<PAGE> 1
'33 ACT FILE NO. 2-75533
'40 ACT FILE NO. 811-3365
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 29 /X/
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
AMENDMENT NO. 74 /X/
(CHECK APPROPRIATE BOX OR BOXES.)
SECURITY FIRST LIFE SEPARATE ACCOUNT A
--------------------------------------
(EXACT NAME OF REGISTRANT)
SECURITY FIRST LIFE INSURANCE COMPANY
-------------------------------------
(NAME OF DEPOSITOR)
11365 WEST OLYMPIC BOULEVARD, LOS ANGELES, CALIFORNIA 90064
-----------------------------------------------------------
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 312-6100
RICHARD C. PEARSON
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
SECURITY FIRST LIFE INSURANCE COMPANY
11365 WEST OLYMPIC BOULEVARD, LOS ANGELES, CALIFORNIA 90064
-----------------------------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (CHECK APPROPRIATE SPACE)
IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
---
X ON MAY 1, 1996 PURSUANT TO PARAGRAPH (b) OF RULE 485
---
60 DAYS AFTER FILING PURSUANT TO PARAGRAPH (a) OF RULE 485
---
ON [DATE] PURSUANT TO PARAGRAPH (a) 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.
THE COMPANY HAS ELECTED PURSUANT TO RULE 24f-2 UNDER THE INVESTMENT COMPANY ACT
OF 1940 TO REGISTER AN INDEFINITE NUMBER OF SECURITIES. THE MOST RECENT RULE
24F-2 NOTICE WAS FILED ON FEBRUARY 23, 1996.
<PAGE> 2
SECURITY FIRST LIFE SEPARATE ACCOUNT A
CROSS REFERENCE SHEET
PART A - PROSPECTUS
<TABLE>
<CAPTION>
Item Number in Form N-4 Caption in Prospectus
- ----------------------- ---------------------
<S> <C>
1. Cover Page Cover Page
2. Definition Glossary
3. Synopsis Summary of the Contracts
4. Condensed Financial Information Condensed Financial Information; Financial
Information
5. General Description of Registrant Depositor, and Description of Security First Life Insurance
Portfolio Companies Company, The General Account, The Separate
Account and The Funds; Voting Rights;
Servicing Agent
6. Deductions and Expenses Contract Charges
7. General Description of Variable Annuity Contracts Description of the Contracts; Accumulation
Period; Annuity Benefits
8. Annuity Period Annuity Benefits
9. Death Benefit Death Benefits
10. Purchases and Contract Value Description of the Contracts; Accumulation
Period; Principal Underwriter
11. Redemptions Accumulation Period
12. Taxes Federal Income Tax Status
13. Legal Proceedings Legal Proceedings
14. Table of Contents of Statement of Additional Table of Contents of Statement of Additional
Information Information
</TABLE>
<PAGE> 3
PART B - STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<S> <C>
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company; The Separate Account;
The Funds
18. Services Servicing Agent; Safekeeping of Securities;
Independent Public Accountant; Legal Matters
19. Purchase of Securities Being Offered Purchase of Securities Being Offered
20. Underwriters Distribution of the Contracts
21. Calculation of Yield Quotations of Money Market Not Applicable
Subaccounts
22. Annuity Payments Annuity Payments
23. Financial Statements Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this registration statement.
<PAGE> 4
SECURITY FIRST LIFE SEPARATE ACCOUNT A
- --------------------------------------------------------------------------------
GROUP FLEXIBLE PAYMENT
VARIABLE ANNUITY CONTRACTS
Security First Life Insurance Company
11365 West Olympic Boulevard
Los Angeles, California 90064
- --------------------------------------------------------------------------------
The group flexible payment variable annuity contracts (the "Contracts")
described in this Prospectus are issued by Security First Life Insurance Company
("Security First Life"). The Contracts are designed to provide variable annuity
benefits to employees covered under employer deferred compensation plans which
qualify under the provisions of Section 457 of the Internal Revenue Code of 1986
(the "Code") or retirement plans that qualify under Section 401 of the Code.
Participants may allocate premiums and cash value to one or more sub- accounts
of the variable account. The assets of these sub-accounts will be used to
purchase, at net asset value, shares of the T. Rowe Price Bond Series (formerly
Bond Series) and the T. Rowe Price Growth and Income Series (formerly Growth and
Income Series) of the Security First Trust, the Money Market Portfolio and
Growth Portfolio of the Variable Insurance Products Fund, the Asset Manager
Portfolio and Index 500 Portfolio of the Variable Insurance Products Fund II,
the T. Rowe Price Growth Stock Fund and the T. Rowe Price International Stock
Fund (herein referred to as the "Funds"). The prospectuses for the Funds
describe the investment objective of each Fund.
This Prospectus sets forth information a prospective investor should know before
investing. Additional information about the Contracts has been filed with the
Securities and Exchange Commission ("SEC") in a Statement of Additional
Information, dated May 1, 1996, which information is incorporated herein by
reference and is available without charge upon written request to Security First
Life Insurance Company, P.O. Box 92193, Los Angeles, California 90009 or by
telephoning: 1 (310) 312-6100 (in California) or 1 (800) 992-9785 (outside
California).
The table of contents of the Statement of Additional Information appears on page
19 of the Prospectus.
- --------------------------------------------------------------------------------
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING OF SHARES OF ANY UNDERLYING FUND
FOR WHICH A CURRENT PROSPECTUS HAS NOT BEEN RECEIVED AND IN NO EVENT WILL
DESIGNATION OF AN UNDERLYING FUND FOR WHICH A CURRENT PROSPECTUS HAS NOT BEEN
RECEIVED BE PERMITTED.
PLEASE READ AND RETAIN THIS PROSPECTUS FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Prospectus dated May 1, 1996 SF 234 (5/96)
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Glossary....................................................................................... 3
Summary of the Contracts....................................................................... 4
Fee Tables..................................................................................... 6
Condensed Financial Information................................................................ 8
Financial Information.......................................................................... 8
Description of Security First Life
The Separate Account and The Funds........................................................... 9
The Insurance Company...................................................................... 9
The Separate Account....................................................................... 9
The Funds.................................................................................. 9
Principal Underwriter.......................................................................... 11
Servicing Agent................................................................................ 11
Custody of Securities.......................................................................... 11
Contract Charges............................................................................... 11
Premium Taxes.............................................................................. 11
Surrender Charges.......................................................................... 11
Administrative Fees........................................................................ 11
Transaction Charges........................................................................ 12
Mortality Risk and Administrative Expense Risk Charges..................................... 12
20-Day Free Look........................................................................... 12
Description of the Contract.................................................................... 12
General.................................................................................... 12
Purchase Payments.......................................................................... 12
Conversions................................................................................ 13
Transfers to Another Contract.............................................................. 13
Modification of the Contract............................................................... 13
Assignments................................................................................ 13
Accumulation Period............................................................................ 13
Crediting Accumulation Units............................................................... 13
Valuation of Accumulation Units............................................................ 13
Net Investment Factor...................................................................... 14
Surrenders................................................................................. 14
Statement of Account....................................................................... 14
Annuity Benefits............................................................................... 14
Annuity Payments........................................................................... 14
Level Payments Varying Annually............................................................ 14
Assumed Investment Return.................................................................. 15
Election of Annuity Date and Form of Annuity............................................... 15
Frequency of Payment....................................................................... 16
Annuity Unit Values........................................................................ 16
Death Benefits................................................................................. 16
Death Benefit Before the Annuity Date...................................................... 16
Death Benefit After the Annuity Date....................................................... 17
Federal Income Tax Status...................................................................... 18
Withholding................................................................................ 18
Voting Rights.................................................................................. 18
Legal Proceedings.............................................................................. 18
Additional Information......................................................................... 19
Table of Contents of Statement of Additional Information....................................... 19
</TABLE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offer described herein and, if given or made, such information or
representations must not be relied upon as having been authorized. This
Prospectus does not constitute an offer in any jurisdiction to any person to
whom such offer would be unlawful therein.
2
<PAGE> 6
GLOSSARY
As used in this Prospectus, these terms have the following meanings:
ACCUMULATION UNIT -- A measuring unit used to determine the value of a
Participant's interest in a Separate Account Series under a Contract at any time
before Annuity payments commence.
ANNUITANT -- The individual on whose life Annuity payments under a Contract are
based.
ANNUITY -- A series of periodic payments made to an Annuitant for a defined
period of time.
ANNUITY DATE -- The date on which Annuity payments begin.
ANNUITY UNIT -- A measuring unit used to determine the amount of Variable
Annuity payments based on a Separate Account Series under a Contract after such
payments have commenced.
ASSUMED INVESTMENT RETURN -- The investment rate selected by the Annuitant for
use in determining the Variable Annuity payments.
BENEFICIARY -- The person who has the right to receive a death benefit on the
death of the Participant.
BUSINESS DAY -- Each Monday through Friday except for the days the New York
Stock Exchange is not open for trading.
CERTIFICATE -- The form given to Participants describing their rights under a
Contract. No Certificates are issued to Participants under deferred compensation
or qualified retirement plans.
CERTIFICATE DATE -- The date a Participant's Certificate is issued or the date
when a Participant's Account is established where no Certificate is issued.
CERTIFICATE YEAR -- A 12-month period beginning on the Certificate Date and on
each anniversary of this date.
CONTRACT -- The agreement between Security First Life and the Owner covering the
rights of the whole group.
FIXED ANNUITY -- An Annuity providing guaranteed level payments. Such payments
are not based upon the investment experience of the Separate Account.
FUND -- A diversified, open-end management investment company, or series
thereof, registered under the Investment Company Act of 1940 ("1940 Act"), which
serves as the underlying investment medium for a Series in the Separate Account.
GENERAL ACCOUNT -- All assets of Security First Life other than those in the
Separate Account or any of its other segregated asset accounts.
NORMAL ANNUITY DATE -- The first day of the month coincident with or immediately
preceding the date on which a distribution must commence under the terms of the
Plan to which the Contract is issued, but in no event later than the month in
which the participant attains age 85.
OWNER -- The person who has title to the Contract.
PARTICIPANT -- The individual by or for whom Purchase Payments are made under a
Contract.
PARTICIPANT'S ACCOUNT -- The sum of the value of all Accumulation Units credited
for a Participant under a Contract.
PLAN -- The deferred compensation plan or qualified retirement plan with respect
to which the Contract is issued.
PURCHASE PAYMENT -- An amount paid to Security First Life in order to provide
benefits under the Contract.
SEPARATE ACCOUNT -- The segregated asset account, entitled "Security First Life
Separate Account A," which has been established by Security First Life pursuant
to Delaware law to receive and invest amounts allocated to provide Variable
Annuity benefits under the Contracts. The Separate Account is registered as a
unit investment trust under the 1940 Act.
SERIES -- A division of the Separate Account the assets of which consist of
shares of a Fund.
SURRENDER CHARGE -- A percentage charge which may be deducted upon full or
partial surrender.
VALUATION DATE -- Any Business Day used by the Separate Account to determine the
value of part or all of its assets for purposes of determining Accumulation and
Annuity Unit values for the Contract. Accumulation Unit values will be
3
<PAGE> 7
determined each Business Day. There will be one Valuation Date each week for
Annuity Unit values. Security First Life will establish the Valuation Date at
its discretion, but until notice to the contrary is given, that date will be the
last Business Day in a week.
VALUATION PERIOD -- The period of time from one Valuation Date through the next
Valuation Date.
VARIABLE ANNUITY -- An Annuity providing payments which will vary annually in
accordance with the net investment experience of the applicable Separate Account
Series.
SUMMARY OF THE CONTRACTS
THE CONTRACT
The Contract may be issued to employers to fund in whole or in part deferred
compensation plans which qualify under Section 457 of the Code or to trusts to
fund retirement plans that qualify under Section 401 of the Code.
PURCHASE PAYMENTS
Purchase Payments under the Contracts will be allocated to the Separate
Account. The minimum Purchase Payment is $20, with an annual minimum of $240.
There is no sales charge; however, certain charges and deductions will be made
to the Participant's Account. (See "Contract Charges," page 11.) Subject to
certain limitations as to time and amount, assets allocated to a Series may be
converted to one or more of the other Series, either prior to starting an
Annuity or after Variable Annuity payments have begun. The minimum conversion is
the lesser of $500 or the balance of the Participant's Account in the Series.
(See "Conversions," page 13.)
SEPARATE ACCOUNT
Pursuant to the Participant's election, Purchase Payments allocated to the
Separate Account are invested at net asset value in Accumulation Units of one or
more of eight Series, each of which consists of the shares of a different Fund.
The Funds consist of the T. Rowe Price Bond Series and T. Rowe Price Growth and
Income Series of Security First Trust, the Money Market Portfolio and Growth
Portfolio of the Variable Insurance Products Fund, the Asset Manager Portfolio
and Index 500 Portfolio of the Variable Insurance Products Fund II, the T. Rowe
Price Growth Stock Fund and the T. Rowe Price International Stock Fund. T. Rowe
Price Associates, Inc. is the investment adviser to the T. Rowe Price Growth
Stock Fund and the T. Rowe Price International Stock Fund. Security First
Investment Management Corporation is the investment adviser and manager of each
of the series of the Security First Trust, and T. Rowe Price Associates is
subadviser to Security First Investment Management Corporation for each of these
series. Fidelity Management & Research Company is the investment adviser of the
Variable Insurance Products Fund and the Variable Insurance Products Fund II.
(See "The Separate Account," page 9 and "The Funds," page 9.)
CHARGES AND DEDUCTIONS
An administrative fee of $9.50 plus $2.50 for each Series in which the
Participant invests will be charged annually. (See "Administrative Fees," page
11.)
A transaction charge of $10 will be deducted from the Participant's Account
for each conversion from a Series. In addition, a transaction charge of the
lesser of $10 or 2% of the amount surrendered will be deducted from the
Participant's Account upon any surrender. (See "Transaction Charges," page 12.)
Deductions will be made for mortality risks at the rate of .001342% on a
daily basis (.49% annually) and for administrative expense risks at the rate of
.001096% on a daily basis (.40% annually). (See "Mortality Risk and
Administrative Expense Risk Charges," page 12.)
A surrender charge (contingent deferred sales charge) may be deducted in the
event a Participant requests a full or partial surrender. The surrender charge
equals 5% of the amount surrendered, plus the transaction fee, if the surrender
occurs within the first six Certificate Years; thereafter, no surrender charge
will be deducted. In addition, no surrender charge will be imposed in the event
of a surrender as a result of death, disability, retirement or hardship under
the terms of the Plan. Surrender charges will never exceed 9% of the total
Purchase Payments. No surrender charge will be deducted from any amount
transferred to another group annuity contract issued by Security First Life to
the Plan to which the Contract is issued. (See "Surrender Charges," page 11.)
4
<PAGE> 8
Premium taxes payable to any state or other governmental agency may be
deducted from the Participant's Account when incurred. Premium taxes currently
range from 0% to 2.35% (3.5% in Nevada). Until further notice, Security First
Life will deduct premium taxes upon annuitization. (See "Premium Taxes," page
11.)
FREE LOOK PERIOD
At any time within twenty days (or such longer period as required by state
law) after the receipt of the Contract it may be returned for cancellation and a
full refund of all Purchase Payments or, if required by state law, the greater
of the Purchase Payments or the account value. (See "Free Look Period," page
12).
ANNUITY PAYMENTS
Annuity payments will start on the Annuity Date. The Participant selects the
Annuity Date, an Annuity payment option, and an Assumed Investment Return. Any
of these selections may be changed prior to the Annuity Date, provided that
Annuity payments must commence no later than the Normal Annuity Date. Annuity
payments will vary annually based on a comparison of the Assumed Investment
Return with the investment experience of the Series in which the Participant's
Account is invested. (See "Annuity Payments," page 14.) If Annuity payments from
any one Series would be less than $50, Security First Life reserves the right to
change the frequency of payments to such intervals as will result in payments of
at least $50 from each Series. (See "Frequency of Payment," page 16.)
SURRENDERS
All or part of the Participant's Account may be surrendered prior to the
Annuity Date. However, no partial surrender is permitted if it would reduce the
Owner's interest in any Series to less than $500, unless the entire amount
allocated to that Series is being surrendered. A surrender charge may be
assessed, and a transaction charge will be assessed. (See "Surrender Charges,"
page 11 and "Transaction Charges," page 12.) In addition, amounts surrendered,
less any basis, will be taxed as ordinary income and may be subject to a penalty
tax under the Code. Certain restrictions are applicable to withdrawals from
Contracts funding retirement plans qualified for special tax treatment under the
Code. (See "Federal Income Tax Status," page 17.)
DEATH BENEFIT
Unless otherwise restricted by the Plan, in the event of the Participant's
death prior to the Annuity Date, the Beneficiary may elect either to receive
death benefits in a lump sum or to apply the Participant's Account under any of
the available optional Annuity forms contained in the Contract. If a Participant
who has not attained age 65 dies before the Annuity Date, the amount of any lump
sum settlement will be the greater of the Participant's Account or the total of
the Participant's Purchase Payments, less any Purchase Payments previously
surrendered or applied to Annuity options. (See "Death Benefits," page 17.)
5
<PAGE> 9
FEE TABLES
PARTICIPANT TRANSACTION EXPENSES
<TABLE>
<CAPTION>
Period Percentage
------------------------ ----------------
<S> <C> <C>
(a) Contingent Deferred Sales Charge On or before 6th 5%
(as a percentage of amount Anniversary date of
surrendered) Certificate
(b) Withdrawal Charge $10 for each withdrawal
</TABLE>
<TABLE>
<CAPTION>
Minimum Maximum
------------------------ ----------------
<S> <C> <C>
(c) Administrative Charges $12 $19.50 per year
(d) Conversion Charge (Applies to $10 per conversion
election to convert Accumulation
or Annuity from any one Series to
another)
</TABLE>
SEPARATE ACCOUNT EXPENSES
(AS A PERCENTAGE OF AVERAGE ACCOUNT VALUE.
DEDUCTED DAILY FROM THE SEPARATE ACCOUNT.)
Mortality and Expense Risk Fees .89% per annum
Total Separate Account Annual Expenses .89% per annum
FUND ANNUAL EXPENSES
(NET OF REIMBURSEMENTS)(2)
<TABLE>
<CAPTION>
T. Rowe
Price
Growth & Money Asset Index Growth International
T. Rowe Price Income Market Growth Manager 500 Stock Stock
Bond Series Series Portfolio Portfolio Portfolio Portfolio Fund Fund
------------- --------- --------- --------- --------- --------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(a) Management Fee
(as a percentage
of average net
assets).......... 0.50% 0.50% 0.24% 0.61% 0.71% 0.09% 0.59% 0.69%
(b) Other Expenses
(as a percentage
of average net
assets).......... 0.79% 0.24% 0.09% 0.09% 0.08% 0.19% 0.21% 0.22%
(c) Total Annual
Expenses of
Underlying
Funds............ 1.29% 0.74% 0.33% 0.70% 0.79% 0.28% 0.80% 0.91%
</TABLE>
6
<PAGE> 10
EXAMPLES
<TABLE>
<CAPTION>
CONDITIONS
SEPARATE A PARTICIPANT WOULD PAY THE FOLLOWING EXPENSES ON TIME PERIODS
ACCOUNT A $1,000 INVESTMENT ASSUMING 5% ANNUAL RETURN ON ----------------------------------
SERIES ASSETS: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -------------- ------------------------------------------------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
T. Rowe Price (a) upon surrender at the end of the stated time (a) $ 83 $ 132 $ 183 $258
Bond Series period
(b) if the Certificate WAS NOT surrendered (b) 22 67 115 248
- -------------- ------------------------------------------------- ------ ------- ------- --------
T. Rowe Price Same (a) 78 116 156 200
Growth &
Income Series
(b) 16 51 87 190
- -------------- ------------------------------------------------- ------ ------- ------- --------
Money Market Same (a) 74 104 136 155
Portfolio
(b) 12 38 66 145
- -------------- ------------------------------------------------- ------ ------- ------- --------
Growth Same (a) 78 115 154 196
Portfolio
(b) 16 49 85 186
- -------------- ------------------------------------------------- ------ ------- ------- --------
Asset Manager Same (a) 78 117 159 205
Portfolio
(b) 17 52 90 195
- -------------- ------------------------------------------------- ------ ------- ------- --------
Index 500 Same (a) 74 102 133 149
Portfolio
(b) 12 36 63 139
- -------------- ------------------------------------------------- ------ ------- ------- --------
Growth Stock Same (a) 79 118 159 207
Fund
(b) 17 52 90 197
- -------------- ------------------------------------------------- ------ ------- ------- --------
International Same (a) 80 121 164 218
Stock Fund
(b) 18 56 96 208
- -------------- ------------------------------------------------- ------ ------- ------- --------
</TABLE>
EXPLANATION OF FEE TABLE AND EXAMPLES
1. The purpose of the foregoing tables and examples is to assist the Participant
in understanding the various costs and expenses that he or she will bear
directly or indirectly. The table reflects expenses of the Separate Account
as well as the underlying Funds. For additional information see "Contract
Charges," beginning on page 11.
