depreciation) to market value 188,366 14,411 21,954,561
--------------------------------------------------
Total contract owners' equity $ 8,590,089 $ 2,383,676 $68,445,482
==================================================
</TABLE>
18
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
3. Contract Owners' Equity (continued)
A summary of changes in contract owners' account units follows:
<TABLE>
<CAPTION>
Endeavor Money Endeavor Asset T. Rowe Price Endeavor
Market Allocation International Value Equity
Subaccount Subaccount Stock Subaccount Subaccount
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at January 1, 1999 9,416,706 6,522,822 8,619,164 9,053,565
Units purchased 12,070,033 4,117,174 5,297,032 6,184,215
Units redeemed and transferred (8,660,449) (127,006) (36,677) 271,874
--------------------------------------------------------------------------
Units outstanding at December 31, 1997
12,826,290 10,512,990 13,879,519 15,509,654
Units purchased 13,098,851 4,089,099 3,625,148 4,697,062
Units redeemed and transferred (920,637) (561,270) (1,854,334) (2,819,684)
--------------------------------------------------------------------------
Units outstanding at December 31, 1998 25,004,504 14,040,819 15,650,333 17,387,032
==========================================================================
</TABLE>
<TABLE>
<CAPTION>
Dreyfus U. S.
Dreyfus Small Government T. Rowe Price T. Rowe Price
Cap Value Securities Equity Income Growth Stock
Subaccount Subaccount Subaccount Subaccount
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units outstanding at January 1, 1997 5,378,654 3,772,426 7,413,620 5,893,561
Units purchased 3,486,053 3,115,039 6,532,890 4,362,080
Units redeemed and transferred 912,913 (936,249) 284,744 432,911
-----------------------------------------------------------------------
Units outstanding at December 31, 1997 9,777,620 5,951,216 14,231,254 10,688,552
Units purchased 4,490,339 8,009,922 6,613,382 4,000,942
Units redeemed and transferred (954,930) (1,281,263) (1,694,359) (1,059,577)
-----------------------------------------------------------------------
Units outstanding at December 31, 1998 13,313,029 12,679,875 19,150,277 13,629,917
=======================================================================
</TABLE>
19
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
3. Contract Owners' Equity (continued)
<TABLE>
<CAPTION>
Endeavor Endeavor
Opportunity Enhanced Index Endeavor Select
Value Subaccount Subaccount 50 Portfolio
------------------------------------------------------
<S> <C> <C> <C>
Units outstanding at January 1, 1997 205,301 -- --
Units purchased 2,733,415 2,628,162 --
Units redeemed and transferred 450,009 297,032 --
------------------------------------------------------
Units outstanding at December 31, 1997 3,388,725 2,925,194 --
Units purchased 3,252,873 6,535,647 5,311,601
Units redeemed and transferred (108,232) 1,237,509 2,866,660
------------------------------------------------------
Units outstanding at December 31, 1998 6,533,366 10,698,350 8,178,261
======================================================
</TABLE>
Endeavor High Growth
Yield Portfolio Subaccount
------------------------------------
Units outstanding at January 1, 1997 - 1,130,887
Units purchased - 743,975
Units redeemed and transferred - 10,641
-----------------------------------
Units outstanding at December 31, 1997 - 1,885,503
Units purchased 1,467,292 561,874
Units redeemed and transferred 1,015,633 (162,462)
-----------------------------------
Units outstanding at December 31, 1998 2,482,925 2,284,915
===================================
4. 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 owners' 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. PFL
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 deducts a daily distribution financing charge equal to an
annual rate of .25% of the value of the contract owners' account.
20
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
4. Administrative, Mortality and Expense Risk Charges (continued)
PFL Life deducts a daily charge for assuming certain mortality and expense
risks. For the 5% Annually Compounding Death Benefit and the Double Enhanced
Death Benefit, this charge is equal to an effective annual rate of 1.25% of the
value of the contract owners' individual account. For the Return of Premium
Death Benefit, the corresponding charge is equal to an effective annual rate of
1.10% of the value of the contract owners' individual account.
5. 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.
6. Year 2000 (Unaudited)
The term Year 2000 Issue generally refers to the improper processing of dates
and incorrect date calculations that might occur in computer software and
hardware and embedded systems as the Year 2000 is approached. The use of
computer programs that rely on two-digit date fields to perform computations and
decision-making functions may cause systems to malfunction when processing
information involving dates after 1999. For example, any computer software that
has date-sensitive coding might recognize a code of 00 as the year 1900 rather
than the year 2000.
PFL Life has developed a Year 2000 Project Plan (the Plan) to address the Year
2000 issue as it affects PFL Life's internal IT and non-IT systems, and to
assess Year 2000 issues relating to third parties with whom PFL Life has
critical relationships.
21
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
6. Year 2000 (Unaudited) (continued)
The Plan for addressing internal systems generally includes an assessment of
internal IT and non-IT systems and equipment affected by the Year 2000 issue;
definition of strategies to address affected systems and equipment; remediation
of identified systems and equipment; internal testing and certification that
each internal system is Year 2000 compliant; and a review of existing and
revised business resumption and contingency plans to address potential Year 2000
issues. PFL Life has remediated and tested substantially all of its mission-
critical internal IT systems as of December 31, 1998. PFL Life continues to
remediate and test certain non-critical internal IT systems, internal non-IT
systems and will continue with a revalidation testing program throughout 1999.
PFL Life's Year 2000 issues are more complex because a number of its systems
interface with other systems not under PFL Life's control. PFL Life's most
significant interfaces and uses of third-party vendor systems are in the bank,
financial services and trust areas. PFL Life utilizes various banks to handle
numerous types of financial and sales transactions. Several of these banks also
provide trustee and custodial services for PFL Life's investment holdings and
transactions. These services are critical to a financial services company such
as PFL Life as its business centers around cash receipts and disbursements to
policyholders and the investment of policyholder funds. PFL Life has received
written confirmation from its vendor banks regarding their status on Year 2000.
The banks indicate their dedication to resolving any Year 2000 issues related to
their systems and services prior to December 31, 1999. PFL Life anticipates that
a considerable effort will be necessary to ensure that its corrected or new
systems can properly interface with those business partners with whom it
transmits and receives data and other information (external systems). PFL Life
has undertaken specific testing regimes with these third-party business partners
and expects to continue working with its business partners on any interfacing of
systems. However, the timing of external system compliance cannot currently be
predicted with accuracy because the implementation of Year 2000 readiness will
vary from one company to another.
PFL Life does have some exposure to date sensitive embedded technology such as
micro-controllers, but PFL Life views this exposure as minimal. Unlike other
industries that may be equipment intensive, like manufacturing, PFL Life is a
life insurance, and financial services organization providing insurance,
annuities and pension products to its customers. As such, the primary equipment
and electronic devices in use are computers and telephone related equipment.
This type of hardware can have date sensitive embedded technology which could
have Year 2000 problems. Because of this exposure, PFL Life has reviewed its
computer hardware and telephone systems, with assistance from the applicable
vendors, and has upgraded, or replaced, or is in the process of replacing any
equipment that will not properly process date sensitive data in the Year 2000 or
beyond. This undertaking has been substantially completed for all operations.
22
<PAGE>
PFL Endeavor VA Separate Account -
The Endeavor Platinum Variable Annuity
Notes to Financial Statements (continued)
6. Year 2000 (Unaudited) (continued)
For PFL Life, a reasonably likely worst case scenario might include one or more
of PFL Life's significant policyholder systems being non-compliant. Such an
event could result in a material disruption of PFL Life's operations.
Specifically, a number of PFL Life's operations could experience an interruption
in the ability to collect and process premiums or deposits, process claim
payments, accurately maintain policyholder information, accurately maintain
accounting records, and or perform adequate customer service. Should the worst
case scenario occur, it could, dependent upon its duration, have a material
impact on PFL Life's business and financial condition. Simple failures can be
repaired and returned to production within a matter of hours with no material
impact. Unanticipated failures with a longer service disruption period could
have a more serious impact. For this reason, PFL Life is placing significant
emphasis on risk management and Year 2000 business resumption contingency
planning in 1999 by modifying its existing business resumption and disaster
recovery plans to address potential Year 2000 issues.
The actions taken by management under the Year 2000 Project Plans are intended
to significantly reduce PFL Life's risk of a material business interruption
based on the Year 2000 issues. It should be noted that the Year 2000 computer
problem, and its resolution, is complex and multifaceted, and any company's
success cannot be conclusively known until the Year 2000 is reached. In spite of
its efforts or results, PFL Life's ability to function unaffected to and through
the Year 2000 may be adversely affected by actions (or failure to act) of third
parties beyond our knowledge or control. It is anticipated that there may be
problems that will have to be resolved in the ordinary course of business on and
after the Year 2000. However, PFL Life does not believe that the problems will
have a material adverse affect on PFL Life's operations or financial condition.
23
<PAGE>
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
All required financial statements are included in Part B
of this Registration Statement.
(b) Exhibits: The following exhibits are filed herewith:
(1) (a) Resolution of the Board of Directors of PFL
Life Insurance Company authorizing
establishment of the Mutual Fund Account.
Note 1.
(b) Authorization Changing Name of the Mutual Fund
Account. Note 11.
(2) Not Applicable.
(3) (a) Principal Underwriting Agreement by and between
PFL Life Insurance Company, on its own behalf
and on the behalf of the Mutual Fund Account,
and AEGON USA Securities, Inc. Note 6.
(a)(1) Principal Underwriting Agreement by and between PFL
Life Insurance Company on its own behalf and on the
behalf of the Mutual Fund Account and AFSG
Securities Corporation. Note 13.
(a)(2) Termination of Principal Underwriting Agreement by
and between AEGON USA Securities, Inc., formerly
known as, MidAmerica Management Corporation, and
PFL Life Insurance Company on its own behalf and on
the behalf of PFL Endeavor Variable Annuity
Account. Note 15.
(b) Form of Broker/Dealer Supervision and Sales
Agreement by and between AFSG Securities
Corporation, and the Broker/Dealer. Note 13.
(4) (a) Form of Policy for the Endeavor Platinum
Variable Annuity. Note 7.
(b) Amended pages to Form of Policy for Endeavor
Platinum Variable Annuity. Note 8.
(c) Form of Policy Endorsement (Death Benefits).
Note 10.
(d) Form of Policy for the Endeavor Platinum
Variable Annuity. Note 12
(e) Form of Policy Endorsement (Nursing Care).
Note 12
(f) Form of Policy for the Endeavor Platinum Variable
Annuity. Note 13.
(g) Form of Policy Endorsement (New Separate Accounts
and Annuity Commencement Date). Note 13.
(h) Form of Policy Endorsement(GMIB). Note 15.
(5) (a) Form of Application for the Endeavor Platinum
Variable Annuity. Note 12.
(b) Form of Application for the Endeavor Platinum
Variable Annuity. Note 13.
(c) Form of Application for the Endeavor Platinum
Variable Annuity. Note 15.
(6) (a) Articles of Incorporation of PFL Life Insurance
Company. Note 2.
(b) ByLaws of PFL Life Insurance Company. Note 2.
(7) Not Applicable.
(8) (a) Participation Agreement by and between PFL Life
Insurance Company and Endeavor Series Trust.
<PAGE>
Note 3.
(b) Participation Agreement by and between PFL Life
Insurance Company and the WRL Growth
Portfolio of WRL Series Fund, Inc. Note 4.
(c) Administrative Services Agreement by and
between PFL Life Insurance Company and State
Street Bank and Trust Company (assigned to
Vantage Computer Systems, Inc.). Note 3.
(d) Amendment and Assignment of Administrative
Services Agreement. Note 4.
(e) Second Amendment to Administrative Services
Agreement. Note 5.
(f) Amendment to Participation Agreement by and
between PFL Life Insurance Company and
Endeavor Series Trust. Note 12.
(9) (a) Opinion and Consent of Counsel. Note 7.
(b) Consent of Counsel. Note 7.
(10) (a) Consent of Independent Auditors. Note 16.
(b) Opinion and Consent of Actuary. Note 15.
(11) Not Applicable.
(12) Not Applicable.
(13) Performance Data. Note 16.
(14) Powers of Attorney (P.S. Baird, W.L. Busler, D.C.
Kolsrud, R.J. Kontz). Note 7 (Craig D. Vermie) Note
11 (Brenda K. Clancy) Note 12 (Larry N. Norman)
Note 15.
Note 1. Filed with the initial filing of this Form N-4 Registration
Statement (File No. 33-56908, 811-06032) on January 8, 1993.
Note 2. Filed with the initial filing of Form N-4 Registration Statement
(File No. 33-33085 on January 23, 1990.
Note 3. Filed with Pre-Effective Amendment No. 1 to Form N-4
Registration Statement (File No. 33-33085) on April 9, 1990.
Note 4. Filed with Post-Effective Amendment No. 2 to Form N-4
Registration Statement (File No. 33-33085) on April 1, 1991.
Note 5. Filed with Post-Effective Amendment No. 3 to Form N-4
Registration Statement (File No. 33-33085) on May 1, 1992.
Note 6. Filed with Post-Effective Amendment No. 5 to Form
2
<PAGE>
N-4 Registration Statement (File No. 33-33085) on April 30, 1993.
Note 7. Filed with Post-Effective Amendment No. 8 to this Form N-4
Registration Statement (File No. 33-56908) on December 6, 1993.
Note 8. Filed with Post-Effective Amendment No. 10 to this Form N-4
Registration Statement (File No. 33-56908) on February 28, 1994.
Note 9. Filed with Post-Effective Amendment No. 12 to this Form N-4
Registration Statement (File No. 33-56908) on April 29, 1994.
Note 10. Filed with Post-Effective Amendment No. 5 to this Form N-4
Registration Statement (File No. 33-56908) on April 27, 1995.
Note 11. Filed with Post-Effective Amendment No. 6 to this Form N-4
Registration Statement (File No. 33-56908) on April 24, 1996.
Note 12. Filed with Post-Effective Amendment No. 7 to this Form N-4
Registration Statement (File No. 33-56908) on April 29, 1997.
Note 13. Filed with Post-Effective Amendment No. 8 to this Form N-4
Registration Statement (File No. 33-56908) on February 27, 1998.
Note 14. Filed with Post-Effective Amendment No. 9 to this Form N-4
Registration Statement (file No. 33-56908) on April 29, 1998.
Note 15. Filed with Post-Effective Amendment No. 11 to this form N-4
Registration Statement (File No. 33-56908) on September 28, 1998.
Note 16. Filed herewith.
3
<PAGE>
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and
Business Address Offices with Depositor
- ---------------- ----------------------
<S> <C>
William L. Busler Director, Chairman of
4333 Edgewood Road, N.E. the Board and President
Cedar Rapids, IA 52499
Patrick S. Baird Director, Senior Vice President
4333 Edgewood Road, N.E. and Chief Operating Officer
Cedar Rapids, IA 52499
Craig D. Vermie Director, Vice
4333 Edgewood Road, N.E. President, Secretary and
Cedar Rapids, IA 52499 General Counsel
Douglas C. Kolsrud Director, Senior Vice President,
4333 Edgewood Road, N.E. Chief Investment Officer, and
Cedar Rapids, IA 52499 Corporate Actuary
Robert J. Kontz Vice President and Corporate
4333 Edgewood Road, N.E. Controller
Cedar Rapids, IA 52499
Larry N. Norman Director and Executive Vice
4333 Edgewood Road, N.E. President
Cedar Rapids, IA 52499
Brenda K. Clancy Vice President, Treasurer,
4333 Edgewood Road, N.E. and Chief Financial Officer
Cedar Rapids, IA 52499
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the
Depositor or Registrant
<TABLE>
<CAPTION>
Jurisdiction of Percent of Voting
Name Incorporation Securities Owned Business
- ---- ------------- ---------------- ---------
<S> <C> <C> <C>
AEGON N.V. Netherlands 53.63% of Vereniging Holding company
Corporation AEGON Netherlands
Membership Association
Groninger Financieringen B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON Netherland N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON Nevak Holding B.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
AEGON International N.V. Netherlands 100% of AEGON N.V. Holding company
Corporation Netherlands Corporation
Voting Trust Delaware Voting Trust
Trustees:
K.J. Storm
Donald J. Shepard
H.B. Van Wijk
Dennis Hersch
AEGON U.S. Holding Delaware 100% of Voting Trust Holding company
Corporation
Short Hills Management New Jersey 100% of AEGON U.S. Holding company
Company Holding Corporation
CORPA Reinsurance New York 100% of AEGON U.S. Holding company
Company Holding Corporation
AEGON Management Indiana 100% of AEGON U.S. Holding company
Company Holding Corporation
RCC North America Inc. Delaware 100% of AEGON U.S. Holding company
Holding Corporation
AEGON USA, Inc. Iowa 100% AEGON U.S. Holding company
Holding Corporation
AUSA Holding Company Maryland 100% AEGON USA, Inc. Holding company
Monumental General Insurance Maryland 100% AUSA Holding Co. Holding company
Group, Inc.
Trip Mate Insurance Agency, Inc. Kansas 100% Monumental General Sale/admin. of travel
Insurance Group, Inc. insurance
Monumental General Maryland 100% Monumental General Provides management srvcs.
Administrators, Inc. Insurance Group, Inc. to unaffiliated third party
administrator
Executive Management and Maryland 100% Monumental General Provides actuarial consulting
Consultant Services, Inc. Administrators, Inc. services
Monumental General Mass Maryland 100% Monumental General Marketing arm for sale of
Marketing, Inc. Insurance Group, Inc. mass marketed insurance
coverages
Diversified Investment Delaware 100% AUSA Holding Co. Registered investment advisor
Advisors, Inc.
Diversified Investors Securities Delaware 100% Diversified Investment Broker-Dealer
Corp. Advisors, Inc.
AEGON USA Securities, Inc. Iowa 100% AUSA Holding Co. Broker-Dealer
Supplemental Ins. Division, Inc. Tennessee 100% AUSA Holding Co. Insurance
Creditor Resources, Inc. Michigan 100% AUSA Holding Co. Credit insurance
CRC Creditor Resources Canada 100% Creditor Resources, Inc. Insurance agency
Canadian Dealer Network Inc.
AEGON USA Investment Iowa 100% AUSA Holding Co. Investment advisor
Management, Inc.
AEGON USA Realty Iowa 100% AUSA Holding Co. Provides real estate
Advisors, Inc. administrative and real
estate investment services
Quantra Corporation Delaware 100% AEGON USA Realty Real estate and financial
Advisors, Inc. software production and sales
Quantra Software Corporation Delaware 100% Quantra Corporation Manufacture and sell
mortgage loan and security
management software
Landauer Realty Advisors, Inc. Iowa 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Landauer Associates, Inc. Delaware 100% AEGON USA Realty Real estate counseling
Advisors, Inc.
Realty Information Systems, Inc. Iowa 100% AEGON USA Realty Information Systems for
Advisors, Inc. real estate investment
management
AEGON USA Realty Iowa 100% AEGON USA Real estate management
Management, Inc Realty Advisors, Inc.
USP Real Estate Investment Trust Iowa 21.89% First AUSA Life Ins. Co. Real estate investment trust
13.11% PFL Life Ins. Co.
4.86% Bankers United Life
Assurance Co.
RCC Properties Limited Iowa AEGON USA Realty Advisors, Limited Partnership
Partnership Inc. is General Partner and 5%
owner.
AUSA Financial Markets, Inc. Iowa 100% AUSA Holding Co. Marketing
Endeavor Investment Advisors California 49.9% AUSA Financial General Partnership
Markets, Inc.
Universal Benefits Corporation Iowa 100% AUSA Holding Co. Third party administrator
Investors Warranty of Iowa 100% AUSA Holding Co. Provider of automobile
America, Inc. extended maintenance
contracts
Massachusetts Fidelity Trust Co. Iowa 100% AUSA Holding Co. Trust company
Money Services, Inc. Delaware 100% AUSA Holding Co. Provides financial counseling
for employees and agents of
affiliated companies
Zahorik Company, Inc. California 100% AUSA Holding Co. Broker-Dealer
ZCI, Inc. Alabama 100% Zahorik Company, Inc. Insurance agency
AEGON Asset Management Delaware 100% AUSA Holding Co. Registered investment advisor
Services, Inc.
Intersecurities, Inc. Delaware 100% AUSA Holding Co. Broker-Dealer
ISI Insurance Agency, Inc. California 100% Intersecurities, Inc. Insurance agency
ISI Insurance Agency Ohio 100% ISI Insurance Agency, Inc. Insurance agency
of Ohio, Inc.
ISI Insurance Agency Texas 100% ISI Insurance Agency, Inc. Insurance agency
of Texas, Inc.
ISI Insurance Agency Massachusetts 100% ISI Insurance Agency Inc. Insurance Agency
of Massachusetts, Inc.
Associated Mariner Financial Michigan 100% Intersecurities, Inc. Holding co./management
Group, Inc. services
Mariner Financial Services, Inc. Michigan 100% Associated Mariner Broker/Dealer
Financial Group, Inc.
Mariner Planning Corporation Michigan 100% Mariner Financial Financial planning
Services, Inc.
Associated Mariner Agency, Inc. Michigan 100% Associated Mariner Insurance agency
Financial Group, Inc.
Associated Mariner Agency Hawaii 100% Associated Mariner Insurance agency
of Hawaii, Inc. Agency, Inc.
Associated Mariner Ins. Agency Massachusetts 100% Associated Mariner Insurance agency
of Massachusetts, Inc. Agency, Inc.
Associated Mariner Agency Ohio 100% Associated Mariner Insurance agency
Ohio, Inc. Agency, Inc.
Associated Mariner Agency Texas 100% Associated Mariner Insurance agency
Texas, Inc. Agency, Inc.
Associated Mariner Agency New Mexico 100% Associated Mariner Insurance agency
New Mexico, Inc. Agency, Inc.
Mariner Mortgage Corp. Michigan 100% Associated Mariner Mortgage origination
Financial Group, Inc.
Idex Investor Services, Inc. Florida 100% AUSA Holding Co. Shareholder services
Idex Management, Inc. Delaware 50% AUSA Holding Co. Investment advisor
50% Janus Capital Corp.
IDEX II Series Fund Massachusetts Various Mutual fund
First AUSA Life Insurance Maryland 100% AEGON USA, Inc. Insurance holding company
Company
AUSA Life Insurance New York 100% First AUSA Life Insurance
Company, Inc. Insurance Company
Life Investors Insurance Iowa 100% First AUSA Life Ins. Co. Insurance
Company of America
AEGON Assignment Illinois 100% AEGON Financial Administrator of
Corporation Services Group, Inc. Structured Settlements
Bankers United Life Iowa 100% Life Investors Ins. Insurance
Assurance Company Company of America
Life Investors Agency Iowa 100% Life Investors Ins. Marketing
Group, Inc. Company of America
PFL Life Insurance Company Iowa 100% First AUSA Life Ins. Co. Insurance
AEGON Financial Services Minnesota 100% PFL Life Insurance Co. Marketing
Group, Inc.
AEGON Assignment Corporation Kentucky 100% AEGON Financial Administrator of structured
of Kentucky Services Group, Inc. settlements
Life Investors Delaware 100% LHCA Purchase, own, and hold
Alliance, LLC the equity interest of
other entities
Southwest Equity Life Ins. Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.
Iowa Fidelity Life Insurance Co. Arizona 100% of Common Voting Stock Insurance
First AUSA Life Ins. Co.
Western Reserve Life Assurance Ohio 100% First AUSA Life Ins. Co. Insurance
Co. of Ohio
WRL Series Fund, Inc. Maryland Various Mutual fund
WRL Investment Services, Inc. Florida 100% Western Reserve Life Provides administration for
Assurance Co. of Ohio affiliated mutual fund
WRL Investment Florida 100% Western Reserve Life Registered investment advisor
Management, Inc. Assurance Co. of Ohio
AEGON Equity Florida 100% Western Reserve Life Insurance Agency
Group, Inc. Assurance Co. of Ohio
Monumental Life Insurance Co. Maryland 100% First AUSA Life Ins. Co. Insurance
AEGON Special Markets Maryland 100% Monumental Life Ins. Co. Marketing
Group, Inc.
Monumental General Casualty Co. Maryland 100% First AUSA Life Ins. Co. Insurance
United Financial Services, Inc. Maryland 100% First AUSA Life Ins. Co. General agency
Bankers Financial Life Ins. Co. Arizona 100% First AUSA Life Ins. Co. Insurance
The Whitestone Corporation Maryland 100% First AUSA Life Ins. Co. Insurance agency
Cadet Holding Corp. Iowa 100% First AUSA Life Holding company
Insurance Company
Commonwealth General Delaware 100% AEGON USA Holding company
Corporation ("CGC")
PB Series Trust Massachusetts N/A Mutual fund
Monumental Agency Group, Inc. Kentucky 100% CGC Provider of srvcs. to ins. cos.
Benefit Plans, Inc. Delaware 100% CGC TPA for Peoples Security Life
Insurance Company
Durco Agency, Inc. Virginia 100% Benefit Plans, Inc. General agent
Commonwealth General. Kentucky 100% CGC Administrator of structured
Assignment Corporation settlements
AFSG Securities Corporation Pennsylvania 100% CGC Broker-Dealer
PB Investment Advisors, Inc. Delaware 100% CGC Registered investment advisor
Diversified Financial Products Inc. Delaware 100% CGC Provider of investment,
marketing and admin.
services to ins. cos.
AEGON USA Real Estate Delaware 100% Diversified Financial Real estate and mortgage
Services, Inc. Products Inc. holding company
Capital Real Estate Delaware 100% CGC Furniture and equipment lessor
Development Corporation
Capital General Development Delaware 100% CGC Holding company
Corporation
Ammest Realty Corporation Texas 100% Peoples Security Life Special purpose subsidiary
Insurance Company
JMH Operating Company, Inc. Mississippi 100% Peoples Security Life Real estate holdings
Insurance Company
Independence Automobile Florida 100% Capital Security Automobile Club
Association, Inc. Life Insurance Company
Independence Automobile Georgia 100% Capital Security Automobile Club
Club, Inc. Life Insurance Company
Capital 200 Block Corporation Delaware 100% CGC Real estate holdings
Capital Broadway Corporation Kentucky 100% CGC Real estate holdings
Southlife, Inc. Tennessee 100% CGC Investment subsidiary
Ampac Insurance Agency, Inc. Pennsylvania 100% CGC Provider of management
(EIN 23-1720755) support services
National Home Life Corporation Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
Compass Rose Development Pennsylvania 100% Ampac Insurance Special-purpose subsidiary
Corporation Agency, Inc.
Frazer Association Consultants, Illinois 100% Ampac Insurance TPA license-holder
Inc. Agency, Inc.
Valley Forge Associates, Inc. Pennsylvania 100% Ampac Insurance Furniture & equipment lessor
Agency, Inc.
Veterans Benefits Plans, Inc. Pennsylvania 100% Ampac Insurance Administrator of group
Agency, Inc. insurance programs
Veterans Insurance Services, Inc. Delaware 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
Financial Planning Services, Inc. Dist. Columbia 100% Ampac Insurance Special-purpose subsidiary
Agency, Inc.
Academy Insurance Group, Inc. Delaware 100% CGC Holding company
Academy Life Insurance Co. Missouri 100% Academy Insurance Insurance company
Group, Inc.
Pension Life Insurance New Jersey 100% Academy Insurance Insurance company
Company of America Group, Inc.
Academy Services, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ammest Development Corp. Inc. Kansas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ammest Insurance Agency, Inc. California 100% Academy Insurance General agent
Group, Inc.
Ammest Massachusetts Massachusetts 100% Academy Insurance Special-purpose subsidiary
Insurance Agency, Inc. Group, Inc.
Ammest Realty, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Ampac, Inc. Texas 100% Academy Insurance Managing general agent
Group, Inc.
Ampac Insurance Agency, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
(EIN 23-2364438) Group, Inc.
Data/Mark Services, Inc. Delaware 100% Academy Insurance Provider of mgmt. services
Group, Inc.
Force Financial Group, Inc. Delaware 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Force Financial Services, Inc. Massachusetts 100% Force Fin. Group, Inc. Special-purpose subsidiary
Military Associates, Inc. Pennsylvania 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
NCOA Motor Club, Inc. Georgia 100% Academy Insurance Automobile club
Group, Inc.
NCOAA Management Company Texas 100% Academy Insurance Special-purpose subsidiary
Group, Inc.
Unicom Administrative Pennsylvania 100% Academy Insurance Provider of admin. services
Services, Inc. Group, Inc.
Unicom Administrative Germany 100% Unicom Administrative Provider of admin. services
Services, GmbH Services, Inc.
Capital Liberty, L.P. Delaware 79.2% Commonwealth Life Holding Company
Insurance Company
19.8% Peoples Security Life
Insurance Company
1% CGC
Commonwealth General LLC Turks & 100% CGC Special-purpose subsidiary
Caicos Islands
Peoples Benefit Life Missouri 3.7% CGC Insurance company
Insurance Company 20% Capital Liberty, L.P.
76.3% Monumental Life
Ins. Co.
Veterans Life Insurance Co. Illinois 100% Providian Life and Insurance company
Health Insurance Company
Peoples Benefit Services, Inc. Pennsylvania 100% Veterans Life Ins. Co. Special-purpose subsidiary
</TABLE>
<PAGE>
Item 27. Number of Policyowners
As of December 31, 1998, there were 4,471 Owners of the Policies.
Item 28. Indemnification
The Iowa Code (Sections 490.850 et. seq.) provides for permissive
indemnification in certain situations, mandatory indemnification in other
situations, and prohibits indemnification in certain situations. The Code
also specifies procedures for determining when indemnification payments can
be made.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the Depositor pursuant to the foregoing provisions, or otherwise, the
Depositor has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Depositor of expenses incurred or paid by a director,
officer or controlling person in connection with the securities being
registered), the Depositor will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
Item 29. Principal Underwriter
AFSG Securitite Corporation
4333 Edgewood Road, N.E.
Cedar Rapids, IA 52499-0001
The directors and officers of AFSG Securities Corporation are as follows:/5/
Larry N. Norman Sarah J. Strange
Director and President Director and Vice President
Frank A. Camp Darin Smith
Director and Secretary Assistant Vice President and
Assistant Secretary
Lisa Wachendorf Linda Gilmer
Vice President and Chief Treasurer/Controller
Compliance Officer
Debra C. Cubero Robert Warner
Vice President Assistant Compliance officer
Priscilla Hechler Emily Bates
Assistant Vice President Assistant Treasurer
and Assistant Secretary
Thomas Pierpan Clifton Flenniken
Assistant Vice President and Assistant Treasurer
Assistant Secretary
Anne Spaes
Vice President
- ---------------------
/5/ The principal business address of each person listed is AFSG Securities
Corporation, 4333 Edgewood Road N.E., Cedar Rapids, IA 52499-0001.
5
<PAGE>
Commissions and Other Compensation Received by Principal Underwriter.
- --------------------------------------------------------------------
AFSG Securities Corporation, the broker/dealer, received $4,066,996.67 from
the Registrant from May 1, 1998 through December 31, 1998, for its services in
distributing the Policies. AEGON USA Securities, Inc., its predecessor, received
$1,962,658.71 from the Registrant from January 1, 1998 through April 30, 1998,
for its services in distributing the Policies. No other commission or
compensation was received by the principal underwriter, directly or indirectly,
from the Registrant during the fiscal year.
