<PAGE> 1
'33 ACT FILE NO. 33-37128
'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. 14 [X]
AND/OR
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 83 [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)
X IMMEDIATELY UPON FILING PURSUANT TO PARAGRAPH (b) OF RULE 485
- ----
ON MAY 1, 1997 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
24-F-2 NOTICE WAS FILED ON FEBRUARY 27, 1997.
<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. Definitions Glossary
3. Synopsis of Highlights Summary of the Contract
4. Condensed Financial Information Condensed Financial Information; Financial
Information
5. General Description of Registrant, Description of Security First Life Insurance
Depositor, and Portfolio Companies Company, The Separate Account and The Funds;
Voting Rights; Servicing Agent
6. Deductions and Expenses Contract Charges
7. General Description of Variable Annuity Descriptions of the Contracts; Accumulation
Contracts 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 the Statement of Table of Contents of the Statement of Additional
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
Trust and The Funds
18. Services Servicing Agent; Safekeeping of Securities;
Independent Auditors
19. Purchase of Securities Being Offered Purchase of Securities Being Offered
20. Underwriters Distributions of the Contracts
21. Calculation of Performance Data Calculation of Performance Data
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 fixed and variable contracts (the "Contracts")
described in this prospectus are issued by Security First Life Insurance Company
("Security First Life"). These Contracts are designed to provide annuity
benefits to employees of public school systems and certain tax-exempt
organizations as tax deferred annuity contracts under the provisions of Section
403(b) of the Internal Revenue Code (the "Code"), to retirement plans that
qualify under Section 401 of the Code, to employees covered under employer
deferred compensation plans which are qualified under Section 457 of the Code,
and to individuals as individual retirement annuities.
Participants may allocate premiums and cash value to one or more of eleven
series of the Separate Account (the "Series"). The assets of the Series will be
used to purchase, at net asset value, shares of (i) the Money Market Portfolio,
Growth Portfolio and Overseas Portfolio of the Variable Insurance Products Fund;
(ii) the Asset Manager Portfolio, Contrafund Portfolio and Index 500 Portfolio
of the Variable Insurance Products Fund II; (iii) the Bond Series and T. Rowe
Price Growth and Income Series of the Security First Trust; (iv) the
International Portfolio of the Scudder Variable Life Investment Fund; (v) the
Small Capitalization Portfolio of The Alger American Fund; and (vi) the T. Rowe
Price Growth Stock Fund (available only for plans that qualify under Sections
401 or 457 of the Code) [herein referred to as "The Funds"]. The prospectuses
for the Funds describe their investment objectives.
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, 1997, 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(800)283-4536.
The table of contents of the Statement of Additional Information appears on Page
24 of this 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. THIS PROSPECTUS AND THE PROSPECTUS FOR THE UNDERLYING
FUND(S) SHOULD BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
Prospectus dated May 1, 1997 SF 226RI (228) (5/97)
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Glossary....................................................................................... 3
Summary of the Contract........................................................................ 4
Fee Tables..................................................................................... 7
Explanation of Fee Tables and Examples..................................................... 9
Condensed Financial Information................................................................ 10
Performance Information........................................................................ 11
Financial Information.......................................................................... 11
Description of Security First Life Insurance Company,
the Separate Account and the Funds........................................................... 11
The Insurance Company...................................................................... 11
The General Account........................................................................ 11
The Separate Account....................................................................... 11
The Funds.................................................................................. 12
Principal Underwriter.......................................................................... 13
Servicing Agent................................................................................ 14
Custody of Securities.......................................................................... 14
Contract Charges............................................................................... 14
Premium Taxes.............................................................................. 14
Sales Charges.............................................................................. 14
Administrative Fees........................................................................ 15
Transaction Charges........................................................................ 15
Mortality and Expense Risk Charge.......................................................... 15
Distribution Expense Charge (Sales Load)................................................... 15
Free Look Period........................................................................... 16
Deferred Compensation Plans................................................................ 16
Description of the Contracts................................................................... 16
General.................................................................................... 16
Purchase Payments.......................................................................... 16
Transfers.................................................................................. 16
Loans (Section 403(b) Plans Only).......................................................... 17
Modification of the Contracts.............................................................. 17
Assignment................................................................................. 17
Accumulation Period............................................................................ 18
Crediting Accumulation Units in the Separate Account....................................... 18
Valuation of Accumulation Units............................................................ 18
Net Investment Factor...................................................................... 18
Surrenders................................................................................. 18
Statement of Account....................................................................... 18
Annuity Benefits............................................................................... 19
Variable Annuity Payments.................................................................. 19
Level Payments Varying Annually............................................................ 19
Assumed Investment Return.................................................................. 19
Election of Annuity Date and Form of Annuity............................................... 20
Frequency of Payment....................................................................... 21
Annuity Unit Values........................................................................ 21
Death Benefits................................................................................. 21
Death Benefit Before the Annuity Date...................................................... 21
Death Benefit After the Annuity Date....................................................... 22
Federal Income Tax Status...................................................................... 22
Withholding................................................................................ 23
Multiple Contracts......................................................................... 23
Obtaining Tax Advice....................................................................... 23
Voting Rights.................................................................................. 23
Legal Proceedings.............................................................................. 24
Additional Information......................................................................... 24
Table of Contents of Statement of Additional Information....................................... 24
</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 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 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 certain 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 period of 12 consecutive months beginning on the
Certificate Date and each anniversary of that date.
CONTRACT -- The agreement between Security First Life and the group
contractholder 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 -- An 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 of 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 earlier of (i) 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, or (ii) the first
day of the month coincident with or next following the anniversary of the
Certificate Date nearest the Participant's 75th birthday.