2. The investment adviser to the Index 500 Portfolio voluntarily reimbursed
certain expenses of the Portfolio. If there had been no reimbursement, total
expenses would have been 0.81% (see the Variable Insurance Products Fund II
prospectus for more information).
3. The examples assume that there were no transactions that would result in the
imposition of the Conversion Charge. Premium taxes are not reflected.
Presently, premium taxes ranging from 0% to 2.35% (3.5% in Nevada) may be
deducted from each Purchase Payment, or upon annuitization. Until further
notice, Security First Life will deduct premium tax only from amounts
annuitized.
4. For purposes of the amounts reported in the examples, annual administrative
charges are reflected by dividing the total amount of contract fees collected
during the year by the total average net assets of the Separate Account
respecting the Contracts.
5. NEITHER THE TABLE NOR THE EXAMPLES ARE REPRESENTATIONS OF FUTURE EXPENSES.
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
7
<PAGE> 11
CONDENSED FINANCIAL INFORMATION
The following table sets forth condensed financial information on
accumulation units respecting Contracts issued under this prospectus through the
Separate Account. This information is derived from the financial statements of
the Separate Account which have been audited by Ernst & Young LLP, the Separate
Account's independent auditors. The information should be read in conjunction
with the financial statements, related notes and other financial information in
the Statement of Additional Information.
<TABLE>
<CAPTION>
Seven Twelve Twelve Twelve Twelve Twelve Twelve Five Twelve Twelve
Months Months Months Months Months Months Months Months Months Months
Ended Ended Ended Ended Ended Ended Ended Ended Ended Ended
7/31/87 7/31/88 7/31/89 7/31/90 7/31/91 7/31/92 7/31/93 12/31/93 12/31/94 12/31/95
------- ------- ------- ------- ------- ------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Separate Account Series
- -----------------------
Series B (T. Rowe Price
Bond Series)
Beg. AUV $.............. 5.00 4.97 5.21 5.77 5.90 6.27 7.07 7.66 7.78 15.77
End. AUV $.............. 4.97 5.21 5.77 5.90 6.27 7.07 7.66 7.78 15.77 (1) 18.25
End No. Non-Qualified... 4,018 8,795 14,195 35,914 29,408 34,855 45,488 45,035 -- --
End No. Qualified AUs... -- 33,998 60,665 129,756 167,461 165,862 227,551 255,421 105,708 119,054
Series G (T. Rowe Price
Growth and
Income Series)
Beg. AUV $.............. 5.00 5.57 5.23 6.96 6.26 6.84 7.70 8.27 8.70 27.17
End. AUV $.............. 5.57 5.23 6.96 6.26 6.84 7.70 8.27 8.70 27.17 (1) 35.31
End No. Non-Qualified
AUs................... 60,785 91,611 122,310 152,193 103,701 121,098 157,339 170,454 -- --
End No. Qualified AUs... 10,688 21,057 120,735 396,570 598,731 826,262 1,300,789 1,510,626 533,346 645,594
Series T (T. Rowe Price
Growth Fund)
Beg. AUV $.............. -- 5.00 5.16 6.18 6.65 7.07 7.88 8.54 9.52 23.44
End. AUV $.............. -- 5.16 6.18 6.65 7.07 7.88 8.54 9.52 23.44 (1) 30.44
End No. Qualified AUs... -- 37,691 176,573 333,949 533,793 785,088 1,105,462 1,241,350 687,168 824,050
Series I (T. Rowe Price
International Stock
Fund)
Beg. AUV $ (5/9/94)..... 6.67 6.74
End. AUV $.............. 6.74 7.45
End No. Qualified AUs... 252,365 525,687
Series FA (Asset Manager)
Beg. AUV $ (5/9/94)..... 5.04 5.00
End. AUV $.............. 5.00 5.79
End No. Qualified AUs... 471,610 919,120
Series FG (Growth
Portfolio)
Beg. AUV $ (5/9/94)..... 4.86 5.10
End. AUV $.............. 5.10 6.84
End No. Qualified AUs... 252,355 905,864
Series FI (Index 500)
Beg. AUV $ (5/12/94).... 4.80 5.03
End. AUV $.............. 5.03 6.83
End No. Qualified AUs... 27,277 259,254
Series FM (Money Market)
Beg. AUV $ (1/6/94)..... 5.00 5.16
End. AUV $.............. 5.16 5.42
End No. Qualified AUs... 474,216 561,677
Yield................... 4.81 % 4.40 %
- ------------------------------------------------------------------------------------------------------------------
AUV -- Accumulation Unit Value
AUs -- Accumulation Units
</TABLE>
(1) During 1994 the mortality and expense risk fees were reduced from 1.25% to
.89%. As a result of this change, unit values and units were converted in
order to provide administrative efficiencies. There was no impact on unit
values as a result of this conversion.
FINANCIAL INFORMATION
Financial Statements of the Separate Account and Security First Life are
contained in the Statement of Additional Information.
8
<PAGE> 12
DESCRIPTION OF SECURITY FIRST LIFE,
THE SEPARATE ACCOUNT AND THE FUNDS
THE INSURANCE COMPANY
Security First Life is a stock life insurance company founded in 1960 and
organized under the laws of the State of Delaware. Its principal executive
offices are located at 11365 West Olympic Boulevard, Los Angeles, California
90064. Security First Life owns all of the outstanding stock in Fidelity
Standard Life Insurance Company. Security First Life is a wholly-owned
subsidiary of Security First Group, Inc. ("SFG") (formerly The Holden Group,
Inc.). The outstanding voting stock of SFG is owned by London Insurance Group,
Inc., a Canadian insurance service corporation and publicly traded subsidiary of
Trilon Financial Corporation of Toronto, Canada. Trilon Financial controls
several major Canadian corporations including London Life Insurance Company.
Security First Life is authorized to transact the business of life insurance,
including annuities. Security First Life presently is licensed to do business in
49 states and the District of Columbia.
THE SEPARATE ACCOUNT
The Separate Account was established by Security First Life on May 29, 1980,
in accordance with the provisions of the Delaware Insurance Code. It is
registered with the SEC as a unit investment trust under the 1940 Act.
Registration with the SEC does not involve supervision by the SEC of the
management or investment practices or policies of the Separate Account or
Security First Life.
The Separate Account and each Series therein are administered and accounted
for as part of the general business of Security First Life, but the income and
realized capital gains or losses of each Series are credited to or charged
against the assets held for that Series in accordance with the terms of the
Contract. This is done without regard to the income, realized capital gains or
losses of any other Series or the experience of Security First Life in any other
business it may conduct. The assets of each of these Series are not chargeable
with the liabilities of any other Series, or liabilities arising out of any
other business Security First Life may conduct.
The obligations under the Contract, including the guarantee to make Annuity
payments, are general corporate obligations of Security First Life, and all of
Security First Life's assets are available to meet its expenses and obligations
to make the Variable Annuity payments. However, while Security First Life is
obligated to make the Variable Annuity payments under the Contract, the amount
of such payments is guaranteed only to the extent of the level amount calculated
as of the anniversary of the Annuity Date. (See "Level Payments Varying
Annually," page 15.)
The Separate Account is divided into a number of series of Accumulation and
Annuity Units, eight of which are available under the Contracts, and each Series
invests in the shares of only one of the Funds. The Funds consist of the T. Rowe
Price Bond Series and the T. Rowe Price Growth and Income Series of the Security
First Trust, the Money Market Portfolio and Growth Portfolio of the Variable
Insurance Products Fund, the Asset Manager Portfolio and Index 500 Portfolio of
the Variable Insurance Products Fund II, the T. Rowe Price Growth Stock Fund and
the T. Rowe Price International Stock Fund. The shares of each Fund are
purchased, without sales charge, for the corresponding Series at the net asset
value per share next determined following receipt of the applicable payment. Any
dividend or capital gain distributions received from a Fund are reinvested in
Fund shares which are retained as assets of the applicable Series. Fund shares
will be redeemed without fee to the Series to the extent necessary for Security
First Life to make Annuity or other payments under the Contract.
If shares of any Fund should no longer be available for investment by a
Series, or, if in the judgment of Security First Life's management further
investment in shares of any Fund becomes inappropriate in view of the purposes
of the Contracts, Security First Life may substitute for each Fund share already
purchased, and apply future Purchase Payments under the Contracts to the
purchase of shares of another Fund or other securities. No substitution of
securities of any Series may take place, however, without a prior favorable vote
of contractholders with a majority of units invested in the Series and the prior
approval of the SEC.
THE FUNDS
Each of the Funds is an open-end management investment company, or series
thereof, registered with the SEC under the 1940 Act. Such registration does not
involve supervision by the SEC of the investments or investment policies of the
Funds. There can be no assurance that the investment objectives of the Funds
will be achieved.
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The Security First Trust is a Massachusetts business trust which has a
number of series, two of which are available under the Contracts:
T. Rowe Price Bond Series (formerly Bond Series) seeks to achieve the
highest investment income over the long-term consistent with the preservation of
principal through investment primarily in marketable debt instruments. Growth of
principal and income will also be objectives with respect to up to 10% of the T.
Rowe Price Bond Series' assets which may be invested in common and preferred
stocks.
T. Rowe Price Growth and Income Series (formerly Growth and Income Series)
seeks capital growth and a reasonable level of current income. While this series
will generally invest in common stocks and other equities, it may, depending on
economic conditions, reduce such investments and substitute fixed-income
instruments.
Variable Insurance Products Fund and Variable Insurance Products Fund II are
Massachusetts business trusts. Each is divided into separate portfolios. The
following portfolios from these trusts are available under the Contracts:
Money Market Portfolio seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The portfolio
will invest only in high quality U.S. dollar denominated money market securities
of domestic and foreign issuers.
Growth Portfolio seeks to achieve capital appreciation normally through the
purchase of common stocks (although the portfolio's investments are not
restricted to any one type of security). Capital appreciation may also be found
in other types of securities, including bonds and preferred stocks.
Asset Manager Portfolio seeks high total return with reduced risk over the
long-term by allocating its assets among stocks, bonds and short-term, fixed
income instruments.
Index 500 Portfolio seeks investment results that correspond to the total
return (i.e., the combination of capital changes and income) of common stocks
publicly traded in the United States, as represented by the Standard & Poor's
500 Composite Stock Price Index while keeping transaction costs and other
expenses low.
T. Rowe Price Growth Stock Fund seeks long-term growth of capital through
investing primarily in common stocks of growth companies.
T. Rowe Price International Stock Fund seeks total return on its assets from
long-term growth of capital and income, principally through investments in
common stocks of established non-U.S. companies. Investments may be made solely
for capital appreciation or solely for income or any combination of both for the
purpose of achieving a higher overall return.
The investment adviser and manager to each of the series of the Security
First Trust is Security First Investment Management Corporation ("Security
Management"), a wholly-owned subsidiary of SFG and an affiliate of Security
First Life and Security First Financial, Inc., (See "Principal Underwriter,"
page 11.) T. Rowe Price Associates, Inc. ("Price Associates") is the sub-adviser
to Security Management and provides investment advice with respect to each of
the series of Security First Trust offered under the Contracts. Fidelity
Management & Research Company is the investment adviser of each of the
portfolios of the Variable Insurance Products Fund and the Variable Insurance
Products Fund II. Price Associates is the investment adviser to the T. Rowe
Price Growth Stock Fund, and Rowe Price-Fleming International, Inc. is the
investment adviser to the T. Rowe Price International Stock Fund.
Funds are available to registered separate accounts offering variable
annuity and variable life products of participating insurance companies and
entities permitted under Section 817(h) of the Code (except for the T. Rowe
Price Growth Stock Fund and T. Rowe Price International Stock Fund). Although it
is not anticipated that any disadvantage will result, there is a possibility
that a material conflict may arise between the interest of the Separate Account
and one or more of the other separate accounts participating in the Funds. A
conflict may occur due to a change in law affecting the operations of variable
life and variable annuity separate accounts, differences in the voting
instructions of our Owners and those of other companies, or some other reason.
In the event of a conflict, the Separate Account will take any steps necessary
to protect Owners and variable annuity payees, which may include withdrawal of
amounts invested in the Fund by the Separate Account.
The rights of Owners, Participants or Beneficiaries to instruct Security
First Life on voting of shares of the Funds are described under "Voting Rights,"
page 18.
Detailed information about the Funds, their investment objectives,
investment portfolios and charges may be found in the prospectuses of the Funds.
An investor should carefully read the Funds' prospectuses before investing.
Prospectuses for the underlying Funds may be obtained without charge by written
request addressed to: Security First Life Insurance Company, P.O. Box 92193, Los
Angeles, California 90009.
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PRINCIPAL UNDERWRITER
Security First Financial, Inc., 11365 West Olympic Boulevard, Los Angeles,
California 90064, a broker-dealer registered under the Securities Exchange Act
of 1934 and a member of the National Association of Securities Dealers, Inc., is
the principal underwriter for the Contracts. Security First Financial, Inc., is
a Delaware corporation and a subsidiary of SFG.
SERVICING AGENT
Security First Life receives certain administrative services such as office
space, supplies, utilities, office equipment, travel expenses and periodic
reports pursuant to an agreement with SFG.
CUSTODY OF SECURITIES
All assets of the Separate Account are held in the custody of Security First
Life. The assets of each Series will be kept physically segregated by Security
First Life and held separate from the assets of the other Series and of any
other firm, person, or corporation. Additional protection for the assets of the
Separate Account is afforded by fidelity bonds covering all of Security First
Life's officers and employees.
CONTRACT CHARGES
Charges under the Contract are assessed for the following: (i) premium
taxes; (ii) surrenders, part of which may be deemed to be a sales charge; (iii)
annual administrative charges; (iv) transaction fees; and (v) daily deduction
for the assumption of mortality risks and administrative expense risks. These
risk charges may not be changed under the Contract, and Security First Life may
derive a profit from them.
A Participant should note that there are deductions from and expenses paid
out of the assets of the Funds that are described in the prospectuses for the
Funds.
PREMIUM TAXES
Certain state and government entities impose a premium tax of up to 2.35%
(3.5% in Nevada) of Purchase Payments or amounts applied to an Annuity option.
The Contract permits Security First Life to deduct any applicable premium taxes
from the Participant's Account at the time they are incurred. Until further
notice, Security First Life will deduct any premium tax only from amounts
applied to an Annuity option.
SURRENDER CHARGES
No sales charge is deducted from any Purchase Payment. However, a surrender
charge (contingent deferred sales charge) may be imposed upon a partial or full
surrender of the Participant's Account. The surrender charge covers expenses
relating to the sale of the Contracts, including commissions paid to sales
personnel and other promotional costs.
Partial or full surrenders of a Participant's Account on or before the sixth
anniversary of the Certificate Date will be subject to a surrender charge equal
to 5% of the amount of the surrender, plus any transaction fee. Any full or
partial surrender after the sixth anniversary of the Certificate Date will not
be subject to a surrender charge, and no surrender charge will be imposed in the
event of a surrender as a result of death, disability, retirement or hardship
under the terms of the Plan. In no event will surrender charges imposed exceed
9% of Purchase Payments. In addition, no surrender charge will be deducted from
any amount transferred to another group annuity contract issued by Security
First Life to the Owner in accordance with the terms of the Plan.
Notwithstanding the above, should a Participant have an existing annuity
account with Security First Life under a group annuity contract issued to the
Owner in accordance with the terms of the Plan and should the date of issuance
of a certificate under such other annuity precede the Certificate Date (the
"Alternate Certificate Date"), then the Certificate Date used in the
determination of surrender charges under the Contract will be the Alternate
Certificate Date.
ADMINISTRATIVE FEES
At the end of each Certificate Year, Security First Life will deduct an
administrative fee of up to $9.50 plus an amount up to $2.50 for each Series in
which the Participant's Account is invested. As a result, these charges can
range from $12.00 to $29.50. The fee will be prorated among Series in the
Participant's Account. Administrative expenses
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include the cost of policy issuance, salaries, postage, telephone, travel
expenses, legal, administrative, actuarial, management and accounting fees,
periodic reports, office equipment, stationery, office space and custodial
expenses.
TRANSACTION CHARGES
A transaction charge of up to $10 may be deducted from the Participant's
Account for each allowable conversion from a Series. (See "Conversions," page
13.) Similarly, in the case of a surrender, a transaction charge may be deducted
from the Participant's Account in an amount up to the lesser of a $10 or 2% of
the amount surrendered. These charges are at cost, and Security First Life does
not anticipate profiting from them.
MORTALITY RISK AND ADMINISTRATIVE EXPENSE RISK CHARGES
The minimum death benefit provided for by the Contract requires Security
First Life to assume a mortality risk that the Participant's Account will be
less than the Participant's Purchase Payments adjusted for prior surrenders
and/or amounts applied to Annuity options. (See "Death Before the Annuity Date,"
page 17.) In addition, because the Contract provides life Annuity options,
Security First Life assumes a mortality risk that the death rate of Participants
as a group will be lower than the death rate upon which the mortality tables
specified in the Contract are based. A fee will be charged to compensate
Security First Life for assuming these mortality risks. Security First Life will
make a deduction for mortality risks in the amount of .001342% on a daily basis
(.49% per year) from the Separate Account assets funding the Contracts.
Security First Life also assumes the risk that the amount, if any, deducted
for administrative fees will be insufficient to cover its actual costs. As
compensation for assuming this risk, Security First Life will make a deduction
of .001096% on a daily basis (.40% per year) from the value of the Separate
Account assets funding the Contract.
Prior to January 1, 1994, Security First Life made daily deductions for
mortality risks in the amount of .002192% (.80% per year) and for administrative
expense risks in the amount of .001233% (.45% per year). The reduction in
mortality and administrative expense risk fees applies to Contracts in effect on
January 1, 1994 and new Contracts issued after such date.
If Security First Life has gains from mortality and administrative expense
risk charges over its costs of assuming these risks, it may use the gains in its
discretion, including reduction of expenses incurred distributing the Contracts.
FREE LOOK PERIOD
The Contract provides for an initial "Free Look" period. The Owner has the
right to return the Contract within 20 days (or such longer period as required
by state law) after the Owner receives the Contract by delivering or mailing it
to Security First Life at its administrative office. If the Contract is mailed,
it will be deemed mailed on the date of the postmark or, if sent by certified or
registered mail, the date of certification or registration. The returned
Contract will be treated as if the Company never issued it, and the Company will
refund the Purchase Payments or, if required by state law, the greater of the
Purchase Payments or the account value.
DESCRIPTION OF THE CONTRACT
GENERAL
The Contract described in this prospectus is designed to provide Variable
Annuity benefits to employers to fund in whole or in part deferred compensation
plans which qualify under the provisions of Section 457 of the Code or to trusts
to fund retirement plans that qualify under Section 401 of the Code.
A group contract is issued to an employer or to a trust of a plan which will
be the Owner, covering all present and future Participants. Each Participant
completes an enrollment form and arranges for Purchase Payments to begin. No
certificates are issued to Participants under a deferred compensation or
qualified retirement plan since all ownership rights in the Contract are held by
the employer or the Plan trust. The Contract may be restricted by the governing
instrument of a Plan as to the exercise by the Participant of his or her rights
under the Contract. Participants and Owners should refer to the Plan for
information concerning these restrictions.
PURCHASE PAYMENTS
Purchase Payments may be made at any time. The minimum Purchase Payment is
$20, and Purchase Payments must total at least $240 a year. Purchase Payments
will be allocated to one or more Series of the Separate Account in accordance
with the election of the Participant.
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CONVERSIONS
Accumulation Units may be converted among the Series of the Separate Account
at any time. Conversion instructions may be communicated in writing or, if
permitted by Security First Life, by telephone. If telephone conversions of
Accumulation Units are permitted, the Participant will be required to complete
an authorization in a form provided by Security First Life. Security First Life
will employ reasonable procedures to confirm that telephone instructions are
genuine (including requiring one or more forms of personal identification), and
Security First Life will not be liable for following instructions it reasonably
believes to be genuine.