AFSG Securities Corporation serves as the principal underwriter for the PFL
Endeavor VA Separate Account, the PFL Retirement Builder Variable Annuity
Account, the PFL Life Variable Annuity Account A, the PFL Wright Variable
Annuity Account and the AUSA Endeavor Variable Annuity Account. These accounts
are separate accounts of PFL Life Insurance Company or AUSA Life Insurance
Company, Inc. AFSG Securities Corporation also serves as principal underwriter
for Separate Account I, Separate Account II, Separate Account IV and Separate
Account V of Peoples Benefit Life Insurance Company, and for Separate Account B
and Separate Account C of AUSA Life Insurance Company, Inc.
Item 30. Location of Accounts and Records
The records required to be maintained by Section 31(a) of the Investment
Company Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are
maintained by PFL Life Insurance Company at 4333 Edgewood Road, N.E.,
Cedar Rapids, Iowa 52499.
Item 31. Management Services.
All management policies are discussed in Part A or Part B.
Item 32. Undertakings
(a) Registrant undertakes that it will file a post-effective amendment
to this registration statement as frequently as necessary to ensure that
the audited financial statements in the registration statement are never
more than 16 months old for so long as Premiums under the Policy may be
accepted.
(b) Registrant undertakes that it will include either (i) a postcard
or similar written communication affixed to or included in the Prospectus
that the applicant can remove to send for a Statement of Additional
Information or (ii) a space in the Policy application that an applicant
can check to request a Statement of Additional Information.
(c) Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available
under this Form promptly upon written or oral request to PFL at the address
or phone number listed in the Prospectus.
(d) PFL Life Insurance Company hereby represents that the fees and charges
deducted under the policies, in the Aggregate, are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by PFL Life Insurance Company.
Section 403(b) Representations
- ------------------------------
PFL represents that it is relying on a no-action letter dated November 28,
1988, to the American Council of Life Insurance (Ref. No. IP-6-88),
regarding Sections 22(e), 27(c)(1), and 27(d) of the Investment Company Act
of 1940, in connection with redeemability restrictions on Section 403(b)
Policies, and that paragraphs numbered (1) through (4) of that letter will
be complied with.
Statement Pursuant to Rule 6c-7: Texas Optional Retirement Program
- -------------------------------------------------------------------
PFL and the Mutual Fund Account rely on 17 C.F.R. Sec. 270.6c-7, and
represent that the provisions of that Rule have been or will be complied
with.
6
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant hereby certifies that this Amendment to the Registration
Statement meets the requirements for effectiveness pursuant to paragraph (b) of
Rule 485 and has caused this Registration Statement to be signed on its behalf,
in the City of Cedar Rapids and State of Iowa, on this 27th day of April,
1999.
PFL ENDEAVOR VA SEPARATE
ACCOUNT
PFL LIFE INSURANCE COMPANY
Depositor
/s/ William L. Busler
-------------------------
William L. Busler
President
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the duties indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Patrick S. Baird Director April 27, 1999
- -------------------------
Patrick S. Baird
/s/ Craig D. Vermie Director April 27, 1999
- -------------------------
Craig D. Vermie
/s/ William L. Busler Director April 27, 1999
- ------------------------- (Principal Executive Officer)
William L. Busler
/s/ Larry N. Norman Director April 27, 1999
- -------------------------
Larry N. Norman
/s/ Douglas C. Kolsrud Director April 27, 1999
- -------------------------
Douglas C. Kolsrud
/s/ Robert J. Kontz Vice President and April 27, 1999
- ------------------------- Corporate Controller
Robert J. Kontz
/s/ Brenda K. Clancy Treasurer April 27, 1999
- -------------------------
Brenda K. Clancy
</TABLE>
<PAGE>
Registration No.
33-56908
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
EXHIBITS
TO
FORM N-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FOR
PFL ENDEAVOR VA SEPARATE ACCOUNT
----------------
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description of Exhibit Page No.*
- ----------- ---------------------- ---------
(10)(a) Consent of Independent Auditors
(13) Performance Data Calculations
- ----------------------------------
* Page numbers included only in manually executed original.
<PAGE>
Exhibit (10)(a)
---------------
Consent of Independent Auditors
<PAGE>
Consent of Independent Auditors
We consent to the reference to our firm under the captions "Independent
Auditors" in the Statement of Additional Information and to the use of our
reports (1) dated January 29, 1999 with respect to the financial statements of
certain subaccounts of PFL Endeavor VA Separate Account, which are available for
investment by The Endeavor Platinum Variable contract owners, (2) dated January
29, 1999 with respect to the financial statements of the PFL Endeavor Target
Account and (3) dated February 19, 1999 with respect to the statutory-basis
financial statements and schedules of PFL Life Insurance Company, included in
Post-Effective Amendment No. 11 to the Registration Statement (Form N-4
No. 33-56908) and related Prospectus of The Endeavor Platinum Variable Annuity.
Des Moines, Iowa
April 27, 1999
<PAGE>
Exhibit (13)
------------
Performance Data Calculations
<PAGE>
<TABLE>
<S> <C> <C> <C>
ENDEAVOR PLATINUM - MANAGED ASSET ALLOCATION SUBACCOUNT 31-Mar-99
PERFORMANCE CALCULATIONS 11:41 AM
Fund #141
Initial investment $1,000
AUV 1.000000
---------------
Units purchased 1,000.000
Additional M&E above 1.40% model 0.0025
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/08/91 1.000000 1000 1,000.00 1,000.00 2,485.54 7.74 12.49% 2,485.54
04/30/91 1.002047 1000 1,002.05 0.0001602685 0.160268493 1,001.89 TOTAL RETURN 148.55%
05/31/91 1.005855 1000 1,005.86 0.0002258329 0.226258963 1,005.47
06/30/91 1.005782 1000 1,005.78 0.0002185479 0.219742936 1,005.18
07/31/91 1.009500 1000 1,009.50 0.0002258329 0.227001595 1,008.66
08/31/91 1.018292 1000 1,018.29 0.0002258329 0.227789471 1,017.22
09/30/91 1.026027 1000 1,026.03 0.0002185479 0.222311523 1,024.73
10/31/91 1.054581 1000 1,054.58 0.0002258329 0.231416681 1,053.01
11/30/91 1.030625 1000 1,030.63 0.0002185479 0.230133553 1,028.86
12/31/91 1.125386 1000 1,125.39 0.0002258329 0.232350698 1,123.23
01/31/92 1.147786 1000 1,147.79 0.0002258329 0.253661752 1,145.33
02/28/92 1.159400 1000 1,159.40 0.0002039781 0.233622445 1,156.69
03/31/92 1.125438 1000 1,125.44 0.0002331178 0.269644258 1,122.53
04/30/92 1.127107 1000 1,127.11 0.0002185479 0.245327607 1,123.95
05/31/92 1.133736 1000 1,133.74 0.0002258329 0.253825734 1,130.31 2,485.54 6.59 12.70% 2,198.99
06/30/92 1.105814 1000 1,105.81 0.0002185479 0.247027035 1,102.23 2,485.54 6.51 13.31% 2,255.02
07/31/92 1.135926 1000 1,135.93 0.0002258329 0.248918829 1,131.99 2,485.54 6.42 13.03% 2,195.72
08/31/92 1.118799 1000 1,118.80 0.0002258329 0.255640829 1,114.67 2,485.54 6.34 13.49% 2,229.85
09/30/92 1.135264 1000 1,135.26 0.0002185479 0.243608376 1,130.83 2,485.54 6.25 13.42% 2,197.98
10/31/92 1.152672 1000 1,152.67 0.0002258329 0.255378249 1,147.91 2,485.54 6.17 13.34% 2,165.27
11/30/92 1.194573 1000 1,194.57 0.0002185479 0.250874047 1,189.39 2,485.54 6.09 12.87% 2,089.76
12/31/92 1.209859 1000 1,209.86 0.0002258329 0.268603416 1,204.34 2,485.54 6.00 12.83% 2,063.81
01/31/93 1.247765 1000 1,247.77 0.0002258329 0.27197986 1,241.80 2,485.54 5.92 12.44% 2,001.56
02/28/93 1.252311 1000 1,252.31 0.0002039781 0.253300481 1,246.07 2,485.54 5.84 12.55% 1,994.70
03/31/93 1.292821 1000 1,292.82 0.0002258329 0.281404346 1,286.10 2,485.54 5.76 12.13% 1,932.62
04/30/93 1.277694 1000 1,277.69 0.0002185479 0.281074566 1,270.77 2,485.54 5.67 12.55% 1,955.93
05/31/93 1.300898 1000 1,300.90 0.0002258329 0.286981827 1,293.56 2,485.54 5.59 12.40% 1,921.47
06/30/93 1.313005 1000 1,313.01 0.0002185479 0.282705338 1,305.32 2,485.54 5.51 12.41% 1,904.16
07/31/93 1.313466 1000 1,313.47 0.0002258329 0.294783745 1,305.48 2,485.54 5.42 12.61% 1,903.92
08/31/93 1.357882 1000 1,357.88 0.0002258329 0.294820673 1,349.33 2,485.54 5.34 12.13% 1,842.05
09/30/93 1.370998 1000 1,371.00 0.0002185479 0.294893914 1,362.07 2,485.54 5.25 12.13% 1,824.82
10/31/93 1.379255 1000 1,379.26 0.0002258329 0.30760049 1,369.97 2,485.54 5.17 12.21% 1,814.30
11/30/93 1.370744 1000 1,370.74 0.0002185479 0.299403469 1,361.21 2,485.54 5.09 12.56% 1,825.97
12/31/93 1.393488 1000 1,393.49 0.0002258329 0.307406849 1,383.49 2,485.54 5.00 12.42% 1,796.57
01/31/94 1.447326 1000 1,447.33 0.0002258329 0.312438059 1,436.63 2,485.54 4.92 11.79% 1,730.11
02/28/94 1.411752 1000 1,411.75 0.0002039781 0.293041385 1,401.03 2,485.54 4.84 12.57% 1,774.08 -0.998086
03/31/94 1.346957 1000 1,346.96 0.0002258329 0.316398081 1,336.41 2,485.54 4.76 13.94% 1,859.86
04/30/94 1.325580 1000 1,325.58 0.0002185479 0.292069303 1,314.91 2,485.54 4.67 14.59% 1,890.28
05/31/94 1.353171 1000 1,353.17 0.0002258329 0.296949165 1,341.98 2,485.54 4.59 14.37% 1,852.14
06/30/94 1.291335 1000 1,291.34 0.0002185479 0.293286667 1,280.36 2,485.54 4.51 15.86% 1,941.28
07/05/94 1.293033 1000 1,293.03 0.0000364247 0.046636703 1,282.00 2,485.54 4.49 15.88% 1,938.80
07/05/94 0.974417 1315.656 1,282.00 0.0000000000 0 1,282.00 2,485.54 4.49 15.88% 1,938.80
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ENDEAVOR PLATINUM - MANAGED ASSET ALLOCATION SUBACCOUNT 31-Mar-99
PERFORMANCE CALCULATIONS 11:41 AM
Fund #141
Initial investment $1,000
AUV 1.000000
---------------
Units purchased 1,000.000
Additional M&E above 1.40% model 0.0025
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Account value 1,282.00
Inception AUV 0.974417 per Vanatge
-------------
1315.656
07/31/94 0.996055 1315.656 1,310.47 0.014519941 1,310.45 2,485.54 4.42 15.58% 1,896.70
08/31/94 1.025276 1315.656 1,348.91 0.017696477 1,348.88 2,485.54 4.34 15.13% 1,842.67
09/30/94 0.995435 1315.656 1,309.65 0.017627801 1,309.60 2,485.54 4.25 16.25% 1,897.94
10/31/94 1.008626 1315.656 1,327.00 0.017684992 1,326.94 2,485.54 4.17 16.24% 1,873.14
11/30/94 0.984708 1315.656 1,295.54 0.01734107 1,295.45 2,485.54 4.09 17.28% 1,918.66
12/31/94 0.979750 1315.656 1,289.01 0.017493947 1,288.91 2,485.54 4.00 17.83% 1,928.40
01/31/95 0.975442 1315.656 1,283.35 0.017405629 1,283.23 2,485.54 3.92 18.38% 1,936.94
02/28/95 1.003215 1315.656 1,319.89 0.015651874 1,319.75 2,485.54 3.84 17.92% 1,883.34
03/31/95 1.021549 1315.656 1,344.01 0.017822041 1,343.85 2,485.54 3.76 17.79% 1,849.56
04/30/95 1.032376 1315.656 1,358.25 0.017562099 1,358.08 2,485.54 3.67 17.88% 1,830.19
05/31/95 1.076300 1315.656 1,416.04 0.018339603 1,415.84 2,485.54 3.59 16.98% 1,755.52
06/30/95 1.118144 1315.656 1,471.09 0.018502879 1,470.86 2,485.54 3.51 16.14% 1,689.85
07/31/95 1.154693 1315.656 1,519.18 0.019862718 1,518.92 2,485.54 3.42 15.48% 1,636.38
08/31/95 1.151675 1315.656 1,515.21 0.020511707 1,514.93 2,485.54 3.34 15.99% 1,640.69
09/30/95 1.183745 1315.656 1,557.40 0.019797889 1,557.10 2,485.54 3.25 15.45% 1,596.26
10/31/95 1.168182 1315.656 1,536.93 0.021027228 1,536.61 2,485.54 3.17 16.38% 1,617.55
11/30/95 1.191385 1315.656 1,567.45 0.020081123 1,567.11 2,485.54 3.09 16.11% 1,586.07
12/31/95 1.184740 1315.656 1,558.71 0.021162379 1,558.34 2,485.54 3.00 16.82% 1,594.99
01/31/96 1.199701 1315.656 1,578.39 0.021044059 1,578.00 2,485.54 2.92 16.85% 1,575.12
02/29/96 1.214835 1315.656 1,598.30 0.019934713 1,597.89 2,485.54 2.84 16.84% 1,555.51
03/31/96 1.232104 1315.656 1,621.03 0.021578067 1,620.58 2,485.54 2.75 16.80% 1,533.73
04/30/96 1.262905 1315.656 1,661.55 0.021178558 1,661.07 2,485.54 2.67 16.29% 1,496.34
05/31/96 1.299406 1315.656 1,709.57 0.022431309 1,709.06 2,485.54 2.59 15.58% 1,454.33
06/30/96 1.277196 1315.656 1,680.35 0.02233483 1,679.83 2,485.54 2.50 16.94% 1,479.64
07/31/96 1.229073 1315.656 1,617.04 0.022684542 1,616.51 2,485.54 2.42 19.46% 1,537.60
08/31/96 1.255269 1315.656 1,651.50 0.021829513 1,650.94 2,485.54 2.33 19.16% 1,505.53
09/30/96 1.314265 1315.656 1,729.12 0.021952782 1,728.56 2,485.54 2.25 17.50% 1,437.93 0.4379254
10/31/96 1.320478 1315.656 1,737.29 0.021829513 1,736.71 2,485.54 2.17 17.99% 1,431.18 0.4311797
11/30/96 1.400506 1315.656 1,842.58 0.021575307 1,841.94 2,485.54 2.08 15.46% 1,349.42 0.3494156
12/31/96 1.372991 1315.656 1,806.38 0.023342635 1,805.77 2,485.54 2.00 17.32% 1,376.44 0.3764398
01/31/97 1.432219 1315.656 1,884.31 0.023452658 1,883.64 2,485.54 1.92 15.58% 1,319.54 0.3195362
02/28/97 1.417341 1315.656 1,864.73 0.022466574 1,864.05 2,485.54 1.84 16.94% 1,333.40 0.3334035
03/31/97 1.344234 1315.656 1,768.55 0.024385351 1,767.93 2,485.54 1.75 21.45% 1,405.91 0.4059052
04/30/97 1.417816 1315.656 1,865.36 0.024616397 1,864.68 2,485.54 1.67 18.76% 1,332.96 0.3329584
05/31/97 1.497716 1315.656 1,970.48 0.025172401 1,969.74 2,485.54 1.59 15.79% 1,261.86 0.2618625
06/30/97 1.517550 1315.656 1,996.57 0.023104138 1,995.85 2,485.54 1.50 15.71% 1,245.35 0.2453543
07/31/97 1.647098 1315.656 2,167.01 0.025180807 2,166.20 2,485.54 1.42 10.17% 1,147.42 0.1474191
08/31/97 1.563875 1315.656 2,057.52 0.026599546 2,056.72 2,485.54 1.33 15.25% 1,208.50 0.2084956
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - MANAGED ASSET ALLOCATION SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
---------------
Units purchased 1,000.000
Addtional M&E above 1.40% model 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/30/97 1.608320 1315.656 2,116.00 0.0000130685 0.02608272 2,115.20 2,485.54 1.25 13.75% 1,175.08 0.17508377
10/31/97 1.568929 1315.656 2,064.17 0.0000135041 0.029252579 2,063.36 2,485.54 1.17 17.29% 1,204.60 0.20460426
11/30/97 1.617161 1315.656 2,127.63 0.0000130685 0.026878234 2,126.77 2,485.54 1.08 15.45% 1,168.69 0.16869004
12/31/97 1.622765 1315.656 2,135.00 0.0000135041 0.028563894 2,134.17 2,485.54 1.00 16.46% 1,164.64 0.16463938
01/31/98 1.659763 1315.656 2,183.68 0.0000135041 0.027863896 2,182.80 2,485.54 0.92 13.87% 1,126.20 0.13869431
02/28/98 1.746805 1315.656 2,298.19 0.0000121973 0.025940792 2,297.24 2,485.54 0.84 8.20% 1,068.27 0.08196467
03/31/98 1.788432 1315.656 2,352.96 0.0000135041 0.028820053 2,352.02 2,485.54 0.75 5.68% 1,042.48 0.05676882
04/30/98 1.812759 1315.656 2,384.97 0.0000130685 0.028525854 2,383.98 2,485.54 0.67 4.26% 1,028.40 0.04260153
05/31/98 1.781394 1315.656 2,343.70 0.0000135041 0.031022241 2,342.70 2,485.54 0.59 6.10% 1,035.31 0.06097041
06/30/98 1.830692 1315.656 2,408.56 0.0000130685 0.030737307 2,407.56 2,485.54 0.50 3.24% 1,016.20 0.03238738
07/31/98 1.797083 1315.656 2,364.34 0.0000135041 0.032193477 2,363.33 2,485.54 0.42 5.17% 1,021.36 0.05171049
08/31/98 1.592522 1315.656 2,095.21 0.0000135041 0.031636102 2,094.29 2,485.54 0.33 18.68% 1,058.92 0.18681869
09/30/98 1.648384 1315.656 2,168.71 0.0000130685 0.031463217 2,167.78 2,485.54 0.25 14.66% 1,035.08 0.14658401
10/31/98 1.727095 1315.656 2,272.26 0.0000135041 0.031914646 2,271.26 2,485.54 0.17 9.43% 1,015.18 0.0943449
11/30/98 1.797589 1315.656 2,365.01 0.0000130685 0.027369158 2,363.94 2,485.54 0.08 5.14% 1,004.27 0.05143987
12/31/98 1.890033 1315.656 2,486.63 0.0000135041 0.029273885 2,485.54 2,485.54 0.00 0.00% 1,000.00 0
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - INTERNATIONAL STOCK SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial Investment $1,000
AUV 1.000000
------------
Units purchased 1,000.000
Additional M&E above 1.40% model 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/08/91 1.000000 1000 1,000.00 1,000.00 1,502.13 7.74 5.40% 1,502.13
04/30/91 1.002047 1000 1,002.05 0.0001602685 0.160268493 1,001.89 TOTAL RETURN 50.21%
05/31/91 1.005857 1000 1,005.86 0.0002258329 0.226258963 1,005.47
06/30/91 1.008776 1000 1,008.78 0.0002185479 0.219743373 1,008.17
07/31/91 1.011492 1000 1,011.49 0.0002258329 0.227677479 1,010.65
08/31/91 1.015303 1000 1,015.30 0.0002258329 0.228239054 1,014.23
09/30/91 1.018076 1000 1,018.08 0.0002185479 0.22165882 1,016.78
10/31/91 1.014887 1000 1,014.89 0.0002258329 0.229622964 1,013.37
11/30/91 0.993945 1000 993.95 0.0002185479 0.221469524 992.24
12/31/91 1.041235 1000 1,041.24 0.0002258329 0.224079513 1,039.22
01/31/92 1.046928 1000 1,046.93 0.0002258329 0.234690182 1,044.67
02/28/92 1.039888 1000 1,039.89 0.0002039781 0.213089358 1,037.43
03/31/92 0.995220 1000 995.22 0.0002331178 0.241843414 992.63
04/30/92 1.008861 1000 1,008.86 0.0002185479 0.216936321 1,006.01
05/31/92 1.027434 1000 1,027.43 0.0002258329 0.227191096 1,024.31 1,502.13 6.59 5.98% 1,466.48
06/30/92 0.990793 1000 990.79 0.0002185479 0.223860336 987.55 1,502.13 6.51 6.66% 1,521.06
07/31/92 0.969988 1000 969.99 0.0002258329 0.223022229 966.59 1,502.13 6.42 7.11% 1,554.04
08/31/92 0.969826 1000 969.83 0.0002258329 0.218288769 966.21 1,502.13 6.34 7.21% 1,554.65
09/30/92 0.944181 1000 944.18 0.0002185479 0.211164208 940.45 1,502.13 6.25 7.77% 1,597.24
10/31/92 0.945062 1000 945.06 0.0002258329 0.212385409 941.12 1,502.13 6.17 7.87% 1,596.11
11/30/92 0.961574 1000 961.57 0.0002185479 0.205679631 957.36 1,502.13 6.09 7.68% 1,569.04
12/31/92 0.989782 1000 989.78 0.0002258329 0.216202564 985.22 1,502.13 6.00 7.28% 1,524.65
01/31/93 1.006274 1000 1,006.27 0.0002258329 0.222496092 1,001.42 1,502.13 5.92 7.09% 1,500.00
02/28/93 1.017888 1000 1,017.89 0.0002039781 0.204267345 1,012.77 1,502.13 5.84 6.98% 1,483.18
03/31/93 1.070220 1000 1,070.22 0.0002258329 0.228717168 1,064.61 1,502.13 5.76 6.16% 1,410.96
04/30/93 1.078733 1000 1,078.73 0.0002185479 0.232668774 1,072.85 1,502.13 5.67 6.11% 1,400.13
05/31/93 1.104813 1000 1,104.81 0.0002258329 0.242284297 1,098.54 1,502.13 5.59 5.76% 1,367.38
06/30/93 1.078167 1000 1,078.17 0.0002185479 0.240084358 1,071.81 1,502.13 5.51 6.32% 1,401.49
07/31/93 1.086638 1000 1,086.64 0.0002258329 0.242049558 1,079.99 1,502.13 5.42 6.27% 1,390.87
08/30/93 1.133770 1000 1,133.77 0.0002185479 0.236029009 1,126.59 1,502.13 5.34 5.54% 1,333.33
09/30/93 1.154739 1000 1,154.74 0.0002258329 0.254422149 1,147.18 1,502.13 5.25 5.26% 1,309.41
10/31/93 1.156364 1000 1,156.36 0.0002258329 0.259070213 1,148.53 1,502.13 5.17 5.33% 1,307.87
11/30/93 1.100872 1000 1,100.87 0.0002185479 0.251009305 1,093.16 1,502.13 5.09 6.45% 1,374.11
12/31/93 1.156482 1000 1,156.48 0.0002258329 0.246872556 1,148.14 1,502.13 5.00 5.52% 1,308.31
01/31/94 1.194618 1000 1,194.62 0.0002258329 0.259287448 1,185.74 1,502.13 4.92 4.93% 1,266.83
02/28/94 1.188532 1000 1,188.53 0.0002039781 0.241865013 1,179.46 1,502.13 4.84 5.12% 1,273.57
03/31/94 1.121762 1000 1,121.76 0.0002258329 0.266360295 1,112.93 1,502.13 4.76 6.51% 1,349.70
04/30/94 1.139726 1000 1,139.73 0.0002185479 0.243228782 1,130.51 1,502.13 4.67 6.27% 1,328.71
05/31/94 1.123951 1000 1,123.95 0.0002258329 0.255306403 1,114.61 1,502.13 4.59 6.72% 1,347.67
06/30/94 1.105423 1000 1,105.42 0.0002185479 0.243595199 1,095.99 1,502.13 4.51 7.24% 1,370.57
07/05/94 1.116706 1000 1,116.71 0.0000364247 0.039921061 1,107.14 1,502.13 4.49 7.03% 1,356.77
07/05/94 0.978667 1131.27 1,107.14 0.0000000000 0 1,107.14 1,502.13 4.49 7.03% 1,356.77
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
ENDEAVOR PLATINUM - INTERNATIONAL STOCK SUBACCOUNT 31-Mar-99
PERFORMANCE CALCULATIONS
11:41 AM
Initial Investment $1,000 Fund #142
AUV 1.000000
------------
Units purchased 1,000.000
Additional M&E above 1.40% model 0.0025
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Account value 1107.136818
Inception AUV 0.978667
-------------
Units 1131.27
07/31/94 0.989353 1131.27 1,119.23 0.0000113260 0.012413213 1,119.21 1,502.13 4.42 6.88% 1,342.13
08/31/94 1.023891 1131.27 1,158.30 0.0000135041 0.015113974 1,158.27 1,502.13 4.34 6.18% 1,296.87
09/30/94 1.005791 1131.27 1,137.82 0.0000130685 0.015136833 1,137.78 1,502.13 4.25 6.75% 1,320.23
10/31/94 1.020257 1131.27 1,154.19 0.0000135041 0.015364687 1,154.13 1,502.13 4.17 6.52% 1,301.53
11/30/94 0.958848 1131.27 1,084.72 0.0000130685 0.015082708 1,084.65 1,502.13 4.09 8.29% 1,384.90
12/31/94 0.940071 1131.27 1,063.47 0.0000135041 0.014647176 1,063.39 1,502.13 4.00 9.01% 1,412.58
01/31/95 0.894654 1131.27 1,012.10 0.0000135041 0.014360145 1,012.00 1,502.13 3.92 10.61% 1,484.31
02/28/95 0.904327 1131.27 1,023.04 0.0000121973 0.012343646 1,022.93 1,502.13 3.84 10.52% 1,468.45
03/31/95 0.922312 1131.27 1,043.38 0.0000135041 0.013813771 1,043.26 1,502.13 3.76 10.19% 1,439.84
04/30/95 0.940041 1131.27 1,063.44 0.0000130685 0.013633847 1,063.30 1,502.13 3.67 9.86% 1,412.70
05/31/95 0.965399 1131.27 1,092.13 0.0000135041 0.014358935 1,091.97 1,502.13 3.59 9.29% 1,375.61
06/30/95 0.959028 1131.27 1,084.92 0.0000130685 0.0142704 1,084.75 1,502.13 3.51 9.73% 1,384.77
07/31/95 1.010906 1131.27 1,143.61 0.0000135041 0.014648572 1,143.41 1,502.13 3.42 8.30% 1,313.72
08/31/95 0.980872 1131.27 1,109.63 0.0000135041 0.01544078 1,109.43 1,502.13 3.34 9.51% 1,353.97
09/30/95 0.998082 1131.27 1,129.10 0.0000130685 0.014498541 1,128.88 1,502.13 3.25 9.17% 1,330.64
10/31/95 0.981509 1131.27 1,110.35 0.0000135041 0.015244495 1,110.12 1,502.13 3.17 10.01% 1,353.12
11/30/95 0.988588 1131.27 1,118.36 0.0000130685 0.014507571 1,118.11 1,502.13 3.09 10.03% 1,343.45
12/31/95 1.022539 1131.27 1,156.77 0.0000135041 0.015099083 1,156.49 1,502.13 3.00 9.10% 1,298.86
01/31/96 1.048670 1131.27 1,186.33 0.0000135041 0.015617425 1,186.03 1,502.13 2.92 8.43% 1,266.51
02/29/96 1.053999 1131.27 1,192.36 0.0000126329 0.014983007 1,192.04 1,502.13 2.84 8.49% 1,260.13
03/31/96 1.071844 1131.27 1,212.54 0.0000135041 0.016097505 1,212.21 1,502.13 2.75 8.10% 1,239.16
04/30/96 1.102847 1131.27 1,247.62 0.0000130685 0.015841772 1,247.26 1,502.13 2.67 7.21% 1,204.34
05/31/96 1.098053 1131.27 1,242.19 0.0000135041 0.016843113 1,241.82 1,502.13 2.59 7.64% 1,209.62
06/30/96 1.110082 1131.27 1,255.80 0.0000130685 0.016228713 1,255.41 1,502.13 2.50 7.43% 1,196.52
07/31/96 1.071629 1131.27 1,212.30 0.0000135041 0.01695316 1,211.90 1,502.13 2.42 9.28% 1,239.48
08/31/96 1.086899 1131.27 1,229.58 0.0000135041 0.016365677 1,229.16 1,502.13 2.33 8.97% 1,222.08
09/30/96 1.109584 1131.27 1,255.24 0.0000130685 0.016063216 1,254.79 1,502.13 2.25 8.32% 1,197.11