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 values of all Accumulated Units credited
for a Participant under a Contract.
PLAN -- The 403(b) plan, deferred compensation plan, qualified retirement plan
or individual retirement annuity with respect to which the Contract is issued.
PURCHASE PAYMENT -- The amounts paid to Security First Life in order to provide
Annuity 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.
3
<PAGE> 7
SERIES -- A division of the Separate Account, the assets of which consist of
shares of a Fund, or an accounting series maintained for Security First Life's
General Account to determine values used to provide Fixed Annuity accumulation
under the Contracts.
SURRENDER CHARGE -- A percentage charge, deducted upon full or partial
surrender, which varies according to the period of time that Purchase Payments
have remained with Security First Life prior to 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 Contracts. Security First Life will establish
Valuation Dates at its discretion, but until notice to the contrary is given
there will be one Valuation Date in each calendar week for Annuity Unit values,
such date being the last Business Day in a week. Accumulation Unit values will
be determined each Business Day.
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 CONTRACT
THE CONTRACT
The Contract is a combined fixed and variable annuity contract which may be
issued to plans qualified for special tax treatment under Section 403(b) of the
Code (tax shelter annuities), retirement plans which qualify under Section 401
of the Code, deferred compensation plans under Section 457 of the Code and
individual retirement annuities under Section 408 of the Code. This prospectus
is intended to serve as a disclosure document only for the variable portion of
the Contract.
PURCHASE PAYMENTS
Purchase Payments under the Contract may be made to the General Account, the
Separate Account or allocated between them in accordance with the election of
the Participant. The minimum Purchase Payment is $20 with an annual minimum of
$240. There is no initial sales charge, however, certain charges and deductions
will be made to the Participant's Account. (See "Contract Charges," page 14.)
Amounts allocated to a Series of the Separate Account may be transferred to one
or more of the other Separate Account Series at any time and may be transferred
to the General Account at any time before the Annuity Date. Amounts allocated to
the General Account may be transferred to the Separate Account subject to
certain limitations as to time and amount. (See "Transfers," page 16.) The
minimum transfer amount is the lesser of $500 or the balance of the
Participant's Account in the Series.
SEPARATE ACCOUNT
Pursuant to the Participant's designation, Purchase Payments allocated to
the Separate Account are invested at net asset value in Accumulation Units of
one or more of eleven series, each of which consists of the shares of a
different Fund. The Funds consist of the Money Market Portfolio, Growth
Portfolio and Overseas Portfolio of the Variable Insurance Products Fund, the
Asset Manager Portfolio, Contrafund Portfolio and Index 500 Portfolio of the
Variable Insurance Products Fund II, the Bond Series and T. Rowe Price Growth
and Income Series of the Security First Trust, the International Portfolio of
the Scudder Variable Life Investment Fund, the Small Capitalization Portfolio of
The Alger American Fund, and the T. Rowe Price Growth Stock Fund (available only
for plans which qualify under Sections 401 or 457 of the Code). The investment
adviser of the Variable Insurance Products Fund and the Variable Insurance
Products Fund II is Fidelity Management & Research Company ("FMR"). The
investment adviser and manager of Security First Trust is Security First
Investment Management Corporation ("Security Management"). T. Rowe Price
Associates, Inc., ("Price Associates") is subadvisor to Security Management with
respect to the above described series of Security First Trust. The investment
adviser and manager of the Scudder Variable Life Investments Fund is Scudder,
Stevens & Clark, Inc. ("Scudder"). The investment adviser and manager of The
Alger American Fund is Fred Alger Management, Inc. ("Alger Management"). Price
Associates is the investment adviser of the T. Rowe Price Growth Stock Fund.
(See "The Separate Account," page 11 and "The Funds," page 12.)
4
<PAGE> 8
CHARGES AND DEDUCTIONS
The Contract permits Security First Life to deduct a maximum administrative
fee of $21.50 plus $2.50 for each Series in which the Participant invests. The
fee is payable on each anniversary of the Certificate Date. (See "Administrative
Fees," page 15.) Effective as of March 8, 1993, the administrative fee will be
waived for any policy year during which the participant contributes purchase
payments of $2,000 or more or has an aggregate account value at the end of the
policy year of $10,000 or more.
A transaction charge of $10 will be deducted from the Participant's Account
for each transfer from a Separate Account Series or between the Separate Account
and the General Account and upon annuitization of all or a portion of the
Participant's Account. In addition, a transaction charge of the lesser of $10 or
2% of the amount withdrawn will be deducted from the Participant's Account upon
each partial or full surrender. Effective as of March 8, 1993, transaction
charges for transfers from one series of the Separate Account to another series
of the Separate Account will be waived. (See "Transaction Charges," page 15.)
Daily deductions will be made for mortality and expense risks in the amount
of .003425% (1.25% per annum), and for distribution expenses (sales load) in the
amount of .000274% (.10% per annum).
A surrender charge (contingent deferred sales charge) may be deducted in the
event the Participant requests a full or partial surrender from the Separate
Account. The charge is based on a percentage of the amount surrendered. The
surrender charge amounts to 7% for amounts attributable to Purchase Payments
received within 60 months prior to the date of the surrender. (See "Sales
Charges," page 14.)
In contracts issued to Participants in Section 403(b) plans, the Company
will not deduct any percentage surrender charge after nine full calendar years
have elapsed since the Participant's Certificate Date. Further, in the first
surrender in each calendar year, a Participant in a Section 403(b) plan may
surrender up to 10% of the value of the Participant's interest in the Separate
Account without deduction of a percentage surrender charge.