Accumulation Units will be converted on the first Valuation Date after
receipt of written or telephone instructions. Because Accumulation Unit values
are determined at the time of the close of trading on the New York Stock
Exchange (currently 4:00 P.M. Eastern Time), conversions received after that
time will be effected as of the next Valuation Date.
Annuity Units may be converted among the Series of the Separate Account at
any time. Conversions of Annuity Units may only be elected in writing and will
be effective on the first Valuation Date following receipt of the instructions.
A minimum of $500 or the value of the Series must be converted from one
Series to one or more of the other Series.
TRANSFERS TO ANOTHER CONTRACT
Participants may transfer the annuity value of the Participant's Account to
another group annuity contract issued by the Company to the group contract
holder with respect to the Plan. The minimum transfer is the lesser of $500 or
the value of the Participant's interest in the Series from which the transfer is
made. A transaction charge of $10 will be deducted from the amount transferred.
MODIFICATION OF THE CONTRACT
The Contract guarantees that Annuity payments involving life contingencies
will be based on the minimum guaranteed Annuity purchase rates incorporated in
the Contract, regardless of actual mortality experience. The Contract also
includes provisions legally binding on Security First Life with respect to
surrenders, death benefits and maximum charges, fees and deductions from a
Participant's Account. Security First Life may only change such provisions: (i)
with respect to any Purchase Payments received as a tax free exchange under the
Code after the effected date of change; (ii) with respect to benefits and values
provided by Purchase Payments made after the effective date of the change to the
extent that such Purchase Payments in any Contract Year exceed the first year's
Purchase Payments; or (iii) to the extent necessary to conform the Contract to
any federal or state law, regulation or ruling.
A Contract may also be modified by written agreement between Security First
Life and the Owner.
Inquiries about Contract provisions should be made in writing to: Security
First Life Insurance Company, P.O. Box 92193, Los Angeles, California 90009.
ASSIGNMENTS
The Contract permits a Participant to assign his or her rights under it.
However, deferred compensation plans which conform to the requirements under
Section 457 of the Code do not permit Participants to have any direct rights in
the Contract, and the Code provides that interests in a qualified retirement
plan under Section 401 (excluding government plans) must be non-transferrable
and non-assignable.
ACCUMULATION PERIOD
CREDITING ACCUMULATION UNITS
Accumulation Units are credited to a Series upon receipt of each Purchase
Payment or upon conversion. The number of Accumulation Units to be credited is
determined by dividing the net amount allocated to a Series by the value of an
Accumulation Unit in the Series next computed following receipt of the payment
or conversion.
VALUATION OF ACCUMULATION UNITS
The current value of Accumulation Units of a Series varies with the
investment experience of the Fund in which the assets of the Series are
invested. Such value is determined each business day at the close of trading on
the New York
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Stock Exchange (currently 4:00 P.M. Eastern Time) by multiplying the value of an
Accumulation Unit in the Series on the immediately preceding Valuation Date by
the net investment factor for the period since that day. (See "Net Investment
Factor," below.) The Participant bears the investment risk that the current
value of Accumulation Units invested in a Series may, at any time, be less than
amounts originally allocated to the Series.
NET INVESTMENT FACTOR
The net investment factor is an index of the percentage change (adjusted for
distributions by the Fund and the deduction of the mortality and administrative
expense risk fees) in the net asset value of the Fund in which a Series is
invested since the preceding Valuation Date. The net investment factor may be
greater or less than one, depending upon the Fund's investment performance.
SURRENDERS
To the extent permitted by the Plan, a Participant may surrender all or a
portion of his or her cash value at any time prior to the Annuity Date. A
surrender may result in adverse federal income tax consequences to a Participant
including current taxation of the distribution and a penalty tax on a premature
distribution. (See "Federal Income Tax Status," page 17.) A Participant should
consult his or her tax adviser before requesting a surrender.
The cash value of a Participant's interest in the Separate Account prior to
the Annuity Date may be determined at any time by multiplying the number of
Accumulation Units for each Series credited to the Contract by the current value
of an Accumulation Unit in the Series and subtracting the surrender charges, if
any, and the transaction charges. Upon receipt of a written request for a full
or partial surrender, Security First Life will calculate the surrender using the
Accumulation Unit value next computed after receipt of such request.
A request for a partial surrender from more than one Series must specify the
allocation of the partial surrender among the Series. No partial withdrawal may
be made that would cause a Participant's interest in any Series to have a value
after the surrender of less than $500, unless the entire amount allocated to
such Series is being surrendered.
Payment of any amount surrendered from the Series will be made within seven
days of the date the written request is received by Security First Life.
Surrenders may be suspended when: (i) trading on the New York Stock Exchange is
restricted by the SEC or such Exchange is closed for other than weekends or
holidays; (ii) the SEC has by order permitted such suspension; or (iii) an
emergency as determined by the SEC exists making disposal of portfolio
securities or valuation of assets of the Funds not reasonably practicable.
STATEMENT OF ACCOUNT
Prior to the Annuity Date, each Participant will be provided with a written
statement of account each calendar quarter in which a transaction occurs. In no
event will a statement of account be provided less often than once annually. The
statement of account will show all transactions for the period being reported.
It will also show the number of Accumulation Units of each Series in the
Participant's Account, the current Accumulation Unit Value for each series, and
the value of the Participant's Account as of the end of the reporting period.
ANNUITY BENEFITS
ANNUITY PAYMENTS
Unless otherwise elected by the Participant, the Participant's interest in
the Separate Account will be applied to provide a Variable Annuity. The dollar
amount of Variable Annuity payments will reflect the investment experience of
the Series in which Annuity Units are held but will not be affected by adverse
mortality experience which may exceed the mortality risk charge provided for
under the Contract.
LEVEL PAYMENTS VARYING ANNUALLY
Under the Contract, Variable Annuity payments are determined annually rather
than monthly so that Annuity payments, uniform in amount, are made monthly
during each Annuity year. The level of payments for each year is based on the
investment performance of the Series up to the Valuation Date as of which the
payments are determined for the year. Thus, amounts of the Annuity payments vary
with the investment performance of the Series from year to year rather than from
month to month.
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The monthly Variable Annuity payments for the first year will be determined
on the last Valuation Date of the second calendar week preceding the Annuity
Date by using a formula described in the Contract. On each anniversary of the
Annuity Date, Security First Life will determine the amount of monthly payments
for the year then beginning. This is determined by multiplying the number of
Annuity Units in each Series from which payments are to be made by the Annuity
Unit value of that Series for the Valuation Period in which the first payment
for that year is due.
The amount of the year's Variable Annuity payments is transferred to the
General Account of Security First Life at the beginning of the Annuity year.
Although an amount in the Separate Account is credited to an Annuitant and
transferred to the General Account to make Annuity payments, it should not be
inferred that the Annuitant has any property rights in this amount. The
Annuitant has only a contractual right to Annuity payments from the amount
credited to him or her in the Separate Account.
The monthly Annuity payments are made from the General Account with interest
credited using the Assumed Investment Return of 4.25% or the alternative Assumed
Investment Return selected by the Participant. Security First Life will
experience profit or loss on the amounts placed in the General Account to
provide level monthly payments during the year to the extent that net investment
income and gains in the General Account exceed or are lower than the Assumed
Investment Return.
Because the Annuity payments for the year are set at the beginning of the
year, the Annuitant will not benefit from increases in Annuity Unit values
during the year and likewise will not be at risk for decreases during the year.
However, such increases and decreases will be reflected in the calculation of
Annuity payments for the subsequent year.
ASSUMED INVESTMENT RETURN
Variable Annuity payments will vary from payments based on the Assumed
Investment Return depending on whether the investment experience of the Separate
Account Series is better or worse than the Assumed Investment Return. The choice
of the Assumed Investment Return affects the pattern of annuity payments. Over a
period of time, if the Separate Account achieves a net investment result equal
to the Assumed Investment Return applicable to a particular option, Annuity
payments would be level. However, if the Separate Account achieves a net
investment result greater than the Assumed Investment Return, the amount of
Annuity payments would increase each year. Similarly, if the Separate Account
achieves a net investment result less than the Assumed Investment Return, the
amount of the Annuity payments would decrease each year.
Although a higher initial payment would be received under a higher Assumed
Investment Return, there is a point in time after which payments under a lower
Assumed Investment Return would be greater, assuming payments continue through
that point in time. The effect of a higher or lower Assumed Investment Return
can be summarized as follows: a higher Assumed Investment Return will result in
a larger initial payment but more slowly rising or more rapidly falling
subsequent payments than a lower Assumed Investment Return.
Unless otherwise elected, the Assumed Investment Return will be 4.25% per
annum. To the extent permitted by state law and regulations, Security First Life
will permit an election of an Assumed Investment Return of 3.50%, 5% or 6%. It
should not be inferred, however, that such returns will bear any relationship to
the actual net investment experience of the Series.
ELECTION OF ANNUITY DATE AND FORM OF ANNUITY
The Annuity Date and the form of Annuity payment are elected by the
Participant. Unless an earlier date is elected by the Participant in accordance
with the provisions of the Plan, Annuity payments must commence no later than
the Normal Annuity Date. An optional Annuity Date of the first day of any month
prior to the Normal Annuity Date may be elected, provided that the election must
be made at least 31 days before the optional Annuity Date.
The normal form of Annuity payment under the Contract is Option 2, a life
Annuity with 120 monthly payments certain. Unless elected otherwise, Option 2
will be automatically applied. Changes in the form of Annuity Payment may be
made at any time up to 31 days prior to the date on which Annuity payments are
to begin. Options 1 through 4 may be elected as either Variable Annuities or
Fixed Annuities; Option 5 may only be elected as a Fixed Annuity. The first
year's Annuity payments described in Options 1 through 4 are determined on the
basis of (i) the mortality table specified in the Contract, (ii) the age of the
Participant, (iii) the type of Annuity payment option(s) selected, and (iv) the
Assumed Investment Return selected. Fixed Annuity payments described in Option 5
are determined on the basis of (i) the number of years in the payment period and
(ii) the interest rate guaranteed with respect to the option.
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The United States Supreme Court in its decision entitled Arizona Governing
Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris
determined that an employer subject to Title VII of the Civil Rights Act of 1964
may not offer to its employees the option of receiving retirement benefits
calculated on the basis of sex. The Company will issue contracts which comply
with the Norris decision and state law.
OPTION 1--LIFE ANNUITY
An Annuity payable monthly during the lifetime of an individual, ceasing
with the last payment due prior to the death of an individual. This option
offers the maximum level of monthly payments since there is no guarantee of a
minimum number of payments or of death benefits for Beneficiaries.
OPTION 2--120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
An Annuity payable monthly during the lifetime of an individual with a
guaranteed minimum number of monthly payments not less than 120, 180, or 240
months, as elected. If at the death of the individual the specified number of
payments have not been made, Annuity payments will be continued during the
remainder of such period to the designated Beneficiary.
OPTION 3 -- INSTALLMENT REFUND LIFE ANNUITY
An Annuity payable monthly during the lifetime of an individual with a
guaranteed minimum number of monthly payments equal to the amount applied under
this option divided by the first monthly payment. Any payment made to the
designated Beneficiary after death of the individual will stop when Security
First Life has paid out a total number of payments equal to the minimum number
of payments.
OPTION 4 -- JOINT AND LAST SURVIVOR ANNUITY
An Annuity payable monthly during the joint lifetime of two individuals and
thereafter during the lifetime of the survivor, ceasing with the last payment
due prior to the death of the survivor.
OPTION 5 -- DESIGNATED PERIOD ANNUITY -- FIXED DOLLAR ONLY
A fixed dollar Annuity payable monthly for a specified number of years from
5 to 30. The amount of each payment will be based on an interest rate determined
by Security First Life, that will not be less than 3.50% per annum. Fixed
Annuity payments under this option are made from the General Account and may not
be commuted to a lump sum, except as provided under "Death Benefits," below.
FREQUENCY OF PAYMENT
Payments under all options will be made on a monthly basis, unless
quarterly, semi-annual or annual payments are requested by the Participant in
accordance with the Plan. If at any time any Variable Annuity payments under any
Series or Fixed Annuity payments are or become less than $50, Security First
Life shall have the right to decrease the frequency of payments to such interval
as will result in a payment of at least $50 from each Series or under the Fixed
Annuity.
ANNUITY UNIT VALUES
The value of an Annuity Unit at a Valuation Date is determined by
multiplying the value of the Annuity Unit at the preceding Valuation Date by an
"Annuity Change Factor." The Annuity Change Factor is determined by dividing the
value of the Accumulation Unit at the Valuation Date by the value of the
Accumulation Unit at the preceding Valuation Date and multiplying the result by
a neutralization factor.
The neutralization factor is determined by dividing 1 by the weekly
equivalent of the Assumed Investment Return previously selected by the
Annuitant. For example, the neutralization factor for the Assumed Investment
Return of 4.25% is 0.9991999.
The number of Annuity Units for a Series is determined by dividing the
monthly Annuity payment for the first year by that Series' Annuity Unit value on
the same date as the first year's Annuity payments are calculated. The number of
Annuity Units will not change unless the Participant converts Annuity Units to
or from other Series.
DEATH BENEFITS
DEATH BENEFIT BEFORE THE ANNUITY DATE
If a Participant dies before the Annuity Date, the Participant's Account
will be applied in accordance with the terms set forth below.
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Unless otherwise required by the Plan, the following provisions apply:
1. If the Beneficiary is the Participant's spouse, the spouse may elect to
receive Annuity options 1, 2 or 5 or to treat the Certificate as his or
her own. Payments under the Annuity options must begin prior to the date
on which the deceased Participant would have attained 70 1/2.
2. If the Beneficiary is not the Participant's spouse, the Beneficiary may
elect to receive a lump sum settlement or Annuity income under Annuity
income options 1, 2, or 5. (See "Election of Annuity Date and Form of
Annuity," page 15.) The lump sum settlement must be made within 5 years
of the Participant's death. Annuity payments must begin within one year
of the Participant's death. The guaranteed payment under Option 2 and the
designated period under Option 5 may not be longer than the Beneficiary's
life expectancy as specified by the Internal Revenue Service tables.
If a Participant who has not attained age 65 dies before the Annuity Date,
the amount of any lump sum settlement will be the greater of the Participant's
Account or the total of the Participant's Purchase Payments reduced by any
Purchase Payments previously surrendered or applied to an Annuity income option.
If a Participant who has attained age 65 dies before the Annuity Date, only the
normal lump sum settlement will be paid.
DEATH BENEFIT AFTER THE ANNUITY DATE
If the Annuitant under a Contract dies on or after the Annuity Date, the
remaining portion of his or her interest will be distributed to the Beneficiary
at least as rapidly as under the method of distribution being used at the date
of the Annuitant's death. If no designated Beneficiary survives the Annuitant,
the present value of any remaining payments certain on the date of death of the
Annuitant, calculated on the basis of the Assumed Investment Return previously
elected, may be paid in one sum to the estate of the Annuitant unless other
provisions have been made and approved by Security First Life. This value is
calculated as of the date of payment following receipt of due proof of death.
Unless otherwise restricted, a Beneficiary receiving Variable payments under
Option 2 or 3 after the death of an Annuitant may elect at any time to receive
the present value of the remaining number of Annuity payments certain in a
single payment, calculated on the basis of the Assumed Investment Return
previously selected. However, such election is not available to a Beneficiary
receiving Fixed Annuity payments.
FEDERAL INCOME TAX STATUS
The operations of the Separate Account form part of the operation of
Security First Life. Under the Code as it is now written no federal income tax
will be payable by Security First Life on the investment income and capital
gains of the Separate Account. Moreover, as long as the Separate Account meets
the diversification requirements of Section 817(h) of the Code, no federal
income tax is payable by the Participant on the investment income and capital
gains in a Participant's Account until Annuity payments commence or a full or
partial surrender is made. It is intended that the Separate Account will
continue to meet the requirements of Section 817(h) of the Code.
Under a Section 401 pension plan, surrenders may be made only in the event
of death, disability, separation from service, or attainment of normal
retirement age. In the case of a Section 457 deferred compensation plan,
benefits are not permitted to be made available earlier than when the employee
attains age 70 1/2, separates from service or is faced with an unforeseeable
emergency. All surrenders made prior to age 59 1/2 that are not a result of
death, disability, qualified domestic relations order, deductible medical
expense or received as a series of substantially equal payments made for the
life of the Participant or the joint lives of the Participant and the
Participant's Beneficiary will be subject to an additional 10% tax, provided
that no such additional tax will be payable with respect to distributions from a
Section 457 Plan.
In the case of Section 401 and 457 plans, the Participant's Account must be
distributed, or Annuity payments for life or a period not exceeding the life
expectancy of the Participant or the Participant and a designated Beneficiary
must commence by April 1 of the calendar year following the calendar year in
which the employee attains age 70 1/2 (or retires in the case of government
plans).
Providing certain requirements of the Code are met, distributions, other
than required distributions, from a plan may be rolled over tax-free to another
plan. Distributions from a Section 401 plan must be rolled over to a Section 401
defined contribution plan, a Section 403(a) annuity or an individual retirement
account or annuity ("IRA"). A participant in a Section 457 plan can only
transfer all or a portion of the value of his account to another eligible
Section 457 plan.
All distributions, with the exception of a return of non-deductible employee
contributions, received from a Section 401 or 457 plan are included in gross
income. In the case of Section 401 the distribution is includable in the year
paid; under 457 plans, a distribution is includable in the year it is paid or
when made available. A lump sum distribution
17
<PAGE> 21
from a Section 401 plan may qualify for special forward income averaging. In
very limited situations, the distribution may qualify for long term capital
gains treatment.
Distributions under Sections 401 and 457 plans must also meet the minimum
incidental death benefit requirements of the Code. This rule does not apply in
the case of Section 401 plan Participants when the Participant's spouse is the
designated Beneficiary.
Any non-deductible employee contribution will be received tax-free as a
portion of each Annuity payment.
Employers may deduct their contributions to self-employed and corporate
pension and profit-sharing plans described in Section 401 of the Code in the
year when made, up to the limits specified in the Code. In addition, these plans
may permit non-deductible employee contributions.
WITHHOLDING
Amounts distributed under Section 457 plans are considered compensation and
are subject to the employer's withholding and reporting requirements.
Distribution from a Section 401 plan are subject to withholding and reporting by
the trustee of the plan.
The trustee is required to withhold 20% of certain taxable amounts
constituting "eligible rollover distributions" to participants (including lump
sum distributions) in retirement plans under Code Section 401. This withholding
requirement does not apply to distributions from such plans and annuities in the
form of a life and life expectancy annuity (individual or joint), an annuity
with a designated period of 10 years or more, or any distribution required by
the minimum distribution requirements of Code Section 401(a)(9). Withholding on
these latter types of distribution will continue to be made under the rules
described in the prior paragraph. A participant cannot elect out of the 20%
withholding requirement. However, if an eligible rollover distribution is rolled
over into an eligible retirement plan or IRA in a direct trustee-to-trustee
transfer, no withholding will be required.
VOTING RIGHTS
Unless otherwise restricted by the plan, each Participant has the right to
instruct Security First Life with respect to voting the Fund shares underlying
his interest in the Separate Account, at all regular and special shareholders'
meetings. Security First Life will mail to each Participant, at his or her last
known address, all periodic reports and proxy materials of the applicable Fund
and a form with which to give voting instructions. Fund shares as to which no
timely instructions are received will be voted by Security First Life in
proportion to the instructions received from all Participants giving timely
instructions. Security First Life is under no duty to inquire as to the
instructions received or the authority of persons to instruct the voting of the
Fund shares, and unless Security First Life has actual knowledge to the
contrary, the instructions given it will be valid as they affect Security First
Life or the Funds.
Even though Annuity payments have begun, the Annuitant will continue to have
any voting rights exercisable with respect to the Fund's shares. The number of
votes to be cast by each person having the right to vote will be determined as
of a record date within 90 days prior to the meeting of the Fund, and voting
instructions will be solicited by written communication at least 10 days prior
to such meeting. To be entitled to vote, the Participant or Annuitant must have
been such on the record date. The number of shares as to which voting
instructions may be given to Security First Life is determined by dividing the
value on the record date of that portion of the Participant's Account then
allocated to the Series for a Fund by the net asset value of the Fund share as
of the same date.
LEGAL PROCEEDINGS
Security First Life, in the ordinary course of its business, is engaged in
litigation of various kinds which in its judgment is not of material importance
in relation to its total assets. There are no present or pending material legal
proceedings affecting the Separate Account.