10/31/96 1.103044 1131.27 1,247.84 0.0000135041 0.016944875 1,247.38 1,502.13 2.17 8.95% 1,204.22
11/30/96 1.151535 1131.27 1,302.70 0.0000130685 0.016301391 1,302.20 1,502.13 2.08 7.09% 1,153.53
12/31/96 1.159025 1131.27 1,311.17 0.0000135041 0.017585065 1,310.65 1,502.13 2.00 7.06% 1,146.09
01/31/97 1.14497 1131.27 1,295.27 0.0000135041 0.017699207 1,294.74 1,502.13 1.92 8.07% 1,160.17
02/28/97 1.159279 1131.27 1,311.46 0.0000121973 0.015792305 1,310.91 1,502.13 1.84 7.69% 1,145.87
03/31/97 1.153531 1131.27 1,304.96 0.0000135041 0.017702631 1,304.39 1,502.13 1.75 8.38% 1,151.59
04/30/97 1.158592 1131.27 1,310.68 0.0000130685 0.017046404 1,310.10 1,502.13 1.67 8.53% 1,146.58
05/31/97 1.230486 1131.27 1,392.01 0.0000135041 0.01769167 1,391.37 1,502.13 1.59 4.95% 1,079.60
06/30/97 1.281744 1131.27 1,450.00 0.0000130685 0.018183146 1,449.31 1,502.13 1.50 2.41% 1,036.44
07/31/97 1.312274 1131.27 1,484.54 0.0000135041 0.019571703 1,483.82 1,502.13 1.42 0.87% 1,012.34
08/31/97 1.191418 1131.27 1,347.82 0.0000135041 0.020037619 1,347.14 1,502.13 1.33 8.50% 1,115.05
09/30/97 1.266551 1131.27 1,432.81 0.0000130685 0.017605115 1,432.08 1,502.13 1.25 3.89% 1,048.91
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - INTERNATIONAL STOCK SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial Investment $1,000
AUV 1.000000
------------
Units purchased 1,000.000
Addtional M&E above 1.40% model 0.0025
Contrac Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/97 1.166605 1131.27 1,319.75 0.0000135041 0.019338932 1,319.05 1,502.13 1.17 11.78% 1,138.79
11/30/97 1.163496 1131.27 1,316.23 0.0000130685 0.017237998 1,315.52 1,502.13 1.08 13.01% 1,141.85
12/31/97 1.170007 1131.27 1,323.59 0.0000135041 0.017764895 1,322.86 1,502.13 1.00 13.55% 1,135.51
01/31/98 1.204593 1131.27 1,362.72 0.0000135041 0.017864068 1,361.95 1,502.13 0.92 10.29% 1,093.79
02/28/98 1.275308 1131.27 1,442.72 0.0000121973 0.016612037 1,441.88 1,502.13 0.84 4.18% 1,034.91
03/31/98 1.320195 1131.27 1,493.50 0.0000135041 0.01947136 1,492.61 1,502.13 0.75 0.64% 1,004.80
04/30/98 1.330695 1131.27 1,505.38 0.0000130685 0.019506223 1,504.47 1,502.13 0.67 -0.16% 998.96
05/31/98 1.320142 1131.27 1,493.44 0.0000135041 0.020316479 1,492.51 1,502.13 0.59 0.64% 1,003.77
06/30/98 1.318248 1131.27 1,491.29 0.0000130685 0.019504922 1,490.35 1,502.13 0.50 0.79% 1,003.97
07/31/98 1.330467 1131.27 1,505.12 0.0000135041 0.020125906 1,504.15 1,502.13 0.42 -0.13% 999.44
08/31/98 1.159436 1131.27 1,311.64 0.0000135041 0.020312184 1,310.77 1,502.13 0.33 14.60% 1,046.60
09/30/98 1.126566 1131.27 1,274.45 0.0000130685 0.017129793 1,273.59 1,502.13 0.25 17.94% 1,042.48
10/31/98 1.226288 1131.27 1,387.26 0.0000135041 0.017198738 1,386.31 1,502.13 0.17 8.35% 1,013.50
11/30/98 1.28623 1131.27 1,455.07 0.0000130685 0.018117013 1,454.06 1,502.13 0.08 3.31% 1,002.77
12/31/98 1.328767 1131.27 1,503.19 0.0000135041 0.019635763 1,502.13 1,502.13 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - INTERNATIONAL STOCK SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial Investment $1,000
AUV 1.000000
------------
Units purchased 1,000.000
Addtional M&E above 1.40% model 0.0025
Contrac Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ENDEAVOR PLATINUM - WRL SUBACCOUNT 31-Mar-99
PERFORMANCE CALCULATIONS 11:41 AM
Fund #143
INITIAL INVESTMENT 1,000.00
M&E Charge to fund performance 0.016500
Additional M&E from 1.40% model 0.002500
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FUND DISTRIBUTIONS:
REINVEST REINVEST
DIV PR/SH NAV SHARES SHARE BASE
($1000 @ $10.00 ON 10/02/86) 100.000000
12/86 0.00 0.000 0.000 100.000000
12/87 0.11 11.141 0.972 100.971924
12/88 0.25 12.970 1.913 102.884985
12/89 1.22 17.851 7.030 109.914666
12/90 0.33 17.479 2.092 112.006544
12/91 1.66 26.086 7.145 119.151405
12/92 0.00 24.616 0.007 119.158099
12/92 1.05 25.930 4.809 123.967156
</TABLE>
<TABLE>
<CAPTION>
Additional
M&E &
Contract Adjusted Ending
Gross Charge Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Factor Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/2/86 10.000000 100.000 1,000.00 1,000.00 5,789.47 12.25 15.41% 5,789.47
10/31/86 10.242480 100.000 1,024.25 0.0013235918 1.32 1,022.92 TOTAL RETURN 478.95%
11/30/86 10.178265 100.000 1,017.83 0.0013692329 1.40 1,015.11
12/31/86 10.143918 100.000 1,014.39 0.0014148740 1.44 1,010.25
1/31/87 11.099823 100.000 1,109.98 0.0014148740 1.43 1,104.02
2/28/87 11.941933 100.000 1,194.19 0.0012779507 1.41 1,186.37
3/31/87 12.253046 100.000 1,225.30 0.0014148740 1.68 1,215.60
4/30/87 12.326861 100.000 1,232.69 0.0013692329 1.66 1,221.25
5/31/87 12.584261 100.000 1,258.43 0.0014148740 1.73 1,245.03
6/30/87 13.053930 100.000 1,305.39 0.0013692329 1.70 1,289.79 8,306.68 11.51 13.93% 4,488.69
7/31/87 13.768105 100.000 1,376.81 0.0014148740 1.82 1,358.53 8,306.68 11.43 13.53% 4,261.57
8/31/87 14.383761 100.000 1,438.38 0.0014148740 1.92 1,417.36 8,306.68 11.34 13.21% 4,084.70
9/30/87 14.382060 100.000 1,438.21 0.0013692329 1.94 1,415.25 8,306.68 11.26 13.33% 4,090.78
10/31/87 11.350889 100.000 1,135.09 0.0014148740 2.00 1,114.97 8,306.68 11.18 15.88% 5,192.51
11/30/87 10.884572 100.000 1,088.46 0.0013692329 1.53 1,067.63 8,306.68 11.09 16.46% 5,422.71
12/31/87 11.140893 100.972 1,124.92 0.0014148740 1.51 1,101.89 8,306.68 11.01 16.27% 5,254.14
1/31/88 11.262292 100.972 1,137.18 0.0014148740 1.56 1,112.33 TOTAL RETURN 546.08%
2/28/88 11.558128 100.972 1,167.05 0.0012779507 1.42 1,140.13 8,306.68 10.85 20.09% 7,285.72
3/31/88 11.539389 100.972 1,165.15 0.0014605151 1.67 1,136.62 8,306.68 10.76 20.31% 7,308.24
4/30/88 11.749717 100.972 1,186.39 0.0013692329 1.56 1,155.78 8,306.68 10.68 20.29% 7,187.08
5/31/88 11.798150 100.972 1,191.28 0.0014148740 1.64 1,158.91 8,306.68 10.59 20.44% 7,167.68
6/30/88 12.349026 100.972 1,246.90 0.0013692329 1.59 1,211.43 8,306.68 10.51 20.10% 6,856.91
7/31/88 12.293135 100.972 1,241.26 0.0014148740 1.71 1,204.24 8,306.68 10.42 20.35% 6,897.89
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ENDEAVOR PLATINUM - WRL SUBACCOUNT 31-Mar-99
PERFORMANCE CALCULATIONS 11:41 AM
Fund #143
INITIAL INVESTMENT 1,000.00
M&E Charge to fund performance 0.016500
Additional M&E from 1.40% model 0.002500
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8/31/88 12.118060 100.972 1,223.58 0.0014148740 1.70 1,185.38 8,306.68 10.34 20.72% 7,007.60
9/30/88 12.924912 100.972 1,305.05 0.0013692329 1.62 1,262.68 8,306.68 10.26 20.16% 6,578.59
10/31/88 12.979238 100.972 1,310.54 0.0014148740 1.79 1,266.20 8,306.68 10.17 20.31% 6,560.30
11/30/88 12.742550 100.972 1,286.64 0.0013692329 1.73 1,241.38 8,306.68 10.09 20.73% 6,691.48
12/31/88 12.969913 102.885 1,334.41 0.0014148740 1.76 1,285.71 8,306.68 10.01 20.50% 6,460.75
1/31/89 13.797157 102.885 1,419.52 0.0014148740 1.82 1,365.90 8,306.68 9.92 19.96% 6,081.47
2/28/89 13.699227 102.885 1,409.44 0.0012779507 1.75 1,354.46 8,306.68 9.84 20.23% 6,132.84
3/31/89 14.507994 102.885 1,492.65 0.0014148740 1.92 1,432.51 8,306.68 9.76 19.73% 5,798.70
4/30/89 15.485756 102.885 1,593.25 0.0013692329 1.96 1,527.09 8,306.68 9.68 19.13% 5,439.55
5/31/89 16.831921 102.885 1,731.75 0.0014148740 2.16 1,657.68 8,306.68 9.59 18.30% 5,011.04
6/30/89 16.418542 102.885 1,689.22 0.0013692329 2.27 1,614.70 8,306.68 9.51 18.80% 5,144.42
7/31/89 18.076256 102.885 1,859.78 0.0014148740 2.28 1,775.44 8,306.68 9.42 17.79% 4,678.66
8/31/89 19.196966 102.885 1,975.08 0.0014148740 2.51 1,883.00 8,306.68 9.34 17.22% 4,411.40
9/30/89 19.972520 102.885 2,054.87 0.0013692329 2.58 1,956.50 8,306.68 9.26 16.90% 4,245.69
10/31/89 19.066423 102.885 1,961.65 0.0014148740 2.77 1,864.97 8,306.68 9.17 17.69% 4,454.06
11/30/89 19.230784 102.885 1,978.56 0.0013692329 2.55 1,878.49 8,306.68 9.09 17.77% 4,421.99
12/31/89 17.850799 109.915 1,962.06 0.0014148740 2.66 1,860.17 8,306.68 9.01 18.08% 4,465.54
1/31/90 16.301313 109.915 1,791.75 0.0014148740 2.63 1,696.08 8,306.68 8.92 19.49% 4,897.59
2/28/90 16.717816 109.915 1,837.53 0.0012779507 2.17 1,737.24 8,306.68 8.84 19.36% 4,781.53
3/31/90 17.394768 109.915 1,911.94 0.0014148740 2.46 1,805.13 8,306.68 8.76 19.04% 4,601.70
4/30/90 17.552402 109.915 1,929.27 0.0013692329 2.47 1,819.02 8,306.68 8.68 19.13% 4,566.57
5/31/90 19.412925 109.915 2,133.77 0.0014148740 2.57 2,009.26 8,306.68 8.59 17.96% 4,134.20
6/30/90 19.881337 109.915 2,185.25 0.0013692329 2.75 2,054.99 8,306.68 8.51 17.84% 4,042.21
7/31/90 19.238628 109.915 2,114.61 0.0014148740 2.91 1,985.65 8,306.68 8.42 18.52% 4,183.36
8/31/90 17.312376 109.915 1,902.88 0.0014148740 2.81 1,784.03 8,306.68 8.34 20.25% 4,656.14
9/30/90 16.581488 109.915 1,822.55 0.0013692329 2.44 1,706.27 8,306.68 8.26 21.13% 4,868.34
10/31/90 16.144908 109.915 1,774.56 0.0014148740 2.41 1,658.93 8,306.68 8.17 21.79% 5,007.26
11/30/90 16.986867 109.915 1,867.11 0.0013692329 2.27 1,743.17 8,306.68 8.09 21.29% 4,765.27
12/31/90 17.479079 112.007 1,957.77 0.0014148740 2.47 1,825.35 8,306.68 8.01 20.84% 4,550.73
1/31/91 18.562905 112.007 2,079.17 0.0014148740 2.58 1,935.95 8,306.68 7.92 20.19% 4,290.75
2/28/91 20.096951 112.007 2,250.99 0.0012779507 2.47 2,093.47 8,306.68 7.84 19.21% 3,967.91
3/31/91 21.114275 112.007 2,364.94 0.0014148740 2.96 2,196.48 8,306.68 7.76 18.70% 3,781.82
4/30/91 21.195645 112.007 2,374.05 0.0013692329 3.01 2,201.93 8,306.68 7.68 18.88% 3,772.45
5/31/91 22.353555 112.007 2,503.74 0.0014148740 3.12 2,319.11 8,306.68 7.59 18.30% 3,581.84
6/30/91 21.233106 112.007 2,378.25 0.0013692329 3.18 2,199.69 8,306.68 7.51 19.36% 3,776.29
7/31/91 22.860955 112.007 2,560.58 0.0014148740 3.11 2,365.22 8,306.68 7.42 18.43% 3,512.01
8/31/91 24.093541 112.007 2,698.63 0.0014148740 3.35 2,489.40 8,306.68 7.34 17.84% 3,336.82
9/30/91 24.117922 112.007 2,701.37 0.0013692329 3.41 2,488.51 8,306.68 7.26 18.07% 3,338.02
10/31/91 25.230014 112.007 2,825.93 0.0014148740 3.52 2,599.73 8,306.68 7.17 17.58% 3,195.20
11/30/91 24.199800 112.007 2,710.54 0.0013692329 3.56 2,490.02 8,306.68 7.09 18.52% 3,335.99
12/31/91 26.255817 119.151 3,128.42 0.0014148740 3.52 2,870.38 8,306.68 7.01 16.38% 2,893.93
1/31/92 25.593236 119.151 3,049.47 0.0014148740 4.06 2,793.88 8,306.68 6.92 17.05% 2,973.17
2/28/92 25.397891 119.151 3,026.19 0.0012779507 3.57 2,768.99 8,306.68 6.84 17.41% 2,999.90
3/31/92 24.544017 119.151 2,924.45 0.0014605151 4.04 2,671.85 8,306.68 6.76 18.28% 3,108.96
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT 1,000.00
M&E Charge to fund performance 0.016500
Additional M&E from 1.40% model 0.002500
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/30/92 24.400719 119.151 2,907.38 0.0013692329 3.66 2,652.59 8,306.68 6.67 18.65% 3,131.53
05/31/92 25.110607 119.151 2,991.96 0.0014148740 3.75 2,726.01 8,306.68 6.59 18.42% 3,047.19
06/30/92 24.436151 119.151 2,911.60 0.0013692329 3.73 2,649.06 8,306.68 6.51 19.20% 3,135.71
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ENDEAVOR PLATINUM - WRL SUBACCOUNT 31-MAR-99
PERFORMANCE CALCULATIONS 11:41 AM
Fund #143
INITIAL INVESTMENT 1,000.00
M&E Charge to fund performance 0.016500
Additional M&E from 1.40% model 0.002500
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Effective 7/1/92 WRL Growth began with
AUV = to $10.00
ERV @ 6/30/92 / $10.00 AUV 264.91 Units
Using Endeavor AUVs until inception date
ADDITIONAL M&E (1.65% - 1.40%)/12 plus contract charge factor
<CAPTION>
Contract
AUV Units Acct Value Charge Value
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/1992 10.090579 264.906 2,673.06 0.0002258329 0.60 2,672.46 8,306.68 6.42 19.31% 3,108.25
8/31/1992 9.819286 264.906 2,601.19 0.0002258329 0.60 2,600.00 8,306.68 6.34 20.12% 3,194.87
9/30/1992 9.889039 264.906 2,619.67 0.0002185479 0.57 2,617.90 8,306.68 6.25 20.27% 3,173.03
10/31/1992 10.039500 264.906 2,659.52 0.0002258329 0.59 2,657.14 8,306.68 6.17 20.29% 3,126.17
11/30/1992 10.621351 264.906 2,813.66 0.0002185479 0.58 2,810.56 8,306.68 6.09 19.48% 2,955.52
12/31/1992 10.839753 264.906 2,871.52 0.0002258329 0.63 2,867.72 8,306.68 6.00 19.38% 2,896.62
1/31/1993 10.999669 264.906 2,913.88 0.0002258329 0.65 2,909.38 8,306.68 5.92 19.40% 2,855.14
2/28/1993 10.535633 264.906 2,790.95 0.0002039781 0.59 2,786.05 8,306.68 5.84 20.57% 2,981.53
3/31/1993 10.794261 264.906 2,859.46 0.0002258329 0.63 2,853.81 8,306.68 5.76 20.40% 2,910.73
4/30/1993 10.334927 264.906 2,737.78 0.0002185479 0.62 2,731.75 8,306.68 5.67 21.65% 3,040.79
5/31/1993 10.681999 264.906 2,829.73 0.0002258329 0.62 2,822.87 8,306.68 5.59 21.30% 2,942.64
6/30/1993 10.866888 264.906 2,878.70 0.0002185479 0.62 2,871.11 8,306.68 5.51 21.28% 2,893.19
7/31/1993 10.825063 264.906 2,867.62 0.0002258329 0.65 2,859.41 8,306.68 5.42 21.74% 2,905.03
8/31/1993 11.044325 264.906 2,925.71 0.0002258329 0.65 2,916.68 8,306.68 5.34 21.67% 2,847.99
9/30/1993 11.255563 264.906 2,981.67 0.0002185479 0.64 2,971.83 8,306.68 5.25 21.61% 2,795.14
10/31/1993 11.229805 264.906 2,974.84 0.0002258329 0.67 2,964.36 8,306.68 5.17 22.06% 2,802.18
11/30/1993 10.876928 264.906 2,881.36 0.0002185479 0.65 2,870.56 8,306.68 5.09 23.23% 2,893.75
12/31/1993 11.114865 264.906 2,944.39 0.0002258329 0.65 2,932.71 8,306.68 5.00 23.14% 2,832.42
1/31/1994 11.627506 264.906 3,080.20 0.0002258329 0.66 3,067.31 8,306.68 4.92 22.46% 2,708.13
2/28/1994 11.325864 264.906 3,000.29 0.0002039781 0.63 2,987.11 8,306.68 4.84 23.52% 2,780.84
3/31/1994 10.540923 264.906 2,792.35 0.0002258329 0.67 2,779.41 8,306.68 4.76 25.88% 2,988.64
4/30/1994 10.402986 264.906 2,755.81 0.0002185479 0.61 2,742.44 8,306.68 4.67 26.76% 3,028.94
5/31/1994 10.278529 264.906 2,722.84 0.0002258329 0.62 2,709.01 8,306.68 4.59 27.66% 3,066.32
6/30/1994 9.878571 264.906 2,616.89 0.0002185479 0.59 2,603.00 8,306.68 4.51 29.37% 3,191.19
7/5/1994 9.920052 264.906 2,627.88 0.0000364247 0.09 2,613.84 8,306.68 4.49 29.35% 3,177.96
7/5/1994 9.418271 277.396 2,612.59 0.0000000000 0.00 2,612.59 8,306.68 4.49 29.36% 3,179.48
<CAPTION>
Account value 2,613.838
Inception AUV 9.418271
------------ Contract
Units 277.528 Charge
Deduction
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
7/31/1994 10.147571 277.528 2,816.24 0.0000113260 0.03 2,816.21 8,306.68 4.42 27.71% 2,949.60
8/31/1994 9.970886 277.528 2,767.20 0.0000135041 0.04 2,767.13 8,306.68 4.34 28.85% 3,001.91
9/30/1994 9.668790 277.528 2,683.36 0.0000130685 0.04 2,683.26 8,306.68 4.25 30.42% 3,095.74
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
ENDEAVOR PLATINUM - WRL SUBACCOUNT 31-MAR-99
PERFORMANCE CALCULATIONS 11:41 AM
Fund #143
INITIAL INVESTMENT 1,000.00
M&E Charge to fund performance 0.016500
Additional M&E from 1.40% model 0.002500
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/31/94 10.016797 277.528 2,779.94 0.0000135041 0.04 2,779.80 8,306.68 4.17 30.02% 2,988.23
11/30/94 9.580338 277.528 2,658.81 0.0000130685 0.04 2,658.64 8,306.68 4.09 32.14% 3,124.41
12/31/94 9.531263 277.528 2,645.19 0.0000135041 0.04 2,644.99 8,306.68 4.00 33.10% 3,140.54
1/31/95 9.573181 277.528 2,656.83 0.0000135041 0.04 2,656.58 8,306.68 3.92 33.77% 3,126.83
2/28/95 9.854112 277.528 2,734.79 0.0000121973 0.03 2,734.51 8,306.68 3.84 33.55% 3,037.72
3/31/95 10.261315 277.528 2,847.80 0.0000135041 0.04 2,847.47 8,306.68 3.76 32.98% 2,917.21
4/30/95 10.488427 277.528 2,910.83 0.0000130685 0.04 2,910.46 8,306.68 3.67 33.04% 2,854.08
5/31/95 10.919240 277.528 3,030.39 0.0000135041 0.04 3,029.96 8,306.68 3.59 32.44% 2,741.51
6/30/95 11.684330 277.528 3,242.73 0.0000130685 0.04 3,242.23 8,306.68 3.51 30.77% 2,562.03
7/31/95 12.597713 277.528 3,496.22 0.0000135041 0.04 3,495.64 8,306.68 3.42 28.78% 2,376.30
8/31/95 12.400749 277.528 3,441.56 0.0000135041 0.05 3,440.93 8,306.68 3.34 30.23% 2,414.08
9/30/95 13.189073 277.528 3,660.34 0.0000130685 0.04 3,659.63 8,306.68 3.25 28.64% 2,269.81
10/31/95 13.367548 277.528 3,709.87 0.0000135041 0.05 3,709.10 8,306.68 3.17 28.96% 2,239.54
11/30/95 13.841705 277.528 3,841.46 0.0000130685 0.05 3,840.62 8,306.68 3.09 28.38% 2,162.85
12/31/95 13.795672 277.528 3,828.69 0.0000135041 0.05 3,827.80 8,306.68 3.00 29.44% 2,170.09
1/31/96 14.089220 277.528 3,910.15 0.0000135041 0.05 3,909.19 8,306.68 2.92 29.48% 2,124.91
2/29/96 14.567715 277.528 4,042.95 0.0000126329 0.05 4,041.91 8,306.68 2.84 28.89% 2,055.14
3/31/96 14.416126 277.528 4,000.88 0.0000135041 0.05 3,999.79 8,306.68 2.75 30.40% 2,076.78
4/30/96 15.219758 277.528 4,223.91 0.0000130685 0.05 4,222.71 8,306.68 2.67 28.83% 1,967.14
5/31/96 15.956112 277.528 4,428.27 0.0000135041 0.06 4,426.95 8,306.68 2.59 27.55% 1,876.39
6/30/96 15.770791 277.528 4,376.84 0.0000130685 0.06 4,375.48 8,306.68 2.50 29.17% 1,898.46
7/31/96 14.432441 277.528 4,005.41 0.0000135041 0.06 4,004.11 8,306.68 2.42 35.21% 2,074.54
8/31/96 14.960682 277.528 4,152.01 0.0000135041 0.05 4,150.61 8,306.68 2.33 34.61% 2,001.32
9/30/96 15.972695 277.528 4,432.87 0.0000130685 0.05 4,431.32 8,306.68 2.25 32.18% 1,874.54
10/31/96 15.806720 277.528 4,386.81 0.0000135041 0.06 4,385.21 8,306.68 2.17 34.28% 1,894.25
11/30/96 16.624645 277.528 4,613.80 0.0000130685 0.06 4,612.07 8,306.68 2.08 32.61% 1,801.07
12/31/96 16.007469 277.528 4,442.52 0.0000135041 0.06 4,440.79 8,306.68 2.00 36.77% 1,870.54
1/31/97 16.784447 277.528 4,658.15 0.0000135041 0.06 4,656.28 8,306.68 1.92 35.29% 1,783.97
2/28/97 16.277629 277.528 4,517.50 0.0000121973 0.06 4,515.62 8,306.68 1.84 39.31% 1,839.54
3/31/97 15.258718 277.528 4,234.72 0.0000135041 0.06 4,232.90 8,306.68 1.75 46.89% 1,962.41
4/30/97 16.125707 277.528 4,475.34 0.0000130685 0.06 4,473.36 8,306.68 1.67 44.82% 1,856.92
5/31/97 17.012378 277.528 4,721.41 0.0000135041 0.06 4,719.26 8,306.68 1.59 42.82% 1,760.16
6/30/97 17.705439 277.528 4,913.76 0.0000130685 0.06 4,911.46 8,306.68 1.50 41.82% 1,691.29
7/31/97 19.486088 277.528 5,407.94 0.0000135041 0.07 5,405.34 8,306.68 1.42 35.36% 1,536.75
8/31/97 18.029330 277.528 5,003.64 0.0000135041 0.07 5,001.17 8,306.68 1.33 46.27% 1,660.95
9/30/97 19.310018 277.528 5,359.07 0.0000130685 0.07 5,356.36 8,306.68 1.25 41.97% 1,550.81
10/31/97 18.210305 277.528 5,053.87 0.0000135041 0.07 5,051.24 8,306.68 1.17 53.14% 1,644.48
11/30/97 18.460602 277.528 5,123.33 0.0000130685 0.07 5,120.60 8,306.68 1.08 56.19% 1,622.21
12/31/97 18.510625 277.528 5,137.22 0.0000135041 0.07 5,134.41 8,306.68 1.00 61.78% 1,617.85
1/31/98 19.238046 277.528 5,339.10 0.0000135041 0.07 5,336.11 8,306.68 0.92 55.67% 1,499.27
2/28/98 20.872772 277.528 5,792.78 0.0000121973 0.07 5,789.47 8,306.68 0.84 43.48% 1,353.46
3/31/98 22.067145 277.528 6,124.25 0.0000135041 0.08 6,120.67 8,306.68 0.75 35.72% 1,258.71
4/30/98 23.386897 277.528 6,490.52 0.0000130685 0.08 6,486.65 8,306.68 0.67 28.06% 1,180.58
5/31/98 22.669388 277.528 6,291.39 0.0000135041 0.09 6,287.55 8,306.68 0.59 32.11% 1,177.36
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT 1,000.00
M&E Charge to fund performance 0.016500
Additional M&E from 1.40% model 0.002500
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/98 24.977479 277.528 6,931.95 0.0000130685 0.08 6,927.64 8,306.68 0.50 19.91% 1,095.83
7/31/98 25.649301 277.528 7,118.40 0.0000135041 0.09 7,113.88 8,306.68 0.42 16.77% 1,067.14
8/31/98 21.279168 277.528 5,905.56 0.0000135041 0.10 5,901.72 8,306.68 0.33 40.75% 1,121.03
9/30/98 23.363458 277.528 6,484.01 0.0000130685 0.08 6,479.71 8,306.68 0.25 28.20% 1,064.61
10/31/98 24.203355 277.528 6,717.11 0.0000135041 0.09 6,712.56 8,306.68 0.17 23.75% 1,036.25
11/30/98 25.756067 277.528 7,148.03 0.0000130685 0.09 7,143.11 8,306.68 0.08 16.29% 1,012.90
12/31/98 29.951933 277.528 8,312.50 0.0000135041 0.10 8,306.68 8,306.68 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT $1,000.00
M&E Charge to fund performance 0.016500
Additional M&E from 1.40% model 0.002500
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE EQUITY SUBACCOUNT
PERFORMANCE RETURNS
Initial investment $1,000
AUV 0.999050
-------------
Units purchased 1,000.951
Additional M&E from 1.40% model 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 117.80%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/27/93 0.999050 1,000.951 1,000.00 1,000.00 2,177.97 5.60 14.91% 2,177.97
05/31/93 0.999050 1,000.951 1,000.00 0.0000291397 0.029139726 999.97 2,177.97 5.59 14.94% 2,178.03
06/30/93 1.004782 1,000.951 1,005.74 0.0002185479 0.218541577 1,005.49 2,177.97 5.51 15.07% 2,166.08
07/31/93 0.997653 1,000.951 998.60 0.0002258329 0.227072609 998.13 2,177.97 5.42 15.48% 2,182.05
08/30/93 1.021325 1,000.951 1,022.30 0.0002185479 0.218138935 1,021.59 2,177.97 5.34 15.23% 2,131.93
09/30/93 1.009223 1,000.951 1,010.18 0.0002258329 0.230709433 1,009.26 2,177.97 5.25 15.76% 2,157.99
10/31/93 1.012084 1,000.951 1,013.05 0.0002258329 0.227923583 1,011.89 2,177.97 5.17 15.98% 2,152.37
11/30/93 1.008866 1,000.951 1,009.83 0.0002185479 0.221146685 1,008.45 2,177.97 5.09 16.34% 2,159.71
12/31/93 1.018576 1,000.951 1,019.54 0.0002258329 0.227741707 1,017.93 2,177.97 5.00 16.42% 2,139.60
01/31/94 1.046074 1,000.951 1,047.07 0.0002258329 0.229882214 1,045.18 2,177.97 4.92 16.10% 2,083.82
02/28/94 1.035073 1,000.951 1,036.06 0.0002039781 0.213194093 1,033.98 2,177.97 4.84 16.64% 2,106.40
03/31/94 0.998303 1,000.951 999.25 0.0002258329 0.233505903 997.01 2,177.97 4.76 17.86% 2,184.49
04/30/94 1.031724 1,000.951 1,032.71 0.0002185479 0.217894927 1,030.17 2,177.97 4.67 17.37% 2,114.18
05/31/94 1.046247 1,000.951 1,047.24 0.0002258329 0.232646683 1,044.44 2,177.97 4.59 17.37% 2,085.30
06/30/94 1.011559 1,000.951 1,012.52 0.0002185479 0.228260304 1,009.58 2,177.97 4.51 18.60% 2,157.29
07/05/94 1.012120 1,000.951 1,013.08 0.0000364247 0.036773753 1,010.11 2,177.97 4.49 18.65% 2,156.17
07/05/94 0.980009 1,030.712 1,010.11 0.0000000000 0 1,010.11 2,177.97 4.49 18.65% 2,156.17
<CAPTION>
Account value 1,010.11
Inception AUV 0.980009
------------
1,030.712
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/94 1.000683 1,030.712 1,031.42 0.0000113260 0.011434577 1,031.40 2,177.97 4.42 18.42% 2,111.65
08/31/94 1.039197 1,030.712 1,071.11 0.0000135041 0.0139282 1,071.09 2,177.97 4.34 17.78% 2,033.42
09/30/94 1.007469 1,030.712 1,038.41 0.0000130685 0.013997493 1,038.37 2,177.97 4.25 19.02% 2,097.48
10/31/94 1.027836 1,030.712 1,059.40 0.0000135041 0.014022281 1,059.35 2,177.97 4.17 18.87% 2,055.95
11/30/94 0.994316 1,030.712 1,024.85 0.0000130685 0.013844096 1,024.79 2,177.97 4.09 20.25% 2,125.29
12/31/94 1.009026 1,030.712 1,040.02 0.0000135041 0.013838843 1,039.93 2,177.97 4.00 20.28% 2,094.33