Premium taxes payable to any state or other governmental agency may be
deducted from the Participant's Account on or after the time the tax is payable
by Security First Life. Premium taxes currently range from 0% to 2.35% (except
Nevada where it is 3.5%). In states where a premium tax is imposed, rates may be
lower for tax qualified contracts. Until further notice to the Participant,
Security First Life will waive deduction of premium taxes. (See "Premium Taxes,"
page 14.)
Security First Life may reduce or waive administrative fees, transaction
charges and the distribution expense fee on Contracts issued to deferred
compensation plans qualifying under Code Section 457. In addition sales charges
may be waived on certain surrenders by such plans. (See "Deferred Compensation
Plans," page 16.)
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
16).
VARIABLE 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. The Variable
Annuity payment will vary annually based on a comparison of the Assumed
Investment Returns with the investment experience of the Series in which the
Annuity Units are invested. (See "Variable Annuity Payments," page 19.) If
Annuity payments from any one Series would be less than $50, Security First Life
reserves the right to change the frequency of the payments from that Series to
such intervals as will result in payments of at least $50 from each Series. (See
"Frequency of Payment," page 21.)
SURRENDERS
If permitted by the Plan, a Participant may surrender all or part of his or
her account before the Annuity Date. Requests for partial or full surrenders
must be made in writing. However, no partial surrender from a Series is
permitted if it would reduce the Participant's interest in the Series to less
than $200, 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 "Sales Charges," page 14 and "Transaction Charges," page 15.) In
addition, the 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
5
<PAGE> 9
to withdrawals from Contracts funding retirement plans qualified for special tax
treatment under the Code. (See "Federal Income Tax Status," page 22.)
LOANS (SECTION 403(B) PLANS ONLY)
Participants whose Contracts are issued under a Plan that qualifies under
Section 403(b) of the Code may be entitled to obtain a loan from that portion of
the Participant's Account allocated to the General Account. Security First Life
reserves the right to terminate loans and to change the terms under which loans
may be made. Any such action would not affect outstanding loans. (See "Loans,"
page 17.) Loan proceeds may be considered a "distribution" for tax purposes.
(See "Federal Income Tax Status," page 22.)
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 Annuity Value under any of the
available Annuity options 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 value of the Participant's Account or the
total of the Participant's Purchase Payments, less any Purchase Payments
previously withdrawn as partial surrenders or applied to annuity options. (See
"Death Benefits," page 21.)
6
<PAGE> 10
FEE TABLES
PARTICIPANT TRANSACTION EXPENSES
Surrenders prior to the expiration of nine full calendar years following the
Certificate Date will be subject to a Surrender Charge (contingent deferred
sales charge) indicated in the following table.
<TABLE>
<CAPTION>
Elapsed Months
Between Purchase
Payment Date and Surrender
Surrender Date Charge
----------------------- ---------
<S> <C> <C>
(a) Contingent Deferred Sales Charge (as a 60 or less 7%
percentage of amount surrendered) More than 60 0%
(b) Transaction Charge $10 for each surrender
or annuitization
(c) Administrative Charges $21.50 plus $2.50 for
each Series to which
Participant's Account
is allocated (Maximum
$41.50 per year)
(d) Transfer Charge $10 per transfer to
convert Accumulation or
Annuity Units 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 Charge 1.25% per annum
Distribution Expense Charge(1) 0.10% per annum
Total Separate Account 1.35% per annum
FUND ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
Money Asset Index
Market Growth Overseas Manager Contrafund 500
Portfolio Portfolio Portfolio Portfolio Portfolio Portfolio
--------- ---------- ------------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
(a) Management Fee................ 0.21% 0.61% 0.76% 0.64% 0.61% 0.13%
(b) Other Expenses................ 0.09% 0.08% 0.17% 0.10% 0.13% 0.15%
(c) Total Annual Expenses......... 0.30% 0.69% 0.93% 0.74% 0.74% 0.28%
</TABLE>
<TABLE>
<CAPTION>
T. Rowe
Price
Growth and Small
Bond Income International Capitalization Growth
Series Series Portfolio Portfolio Stock Fund
---------- ----------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
(a) Management Fee........... 0.50% 0.50% 0.70% 0.85% 0.58%
(b) Other Expenses........... 0.40% 0.14% 0.35% 0.03% 0.19%
(c) Total Annual Expenses.... 0.90% 0.64% 1.05% 0.88% 0.77%
</TABLE>
- --------------------------------------------------------------------------------
(1) This charge may be deemed a deferred sales charge.