18
<PAGE> 22
ADDITIONAL INFORMATION
For further information, contact Security First Life at the address and
phone number on the cover of this Prospectus. A copy of the Statement of
Additional Information, dated May 1, 1996, which provides more detailed
information about the Contracts, may also be obtained. Set forth below is the
table of contents for the Statement of Additional Information.
A registration statement has been filed with the SEC under the Securities
Act of 1933 with respect to the Contracts offered hereby. This Prospectus does
not contain all the information set forth in the registration statement and the
amendments and exhibits thereto. Reference is hereby made to such materials for
further information concerning the Separate Account, Security First Life and the
Contracts offered hereby. Statements contained in this Prospectus as to the
contents of the Contracts and other legal instruments are summaries. For a
complete statement of the terms thereof, reference is made to such instruments
as filed.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Insurance Company............................................................................ 3
The Separate Account............................................................................. 3
The Funds........................................................................................ 3
Purchase of Securities Being Offered............................................................. 6
Surrender Charges................................................................................ 7
Net Investment Factor............................................................................ 7
Annuity Payments................................................................................. 7
Additional Federal Income Tax Information........................................................ 9
Underwriters, Distribution of the Contracts...................................................... 10
Voting Rights.................................................................................... 10
Safekeeping of the Securities.................................................................... 10
Servicing Agent.................................................................................. 10
Independent Auditors............................................................................. 11
Legal Matters.................................................................................... 11
State Regulation of Security First Life.......................................................... 11
Financial Statements............................................................................. 11
</TABLE>
19
<PAGE> 23
'33 ACT FILE NO. 2-75533
STATEMENT OF
ADDITIONAL INFORMATION
SECURITY FIRST LIFE SEPARATE ACCOUNT A
-----------------------------------------------------------------
GROUP FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
-----------------------------------------------------------------
SECURITY FIRST LIFE INSURANCE COMPANY
MAY 1, 1996
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus. A copy of the prospectus, dated May 1, 1996
may be obtained without charge by writing to Security First Life Insurance
Company, P.O. Box 92193, Los Angeles, California 90009 or by telephoning 1 (310)
312-6100 (in California) or 1 (800) 992-9785 (outside California).
SF 234
<PAGE> 24
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Insurance Company 3
The Separate Account 3
The Funds 3
Purchase of Securities Being Offered 6
Surrender Charges 7
Net Investment Factor 7
Annuity Payments 7
Additional Federal Income Tax Information 9
Underwriters, Distribution of the Contracts 10
Voting Rights 10
Safekeeping of Securities 10
Servicing Agent 10
Independent Auditors 11
Legal Matters 11
State Regulation of Security First Life 11
Financial Statements 11
</TABLE>
2
<PAGE> 25
THE INSURANCE COMPANY
Security First Life Insurance Company ("Security First Life") is a wholly-owned
subsidiary of Security First Group, Inc. ("SFG"). The common shares of SFG are
held by London Insurance Group, Inc., a Canadian insurance service corporation
and publicly traded subsidiary of the Trilon Financial Corporation of Toronto,
Canada.
THE SEPARATE ACCOUNT
Amounts allocated to the Separate Account are invested in the securities of
eight Funds: the T. Rowe Price Bond Series and the T. Rowe Price Growth and
Income Series of the Security First Trust; the Money Market Portfolio and Growth
Portfolio of the Variable Insurance Products Fund; the Asset Manager Portfolio
and Index 500 Portfolio of the Variable Insurance Products Fund II; the T. Rowe
Price Growth Stock Fund; and the T. Rowe Price International Stock Fund. The
Separate Account is divided into Series which correspond to these eight Funds.
THE FUNDS
The Security First Trust is a Massachusetts business trust, which was formed on
February 13, 1987. Security First Trust is divided into four Series, two of
which, the T. Rowe Price Bond Series and the T. Rowe Price Growth and Income
Series, are presently available under the Contracts.
The T. Rowe Price Bond Series (formerly Bond Series) seeks to achieve the
highest investment income over the long-term consistent with the preservation of
capital through investment primarily in marketable debt instruments. Growth of
principal and income will also be objectives with respect to up to 10% of the T.
Rowe Price Bond Series' assets, which may be invested in common and preferred
stocks.
The T. Rowe Price Growth and Income Series (formerly Growth and Income Series)
seeks growth of principal and a reasonable level of current income. While this
Series will generally invest in common stocks and other equities, it may,
depending on economic conditions, reduce such investments and substitute
fixed-income instruments. Through flexible and aggressive portfolio management,
this Series will attempt to take advantage of opportunities for both growth of
principal and current income.
The Variable Insurance Products Fund and Variable Insurance Products Fund II are
Massachusetts business trusts and are registered with the Securities and
Exchange Commission as open-end, diversified management investment companies.
Four of the portfolios from these funds are offered under the Contracts.
The Money Market Portfolio seeks to obtain as high a level of current income as
is consistent with preserving capital and providing liquidity. The Portfolio
will invest only in high quality U.S. dollar denominated money market securities
of domestic and foreign issuers.
The Growth Portfolio seeks to achieve capital appreciation. The Portfolio
normally purchases common stocks, although its investments are not restricted to
any one type of security. Capital appreciation may also be found in other types
of securities, including bonds and preferred stocks.
The Asset Manager Portfolio seeks high total return with reduced risk over the
long-term by allocating its assets among stocks, bonds and short-term
fixed-income instruments.
3
<PAGE> 26
The Index 500 Portfolio seeks to provide investment results that correspond to
the total return (i.e. the combination of capital changes and income ) of common
stocks publicly traded in the United States. In seeking this objective, the
Portfolio attempts to duplicate the composition and total return of the Standard
& Poor's 500 Composite Stock Price Index while keeping transactions costs and
other expenses low. The portfolio is designed as a long-term investment option.
The T. Rowe Price Growth Stock Fund seeks long-term growth of capital and
increasing dividend income through investment primarily in common stocks of
well-established growth companies.
The T. Rowe Price International Stock Fund seeks a total return on its assets
from long-term growth of capital and income, principally through investments in
common stocks of established, non-U.S. companies. Investments may be made solely
for capital appreciation or solely for income or any combination of both for the
purpose of achieving a higher overall return. Total return consists of capital
appreciation or depreciation, dividend income, and currency gains or losses.
The Series of the Security First Trust which are available under the Contracts
have contracted to receive investment advisory services from Security First
Investment Management Corporation ("Security Management") in accordance with
their respective investment objectives, policies and restrictions. Security
Management receives an annual fee, accrued daily and payable in monthly
installments, based on 0.50% of the average daily net assets of each series.
Security Management has entered into a Sub-Advisory Agreement with T. Rowe Price
Associates, Inc. ("Price Associates") under which Price Associates provides
investment advisory services to such series of Security First Trust. Price
Associates receives an annual fee from Security Management, accrued daily and
payable in monthly installments, equal to 0.35% of average daily net assets of
each of the Series.
Variable Insurance Products Fund and Variable Insurance Products Fund II have
entered into investment advisory agreements with Fidelity Management and
Research Company ("FMR") under which they received investment advisory fees.
Money Market Portfolio's advisory fee is made up of two components: (a) a basic
fee rate and (b) an income-based component. The basic fee rate is the sum of the
following two components:
a. A group fee rate based on the monthly average net assets of all the
mutual funds advised by FMR. This rate cannot rise above .37%, and it
drops as total assets in all these funds rise. The effective group fee
rate for December 1995 was .1482%.
b. An individual fund fee rate of 0.03%.
One-twelfth of the combined annual fee rate is applied to the fund's net assets
averaged over the most recent month, giving a dollar amount which is the fee for
that month. If the fund's gross yield is 5% or less, the basic fee is the total
management fee. The income-based component is added to the basic fee only when
the fund's yield is greater than 5%. The income-based fee is 6% of that portion
of the fund's yield that represents a gross yield of more than 5% per year. The
maximum income-based component is .24%.
For fiscal year 1995, the Portfolio's Management fee was .24% of the average net
assets of the Portfolio, approximately $2.40 for every $1,000 of the Portfolio's
average net assets.
Growth Portfolio's annual advisory fee rate is the sum of two components:
4
<PAGE> 27
a. A group fee rate based on the monthly average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .52%, and it drops as total
assets in all these funds rise. The effective group fee rate for December 1995
was .3097%.
b. An individual fund fee rate of .30%.
One-twelfth of the combined annual rate is applied to the Portfolio's net assets
averaged over the most recent month, giving a dollar amount which is the fee for
that month.
In fiscal year 1995, FMR's fee was .61% of Growth Portfolio's average net
assets, or $6.10 for every $1,000 of the Portfolio's average net assets.
Asset Manager Portfolio's annual fee is the sum of two components:
a. A group fee rate based on the monthly average net assets of all the mutual
funds advised by FMR. This rate cannot rise above .52%, and it drops as total
assets in all these funds rise. The effective group fee rate for December 1995
was .3097%.
b. An individual fund fee rate of .40%.
One-twelfth of the combined annual fee rate is applied to the Portfolio's net
assets averaged over the most recent month, giving a dollar amount which is the
fee for that month.
In fiscal year 1995, FMR's fee was .71% of the Portfolio's average net assets or
$7.10 for every $1,000 of the Portfolio's average net assets.
Index 500 Portfolio pays a monthly management fee to FMR at the annual rate of
.28% of the Portfolio's average net assets. One-twelfth of this annual fee rate
is applied to the net assets averaged over the most recent month, giving a
dollar amount which is the management fee for that month. In fiscal year 1995,
FMR reimbursed to the Portfolio its management fee.
The mutual funds advised by FMR have over 25 million shareholder accounts with a
total value of more than 374 billion.
T. Rowe Price Growth Stock Fund, Inc. is managed by Price Associates, which
provides administrative services and investment advice and makes all investment
decisions for the Funds. Price Associates receives from the T. Rowe Price Growth
Stock Fund an investment management fee consisting of two elements: a flat
Individual Fund Fee of 0.25% of the Fund's net assets, and a Group Fee of 0.34%.
T. Rowe Price International Stock Fund is managed by Rowe Price-Fleming
International, Inc., which provides investment advice and makes all investment
decisions for the Fund. Price-Fleming receives from T. Rowe Price International
Stock Fund an investment management fee consisting of two elements: a flat
Individual Fund Fee of 0.35% of the Fund's net assets and a Group Fee of 0.34%.
The Group Fee varies and is based on the combined net assets of all mutual funds
sponsored and managed by Price-Fleming and Price Associates, excluding T. Rowe
Price Spectrum Fund Inc., and any institutional or private label mutual funds,
and distributed by T. Rowe Price Investment Services, Inc.
5
<PAGE> 28
Each T. Rowe Price Fund pays, as a portion of its Group Fee, an amount equal to
the ratio of its daily net assets to the daily net assets of all of the T. Rowe
Price Funds. The table below shows the annual Group Fee rate at various asset
levels of the combined T. Rowe Price Funds:
0.480% First $1 Billion 0.350% Next $2 Billion
0.450% Next $1 Billion 0.340% Next $5 Billion
0.420% Next $1 Billion 0.330% Next $10 Billion
0.390% Next $1 Billion 0.320% Next $10 Billion
0.370% Next $1 Billion 0.310% Thereafter
0.360% Next $2 Billion
The primary objective of a Variable Annuity having Separate Account assets
chiefly invested in a portfolio of common stocks is to provide Annuitants with
Annuity Payments which will tend to remain level during a period when the
economy is relatively stable and to provide increased Annuity Payments during
periods of economic growth and inflation. It is believed that the value of such
Separate Account investment will, over the long term, tend to reflect changes in
the general economic price level. Historically, the value of a diversified
portfolio of common stocks held for an extended period of time has tended to
rise during the periods of economic growth and inflation. However, there is no
exact correlation between the two. In some periods, the value of a common stock
portfolio has declined while the cost of living has increased.
The primary objective of a Variable Annuity having Separate Account assets
chiefly invested in fixed-income securities is to provide Annuitants with
Annuity Payments which will be higher in amount than those provided by
conventional Fixed Annuities. It should be recognized, however, that a portfolio
consisting of non-convertible fixed-income securities and which is designed to
obtain a high level of current yield involves market risks that are not found in
a Fixed Annuity and that differ from those found in a Variable Annuity which is
invested primarily in common and preferred stocks.
The market value of non-convertible fixed-income securities usually reflects
yields then generally available in securities of similar quality and type. Based
upon historical analysis, when interest rates decline, the market value of a
portfolio already invested at higher interest rates may be expected to rise if
such securities are not subject to call at the option of the issuer. Conversely,
when such interest rates increase, the market value of a portfolio already
invested at lower interest rates may be expected to decline. The Asset Manager
Portfolio, T. Rowe Price Bond Series and T. Rowe Price Growth and Income Series
of Security First Trust may, pursuant to the investment policies, invest a
significant portion of their assets in long-term fixed income securities.
Because of this, Participants who select one of these series as the basis for
Annuity Payments should recognize that Annuity Payments may decrease during
periods when interest rates and general prices are rising.
Participants should carefully consider which of the underlying Funds is best
suited to their long-term needs.
PURCHASE OF SECURITIES BEING OFFERED
Except as may be limited by the Plan with respect to which the Contract is
issued, Purchase Payments may be made at any time. The minimum Purchase Payment
is $20.00 per month and $240.00 per year. Purchase Payments will be allocated to
Series of the Separate Account.
6
<PAGE> 29
Amounts in Separate Account Series may be converted to amounts in any one or
more Separate Account Series at any time.
Unless waived by Security First Life, each conversion from a Series to one or
more other Series is subject to a $10.00 charge. This charge is applied by
reducing the Participant's interest on a pro rata basis in the Separate Account.
SURRENDER CHARGES
Subject to the Plan with respect to which the Contract has been issued, all or a
portion of the Participant's Account may be surrendered at any time prior to the
Annuity Date. In the event of a partial or full surrender on or before the sixth
anniversary of the Certificate Date, the portion of the Participant's Account
surrendered will be subject to a surrender charge equal to 5% of the amount
surrendered. Any surrender after the sixth anniversary of the Certificate Date
will not be subject to a surrender charge. In no event, however, will surrender
charges imposed exceed 9% of the Purchase Payments received. No surrender charge
will be deducted from any amount surrendered and reinvested by the Participant
in another group annuity contract issued by Security First Life to the Owner
under the Plan with respect to which the Contract is issued.
Notwithstanding the above, should a Participant have an existing annuity account
with Security First Life under a group annuity contract issued to the Owner in
accordance with the terms of the Plan with respect to which the Contract was
issued and should the date of the Participant's first Purchase Payment to this
group annuity contract precede the Certificate Date, then the Certificate Date
used in the determination of surrender charges under the Certificate shall be
deemed to be the date of such first Purchase Payment under the group annuity
contract.
NET INVESTMENT FACTOR
The Separate Account net investment factor is an index of the percentage change
(adjusted for distributions by the Series and the deduction of the mortality and
administrative expense risk fees) in the net asset value of each Fund in which
the Series is invested, since the preceding Business Day. The Separate Account
net investment factor for each Series of Accumulation Units is determined for
any Business Day by dividing (i) the net asset value of a share of the Fund
which is represented by such Series at the close of the business on such day,
plus the per share amount of any distributions made by such Series on such day
by (ii) the net asset value of share of such Fund determined as of the close of
business on the preceding Business Day and then subtracting from this result the
mortality and administrative expense risk fees factor of 0.003425 for each
calendar day between the preceding Business Day and the end of the current
Business Day.
ANNUITY PAYMENTS
Basis of Variable Annuity Benefits
The Variable Annuity benefit rates used in determining Annuity Payments under
the Contract are based on actuarial assumptions, reflected in tables in the
Contract, as to the expected mortality and adjusted age and the form of Annuity
selected. The mortality basis for these tables is Security First Life's Modified
Select Annuity Mortality Table, projected to the year 2000 on Projection Scale
C, with interest at 4.25% for all functions involving life contingencies and the
portion of any period certain beyond 10 years, and 3.25% for the first 10 years
of any certain period. Adjusted age in those tables means actual age to the
nearest birthday at the time the first payment is due, adjusted according to the
following table:
7
<PAGE> 30
Calendar Year of Birth Adjusted Age Is
---------------------- ---------------
Before 1916 Actual Age
1916 - 1935 Actual Age Minus 1
1936 - 1955 Actual Age Minus 2
1956 - 1975 Actual Age Minus 3
1976 - 1995 Actual Age Minus 4
Determination of Amount of Monthly Variable Annuity Payments for First Year
The Separate Account value used to establish the monthly Variable Annuity
Payment for the first year consists of the value of Accumulation Units of each
Series of the Separate Account credited to a Participant on the last day of the
second calendar week before the Annuity Date. The Contract contains tables
showing monthly payment factors and Annuity premium rates per $1,000 of Separate
Account value to be applied under Options 1 through 4.
At the beginning of the first payment year, an amount is transferred from the
Separate Account to Security First Life's General Account and level monthly
Annuity Payments for the year are made out of the General Account. The amount to
be transferred is determined by multiplying the Annuity premium rate per $1,000
set forth in the Contract tables by the number of thousands of dollars of
Separate Account Value credited to a Participant. The level monthly payment for
the first payment year is then determined by multiplying the amount transferred
(the "Annuity Premium") by the monthly payment factor in the same table. In the
event the Contract involved has Separate Account Accumulation Units in more than
one Series, the total monthly Annuity payment for the first year is the sum of
the monthly Annuity payments, determined in the same manner as above, for each
Series.
At the time the first year's monthly payments are determined, a number of
Annuity Units for each Separate Account Series is also established for the
Annuitant by dividing the monthly payment derived from that Series for the first
year by the Separate Account Annuity Unit values for the Series on the last
Business Day of the second calendar week before the first Annuity payment is
due. The number of Annuity Units remains fixed during the Annuity period unless
Annuity Units are converted to another Series.
Determination of Amount of Monthly Variable Annuity Payments for Second and
Subsequent Years
As of each anniversary of the Annuity Date, Security First Life will determine
the amount of the monthly Variable Annuity Payments for the year then beginning.
Separate determinations will be made for each Separate Account Series in which
the Annuitant has Annuity Units, with the total Annuity Payment being the sum of
the payments derived from the Series. The amount of monthly payments for any
Separate Account Series for any year after the first will be determined by
multiplying the number of Annuity Units for that Series by the Annuity Unit
value for that Series for the Valuation Period in which the first payment for
the year is due. It will be Security First Life's practice to mail Variable
Annuity payments no later than 7 days after the last day of the Valuation Period
upon which they are based or the monthly anniversary thereof.
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<PAGE> 31
The objective of a Variable Annuity contract is to provide level payments during
periods when the economy is relatively stable and to reflect as increased
payments only the excess of investment results flowing from inflation or an
increase in productivity. The achievement of this objective will depend, in
part, upon the validity of the assumption that the net investment return of the
Separate Account equals the Assumed Investment Return during periods of stable
prices. Subsequent years' payments will be smaller than, equal to or greater
than the first year's payments depending on whether the actual net investment
return for the Separate Account is smaller than, equal to or greater than the
Assumed Investment Return.
Annuity Unit Values
The initial value of an Annuity Unit is $5 for each Series for the first
Valuation Period as of which the first Variable Annuity Payment from such Series
is made. The value of an Annuity Unit for each Series on any later date is
determined by multiplying the value of an Annuity Unit at the end of the
preceding Valuation Period by the "Annuity Change Factor" for the second
preceding Valuation Period. The Annuity Change Factor is an adjusted measurement
of the investment performance of the Series since the end of the preceding
Valuation Period. The Annuity Change Factor is determined by dividing the value
of an Accumulation Unit at the end of the Valuation Period and multiplying the
result by a neutralization factor.
Variable Annuity payments for each year after the first reflect variations in
the investment performance of the Separate Account above and below an Assumed
Investment Return. This assumed investment rate is included for purposes of
actuarial computations and does not relate to the actual investment performance
of the underlying Series. Therefore, the Assumed Investment Return must be
"neutralized" in computing the Annuity Change Factor. For weekly Valuation
Periods and a 4.25% Assumed Investment Return, the neutralization factor is
0.9991999.
ADDITIONAL FEDERAL INCOME TAX INFORMATION
Security First Life is required to withhold federal income tax on any Contract
distributions to Participants (such as Annuity Payments, lump sum distributions
or partial surrenders). However, Participants are allowed to make an election
not to have federal income tax withheld. After such election is made with
respect to Annuity Payments, an Annuitant may revoke the election at any time,
and thereafter commence withholding. In such a case, Security First Life will
notify the payee at least annually of his or her right to change such election.