01/31/95 1.035859 1,030.712 1,067.67 0.0000135041 0.014043389 1,067.58 2,177.97 3.92 19.96% 2,040.11
02/28/95 1.075980 1,030.712 1,109.03 0.0000121973 0.013021495 1,108.91 2,177.97 3.84 19.21% 1,964.06
03/31/95 1.101946 1,030.712 1,135.79 0.0000135041 0.014974867 1,135.66 2,177.97 3.76 18.93% 1,917.80
04/30/95 1.111635 1,030.712 1,145.78 0.0000130685 0.014841333 1,145.63 2,177.97 3.67 19.11% 1,901.11
05/31/95 1.176305 1,030.712 1,212.43 0.0000135041 0.015470688 1,212.26 2,177.97 3.59 17.73% 1,796.62
06/30/95 1.215430 1,030.712 1,252.76 0.0000130685 0.015842414 1,252.57 2,177.97 3.51 17.09% 1,738.81
07/31/95 1.263845 1,030.712 1,302.66 0.0000135041 0.016914779 1,302.44 2,177.97 3.42 16.21% 1,672.22
08/31/95 1.260258 1,030.712 1,298.96 0.0000135041 0.017588328 1,298.73 2,177.97 3.34 16.76% 1,677.00
09/30/95 1.290620 1,030.712 1,330.26 0.0000130685 0.016972424 1,330.00 2,177.97 3.25 16.36% 1,637.57
10/31/95 1.261467 1,030.712 1,300.21 0.0000135041 0.01796047 1,299.94 2,177.97 3.17 17.68% 1,675.44
11/30/95 1.318064 1,030.712 1,358.54 0.0000130685 0.016988255 1,358.25 2,177.97 3.09 16.52% 1,603.51
12/31/95 1.336071 1,030.712 1,377.10 0.0000135041 0.018341902 1,376.78 2,177.97 3.00 16.50% 1,581.92
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE EQUITY SUBACCOUNT
PERFORMANCE RETURNS
Initial investment $1,000
AUV 0.999050
-------------
Units purchased 1,000.951
Additional M&E from 1.40% model 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/31/96 1.400664 1,030.712 1,443.68 0.0000135041 0.018592236 1,443.33 2,177.97 2.92 15.14% 1,508.99
02/29/96 1.427871 1,030.712 1,471.72 0.0000126329 0.018233363 1,471.34 2,177.97 2.84 14.82% 1,480.26
03/31/96 1.452203 1,030.712 1,496.80 0.0000135041 0.019869187 1,496.40 2,177.97 2.75 14.60% 1,455.47
04/30/96 1.453854 1,030.712 1,498.50 0.0000130685 0.019555649 1,498.08 2,177.97 2.67 15.04% 1,453.84
05/31/96 1.490433 1,030.712 1,536.21 0.0000135041 0.020230214 1,535.75 2,177.97 2.59 14.46% 1,418.18
06/30/96 1.482843 1,030.712 1,528.38 0.0000130685 0.020069936 1,527.91 2,177.97 2.50 15.21% 1,425.46
07/31/96 1.424462 1,030.712 1,468.21 0.0000135041 0.02063305 1,467.73 2,177.97 2.42 17.72% 1,483.90
08/31/96 1.481506 1,030.712 1,527.01 0.0000135041 0.019820428 1,526.49 2,177.97 2.33 16.45% 1,426.78
09/30/96 1.538327 1,030.712 1,585.57 0.0000130685 0.019948924 1,585.02 2,177.97 2.25 15.16% 1,374.10
10/31/96 1.564640 1,030.712 1,612.69 0.0000135041 0.021404235 1,612.11 2,177.97 2.17 14.89% 1,351.01
11/30/96 1.644057 1,030.712 1,694.55 0.0000130685 0.021067804 1,693.91 2,177.97 2.08 12.81% 1,285.76
12/31/96 1.627513 1,030.712 1,677.50 0.0000135041 0.022874771 1,676.84 2,177.97 2.00 13.97% 1,298.85
01/31/97 1.684750 1,030.712 1,736.49 0.0000135041 0.022644275 1,735.79 2,177.97 1.92 12.58% 1,254.74
02/28/97 1.685467 1,030.712 1,737.23 0.0000121973 0.021171912 1,736.51 2,177.97 1.84 13.11% 1,254.22
03/31/97 1.629436 1,030.712 1,679.48 0.0000135041 0.023450022 1,678.76 2,177.97 1.75 16.01% 1,297.37
04/30/97 1.661111 1,030.712 1,712.13 0.0000130685 0.021938847 1,711.37 2,177.97 1.67 15.52% 1,272.65
05/31/97 1.742487 1,030.712 1,796.00 0.0000135041 0.023110536 1,795.19 2,177.97 1.59 12.96% 1,213.23
06/30/97 1.833816 1,030.712 1,890.14 0.0000130685 0.023460371 1,889.25 2,177.97 1.50 9.92% 1,152.82
07/31/97 1.944999 1,030.712 2,004.73 0.0000135041 0.025512683 2,003.77 2,177.97 1.42 6.05% 1,086.94
08/31/97 1.893933 1,030.712 1,952.10 0.0000135041 0.027059155 1,951.14 2,177.97 1.33 8.59% 1,116.26
09/30/97 1.963929 1,030.712 2,024.25 0.0000130685 0.025498404 2,023.22 2,177.97 1.25 6.06% 1,076.49
10/31/97 1.924406 1,030.712 1,983.51 0.0000135041 0.027321789 1,982.48 2,177.97 1.17 8.39% 1,098.61
11/30/97 1.959698 1,030.712 2,019.88 0.0000130685 0.025907984 2,018.81 2,177.97 1.08 7.24% 1,078.84
12/31/97 1.998321 1,030.712 2,059.69 0.0000135041 0.027262203 2,058.57 2,177.97 1.00 5.80% 1,058.00
01/31/98 1.971532 1,030.712 2,032.08 0.0000135041 0.027799136 2,030.94 2,177.97 0.92 7.24% 1,066.05
02/28/98 2.103872 1,030.712 2,168.49 0.0000121973 0.024771954 2,167.25 2,177.97 0.84 0.49% 1,004.15
03/31/98 2.203741 1,030.712 2,271.42 0.0000135041 0.029266746 2,270.10 2,177.97 0.75 -4.06% 969.27
04/30/98 2.218059 1,030.712 2,286.18 0.0000130685 0.029666728 2,284.81 2,177.97 0.67 -4.68% 968.36
05/31/98 2.177485 1,030.712 2,244.36 0.0000135041 0.030854392 2,242.99 2,177.97 0.59 -2.90% 982.90
06/30/98 2.201901 1,030.712 2,269.53 0.0000130685 0.029312486 2,268.11 2,177.97 0.50 -3.97% 979.76
07/31/98 2.119293 1,030.712 2,184.38 0.0000135041 0.030628808 2,182.99 2,177.97 0.42 -0.23% 999.04
08/31/98 1.796619 1,030.712 1,851.80 0.0000135041 0.029479303 1,850.59 2,177.97 0.33 17.69% 1,055.96
09/30/98 1.848085 1,030.712 1,904.84 0.0000130685 0.024184374 1,903.57 2,177.97 0.25 14.41% 1,034.52
10/31/98 2.034378 1,030.712 2,096.86 0.0000135041 0.025706072 2,095.43 2,177.97 0.17 3.94% 1,006.48
11/30/98 2.108716 1,030.712 2,173.48 0.0000130685 0.027384175 2,171.98 2,177.97 0.08 0.28% 1,000.23
12/31/98 2.114561 1,030.712 2,179.50 0.0000135041 0.029330608 2,177.97 2,177.97 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE EQUITY SUBACCOUNT
PERFORMANCE RETURNS
Initial investment $1,000
AUV 0.999050
-------------
Units purchased 1,000.951
Additional M&E from 1.40% model 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE SMALL CAP SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999962
-------------
Units purchased 1,000.038
Additional M&E above 1.40% 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 75.96%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/04/93 0.999962 1,000.038 1,000.00 1,000.00 1,759.65 5.66 10.49% 1,759.65
05/31/93 0.999050 1,000.038 999.09 0.0001966932 0.196693151 998.89 1,759.65 5.59 10.66% 1,761.60
06/30/93 1.000790 1,000.038 1,000.83 0.0002185479 0.218305635 1,000.41 1,759.65 5.51 10.80% 1,758.92
08/31/93 1.034532 1,000.038 1,034.57 0.0002258329 0.225926076 1,033.92 1,759.65 5.42 10.30% 1,701.92
08/31/93 1.065127 1,000.038 1,065.17 0.0002258329 0.233492234 1,064.26 1,759.65 5.34 9.88% 1,653.40
09/30/93 1.093740 1,000.038 1,093.78 0.0002185479 0.232591691 1,092.62 1,759.65 5.25 9.49% 1,610.49
10/31/93 1.091540 1,000.038 1,091.58 0.0002258329 0.246748713 1,090.17 1,759.65 5.17 9.70% 1,614.10
11/30/93 1.064416 1,000.038 1,064.46 0.0002185479 0.238254839 1,062.84 1,759.65 5.09 10.42% 1,655.60
12/31/93 1.107447 1,000.038 1,107.49 0.0002258329 0.240025047 1,105.57 1,759.65 5.00 9.74% 1,591.62
01/31/94 1.134150 1,000.038 1,134.19 0.0002258329 0.249674301 1,131.98 1,759.65 4.92 9.39% 1,554.49
02/28/94 1.129975 1,000.038 1,130.02 0.0002039781 0.230898944 1,127.58 1,759.65 4.84 9.63% 1,560.55
03/31/94 1.063464 1,000.038 1,063.50 0.0002258329 0.254644925 1,060.96 1,759.65 4.76 11.22% 1,658.55
04/30/94 1.062289 1,000.038 1,062.33 0.0002185479 0.23186987 1,059.55 1,759.65 4.67 11.46% 1,660.75
05/31/94 1.047201 1,000.038 1,047.24 0.0002258329 0.239281774 1,044.26 1,759.65 4.59 12.04% 1,685.06
06/30/94 1.021404 1,000.038 1,021.44 0.0002185479 0.228221756 1,018.31 1,759.65 4.51 12.90% 1,728.01
07/05/94 1.022193 1,000.038 1,022.23 0.0000364247 0.037091635 1,019.06 1,759.65 4.49 12.93% 1,726.73
07/05/94 0.958389 1,063.306 1,019.06 0.0000000000 0 1,019.06 1,759.65 4.49 12.93% 1,726.73
<CAPTION>
Account value 1,019.06
Inception AUV 0.958389
------------
Units 1063.306
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/94 0.975788 1,063.306 1,037.56 0.0000113260 0.01153342 1,037.55 1,759.65 4.42 12.69% 1,695.96
08/31/94 1.015748 1,063.306 1,080.05 0.0000135041 0.014011185 1,080.02 1,759.65 4.34 11.91% 1,629.27
09/30/94 1.022652 1,063.306 1,087.39 0.0000130685 0.014114298 1,087.35 1,759.65 4.25 11.98% 1,618.29
10/31/94 0.993705 1,063.306 1,056.61 0.0000135041 0.014683717 1,056.56 1,759.65 4.17 13.01% 1,665.45
11/30/94 0.979542 1,063.306 1,041.55 0.0000130685 0.013807629 1,041.49 1,759.65 4.09 13.69% 1,689.55
12/31/94 1.004766 1,063.306 1,068.37 0.0000135041 0.014064341 1,068.29 1,759.65 4.00 13.28% 1,647.16
01/31/95 0.970425 1,063.306 1,031.86 0.0000135041 0.014426319 1,031.76 1,759.65 3.92 14.60% 1,705.47
02/28/95 0.981984 1,063.306 1,044.15 0.0000121973 0.012584699 1,044.04 1,759.65 3.84 14.56% 1,685.42
03/31/95 0.978971 1,063.306 1,040.95 0.0000135041 0.014098851 1,040.82 1,759.65 3.76 15.00% 1,690.63
04/30/95 0.988491 1,063.306 1,051.07 0.0000130685 0.013602001 1,050.93 1,759.65 3.67 15.06% 1,674.37
05/31/95 1.031973 1,063.306 1,097.30 0.0000135041 0.014191899 1,097.15 1,759.65 3.59 14.07% 1,603.84
06/30/95 1.057563 1,063.306 1,124.51 0.0000130685 0.014338049 1,124.34 1,759.65 3.51 13.62% 1,565.05
07/31/95 1.091393 1,063.306 1,160.48 0.0000135041 0.015183185 1,160.29 1,759.65 3.42 12.94% 1,516.56
08/31/95 1.110334 1,063.306 1,180.62 0.0000135041 0.01566867 1,180.41 1,759.65 3.34 12.71% 1,490.71
09/30/95 1.119032 1,063.306 1,189.87 0.0000130685 0.01542618 1,189.64 1,759.65 3.25 12.78% 1,479.14
10/31/95 1.083200 1,063.306 1,151.77 0.0000135041 0.016065049 1,151.53 1,759.65 3.17 14.31% 1,528.09
11/30/95 1.095599 1,063.306 1,164.96 0.0000130685 0.015048795 1,164.70 1,759.65 3.09 14.30% 1,510.82
12/31/95 1.127390 1,063.306 1,198.76 0.0000135041 0.015728218 1,198.48 1,759.65 3.00 13.64% 1,468.23
01/31/96 1.110062 1,063.306 1,180.34 0.0000135041 0.016184391 1,180.04 1,759.65 2.92 14.68% 1,491.17
02/29/96 1.133462 1,063.306 1,205.22 0.0000126329 0.014907327 1,204.90 1,759.65 2.84 14.27% 1,460.41
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE SMALL CAP SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999962
-------------
Units purchased 1,000.038
Additional M&E above 1.40% 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/31/96 1.166908 1,063.306 1,240.78 0.0000135041 0.016271134 1,240.44 1,759.65 2.75 13.54% 1,418.57
04/30/96 1.210194 1,063.306 1,286.81 0.0000130685 0.016210684 1,286.44 1,759.65 2.67 12.44% 1,367.84
05/31/96 1.259131 1,063.306 1,338.84 0.0000135041 0.017372195 1,338.44 1,759.65 2.59 11.16% 1,314.70
06/30/96 1.216427 1,063.306 1,293.43 0.0000130685 0.017491398 1,293.03 1,759.65 2.50 13.09% 1,360.87
07/31/96 1.170700 1,063.306 1,244.81 0.0000135041 0.017461206 1,244.41 1,759.65 2.42 15.40% 1,414.05
08/31/96 1.220623 1,063.306 1,297.90 0.0000135041 0.016804582 1,297.45 1,759.65 2.33 13.94% 1,356.23
09/30/96 1.246547 1,063.306 1,325.46 0.0000130685 0.016955772 1,324.99 1,759.65 2.25 13.43% 1,328.04
10/31/96 1.257177 1,063.306 1,336.76 0.0000135041 0.017892852 1,336.27 1,759.65 2.17 13.54% 1,316.83
11/30/96 1.371418 1,063.306 1,458.24 0.0000130685 0.017463089 1,457.69 1,759.65 2.08 9.45% 1,207.15
12/31/96 1.394113 1,063.306 1,482.37 0.0000135041 0.019684742 1,481.79 1,759.65 2.00 8.97% 1,187.52
01/31/97 1.459421 1,063.306 1,551.81 0.0000135041 0.020010231 1,551.18 1,759.65 1.92 6.81% 1,134.39
02/28/97 1.458537 1,063.306 1,550.87 0.0000121973 0.018920188 1,550.22 1,759.65 1.84 7.14% 1,135.09
03/31/97 1.414948 1,063.306 1,504.52 0.0000135041 0.020934407 1,503.87 1,759.65 1.75 9.37% 1,170.08
04/30/97 1.414933 1,063.306 1,504.51 0.0000130685 0.019653378 1,503.84 1,759.65 1.67 9.86% 1,170.10
05/31/97 1.545868 1,063.306 1,643.73 0.0000135041 0.02030801 1,642.98 1,759.65 1.59 4.42% 1,071.01
06/30/97 1.635700 1,063.306 1,739.25 0.0000130685 0.021471288 1,738.44 1,759.65 1.50 0.81% 1,012.20
07/31/97 1.722126 1,063.306 1,831.15 0.0000135041 0.023476017 1,830.27 1,759.65 1.42 -2.73% 961.42
08/31/97 1.762073 1,063.306 1,873.62 0.0000135041 0.02471611 1,872.70 1,759.65 1.33 -4.56% 939.63
09/30/97 1.831159 1,063.306 1,947.08 0.0000130685 0.024473322 1,946.10 1,759.65 1.25 -7.73% 904.19
10/31/97 1.742377 1,063.306 1,852.68 0.0000135041 0.026280284 1,851.71 1,759.65 1.17 -4.28% 950.28
11/30/97 1.734940 1,063.306 1,844.77 0.0000130685 0.024199117 1,843.79 1,759.65 1.08 -4.21% 954.37
12/31/97 1.720848 1,063.306 1,829.79 0.0000135041 0.024898696 1,828.79 1,759.65 1.00 -3.78% 962.19
01/31/98 1.693401 1,063.306 1,800.60 0.0000135041 0.02469612 1,799.59 1,759.65 0.92 -2.22% 979.67
02/28/98 1.823074 1,063.306 1,938.49 0.0000121973 0.021950095 1,937.37 1,759.65 0.84 -9.17% 922.50
03/31/98 1.910285 1,063.306 2,031.22 0.0000135041 0.026162524 2,030.03 1,759.65 0.75 -13.32% 897.90
04/30/98 1.919184 1,063.306 2,040.68 0.0000130685 0.026529403 2,039.46 1,759.65 0.67 -13.72% 905.69
05/31/98 1.843661 1,063.306 1,960.38 0.0000135041 0.027541064 1,959.17 1,759.65 0.59 -10.18% 938.97
06/30/98 1.805584 1,063.306 1,919.89 0.0000130685 0.025603458 1,918.69 1,759.65 0.50 -8.29% 957.32
07/31/98 1.648587 1,063.306 1,752.95 0.0000135041 0.025910148 1,751.83 1,759.65 0.42 0.45% 1,001.87
08/31/98 1.272966 1,063.306 1,353.55 0.0000135041 0.02365689 1,352.66 1,759.65 0.33 30.09% 1,091.90
09/30/98 1.299486 1,063.306 1,381.75 0.0000130685 0.017677243 1,380.82 1,759.65 0.25 27.43% 1,063.01
10/31/98 1.437508 1,063.306 1,528.51 0.0000135041 0.018646796 1,527.47 1,759.65 0.17 15.20% 1,023.93
11/30/98 1.572740 1,063.306 1,672.30 0.0000130685 0.019961683 1,671.14 1,759.65 0.08 5.30% 1,004.39
12/31/98 1.656056 1,063.306 1,760.89 0.0000135041 0.022567272 1,759.65 1,759.65 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE SMALL CAP SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999962
-------------
Units purchased 1,000.038
Additional M&E above 1.40% 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - DREYFUS US GOVERNMENT SECURITIES SUBACCOUNT
Performance Calculations
Initial investment $1,000
AUV 0.998670
-------------
Units purchased 1001.332
Additional M&E above 140% model 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 27.29%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/09/94 0.99867 1,001.332 1,000.00 1,000.00 1,272.90 4.65 5.33% 1,272.90
05/31/94 0.997834 1,001.332 999.16 0.0001602685 0.160268493 999.00 1,272.90 4.59 5.42% 1,274.17
06/30/94 0.991708 1,001.332 993.03 0.0002185479 0.218329969 992.65 1,272.90 4.51 5.67% 1,282.32
07/31/94 1.000569 1,001.332 1,001.90 0.0002258329 0.224173257 1,001.30 1,272.90 4.42 5.58% 1,271.25
08/03/94 1.000378 1,001.332 1,001.71 0.0000218548 0.021883126 1,001.08 1,272.90 4.41 5.59% 1,271.52
08/03/94 1.000769 1,000.311 1,001.08 0.0000000000 0 1,001.08 1,272.90 4.41 5.59% 1,271.53
<CAPTION>
Account value 1,001.080
Inception AUV 1.000769
------------
Units 1,000.311
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/94 0.999558 1,000.311 999.87 0.0000121973 0.012213072 999.86 1,272.90 4.34 5.72% 1,273.08
09/30/94 0.990269 1,000.311 990.58 0.0000130685 0.01306662 990.55 1,272.90 4.25 6.07% 1,285.04
10/31/94 0.987905 1,000.311 988.21 0.0000135041 0.01337652 988.17 1,272.90 4.17 6.26% 1,288.13
11/30/94 0.983608 1,000.311 983.91 0.0000130685 0.012913942 983.86 1,272.90 4.09 6.50% 1,293.78
12/31/94 0.985254 1,000.311 985.56 0.0000135041 0.013286189 985.50 1,272.90 4.00 6.60% 1,291.63
01/31/95 0.998661 1,000.311 998.97 0.0000135041 0.013308243 998.89 1,272.90 3.92 6.38% 1,274.31
02/28/95 1.015168 1,000.311 1,015.48 0.0000121973 0.012183755 1,015.39 1,272.90 3.84 6.06% 1,253.61
03/31/95 1.024778 1,000.311 1,025.10 0.0000135041 0.013711957 1,024.99 1,272.90 3.76 5.94% 1,241.87
04/30/95 1.017405 1,000.311 1,017.72 0.0000130685 0.013395073 1,017.60 1,272.90 3.67 6.28% 1,250.88
05/31/95 1.066049 1,000.311 1,066.38 0.0000135041 0.013741808 1,066.24 1,272.90 3.59 5.06% 1,193.82
06/30/95 1.070568 1,000.311 1,070.90 0.0000130685 0.013934171 1,070.75 1,272.90 3.51 5.06% 1,188.80
07/31/95 1.065120 1,000.311 1,065.45 0.0000135041 0.014459491 1,065.28 1,272.90 3.42 5.34% 1,194.89
08/31/95 1.072596 1,000.311 1,072.93 0.0000135041 0.014385713 1,072.75 1,272.90 3.34 5.26% 1,186.58
09/30/95 1.082027 1,000.311 1,082.36 0.0000130685 0.014019185 1,082.17 1,272.90 3.25 5.11% 1,176.25
10/31/95 1.093303 1,000.311 1,093.64 0.0000135041 0.014613677 1,093.43 1,272.90 3.17 4.91% 1,164.14
11/30/95 1.107600 1,000.311 1,107.94 0.0000130685 0.014289456 1,107.71 1,272.90 3.09 4.60% 1,149.13
12/31/95 1.120922 1,000.311 1,121.27 0.0000135041 0.014958669 1,121.02 1,272.90 3.00 4.32% 1,135.48
01/31/96 1.125164 1,000.311 1,125.51 0.0000135041 0.015138387 1,125.25 1,272.90 2.92 4.32% 1,131.22
02/29/96 1.099164 1,000.311 1,099.51 0.0000126329 0.014215119 1,099.23 1,272.90 2.84 5.30% 1,157.99
03/31/96 1.086952 1,000.311 1,087.29 0.0000135041 0.014844147 1,087.00 1,272.90 2.75 5.90% 1,171.02
04/30/96 1.077560 1,000.311 1,077.90 0.0000130685 0.014205507 1,077.60 1,272.90 2.67 6.43% 1,181.24
05/31/96 1.073859 1,000.311 1,074.19 0.0000135041 0.014551996 1,073.88 1,272.90 2.59 6.79% 1,185.33
06/30/96 1.083599 1,000.311 1,083.94 0.0000130685 0.014034018 1,083.61 1,272.90 2.50 6.64% 1,174.69
07/31/96 1.084008 1,000.311 1,084.35 0.0000135041 0.014633162 1,084.00 1,272.90 2.42 6.87% 1,174.26
08/31/96 1.080540 1,000.311 1,080.88 0.0000135041 0.014638488 1,080.52 1,272.90 2.33 7.27% 1,178.04
09/30/96 1.097107 1,000.311 1,097.45 0.0000130685 0.014120766 1,097.07 1,272.90 2.25 6.82% 1,160.27
10/31/96 1.118639 1,000.311 1,118.99 0.0000135041 0.014814986 1,118.59 1,272.90 2.17 6.14% 1,137.95
11/30/96 1.136207 1,000.311 1,136.56 0.0000130685 0.014618271 1,136.14 1,272.90 2.08 5.60% 1,120.37
12/31/96 1.122583 1,000.311 1,122.93 0.0000135041 0.015342579 1,122.50 1,272.90 2.00 6.49% 1,133.98
01/31/97 1.123020 1,000.311 1,123.37 0.0000135041 0.015158403 1,122.92 1,272.90 1.92 6.77% 1,133.56
02/28/97 1.125599 1,000.311 1,125.95 0.0000121973 0.013696605 1,125.49 1,272.90 1.84 6.92% 1,130.97
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - DREYFUS US GOVERNMENT SECURITIES SUBACCOUNT
Performance Calculations
Initial investment $1,000
AUV 0.998670
-------------
Units purchased 1001.332
Additional M&E above 140% model 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/31/97 1.111095 1,000.311 1,111.44 0.0000135041 0.015198738 1,110.97 1,272.90 1.75 8.07% 1,145.75
04/30/97 1.124518 1,000.311 1,124.87 0.0000130685 0.01451873 1,124.38 1,272.90 1.67 7.71% 1,132.09
05/31/97 1.132937 1,000.311 1,133.29 0.0000135041 0.015183738 1,132.78 1,272.90 1.59 7.63% 1,123.69
06/30/97 1.144741 1,000.311 1,145.10 0.0000130685 0.014803751 1,144.57 1,272.90 1.50 7.32% 1,112.12
07/31/97 1.172805 1,000.311 1,173.17 0.0000135041 0.01545639 1,172.61 1,272.90 1.42 5.95% 1,085.52
08/31/97 1.159025 1,000.311 1,159.39 0.0000135041 0.015835104 1,158.82 1,272.90 1.33 7.29% 1,098.44
09/30/97 1.175718 1,000.311 1,176.08 0.0000130685 0.015144033 1,175.50 1,272.90 1.25 6.56% 1,082.86
10/31/97 1.191399 1,000.311 1,191.77 0.0000135041 0.015874014 1,191.16 1,272.90 1.17 5.85% 1,068.62
11/30/97 1.194990 1,000.311 1,195.36 0.0000130685 0.01556663 1,194.73 1,272.90 1.08 6.02% 1,065.43
12/31/97 1.205408 1,000.311 1,205.78 0.0000135041 0.01613379 1,205.13 1,272.90 1.00 5.62% 1,056.23
01/31/98 1.220015 1,000.311 1,220.39 0.0000135041 0.016274228 1,219.72 1,272.90 0.92 4.36% 1,039.83
02/28/98 1.214432 1,000.311 1,214.81 0.0000121973 0.014877229 1,214.12 1,272.90 0.84 4.84% 1,040.43
03/31/98 1.215724 1,000.311 1,216.10 0.0000135041 0.016395641 1,215.40 1,272.90 0.75 4.73% 1,035.44
04/30/98 1.217118 1,000.311 1,217.50 0.0000130685 0.015883416 1,216.78 1,272.90 0.67 4.61% 1,030.73
05/31/98 1.230468 1,000.311 1,230.85 0.0000135041 0.016431468 1,230.11 1,272.90 0.59 3.48% 1,020.25
06/30/98 1.241209 1,000.311 1,241.60 0.0000130685 0.016075621 1,240.83 1,272.90 0.50 2.58% 1,012.95
07/31/98 1.240523 1,000.311 1,240.91 0.0000135041 0.016756263 1,240.12 1,272.90 0.42 2.64% 1,010.99
08/31/98 1.254391 1,000.311 1,254.78 0.0000135041 0.016746776 1,253.97 1,272.90 0.33 1.51% 1,005.02
09/30/98 1.278654 1,000.311 1,279.05 0.0000130685 0.016387514 1,278.21 1,272.90 0.25 -0.42% 998.95
10/31/98 1.271752 1,000.311 1,272.15 0.0000135041 0.017261084 1,271.29 1,272.90 0.17 0.13% 1,000.21
11/30/98 1.271020 1,000.311 1,271.42 0.0000130685 0.016613882 1,270.54 1,272.90 0.08 0.19% 1,000.16
12/31/98 1.273389 1,000.311 1,273.79 0.0000135041 0.017157572 1,272.90 1,272.90 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - DREYFUS US GOVERNMENT SECURITIES SUBACCOUNT
Performance Calculations
Initial investment $1,000
AUV 0.998670
-------------
Units purchased 1001.332
Additional M&E above 140% model 0.0025
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T ROWE PRICE EQUITY INCOME
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999924
------------
Units purchased 1,000.076
Additional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 104.41%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/01/95 1.000000 1000.076006 1,000.08 1,000.08 2,044.30 4.00 19.57% 2,044.14
01/20/95 0.999237 1000.076006 999.31 0.0000082767 0 999.31 2,044.30 3.95 19.88% 2,045.71
01/31/95 0.999742 1000.076006 999.82 0.0000047918 0.004792145 999.81 2,044.30 3.92 20.03% 2,044.68
02/28/95 1.038389 1000.076006 1,038.47 0.0000121973 0.012194982 1,038.45 2,044.30 3.84 19.28% 1,968.61
03/31/95 1.056065 1000.076006 1,056.15 0.0000135041 0.014023353 1,056.11 2,044.30 3.76 19.22% 1,935.68
04/30/95 1.074451 1000.076006 1,074.53 0.0000130685 0.013801816 1,074.49 2,044.30 3.67 19.13% 1,902.58
05/31/95 1.107634 1000.076006 1,107.72 0.0000135041 0.014509988 1,107.66 2,044.30 3.59 18.62% 1,845.61
06/30/95 1.114081 1000.076006 1,114.17 0.0000130685 0.0144754 1,114.09 2,044.30 3.51 18.90% 1,834.95
07/31/95 1.134329 1000.076006 1,134.42 0.0000135041 0.015044781 1,134.32 2,044.30 3.42 18.78% 1,802.22
08/31/95 1.148635 1000.076006 1,148.72 0.0000135041 0.015318011 1,148.61 2,044.30 3.34 18.86% 1,779.80
09/30/95 1.191553 1000.076006 1,191.64 0.0000130685 0.015010638 1,191.51 2,044.30 3.25 18.04% 1,715.72
10/31/95 1.199711 1000.076006 1,199.80 0.0000135041 0.016090348 1,199.66 2,044.30 3.17 18.31% 1,704.07
11/30/95 1.245395 1000.076006 1,245.49 0.0000130685 0.015677704 1,245.32 2,044.30 3.09 17.41% 1,641.58
12/31/95 1.284124 1000.076006 1,284.22 0.0000135041 0.016816976 1,284.03 2,044.30 3.00 16.75% 1,592.09
01/31/96 1.319568 1000.076006 1,319.67 0.0000135041 0.017339719 1,319.46 2,044.30 2.92 16.19% 1,549.35
02/29/96 1.321775 1000.076006 1,321.88 0.0000126329 0.016668537 1,321.65 2,044.30 2.84 16.61% 1,546.78
03/31/96 1.338681 1000.076006 1,338.78 0.0000135041 0.017847667 1,338.53 2,044.30 2.75 16.63% 1,527.27
04/30/96 1.345568 1000.076006 1,345.67 0.0000130685 0.017492617 1,345.40 2,044.30 2.67 16.95% 1,519.47
05/31/96 1.365973 1000.076006 1,366.08 0.0000135041 0.01816846 1,365.79 2,044.30 2.59 16.88% 1,496.79
06/30/96 1.37313 1000.076006 1,373.23 0.0000130685 0.017848773 1,372.92 2,044.30 2.50 17.23% 1,489.01