7
<PAGE> 11
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>
Money Market (a) upon surrender at the end of the stated time (a) $ 92 $ 132 $ 174 $205
Portfolio period
(b) if the Certificate WAS NOT surrendered (b) 17 52 90 195
(c) if you annuitize at the end of the applicable (c) 27 62 100 205
time period
- ------------- ------------------------------------------------- ------ ------- ------- --------
Growth SAME (a) 96 143 193 247
Portfolio
Series
(b) 21 64 110 237
(c) 31 74 120 247
- ------------- ------------------------------------------------- ------ ------- ------- --------
Overseas SAME (a) 98 150 204 272
Portfolio
(b) 23 71 122 262
(c) 33 81 132 272
- ------------- ------------------------------------------------- ------ ------- ------- --------
Asset SAME (a) 96 144 195 252
Manager
Portfolio
Series
(b) 21 65 112 242
(c) 31 75 122 252
- ------------- ------------------------------------------------- ------ ------- ------- --------
Contrafund SAME (a) 96 144 195 252
Portfolio
(b) 21 65 112 242
(c) 31 75 122 252
- ------------- ------------------------------------------------- ------ ------- ------- --------
Index 500 SAME (a) 92 131 173 203
Portfolio
Series
(b) 17 51 89 193
(c) 27 61 99 203
- ------------- ------------------------------------------------- ------ ------- ------- --------
Bond SAME (a) 98 149 203 268
Series
(b) 23 70 120 258
(c) 33 80 130 268
- ------------- ------------------------------------------------- ------ ------- ------- --------
T. Rowe Price SAME (a) 95 141 190 242
Growth &
Income Series
(b) 20 62 107 232
(c) 30 72 117 242
- ------------- ------------------------------------------------- ------ ------- ------- --------
International SAME (a) 99 153 210 284
Portfolio
(b) 24 75 128 274
(c) 34 85 138 284
- ------------- ------------------------------------------------- ------ ------- ------- --------
</TABLE>
8
<PAGE> 12
<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>
Small SAME (a) 97 148 202 266
Capitalization
Portfolio
(b) 23 70 119 256
(c) 33 80 129 266
- ------------- ------------------------------------------------- ------ ------- ------- --------
Growth SAME (a) 96 145 197 255
Stock Fund
(b) 22 66 114 245
(c) 32 76 124 255
- ------------- ------------------------------------------------- ------ ------- ------- --------
</TABLE>
EXPLANATION OF FEE TABLES 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 14.
2. Amounts surrendered are attributed to Purchase Payments made (and interest
thereon) on a first-in, first-out basis.
3. The investment advisers to the Index 500 Portfolio voluntarily reimbursed
certain expenses of the Portfolio. If there had been no reimbursement, total
expenses would have been 0.43% (see the Variable Insurance Products Fund II
prospectus for more information).
4. The examples reflect a $10 transaction charge for full surrender (see
"Transaction Charges", page 15). Premium taxes are not reflected in the
examples. Presently, premium taxes ranging from 0% to 2.35% (3.5% in Nevada)
may be deducted from a Participant's Account on or after the time the tax is
payable by Security First Life. Until further notice, Security First Life
currently absorbs these charges.
5. NEITHER THE TABLE NOR THE EXAMPLES ARE REPRESENTATIONS OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
9
<PAGE> 13
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. No Accumulation Units for Series T (Growth Stock
Fund) had been issued as of December 31, 1995. 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>
Twelve Months Five Months Twelve Months Twelve Months Twelve Months
Period Ended Ended Ended Ended Ended Ended
7/31/92 7/31/93 12/31/93 12/31/94 12/31/95 12/31/96
------------ ------------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Series B Bond Series
Beg. AUV $ (11/27/91)................... 5.00 5.34 7.66 7.78 7.42 8.55
End. AUV $.............................. 5.34 7.66 7.78 7.42 8.55 8.68
End. No. Non-Qualified AUs.............. 36 19 33 46
End. No. Qualified AUs.................. 4,339 16,762 25,717 42,525 64,141 139,070
Series G (T. Rowe Price Growth and Income
Series)
Beg. AUV $ (10/22/91)................... 5.00 5.63 8.27 8.70 8.85 11.46
End. AUV $.............................. 5.63 8.27 8.70 8.85 11.46 13.77
End. No. Non-Qualified AUs.............. 3 17 108 722
End. No. Qualified AUs.................. 43,927 133,858 183,603 328,780 567,174 1,273,509
Series FA (Asset Manager Portfolio)
Beg. AUV $ (5/13/93).................... 5.00 5.15 5.62 5.21 6.02
End. AUV $.............................. 5.15 5.62 5.21 6.02 6.81
End. No. Non-Qualified AUs.............. 22,279 36,999 41,728
End. No. Qualified AUs.................. 38,782 258,061 2,494,047 4,145,919 5,422,386
Series FG (Growth Portfolio)
Beg. AUV $ (5/24/93).................... 5.00 5.06 5.40 5.33 7.13
End. AUV $.............................. 5.06 5.40 5.33 7.13 8.08
End. No. Non-Qualified AUs.............. 7,202 8,786 11,442
End. No. Qualified AUs.................. 5,573 110,644 1,195,256 2,750,127 4,992,011
Series FI (Index 500 Portfolio)
Beg. AUV $ (6/30/93).................... 5.00 4.97 5.20 5.19 7.04
End. AUV $.............................. 4.97 5.20 5.19 7.04 8.54
End. No. Non-Qualified AUs.............. -- -- -- 169 1,755
End. No. Qualified AUs.................. 5.93 13,988 82,152 416,388 1,542,041
Series FM (Money Market Portfolio)
Beg. AUV $ (11/12/93)................... 5.00 5.01 5.16 5.40
End. AUV $.............................. 5.01 5.16 5.40 5.62
End. No. Non-Qualified AUs.............. 9,114 6,823 6,854
End. No. Qualified AUs.................. 2,080 58,578 233,160 404,761
Yield................................... 1.95% 4.45% 3.95% 3.98%
Series FO (Overseas Portfolio)
Beg. AUV $ (11/17/94)................... 5.33 5.67 6.14
End. AUV $.............................. 5.67 6.14 6.86
End. No. Qualified AUs.................. 114 1,721 15,303
Series FC (Contrafund Portfolio)
Beg. AUV $ (5/16/95).................... 5.00 6.29
End. AUV $.............................. 6.29 7.54
End. No. Non-Qualified AUs.............. 149 2,230
End. No. Qualified AUs.................. 691,504 3,024,385
Series SI (International Portfolio)
Beg. AUV $ (5/22/95).................... 5.00 5.84
End. AUV $.............................. 5.84 6.62
End. No. Non-Qualified AUs.............. 65,505 105
End. No. Qualified AUs.................. 691,505 284,172
Series AS (Small Capitalization
Portfolio)
Beg. AUV $ (5/22/95).................... 5.00 6.54
End. AUV $.............................. 6.54 6.23
End. No. Non-Qualified AUs.............. 858 1,677
End. No. Qualified AUs.................. 457,442 1,971,488
- ----------------------------------------------------------------------------------------------------------------
AUV -- Accumulation Unit Value
AUs -- Accumulation Units
</TABLE>
10
<PAGE> 14
PERFORMANCE INFORMATION
Security First Life may, from time to time, advertise the yield and
effective yield of the Series invested in the Money Market Portfolio of the
Separate Account and the average annual total returns for the other Series in
the Separate Account. Yields and average annual total returns are determined in
accordance with the methods of computation set forth by the SEC in the Form N-4
Registration Statement and are more particularly described in the Statement of
Additional Information. Yields are expressed for a seven day period, and average
annual total returns are expressed for at least one, five and ten year periods
(or from inception if shorter).