The withholding rate followed by Security First Life will be applied only
against the taxable portion of the Contract distributions. Federal tax will be
withheld from Annuity Payments pursuant to the recipient's withholding
certificate. If no withholding certificate is filed with Security First Life,
federal tax will be withheld from Annuity Payments on the basis that the payee
is married with three withholding exemptions. Federal tax on the taxable portion
of a partial or total surrender (i.e., non-periodic distribution) generally will
be withheld at a flat 10% rate. In the case of a plan qualified under Sections
401(a) or 403(a) of the Code, if the balance to the credit of a participant in a
plan is distributed within one taxable year to the recipient ("total
distribution"), the amount of withholding will approximate the federal income
tax on a lump sum distribution. If a total distribution is made from such a plan
or a tax-sheltered annuity on account of the Participant's death, the amount of
withholding will reflect the exclusion from federal income tax for
employer-provided death benefits.
The trustee is required to withhold 20% of certain taxable amounts constituting
"eligible rollover distributions" to participants (including lump sum
distributions) in retirement plans under Code Section 401. This withholding
requirement does not apply to distributions from such plans and
9
<PAGE> 32
annuities in the form of a life and life expectancy annuity (individual or
joint), an annuity with a designated period of 10 years or more, or any
distribution required by the minimum distribution requirement of Code Section
401(a)(9). Withholding on these latter types of distribution will continue to be
made under the rules described in the prior paragraph. A participant cannot
elect out of the 20% withholding requirement. However, if an eligible rollover
distribution is rolled over into an eligible retirement plan or IRA in a direct
trustee-to-trustee transfer, no withholding will be required.
Payees are required by law to provide Security First Life (as payor) with their
correct taxpayer identification number ("TIN"). If the payee is an individual,
the TIN is the same as his or her Social Security number. If the payee elects
not to have federal income tax withheld on an Annuity payment or a non-periodic
distribution and a correct TIN has not been provided, such election is
ineffective, and such payment will be subject to withholding as noted above.
UNDERWRITERS, DISTRIBUTION OF THE CONTRACTS
The Contracts will be sold as a continuous offering by individuals who are
appropriately licensed as insurance agents of Security First Life for the sale
of life insurance and variable annuity contracts in the state where the sale is
made. In addition, these individuals will be registered representatives of the
principal underwriter, Security First Financial, Inc., or of other
broker-dealers registered under the Securities Exchange Act of 1934 whose
registered representatives are authorized by applicable law to sell variable
annuity contracts issued by Security First Life. Commissions on sales of
contracts range from 0% to 7.5%. Agents are paid from the General Account of
Security First Life. Such commissions bear no direct relationship to any of the
charges under the Contracts. It is expected that the Contracts will be sold in
all states where Security First Life is qualified to sell insurance. No direct
underwriting commissions are paid to Security First Financial, Inc.
VOTING RIGHTS
Unless otherwise restricted by the Plan under which a Contract is issued, each
Participant will have the right to instruct Security First Life with respect to
voting the Funds' shares which are the assets underlying the Participant's
interest in the Separate Account, at all regular and special shareholder
meetings. An Annuitant's voting power with respect to Funds' shares held by the
Separate Account declines during the time the Annuitant is receiving a Variable
Annuity based on the investment performance of the Separate Account, because
amounts attributable to the Annuitant's interest are being transferred annually
to the General Account to provide the variable payments.
SAFEKEEPING OF SECURITIES
All assets of the Separate Account are held in the custody of Security First
Life. The assets of each Separate Account Series will be kept physically
segregated by Security First Life and held separate from the assets of any other
firm, person or corporation. Additional protection for the assets of the
Separate Account is afforded by fidelity bonds covering all of Security First
Life's officers and employees.
SERVICING AGENT
An Administrative Services Agreement has been entered into between Security
First Life and SFG under which the latter has agreed to perform certain of the
administrative services relating to the Contracts and for the Separate Account.
SFG performs substantially all of the record keeping and
10
<PAGE> 33
administrative services for the Separate Account. Security First Life has not
paid fees to SFG for these services.
11
<PAGE> 34
INDEPENDENT AUDITORS
The financial statements of Security First Life Insurance Company and Security
First Life Separate Account A included in this Statement of Additional
Information and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, for the periods indicated in their reports thereon which
appear elsewhere herein and in the Registration Statement. The financial
statements audited by Ernst & Young LLP have been included in reliance on their
reports, given on their authority as experts in accounting and auditing.
LEGAL MATTERS
Legal matters concerning federal securities laws applicable to the issue and
sale of the contracts have been passed upon by Routier and Johnson, P.C., 1700 K
Street N.W., Washington, D.C. 20006.
STATE REGULATION OF SECURITY FIRST LIFE
Security First Life is subject to the laws of the State of Delaware governing
insurance companies and to regulation by the Delaware Commissioner of Insurance.
An annual statement, in a prescribed form, is filed with the Commissioner on or
before March 1 each year covering the operations of Security First Life for the
preceding year and its financial condition on December 31 of such year. Security
First Life's books and assets are subject to review or examination by the
Commissioner or his agents at all times, and a full examination of its
operations is usually conducted by the National Association of Insurance
Commissioners at least once in every three years. Security First Life was last
examined as of December 31, 1993. While Delaware insurance law prescribes
permissible investments for Security First Life, it does not prescribe
permissible investments for the Separate Account, nor does it involve
supervision of the investment management or policy of Security First Life.
In addition, Security First Life is subject to the insurance laws and
regulations of other jurisdictions in which it is licensed to operate. State
insurance laws generally provide regulations for the licensing of insurers and
their agents, govern the financial affairs of insurers, require approval of
policy forms, impose reserve requirements and require filing of an annual
statement. Generally, the insurance departments of these other jurisdictions
apply the laws of Delaware in determining permissible investments for Security
First Life.
FINANCIAL STATEMENTS
The financial statements of Security First Life and subsidiaries contained
herein should be considered only for the purposes of informing investors as to
its ability to carry out the contractual obligations as depositor under the
Contracts and custodian as described elsewhere herein and in the prospectus. The
financial statements of the Separate Account are also included in this Statement
of Additional Information.
12
<PAGE> 35
[LETTERHEAD]
Report of Independent Auditors
To the Board of Directors
Security First Life Insurance Company
and Contract Owners
Security First Life Separate Account A
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Security First Life Separate Account A
(comprised of Series B, G, T, P, I, FA, FG, FI, FO, FM, SU, SV, and commencing
on May 16, 1995, Series FC, commencing on May 22, 1995, Series AS and SI, and
commencing on May 25, 1995, Series FE) as of December 31, 1995, and the related
statements of operations for the year or period then ended and changes in net
assets for each of the two years or periods then ended. These financial
statements are the responsibility of the Separate 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 securities owned as of December 31, 1995, by correspondence with
the respective mutual fund managers. 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 Security First Life Separate
Account A (comprised of the above referenced Series) at December 31, 1995, the
results of their operations for the year or period then ended, and the changes
in their net assets for each of the two years or periods then ended, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young
------------------
Ernst & Young
Los Angeles, California
April 5, 1996
1
<PAGE> 36
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Security First Trust - Bond Series (1,656,211 shares at
net asset value of $3.94 per share; cost $6,524,502) $6,530,291
Security First Trust - Growth and Income Series
(6,132,716 shares at net asset value of $11.52 per
share; cost $58,200,522) $70,635,406
T. Rowe Price Growth Stock Fund, Inc. (1,865,082 shares
at net asset value of $23.35 per share; cost
$38,474,288) $43,549,662
T. Rowe Price Prime Reserve Fund, Inc. (2,625,979
shares at net asset value of $1.00 per share; cost
$2,625,979) $2,625,979
T. Rowe Price International Fund, Inc. (681,384 shares at
net asset value of $12.23 per share; cost $8,160,138) $8,333,329
Receivable from Security First Life Insurance Company for
purchases 7,703 60,695 31,863 535 35,702
Other assets 14,473 8,944 9 865
---------- ----------- ----------- ---------- ----------
TOTAL ASSETS $6,552,467 $70,705,045 $43,581,525 $2,626,523 $8,369,896
</TABLE>
1
<PAGE> 37
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES (continued)
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company for
mortality and expense risk $ 5,314 $ 56,529 $ 30,437 $ 2,036 $ 7,834
Payable to Security First Life Insurance Company for
redemptions 659 3,862 1,150 51 27,985
Payable to Mutual Funds 22,109 65,348
Other liabilities 16,637 1,151 15
---------- ----------- ----------- ---------- ----------
TOTAL LIABILITIES 28,082 125,739 48,224 3,238 35,834
NET ASSETS
Cost to Investors:
Series B Accumulation Units 6,518,596
Series G Accumulation Units 58,144,422
Series T Accumulation Units 38,457,927
Series P Accumulation Units 2,623,285
Series I Accumulation Units 8,160,870
Accumulated Undistributed Gain:
Net unrealized appreciation 5,789 12,434,884 5,075,374 173,191
---------- ----------- ----------- ---------- ----------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $6,524,385 $70,579,306 $43,533,301 $2,623,285 $8,334,061
========== =========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 38
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $371,424 $ 2,047,981 $2,127,559 $143,086 $251,104
Other income 1,744 22,216 2,422 800 4,629
-------- ----------- ---------- -------- --------
373,168 2,070,197 2,129,981 143,886 255,733
EXPENSES:
Charges for mortality and expense risk 56,396 555,472 322,986 23,948 61,500
-------- ----------- ---------- -------- --------
Net Investment Income 316,772 1,514,725 1,806,995 119,938 194,233
REALIZED AND UNREALIZED INVESTMENT GAINS
(LOSSES)
Realized investment gains (losses) (36,046) 1,021,117 764,380 17,327
Unrealized appreciation of investments 560,723 12,817,755 6,849,189 506,270
-------- ----------- ---------- -------- --------
Net investment gains 524,677 13,838,872 7,613,569 523,597
-------- ----------- ---------- -------- --------
Increase in net assets resulting from operations $841,449 $15,353,597 $9,420,564 $119,938 $717,830
======== =========== ========== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 39
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 316,772 $ 1,514,725 $ 1,806,995 $ 119,938 $ 194,233
Net realized investment gains (losses) (36,046) 1,021,117 764,380 17,327
Net unrealized investment appreciation during the year 560,723 12,817,755 6,849,189 506,270
---------- ----------- ----------- ---------- ----------
Increase in net assets resulting from operations 841,449 15,353,597 9,420,564 119,938 717,830
Increase (decrease) in net assets resulting from capital
unit transactions 577,456 6,487,662 4,713,786 (98,627) 2,662,352
---------- ----------- ----------- ---------- ----------
Total Increase 1,418,905 21,841,259 14,134,350 21,311 3,380,182
Net Assets at December 31, 1994 5,105,480 48,738,047 29,398,951 2,601,974 4,953,879
---------- ----------- ----------- ---------- ----------
Net Assets at December 31, 1995 $6,524,385 $70,579,306 $43,533,301 $2,623,285 $8,334,061
========== =========== =========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 40
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series M Series I
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Operations:
Net investment income $ 238,821 $ 1,215,163 $ 2,367,834 $ 74,197 $ 1,285 $ 278,259
Net realized investment gains 19,242 2,736,099 1,786,634 147,429
Net unrealized investment depreciation during
the year (508,208) (3,086,482) (4,153,007) (555,178)
---------- ----------- ----------- ---------- ----------- ----------
Increase (decrease) in net assets resulting
from operations (250,145) 864,780 1,461 74,197 1,285 (129,490)
Increase in net assets resulting from capital unit
transactions (279,127) 4,586,417 4,781,841 (564,963) (2,478,148) 3,540,284
---------- ----------- ----------- ---------- ----------- ----------
Total Increase (Decrease) (529,272) 5,451,197 4,783,302 (490,766) (2,476,863) 3,410,794
Net Assets at December 31, 1993 5,634,752 43,286,850 24,615,649 3,092,740 2,476,863 1,543,085
---------- ----------- ----------- ---------- ----------- ----------
Net Assets at December 31, 1994 $5,105,480 $48,738,047 $29,398,951 $2,601,974 $ 0 $4,953,879
========== =========== =========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 41
SECURITY FIRST LIFE SEPARATE ACCOUNT A
INVESTMENTS
DECEMBER 31, 1995
SCHEDULE I
<TABLE>
<CAPTION>
Carrying Unrealized
Name of Issue Shares Value Appreciation Cost
------------- ------ ----- ------------ ----
<S> <C> <C> <C> <C>
Security First Trust Bond Series - capital
shares 1,656,211 $ 6,530,291 $ 5,789 $ 6,524,502
Security First Trust Growth and Income
Series - capital shares 6,132,716 $70,635,406 $12,434,884 $58,200,522
T. Rowe Price Growth Stock Fund, Inc. -
capital shares 1,865,082 $43,549,662 $ 5,075,374 $38,474,288
T. Rowe Price Prime Reserve Fund, Inc. -
capital shares 2,625,979 $ 2,625,979 $ 2,625,979
T. Rowe Price International Stock Fund,
Inc. - capital shares 681,384 $ 8,333,329 $ 173,191 $ 8,160,138
</TABLE>
Note A The carrying value of the investments is the reported net asset value
of investment companies capital shares.
Note B Cost is determined by using the first-in, first-out cost method.
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 42
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments
Fidelity Investments - VIP Asset Manager (2,782,258
shares at net asset value of $15.79 per share; cost
$39,902,742) $43,931,846
Fidelity Investments - VIP Growth Portfolio (1,518,582
shares at net asset value of $29.20; cost
$37,606,829) $44,342,589
Fidelity Investments - VIP Index 500 (86,186 shares at
net asset value of $75.71; cost $5,776,430) $6,525,133
Fidelity Investments - VIP Overseas Portfolio (284,670
shares at net asset value of $17.05; cost
$ 4,603,656) $4,853,623
Fidelity Investments - VIP Money Market Series
(8,395,157 shares at net asset value of $1.00 per
share; cost $8,395,157) $8,395,157
Receivable from Security First Life Insurance Company
for purchases 75,517 213,505 64,542 62,379 56,584
Other assets 3,180 4,999 10,357 59
----------- ----------- ---------- ---------- ----------
TOTAL ASSETS $44,010,543 $44,561,093 $6,600,032 $4,916,002 $8,451,800
</TABLE>
7
<PAGE> 43
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES (continued)
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company for
mortality and expense risk $ 44,158 $ 42,932 $ 5,949 $ 4,550 $ 7,351
Payable to Security First Life Insurance Company for
redemptions 14,433 19,499 11,207 750 492
Payable to Mutual Funds 71,222 198,340 61,878 62,436 54,732
Other liabilities 680 1,852
----------- ----------- ---------- ---------- ----------
TOTAL LIABILITIES 129,813 261,451 79,034 67,736 64,427
NET ASSETS
Cost to Investors:
Series FA Accumulation Units 39,851,626
Series FG Accumulation Units 37,563,882
Series FI Accumulation Units 5,772,295
Series FO Accumulation Units 4,598,299
Series FM Accumulation Units 8,387,373
Accumulated Undistributed Income:
Net unrealized appreciation 4,029,104 6,735,760 748,703 249,967
----------- ----------- ---------- ---------- ----------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $43,880,730 $44,299,642 $6,520,998 $4,848,266 $8,387,373
=========== =========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 44
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $ 562,504 $ 81,618 $ 20,704 $ 15,919 $339,310
EXPENSES:
Charges for mortality and expense risk 414,098 320,517 31,873 36,283 62,783
Other expense (income) (10,299) (101,082) (16,698) 2,443 39,243
---------- ---------- -------- -------- --------
403,799 219,435 15,175 38,726 102,026
---------- ---------- -------- -------- --------
Net Investment Income (Loss) 158,705 (137,817) 5,529 (22,807) 237,284
REALIZED AND UNREALIZED INVESTMENT GAINS:
Realized investment gains 64,929 93,864 36,253 6,514
Unrealized investment appreciation during the year 5,020,534 6,383,879 741,445 294,152
---------- ---------- -------- --------
Net investment gains 5,085,463 6,477,743 777,698 300,666
---------- ---------- -------- -------- --------
Increase in net assets resulting from
operations $5,244,168 $6,339,926 $783,227 $277,859 $237,284
========== ========== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 45
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 158,705 $ (137,817) $ 5,529 $ (22,807) $ 237,284
Net realized investment gain 64,929 93,864 36,253 6,514
Net unrealized investment appreciation
during the year 5,020,534 6,383,879 741,445 294,152
----------- ----------- ---------- ---------- ----------
Increase in net assets resulting from operations 5,244,168 6,339,926 783,227 277,859 237,284
Increase in net assets resulting from capital unit
transactions 13,466,719 24,403,159 4,791,886 2,585,161 4,276,144
----------- ----------- ---------- ---------- ----------
Total Increase 18,710,887 30,743,085 5,575,113 2,863,020 4,513,428
Net Assets at December 31, 1994 25,169,843 13,556,557 945,885 1,985,246 3,873,945
----------- ----------- ---------- ---------- ----------
Net Assets at December 31, 1995 $43,880,730 $44,299,642 $6,520,998 $4,848,266 $8,387,373
=========== =========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 46
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) $ 87,421 $ 31,856 $ (5,934) $ (10,535) $ 106,832
Net realized investment gains (losses) (5,869) (40,668) (412) 1,749
Net unrealized investment appreciation (depreciation)
during the year (1,215,262) 324,465 9,612 (47,106)
----------- ----------- -------- ---------- ----------
Increase (decrease) in net assets resulting from
operations (1,133,710) 315,653 3,266 (55,892) 106,832
Increase in net assets resulting from capital unit
transactions 21,658,209 11,739,399 773,367 1,931,599 3,736,108
----------- ----------- -------- ---------- ----------
Total Increase 20,524,499 12,055,052 776,633 1,875,707 3,842,940
Net Assets at December 31, 1993 4,645,344 1,501,505 169,252 109,539 31,005
----------- ----------- -------- ---------- ----------
Net Assets at December 31, 1994 $25,169,843 $13,556,557 $945,885 $1,985,246 $3,873,945
=========== =========== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE> 47
SECURITY FIRST LIFE SEPARATE ACCOUNT A
INVESTMENTS
DECEMBER 31, 1995
SCHEDULE I
<TABLE>
<CAPTION>
Carrying
Value Unrealized Cost
Name of Issue Shares (Note A) Appreciation (Note B)
------------- ------ -------- ------------ --------
<S> <C> <C> <C> <C>
Fidelity Investments VIP Asset Manager -
capital shares 2,782,258 $43,931,846 $4,029,104 $39,902,742
Fidelity Investments VIP Growth Portfolio -
capital shares 1,518,582 $44,342,589 $6,735,760 $37,606,829
Fidelity Investments VIP Index 500 - capital
shares 86,186 $ 6,525,133 $ 748,703 $ 5,776,430
Fidelity Investments Overseas Portfolio -
capital shares 284,670 $ 4,853,623 $ 249,967 $ 4,603,656
Fidelity Investments VIP Money Market Fund
- capital shares 8,395,157 $ 8,395,157 $ 8,395,157
</TABLE>
Note A The carrying value of the investments is the reported net asset value
of the investment companies capital shares.
Note B Cost is determined by using the first-in, first-out cost method.