07/31/96 1.332707 1000.076006 1,332.81 0.0000135041 0.018540127 1,332.49 2,044.30 2.42 19.35% 1,534.20
08/31/96 1.360406 1000.076006 1,360.51 0.0000135041 0.017994082 1,360.17 2,044.30 2.33 19.07% 1,502.98
09/30/96 1.414470 1000.076006 1,414.58 0.0000130685 0.017775317 1,414.20 2,044.30 2.25 17.78% 1,445.55
10/31/96 1.444852 1000.076006 1,444.96 0.0000135041 0.019097545 1,444.56 2,044.30 2.17 17.38% 1,415.17
11/30/96 1.525213 1000.076006 1,525.33 0.0000130685 0.018878218 1,524.89 2,044.30 2.08 15.10% 1,340.63
12/31/96 1.514228 1000.076006 1,514.34 0.0000135041 0.020592221 1,513.88 2,044.30 2.00 16.21% 1,350.37
01/31/97 1.552148 1000.076006 1,552.27 0.0000135041 0.020443632 1,551.77 2,044.30 1.92 15.48% 1,317.40
02/28/97 1.587255 1000.076006 1,587.38 0.0000121973 0.018927381 1,586.85 2,044.30 1.84 14.77% 1,288.27
03/31/97 1.551945 1000.076006 1,552.06 0.0000135041 0.021429034 1,551.53 2,044.30 1.75 17.03% 1,317.60
04/30/97 1.586811 1000.076006 1,586.93 0.0000130685 0.020276163 1,586.37 2,044.30 1.67 16.39% 1,288.67
05/31/97 1.659454 1000.076006 1,659.58 0.0000135041 0.02142247 1,658.97 2,044.30 1.59 14.07% 1,232.27
06/30/97 1.719479 1000.076006 1,719.61 0.0000130685 0.021680211 1,718.95 2,044.30 1.50 12.21% 1,189.27
07/31/97 1.815583 1000.076006 1,815.72 0.0000135041 0.023212939 1,815.01 2,044.30 1.42 8.74% 1,126.33
08/31/97 1.765535 1000.076006 1,765.67 0.0000135041 0.024510028 1,764.95 2,044.30 1.33 11.64% 1,158.28
09/30/97 1.845359 1000.076006 1,845.50 0.0000130685 0.023065217 1,844.72 2,044.30 1.25 8.55% 1,108.19
10/31/97 1.794241 1000.076006 1,794.38 0.0000135041 0.02491134 1,793.60 2,044.30 1.17 11.86% 1,139.78
11/30/97 1.858293 1000.076006 1,858.43 0.0000130685 0.023439618 1,857.60 2,044.30 1.08 9.23% 1,100.50
12/31/97 1.910886 1000.076006 1,911.03 0.0000135041 0.025085277 1,910.15 2,044.30 1.00 7.02% 1,070.23
01/31/98 1.892533 1000.076006 1,892.68 0.0000135041 0.025794897 1,891.78 2,044.30 0.92 8.06% 1,073.53
02/28/98 1.983788 1000.076006 1,983.94 0.0000121973 0.023074532 1,982.98 2,044.30 0.84 3.09% 1,025.86
03/31/98 2.073451 1000.076006 2,073.61 0.0000135041 0.026778318 2,072.57 2,044.30 0.75 -1.36% 989.70
04/30/98 2.053952 1000.076006 2,054.11 0.0000130685 0.027085432 2,053.06 2,044.30 0.67 -0.43% 997.13
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T ROWE PRICE EQUITY INCOME
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999924
------------
Units purchased 1,000.076
Additional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/31/98 2.017908 1000.076006 2,018.06 0.0000135041 0.027724709 2,017.00 2,044.30 0.59 1.35% 1,007.91
06/30/98 2.008837 1000.076006 2,008.99 0.0000130685 0.026359165 2,007.91 2,044.30 0.50 1.81% 1,009.10
07/31/98 1.948493 1000.076006 1,948.64 0.0000135041 0.027115007 1,947.56 2,044.30 0.42 4.97% 1,020.53
08/31/98 1.758994 1000.076006 1,759.13 0.0000135041 0.026300126 1,758.13 2,044.30 0.33 16.28% 1,051.70
09/30/98 1.849904 1000.076006 1,850.04 0.0000130685 0.022976105 1,848.97 2,044.30 0.25 10.56% 1,025.64
10/31/98 1.958986 1000.076006 1,959.13 0.0000135041 0.02496872 1,957.97 2,044.30 0.17 4.41% 1,007.24
11/30/98 2.03497 1000.076006 2,035.12 0.0000130685 0.02558777 2,033.89 2,044.30 0.08 0.51% 1,000.43
12/31/98 2.04541 1000.076006 2,045.57 0.0000135041 0.027465917 2,044.30 2,044.30 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T ROWE PRICE EQUITY INCOME
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999924
------------
Units purchased 1,000.076
Additional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T ROWE PRICE GROWTH STOCK
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Addtional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 156.61%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/01/95 1.000000 1000 1,000.00 1,000.00 2,566.13 4.00 26.57% 2,566.13
01/05/95 0.99991 1000 999.91 0.0000017425 0.001742466 999.91 2,566.13 3.99 26.65% 2,566.37
01/31/95 0.999741 1000 999.74 0.0000113260 0.011324988 999.73 2,566.13 3.92 27.20% 2,566.82
02/28/95 1.065317 1000 1,065.32 0.0000121973 0.012193963 1,065.29 2,566.13 3.84 25.72% 2,408.85
03/31/95 1.138756 1000 1,138.76 0.0000135041 0.01438583 1,138.72 2,566.13 3.76 24.15% 2,253.53
04/30/95 1.145083 1000 1,145.08 0.0000130685 0.014881298 1,145.03 2,566.13 3.67 24.56% 2,241.11
05/31/95 1.168224 1000 1,168.22 0.0000135041 0.015462578 1,168.15 2,566.13 3.59 24.52% 2,196.74
06/30/95 1.211298 1000 1,211.30 0.0000130685 0.015265986 1,211.21 2,566.13 3.51 23.87% 2,118.65
07/31/95 1.251227 1000 1,251.23 0.0000135041 0.016356287 1,251.12 2,566.13 3.42 23.36% 2,051.07
08/31/95 1.252515 1000 1,252.52 0.0000135041 0.016895231 1,252.39 2,566.13 3.34 23.98% 2,048.99
09/30/95 1.292330 1000 1,292.33 0.0000130685 0.016366834 1,292.18 2,566.13 3.25 23.46% 1,985.89
10/31/95 1.287516 1000 1,287.52 0.0000135041 0.017449786 1,287.35 2,566.13 3.17 24.31% 1,993.34
11/30/95 1.326183 1000 1,326.18 0.0000130685 0.016823757 1,326.00 2,566.13 3.09 23.84% 1,935.25
12/31/95 1.350045 1000 1,350.05 0.0000135041 0.017906419 1,349.84 2,566.13 3.00 23.86% 1,901.06
01/31/96 1.383423 1000 1,383.42 0.0000135041 0.018228367 1,383.19 2,566.13 2.92 23.59% 1,855.22
02/29/96 1.399286 1000 1,399.29 0.0000126329 0.017473709 1,399.04 2,566.13 2.84 23.83% 1,834.21
03/31/96 1.402368 1000 1,402.37 0.0000135041 0.018892736 1,402.10 2,566.13 2.75 24.55% 1,830.21
04/30/96 1.438524 1000 1,438.52 0.0000130685 0.018323316 1,438.23 2,566.13 2.67 24.20% 1,784.23
05/31/96 1.452177 1000 1,452.18 0.0000135041 0.019422006 1,451.86 2,566.13 2.59 24.64% 1,767.48
06/30/96 1.445391 1000 1,445.39 0.0000130685 0.018973624 1,445.06 2,566.13 2.50 25.77% 1,775.80
07/31/96 1.378813 1000 1,378.81 0.0000135041 0.019514203 1,378.47 2,566.13 2.42 29.29% 1,861.57
08/31/96 1.431404 1000 1,431.40 0.0000135041 0.018615071 1,431.03 2,566.13 2.33 28.43% 1,793.20
09/30/96 1.506528 1000 1,506.53 0.0000130685 0.018701458 1,506.12 2,566.13 2.25 26.69% 1,703.80
10/31/96 1.518257 1000 1,518.26 0.0000135041 0.020338808 1,517.83 2,566.13 2.17 27.42% 1,690.66
11/30/96 1.614879 1000 1,614.88 0.0000130685 0.01983569 1,614.40 2,566.13 2.08 24.89% 1,589.53
12/31/96 1.603700 1000 1,603.70 0.0000135041 0.021801035 1,603.20 2,566.13 2.00 26.52% 1,600.63
01/31/97 1.658494 1000 1,658.49 0.0000135041 0.021649823 1,657.96 2,566.13 1.92 25.62% 1,547.77
02/28/97 1.660340 1000 1,660.34 0.0000121973 0.020222544 1,659.78 2,566.13 1.84 26.75% 1,546.06
03/31/97 1.594298 1000 1,594.30 0.0000135041 0.022413893 1,593.74 2,566.13 1.75 31.21% 1,610.13
04/30/97 1.657766 1000 1,657.77 0.0000130685 0.020827791 1,657.17 2,566.13 1.67 29.91% 1,548.51
05/31/97 1.773870 1000 1,773.87 0.0000135041 0.022378549 1,773.21 2,566.13 1.59 26.24% 1,447.17
06/30/97 1.858236 1000 1,858.24 0.0000130685 0.023173123 1,857.52 2,566.13 1.50 23.97% 1,381.48
07/31/97 1.979499 1000 1,979.50 0.0000135041 0.025084108 1,978.71 2,566.13 1.42 20.10% 1,296.87
08/31/97 1.875820 1000 1,875.82 0.0000135041 0.026720684 1,875.04 2,566.13 1.33 26.51% 1,368.57
09/30/97 1.977041 1000 1,977.04 0.0000130685 0.024503991 1,976.20 2,566.13 1.25 23.20% 1,298.52
10/31/97 1.919472 1000 1,919.47 0.0000135041 0.026686793 1,918.63 2,566.13 1.17 28.29% 1,337.48
11/30/97 1.985504 1000 1,985.50 0.0000130685 0.025073561 1,984.60 2,566.13 1.08 26.73% 1,293.02
12/31/97 2.028458 1000 2,028.46 0.0000135041 0.026800318 2,027.51 2,566.13 1.00 26.57% 1,265.65
01/31/98 2.063756 1000 2,063.76 0.0000135041 0.027379749 2,062.77 2,566.13 0.92 24.40% 1,221.17
02/28/98 2.229618 1000 2,229.62 0.0000121973 0.0251601 2,228.52 2,566.13 0.84 15.15% 1,125.53
03/31/98 2.337261 1000 2,337.26 0.0000135041 0.03009423 2,336.08 2,566.13 0.75 9.85% 1,073.33
04/30/98 2.347709 1000 2,347.71 0.0000130685 0.030529097 2,346.50 2,566.13 0.67 9.36% 1,061.90
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T ROWE PRICE GROWTH STOCK
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Addtional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/31/98 2.284821 1000 2,284.82 0.0000135041 0.031687341 2,283.61 2,566.13 0.59 12.37% 1,070.78
06/30/98 2.361301 1000 2,361.30 0.0000130685 0.029843328 2,360.02 2,566.13 0.50 8.73% 1,043.11
07/31/98 2.339875 1000 2,339.88 0.0000135041 0.031869949 2,338.57 2,566.13 0.42 9.73% 1,039.69
08/31/98 1.978201 1000 1,978.20 0.0000135041 0.031580336 1,977.07 2,566.13 0.33 29.79% 1,091.08
09/30/98 2.089845 1000 2,089.85 0.0000130685 0.0258373 2,088.62 2,566.13 0.25 22.86% 1,053.27
10/31/98 2.261048 1000 2,261.05 0.0000135041 0.028204984 2,259.70 2,566.13 0.17 13.56% 1,021.48
11/30/98 2.395520 1000 2,395.52 0.0000130685 0.029530834 2,394.06 2,566.13 0.08 7.19% 1,005.91
12/31/98 2.567729 1000 2,567.73 0.0000135041 0.032329636 2,566.13 2,566.13 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T ROWE PRICE GROWTH STOCK
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Addtional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - OPPORTUNITY VALUE PORTFOLIO
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Addtional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 19.35%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
11/18/96 1.000000 1000 1,000.00 1,000.00 1,193.47 2.12 8.71% 1,193.47
11/20/96 0.999910 1000 999.91 0.0000008712 0 999.91 1,193.47 2.11 8.74% 1,193.58
11/30/96 0.999506 1000 999.51 0.0000043562 0.004356164 999.50 1,193.47 2.08 8.88% 1,194.06
12/31/96 1.004062 1000 1,004.06 0.0000135041 0.01349738 1,004.04 1,193.47 2.00 9.03% 1,188.66
01/31/97 1.025593 1000 1,025.59 0.0000135041 0.013558722 1,025.56 1,193.47 1.92 8.24% 1,163.72
02/28/97 1.012361 1000 1,012.36 0.0000121973 0.012509037 1,012.32 1,193.47 1.84 9.37% 1,178.95
03/31/97 0.996046 1000 996.05 0.0000135041 0.013670441 995.99 1,193.47 1.75 10.87% 1,198.27
04/30/97 1.021512 1000 1,021.51 0.0000130685 0.013016077 1,021.44 1,193.47 1.67 9.76% 1,168.42
05/31/97 1.053848 1000 1,053.85 0.0000135041 0.013793647 1,053.76 1,193.47 1.59 8.16% 1,132.58
06/30/97 1.091099 1000 1,091.10 0.0000130685 0.013771063 1,090.99 1,193.47 1.50 6.15% 1,093.93
07/31/97 1.151874 1000 1,151.87 0.0000135041 0.014732913 1,151.75 1,193.47 1.42 2.54% 1,036.22
08/31/97 1.112856 1000 1,112.86 0.0000135041 0.015553347 1,112.72 1,193.47 1.33 5.39% 1,072.57
09/30/97 1.148733 1000 1,148.73 0.0000130685 0.014541572 1,148.58 1,193.47 1.25 3.11% 1,039.08
10/31/97 1.127438 1000 1,127.44 0.0000135041 0.015510522 1,127.27 1,193.47 1.17 5.01% 1,058.72
11/30/97 1.151595 1000 1,151.60 0.0000130685 0.014731724 1,151.41 1,193.47 1.08 3.36% 1,036.53
12/31/97 1.153823 1000 1,153.82 0.0000135041 0.015548753 1,153.62 1,193.47 1.00 3.45% 1,034.54
01/31/98 1.162082 1000 1,162.08 0.0000135041 0.015578625 1,161.86 1,193.47 0.92 2.72% 1,024.86
02/28/98 1.213519 1000 1,213.52 0.0000121973 0.014171546 1,213.28 1,193.47 0.84 -1.63% 986.29
03/31/98 1.246012 1000 1,246.01 0.0000135041 0.016384215 1,245.75 1,193.47 0.75 -4.20% 968.22
04/30/98 1.254102 1000 1,254.10 0.0000130685 0.016280027 1,253.82 1,193.47 0.67 -4.81% 967.43
05/31/98 1.237057 1000 1,237.06 0.0000135041 0.0169317 1,236.76 1,193.47 0.59 -3.50% 979.33
06/30/98 1.252028 1000 1,252.03 0.0000130685 0.016162592 1,251.71 1,193.47 0.50 -4.65% 976.27
07/31/98 1.204053 1000 1,204.05 0.0000135041 0.016903249 1,203.73 1,193.47 0.42 -0.85% 996.42
08/31/98 1.023582 1000 1,023.58 0.0000135041 0.016255325 1,023.29 1,193.47 0.33 16.63% 1,052.76
09/30/98 1.074210 1000 1,074.21 0.0000130685 0.013372892 1,073.89 1,193.47 0.25 11.13% 1,026.97
10/31/98 1.150164 1000 1,150.16 0.0000135041 0.014501968 1,149.81 1,193.47 0.17 3.80% 1,006.25
11/30/98 1.193574 1000 1,193.57 0.0000130685 0.015026284 1,193.19 1,193.47 0.08 0.02% 1,000.02
12/31/98 1.193867 1000 1,193.87 0.0000135041 0.01611299 1,193.47 1,193.47 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - OPPORTUNITY VALUE PORTFOLIO
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Addtional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
31-Mar-99
ENDEAVOR PLATINUM - ENHANCED INDEX 11:41 AM
PERFORMANCE CALCULATIONS Fund #150
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
AddEtional M&E above 1.40% model 0
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return 57.09%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/1/97 1.000000 1000 1,000.00 1,000.00 1,570.90 1.67 31.09% 1,570.90
05/31/97 1.053848 1000 1,053.85 0.0000130685 0.013068 1,053.83 1,570.90 1.59 28.62% 1,490.65
06/30/97 1.116001 1000 1,116.00 0.0000130685 0.013772 1,115.97 1,570.90 1.50 25.52% 1,407.65
07/31/97 1.207075 1000 1,207.08 0.0000135041 0.01507 1,207.03 1,570.90 1.42 20.40% 1,301.46
08/31/97 1.143834 1000 1,143.83 0.0000135041 0.0163 1,143.78 1,570.90 1.33 26.85% 1,373.44
09/30/97 1.192856 1000 1,192.86 0.0000130685 0.014947 1,192.78 1,570.90 1.25 24.60% 1,317.01
10/31/97 1.153503 1000 1,153.50 0.0000135041 0.016107 1,153.41 1,570.90 1.17 30.30% 1,361.96
11/30/97 1.201590 1000 1,201.59 0.0000130685 0.015073 1,201.48 1,570.90 1.08 28.03% 1,307.47
12/31/97 1.215643 1000 1,215.64 0.0000135041 0.016225 1,215.52 1,570.90 1.00 29.24% 1,292.37
01/31/98 1.231795 1000 1,231.80 0.0000135041 0.016414 1,231.65 1,570.90 0.92 27.54% 1,249.36
02/28/98 1.319047 1000 1,319.05 0.0000121973 0.015023 1,318.88 1,570.90 0.84 19.11% 1,157.89
03/31/98 1.385135 1000 1,385.14 0.0000135041 0.01781 1,384.94 1,570.90 0.75 13.43% 1,099.58
04/30/98 1.403933 1000 1,403.93 0.0000130685 0.018099 1,403.72 1,570.90 0.67 11.91% 1,078.46
05/31/98 1.386287 1000 1,386.29 0.0000135041 0.018956 1,386.05 1,570.90 0.59 13.34% 1,076.16
06/30/98 1.432581 1000 1,432.58 0.0000130685 0.018114 1,432.32 1,570.90 0.50 9.68% 1,047.66
07/31/98 1.419770 1000 1,419.77 0.0000135041 0.019342 1,419.49 1,570.90 0.42 10.67% 1,043.40
08/31/98 1.212432 1000 1,212.43 0.0000135041 0.019169 1,212.18 1,570.90 0.33 29.59% 1,090.51
09/30/98 1.289313 1000 1,289.31 0.0000130685 0.015841 1,289.03 1,570.90 0.25 21.87% 1,051.11
10/31/98 1.392432 1000 1,392.43 0.0000135041 0.017407 1,392.10 1,570.90 0.17 12.84% 1,020.40
11/30/98 1.485422 1000 1,485.42 0.0000130685 0.018193 1,485.05 1,570.90 0.08 5.78% 1,004.78
12/31/98 1.571311 1000 1,571.31 0.0000135041 0.020054 1,570.90 1,570.90 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
31-Mar-99
ENDEAVOR PLATINUM - MONTGOMERY SELECT 11:41 AM
PERFORMANCE CALCULATIONS Fund #151
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Additional M&E above 1.40% model 0
Contract Charge Factor 0.000159
</TABLE>
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Return 5.02%
2/2/98 1.000000 1000 1,000.00 1,000.00 1,050.24 0.91 5.02% 1,045.60
2/28/98 1.048828 1000 1,048.83 0.0000113260 0.011326 1,048.82 1,050.24 0.84 0.14% 1,001.14
3/31/98 1.111163 1000 1,111.16 0.0000135041 0.014163 1,111.15 1,050.24 0.75 -5.48% 958.41
4/30/98 1.145525 1000 1,145.53 0.0000130685 0.014521 1,145.51 1,050.24 0.67 -8.32% 943.38
5/31/98 1.118170 1000 1,118.17 0.0000135041 0.015469 1,118.15 1,050.24 0.59 -6.07% 963.93
6/30/98 1.097689 1000 1,097.69 0.0000130685 0.014613 1,097.67 1,050.24 0.50 -4.32% 977.98
7/31/98 1.066405 1000 1,066.41 0.0000135041 0.014823 1,066.39 1,050.24 0.42 -1.51% 993.62
8/31/98 0.867775 1000 867.78 0.0000135041 0.014401 867.76 1,050.24 0.33 21.03% 1,065.87
9/30/98 0.897285 1000 897.29 0.0000130685 0.01134 897.27 1,050.24 0.25 17.05% 1,040.47
10/31/98 0.953384 1000 953.38 0.0000135041 0.012117 953.37 1,050.24 0.17 10.16% 1,016.30
11/30/98 1.012248 1000 1,012.25 0.0000130685 0.012459 1,012.24 1,050.24 0.08 3.75% 1,003.14
12/31/98 1.050254 1000 1,050.25 0.0000135041 0.013669 1,050.24 1,050.24 0.00 0.00% 1,000.00
12/31/98 1,050.24
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - Endeavor High Yield
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Additional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Return -4.03%
6/2/98 1.000000 1000 1,000.00 1,000.00 959.74 0.58 -4.03% 976.42
6/30/98 0.997747 1000 997.75 0.0000121973 0.012197 997.73 959.74 0.50 -3.81% 980.62
7/31/98 1.005339 1000 1,005.34 0.0000135041 0.013474 1,005.31 959.74 0.42 -4.53% 980.74
8/31/98 0.936214 1000 936.21 0.0000135041 0.013576 936.18 959.74 0.33 2.52% 1,008.35
9/30/98 0.928985 1000 928.99 0.0000130685 0.012234 928.94 959.74 0.25 3.32% 1,008.26
10/31/98 0.907871 1000 907.87 0.0000135041 0.012544 907.81 959.74 0.17 5.72% 1,009.34
11/30/98 0.967121 1000 967.12 0.0000130685 0.011864 967.04 959.74 0.08 -0.75% 999.36
12/31/98 0.959834 1000 959.83 0.0000135041 0.013059 959.74 959.74 0.00 0.00% 1,000.00
12/31/98 959.74
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - MANAGED ASSET ALLOCATION SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/08/91 1.000000 1000 1,000.00 1,000.00 2,503.99 7.74 12.60% 2,503.99
04/30/91 1.002047 1000 1,002.05 0.00006986 0.07 1,001.98 TOTAL RETURN 150.40%
05/31/91 1.005855 1000 1,005.86 0.00009844 0.10 1,005.69
06/30/91 1.005782 1000 1,005.78 0.00009526 0.10 1,005.52
07/31/91 1.009500 1000 1,009.50 0.00009844 0.10 1,009.14
08/31/91 1.018292 1000 1,018.29 0.00009844 0.10 1,017.82
09/30/91 1.026027 1000 1,026.03 0.00009526 0.10 1,025.46
10/31/91 1.054581 1000 1,054.58 0.00009844 0.10 1,053.90
11/30/91 1.030625 1000 1,030.63 0.00009526 0.10 1,029.86
12/31/91 1.125386 1000 1,125.39 0.00009844 0.10 1,124.44
01/31/92 1.147786 1000 1,147.79 0.00009844 0.11 1,146.72
02/28/92 1.159400 1000 1,159.40 0.00008891 0.10 1,158.22
03/31/92 1.125438 1000 1,125.44 0.00010161 0.12 1,124.17
04/30/92 1.127107 1000 1,127.11 0.00009526 0.11 1,125.73 2,503.99 6.67 12.73% 2,224.32
05/31/92 1.133736 1000 1,133.74 0.00009844 0.11 1,132.24 2,503.99 6.59 12.80% 2,211.53
06/30/92 1.105814 1000 1,105.81 0.00009526 0.11 1,104.25 2,503.99 6.51 13.41% 2,267.60
07/31/92 1.135926 1000 1,135.93 0.00009844 0.11 1,134.21 2,503.99 6.42 13.12% 2,207.70
08/31/92 1.118799 1000 1,118.80 0.00009844 0.11 1,117.00 2,503.99 6.34 13.59% 2,241.72
09/30/92 1.135264 1000 1,135.26 0.00009526 0.11 1,133.33 2,503.99 6.25 13.51% 2,209.41
10/31/92 1.152672 1000 1,152.67 0.00009844 0.11 1,150.60 2,503.99 6.17 13.43% 2,176.26
11/30/92 1.194573 1000 1,194.57 0.00009526 0.11 1,192.31 2,503.99 6.09 12.96% 2,100.12
12/31/92 1.209859 1000 1,209.86 0.00009844 0.12 1,207.45 2,503.99 6.00 12.92% 2,073.78
01/31/93 1.247765 1000 1,247.77 0.00009844 0.12 1,245.16 2,503.99 5.92 12.53% 2,010.98
02/28/93 1.252311 1000 1,252.31 0.00008891 0.11 1,249.59 2,503.99 5.84 12.64% 2,003.85
03/31/93 1.292821 1000 1,292.82 0.00009844 0.12 1,289.89 2,503.99 5.76 12.21% 1,941.25
04/30/93 1.277694 1000 1,277.69 0.00009526 0.12 1,274.67 2,503.99 5.67 12.64% 1,964.42
05/31/93 1.300898 1000 1,300.90 0.00009844 0.13 1,297.70 2,503.99 5.59 12.48% 1,929.57
06/30/93 1.313005 1000 1,313.01 0.00009526 0.12 1,309.65 2,503.99 5.51 12.49% 1,911.96
07/31/93 1.313466 1000 1,313.47 0.00009844 0.13 1,309.98 2,503.99 5.42 12.69% 1,911.47
08/31/93 1.357882 1000 1,357.88 0.00009844 0.13 1,354.15 2,503.99 5.34 12.21% 1,849.13
09/30/93 1.370998 1000 1,371.00 0.00009526 0.13 1,367.10 2,503.99 5.25 12.21% 1,831.61
10/31/93 1.379255 1000 1,379.26 0.00009844 0.13 1,375.20 2,503.99 5.17 12.29% 1,820.82
11/30/93 1.370744 1000 1,370.74 0.00009526 0.13 1,366.58 2,503.99 5.09 12.64% 1,832.30
12/31/93 1.393488 1000 1,393.49 0.00009844 0.13 1,389.12 2,503.99 5.00 12.50% 1,802.57
01/31/94 1.447326 1000 1,447.33 0.00009844 0.14 1,442.66 2,503.99 4.92 11.87% 1,735.68
02/28/94 1.411752 1000 1,411.75 0.00008891 0.13 1,407.07 2,503.99 4.84 12.64% 1,779.58
03/31/94 1.346957 1000 1,346.96 0.00009844 0.14 1,342.35 2,503.99 4.76 14.01% 1,865.38
04/30/94 1.325580 1000 1,325.58 0.00009526 0.13 1,320.92 2,503.99 4.67 14.66% 1,895.65
05/31/94 1.353171 1000 1,353.17 0.00009844 0.13 1,348.28 2,503.99 4.59 14.44% 1,857.17
06/30/94 1.291335 1000 1,291.34 0.00009526 0.13 1,286.54 2,503.99 4.51 15.92% 1,946.30
07/05/94 1.293033 1000 1,293.03 0.00001588 0.02 1,288.21 2,503.99 4.49 15.94% 1,943.77
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - MANAGED ASSET ALLOCATION SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Account value 1,288.21
Inception AUV 0.974417
-----------
1322.033
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/94 0.996055 1322.033 1,316.82 (0.00009552) -0.12 1,312.03 2,503.99 4.42 15.74% 1,908.49
08/31/94 1.025276 1322.033 1,355.45 (0.00011389) -0.15 1,350.67 2,503.99 4.34 15.30% 1,853.89
09/30/94 0.995435 1322.033 1,316.00 (0.00011022) -0.15 1,311.51 2,503.99 4.25 16.42% 1,909.25
10/31/94 1.008626 1322.033 1,333.44 (0.00011389) -0.15 1,329.04 2,503.99 4.17 16.41% 1,884.07
11/30/94 0.984708 1322.033 1,301.82 (0.00011022) -0.15 1,297.67 2,503.99 4.09 17.45% 1,929.61
12/31/94 0.979750 1322.033 1,295.26 (0.00011389) -0.15 1,291.28 2,503.99 4.00 17.99% 1,939.15
01/31/95 0.975442 1322.033 1,289.57 (0.00011389) -0.15 1,285.75 2,503.99 3.92 18.55% 1,947.49
02/28/95 1.003215 1322.033 1,326.28 (0.00010287) -0.13 1,322.49 2,503.99 3.84 18.08% 1,893.39
03/31/95 1.021549 1322.033 1,350.52 (0.00011389) -0.15 1,346.81 2,503.99 3.76 17.95% 1,859.20
04/30/95 1.032376 1322.033 1,364.84 (0.00011022) -0.15 1,361.23 2,503.99 3.67 18.04% 1,839.50
05/31/95 1.076300 1322.033 1,422.90 (0.00011389) -0.16 1,419.30 2,503.99 3.59 17.14% 1,764.24
06/30/95 1.118144 1322.033 1,478.22 (0.00011022) -0.16 1,474.64 2,503.99 3.51 16.30% 1,698.04
07/31/95 1.154693 1322.033 1,526.54 (0.00011389) -0.17 1,523.01 2,503.99 3.42 15.64% 1,644.11
08/31/95 1.151675 1322.033 1,522.55 (0.00011389) -0.17 1,519.20 2,503.99 3.34 16.15% 1,648.23
09/30/95 1.183745 1322.033 1,564.95 (0.00011022) -0.17 1,561.67 2,503.99 3.25 15.61% 1,603.40
10/31/95 1.168182 1322.033 1,544.38 (0.00011389) -0.18 1,541.32 2,503.99 3.17 16.54% 1,624.58
11/30/95 1.191385 1322.033 1,575.05 (0.00011022) -0.17 1,572.10 2,503.99 3.09 16.27% 1,592.76
12/31/95 1.184740 1322.033 1,566.27 (0.00011389) -0.18 1,563.51 2,503.99 3.00 16.98% 1,601.51
01/31/96 1.199701 1322.033 1,586.04 (0.00011389) -0.18 1,583.44 2,503.99 2.92 17.01% 1,581.36
02/29/96 1.214835 1322.033 1,606.05 (0.00010655) -0.17 1,603.58 2,503.99 2.84 17.00% 1,561.50
03/31/96 1.232104 1322.033 1,628.88 (0.00011389) -0.18 1,626.56 2,503.99 2.75 16.96% 1,539.44
04/30/96 1.262905 1322.033 1,669.60 (0.00011022) -0.18 1,667.40 2,503.99 2.67 16.44% 1,501.73
05/31/96 1.299406 1322.033 1,717.86 (0.00011389) -0.19 1,715.78 2,503.99 2.59 15.74% 1,459.39
06/30/96 1.277196 1322.033 1,688.50 (0.00011022) -0.19 1,686.64 2,503.99 2.50 17.09% 1,484.60
07/31/96 1.229073 1322.033 1,624.88 (0.00011389) -0.19 1,623.29 2,503.99 2.42 19.62% 1,542.55