The yields of the Money Market Portfolio are determined based upon the
change in the value of an outstanding unit in the Separate Account over a seven
day period and annualizing the result. Both yield figures are based on
historical earnings and are not intended to indicate future performance. The
computation takes into account recurring deductions from account values, but no
deduction is made for transaction or surrender charges which may apply upon a
full or partial surrender. These charges are described in "Sales Charges," page
14 and "Transaction Charges," page 15. In the event of a surrender of the
Contract, the imposition of surrender and transaction charges will have the
effect of reducing the yield earned over the period of ownership.
The computation of average annual total returns does take into consideration
recurring charges and any non-recurring charges applicable to a Contract which
is surrendered in full at the end of the stated holding period.
FINANCIAL INFORMATION
Financial statements of Security First Life and of the Separate Account are
contained in the Statement of Additional Information.
DESCRIPTION OF SECURITY FIRST LIFE INSURANCE COMPANY,
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 is a wholly-owned subsidiary of Security First Group,
Inc. ("SFG"). The outstanding voting stock of SFG is owned by London Insurance
Group, Inc., a Canadian insurance service corporation and a publicly traded
subsidiary of Trilon Financial Corporation of Toronto, Canada. 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 GENERAL ACCOUNT
The General Account is made up of all of the assets of Security First Life,
other than those in the Separate Account and any other segregated asset account.
The Participant may allocate amounts to the General Account at the time of
purchase or by subsequent transfers from the Separate Account. Amounts allocated
to the General Account will be credited with interest on the basis of interest
rates guaranteed or declared by Security First Life under the terms of the
Contract. Instead of the Participant bearing the risk of fluctuations in the
value of the assets as is the case for amounts invested in the Separate Account,
Security First Life bears the full investment risk for amounts in the General
Account. Security First Life has sole discretion to invest the assets of the
General Account, subject to applicable law. The General Account provisions of
the Contract are not intended to be offered by this Prospectus. Participants are
referred to the terms of the Contract itself for more information concerning the
General Account provisions.
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 Commission 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
Contracts. 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 arising out of any other business
Security First Life may conduct.
All obligations under the Contracts, 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
under the Contracts. However, while Security First Life is obligated to make the
Variable Annuity payments under the
11
<PAGE> 15
Contracts, the amount of such payments is guaranteed only to the extent of the
level amount calculated at the beginning of each Annuity year. (See "Level
Payments Varying Annually," page 19.)
The Funds consist of (i) the Money Market Portfolio, Growth Portfolio and
Overseas Portfolio of the Variable Insurance Products Fund, (ii) the Asset
Manager Portfolio, Contrafund Portfolio and Index 500 Portfolio of the Variable
Insurance Products Fund II, (iii) the Bond Series and T. Rowe Price Growth and
Income Series of the Security First Trust, (iv) the International Portfolio of
the Scudder Variable Life Investment Fund, (v) the Small Capitalization
Portfolio of The Alger American Fund, and (vi) the T. Rowe Price Growth Stock
Fund (available only for plans that qualify under Sections 401 or 457 of the
Code). The shares of each Fund are purchased, without sales charge, for the
corresponding Separate Account Series at the net asset value per share next
determined by each Fund 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 Contracts.
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 should become 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 notice to
Participants and the prior approval of the SEC.
THE FUNDS
Each of the Funds is a portfolio or series of an open-end management
investment company registered with the SEC under the 1940 Act. 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. The investment objectives of the Funds are set forth below.
Variable Insurance Products Fund and Variable Insurance Products Fund II are
Massachusetts business trusts. Each is divided into separate portfolios. The
following portfolios 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.
Overseas Portfolio seeks long-term growth of capital primarily through
investments in foreign securities. Overseas Portfolio provides a means for
investors to diversify their own portfolios by participating in companies and
economies outside of the United States.
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.
Contrafund Portfolio seeks capital appreciation by investing in companies
that the investment adviser believes to be undervalued due to an overly
pessimistic appraisal by the public.
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.
FMR is the investment adviser to each of the portfolios of the Variable
Insurance Products Fund and the Variable Insurance Products Fund II.
The Security First Trust is a Massachusetts business trust which presently
has four series, two of which are available under the Contracts:
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 Bond Series' assets that may be
invested in common and preferred stocks.
12
<PAGE> 16
T. Rowe Price 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.
Security First Investment Management Corporation ("Security Management")
provides investment advisory, administrative and management services to the two
Funds. T. Rowe Price Associates, Inc. ("Price Associates") serves as sub-adviser
to these Funds.