12
<PAGE> 48
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments
Security First Trust - U.S. Government Income
Series (1,788,475 shares at net asset value
of $5.18 per share; cost $9,015,628) $9,263,160
Security First Trust - Value Equity Series
(2,216,873 shares at net asset value of
$5.91 per share; cost $11,968,596) $13,100,908
Alger American Small Capitalization Portfolio
(122,440 shares at net asset value of $39.41
per share; cost $4,918,114) $4,825,362
Scudder International Fund (32,389 shares at
net asset value of $11.82 per share; cost
$372,264) $382,835
Fidelity Investments - VIP Contra Fund
(426,703 shares at net asset value of $13.78
per share; cost $5,787,530) $5,879,966
Fidelity Investments - VIP Equity Income
Portfolio (41,802 shares at net asset value of
$19.27 per share; cost $759,759) $805,524
Receivable from Security First Life Insurance
Company for purchases 47,996 144,892 34,274 331 60,377 17,300
Other assets 170 1,009 15 8,845
---------- ----------- ---------- -------- ---------- --------
TOTAL ASSETS $9,311,326 $13,246,809 $4,859,636 $383,181 $5,949,188 $822,824
</TABLE>
13
<PAGE> 49
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES (continued)
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES
Payable to Security First Life Insurance Company for
mortality and expense risk $ 8,574 $ 12,101 $ 4,639 $ 402 $ 5,644 $ 752
Payable to Security First Life Insurance Company for
redemptions 4,378 5,431 552 653
Payable to Mutual Funds 46,895 143,791 34,286 331 68,064 17,300
Other liabilities 13,670 252
---------- ----------- ---------- -------- ---------- --------
TOTAL LIABILITIES 59,847 161,323 53,147 733 74,361 18,304
NET ASSETS - NOTES 4 AND 5
Cost to Investors:
Series SU Accumulation Units 9,003,947
Series SV Accumulation Units 11,953,174
Series AS Accumulation Units 4,899,241
Series SI Accumulation Units 371,877
Series FC Accumulation Units 5,782,391
Series FE Accumulation Units 758,755
Accumulated Undistributed Income (loss):
Net unrealized appreciation (depreciation) 247,532 1,132,312 (92,752) 10,571 92,436 45,765
---------- ----------- ---------- -------- ---------- --------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $9,251,479 $13,085,486 $4,806,489 $382,448 $5,874,827 $804,520
========== =========== ========== ======== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 50
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series SU Series SV Series AS(1) Series SI(1) Series FC(1) Series FE(1)
--------- --------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends $349,446 $ 444,126 $ 70,263 $ 5,416
Other income 2,208 4,077 $ 19,725 $ 349 30,772 490
-------- ---------- -------- ------- -------- -------
351,654 448,203 19,725 349 101,035 5,906
EXPENSES:
Charges for mortality and expense risk 70,358 88,613 14,826 1,349 18,477 2,303
-------- ---------- -------- ------- -------- -------
Net investment income (loss) 281,296 359,590 4,899 (1,000) 82,558 3,603
REALIZED AND UNREALIZED INVESTMENT GAINS
(LOSSES)
Net realized investment gains (losses) (29,574) 13,023 26,373 304 26,862 452
Unrealized investment appreciation (depreciation) 436,539 1,352,775 (92,752) 10,571 92,436 45,765
-------- ---------- -------- ------- -------- -------
Net investment gains (losses) 406,965 1,365,798 (66,379) 10,875 119,298 46,217
-------- ---------- -------- ------- -------- -------
Increase (decrease) in net assets
resulting from operations $688,261 $1,725,388 $(61,480) $ 9,875 $201,856 $49,820
======== ========== ======== ======= ======== =======
</TABLE>
(1) Series FC commenced operations May 16, 1995; Series AS and SI on May 22,
1995; and Series FE on May 25, 1995.
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 51
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Series SU Series SV Series AS(1) Series SI(1) Series FC(1) Series FE(1)
--------- --------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ 281,296 $ 359,590 $ 4,899 $ (1,000) $ 82,558 $ 3,603
Net realized investment gains (losses) (29,574) 13,023 26,373 304 26,862 452
Unrealized investment appreciation
(depreciation) during the year 436,539 1,352,775 (92,752) 10,571 92,436 45,765
---------- ----------- ---------- -------- ---------- --------
Increase (decrease) in net assets resulting
from operations 688,261 1,725,388 (61,480) 9,875 201,856 49,820
Increase in net assets resulting from capital
unit transactions 4,043,705 6,807,136 4,867,969 372,573 5,672,971 754,700
---------- ----------- ---------- -------- ---------- --------
Total Increase 4,731,966 8,532,524 4,806,489 382,448 5,874,827 804,520
Net assets at December 31, 1994 4,519,513 4,552,962
---------- ----------- ---------- -------- ---------- --------
Net assets at December 31, 1995 $9,251,479 $13,085,486 $4,806,489 $382,448 $5,874,827 $804,520
========== =========== ========== ======== ========== ========
</TABLE>
(1) Series FC commenced operations May 16, 1995; Series AS and SI on May 22,
1995; and Series FE on May 25, 1995.
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 52
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
Series SU Series SV
--------- ---------
<S> <C> <C>
OPERATIONS:
Net investment income $ 100,307 $ 15,569
Net realized investment losses (31,739) (16,538)
Unrealized investment depreciation during the year (157,317) (226,588)
---------- ----------
Decrease in net assets resulting from operations (88,749) (227,557)
Increase in net assets resulting from capital unit
transactions 3,081,435 3,471,901
---------- ----------
Total Increase 2,992,686 3,244,344
Net assets at December 31, 1993 1,526,827 1,308,618
---------- ----------
Net assets at December 31, 1994 $4,519,513 $4,552,962
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
17
<PAGE> 53
SECURITY FIRST LIFE SEPARATE ACCOUNT A
INVESTMENTS
DECEMBER 31, 1995
SCHEDULE I
<TABLE>
<CAPTION>
Carrying Unrealized
Value Appreciation Cost
Name of Issue Shares (Note A) (Depreciation) (Note B)
------------- ------ -------- -------------- --------
<S> <C> <C> <C> <C>
Security First Trust U. S. Government Series -
capital shares 1,788,475 $ 9,263,160 $ 247,532 $ 9,015,628
Security First Trust Value Equity Series -
capital shares 2,216,873 $13,100,908 $1,132,312 $11,968,596
Alger American Small Capitalization Portfolio
- capital shares 122,440 $ 4,825,362 $ (92,752) $ 4,918,114
Scudder International Portfolio - capital
shares 32,389 $ 382,835 $ 10,571 $ 372,264
Fidelity Investments VIP Contra Fund - capital
shares 426,703 $ 5,879,966 $ 92,436 $ 5,787,530
Fidelity Investments VIP Equity Income
Portfolio - capital shares 41,802 $ 805,524 $ 45,765 $ 759,759
</TABLE>
Note A The carrying value of the investments is the reported net asset value
of investment companies capital shares.
Note B Cost is determined by using the first-in, first-out cost method.
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 54
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
NOTE 1 -- BASIS OF PRESENTATION
Security First Life Separate Account A (Separate Account) was established on May
29, 1980, as a separate account of Security First Life Insurance Company
(Security Life), the sponsor company, and is registered under the Investment
Company Act of 1940 as a unit investment trust. The Separate Account is designed
to provide annuity benefits pursuant to certain variable annuity contracts (the
Contracts) issued by Security Life.
In accordance with the terms of the Contracts, all payments allocated to the
Separate Account by the contract owners must be allocated to purchase shares of
any or all of four series of Security First Trust (the Trust), a Massachusetts
business trust, and twelve mutual funds (investment companies). The series of
the Trust are Bond Series, Growth and Income Series, Value Equity Series, and
U.S. Government Income Series and the mutual funds are T. Rowe Price Growth
Stock Fund, Inc., T. Rowe Price Prime Reserve Fund, Inc., T. Rowe Price
International Stock Fund, Inc., Alger American Small Capitalization Portfolio,
Scudder International Fund, and Fidelity Investments: VIP Asset Manager, VIP
Growth Portfolio, VIP Index 500, VIP Overseas Portfolio, VIP Contra Fund, VIP
Equity Income Portfolio and VIP Money Market Fund. The Trust and the (investment
companies) are registered as diversified, open-end management investment
companies under the Investment Company Act of 1940. The Separate Account is
correspondingly divided into sixteen series of Accumulation Units, Series B, G,
SU, SV, T, P, I, AS, SI, FA, FG, FI, FO, FC, FE and FM, relating to investments
in each of the investment companies, respectively. For the year ended December
31, 1994 and prior, assets held by certain Series (SF 135R2S contracts) were
reported separately in the financial statements. For the year ended December 31,
1995 these contracts were combined with the other contracts that shared the same
series.
All series of the Trust receive administrative services for a fee from Security
First Investment Management Corporation (Security Management). Security First
Financial, Inc. is the principal underwriter for the Contracts. Security Life,
Security Management, and Security First Financial, Inc. are wholly-owned
subsidiaries of Security First Group, Inc. Investment advice is provided to the
Security First Trust Bond Series and Growth and Income Series by T. Rowe Price
Associates, Inc. and to the Security First Trust Value Equity and U. S.
Government Income Series by Virtus Capital Management.
19
<PAGE> 55
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 1 -- BASIS OF PRESENTATION (continued)
The Separate Account and each series therein are administered and accounted for
as part of the business of Security Life, but the investment income and capital
gains and losses of each Separate Account series are identified with the assets
held for that series in accordance with the terms of the Contracts, without
regard to investment income and capital gains and losses arising out of any
other business Security Life may conduct.
The Separate Account incurs no liability for remuneration to directors, advisory
boards, officers or such other persons who may from time to time perform
services for the Separate Account.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS -- Investments are carried at market value, which is
determined by multiplying the investment company's shares owned by the Separate
Account by the reported net asset value per share of each respective investment
company. Realized investment gains and losses are determined on the first-in,
first-out cost basis.
EXPENSES AND CHARGES -- The Separate Account accrues charges incurred for the
mortality and expense risk assumed by Security Life. The charges are calculated
daily by multiplying the value of the assets of the Separate Account by the
daily mortality and expense risk rate. Security Life has the option of calling
for payment of such charges at any time. The following table illustrates the
rates for the respective contracts:
<TABLE>
<CAPTION>
Contract Type Annual Rate Daily Rate
------------- ----------- ----------
<S> <C> <C>
SF 234; SF 89; SF 224FL;
SF 236FL; SF 1700 Contracts .89% .0000244
SF 135R; SF 135R2V; SF 226RI Contracts 1.25% .0000342
SF 135R2S Contracts 1.15% .0000315
</TABLE>
The following charges are deducted from a contract holder's account by Security
Life as a capital transaction by reducing the separate account units held, and
such charges are not an expense of the Separate Account. An administration
charge (contract charge) is deducted from each contract and paid to Security
Life at the end of each contract year prior to the annuity date, and when the
entire contract value is withdrawn on any date other than a contract
anniversary. In the event that a participant withdraws
20
<PAGE> 56
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (continued)
all or a portion of the participant's account, a contingent deferred sales
charge (CDSC) may be applied to the amount of the contract value withdrawn to
cover certain expense relating to the sale of contracts. The following table
illustrates contract charges and CDSC with respect to the various types of
contracts:
<TABLE>
<CAPTION>
Maximum Contract
Contract Type Charge Per Year CDSC
------------- --------------- ----
<S> <C> <C>
SF 236FL $12.00 Based on elapsed time since premium received.
Disappears on or before 6th anniversary.
SF 224FL $40.00 Based on elapsed time since premium received.
Disappears on or before 6th anniversary.
SF 1700 $42.50 Based on elapsed time since premium received.
Disappears on or before 6th anniversary.
Group Form
226RI $41.50 Seven percent of premium received. Disappears
on or before 6th anniversary.
All other group $19.50 Five percent of premium received. Disappears on
or before 6th anniversary.
SF 135R2V * None
SF 135R2S and other
individual * Based on elapsed time since premium received.
Disappears after 7th year.
</TABLE>
* .15% annually of average account value (currently being waived).
In addition, transaction charges of $10 are incurred for each surrender or
annuitization. Upon conversion of either accumulation or annuity units from one
series to another, a $10 conversion charge is incurred. The amount deducted for
contract charges and CDSC was $273,809 for the year ended December 31, 1995, and
$132,959 for the year ended December 31, 1994.
INCOME RECOGNITION AND REINVESTMENT -- Income is recognized as declared payable
by the investment companies. All distributions received are reinvested in the
investment companies.
21
<PAGE> 57
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 3 -- FEDERAL INCOME TAXES
The operations of the Separate Account form a part of, and are taxed with, the
operations of Security Life, which is taxed as a "life insurance company" under
the Internal Revenue Code, and as such, Security Life is liable for income
taxes, if any, which become payable with respect to the Separate Account's
operations.
Separate accounts are generally required to meet certain diversification
requirements for their assets. However, separate accounts which solely provide
benefits for "pension plan contracts" are exempt from the diversification
requirements. Pension plan contracts include: (i) tax qualified plans; (ii)
employee annuities; (iii) plans for employees of life insurance companies; (iv)
tax sheltered annuities of exempt organizations; (v) individual retirement
accounts or annuities, and (vi) deferred compensation plans of certain
governmental or tax-exempt organizations. The Contracts issued by Security Life
are offered in connection with both pension plan contracts and non-qualified
contracts, therefore the Separate Account is subject to the diversification
requirements. Management believes that the Separate Account has met the
diversification requirements.
NOTE 4 -- CAPITAL TRANSACTIONS
Additions and deductions to Units of Capital consisting of the effect of capital
unit transactions were as follows:
<TABLE>
<CAPTION>
Additions to Capital Deductions From Capital
$ Units $ Units
----- ----- ----- -----
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
SF 135R; SF 226RI Contracts
---------------------------
Series B Accumulation Units 434,597 54,077 110,016 13,561
Series G Accumulation Units 4,305,620 420,939 881,557 89,611
Series FA Accumulation Units 14,071,749 2,554,939 4,044,605 724,251
Series FG Accumulation Units 14,711,150 2,249,747 1,345,976 204,887
Series FI Accumulation Units 3,146,381 487,693 135,735 21,838
Series FO Accumulation Units 505,089 87,729 336,120 58,663
Series FM Accumulation Units 4,916,221 921,317 1,605,571 302,600
Series SU Accumulation Units 105,370 19,715
Series AS Accumulation Units 4,947,271 746,279 79,302 11,979
Series SI Accumulation Units 376,043 66,110 3,470 605
Series FC Accumulation Units 5,777,070 950,446 104,099 16,764
</TABLE>
22
<PAGE> 58
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Additions to Capital Deductions From Capital
$ Units $ Units
----- ----- ----- -----
<S> <C> <C> <C> <C>
Series FE Accumulation Units 760,961 132,235 6,261 1,114
</TABLE>
NOTE 4 -- CAPITAL TRANSACTIONS (continued)
<TABLE>
<CAPTION>
Additions to Capital Deductions From Capital
$ Units $ Units
----- ----- ----- -----
<S> <C> <C> <C> <C>
SF 234; SF 89; SF 224FL; SF 236FL; SF 1700 Contracts
- ----------------------------------------------------
Series B Accumulation Units 833,258 48,874 580,383 33,929
Series G Accumulation Units 9,125,759 294,937 6,062,160 196,489
Series T Accumulation Units 9,366,192 347,286 4,652,406 171,305
Series P Accumulation Units 634,124 50,176 732,751 57,732
Series I Accumulation Units 4,605,139 660,163 1,942,787 276,598
Series FA Accumulation Units 5,110,732 961,908 1,671,157 311,571
Series FG Accumulation Units 6,918,341 1,058,309 692,639 106,251
Series FI Accumulation Units 1,988,299 318,789 207,059 32,436
Series FM Accumulation Units 1,745,516 329,755 1,217,457 229,906
SF 135R2S
- ---------
Series SU Accumulation Units 4,886,186 942,800 947,851 188,764
Series SV Accumulation Units 7,552,784 1,366,412 745,648 142,445
Series FM Accumulation Units 511,763 95,847 74,328 14,079
Series FG Accumulation Units 5,215,983 786,021 403,700 61,003
Series FO Accumulation Units 2,521,718 501,641 105,526 21,247
Year ended December 31, 1994:
SF 135R; SF 226RI Contracts
- ---------------------------
Series B Accumulation Units 450,410 59,234 1,964,889 255,231
Series G Accumulation Units 2,256,171 255,847 11,816,179 1,346,467
Series M Accumulation Units 3,404 513 1,896,616 286,075
Series T Accumulation Units 25,699 2,710 11,921,075 1,244,060
Series FA Accumulation Units 18,699,464 3,451,499 1,087,647 202,875
Series FG Accumulation Units 8,227,024 1,580,400 278,031 53,770
Series FI Accumulation Units 588,897 113,711 6,953 1,338
Series FO Accumulation Units 1,019,668 174,720 22,111 3,810
Series FM Accumulation Units 1,187,375 234,573 571,042 111,981
</TABLE>
23
<PAGE> 59
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4 -- CAPITAL TRANSACTIONS (continued)
<TABLE>
<CAPTION>
Additions to Capital Deductions From Capital
$ Units $ Units
----- ----- ----- -----
<S> <C> <C> <C> <C>
SF 234; SF 89; SF 224FL; SF 236FL; SF 1700 Contracts
- ----------------------------------------------------
Series B Accumulation Units 2,365,192 145,428 1,129,840 70,689
Series G Accumulation Units 19,236,016 714,441 5,089,591 188,577
Series M Accumulation Units 163 17 585,099 60,337
Series T Accumulation Units 20,139,827 857,260 3,462,610 148,948
Series P Accumulation Units 610,483 49,901 1,175,446 96,364
Series I Accumulation Units 4,068,516 585,985 528,232 76,552
Series FA Accumulation Units 4,252,178 825,943 205,786 40,076
Series FG Accumulation Units 2,075,220 420,944 87,975 17,729
Series FI Accumulation Units 194,766 39,124 3,343 662
Series FM Accumulation Units 3,785,144 753,094 945,024 186,554
SF 135R2S
- ---------
Series SU Accumulation Units 3,327,573 685,345 246,138 51,484
Series SV Accumulation Units 3,719,973 755,973 248,072 51,516
Series FM Accumulation Units 289,695 56,479 10,040 1,962
Series FG Accumulation Units 1,843,704 367,479 40,543 8,061
Series FO Accumulation Units 952,968 191,482 18,926 3,926
</TABLE>
NOTE 5 -- UNITS OF CAPITAL
The following are the units outstanding and corresponding unit values as of
December 31, 1995:
<TABLE>
<CAPTION>
Units Unit Value
Description Outstanding $
----------- ----------- ----------
<S> <C> <C>
SF 135R2C; SF 226 RI Contracts
- ------------------------------
Series B Accumulation Units 170,728 8.55
Series G Accumulation Units 1,105,394 11.46
Series FA Accumulation Units 5,868,185 6.02
Series FG Accumulation Units 3,819,793 7.13
Series FI Accumulation Units 610,372 7.04
Series FO Accumulation Units 219,402 6.14
Series FM Accumulation Units 743,389 5.40
Series SU Accumulation Units 19,715 5.43
Series AS Accumulation Units 734,300 6.54
Series SI Accumulation Units 65,505 5.84
Series FC Accumulation Units 933,682 6.29
Series FE Accumulation Units 131,121 6.13
</TABLE>
24
<PAGE> 60
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5 -- UNITS OF CAPITAL (continued)
<TABLE>
<CAPTION>
Units Unit Value
Description Outstanding $
----------- ----------- ----------
<S> <C> <C>
SF 234; SF 89; SF 224FL; SF 236FL; SF 1700 Contracts
- ----------------------------------------------------
Series B Accumulation Units 277,508 18.25
Series G Accumulation Units 1,640,191 35.31
Series T Accumulation Units 1,430,263 30.44
Series P Accumulation Units 202,251 12.97
Series I Accumulation Units 1,118,228 7.45
Series FA Accumulation Units 1,475,597 5.79
Series FG Accumulation Units 1,386,442 6.84
Series FI Accumulation Units 325,198 6.83
Series FM Accumulation Units 666,389 5.42
SF 135R2S
- ---------
Series SU Accumulation Units 1,692,672 5.40
Series SV Accumulation Units 2,186,595 5.98
Series FM Accumulation Units 140,365 5.44
Series FG Accumulation Units 1,084,436 6.99
Series FO Accumulation Units 667,950 5.24
</TABLE>
NOTE 6 -- SECURITY FIRST TRUST - MONEY MARKET SERIES INVESTMENT OPTION
Effective January 31, 1994, the Security First Trust Money Market Series (Series
M) was closed and liquidated. Policyholders were notified of this and allowed to
transfer their funds. The Fidelity Investments VIP Money Market Fund has similar
investment objectives and many policyholders elected to transfer their Security
First Trust Money Market investments into it.
25
<PAGE> 61
[LETTERHEAD]
Report of Independent Auditors
Board of Directors
Security First Life Insurance Company
We have audited the accompanying consolidated balance sheets of Security First
Life Insurance Company and subsidiaries as of December 31, 1995 and 1994, and
the related consolidated statements of income, stockholder's equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company'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. 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 consolidated financial position of Security First
Life Insurance Company and subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in Notes 3 and 5 to the consolidated financial statements, Security
First Life Insurance Company and subsidiaries made certain accounting changes in
1994 and 1993.