08/31/96 1.255269 1322.033 1,659.51 (0.00011389) -0.18 1,658.07 2,503.99 2.33 19.32% 1,510.19
09/30/96 1.314265 1322.033 1,737.50 (0.00011022) -0.18 1,736.18 2,503.99 2.25 17.66% 1,442.24
10/31/96 1.320478 1322.033 1,745.72 (0.00011389) -0.20 1,744.58 2,503.99 2.17 18.15% 1,435.30
11/30/96 1.400506 1322.033 1,851.52 (0.00011022) -0.19 1,850.51 2,503.99 2.08 15.61% 1,353.14
12/31/96 1.372991 1322.033 1,815.14 (0.00011389) -0.21 1,814.36 2,503.99 2.00 17.48% 1,380.10
01/31/97 1.432219 1322.033 1,893.44 (0.00011389) -0.21 1,892.84 2,503.99 1.92 15.73% 1,322.88
02/28/97 1.417341 1322.033 1,873.77 (0.00010287) -0.19 1,873.37 2,503.99 1.84 17.10% 1,336.63
03/31/97 1.344234 1322.033 1,777.12 (0.00011389) -0.21 1,776.95 2,503.99 1.75 21.61% 1,409.15
04/30/97 1.417816 1322.033 1,874.40 (0.00011022) -0.20 1,874.42 2,503.99 1.67 18.92% 1,335.88
05/31/97 1.497716 1322.033 1,980.03 (0.00011389) -0.21 1,980.26 2,503.99 1.59 15.94% 1,264.48
06/30/97 1.517550 1322.033 2,006.25 (0.00011022) -0.22 2,006.70 2,503.99 1.50 15.86% 1,247.81
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - MANAGED ASSET ALLOCATION SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/23/97 1.619154 1322.033 2,140.58 0.00001002 0.02 2,141.04 2,503.99 1.44 11.48% 1,169.52
07/31/97 1.647152 1322.033 2,177.59 0.00000348 0.00 2,178.06 2,503.99 1.42 10.33% 1,149.64
08/31/97 1.564112 1322.033 2,067.81 0.00001350 0.03 2,068.23 2,503.99 1.33 15.41% 1,210.69
09/30/97 1.608774 1322.033 2,126.85 0.00001307 0.03 2,127.26 2,503.99 1.25 13.91% 1,177.10
10/31/97 1.569570 1322.033 2,075.02 0.00001350 0.03 2,075.39 2,503.99 1.17 17.45% 1,206.52
11/30/97 1.618004 1322.033 2,139.06 0.00001307 0.03 2,139.41 2,503.99 1.08 15.61% 1,170.41
12/31/97 1.623829 1322.033 2,146.76 0.00001350 0.03 2,147.08 2,503.99 1.00 16.62% 1,166.23
01/31/98 1.661053 1322.033 2,195.97 0.00001350 0.03 2,196.27 2,503.99 0.92 14.01% 1,127.49
02/28/98 1.748360 1322.033 2,311.39 0.00001220 0.03 2,311.68 2,503.99 0.84 8.32% 1,069.29
03/31/98 1.790258 1322.033 2,366.78 0.00001350 0.03 2,367.05 2,503.99 0.75 5.79% 1,043.29
04/30/98 1.814830 1322.033 2,399.27 0.00001307 0.03 2,399.50 2,503.99 0.67 4.35% 1,029.02
05/31/98 1.783636 1322.033 2,358.03 0.00001350 0.03 2,358.23 2,503.99 0.59 6.18% 1,035.79
06/30/98 1.833234 1322.033 2,423.60 0.00001307 0.03 2,423.77 2,503.99 0.50 3.31% 1,016.55
07/31/98 1.799803 1322.033 2,379.40 0.00001350 0.03 2,379.54 2,503.99 0.42 5.23% 1,021.60
08/31/98 1.595133 1322.033 2,108.82 0.00001350 0.03 2,108.91 2,503.99 0.33 18.73% 1,059.07
09/30/98 1.651286 1322.033 2,183.05 0.00001307 0.03 2,183.12 2,503.99 0.25 14.70% 1,035.17
10/31/98 1.730342 1322.033 2,287.57 0.00001350 0.03 2,287.61 2,503.99 0.17 9.46% 1,015.22
11/30/98 1.801191 1322.033 2,381.23 0.00001307 0.03 2,381.25 2,503.99 0.08 5.15% 1,004.28
12/31/98 1.894059 1322.033 2,504.01 0.00001350 0.03 2,503.99 2,503.99 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - MANAGED ASSET ALLOCATION SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - INTERNATIONAL STOCK SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial Investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/08/91 1.000000 1000 1,000.00 1,000.00 1,513.81 7.74 5.51% 1,513.81
04/30/91 1.002047 1000 1,002.05 0.00006986 0.069857534 1,001.98 TOTAL RETURN 51.38%
05/31/91 1.005857 1000 1,005.86 0.00009844 0.098630238 1,005.69
06/30/91 1.008776 1000 1,008.78 0.00009526 0.095802138 1,008.51
07/31/91 1.011492 1000 1,011.49 0.00009844 0.099273398 1,011.13
08/31/91 1.015303 1000 1,015.30 0.00009844 0.099530906 1,014.84
09/30/91 1.018076 1000 1,018.08 0.00009526 0.096673657 1,017.51
10/31/91 1.014887 1000 1,014.89 0.00009844 0.100159432 1,014.22
11/30/91 0.993945 1000 993.95 0.00009526 0.096615325 993.20
12/31/91 1.041235 1000 1,041.24 0.00009844 0.097766232 1,040.36
01/31/92 1.046928 1000 1,046.93 0.00009844 0.102408138 1,045.94
02/28/92 1.039888 1000 1,039.89 0.00008891 0.092994304 1,038.82
03/31/92 0.995220 1000 995.22 0.00010161 0.105555087 994.09
04/30/92 1.008861 1000 1,008.86 0.00009526 0.09469714 1,007.62 1,513.81 6.67 6.29% 1,502.36
05/31/92 1.027434 1000 1,027.43 0.00009844 0.099185623 1,026.07 1,513.81 6.59 6.08% 1,475.34
06/30/92 0.990793 1000 990.79 0.00009526 0.09774373 989.38 1,513.81 6.51 6.75% 1,530.05
07/31/92 0.969988 1000 969.99 0.00009844 0.097390241 968.51 1,513.81 6.42 7.20% 1,563.03
08/31/92 0.969826 1000 969.83 0.00009844 0.095335621 968.25 1,513.81 6.34 7.31% 1,563.44
09/30/92 0.944181 1000 944.18 0.00009526 0.092235788 942.55 1,513.81 6.25 7.87% 1,606.07
10/31/92 0.945062 1000 945.06 0.00009844 0.092780956 943.34 1,513.81 6.17 7.97% 1,604.73
11/30/92 0.961574 1000 961.57 0.00009526 0.089862963 959.73 1,513.81 6.09 7.77% 1,577.32
12/31/92 0.989782 1000 989.78 0.00009844 0.094471959 987.79 1,513.81 6.00 7.37% 1,532.51
01/31/93 1.006274 1000 1,006.27 0.00009844 0.097234017 1,004.15 1,513.81 5.92 7.18% 1,507.54
02/28/93 1.017888 1000 1,017.89 0.00008891 0.089278979 1,015.65 1,513.81 5.84 7.07% 1,490.47
03/31/93 1.070220 1000 1,070.22 0.00009844 0.099976619 1,067.77 1,513.81 5.76 6.25% 1,417.72
04/30/93 1.078733 1000 1,078.73 0.00009526 0.101716267 1,076.16 1,513.81 5.67 6.20% 1,406.67
05/31/93 1.104813 1000 1,104.81 0.00009844 0.105932862 1,102.08 1,513.81 5.59 5.84% 1,373.59
06/30/93 1.078167 1000 1,078.17 0.00009526 0.104984053 1,075.39 1,513.81 5.51 6.41% 1,407.68
07/31/93 1.086638 1000 1,086.64 0.00009844 0.10585677 1,083.73 1,513.81 5.42 6.36% 1,396.84
08/30/93 1.133770 1000 1,133.77 0.00009526 0.103236824 1,130.64 1,513.81 5.34 5.62% 1,338.90
09/30/93 1.154739 1000 1,154.74 0.00009844 0.111294959 1,151.44 1,513.81 5.25 5.34% 1,314.71
10/31/93 1.156364 1000 1,156.36 0.00009844 0.113342396 1,152.94 1,513.81 5.17 5.41% 1,312.99
11/30/93 1.100872 1000 1,100.87 0.00009526 0.109829748 1,097.51 1,513.81 5.09 6.52% 1,379.31
12/31/93 1.156482 1000 1,156.48 0.00009844 0.108033695 1,152.84 1,513.81 5.00 5.60% 1,313.11
01/31/94 1.194618 1000 1,194.62 0.00009844 0.113480329 1,190.74 1,513.81 4.92 5.00% 1,271.31
02/28/94 1.188532 1000 1,188.53 0.00008891 0.105868245 1,184.57 1,513.81 4.84 5.20% 1,277.94
03/31/94 1.121762 1000 1,121.76 0.00009844 0.116603715 1,117.90 1,513.81 4.76 6.58% 1,354.15
04/30/94 1.139726 1000 1,139.73 0.00009526 0.106491881 1,135.70 1,513.81 4.67 6.34% 1,332.93
05/31/94 1.123951 1000 1,123.95 0.00009844 0.111793344 1,119.87 1,513.81 4.59 6.79% 1,351.77
06/30/94 1.105423 1000 1,105.42 0.00009526 0.106679035 1,101.30 1,513.81 4.51 7.31% 1,374.56
07/05/94 1.116706 1000 1,116.71 0.00001588 0.01748505 1,112.53 1,513.81 4.49 7.10% 1,360.69
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - INTERNATIONAL STOCK SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial Investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ---------------------------------------------------------------------------------------------------------------------------------
Account value 1113
Inception AUV 0.98
-------
Units 1137
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/94 0.989353 1137 1,124.67 (0.00009552) -0.10519996 1,120.57 1,513.81 4.42 7.04% 1,350.93
08/31/94 1.023891 1137 1,163.93 (0.00011389) -0.12762493 1,159.81 1,513.81 4.34 6.33% 1,305.21
09/30/94 1.005791 1137 1,143.36 (0.00011022) -0.12783369 1,139.44 1,513.81 4.25 6.90% 1,328.55
10/31/94 1.020257 1137 1,159.80 (0.00011389) -0.12977425 1,155.96 1,513.81 4.17 6.68% 1,309.57
11/30/94 0.958848 1137 1,090.00 (0.00011022) -0.12740858 1,086.51 1,513.81 4.09 8.45% 1,393.28
12/31/94 0.940071 1137 1,068.65 (0.00011389) -0.12374573 1,065.35 1,513.81 4.00 9.17% 1,420.94
01/31/95 0.894654 1137 1,017.02 (0.00011389) -0.12133653 1,014.01 1,513.81 3.92 10.77% 1,492.90
02/28/95 0.904327 1137 1,028.02 (0.00010287) -0.10431201 1,025.07 1,513.81 3.84 10.68% 1,476.78
03/31/95 0.922312 1137 1,048.46 (0.00011389) -0.11674884 1,045.58 1,513.81 3.76 10.35% 1,447.82
04/30/95 0.940041 1137 1,068.62 (0.00011022) -0.11524258 1,065.79 1,513.81 3.67 10.02% 1,420.36
05/31/95 0.965399 1137 1,097.44 (0.00011389) -0.1213862 1,094.66 1,513.81 3.59 9.45% 1,382.90
06/30/95 0.959028 1137 1,090.20 (0.00011022) -0.12065271 1,087.56 1,513.81 3.51 9.89% 1,391.93
07/31/95 1.010906 1137 1,149.17 (0.00011389) -0.12386544 1,146.51 1,513.81 3.42 8.46% 1,320.36
08/31/95 0.980872 1137 1,115.03 (0.00011389) -0.13057997 1,112.58 1,513.81 3.34 9.67% 1,360.63
09/30/95 0.998082 1137 1,134.60 (0.00011022) -0.12262772 1,132.22 1,513.81 3.25 9.33% 1,337.02
10/31/95 0.981509 1137 1,115.76 (0.00011389) -0.12895258 1,113.55 1,513.81 3.17 10.17% 1,359.44
11/30/95 0.988588 1137 1,123.80 (0.00011022) -0.12273487 1,121.71 1,513.81 3.09 10.20% 1,349.56
12/31/95 1.022539 1137 1,162.40 (0.00011389) -0.12775472 1,160.36 1,513.81 3.00 9.26% 1,304.60
01/31/96 1.048670 1137 1,192.10 (0.00011389) -0.13215674 1,190.14 1,513.81 2.92 8.59% 1,271.95
02/29/96 1.053999 1137 1,198.16 (0.00010655) -0.12680396 1,196.32 1,513.81 2.84 8.65% 1,265.39
03/31/96 1.071844 1137 1,218.45 (0.00011389) -0.13625232 1,216.71 1,513.81 2.75 8.26% 1,244.18
04/30/96 1.102847 1137 1,253.69 (0.00011022) -0.13410454 1,252.04 1,513.81 2.67 7.37% 1,209.08
05/31/96 1.098053 1137 1,248.24 (0.00011389) -0.14259823 1,246.74 1,513.81 2.59 7.79% 1,214.22
06/30/96 1.110082 1137 1,261.91 (0.00011022) -0.13741413 1,260.53 1,513.81 2.50 7.59% 1,200.93
07/31/96 1.071629 1137 1,218.20 (0.00011389) -0.14356579 1,217.01 1,513.81 2.42 9.44% 1,243.87
08/31/96 1.086899 1137 1,235.56 (0.00011389) -0.13860905 1,234.49 1,513.81 2.33 9.13% 1,226.26
09/30/96 1.109584 1137 1,261.35 (0.00011022) -0.13606444 1,260.39 1,513.81 2.25 8.48% 1,201.06
10/31/96 1.103044 1137 1,253.91 (0.00011389) -0.14354992 1,253.11 1,513.81 2.17 9.11% 1,208.04
11/30/96 1.151535 1137 1,309.04 (0.00011022) -0.1381163 1,308.33 1,513.81 2.08 7.25% 1,157.05
12/31/96 1.159025 1137 1,317.55 (0.00011389) -0.14901004 1,316.99 1,513.81 2.00 7.21% 1,149.44
01/31/97 1.14497 1137 1,301.57 (0.00011389) -0.14999622 1,301.17 1,513.81 1.92 8.22% 1,163.42
02/28/97 1.159279 1137 1,317.84 (0.00010287) -0.13385298 1,317.57 1,513.81 1.84 7.84% 1,148.94
03/31/97 1.153531 1137 1,311.31 (0.00011389) -0.15006164 1,311.18 1,513.81 1.75 8.54% 1,154.53
04/30/97 1.158592 1137 1,317.06 (0.00011022) -0.14451744 1,317.08 1,513.81 1.67 8.69% 1,149.37
05/31/97 1.230486 1137 1,398.79 (0.00011389) -0.15000633 1,398.96 1,513.81 1.59 5.10% 1,082.10
06/30/97 1.281744 1137 1,457.06 (0.00011022) -0.15419201 1,457.39 1,513.81 1.50 2.56% 1,038.71
07/23/97 1.314403 1137 1,494.18 (0.00008450) -0.094416 1,494.62 1,513.81 1.44 0.89% 1,012.84
07/31/97 1.312316 1137 1,491.81 0.00000348 0.00138897 1,492.24 1,513.81 1.42 1.02% 1,014.45
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - INTERNATIONAL STOCK SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial Investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/97 1.191596 1137 1,354.58 0.00001350 0.020151408 1,354.95 1,513.81 1.33 8.66% 1,117.24
09/30/97 1.266902 1137 1,440.18 0.00001307 0.017707168 1,440.56 1,513.81 1.25 4.04% 1,050.84
10/31/97 1.167075 1137 1,326.70 0.00001350 0.01945352 1,327.03 1,513.81 1.17 11.94% 1,140.74
11/30/97 1.164099 1137 1,323.32 0.00001307 0.017342318 1,323.63 1,513.81 1.08 13.17% 1,143.68
12/31/97 1.170767 1137 1,330.90 0.00001350 0.017874464 1,331.20 1,513.81 1.00 13.72% 1,137.18
01/31/98 1.205517 1137 1,370.40 0.00001350 0.017976609 1,370.69 1,513.81 0.92 10.44% 1,095.14
02/28/98 1.276428 1137 1,451.01 0.00001220 0.016718652 1,451.30 1,513.81 0.84 4.31% 1,035.98
03/31/98 1.321524 1137 1,502.28 0.00001350 0.019598504 1,502.55 1,513.81 0.75 0.75% 1,005.64
04/30/98 1.332197 1137 1,514.41 0.00001307 0.019636114 1,514.67 1,513.81 0.67 -0.06% 999.62
05/31/98 1.321786 1137 1,502.57 0.00001350 0.020454259 1,502.81 1,513.81 0.59 0.73% 1,004.28
06/30/98 1.320059 1137 1,500.61 0.00001307 0.019639485 1,500.83 1,513.81 0.50 0.86% 1,004.35
07/31/98 1.332463 1137 1,514.71 0.00001350 0.020267354 1,514.91 1,513.81 0.42 -0.07% 999.69
08/31/98 1.161323 1137 1,320.16 0.00001350 0.020457523 1,320.32 1,513.81 0.33 14.65% 1,046.77
09/30/98 1.128534 1137 1,282.89 0.00001307 0.017254554 1,283.02 1,513.81 0.25 17.99% 1,042.57
10/31/98 1.228576 1137 1,396.62 0.00001350 0.017326066 1,396.74 1,513.81 0.17 8.38% 1,013.54
11/30/98 1.288792 1137 1,465.07 0.00001307 0.018253305 1,465.18 1,513.81 0.08 3.32% 1,002.78
12/31/98 1.33158 1137 1,513.71 0.00001350 0.01978597 1,513.81 1,513.81 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - INTERNATIONAL STOCK SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial Investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT $1,000.00
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FUND DISTRIBUTIONS:
REINVEST REINVEST
DIV PR/SH NAV SHARES SHARE BASE
($1000 @ $10.00 ON 10/02/86) 100.000000
12/86 0.00000000 0.000 0.000 100.000000
12/87 0.10828100 11.141 0.972 100.971924
12/88 0.24573400 12.970 1.913 102.884985
12/89 1.21966700 17.851 7.030 109.914666
12/90 0.33265900 17.479 2.092 112.006544
12/91 1.66402600 26.086 7.145 119.151405
12/92 0.00138300 24.616 0.007 119.158099
12/92 1.04649900 25.930 4.809 123.967156
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10/02/86 10.000000 100.000 1,000.00 1,000.00 8,436.29 12.25 16.07% 6,209.27
10/31/86 10.242480 100.000 1,024.25 1.20 1,023.04
11/30/86 10.178265 100.000 1,017.83 1.29 1,015.34
12/31/86 10.143918 100.000 1,014.39 1.28 1,010.63
01/31/87 11.099823 100.000 1,109.98 1.28 1,104.59
02/28/87 11.941933 100.000 1,194.19 1.40 1,186.99
03/31/87 12.253046 100.000 1,225.30 1.50 1,216.42
04/30/87 12.326861 100.000 1,232.69 1.54 1,222.21
05/31/87 12.584261 100.000 1,258.43 1.54 1,246.19 8,436.29 11.59 14.86% 4,982.62
06/30/87 13.053930 100.000 1,305.39 1.57 1,291.12 8,436.29 11.51 14.62% 4,809.20
07/31/87 13.768105 100.000 1,376.81 1.63 1,360.13 8,436.29 11.43 14.21% 4,565.21
08/31/87 14.383761 100.000 1,438.38 1.72 1,419.23 8,436.29 11.34 13.90% 4,375.10
09/30/87 14.382060 100.000 1,438.21 1.79 1,417.27 8,436.29 11.26 14.02% 4,381.15
10/31/87 11.350889 100.000 1,135.09 1.79 1,116.77 8,436.29 11.18 16.59% 5,560.01
11/30/87 10.884572 100.000 1,088.46 1.41 1,069.48 8,436.29 11.09 17.18% 5,805.86
12/31/87 11.140893 100.972 1,124.92 1.35 1,103.96 8,436.29 11.01 16.99% 5,624.56
01/31/88 11.262292 100.972 1,137.18 1.39 1,114.59 TOTAL RETURN 553.92%
02/28/88 11.558128 100.972 1,167.05 1.41 1,142.46 8,436.29
03/31/88 11.539389 100.972 1,165.15 1.44 1,139.17 8,436.29 10.76 20.45% 7,405.66
04/30/88 11.749717 100.972 1,186.39 1.44 1,158.49 8,436.29 10.68 20.44% 7,282.13
05/31/88 11.798150 100.972 1,191.28 1.46 1,161.80 8,436.29 10.59 20.58% 7,261.37
06/30/88 12.349026 100.972 1,246.90 1.47 1,214.58 8,436.29 10.51 20.25% 6,945.83
07/31/88 12.293135 100.972 1,241.26 1.53 1,207.55 8,436.29 10.42 20.50% 6,986.28
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT $1,000.00
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/88 12.118060 100.972 1,223.58 1.53 1,188.83 8,436.29 10.34 20.87% 7,096.31
09/30/88 12.924912 100.972 1,305.05 1.50 1,266.48 8,436.29 10.26 20.31% 6,661.20
10/31/88 12.979238 100.972 1,310.54 1.60 1,270.21 8,436.29 10.17 20.46% 6,641.67
11/30/88 12.742550 100.972 1,286.64 1.60 1,245.44 8,436.29 10.09 20.88% 6,773.76
12/31/88 12.969913 102.885 1,334.41 1.57 1,290.10 8,436.29 10.01 20.64% 6,539.23
01/31/89 13.797157 102.885 1,419.52 1.63 1,370.76 8,436.29 9.92 20.10% 6,154.47
02/28/89 13.699227 102.885 1,409.44 1.73 1,359.30 8,436.29 9.84 20.38% 6,206.36
03/31/89 14.507994 102.885 1,492.65 1.72 1,437.83 8,436.29 9.76 19.88% 5,867.37
04/30/89 15.485756 102.885 1,593.25 1.82 1,532.92 8,436.29 9.68 19.27% 5,503.43
05/31/89 16.831921 102.885 1,731.75 1.94 1,664.23 8,436.29 9.59 18.44% 5,069.17
06/30/89 16.418542 102.885 1,689.22 2.10 1,621.26 8,436.29 9.51 18.94% 5,203.54
07/31/89 18.076256 102.885 1,859.78 2.05 1,782.90 8,436.29 9.42 17.93% 4,731.77
08/31/89 19.196966 102.885 1,975.08 2.25 1,891.19 8,436.29 9.34 17.36% 4,460.84
09/30/89 19.972520 102.885 2,054.87 2.39 1,965.21 8,436.29 9.26 17.04% 4,292.83
10/31/89 19.066423 102.885 1,961.65 2.48 1,873.57 8,436.29 9.17 17.83% 4,502.80
11/30/89 19.230784 102.885 1,978.56 2.37 1,887.35 8,436.29 9.09 17.91% 4,469.91
12/31/89 17.850799 109.915 1,962.06 2.38 1,869.23 8,436.29 9.01 18.22% 4,513.24
01/31/90 16.301313 109.915 1,791.75 2.36 1,704.62 8,436.29 8.92 19.63% 4,949.08
02/28/90 16.717816 109.915 1,837.53 2.15 1,746.02 8,436.29 8.84 19.50% 4,831.73
03/31/90 17.394768 109.915 1,911.94 2.21 1,814.51 8,436.29 8.76 19.18% 4,649.34
04/30/90 17.552402 109.915 1,929.27 2.29 1,828.67 8,436.29 8.68 19.27% 4,613.36
05/31/90 19.412925 109.915 2,133.77 2.31 2,020.19 8,436.29 8.59 18.10% 4,175.99
06/30/90 19.881337 109.915 2,185.25 2.55 2,066.38 8,436.29 8.51 17.98% 4,082.64
07/31/90 19.238628 109.915 2,114.61 2.61 1,996.97 8,436.29 8.42 18.65% 4,224.54
08/31/90 17.312376 109.915 1,902.88 2.52 1,794.50 8,436.29 8.34 20.39% 4,701.18
09/30/90 16.581488 109.915 1,822.55 2.27 1,716.48 8,436.29 8.26 21.27% 4,914.88
10/31/90 16.144908 109.915 1,774.56 2.17 1,669.12 8,436.29 8.17 21.93% 5,054.35
11/30/90 16.986867 109.915 1,867.11 2.11 1,754.05 8,436.29 8.09 21.43% 4,809.60
12/31/90 17.479079 112.007 1,957.77 2.22 1,837.01 8,436.29 8.01 20.98% 4,592.40
01/31/91 18.562905 112.007 2,079.17 2.32 1,948.60 8,436.29 7.92 20.32% 4,329.41
02/28/91 20.096951 112.007 2,250.99 2.46 2,107.17 8,436.29 7.84 19.35% 4,003.61
03/31/91 21.114275 112.007 2,364.94 2.66 2,211.17 8,436.29 7.76 18.84% 3,815.30
04/30/91 21.195645 112.007 2,374.05 2.79 2,216.90 8,436.29 7.68 19.02% 3,805.44
05/31/91 22.353555 112.007 2,503.74 2.80 2,335.21 8,436.29 7.59 18.43% 3,612.65
06/30/91 21.233106 112.007 2,378.25 2.95 2,215.21 8,436.29 7.51 19.49% 3,808.35
07/31/91 22.860955 112.007 2,560.58 2.80 2,382.24 8,436.29 7.42 18.57% 3,541.32
08/31/91 24.093541 112.007 2,698.63 3.01 2,507.68 8,436.29 7.34 17.97% 3,364.19
09/30/91 24.117922 112.007 2,701.37 3.17 2,507.05 8,436.29 7.26 18.20% 3,365.03
10/31/91 25.230014 112.007 2,825.93 3.17 2,619.48 8,436.29 7.17 17.71% 3,220.60
11/30/91 24.199800 112.007 2,710.54 3.31 2,509.21 8,436.29 7.09 18.65% 3,362.13
12/31/91 26.255817 119.151 3,128.42 3.17 2,892.88 8,436.29 7.01 16.51% 2,916.22
01/31/92 25.593236 119.151 3,049.47 3.65 2,816.23 8,436.29 6.92 17.18% 2,995.60
02/28/92 25.397891 119.151 3,026.19 3.56 2,791.17 8,436.29 6.84 17.54% 3,022.49
03/31/92 24.544017 119.151 2,924.45 3.53 2,693.81 8,436.29 6.76 18.41% 3,131.73
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS Fund #87
INITIAL INVESTMENT $1,000.00
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4/30/92 24.400719 119.151 2,907.38 3.40 2,674.68 8,436.29 6.67 18.78% 3,154.13
5/31/92 25.110607 119.151 2,991.96 3.38 2,749.11 8,436.29 6.59 18.55% 3,068.73
6/30/92 24.436151 119.151 2,911.60 3.47 2,671.80 8,436.29 6.51 19.33% 3,157.53
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT $1,000.00
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
Effective 7/1/92 WRL Growth began with
AUV = to $10.00
ERV @ 6/30/92 / $10.00 AUV 267.180 Units
Using Endeavor AUVs until inception date
ADDITIONAL M&E (1.65% - 1.40%)/12 plus contract charge factor
Contract
AUV Units Acct Value Charge Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/92 10.090579 267.180 2,696.00 0.25 2,695.75 8,436.29 6.42 19.44% 3,129.48
08/31/92 9.819286 267.180 2,623.52 0.26 2,623.01 8,436.29 6.34 20.24% 3,216.26
09/30/92 9.889039 267.180 2,642.15 0.25 2,641.39 8,436.29 6.25 20.40% 3,193.88
10/31/92 10.039500 267.180 2,682.35 0.26 2,681.32 8,436.29 6.17 20.42% 3,146.32
11/30/92 10.621351 267.180 2,837.81 0.26 2,836.46 8,436.29 6.09 19.61% 2,974.23
12/31/92 10.839753 267.180 2,896.17 0.27 2,894.51 8,436.29 6.00 19.51% 2,914.58
01/31/93 10.999669 267.180 2,938.89 0.28 2,936.94 8,436.29 5.92 19.52% 2,872.48
02/28/93 10.535633 267.180 2,814.91 0.28 2,812.75 8,436.29 5.84 20.69% 2,999.30
03/31/93 10.794261 267.180 2,884.01 0.27 2,881.53 8,436.29 5.76 20.52% 2,927.71
04/30/93 10.334927 267.180 2,761.29 0.28 2,758.63 8,436.29 5.67 21.78% 3,058.14
05/31/93 10.681999 267.180 2,854.02 0.27 2,851.01 8,436.29 5.59 21.42% 2,959.06
06/30/93 10.866888 267.180 2,903.42 0.28 2,900.08 8,436.29 5.51 21.40% 2,908.99
07/31/93 10.825063 267.180 2,892.24 0.28 2,888.64 8,436.29 5.42 21.86% 2,920.51
08/30/93 11.044325 267.180 2,950.82 0.28 2,946.87 8,436.29 5.34 21.77% 2,862.80
09/30/93 11.255563 267.180 3,007.26 0.28 3,002.94 8,436.29 5.25 21.72% 2,809.34
10/31/93 11.229805 267.180 3,000.38 0.29 2,995.78 8,436.29 5.17 22.17% 2,816.06
11/30/93 10.876928 267.180 2,906.10 0.29 2,901.36 8,436.29 5.09 23.34% 2,907.71
12/31/93 11.114865 267.180 2,969.67 0.28 2,964.54 8,436.29 5.00 23.25% 2,845.73
01/31/94 11.627506 267.180 3,106.64 0.29 3,100.99 8,436.29 4.92 22.57% 2,720.52
02/28/94 11.325864 267.180 3,026.04 0.30 3,020.24 8,436.29 4.84 23.64% 2,793.25
03/31/94 10.540923 267.180 2,816.32 0.29 2,810.63 8,436.29 4.76 26.00% 3,001.56
04/30/94 10.402986 267.180 2,779.47 0.27 2,773.58 8,436.29 4.67 26.87% 3,041.66
05/31/94 10.278529 267.180 2,746.22 0.27 2,740.13 8,436.29 4.59 27.77% 3,078.79
06/30/94 9.878571 267.180 2,639.36 0.26 2,633.24 8,436.29 4.51 29.48% 3,203.76
07/05/94 9.920052 267.180 2,650.44 0.04 2,644.26 8,436.29 4.49 29.46% 3,190.42
07/05/94 9.418271 280.625 2,643.00 0.00 2,643.00 8,436.29 4.49 29.47% 3,191.93
<CAPTION>
Account value 2,644.259
Inception AUV 9.418271
----------
Units 280.758 Contract
Charge
Deduction
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/94 10.147571 280.758 2,849.02 (0.25) 2,842.62 8,436.29 4.42 27.89% 2,967.78
08/31/94 9.970886 280.758 2,799.41 (0.32) 2,793.45 8,436.29 4.34 29.03% 3,020.03
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT $1,000.00
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
09/30/94 9.668790 280.758 2,714.59 (0.31) 2,709.12 8,436.29 4.25 30.60% 3,114.03
10/31/94 10.016797 280.758 2,812.30 (0.30) 2,806.94 8,436.29 4.17 30.20% 3,005.52
11/30/94 9.580338 280.758 2,689.76 (0.31) 2,684.94 8,436.29 4.09 32.32% 3,142.07
12/31/94 9.531263 280.758 2,675.98 (0.30) 2,671.49 8,436.29 4.00 33.28% 3,157.90
01/31/95 9.573181 280.758 2,687.75 (0.30) 2,683.54 8,436.29 3.92 33.96% 3,143.72
02/28/95 9.854112 280.758 2,766.62 (0.30) 2,762.59 8,436.29 3.84 33.73% 3,053.76
03/31/95 10.261315 280.758 2,880.95 (0.31) 2,877.06 8,436.29 3.76 33.16% 2,932.27
04/30/95 10.488427 280.758 2,944.71 (0.32) 2,941.05 8,436.29 3.67 33.22% 2,868.46
05/31/95 10.919240 280.758 3,065.67 (0.33) 3,062.19 8,436.29 3.59 32.63% 2,754.99