Scudder Variable Life Investment Fund is a Massachusetts business trust
which is divided into separate Portfolios. The following Portfolio is available
under the Contracts.
International Portfolio seeks long-term growth of capital primarily through
diversified holdings of marketable foreign equity investments. The Portfolio
invests in companies, wherever organized, which do business primarily outside
the United States. The Portfolio intends to diversify investments among several
countries and to have represented in its holdings business activities in not
less than three different countries. The Portfolio does not intend to
concentrate investments in any particular industry.
The investment adviser of the Scudder Variable Life Investment Fund is
Scudder.
The Alger American Fund is a Massachusetts business trust which has a number
of portfolios, one of which is available under the Contracts.
Small Capitalization Portfolio seeks long-term capital appreciation by
investing in a diversified, actively managed portfolio of equity securities,
primarily of companies within the range of companies included in the Russell
2000 Growth Index. Income is a consideration in the selection of investments but
is not an investment objective of the Portfolio.
The investment adviser of The Alger American Fund is Alger Management.
T. Rowe Price Growth Stock Fund. The investment objective of the T. Rowe
Price Growth Stock Fund, Inc. is long-term growth of capital and increasing
dividend income through investment primarily in common stocks of well-
established growth companies.
T. Rowe Price Associates is the investment adviser to the Growth 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). 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 Participants or Beneficiaries to instruct Security First Life
on voting shares of the Funds are described under "Voting Rights," page 23.
Detailed information about the Funds, their investment objectives,
investment portfolios and the charges may be found in the prospectuses of the
Funds. An investor should carefully read the Funds' prospectuses before
investing. Prospectuses for the Variable Insurance Products Fund, the Variable
Insurance Products Fund II, the Security First Trust, the Scudder Variable Life
Investment Fund, The Alger American Fund and the T. Rowe Price Growth Stock Fund
accompany this prospectus. Additional copies may be obtained without charge by
written request to Security First Life Insurance Company, P.O. Box 92193, Los
Angeles, California 90009.
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
a Delaware corporation and a subsidiary of SFG.
13
<PAGE> 17
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
The custodian of assets of the Separate Account is 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
Security First Life represents that the charges deducted under the Contract,
described below, are, in the aggregate, reasonable in relation to the services
rendered, the expenses expected to be incurred and the risks assumed by Security
First Life.
Charges under the Contract are assessed for the following: (i) premium
taxes; (ii) surrenders and distribution expense charges, which may be deemed to
be sales charges; (iii) administrative charges; (iv) certain transactions; and
(v) assumption of mortality and administrative expense risks with respect to the
Separate Account. These charges may not be changed under the Contract, and
Security First Life may profit from the surrender, distribution expense and risk
charges.
A Participant should note that there are deductions from and expenses paid
out of the assets of the Funds that are described in the Funds' prospectuses.
PREMIUM TAXES
Certain state and governmental entities impose a premium tax of up to 2.35%
(Nevada charges 3.5%) of Purchase Payments on amounts applied to an Annuity
option. The Contract permits Security First Life to deduct any applicable
premium taxes from the Participant's Account on or after the time the tax is
payable by Security First Life. Until further notice, such premium taxes will be
absorbed by Security First Life and will not be charged against a Participant's
Account.
SALES 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 Contract, including commissions paid to sales
personnel and other promotional costs.
The surrender charge is a charge based upon the amount surrendered and
applies to amounts attributable to purchase payments made within 60 months of
the date of surrender. The charge amounts to:
7% with respect to amounts surrendered attributable to Purchase Payments
received within 60 months of the date of surrender; and 0% with respect
to amounts surrendered attributable to Purchase Payments received more
than 60 months prior to the date of the surrender.
In no event will surrender charges exceed an amount equal to 9% of Purchase
Payments. Purchase Payments will be surrendered on a first-in, first-out basis.
These charges are applied by reducing the Series from which the surrender
will be taken by an amount determined by dividing the amount elected to be
surrendered, plus the transaction charge described below, by a factor derived
from the above percentage charges. This factor is equivalent to (a) - (b) where
(a) is 1 and (b) is the percentage charge expressed as a decimal. Accumulation
Units are cancelled on a first-in, first-out basis.
In contracts issued to Participants in Section 403(b) plans, the Company
will not deduct any percentage surrender charge after nine full calendar years
have elapsed since the Participants' Certificate Date. Further, in the first
surrender in each calendar year, a Participant in a Section 403(b) plan may
surrender up to 10% of the value of the Participants' interest in the Separate
Account without deduction of a percentage surrender charge. In such cases, the
"amount surrendered" is construed to be the amount requested from the Separate
Account, less 10% of the Participant's interest in the Separate Account.
14
<PAGE> 18
In the event of a partial surrender, the Participant will receive a check in
the amount requested. Surrender charges, if any, will be deducted from the
Series from which the partial surrender was taken, or proportionally from the
remaining Series in the event that the Series is fully surrendered. Deductions
from the Participant's interest in the General Account, if any, will be from
Purchase Payments and accumulations thereon on a first-in, first-out basis.
Surrender charges will be waived on a lump sum withdrawal if the Owner is
confined to a hospital for a minimum of 30 consecutive days or a skilled nursing
home for a minimum of 90 consecutive days and the withdrawal is requested within
60 days after termination of confinement. Surrender charges will be eliminated
when the Contracts are issued to officers, directors or full-time employees of
Security First Life or its affiliates. Contracts so purchased are purchased for
investment purposes only.