/s/ Ernst & Young
-----------------
Ernst & Young
February 9, 1996
<PAGE> 62
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
1995 1994
---- ----
(In thousands)
<S> <C> <C>
ASSETS
INVESTMENTS
Fixed maturities:
Available-for-sale $2,176,985 $1,602,387
Held-for-investment 197,379
Equity securities 5,129 5,827
Investment real estate 2,311 2,298
Policy and mortgage loans 18,798 16,239
Short-term investments 7,024 26,215
---------- ----------
2,210,247 1,850,345
CASH AND CASH EQUIVALENTS 7,990 13,359
ACCRUED INVESTMENT INCOME 30,459 27,018
DEFERRED POLICY ACQUISITION COSTS 56,515 47,985
OTHER ASSETS
Property under capital lease 10,680 11,260
Assets held in separate accounts 340,287 184,196
Other 4,318 4,517
---------- ----------
$2,660,496 $2,138,680
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE> 63
<TABLE>
<CAPTION>
December 31
1995 1994
---- ----
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Policyholder liabilities $2,047,818 $1,790,456
Obligation under capital lease 15,966 16,183
Notes payable to parent 35,000 35,000
Note payable 1,000 2,000
Federal income taxes 35,052 1,723
Liabilities related to separate accounts 340,287 184,196
Other 5,293 5,060
---------- ----------
2,480,416 2,034,618
COMMITMENTS AND CONTINGENCIES
STOCKHOLDER'S EQUITY
Preferred stock, $1 par value
Authorized, issued and outstanding -- 200,000 shares 200 200
Common stock, $200 par value
Authorized -- 15,000 shares
Issued and outstanding -- 11,000 shares 2,200 2,200
Additional paid-in capital 48,147 48,147
Net unrealized investment gains (losses) 38,972 (21,561)
Retained earnings 90,561 75,076
---------- ----------
180,080 104,062
---------- ----------
$2,660,496 $2,138,680
========== ==========
</TABLE>
3
<PAGE> 64
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
REVENUES
Net investment income $158,174 $146,101 $137,450
Annuity product income 14,815 6,121 2,499
Net realized investment gains (losses) 1,347 (1,735) 921
Other 701 709 721
-------- -------- --------
TOTAL REVENUES 175,037 151,196 141,591
BENEFITS AND EXPENSES
Interest credited to policyholders 103,959 102,776 102,513
Benefits in excess of policyholder liabilities 5,738 4,119 1,907
Amortization of deferred policy acquisition costs 15,505 5,612 1,981
Operating expenses 28,201 23,543 17,397
-------- -------- --------
TOTAL BENEFITS AND EXPENSES 153,403 136,050 123,798
-------- -------- --------
21,634 15,146 17,793
Income tax expense
Current 3,044 1,776 5,467
Deferred 3,105 3,388 597
-------- -------- --------
6,149 5,164 6,064
-------- -------- --------
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING PRINCIPLE 15,485 9,982 11,729
Cumulative effect of change in accounting for income taxes 1,510
-------- -------- --------
NET INCOME $ 15,485 $ 9,982 $ 13,239
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE> 65
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
Net
Additional Unrealized Total
Preferred Common Paid-in Investment Retained Stockholder's
Stock Stock Capital Gains (Losses) Earnings Equity
----- ----- ------- -------------- -------- ------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 $200 $2,200 $48,147 $ 226 $51,855 $102,628
Net income 13,239 13,239
Net unrealized investment losses (269) (269)
---- ------ ------- -------- ------- --------
Balance at December 31, 1993 200 2,200 48,147 (43) 65,094 115,598
Net income 9,982 9,982
Cumulative effect of change in
accounting principle at January 1 28,618 28,618
Net unrealized investment losses (50,136) (50,136)
---- ------ ------- -------- ------- --------
Balance at December 31, 1994 200 2,200 48,147 (21,561) 75,076 104,062
Net income 15,485 15,485
Net unrealized investment gains 60,533 60,533
---- ------ ------- -------- ------- --------
Balance at December 31, 1995 $200 $2,200 $48,147 $ 38,972 $90,561 $180,080
==== ====== ======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE> 66
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1995 1994 1993
---- ---- ----
(In thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 15,485 $ 9,982 $ 13,239
Adjustments to reconcile net income to net cash
provided by operations:
Cumulative effect of accounting change (1,510)
Net realized investment losses (gains) (1,347) 3,014 (12,121)
Depreciation and amortization 1,391 2,281 1,703
Accretion of discount and amortization of
premium on investments 1,059 (2,423) (8,212)
Changes in operating assets and liabilities:
Accrued investment income (3,441) (648) (3,957)
Deferred policy acquisition costs (15,676) (4,915) (16,946)
Other assets 2,194 4,560 (4,504)
Other liabilities 673 (9,050) 2,207
--------- ----------- -----------
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES 338 2,801 (30,101)
INVESTING ACTIVITIES
Fixed maturity securities -- available-for-sale
Purchases (636,371) (1,033,097)
Sales and maturities 439,897 860,239
Fixed maturity securities -- held-for-investment
Purchases (1,037,222)
Sales and maturities 783,570
Equity securities
Purchases (117)
Sales 931 1,085
Disposal (acquisition) of real estate, net (13) 2,192 (161)
Net sale (purchase) of short-term investments 19,191 (26,215)
Repayment (issuance) of loans, net (2,558) 5,792 (359)
Purchase of equipment (388) (896)
--------- ----------- -----------
NET CASH USED IN
INVESTING ACTIVITIES (179,428) (190,900) (254,172)
FINANCING ACTIVITIES
Receipts credited to policyholder accounts 565,698 468,898 509,223
Amounts returned to policyholders (390,760) (326,691) (208,422)
Issuance of note payable to parent 10,000 25,000
Repayment of notes payable (1,000) (1,000) (1,000)
Reduction of capital lease obligation (217) (192) (170)
--------- ----------- -----------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 173,721 151,015 324,631
--------- ----------- -----------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (5,369) (37,084) 40,358
Cash and cash equivalents at beginning of year 13,359 50,443 10,085
--------- ----------- -----------
CASH AND CASH
EQUIVALENTS AT END OF YEAR $ 7,990 $ 13,359 $ 50,443
========= =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE> 67
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION -- Security First Life Insurance Company (Security First
Life) and subsidiaries (collectively, the Company) is a wholly-owned subsidiary
of Security First Group, Inc. (SFG), formerly The Holden Group, Inc. SFG has
been a wholly-owned subsidiary of London Insurance Group, Inc. (LIG) since May
1994. The Company sells a broad range of fixed and variable annuity contracts.
The Company's consolidated financial statements are prepared in conformity with
generally accepted accounting principles (GAAP) which vary in some respects from
statutory accounting practices prescribed or permitted by regulatory authorities
(statutory basis) and include the accounts of its wholly-owned subsidiaries,
Fidelity Standard Life Insurance Company (Fidelity Standard Life) and Security
First Life Insurance Company of Arizona (SFL-Arizona). All significant
intercompany transactions and accounts are eliminated in consolidation.
INVESTMENTS -- Investments are reported on the following bases:
Fixed Maturities:
Available-for-sale -- at fair value, which differs from the amortized
cost of such investments. Unrealized gains and losses on these
investments (net of related adjustments for deferred policy acquisition
costs and applicable deferred income taxes) are credited or charged to
stockholder's equity and, accordingly, have no effect on net income.
Held-for-investment -- at cost, adjusted for amortization of premium or
accretion of discount and other-than-temporary declines in fair value.
The amortized cost of such investments differs from their fair values.
See Note 3 regarding the reclassification in 1995 of
held-for-investment securities to available-for-sale.
For those fixed maturities which are mortgage-backed, the Company
recognizes income using a constant effective yield based on anticipated
prepayments and the estimated economic life of the securities. When
actual prepayments differ significantly from anticipated prepayments,
the effective yield is recalculated to reflect actual payments to date
and anticipated future payments. The net investment in the security is
adjusted to the amount that would have existed had the new effective
yield been applied since the acquisition of the security. Such
adjustment is included in net investment income.
The Company does not maintain a trading portfolio, or at December 31,
1995, a held-for-investment portfolio.
7
<PAGE> 68
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity securities (common and non-redeemable preferred stocks) -- at fair
value if publicly traded. Changes in fair values of equity securities, net
of applicable deferred income taxes, are reported as unrealized gains or
losses directly in stockholder's equity and, accordingly, have no effect on
net income.
Investment real estate -- at lower of cost less accumulated depreciation or
fair value.
Mortgage loans and policy loans -- at unpaid balances.
Short-term investments -- at cost, which approximates fair value.
Realized gains and losses on disposal of investments are determined on a
specific identification basis.
CASH EQUIVALENTS -- Cash equivalents consist of investments in money market
funds. The carrying amount of cash equivalents approximates fair value.
DEFERRED POLICY ACQUISITION COSTS -- As of January 1, 1995, the Company adopted
the account value deposit method of reporting on two-tier annuities (those
annuities that have a different interest credited rate for annuitization as
compared to withdrawal). The Company had previously adopted this method for
single-tier annuities. Under this method, commissions and other costs of
acquiring annuities that vary with and are primarily related to the acquisition
of such business are included in deferred policy acquisition costs. Prior to
that date, certain commission costs for two-tier annuities were reported as a
component of policyholder liabilities. As a result of this change, deferred
policy acquisition costs and policyholder liabilities increased by $38,590,000
on January 1, 1995 with no effect on stockholder's equity. Additionally, the
presentation of certain revenue and expense items in the consolidated statement
of income for the year ended December 31, 1995 has been effected by this change
with no significant impact on net income.
Deferred policy acquisition costs are being amortized in proportion to the
present value of estimated future gross margins which includes the impact of
realized investment gains and losses.
8
<PAGE> 69
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
POLICYHOLDER LIABILITIES -- As indicated previously, the Company adopted the
account value deposit method for reporting on two-tier annuities as of January
1, 1995. Under this method, the policyholder liabilities for two-tier annuities
are the lower tier account values. Prior to that date, policyholder liabilities
for the Company's two-tier fixed annuity products were calculated using a
prospective approach. Under the prospective approach, the policyholder liability
was equal to the present value of future benefits using a "break-even" discount
rate which resulted in no gain or loss when a policy was issued. This method
allowed profits to emerge in relation to the difference between actual
investment earnings and the break-even discount rate used in the calculation of
the policyholder liabilities. Policyholder liabilities for the Company's
single-tier fixed annuity products are the account values.
The fair value of policyholder liabilities is estimated assuming all
policyholders surrender their policies. The carrying amounts and estimated fair
values are as follows (in thousands):
<TABLE>
<CAPTION>
Carrying Amount Estimated Fair Value
--------------- --------------------
<S> <C> <C>
December 31, 1995 $2,047,818 $1,976,079
December 31, 1994 1,790,456 1,760,999
</TABLE>
NOTES PAYABLE -- Notes payable are carried at their unpaid balances which
approximate fair value because the interest rates on these notes approximate
market rates.
INCOME TAXES -- The Company files consolidated federal income tax returns with
SFG. Income taxes are provided on the basis as if the companies filed
separately.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Such differences are related principally to the deferral of policy
acquisition costs, the valuation of fixed maturities and the provision for
policyholder liabilities. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
SEPARATE ACCOUNTS -- The assets held in separate accounts represent funds which
are separately administered by the Company pursuant to variable annuity
contracts. The liabilities related to separate accounts consist of policyholder
liabilities for variable annuities. The separate account assets and liabilities
are reported at fair value. The Company receives a fee for administrative
services provided to the separate accounts. Investment risks associated with
fair value changes are borne by the contract holders.
9
<PAGE> 70
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
ANNUITY REVENUES AND BENEFITS -- Annuity product income represents fees earned
from policyholders of annuity contracts, including surrender charges,
annuitization charges and administration fees. Benefits in excess of
policyholder liabilities consists of the difference between the policyholder
account values surrendered or annuitized during the period and the related
policyholder liability balances.
ESTIMATES -- Certain amounts reported in the accompanying consolidated financial
statements are based on management's best estimates and judgments. Actual
results could differ from those estimates.
NEW ACCOUNTING STANDARD -- In March 1995, the Financial Accounting Standards
Board (FASB) issued a new standard on accounting for long-lived assets which are
impaired or to be disposed of. The Company must adopt the standard by 1996. The
standard requires that an impaired long-lived asset be measured based on the
fair value of the asset to be held and used or the fair value less cost to sell
the asset to be disposed of. When adopted, this standard is not expected to have
a material effect on the financial position or results of operations of the
Company.
RECLASSIFICATIONS -- Certain reclassifications of prior-year amounts have been
made to conform with current-year classifications.
10
<PAGE> 71
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 2 -- STATUTORY CAPITAL AND RESTRICTIONS
Security First Life and each of its subsidiaries are required to file annual
statements with various state insurance regulatory authorities on a statutory
basis.
The statutory-basis capital and surplus at December 31, 1995, 1994 and 1993, and
statutory-basis net income (loss) for those years are as follows (in thousands):
<TABLE>
<CAPTION>
Capital Net
and Surplus Income (Loss)
----------- -------------
December 31, 1995
-----------------
<S> <C> <C>
Security First Life Insurance Company $100,027* $3,161*
Fidelity Standard Life Insurance Company 15,573* 831*
Security First Life Insurance Company of Arizona 12,715* 612*
December 31, 1994
-----------------
Security First Life Insurance Company $ 99,272 $1,758
Fidelity Standard Life Insurance Company 14,894 409
Security First Life Insurance Company of Arizona 12,118 1,246
December 31, 1993
-----------------
Security First Life Insurance Company $ 90,967 $5,057
Fidelity Standard Life Insurance Company 14,651 (160)
Security First Life Insurance Company of Arizona 10,890 1,358
</TABLE>
* These unaudited amounts are preliminary and subject to change upon
completion of the statutory annual statements.
The difference between statutory-basis net income (loss) and net income reported
based on GAAP relates primarily to different reserving methods used to calculate
policyholder liabilities, the recognition of deferred policy acquisition costs
and deferred income taxes.
Security First Life and Fidelity Standard Life are incorporated and domiciled in
Delaware. SFL-Arizona is incorporated and domiciled in Arizona. The payment of
dividends by Security First Life and each of its subsidiaries is subject to
statutory limitations which are based on each company's statutory-basis net
income and surplus levels. At December 31, 1995, the maximum amount of dividends
Security First Life could pay SFG without prior approval from state insurance
regulatory authorities is $9,762,000.
11
<PAGE> 72
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS
The Company adopted Statement of Financial Accounting Standards No. 115 (SFAS
No. 115), Accounting for Certain Investments in Debt and Equity Securities, as
of January 1, 1994. In accordance with SFAS No. 115, prior period financial
statements were not restated to reflect the change in accounting principle. The
cumulative effect as of January 1, 1994 of adopting SFAS No. 115 was an increase
in stockholder's equity of $28,618,000 -- net of related adjustments for
deferred policy acquisition costs of $62,166,000 which was recorded as an
adjustment to policyholder liabilities and deferred income taxes of $14,743,000
- -- to reflect the net unrealized gains on securities previously carried at
amortized cost. There was no effect on net income as a result of the adoption of
SFAS No. 115.
In November 1995, the FASB issued a Special Report, A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities. In accordance with provisions in that Special Report, the Company
chose to reclassify securities from held-for-investment to available-for-sale.
At the date of transfer, the amortized cost of those securities was $169,879,000
and the unrealized gain on those securities was $2,291,000, which is included in
stockholder's equity.
Unrealized investment gains and losses reported in the accompanying financial
statements are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1995 1994
---- ----
<S> <C> <C>
Unrealized investment gains (losses) $104,593 $(76,004)
Less: Adjustment for deferred policy acquisition costs 45,736 (43,719)
Deferred income taxes (benefit) 19,885 (10,724)
-------- --------
Net unrealized investment gains (losses) $ 38,972 $(21,561)
======== ========
</TABLE>
The adjustment for deferred policy acquisition costs of $43,719,000 in 1994 was
recorded as an adjustment to policyholder liabilities. Included in unrealized
investment gains (losses) are net losses related to equity securities of $58,000
and $230,000 at December 31, 1995 and 1994, respectively.
12
<PAGE> 73
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS (continued)
The amortized cost and fair value of fixed maturities as of December 31, 1995
and 1994 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
December 31, 1995
-----------------
Available-for-sale:
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 131,672 $ 12,467 $ (153) $ 143,986
Debt securities issued by foreign governments 16,779 1,687 18,466
Corporate securities 894,766 64,723 (5,194) 954,295
Mortgage-backed securities 1,029,090 33,049 (1,901) 1,060,238
---------- -------- -------- ----------
$2,072,307 $111,926 $ (7,248) $2,176,985
========== ======== ======== ==========
December 31, 1994
-----------------
Available-for-sale:
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 114,207 $ 2,100 $ (4,649) $ 111,658
Debt securities issued by foreign
governments 21,916 334 (481) 21,769
Corporate securities 760,618 9,679 (39,496) 730,801
Mortgage-backed securities 781,296 6,735 (49,872) 738,159
---------- -------- -------- ----------
$1,678,037 $ 18,848 $(94,498) $1,602,387
========== ======== ======== ==========
Held-for-investment:
Mortgage-backed securities $ 197,379 $ 1,471 $(13,215) $ 185,635
========== ======== ======== ==========
</TABLE>
13
<PAGE> 74
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS (continued)
The amortized cost and fair value of fixed maturities by contractual maturity at
December 31, 1995, are summarized below. Actual maturities will differ from
contractual maturities because certain borrowers have the right to call or
prepay obligations.
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
---- -----
(In thousands)
<S> <C> <C>
Available-for-sale:
Due in one year or less $ 18,459 $ 18,666
Due after one year through five years 162,465 172,269
Due after five years through ten years 580,386 611,671
Due after ten years 281,907 314,142
Mortgage-backed securities 1,029,090 1,060,237
---------- ----------
$2,072,307 $2,176,985
========== ==========
</TABLE>
Proceeds from sales of fixed maturities are $441,790,000 and $695,755,000 in
1995 and 1994, respectively.
The Company reports realized gains (losses) on investment transactions net of
any adjustment to the amortization of deferred policy acquisition costs when
such amortization is accelerated or decelerated as a result of the realization
of gains or losses other than as originally anticipated on the sale of
investments associated with annuity products. Net realized investment gains
(losses) reported in the accompanying financial statements are as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Fixed maturities -- available-for-sale
Gross gains $ 6,181 $ 7,174
Gross losses (4,621) (6,328)
------- -------
1,560 846
Fixed maturities -- held-for-investment
Gross gains $ 14,755
Gross losses (2,634)
--------
12,121
Loss on equity securities (213) (31)
Loss on real estate (2,250)
Accelerated amortization
of deferred policy acquisition costs (300) (11,200)
------- ------- ---------
Net realized investment gains (losses) $ 1,347 $(1,735) $ 921
======= ======= ========
</TABLE>
14
<PAGE> 75
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS (continued)
The Company has recorded a valuation reserve for possible other-than-temporary
impairment in the value of fixed maturities of $2,000,000 at December 31, 1995
and 1994.
Concentrations of credit risk with respect to fixed maturities are limited due
to the large number of issues owned and their dispersion across many different
industries and geographic areas. Accordingly, at December 31, 1995, the Company
had no significant concentration of credit risk.
The fair values for fixed maturities and equity securities are primarily based
on values obtained from independent pricing services.
The cost of equity securities was $5,214,000 and $6,177,000 on December 31, 1995
and 1994, respectively.
Investment real estate is net of accumulated depreciation of $1,596,000 and
$1,538,000 as of December 31, 1995 and 1994, respectively, and a $2,250,000
provision for decline in fair value at those dates.
The carrying amount of mortgage loans ($945,000 and $934,000 at December 31,
1995 and 1994, respectively) and policy loans ($17,853,000 and $15,305,000 at
December 31, 1995 and 1994, respectively) approximates fair value because the
interest rates on these loans approximate market rates.
The Company places its temporary cash investments with high-credit quality
financial institutions and, by corporate policy, limits the amount of credit
exposure to any one financial institution.
At December 31, 1995, investment securities having an amortized cost of
$10,561,000 were on deposit with various states in accordance with state
insurance department requirements.
15
<PAGE> 76
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS (continued)
Investment income by major category of investment is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Fixed maturities $159,266 $148,303 $139,404
Policy loans 884 749 620
Real estate 894 406 367
Mortgage loans 345 769 974
Short-term investments 1,943 114
Cash and cash equivalents 388 783 831
-------- -------- --------
163,720 151,124 142,196
Investment expenses (5,546) (5,023) (4,746)
--------- -------- --------
Net investment income $158,174 $146,101 $137,450
======== ======== ========
</TABLE>
The Company has no significant amounts of non-income producing investments.