06/30/95 11.684330 280.758 3,280.47 (0.34) 3,277.09 8,436.29 3.51 30.95% 2,574.32
07/31/95 12.597713 280.758 3,536.91 (0.37) 3,533.63 8,436.29 3.42 28.96% 2,387.43
08/31/95 12.400749 280.758 3,481.61 (0.39) 3,478.78 8,436.29 3.34 30.40% 2,425.07
09/30/95 13.189073 280.758 3,702.94 (0.39) 3,700.32 8,436.29 3.25 28.81% 2,279.88
10/31/95 13.367548 280.758 3,753.05 (0.41) 3,750.80 8,436.29 3.17 29.14% 2,249.20
11/30/95 13.841705 280.758 3,886.18 (0.42) 3,884.27 8,436.29 3.09 28.56% 2,171.91
12/31/95 13.795672 280.758 3,873.25 (0.43) 3,871.78 8,436.29 3.00 29.61% 2,178.92
01/31/96 14.089220 280.758 3,955.67 (0.43) 3,954.60 8,436.29 2.92 29.65% 2,133.29
02/29/96 14.567715 280.758 4,090.01 (0.44) 4,089.35 8,436.29 2.84 29.06% 2,062.99
03/31/96 14.416126 280.758 4,047.45 (0.46) 4,047.25 8,436.29 2.75 30.57% 2,084.45
04/30/96 15.219758 280.758 4,273.08 (0.45) 4,273.32 8,436.29 2.67 29.00% 1,974.18
05/31/96 15.956112 280.758 4,479.81 (0.48) 4,480.55 8,436.29 2.59 27.72% 1,882.87
06/30/96 15.770791 280.758 4,427.78 (0.50) 4,429.01 8,436.29 2.50 29.35% 1,904.78
07/31/96 14.432441 280.758 4,052.03 (0.49) 4,053.64 8,436.29 2.42 35.39% 2,081.16
08/31/96 14.960682 280.758 4,200.34 (0.45) 4,202.47 8,436.29 2.33 34.79% 2,007.46
09/30/96 15.972695 280.758 4,484.47 (0.47) 4,487.21 8,436.29 2.25 32.36% 1,880.07
10/31/96 15.806720 280.758 4,437.87 (0.50) 4,441.08 8,436.29 2.17 34.46% 1,899.60
11/30/96 16.624645 280.758 4,667.51 (0.50) 4,671.39 8,436.29 2.08 32.78% 1,805.95
12/31/96 16.007469 280.758 4,494.23 (0.52) 4,498.49 8,436.29 2.00 36.94% 1,875.36
01/31/97 16.784447 280.758 4,712.37 (0.50) 4,717.34 8,436.29 1.92 35.46% 1,788.36
02/28/97 16.277629 280.758 4,570.08 (0.53) 4,575.42 8,436.29 1.84 39.49% 1,843.83
03/31/97 15.258718 280.758 4,284.01 (0.51) 4,289.53 8,436.29 1.75 47.07% 1,966.72
04/30/97 16.125707 280.758 4,527.43 (0.48) 4,533.74 8,436.29 1.67 45.00% 1,860.78
05/31/97 17.012378 280.758 4,776.37 (0.51) 4,783.53 8,436.29 1.59 43.00% 1,763.61
06/30/97 17.705439 280.758 4,970.95 (0.53) 4,978.94 8,436.29 1.50 41.99% 1,694.39
07/23/97 19.289712 280.758 5,415.75 0.61 5,423.85 8,436.29 1.44 35.87% 1,555.41
07/31/97 19.486720 280.758 5,471.06 0.23 5,479.01 8,436.29 1.42 35.54% 1,539.75
08/31/97 18.032035 280.758 5,062.65 0.23 5,069.77 8,436.29 1.33 46.47% 1,664.04
09/30/97 19.315403 280.758 5,422.96 0.21 5,430.38 8,436.29 1.25 42.17% 1,553.54
10/31/97 18.217685 280.758 5,114.77 0.23 5,121.54 8,436.29 1.17 53.36% 1,647.22
11/30/97 18.470174 280.758 5,185.66 0.22 5,192.30 8,436.29 1.08 56.42% 1,624.77
12/31/97 18.522685 280.758 5,200.40 0.22 5,206.84 8,436.29 1.00 62.02% 1,620.23
01/31/98 19.252903 280.758 5,405.41 0.07 5,412.04 8,436.29 0.92 55.88% 1,501.12
02/28/98 20.891242 280.758 5,865.39 0.07 5,872.52 8,436.29 0.84 43.66% 1,354.87
03/31/98 22.089526 280.758 6,201.82 0.08 6,209.27 8,436.29 0.75 35.87% 1,259.76
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT $1,000.00
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann ERV of
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/30/98 23.413455 280.758 6,573.52 0.08 6,581.34 8,436.29 0.67 28.18% 1,181.36
05/31/98 22.697802 280.758 6,372.60 0.09 6,380.09 8,436.29 0.59 32.23% 1,177.97
06/30/98 25.012019 280.758 7,022.33 0.08 7,030.51 8,436.29 0.50 20.00% 1,096.25
07/31/98 25.687981 280.758 7,212.12 0.09 7,220.41 8,436.29 0.42 16.84% 1,067.41
08/31/98 21.313960 280.758 5,984.07 0.10 5,990.86 8,436.29 0.33 40.82% 1,121.22
09/30/98 23.404466 280.758 6,571.00 0.08 6,578.37 8,436.29 0.25 28.24% 1,064.71
10/31/98 24.248780 280.758 6,808.05 0.09 6,815.60 8,436.29 0.17 23.78% 1,036.30
11/30/98 25.807634 280.758 7,245.71 0.09 7,253.66 8,436.29 0.08 16.30% 1,012.91
12/31/98 30.015641 280.758 8,427.14 0.10 8,436.29 8,436.29 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - WRL SUBACCOUNT
PERFORMANCE CALCULATIONS
INITIAL INVESTMENT $1,000.00
<TABLE>
<CAPTION>
Adjusted Ending
Gross Admin/ Account Redeemable Avg Ann
Month Yr Fund NAV Shares Value Mthly M/E Value Value n Return
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE EQUITY SUBACCOUNT
PERFORMANCE RETURNS
Initial investment $1,000
AUV 0.999050
-------------
Units purchased 1,000.951
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 119.32%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/27/93 0.999050 1,000.951 1,000.00 1,000.00 2,193.24 5.60 15.06% 2,193.24
05/31/93 0.999050 1,000.951 1,000.00 0.00001270 0.01270137 999.99 2,193.24 5.59 15.09% 2,193.24
06/30/93 1.004782 1,000.951 1,005.74 0.00009526 0.09525906 1,005.63 2,193.24 5.51 15.33% 2,193.24
07/31/93 0.997653 1,000.951 998.60 0.00009844 0.09898975 998.40 2,193.24 5.42 15.59% 2,193.24
08/30/93 1.021325 1,000.951 1,022.30 0.00009526 0.09510742 1,021.99 2,193.24 5.34 15.84% 2,193.24
09/30/93 1.009223 1,000.951 1,010.18 0.00009844 0.10060021 1,009.78 2,193.24 5.26 16.12% 2,193.24
10/31/93 1.012084 1,000.951 1,013.05 0.00009844 0.09939826 1,012.54 2,193.24 5.17 16.41% 2,193.24
11/30/93 1.008866 1,000.951 1,009.83 0.00009526 0.09645509 1,009.23 2,193.24 5.09 16.69% 2,193.24
12/31/93 1.018576 1,000.951 1,019.54 0.00009844 0.09934385 1,018.84 2,193.24 5.00 17.00% 2,193.24
01/31/94 1.046074 1,000.951 1,047.07 0.00009844 0.10029023 1,046.25 2,193.24 4.92 17.32% 2,193.24
02/28/94 1.035073 1,000.951 1,036.06 0.00008891 0.09302128 1,035.15 2,193.24 4.84 17.61% 2,193.24
03/31/94 0.998303 1,000.951 999.25 0.00009844 0.10189562 998.28 2,193.24 4.76 17.96% 2,193.24
04/30/94 1.031724 1,000.951 1,032.71 0.00009526 0.09509597 1,031.60 2,193.24 4.67 17.51% 2,126.06
05/31/94 1.046247 1,000.951 1,047.24 0.00009844 0.1015462 1,046.02 2,193.24 4.59 17.51% 2,096.75
06/30/94 1.011559 1,000.951 1,012.52 0.00009526 0.09964415 1,011.24 2,193.24 4.51 18.74% 2,168.87
07/05/94 1.012120 1,000.951 1,013.08 0.00001588 0.01605516 1,011.78 2,193.24 4.49 18.79% 2,167.70
<CAPTION>
Account value 1,011.78
01/00/00 0.980009 0
------------
1,032.424
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/94 0.997015 1,032.424 1,029.34 (0.00009552) -0.09659695 1,028.12 2,193.24 4.42 18.69% 2,133.26
08/31/94 1.039197 1,032.424 1,072.89 (0.00011389) -0.11709584 1,071.74 2,193.24 4.34 17.95% 2,046.44
09/30/94 1.007469 1,032.424 1,040.14 (0.00011022) -0.11812578 1,039.13 2,193.24 4.25 19.19% 2,110.65
10/31/94 1.027836 1,032.424 1,061.16 (0.00011389) -0.11835001 1,060.26 2,193.24 4.17 19.04% 2,068.60
11/30/94 0.994316 1,032.424 1,026.56 (0.00011022) -0.1168607 1,025.80 2,193.24 4.09 20.43% 2,138.09
12/31/94 1.009026 1,032.424 1,041.74 (0.00011389) -0.11683124 1,041.09 2,193.24 4.00 20.46% 2,106.68
01/31/95 1.035859 1,032.424 1,069.45 (0.00011389) -0.11857296 1,068.89 2,193.24 3.92 20.14% 2,051.88
02/28/95 1.075980 1,032.424 1,110.87 (0.00010287) -0.10995841 1,110.40 2,193.24 3.84 19.39% 1,975.18
03/31/95 1.101946 1,032.424 1,137.68 (0.00011389) -0.12646743 1,137.33 2,193.24 3.76 19.10% 1,928.42
04/30/95 1.111635 1,032.424 1,147.68 (0.00011022) -0.12535529 1,147.45 2,193.24 3.67 19.28% 1,911.40
05/31/95 1.176305 1,032.424 1,214.45 (0.00011389) -0.13068702 1,214.34 2,193.24 3.59 17.91% 1,806.12
06/30/95 1.215430 1,032.424 1,254.84 (0.00011022) -0.13384325 1,254.86 2,193.24 3.51 17.26% 1,747.80
07/31/95 1.263845 1,032.424 1,304.82 (0.00011389) -0.14292008 1,304.99 2,193.24 3.42 16.38% 1,680.66
08/31/95 1.260258 1,032.424 1,301.12 (0.00011389) -0.14862938 1,301.43 2,193.24 3.34 16.93% 1,685.25
09/30/95 1.290620 1,032.424 1,332.47 (0.00011022) -0.14344304 1,332.93 2,193.24 3.25 16.53% 1,645.43
10/31/95 1.261467 1,032.424 1,302.37 (0.00011389) -0.15181182 1,302.98 2,193.24 3.17 17.85% 1,683.26
11/30/95 1.318064 1,032.424 1,360.80 (0.00011022) -0.14361284 1,361.58 2,193.24 3.09 16.70% 1,610.81
12/31/95 1.336071 1,032.424 1,379.39 (0.00011389) -0.1550744 1,380.33 2,193.24 3.00 16.67% 1,588.92
01/31/96 1.400664 1,032.424 1,446.08 (0.00011389) -0.15721064 1,447.22 2,193.24 2.92 15.31% 1,515.48
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE EQUITY SUBACCOUNT
PERFORMANCE RETURNS
Initial investment $1,000
AUV 0.999050
-------------
Units purchased 1,000.951
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/29/96 1.427871 1,032.424 1,474.17 (0.00010655) -0.15419485 1,475.49 2,193.24 2.84 14.99% 1,486.45
03/31/96 1.452203 1,032.424 1,499.29 (0.00011389) -0.16804823 1,500.80 2,193.24 2.75 14.77% 1,461.38
04/30/96 1.453854 1,032.424 1,500.99 (0.00011022) -0.16541714 1,502.67 2,193.24 2.67 15.21% 1,459.56
05/31/96 1.490433 1,032.424 1,538.76 (0.00011389) -0.17114421 1,540.65 2,193.24 2.59 14.63% 1,423.58
06/30/96 1.482843 1,032.424 1,530.92 (0.00011022) -0.16980938 1,532.98 2,193.24 2.50 15.38% 1,430.71
07/31/96 1.424462 1,032.424 1,470.65 (0.00011389) -0.17459546 1,472.80 2,193.24 2.42 17.89% 1,489.17
08/31/96 1.481506 1,032.424 1,529.54 (0.00011389) -0.16774135 1,531.94 2,193.24 2.33 16.62% 1,431.67
09/30/96 1.538327 1,032.424 1,588.21 (0.00011022) -0.16884951 1,590.87 2,193.24 2.25 15.32% 1,378.64
10/31/96 1.564640 1,032.424 1,615.37 (0.00011389) -0.1811889 1,618.26 2,193.24 2.17 15.06% 1,355.31
11/30/96 1.644057 1,032.424 1,697.36 (0.00011022) -0.17836332 1,700.58 2,193.24 2.08 12.98% 1,289.70
12/31/96 1.627513 1,032.424 1,680.28 (0.00011389) -0.1936841 1,683.66 2,193.24 2.00 14.13% 1,302.66
01/31/97 1.684750 1,032.424 1,739.38 (0.00011389) -0.19175713 1,743.06 2,193.24 1.92 12.75% 1,258.27
02/28/97 1.685467 1,032.424 1,740.12 (0.00010287) -0.17931088 1,743.98 2,193.24 1.84 13.28% 1,257.60
03/31/97 1.629436 1,032.424 1,682.27 (0.00011389) -0.19862767 1,686.20 2,193.24 1.75 16.18% 1,300.70
04/30/97 1.661111 1,032.424 1,714.97 (0.00011022) -0.18585212 1,719.17 2,193.24 1.67 15.69% 1,275.76
05/31/97 1.742487 1,032.424 1,798.99 (0.00011389) -0.19580161 1,803.59 2,193.24 1.59 13.12% 1,216.04
06/30/97 1.833816 1,032.424 1,893.28 (0.00011022) -0.1987897 1,898.32 2,193.24 1.50 10.08% 1,155.36
07/23/97 1.912635 1,032.424 1,974.65 (0.00008450) -0.1229812 1,980.03 2,193.24 1.44 7.35% 1,107.68
07/31/97 1.945062 1,032.424 2,008.13 0.00000348 0.00184007 2,013.60 2,193.24 1.42 6.21% 1,089.21
08/31/97 1.894216 1,032.424 1,955.63 0.00001350 0.02719184 1,960.93 2,193.24 1.33 8.75% 1,118.47
09/30/97 1.964477 1,032.424 2,028.17 0.00001307 0.02562644 2,033.64 2,193.24 1.25 6.22% 1,078.48
10/31/97 1.925186 1,032.424 1,987.61 0.00001350 0.02746253 1,992.94 2,193.24 1.17 8.55% 1,100.50
11/30/97 1.960718 1,032.424 2,024.29 0.00001307 0.02604474 2,029.70 2,193.24 1.08 7.40% 1,080.57
12/31/97 1.999623 1,032.424 2,064.46 0.00001350 0.02740926 2,069.94 2,193.24 1.00 5.96% 1,059.57
01/31/98 1.973058 1,032.424 2,037.03 0.00001350 0.02795275 2,042.42 2,193.24 0.92 7.38% 1,067.37
02/28/98 2.105738 1,032.424 2,174.01 0.00001220 0.02491189 2,179.74 2,193.24 0.84 0.62% 1,005.19
03/31/98 2.205981 1,032.424 2,277.51 0.00001350 0.02943539 2,283.47 2,193.24 0.75 -3.95% 970.08
04/30/98 2.220584 1,032.424 2,292.58 0.00001307 0.02984154 2,298.56 2,193.24 0.67 -4.58% 969.01
05/31/98 2.180218 1,032.424 2,250.91 0.00001350 0.03103998 2,256.74 2,193.24 0.59 -2.81% 983.40
06/30/98 2.204949 1,032.424 2,276.44 0.00001307 0.02949224 2,282.31 2,193.24 0.50 -3.90% 980.13
07/31/98 2.122493 1,032.424 2,191.31 0.00001350 0.03082061 2,196.93 2,193.24 0.42 -0.17% 999.29
08/31/98 1.799560 1,032.424 1,857.91 0.00001350 0.02966763 1,862.64 2,193.24 0.33 17.75% 1,056.13
09/30/98 1.851336 1,032.424 1,911.36 0.00001307 0.02434196 1,916.21 2,193.24 0.25 14.46% 1,034.62
10/31/98 2.038205 1,032.424 2,104.29 0.00001350 0.02587673 2,109.60 2,193.24 0.17 3.96% 1,006.52
11/30/98 2.112947 1,032.424 2,181.46 0.00001307 0.02756933 2,186.94 2,193.24 0.08 0.29% 1,000.24
12/31/98 2.119071 1,032.424 2,187.78 0.00001350 0.02953262 2,193.24 2,193.24 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE EQUITY SUBACCOUNT
PERFORMANCE RETURNS
Initial investment $1,000
AUV 0.999050
-------------
Units purchased 1,000.951
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE SMALL CAP SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999962
------------
Units purchased 1,000.038
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/04/93 0.999962 1,000.038 1,000.00 1,000.00 1,772.08 5.66 10.63% 1,772.08
05/31/93 0.999050 1,000.038 999.09 0.00008573 0.085734247 999.00 1,772.08 5.59 10.78% 1,772.08
06/30/93 1.000790 1,000.038 1,000.83 0.00009526 0.095165226 1,000.65 1,772.08 5.51 10.95% 1,772.08
07/31/93 1.034532 1,000.038 1,034.57 0.00009844 0.098499303 1,034.29 1,772.08 5.42 10.44% 1,713.33
08/30/93 1.065127 1,000.038 1,065.17 0.00009526 0.098526335 1,064.77 1,772.08 5.34 10.01% 1,664.27
09/30/93 1.093740 1,000.038 1,093.78 0.00009844 0.104811769 1,093.27 1,772.08 5.25 9.63% 1,620.89
10/31/93 1.091540 1,000.038 1,091.58 0.00009844 0.107617059 1,090.97 1,772.08 5.17 9.84% 1,624.32
11/30/93 1.064416 1,000.038 1,064.46 0.00009526 0.103925806 1,063.75 1,772.08 5.09 10.55% 1,665.87
12/31/93 1.107447 1,000.038 1,107.49 0.00009844 0.104711203 1,106.65 1,772.08 5.00 9.87% 1,601.29
01/31/94 1.134150 1,000.038 1,134.19 0.00009844 0.108934042 1,133.23 1,772.08 4.92 9.52% 1,563.74
02/28/94 1.129975 1,000.038 1,130.02 0.00008891 0.100754802 1,128.96 1,772.08 4.84 9.76% 1,569.66
03/31/94 1.063464 1,000.038 1,063.50 0.00009844 0.111129407 1,062.39 1,772.08 4.76 11.36% 1,668.00
04/30/94 1.062289 1,000.038 1,062.33 0.00009526 0.101203863 1,061.12 1,772.08 4.67 11.60% 1,670.01
05/31/94 1.047201 1,000.038 1,047.24 0.00009844 0.104451818 1,045.94 1,772.08 4.59 12.17% 1,694.24
06/30/94 1.021404 1,000.038 1,021.44 0.00009526 0.099636751 1,020.08 1,772.08 4.51 13.04% 1,737.20
07/05/94 1.022193 1,000.038 1,022.23 0.00001588 0.016195464 1,020.85 1,772.08 4.49 13.06% 1,735.89
<CAPTION>
Account value 1,020.85
Inception AUV 0.958389
-----------
Account value 1065.171 0
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
07/31/94 0.975788 1,065.171 1,039.38 (0.00009552) -0.097441079 1,038.09 1,772.08 4.42 12.86% 1,707.06
08/31/94 1.015748 1,065.171 1,081.95 (0.00011389) -0.11823119 1,080.72 1,772.08 4.34 12.08% 1,639.72
09/30/94 1.022652 1,065.171 1,089.30 (0.00011022) -0.11911588 1,088.18 1,772.08 4.25 12.14% 1,628.47
10/31/94 0.993705 1,065.171 1,058.47 (0.00011389) -0.12393659 1,057.50 1,772.08 4.17 13.18% 1,675.71
11/30/94 0.979542 1,065.171 1,043.38 (0.00011022) -0.11655733 1,042.55 1,772.08 4.09 13.86% 1,699.75
12/31/94 1.004766 1,065.171 1,070.25 (0.00011389) -0.11873921 1,069.51 1,772.08 4.00 13.45% 1,656.90
01/31/95 0.970425 1,065.171 1,033.67 (0.00011389) -0.12181037 1,033.08 1,772.08 3.92 14.77% 1,715.33
02/28/95 0.981984 1,065.171 1,045.98 (0.00010287) -0.10627445 1,045.49 1,772.08 3.84 14.73% 1,694.97
03/31/95 0.978971 1,065.171 1,042.77 (0.00011389) -0.11907459 1,042.41 1,772.08 3.76 15.17% 1,699.99
04/30/95 0.988491 1,065.171 1,052.91 (0.00011022) -0.11489303 1,052.66 1,772.08 3.67 15.23% 1,683.43
05/31/95 1.031973 1,065.171 1,099.23 (0.00011389) -0.1198904 1,099.08 1,772.08 3.59 14.24% 1,612.32
06/30/95 1.057563 1,065.171 1,126.49 (0.00011022) -0.12113983 1,126.46 1,772.08 3.51 13.79% 1,573.14
07/31/95 1.091393 1,065.171 1,162.52 (0.00011389) -0.12829568 1,162.62 1,772.08 3.42 13.11% 1,524.21
08/31/95 1.110334 1,065.171 1,182.70 (0.00011389) -0.1324143 1,182.93 1,772.08 3.34 12.88% 1,498.04
09/30/95 1.119032 1,065.171 1,191.96 (0.00011022) -0.13038137 1,192.33 1,772.08 3.25 12.95% 1,486.24
10/31/95 1.083200 1,065.171 1,153.79 (0.00011389) -0.13579767 1,154.28 1,772.08 3.17 14.48% 1,535.22
11/30/95 1.095599 1,065.171 1,167.00 (0.00011022) -0.12722403 1,167.62 1,772.08 3.09 14.47% 1,517.68
12/31/95 1.127390 1,065.171 1,200.86 (0.00011389) -0.13298415 1,201.64 1,772.08 3.00 13.81% 1,474.72
01/31/96 1.110062 1,065.171 1,182.41 (0.00011389) -0.13685809 1,183.30 1,772.08 2.92 14.84% 1,497.57
02/29/96 1.133462 1,065.171 1,207.33 (0.00010655) -0.12607532 1,208.37 1,772.08 2.84 14.44% 1,466.50
03/31/96 1.166908 1,065.171 1,242.96 (0.00011389) -0.13762547 1,244.17 1,772.08 2.75 13.71% 1,424.31
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE SMALL CAP SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999962
------------
Units purchased 1,000.038
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/30/96 1.210194 1,065.171 1,289.06 (0.00011022) -0.13713114 1,290.46 1,772.08 2.67 12.61% 1,373.22
05/31/96 1.259131 1,065.171 1,341.19 (0.00011389) -0.14697418 1,342.79 1,772.08 2.59 11.32% 1,319.70
06/30/96 1.216427 1,065.171 1,295.70 (0.00011022) -0.1480008 1,297.39 1,772.08 2.50 13.26% 1,365.87
07/31/96 1.170700 1,065.171 1,247.00 (0.00011389) -0.14776419 1,248.77 1,772.08 2.42 15.57% 1,419.06
08/31/96 1.220623 1,065.171 1,300.17 (0.00011389) -0.14222638 1,302.16 1,772.08 2.33 14.11% 1,360.87
09/30/96 1.246547 1,065.171 1,327.79 (0.00011022) -0.14352352 1,329.96 1,772.08 2.25 13.59% 1,332.42
10/31/96 1.257177 1,065.171 1,339.11 (0.00011389) -0.15147379 1,341.46 1,772.08 2.17 13.71% 1,321.01
11/30/96 1.371418 1,065.171 1,460.80 (0.00011022) -0.14785427 1,463.50 1,772.08 2.08 9.61% 1,210.84
12/31/96 1.394113 1,065.171 1,484.97 (0.00011389) -0.16668311 1,487.89 1,772.08 2.00 9.13% 1,191.00
01/31/97 1.459421 1,065.171 1,554.53 (0.00011389) -0.16946046 1,557.76 1,772.08 1.92 6.96% 1,137.58
02/28/97 1.458537 1,065.171 1,553.59 (0.00010287) -0.16024873 1,556.98 1,772.08 1.84 7.29% 1,138.15
03/31/97 1.414948 1,065.171 1,507.16 (0.00011389) -0.17732902 1,510.62 1,772.08 1.75 9.53% 1,173.08
04/30/97 1.414933 1,065.171 1,507.15 (0.00011022) -0.16649967 1,510.77 1,772.08 1.67 10.02% 1,172.96
05/31/97 1.545868 1,065.171 1,646.61 (0.00011389) -0.1720668 1,650.75 1,772.08 1.59 4.57% 1,073.50
06/30/97 1.635700 1,065.171 1,742.30 (0.00011022) -0.1819443 1,746.86 1,772.08 1.50 0.96% 1,014.44
07/23/97 1.680492 1,065.171 1,790.01 (0.00008450) -0.11316916 1,794.81 1,772.08 1.44 -0.88% 987.33
07/31/97 1.722182 1,065.171 1,834.42 0.00000348 0.001667942 1,839.33 1,772.08 1.42 -2.59% 963.43
08/31/97 1.762335 1,065.171 1,877.19 0.00001350 0.024838542 1,882.19 1,772.08 1.33 -4.42% 941.50
09/30/97 1.831666 1,065.171 1,951.04 0.00001307 0.024597408 1,956.21 1,772.08 1.25 -7.59% 905.87
10/31/97 1.743079 1,065.171 1,856.68 0.00001350 0.026416918 1,861.58 1,772.08 1.17 -4.13% 951.92
11/30/97 1.735838 1,065.171 1,848.96 0.00001307 0.024327996 1,853.82 1,772.08 1.08 -4.07% 955.91
12/31/97 1.721966 1,065.171 1,834.19 0.00001350 0.02503417 1,838.98 1,772.08 1.00 -3.64% 963.62
01/31/98 1.694706 1,065.171 1,805.15 0.00001350 0.02483377 1,809.84 1,772.08 0.92 -2.09% 980.89
02/28/98 1.824684 1,065.171 1,943.60 0.00001220 0.022075108 1,948.63 1,772.08 0.84 -9.06% 923.47
03/31/98 1.912221 1,065.171 2,036.84 0.00001350 0.026314485 2,042.08 1,772.08 0.75 -13.22% 898.66
04/30/98 1.921365 1,065.171 2,046.58 0.00001307 0.026686969 2,051.82 1,772.08 0.67 -13.63% 906.30
05/31/98 1.845974 1,065.171 1,966.28 0.00001350 0.027708042 1,971.29 1,772.08 0.59 -10.11% 939.45
06/30/98 1.808084 1,065.171 1,925.92 0.00001307 0.025761729 1,930.80 1,772.08 0.50 -8.22% 957.68
07/31/98 1.651077 1,065.171 1,758.68 0.00001350 0.0260737 1,763.11 1,772.08 0.42 0.51% 1,002.13
08/31/98 1.275053 1,065.171 1,358.15 0.00001350 0.023809209 1,361.55 1,772.08 0.33 30.15% 1,092.08
09/30/98 1.301774 1,065.171 1,386.61 0.00001307 0.017793355 1,390.06 1,772.08 0.25 27.48% 1,063.11
10/31/98 1.440211 1,065.171 1,534.07 0.00001350 0.018771548 1,537.87 1,772.08 0.17 15.23% 1,023.97
11/30/98 1.575896 1,065.171 1,678.60 0.00001307 0.020097631 1,682.73 1,772.08 0.08 5.31% 1,004.40
12/31/98 1.659586 1,065.171 1,767.74 0.00001350 0.022723831 1,772.08 1,772.08 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - VALUE SMALL CAP SUBACCOUNT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 0.999962
------------
Units purchased 1,000.038
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Additional Additional
M&E & M&E &
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - DREYFUS US GOVERNMENT SECURITIES SUBACCOUNT
Performance Calculations
Initial investment $1,000
AUV 0.998670
----------
Units purchased 1001.332
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 28.17%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/09/94 0.99867 1,001.332 1,000.00 1,000.00 1,281.72 4.65 5.48% 1,281.72
05/31/94 0.997834 1,001.332 999.16 0.00006986 0.069857534 999.09 1,281.72 4.59 5.58% 1,282.88
06/30/94 0.991708 1,001.332 993.03 0.00009526 0.095173876 992.86 1,281.72 4.51 5.83% 1,290.93
07/31/94 1.000569 1,001.332 1,001.90 0.00009844 0.097733192 1,001.64 1,281.72 4.42 5.73% 1,279.62
08/03/94 1.000378 1,001.332 1,001.71 0.00000953 0.009541628 1,001.44 1,281.72 4.4137 5.75% 1,279.88
08/03/94 1.000769 1,000.670 1,001.44 - 0 1,001.44 1,281.72 4.4137 5.75% 1,279.88
<CAPTION>
Account value 1,001.440
Inception AUV 1.000769
-----------
Units 1,000.670
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
08/31/94 0.999558 1,000.670 1,000.23 (0.00010287) -0.10303971 1,000.33 1,281.72 4.34 5.88% 1,281.30
09/30/94 0.990269 1,000.670 990.93 (0.00011022) -0.11025563 991.14 1,281.72 4.25 6.23% 1,293.17
10/31/94 0.987905 1,000.670 988.57 (0.00011389) -0.11288461 988.89 1,281.72 4.17 6.42% 1,296.12
11/30/94 0.983608 1,000.670 984.27 (0.00011022) -0.10899482 984.70 1,281.72 4.09 6.66% 1,301.64
12/31/94 0.985254 1,000.670 985.91 (0.00011389) -0.11215051 986.46 1,281.72 4.00 6.76% 1,299.31
01/31/95 0.998661 1,000.670 999.33 (0.00011389) -0.11235096 1,000.00 1,281.72 3.92 6.54% 1,281.73
02/28/95 1.015168 1,000.670 1,015.85 (0.00010287) -0.10287072 1,016.63 1,281.72 3.84 6.22% 1,260.76
03/31/95 1.024778 1,000.670 1,025.46 (0.00011389) -0.11578685 1,026.37 1,281.72 3.76 6.09% 1,248.79
04/30/95 1.017405 1,000.670 1,018.09 (0.00011022) -0.11312528 1,019.10 1,281.72 3.67 6.44% 1,257.70
05/31/95 1.066049 1,000.670 1,066.76 (0.00011389) -0.11606797 1,067.94 1,281.72 3.59 5.22% 1,200.18
06/30/95 1.070568 1,000.670 1,071.29 (0.00011022) -0.11770704 1,072.58 1,281.72 3.51 5.21% 1,194.99
07/31/95 1.065120 1,000.670 1,065.83 (0.00011389) -0.12215961 1,067.24 1,281.72 3.42 5.50% 1,200.96
08/31/95 1.072596 1,000.670 1,073.31 (0.00011389) -0.12155187 1,074.86 1,281.72 3.34 5.42% 1,192.46
09/30/95 1.082027 1,000.670 1,082.75 (0.00011022) -0.11846988 1,084.43 1,281.72 3.25 5.27% 1,181.93
10/31/95 1.093303 1,000.670 1,094.04 (0.00011389) -0.12350876 1,095.85 1,281.72 3.17 5.07% 1,169.61
11/30/95 1.107600 1,000.670 1,108.34 (0.00011022) -0.12078381 1,110.30 1,281.72 3.09 4.76% 1,154.39
12/31/95 1.120922 1,000.670 1,121.67 (0.00011389) -0.12645582 1,123.78 1,281.72 3.00 4.48% 1,140.54