ADMINISTRATIVE FEES
At the end of each Certificate Year Security First Life will deduct an
administrative fee. This fee will not exceed $21.50 plus $2.50 for each Series
for which there are Accumulation Units included in the value of the
Participant's Account. Therefore, the maximum fee on an annual basis will not
exceed $41.50. The fee will be prorated between Series in the Participant's
Account on the basis of their respective values on the date of the deduction.
Administrative expenses 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. Effective as of March 8, 1993, the administrative fee
will be waived for any policy year during which the participant contributes
purchase payments of $2,000 or more or has an aggregate account value at the end
of the policy year of $10,000 or more.
TRANSACTION CHARGES
A $10 transaction charge will be deducted from the Participant's Account for
each transfer from a Series (See "Transfers," page 16) and upon annuitization of
all or a portion of the Participant's Account (see "Annuity Benefits," page 19).
Similarly, in the event of a full or partial surrender, a transaction charge
will be deducted from the Participant's Account in an amount equal to the lesser
of $10 or 2% of the amount surrendered. These charges are at cost, and Security
First Life does not anticipate profiting from them. Effective as of March 8,
1993, transaction charges for transfers from one series of the Separate Account
to another series of the Separate Account will be waived.
MORTALITY AND EXPENSE RISK CHARGE
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 Benefit Before the
Annuity Date," page 21.) Further, 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 table specified in the Contract is based. In addition, Security First
Life assumes the risk that the amount, if any, deducted for administrative fees
will be insufficient to cover its actual costs for administrative services.
Contract administration expenses include the cost of policy issuance, salaries,
rent, postage, travel expenses, legal, administrative, actuarial and accounting
fees, periodic reports, office equipment, stationery, office space and custodial
expenses. There is no assurance that the margins will be sufficient to absorb
the expenses during the term of the Contract. As compensation for assuming these
risks, Security First Life will make a deduction of .003425% on a daily basis
(1.25% per year) from the value of the Separate Account assets funding the
Contract.
DISTRIBUTION EXPENSE CHARGE (SALES LOAD)
Security First Life also assumes the risk that surrender charges described
above will be insufficient to cover the actual costs of distribution. These
costs include commissions, fees, registration costs, direct and indirect selling
expenses including advertising, sales materials, illustrations, marketing
personnel, printing and related overhead expenses. As compensation for assuming
this risk, Security First Life will make a deduction of .000274% on a daily
basis (.10% per year) from the value of the Separate Account assets funding the
Contract (the staff of the Securities and Exchange Commission deems this charge
a deferred sales charge). The distribution expense charge (sales load), together
with any contingent deferred sales charge imposed as described on page 14 above,
will never exceed 9% of purchase payments.
15
<PAGE> 19
If Security First Life has gains from the mortality and expense risk charge
and distribution expense charges over its costs of assuming these risks, it may
profit from these gains. Any gains derived from the mortality and administrative
expense risk charges may be used to cover shortfalls in amounts available to pay
distribution expenses.
Security First Life may, in its discretion, voluntarily waive a portion of
the mortality, administrative expense, and/or distribution risk fees, which
waiver may be terminated at any time.
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.
DEFERRED COMPENSATION PLANS
With respect to certain Contracts issued to fund deferred compensation plans
qualifying under Section 457 of the Code for state and local government
employees, Security First Life may agree to reduce or waive the administrative
fees, transaction charges and the distribution expense fee. In addition,
deductions for sales charges may be reduced or waived in the event of a
surrender under the plan resulting from a Participant's death, disability,
retirement, termination of employment, financial hardship or transfer to another
investment provider.
DESCRIPTION OF THE CONTRACTS
GENERAL
The Contracts (designated Form 226R1) are group contracts designed to
provide annuity benefits to employees of public school systems, churches and
certain tax-exempt organizations as tax deferred annuity contracts under the
provisions of Section 403(b) of the Code, to employees covered under various
types of employer deferred compensation plans which qualify under the provisions
of Section 457 of the Code, to trusts under retirement plans which qualify under
Section 401 of the Code and to individuals as individual retirement annuities
under Section 408 of the Code. (See "Federal Income Tax Status," page 22.) Since
the Contracts are designed to fulfill long-term financial needs, purchasers
should not consider them as short-term or temporary investments.
A group Contract is issued to an employer, to a trustee of a qualified
corporate retirement plan, or to another organization, which will be the Owner,
covering all present and future Participants. Except as described below, after
completing an enrollment form and arranging for Purchase Payments to begin, each
enrolled Participant receives a Certificate that summarizes the provisions of
the group Contract and evidences his or her participation in the Plan. The group
Contracts described below may be restricted by the governing instrument of the
Plan as to the exercise by the Participant of certain rights provided in such
Contracts. Owners and Participants should refer to the Plan for information
concerning such restrictions, if any. No Certificates are issued to Participants
under deferred compensation or qualified corporate retirement Plans.
PURCHASE PAYMENTS
Purchase Payments may be on an annual, semi-annual, quarterly, or monthly
basis, or at such intervals as may be agreed to by Security First Life. The
frequency of Purchase Payments may be changed if permitted by the Plan. The
minimum Purchase Payment is $20, with an annual minimum of $240. Purchase
Payments may be allocated to the Separate Account, the General Account or
between them in accordance with the election of the Participant. Confirmation of
each Purchase Payment received will be sent periodically to the Participant.
TRANSFERS
Accumulation Units may be transferred among the Series of the Separate
Account or from the Separate Account to the General Account at any time. In
addition, amounts accumulated in the General Account may be transferred to the
Separate Account subject to the following limitations: (i) transfers are limited
to once per Certificate year; (ii) unless otherwise permitted by Security First
Life, the total value transferred from the General Account during any
Certificate Year may not exceed 20% of the accumulated value of the
Participant's interest in the General Account and (iii) the
16
<PAGE> 20
amount transferred will be based upon accumulated value less transaction fees,
and proportional reduction will be made in the annuity value of the
Participant's interest in the General Account.