NOTE 4 -- NOTES PAYABLE
Notes payable consist of the following as of December 31 (in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
5% Surplus note due to SFG, interest payable monthly,
principal payable upon regulatory approval $25,000 $25,000
8% Note due to The Capitol Life Insurance Company,
interest payable quarterly, principal payments of $1,000,000
each paid annually on December 31 1,000 2,000
8% Surplus note due to SFG, interest payable monthly,
principal payable upon regulatory approval 10,000 10,000
------- -------
$36,000 $37,000
======= =======
</TABLE>
Security First Life has a $15,000,000 bank revolving credit line which bears
interest at a floating rate based on London Interbank Offered Rates. There were
no borrowings outstanding under this revolving credit line at December 31, 1995
and 1994. The $25,000,000 and $10,000,000 surplus notes payable to SFG are
pledged, along with the common and preferred stock of Security First Life, as
collateral for SFG's bank revolving credit line.
Principal payments due on the notes payable during the next five years are
$1,000,000 in 1996.
16
<PAGE> 77
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 4 -- NOTES PAYABLE (continued)
Interest paid by the Company totaled $2,225,000 in 1995, $1,799,000 in 1994 and
$343,000 in 1993.
NOTE 5 -- INCOME TAXES
The Company files a consolidated federal income tax return with SFG and its
subsidiaries. Taxes are provided for and paid to SFG as if the Company filed
separately.
The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, effective January 1, 1993 and, as permitted under
the new rules, did not restate prior years' financial statements. The cumulative
effect of this change in accounting for income taxes as of January 1, 1993 of
$1,510,000 is reported separately in the consolidated statement of income for
the year ended December 31, 1993.
The liability for federal income taxes includes deferred taxes of $35,875,000
and $3,324,000 at December 31, 1995 and 1994, respectively. Significant
components of these deferred taxes are as follows (in thousands):
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition costs $32,937 $14,701
Fixed maturities 19,980
Other assets 301
Other, net 495 1,050
------- -------
Total deferred tax liabilities 53,412 16,052
Deferred tax assets:
Fixed maturities 8,654
Policyholder liabilities 13,384 1,674
Capital lease 765 628
Other liabilities 3,388 1,772
------- -------
Total deferred tax assets 17,537 12,728
------- -------
Net deferred tax liabilities $35,875 $ 3,324
======= =======
</TABLE>
Income taxes paid by the Company were $3,248,000 in 1995, $2,000,000 in 1994 and
$4,325,000 in 1993.
17
<PAGE> 78
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 5 -- INCOME TAXES (continued)
In 1995, the Company's income tax provision differs from the statutory rate of
34%. The following is a reconciliation of the federal income tax at statutory
rates with the income tax provision as shown in the consolidated statement of
income for the year ended December 31, 1995 (in thousands):
<TABLE>
<S> <C>
Federal income tax at 34% $7,356
Dividends received deduction (317)
True up of prior year taxes (875)
Other (15)
------
Provision for income tax expense $6,149
======
</TABLE>
NOTE 6 -- CAPITAL LEASE
Security First Life has a lease for office space that expires in 2014. This
lease is treated as a capital lease for financial reporting purposes.
The Company subleases space on an annual basis to SFG to use as its home office.
Related income offset against the lease costs was $1,663,000, $1,649,000 and
$1,578,000 for the years ended December 31, 1995, 1994 and 1993, respectively.
Future payments under the lease are as follows (in thousands):
<TABLE>
<S> <C>
1996 $ 2,166
1997 2,166
1998 2,166
1999 2,166
2000 2,166
Thereafter 29,051
--------
Total minimum rental payments 39,881
Amount representing interest (23,915)
Present value of minimum rental payments $ 15,966
========
</TABLE>
The property under capital lease is net of accumulated amortization of
$6,717,000 in 1995 and $6,137,000 in 1994.
18
<PAGE> 79
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 7 -- COMMITMENTS, CONTINGENCIES AND RISKS
The Company has forward contracts with commitments to purchase mortgage-backed
securities with total par values of $25,500,000 at December 31, 1995. The
Company uses these contracts to hedge the interest rate risk on future
investments that match policyholder liabilities, primarily related to
guaranteed-rate products. Gains or losses realized on such contracts are
included in the carrying value of the underlying anticipated investment. The
Company is subject to the risk that the counterparties to such contracts would
fail to deliver the securities to the Company on settlement date, if the Company
were to hold the contract on that date. The Company's current cash balances and
expected future cash flows are sufficient to settle the commitments under these
forward contracts.
Included in the accompanying balance sheet are assets of $6,000,000 at December
31, 1995 related to The Capitol Life Insurance Company (CLICO) and its parent.
CLICO is currently operating under supervision by the Colorado Division of
Insurance. The Company anticipates that CLICO will continue as an ongoing
enterprise. However, there can be no certainty that this will occur.
NOTE 8 -- RELATED PARTY TRANSACTIONS
The Company has marketing and administrative agreements with SFG and previously
with its subsidiary, Holden Financial Company, under which these companies
provide all of the Company's marketing and policyholder administration services.
Amounts incurred under these agreements were $38,954,000, $31,183,000 and
$26,026,000 for 1995, 1994 and 1993, respectively.
The Company has management agreements with SFG under which the latter provides
certain personnel, administrative services and office space. Amounts incurred
under these agreements were $4,308,000 in 1995 and 1994 and $4,248,000 in 1993.
The Company has investment advisory agreements with Security First Investment
Management Corporation, a subsidiary of SFG. Fees of $4,756,000, $4,508,000 and
$4,067,000 were paid in 1995, 1994 and 1993, respectively, pursuant to these
agreements.
19
<PAGE> 80
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements contained herein
(1) Security First Life Separate Account A
Part A - Condensed Financial Information
Part B - Statement of Assets and Liabilities, Statement of
Operations, Statement of Changes in Net Assets,
Statement of Investments
(2) Security First Life Insurance Company
Part B - Depositor's financial statements with notes
(b) Exhibits
(10) Consent of Independent Auditors - herewith
(13) Organizational Chart - herewith
(27) Financial Data Schedule - herewith
All previously filed Exhibits to Security First Life Separate Account A
registration statement and all post-effective amendments thereto are
specifically incorporated herein by reference.
Item 25. Directors and Officers of the Depositor
The officers and directors of Security First Life Insurance Company are listed
below. Their principal business address is 11365 West Olympic Boulevard, Los
Angeles, California 90064.
<TABLE>
<CAPTION>
Name Position and Offices with Depositor
- ---- -----------------------------------
<S> <C>
R. Brock Armstrong Chairman of the Board and Director
Gordon R. Cunningham Director
Frank E. Farella Director
Melvin M. Hawkrigg Director
General P.X. Kelley Director
Robert G. Mepham Director, President and Chief Executive Officer
Richard C. Pearson Director, Senior Vice President, General Counsel
and Secretary
Howard H. Kayton Executive Vice President and Chief Actuary
Robert D. Badun Senior Vice President, Investments
Jane F. Eagle Senior Vice President, Finance
Peter R. Jones Senior Vice President, Public Services
Cheryl M. MacGregor Senior Vice President, Administration
Alex H. Masson Senior Vice President, Information Systems
Michael R. McCoy Senior Vice President, Banking
</TABLE>
<PAGE> 81
<TABLE>
<CAPTION>
Name Position and Offices with Depositor
- ---- -----------------------------------
<S> <C>
Robert L. Pina Senior Vice President, Human Resources
George R. Bateman Vice President, Public Employees Services
James C. Turner Vice President, Taxation
George J. Olah Treasurer
</TABLE>
Item 26. Persons Controlled by or under Common Control with Depositor of
Registrant
The Registrant is a Separate Account of Security First Life Insurance Company
("depositor"). For a complete listing and diagram of all persons directly or
indirectly controlled by or under common control with the depositor, see Exhibit
13.
Item 27. Number of Contract owners
As of December 31, 1995 there were 32,058 owners of the Contracts which are the
subject of this post-effective amendment.
Item 28. Indemnification
None
Item 29. Principal Underwriters
Security First Financial, Inc., the principal underwriter for Security First
Life Separate Account A, also acts as principal underwriter for Fidelity
Standard Life Separate Account.
The following are the directors and officers of Security First Financial, Inc.
Their principal business address is 11365 West Olympic Boulevard, Los Angeles,
California 90064.
<TABLE>
<CAPTION>
Name Position with Underwriter
<S> <C>
Robert Grant Mepham Director and Chairman of the Board
Richard Carl Pearson Director, President, General Counsel and Secretary
Jane Frances Eagle Director, Senior Vice President, Finance and
Treasurer
Howard H. Kayton Senior Vice President and Chief Actuary
James Cyrus Turner Vice President, Taxation and Assistant Secretary
</TABLE>
<TABLE>
<CAPTION>
Net Underwriting Compensation on
Name of Principal Discount and Redemption or Brokerage
Underwriter Commissions* Annuitization Commission Compensation
<S> <C> <C> <C> <C>
Security First None None None None
Financial, Inc.
</TABLE>
*Fee paid by Security First Life Insurance Company for serving as underwriter.
<PAGE> 82
Item 30. Location of Accounts and Records
Security First Financial, Inc., underwriter for the registrant, is located at
11365 West Olympic Boulevard, Los Angeles, California 90064. It maintains those
accounts and records required to be maintained by it pursuant to Section 31(a)
of the Investment Company Act of 1940 and the rules promulgated thereunder.
Security First Life Insurance Company, the depositor for the registrant, is
located at 11365 West Olympic Boulevard, Los Angeles, California 90064. It
maintains those accounts and records required to be maintained by it pursuant to
Section 31(a) of the Investment Company Act and the rules promulgated thereunder
and as custodian of the Registrant.
Security First Group, Inc. is located at 11365 West Olympic Boulevard, Los
Angeles, California 90064. It performs substantially all of the record keeping
and administrative services in connection with the Registrant.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
<PAGE> 83
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of the Securities
Act Rule 485(b) for effectiveness of this Registration Statement and has duly
caused this amended Registration Statement to be signed on its behalf in the
City of Los Angeles and State of California on this 26th day of April 1996.
SECURITY FIRST LIFE SEPARATE ACCOUNT A
(Registrant)
By SECURITY FIRST LIFE INSURANCE COMPANY
(Sponsor)
By /s/ Robert G. Mepham
--------------------------------------
Robert G. Mepham, President
As required by the Securities Act of 1933, this amended Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Robert G. Mepham President, Director April 26, 1996
- ----------------------
Robert G. Mepham
/s/ Jane F. Eagle Principal Financial and April 26, 1996
- ---------------------- Accounting Officer
Jane F. Eagle
R. Brock Armstrong* Chairman, Director April 26, 1996
- ----------------------
R. Brock Armstrong
Gordon R. Cunningham* Director April 26, 1996
- ----------------------
Gordon R. Cunningham
Melvin M. Hawkrigg* Director April 26, 1996
- ----------------------
Melvin M. Hawkrigg
Paul X. Kelley* Director April 26, 1996
- ----------------------
Paul X. Kelley
</TABLE>
<PAGE> 84
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Frank E. Farella* Director April 26, 1996
- ----------------------
Frank E. Farella
/s/ Richard C. Pearson Director April 26, 1996
- ----------------------
Richard C. Pearson
/s/ Richard C. Pearson April 26, 1996
- ----------------------
*(Richard C. Pearson as
Attorney-in-Fact for each
of the persons indicated)
</TABLE>
<PAGE> 1
EXHIBIT 10
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Condensed Financial
Information" and "Independent Auditors" and to the use of our report on
Security First Life Separate Account A dated April 5, 1996 and our report on
Security First Life Insurance Company dated February 9, 1996 in the
Registration Statement (Form N-4 Post-Effective Amendment No. 29 under the
Securities Act of 1933 and No. 74 under the Investment Company Act of 1940)
contained in the Statement of Additional Information.
/s/ ERNST & YOUNG LLP
----------------------
ERNST & YOUNG LLP
Los Angeles, California
April 26, 1996
<PAGE> 1
EXHIBIT 13
ORGANIZATIONAL CHART
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------
Trilon Financial Corporation
(Canada)
------------------------------
------------------------------
London Insurance Group, Inc.
(Canada)
------------------------------
---------------------------- ----------------------------
London Life Security First Group, Inc.
Insurance Company
(Canada) 95-3947585
---------------------------- ----------------------------
----------------- -------------- --------------- -------------- -------------- ------------------- -------------- -----------------
Security First Security First Security First Security First Security First
Insurance Agency, Group of Ohio, Security First Life Insurance Investment Insurance Agency, Security First Security First
(Nevada) Inc. Financial, Inc. Company Management Inc. Management Real Estate, Inc.
Corporation (Massachusetts) Corporation
88-0272002 34-1737227 95-2869421 DE 61050 95-2844896 95-3476150 95-4087137 95-4087153
----------------- -------------- --------------- 54-0696644 --------------- ------------------- ------------- -----------------
--------------
----------------- -------------------
Fidelity Standard Security First Life
Life Insurance Insurance
Company Company
of Arizona
DE 93246 AZ 89010
51-0258372 86-0676035
----------------- -------------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The accompanying notes are an integral part of these financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> B
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 6,524,502
<INVESTMENTS-AT-VALUE> 6,530,291
<RECEIVABLES> 7,703
<ASSETS-OTHER> 14,473
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 6,552,467
<PAYABLE-FOR-SECURITIES> 22,109
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5,973
<TOTAL-LIABILITIES> 28,082
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 448,236
<SHARES-COMMON-PRIOR> 392,775
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,789
<NET-ASSETS> 6,524,385
<DIVIDEND-INCOME> 371,424
<INTEREST-INCOME> 0
<OTHER-INCOME> 1,744
<EXPENSES-NET> 56,396
<NET-INVESTMENT-INCOME> 316,772
<REALIZED-GAINS-CURRENT> (36,646)
<APPREC-INCREASE-CURRENT> 560,723
<NET-CHANGE-FROM-OPS> 841,449
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 102,951
<NUMBER-OF-SHARES-REDEEMED> 47,490
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,418,905
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 56,396
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The accompanying notes are an integral part of these financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> G
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 58,200,522
<INVESTMENTS-AT-VALUE> 70,635,406
<RECEIVABLES> 60,695
<ASSETS-OTHER> 8,944
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70,705,045
<PAYABLE-FOR-SECURITIES> 65,348
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 60,391
<TOTAL-LIABILITIES> 125,739
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 2,745,585
<SHARES-COMMON-PRIOR> 2,315,800
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 12,434,884
<NET-ASSETS> 70,579,306
<DIVIDEND-INCOME> 2,047,981
<INTEREST-INCOME> 0
<OTHER-INCOME> 22,216
<EXPENSES-NET> 555,472
<NET-INVESTMENT-INCOME> 1,514,725
<REALIZED-GAINS-CURRENT> 1,021,117
<APPREC-INCREASE-CURRENT> 12,817,755
<NET-CHANGE-FROM-OPS> 15,353,597
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 715,876
<NUMBER-OF-SHARES-REDEEMED> 286,100
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 21,841,259
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 555,472
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The accompanying notes are an integral part of these financial statements.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> T
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 38,474,288
<INVESTMENTS-AT-VALUE> 43,549,662
<RECEIVABLES> 31,863
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,581,525
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 48,224
<TOTAL-LIABILITIES> 48,224
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,430,263
<SHARES-COMMON-PRIOR> 1,254,282
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,075,374
<NET-ASSETS> 43,533,301
<DIVIDEND-INCOME> 2,127,559
<INTEREST-INCOME> 0
<OTHER-INCOME> 2,422
<EXPENSES-NET> 322,986
<NET-INVESTMENT-INCOME> 1,806,995
<REALIZED-GAINS-CURRENT> 764,380
<APPREC-INCREASE-CURRENT> 6,849,189
<NET-CHANGE-FROM-OPS> 9,420,564
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 347,286
<NUMBER-OF-SHARES-REDEEMED> 171,305
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,134,350
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 322,986
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The accompanying notes are an integral part of these financial statements.
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> I
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 8,160,138
<INVESTMENTS-AT-VALUE> 8,333,329
<RECEIVABLES> 35,702
<ASSETS-OTHER> 865
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,369,896
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 35,834
<TOTAL-LIABILITIES> 35,834
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,118,228
<SHARES-COMMON-PRIOR> 739,663
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 173,191
<NET-ASSETS> 8,334,061
<DIVIDEND-INCOME> 251,104
<INTEREST-INCOME> 0
<OTHER-INCOME> 4,629
<EXPENSES-NET> 61,500
<NET-INVESTMENT-INCOME> 194,233
<REALIZED-GAINS-CURRENT> 17,327
<APPREC-INCREASE-CURRENT> 506,270
<NET-CHANGE-FROM-OPS> 717,830
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 660,163
<NUMBER-OF-SHARES-REDEEMED> 276,598
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,380,182
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 61,500
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The accompanying notes are an integral part of these financial statements.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> FA
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 39,902,742
<INVESTMENTS-AT-VALUE> 43,931,846
<RECEIVABLES> 75,517
<ASSETS-OTHER> 3,180
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 44,010,543
<PAYABLE-FOR-SECURITIES> 71,222
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58,591
<TOTAL-LIABILITIES> 129,813
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 7,343,782
<SHARES-COMMON-PRIOR> 4,862,757
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,029,104
<NET-ASSETS> 43,880,730
<DIVIDEND-INCOME> 562,504
<INTEREST-INCOME> 0
<OTHER-INCOME> 10,299
<EXPENSES-NET> 414,098
<NET-INVESTMENT-INCOME> 158,705
<REALIZED-GAINS-CURRENT> 64,929
<APPREC-INCREASE-CURRENT> 5,020,534
<NET-CHANGE-FROM-OPS> 5,244,168
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,516,847
<NUMBER-OF-SHARES-REDEEMED> 1,035,822
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 18,710,887
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 414,098
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The accompanying notes are an integral part of these financial statements.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> FG
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 37,606,829
<INVESTMENTS-AT-VALUE> 44,342,589
<RECEIVABLES> 213,505
<ASSETS-OTHER> 4,999
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,561,903
<PAYABLE-FOR-SECURITIES> 198,340
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 63,111
<TOTAL-LIABILITIES> 261,451
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6,290,671
<SHARES-COMMON-PRIOR> 2,568,735
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,735,760
<NET-ASSETS> 44,299,642
<DIVIDEND-INCOME> 81,618
<INTEREST-INCOME> 0
<OTHER-INCOME> 101,082
<EXPENSES-NET> 320,517
<NET-INVESTMENT-INCOME> (137,817)
<REALIZED-GAINS-CURRENT> 93,864
<APPREC-INCREASE-CURRENT> 6,383,879
<NET-CHANGE-FROM-OPS> 6,339,926
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,094,077
<NUMBER-OF-SHARES-REDEEMED> 372,141
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 30,743,085
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 320,517
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The accompanying notes are an integral part of these financial statements.
</LEGEND>
<SERIES>
<NUMBER> 8
<NAME> FI
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 4,603,656
<INVESTMENTS-AT-VALUE> 4,853,623
<RECEIVABLES> 64,542
<ASSETS-OTHER> 10,357
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,928,522
<PAYABLE-FOR-SECURITIES> 61,878
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 17,156
<TOTAL-LIABILITIES> 79,034
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 935,570
<SHARES-COMMON-PRIOR> 183,362
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 748,703
<NET-ASSETS> 6,520,998
<DIVIDEND-INCOME> 20,704
<INTEREST-INCOME> 0
<OTHER-INCOME> 16,698
<EXPENSES-NET> 31,873
<NET-INVESTMENT-INCOME> 5,529
<REALIZED-GAINS-CURRENT> 36,253
<APPREC-INCREASE-CURRENT> 741,445
<NET-CHANGE-FROM-OPS> 783,227
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 806,482
<NUMBER-OF-SHARES-REDEEMED> 54,274
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,575,113
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 31,873
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The accompanying notes are an integral part of these financial statements.
</LEGEND>
<SERIES>
<NUMBER> 10
<NAME> FM
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 8,395,157
<INVESTMENTS-AT-VALUE> 8,395,157
<RECEIVABLES> 56,584
<ASSETS-OTHER> 59
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,451,800
<PAYABLE-FOR-SECURITIES> 54,732
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 9,695
<TOTAL-LIABILITIES> 64,427
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,550,143
<SHARES-COMMON-PRIOR> 749,809
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 8,387,373
<DIVIDEND-INCOME> 339,310
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 102,026
<NET-INVESTMENT-INCOME> 237,284
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 237,284
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,346,919
<NUMBER-OF-SHARES-REDEEMED> 546,585
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 4,513,428
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 102,026
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