01/31/96 1.125164 1,000.670 1,125.92 (0.00011389) -0.1279912 1,128.16 1,281.72 2.92 4.47% 1,136.11
02/29/96 1.099164 1,000.670 1,099.90 (0.00010655) -0.12020046 1,102.21 1,281.72 2.84 5.46% 1,162.86
03/31/96 1.086952 1,000.670 1,087.68 (0.00011389) -0.12553472 1,090.09 1,281.72 2.75 6.06% 1,175.79
04/30/96 1.077560 1,000.670 1,078.28 (0.00011022) -0.12014932 1,080.80 1,281.72 2.67 6.59% 1,185.90
05/31/96 1.073859 1,000.670 1,074.58 (0.00011389) -0.1230952 1,077.21 1,281.72 2.59 6.95% 1,189.86
06/30/96 1.083599 1,000.670 1,084.33 (0.00011022) -0.11872881 1,087.10 1,281.72 2.50 6.80% 1,179.03
07/31/96 1.084008 1,000.670 1,084.73 (0.00011389) -0.12381274 1,087.63 1,281.72 2.42 7.02% 1,178.45
08/31/96 1.080540 1,000.670 1,081.26 (0.00011389) -0.12387357 1,084.27 1,281.72 2.33 7.43% 1,182.10
09/30/96 1.097107 1,000.670 1,097.84 (0.00011022) -0.11950779 1,101.02 1,281.72 2.25 6.98% 1,164.12
10/31/96 1.118639 1,000.670 1,119.39 (0.00011389) -0.12539838 1,122.75 1,281.72 2.17 6.30% 1,141.59
11/30/96 1.136207 1,000.670 1,136.97 (0.00011022) -0.12374879 1,140.51 1,281.72 2.08 5.76% 1,123.81
12/31/96 1.122583 1,000.670 1,123.34 (0.00011389) -0.12989608 1,126.96 1,281.72 2.00 6.65% 1,137.32
01/31/97 1.123020 1,000.670 1,123.77 (0.00011389) -0.12835332 1,127.53 1,281.72 1.92 6.92% 1,136.75
02/28/97 1.125599 1,000.670 1,126.35 (0.00010287) -0.11599036 1,130.23 1,281.72 1.84 7.08% 1,134.03
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - DREYFUS US GOVERNMENT SECURITIES SUBACCOUNT
Performance Calculations
Initial investment $1,000
AUV 0.998670
----------
Units purchased 1001.332
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
03/31/97 1.111095 1,000.670 1,111.84 (0.00011389) -0.12872602 1,115.80 1,281.72 1.75 8.23% 1,148.70
04/30/97 1.124518 1,000.670 1,125.27 (0.00011022) -0.12298255 1,129.40 1,281.72 1.67 7.86% 1,134.87
05/31/97 1.132937 1,000.670 1,133.70 (0.00011389) -0.12863124 1,137.99 1,281.72 1.59 7.79% 1,126.30
06/30/97 1.144741 1,000.670 1,145.51 (0.00011022) -0.12542799 1,149.97 1,281.72 1.50 7.48% 1,114.57
07/23/97 1.165042 1,000.670 1,165.82 (0.00008450) -0.07450003 1,170.44 1,281.72 1.44 6.51% 1,095.08
07/31/97 1.172841 1,000.670 1,173.63 0.00000348 0.001087705 1,178.27 1,281.72 1.42 6.11% 1,087.80
08/31/97 1.159200 1,000.670 1,159.98 0.00001350 0.015911504 1,164.55 1,281.72 1.33 7.45% 1,100.61
09/30/97 1.176051 1,000.670 1,176.84 0.00001307 0.015218929 1,181.46 1,281.72 1.25 6.72% 1,084.86
10/31/97 1.191882 1,000.670 1,192.68 0.00001350 0.01595463 1,197.35 1,281.72 1.17 6.01% 1,070.46
11/30/97 1.195607 1,000.670 1,196.41 0.00001307 0.015647595 1,201.08 1,281.72 1.08 6.17% 1,067.14
12/31/97 1.206194 1,000.670 1,207.00 0.00001350 0.016219504 1,211.70 1,281.72 1.00 5.78% 1,057.79
01/31/98 1.220958 1,000.670 1,221.78 0.00001350 0.016362908 1,226.51 1,281.72 0.92 4.50% 1,041.11
02/28/98 1.215508 1,000.670 1,216.32 0.00001220 0.014960103 1,221.02 1,281.72 0.84 4.97% 1,041.51
03/31/98 1.216958 1,000.670 1,217.77 0.00001350 0.016488837 1,222.46 1,281.72 0.75 4.85% 1,036.31
04/30/98 1.218502 1,000.670 1,219.32 0.00001307 0.015975759 1,224.00 1,281.72 0.67 4.72% 1,031.41
05/31/98 1.232009 1,000.670 1,232.83 0.00001350 0.016529013 1,237.55 1,281.72 0.59 3.57% 1,020.77
06/30/98 1.242926 1,000.670 1,243.76 0.00001307 0.016172915 1,248.50 1,281.72 0.50 2.66% 1,013.33
07/31/98 1.242395 1,000.670 1,243.23 0.00001350 0.016859882 1,247.95 1,281.72 0.42 2.71% 1,011.26
08/31/98 1.256439 1,000.670 1,257.28 0.00001350 0.016852451 1,262.04 1,281.72 0.33 1.56% 1,005.19
09/30/98 1.280896 1,000.670 1,281.75 0.00001307 0.016492958 1,286.59 1,281.72 0.25 -0.38% 999.04
10/31/98 1.274137 1,000.670 1,274.99 0.00001350 0.017374243 1,279.78 1,281.72 0.17 0.15% 1,000.25
11/30/98 1.273566 1,000.670 1,274.42 0.00001307 0.016724834 1,279.19 1,281.72 0.08 0.20% 1,000.17
12/31/98 1.276099 1,000.670 1,276.95 0.00001350 0.017274357 1,281.72 1,281.72 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - DREYFUS US GOVERNMENT SECURITIES SUBACCOUNT
Performance Calculations
Initial investment $1,000
AUV 0.998670
----------
Units purchased 1001.332
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Ending
Actual Acct Value Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T. Rowe Price Equity Income
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- -------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 110.70%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/01/95 1.000000 1000 1,000.00 1,000.00 2,107.02 4.00 20.48% 2,107.02
01/20/95 0.999237 1000 999.24 (0.00006981) -0.0698055 999.31 2,107.02 3.95 20.80% 2,108.48
01/31/95 0.999742 1000 999.74 (0.00004041) -0.0404137 999.85 2,107.02 3.92 20.96% 2,107.33
02/28/95 1.038389 1000 1,038.39 (0.00010287) -0.102856 1,038.61 2,107.02 3.84 20.22% 2,028.70
03/31/95 1.056065 1000 1,056.07 (0.00011389) -0.1182902 1,056.40 2,107.02 3.76 20.18% 1,994.52
04/30/95 1.074451 1000 1,074.45 (0.00011022) -0.116436 1,074.91 2,107.02 3.67 20.10% 1,960.18
05/31/95 1.107634 1000 1,107.63 (0.00011389) -0.1224252 1,108.23 2,107.02 3.59 19.60% 1,901.24
06/30/95 1.114081 1000 1,114.08 (0.00011022) -0.1221485 1,114.81 2,107.02 3.51 19.90% 1,890.03
07/31/95 1.134329 1000 1,134.33 (0.00011389) -0.1269687 1,135.19 2,107.02 3.42 19.81% 1,856.09
08/31/95 1.148635 1000 1,148.64 (0.00011389) -0.1292907 1,149.64 2,107.02 3.34 19.91% 1,832.76
09/30/95 1.191553 1000 1,191.55 (0.00011022) -0.1267123 1,192.72 2,107.02 3.25 19.10% 1,766.56
10/31/95 1.199711 1000 1,199.71 (0.00011389) -0.1358428 1,201.02 2,107.02 3.17 19.40% 1,754.35
11/30/95 1.245395 1000 1,245.40 (0.00011022) -0.1323758 1,246.89 2,107.02 3.09 18.52% 1,689.82
12/31/95 1.284124 1000 1,284.12 (0.00011389) -0.1420122 1,285.81 2,107.02 3.00 17.88% 1,638.67
01/31/96 1.319568 1000 1,319.57 (0.00011389) -0.1464446 1,321.44 2,107.02 2.92 17.34% 1,594.48
02/29/96 1.321775 1000 1,321.78 (0.00010655) -0.1407935 1,323.80 2,107.02 2.84 17.79% 1,591.65
03/31/96 1.338681 1000 1,338.68 (0.00011389) -0.1507712 1,340.88 2,107.02 2.75 17.84% 1,571.37
04/30/96 1.345568 1000 1,345.57 (0.00011022) -0.1477904 1,347.92 2,107.02 2.67 18.20% 1,563.16
05/31/96 1.365973 1000 1,365.97 (0.00011389) -0.1535193 1,368.52 2,107.02 2.59 18.16% 1,539.63
06/30/96 1.37313 1000 1,373.13 (0.00011022) -0.1508369 1,375.84 2,107.02 2.50 18.55% 1,531.44
07/31/96 1.332707 1000 1,332.71 (0.00011389) -0.1566987 1,368.52 2,107.02 2.42 19.53% 1,539.63
08/31/96 1.360406 1000 1,360.41 (0.00011389) -0.1558648 1,397.12 2,107.02 2.33 19.25% 1,508.12
09/30/96 1.414470 1000 1,414.47 (0.00011022) -0.1539891 1,452.79 2,107.02 2.25 17.95% 1,450.32
10/31/96 1.444852 1000 1,444.85 (0.00011389) -0.1654633 1,484.16 2,107.02 2.17 17.55% 1,419.67
11/30/96 1.525213 1000 1,525.21 (0.00011022) -0.1635834 1,566.88 2,107.02 2.08 15.26% 1,344.73
12/31/96 1.514228 1000 1,514.23 (0.00011389) -0.1784564 1,555.77 2,107.02 2.00 16.38% 1,354.33
01/31/97 1.552148 1000 1,552.15 (0.00011389) -0.1771915 1,594.91 2,107.02 1.92 15.65% 1,321.09
02/28/97 1.587255 1000 1,587.26 (0.00010287) -0.16407 1,631.14 2,107.02 1.84 14.94% 1,291.74
03/31/97 1.551945 1000 1,551.95 (0.00011389) -0.1857762 1,595.04 2,107.02 1.75 17.21% 1,320.98
04/30/97 1.586811 1000 1,586.81 (0.00011022) -0.1758045 1,631.05 2,107.02 1.67 16.56% 1,291.81
05/31/97 1.659454 1000 1,659.45 (0.00011389) -0.1857659 1,705.91 2,107.02 1.59 14.24% 1,235.13
06/30/97 1.719479 1000 1,719.48 (0.00011022) -0.1880239 1,767.80 2,107.02 1.50 12.38% 1,191.89
07/23/97 1.776425 1000 1,776.43 (0.00008450) -0.114526 1,826.46 2,107.02 1.44 10.42% 1,153.61
07/31/97 1.815642 1000 1,815.64 0.00000348 0.00169736 1,866.78 2,107.02 1.42 8.90% 1,128.69
08/31/97 1.765799 1000 1,765.80 0.00001350 0.02520924 1,815.51 2,107.02 1.33 11.81% 1,160.56
09/30/97 1.845872 1000 1,845.87 0.00001307 0.02372599 1,897.81 2,107.02 1.25 8.71% 1,110.23
10/31/97 1.794968 1000 1,794.97 0.00001350 0.02562829 1,845.45 2,107.02 1.17 12.03% 1,141.73
11/30/97 1.859254 1000 1,859.25 0.00001307 0.02411728 1,911.52 2,107.02 1.08 9.39% 1,102.27
12/31/97 1.912129 1000 1,912.13 0.00001350 0.02581341 1,965.86 2,107.02 1.00 7.18% 1,071.81
01/31/98 1.893991 1000 1,893.99 0.00001350 0.02654716 1,947.18 2,107.02 0.92 8.21% 1,074.86
02/28/98 1.985538 1000 1,985.54 0.00001220 0.02375031 2,041.28 2,107.02 0.84 3.22% 1,026.93
03/31/98 2.07555 1000 2,075.55 0.00001350 0.02756564 2,133.79 2,107.02 0.75 -1.25% 990.53
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T. Rowe Price Equity Income
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/30/98 2.056283 1000 2,056.28 0.00001307 0.02788541 2,113.95 2,107.02 0.67 -0.33% 997.80
05/31/98 2.020432 1000 2,020.43 0.00001350 0.02854706 2,077.07 2,107.02 0.59 1.44% 1,008.43
06/30/98 2.011609 1000 2,011.61 0.00001307 0.02714416 2,067.97 2,107.02 0.50 1.89% 1,009.47
07/31/98 1.951425 1000 1,951.43 0.00001350 0.02792611 2,006.07 2,107.02 0.42 5.03% 1,020.79
08/31/98 1.761863 1000 1,761.86 0.00001350 0.02709023 1,811.18 2,107.02 0.33 16.33% 1,051.87
09/30/98 1.853148 1000 1,853.15 0.00001307 0.02366933 1,904.99 2,107.02 0.25 10.61% 1,025.73
10/31/98 1.962657 1000 1,962.66 0.00001350 0.02572522 2,017.54 2,107.02 0.17 4.44% 1,007.28
11/30/98 2.039037 1000 2,039.04 0.00001307 0.02636619 2,096.03 2,107.02 0.08 0.52% 1,000.44
12/31/98 2.049755 1000 2,049.76 0.00001350 0.02830499 2,107.02 2,107.02 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - T. Rowe Price Equity Income
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
-----------
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - Growth Stock
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 171.79%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
01/01/95 1.000000 1000 1,000.00 1,000.00 2,717.90 4.00 28.40% 2,717.90
01/05/95 0.99991 1000 999.91 (0.00001470) -0.01469589 999.91 2,717.90 3.99 28.49% 2,718.14
01/31/95 0.999741 1000 999.74 (0.00009552) -0.095514691 999.84 2,717.90 3.92 29.08% 2,718.34
02/28/95 1.065317 1000 1,065.32 (0.00010287) -0.102854415 1,065.52 2,717.90 3.84 27.61% 2,550.77
03/31/95 1.138756 1000 1,138.76 (0.00011389) -0.121355616 1,139.10 2,717.90 3.76 26.05% 2,386.01
04/30/95 1.145083 1000 1,145.08 (0.00011022) -0.125550236 1,145.55 2,717.90 3.67 26.51% 2,372.57
05/31/95 1.168224 1000 1,168.22 (0.00011389) -0.13047036 1,168.83 2,717.90 3.59 26.51% 2,325.31
06/30/95 1.211298 1000 1,211.30 (0.00011022) -0.128827642 1,212.06 2,717.90 3.51 25.89% 2,242.39
07/31/95 1.251227 1000 1,251.23 (0.00011389) -0.138044954 1,252.15 2,717.90 3.42 25.42% 2,170.59
08/31/95 1.252515 1000 1,252.52 (0.00011389) -0.142611164 1,253.58 2,717.90 3.34 26.10% 2,168.11
09/30/95 1.292330 1000 1,292.33 (0.00011022) -0.13816859 1,293.57 2,717.90 3.25 25.62% 2,101.09
10/31/95 1.287516 1000 1,287.52 (0.00011389) -0.147328458 1,288.90 2,717.90 3.17 26.54% 2,108.70
11/30/95 1.326183 1000 1,326.18 (0.00011022) -0.142061063 1,327.75 2,717.90 3.09 26.11% 2,047.00
12/31/95 1.350045 1000 1,350.05 (0.00011389) -0.151221238 1,351.79 2,717.90 3.00 26.19% 2,010.60
01/31/96 1.383423 1000 1,383.42 (0.00011389) -0.153959384 1,385.36 2,717.90 2.92 25.98% 1,961.87
02/29/96 1.399286 1000 1,399.29 (0.00010655) -0.147603781 1,401.40 2,717.90 2.84 26.29% 1,939.42
03/31/96 1.402368 1000 1,402.37 (0.00011389) -0.159609384 1,404.64 2,717.90 2.75 27.09% 1,934.94
04/30/96 1.438524 1000 1,438.52 (0.00011022) -0.154818494 1,441.01 2,717.90 2.67 26.81% 1,886.11
05/31/96 1.452177 1000 1,452.18 (0.00011389) -0.164121341 1,454.85 2,717.90 2.59 27.33% 1,868.16
06/30/96 1.445391 1000 1,445.39 (0.00011022) -0.160352618 1,448.21 2,717.90 2.50 28.58% 1,876.73
07/31/96 1.378813 1000 1,378.81 (0.00011389) -0.164941666 1,454.85 2,717.90 2.42 29.48% 1,868.16
08/31/96 1.431404 1000 1,431.40 (0.00011389) -0.165697706 1,510.51 2,717.90 2.33 28.61% 1,799.33
09/30/96 1.506528 1000 1,506.53 (0.00011022) -0.166487087 1,589.95 2,717.90 2.25 26.88% 1,709.42
10/31/96 1.518257 1000 1,518.26 (0.00011389) -0.181084573 1,602.51 2,717.90 2.17 27.61% 1,696.03
11/30/96 1.614879 1000 1,614.88 (0.00011022) -0.176627441 1,704.67 2,717.90 2.08 25.07% 1,594.38
12/31/96 1.603700 1000 1,603.70 (0.00011389) -0.19415041 1,693.07 2,717.90 2.00 26.70% 1,605.31
01/31/97 1.658494 1000 1,658.49 (0.00011389) -0.192828517 1,751.11 2,717.90 1.92 25.80% 1,552.11
02/28/97 1.660340 1000 1,660.34 (0.00010287) -0.180138358 1,753.23 2,717.90 1.84 26.93% 1,550.22
03/31/97 1.594298 1000 1,594.30 (0.00011389) -0.1996814 1,683.70 2,717.90 1.75 31.40% 1,614.25
04/30/97 1.657766 1000 1,657.77 (0.00011022) -0.18557572 1,750.91 2,717.90 1.67 30.10% 1,552.28
05/31/97 1.773870 1000 1,773.87 (0.00011389) -0.19941662 1,873.74 2,717.90 1.59 26.42% 1,450.52
06/30/97 1.858236 1000 1,858.24 (0.00011022) -0.206521703 1,963.06 2,717.90 1.50 24.15% 1,384.52
07/23/97 1.957595 1000 1,957.60 (0.00008450) -0.127175552 2,068.15 2,717.90 1.44 20.87% 1,314.17
07/31/97 1.979563 1000 1,979.56 0.00000348 0.001921963 2,091.36 2,717.90 1.42 20.28% 1,299.59
08/31/97 1.876101 1000 1,876.10 0.00001350 0.028241907 1,982.02 2,717.90 1.33 26.70% 1,371.28
09/30/97 1.977593 1000 1,977.59 0.00001307 0.025902059 2,089.22 2,717.90 1.25 23.38% 1,300.92
10/31/97 1.920247 1000 1,920.25 0.00001350 0.02821305 2,028.61 2,717.90 1.17 28.48% 1,339.79
11/30/97 1.986530 1000 1,986.53 0.00001307 0.026510855 2,098.61 2,717.90 1.08 26.91% 1,295.10
12/31/97 2.029778 1000 2,029.78 0.00001350 0.028339796 2,144.26 2,717.90 1.00 26.75% 1,267.52
01/31/98 2.065351 1000 2,065.35 0.00001350 0.028956389 2,181.82 2,717.90 0.92 24.57% 1,222.68
02/28/98 2.231592 1000 2,231.59 0.00001220 0.02661217 2,357.40 2,717.90 0.84 15.29% 1,126.70
03/31/98 2.339633 1000 2,339.63 0.00001350 0.031834643 2,471.50 2,717.90 0.75 9.97% 1,074.23
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - Growth Stock
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 171.79%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
04/30/98 2.350375 1000 2,350.38 0.00001307 0.032298838 2,482.82 2,717.90 0.67 9.47% 1,062.60
05/31/98 2.287684 1000 2,287.68 0.00001350 0.033528267 2,416.56 2,717.90 0.59 12.47% 1,071.33
06/30/98 2.364566 1000 2,364.57 0.00001307 0.031580828 2,497.74 2,717.90 0.50 8.81% 1,043.50
07/31/98 2.343405 1000 2,343.41 0.00001350 0.033729808 2,475.36 2,717.90 0.42 9.80% 1,039.96
08/31/98 1.981436 1000 1,981.44 0.00001350 0.033427497 2,092.97 2,717.90 0.33 29.86% 1,091.26
09/30/98 2.093514 1000 2,093.51 0.00001307 0.027352006 2,211.33 2,717.90 0.25 22.91% 1,053.37
10/31/98 2.265289 1000 2,265.29 0.00001350 0.029862081 2,392.75 2,717.90 0.17 13.59% 1,021.52
11/30/98 2.400312 1000 2,400.31 0.00001307 0.031269574 2,535.33 2,717.90 0.08 7.20% 1,005.92
12/31/98 2.573188 1000 2,573.19 0.00001350 0.034237427 2,717.90 2,717.90 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - OPPORTUNITY VALUE
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
total return 19.72%
11/18/96 1.000000 1000 1,000.00 1,000.00 1,197.19 2.12 8.87% 1,197.19
11/20/96 0.999910 1000 999.91 (0.00000735) -0.007347945 999.92 1,197.19 2.11 8.90% 1,197.29
11/30/96 0.999506 1000 999.51 (0.00003674) -0.036736689 999.55 1,197.19 2.08 9.04% 1,197.73
12/31/96 1.004062 1000 1,004.06 (0.00011389) -0.113841908 1,004.22 1,197.19 2.00 9.19% 1,192.16
01/31/97 1.025593 1000 1,025.59 (0.00011389) -0.114373794 1,025.87 1,197.19 1.92 8.40% 1,167.00
02/28/97 1.012361 1000 1,012.36 (0.00010287) -0.105532397 1,012.74 1,197.19 1.84 9.53% 1,182.13
03/31/97 0.996046 1000 996.05 (0.00011389) -0.11534402 996.53 1,197.19 1.75 11.03% 1,201.35
04/30/97 1.021512 1000 1,021.51 (0.00011022) -0.109837061 1,022.12 1,197.19 1.67 9.92% 1,171.28
05/31/97 1.053848 1000 1,053.85 (0.00011389) -0.116412628 1,054.59 1,197.19 1.59 8.32% 1,135.21
06/30/97 1.091099 1000 1,091.10 (0.00011022) -0.116236386 1,091.99 1,197.19 1.50 6.31% 1,096.34
07/23/97 1.133494 1000 1,133.49 (0.00008450) -0.070743684 1,134.49 1,197.19 1.44 3.80% 1,055.27
07/31/97 1.151912 1000 1,151.91 0.00000348 0.001054296 1,152.92 1,197.19 1.42 2.69% 1,038.40
08/31/97 1.113020 1000 1,113.02 0.00001350 0.015569158 1,113.98 1,197.19 1.33 5.55% 1,074.70
09/30/97 1.149051 1000 1,149.05 0.00001307 0.014558019 1,150.03 1,197.19 1.25 3.26% 1,041.01
10/31/97 1.127890 1000 1,127.89 0.00001350 0.015530075 1,128.83 1,197.19 1.17 5.17% 1,060.56
11/30/97 1.152186 1000 1,152.19 0.00001307 0.014752125 1,153.13 1,197.19 1.08 3.52% 1,038.20
12/31/97 1.154569 1000 1,154.57 0.00001350 0.015572033 1,155.50 1,197.19 1.00 3.61% 1,036.08
01/31/98 1.162975 1000 1,162.98 0.00001350 0.01560403 1,163.90 1,197.19 0.92 2.86% 1,026.14
02/28/98 1.214586 1000 1,214.59 0.00001220 0.014196385 1,215.54 1,197.19 0.84 -1.51% 987.33
03/31/98 1.247272 1000 1,247.27 0.00001350 0.016414749 1,248.23 1,197.19 0.75 -4.09% 969.03
04/30/98 1.255523 1000 1,255.52 0.00001307 0.016312518 1,256.47 1,197.19 0.67 -4.72% 968.08
05/31/98 1.238606 1000 1,238.61 0.00001350 0.016967556 1,239.53 1,197.19 0.59 -3.42% 979.83
06/30/98 1.253759 1000 1,253.76 0.00001307 0.016198747 1,254.67 1,197.19 0.50 -4.58% 976.63
07/31/98 1.205869 1000 1,205.87 0.00001350 0.016943266 1,206.73 1,197.19 0.42 -0.79% 996.68
08/31/98 1.025256 1000 1,025.26 0.00001350 0.016295853 1,025.97 1,197.19 0.33 16.69% 1,052.94
09/30/98 1.076097 1000 1,076.10 0.00001307 0.013407937 1,076.84 1,197.19 0.25 11.18% 1,027.06
10/31/98 1.152324 1000 1,152.32 0.00001350 0.014541731 1,153.10 1,197.19 0.17 3.82% 1,006.29
11/30/98 1.195966 1000 1,195.97 0.00001307 0.01506931 1,196.76 1,197.19 0.08 0.04% 1,000.03
12/31/98 1.196411 1000 1,196.41 0.00001350 0.016161161 1,197.19 1,197.19 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - OPPORTUNITY VALUE
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM 97-ENHANCED INDEX
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/01/97 1.000000 1000 1,000.00 1,000.00 1,574.72 1.67 31.28% 1,574.72
05/31/97 1.053848 1000 1,053.85 (0.00011022) -0.11022 1,053.96 1,574.72 1.59 28.80% 1,494.10
06/30/97 1.116001 1000 1,116.00 (0.00011022) -0.11617 1,116.23 1,574.72 1.50 25.71% 1,410.74
07/23/97 1.183597 1000 1,183.60 (0.00008450) -0.07231 1,183.92 1,574.72 1.44 21.89% 1,330.09
07/31/97 1.207115 1000 1,207.12 0.00000348 0.0011 1,207.44 1,574.72 1.42 20.58% 1,304.18
08/31/97 1.144010 1000 1,144.01 0.00001350 0.016305 1,144.30 1,574.72 1.33 27.04% 1,376.14
09/30/97 1.193193 1000 1,193.19 0.00001307 0.014954 1,193.48 1,574.72 1.25 24.78% 1,319.43
10/31/97 1.153971 1000 1,153.97 0.00001350 0.016117 1,154.23 1,574.72 1.17 30.49% 1,364.30
11/30/97 1.202212 1000 1,202.21 0.00001307 0.015084 1,202.47 1,574.72 1.08 28.22% 1,309.57
12/31/97 1.216436 1000 1,216.44 0.00001350 0.016238 1,216.68 1,574.72 1.00 29.43% 1,294.27
01/31/98 1.232746 1000 1,232.75 0.00001350 0.01643 1,232.98 1,574.72 0.92 27.72% 1,250.90
02/28/98 1.320217 1000 1,320.22 0.00001220 0.015039 1,320.45 1,574.72 0.84 19.26% 1,159.09
03/31/98 1.386542 1000 1,386.54 0.00001350 0.017832 1,386.77 1,574.72 0.75 13.55% 1,100.50
04/30/98 1.405529 1000 1,405.53 0.00001307 0.018123 1,405.74 1,574.72 0.67 12.02% 1,079.17
05/31/98 1.388025 1000 1,388.03 0.00001350 0.018983 1,388.22 1,574.72 0.59 13.43% 1,076.71
06/30/98 1.434550 1000 1,434.55 0.00001307 0.018142 1,434.73 1,574.72 0.50 9.76% 1,048.05
07/31/98 1.421908 1000 1,421.91 0.00001350 0.019375 1,422.07 1,574.72 0.42 10.73% 1,043.67
08/31/98 1.214412 1000 1,214.41 0.00001350 0.019204 1,214.53 1,574.72 0.33 29.66% 1,090.69
09/30/98 1.291575 1000 1,291.58 0.00001307 0.015872 1,291.68 1,574.72 0.25 21.91% 1,051.21
10/31/98 1.395044 1000 1,395.04 0.00001350 0.017443 1,395.14 1,574.72 0.17 12.87% 1,020.44
11/30/98 1.488392 1000 1,488.39 0.00001307 0.018232 1,488.48 1,574.72 0.08 5.79% 1,004.80
12/31/98 1.574648 1000 1,574.65 0.00001350 0.020101 1,574.72 1,574.72 0.00 0.00% 1,000.00
</TABLE>
<PAGE>
ENDEAVOR PLATINUM 97 - ENHANCED INDEX
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Addtional M&E above 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable
AUV # Units Before Chrge Factor Deduction Acct Value Value n
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - MONTGOMERY SELECT
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Additional M&E factor reduction from 1.40% model 0.0025
M&E factor reduction from 1.65% model 0.0015
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
02/02/98 1.000000 1000 1,000.00 1,000.00 1,051.52 0.91 5.15% 1,046.75
02/28/98 1.048933 1000 1,048.93 0.00001133 0.011326 1,048.92 1,051.52 0.84 0.25% 1,002.07
03/31/98 1.111420 1000 1,111.42 0.00001350 0.014165 1,111.39 1,051.52 0.75 -5.39% 959.13
04/30/98 1.145935 1000 1,145.94 0.00001307 0.014524 1,145.89 1,051.52 0.67 -8.24% 943.94
05/31/98 1.118699 1000 1,118.70 0.00001350 0.015474 1,118.64 1,051.52 0.59 -6.00% 964.37
06/30/98 1.098352 1000 1,098.35 0.00001307 0.014619 1,098.28 1,051.52 0.50 -4.26% 978.30
07/31/98 1.067183 1000 1,067.18 0.00001350 0.014831 1,067.10 1,051.52 0.42 -1.46% 993.85
08/31/98 0.868517 1000 868.52 0.00001350 0.01441 868.44 1,051.52 0.33 21.08% 1,066.03
09/30/98 0.898159 1000 898.16 0.00001307 0.011349 898.06 1,051.52 0.25 17.09% 1,040.56
10/31/98 0.954431 1000 954.43 0.00001350 0.012128 954.32 1,051.52 0.17 10.19% 1,016.34
11/30/98 1.013485 1000 1,013.49 0.00001307 0.012471 1,013.35 1,051.52 0.08 3.77% 1,003.14
12/31/98 1.051668 1000 1,051.67 0.00001350 0.013684 1,051.52 1,051.52 0.00 0.00% 1,000.00
12/31/98 1,051.52
</TABLE>
<PAGE>
ENDEAVOR PLATINUM - Endeavor High Yield
PERFORMANCE CALCULATIONS
Initial investment $1,000
AUV 1.000000
Units purchased 1,000.000
Addtional M&E above 1.40% model 0
Contract Charge Factor 0.000159
<TABLE>
<CAPTION>
Contract Contract Ending
Actual Acct Value Charge Charge Adjusted Redeemable Avg Ann ERV of
AUV # Units Before Chrge Factor Deduction Acct Value Value n Return $1,000
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Return -3.94%
06/02/98 1.000000 1000 1,000.00 1,000.00 960.56 0.58 -3.94% 976.90
06/30/98 0.997747 1000 997.75 0.0000121973 0.012197 997.73 960.56 0.50 -3.73% 981.04
07/31/98 1.005578 1000 1,005.58 0.0000135041 0.013474 1,005.55 960.56 0.42 -4.47% 981.00
08/31/98 0.936553 1000 936.55 0.0000135041 0.013579 936.52 960.56 0.33 2.57% 1,008.51
09/30/98 0.929436 1000 929.44 0.0000130685 0.012239 929.39 960.56 0.25 3.35% 1,008.35
10/31/98 0.908418 1000 908.42 0.0000135041 0.012551 908.36 960.56 0.17 5.75% 1,009.38
11/30/98 0.967824 1000 967.82 0.0000130685 0.011871 967.75 960.56 0.08 -0.74% 999.37
12/31/98 0.960653 1000 960.65 0.0000135041 0.013069 960.56 960.56 0.00 0.00% 1,000.00
</TABLE>