Transfer instructions may be communicated in writing or, if permitted by
Security First Life, by telephone. If telephone transfers of Accumulation Units
are permitted, the Participant will be required to complete a prior
authorization on 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 transferred on the first Valuation Date after
receipt of written or telephone instructions. Because Accumulation Unit values
are determined at the close of the New York Stock Exchange (currently 4:00 P.M.
Eastern Time) on a Valuation Date, conversion instructions received after that
time will be effected as of the next Valuation Date.
Annuity Units may be transferred among the Series of the Separate Account at
any time (except within two calendar weeks before the Annuity Date and any
anniversary thereof). Annuity Units may not be transferred to the General
Account. However, amounts in the General Account that have not been applied to a
Fixed Annuity income option may be transferred to Annuity Units in one or more
Series of the Separate Account for a Variable Annuity payout. Transfers of
Annuity Units must be elected in writing and will be effective on the first
Valuation Date following receipt of the instructions.
A minimum of $500 (or, if lesser, the balance of the Participant's account
allocated to the Series to be transferred) is required to transfer from any
Series of the Separate Account or from the General Account. The value of
Accumulation and Annuity Units transferred will be calculated as of the close of
business on the date the transfer occurs.
LOANS (SECTION 403(B) PLANS ONLY)
Participants in Plans which qualify under Section 403(b) may obtain a loan
under the Contract from that portion of the Participant's Account which is
allocated to the General Account. Accumulation Units in the Separate Account
will be taken into account in determining the maximum amount of any loan, and
the Participant would be permitted to transfer Accumulation Units from the
Separate Account to the General Account prior to any loan. The Participant's
Account will serve as sole security for a loan, and Security First Life may
terminate a loan, in its discretion, in the event of a request for a surrender.
Loan proceeds may be considered a "distribution" for tax purposes. (See "Federal
Income Tax Status," page 22.) Security First Life may modify or terminate the
granting of loans at any time, provided that any such modification or
termination will not affect outstanding loans. Fees may be charged for loan
set-up and administration. The loan set-up fee is currently $50.00, and would be
deducted from the loan proceeds. There currently is no fee for administering the
loans.
MODIFICATION OF THE CONTRACTS
The Contract guarantees that Annuity payments involving life contingencies
will be based on the minimum guaranteed Annuity purchase rates incorporated in
the Contracts, 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 these provisions to
the extent permitted by the Contract: (i) with respect to terms which apply to
Participants enrolling after the effective date of the change; (ii) with respect
to terms which apply to the excess of any Purchase Payments received in any
Certificate Year over the Purchase Payments received in the first Certificate
year for Certificates issued before the effective date of the change; 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. No such change may affect a Participant's Account where his
or her interest is nonforfeitable, without the written consent of that
Participant.
ASSIGNMENT
If permitted by the Plan, the Contracts may be assigned by the Participant
provided written notice of such assignment is received by Security First Life.
In the case of Contracts issued in connection with a deferred compensation plan,
all rights, discretion and powers under the Contract are vested in the Owner and
not the Participant.
17
<PAGE> 21
Inquiries as to any Contract provisions should be made in writing to
Security First Life Insurance Company, P.O. Box 92193, Los Angeles, California
90009 or by telephoning 1-800-283-4536.
ACCUMULATION PERIOD
CREDITING ACCUMULATION UNITS IN THE SEPARATE ACCOUNT
Accumulation Units are credited to a Series upon receipt of each Purchase
Payment or conversion, as the case may be. 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 Purchase Payment or transfer.
In the event that an application for a Contract fails to recite all of the
necessary information, Security First Life will promptly request that the
Participant furnish further instructions and will hold any initial Purchase
Payment in a suspense account, without interest, for a period not exceeding five
Business Days pending receipt of such information. If the necessary information
is not received by Security First Life within five Business Days of receipt of
the application, Security First Life will return the initial Purchase Payment.
VALUATION OF ACCUMULATION UNITS
The current value of Accumulation Units of a Series of the Separate Account
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
the New York 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 the 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 charges, and distribution expense charges) 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 the Participant's Account at any time prior to the Annuity Date. A
surrender may result in adverse federal income tax consequences to the
participant including current taxation of the distribution and a penalty tax on
a premature distribution. (See "Federal Income Tax Status," page 22). The
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 Separate Account 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 value of Accumulation Units 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 surrender may
be made that would cause a Participant's interest in any Series to have a value
after the surrender of less than $200.
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) the New York Stock Exchange is closed for
other than customary weekends or holidays; (ii) trading on such exchange is
restricted or an emergency exists as determined by the SEC, making disposal of
portfolio securities or valuation of assets of the Funds not reasonably
practicable; or (iii) the SEC has by order permitted such suspension.
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
18
<PAGE> 22
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.
Although care is taken to ensure the accuracy of allocations and transfers
to and within the Separate Account, the possibility of an error still exists.
Owners are asked to review their statements and confirmations of transactions
carefully and to promptly advise Security First Life of any discrepancy.
Allocations and transfers reflected in the statements will be considered final
at the end of 60 days from the date of the statement.
ANNUITY BENEFITS
VARIABLE 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 the Variable Annuity payments will reflect the investment experience
of the Series 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.
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 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 selected.
Because 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. 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 if the actual investment experience of the Series is better or
worse than the Assumed Investment Return. The choice of the Assumed Investment
Return can affect the level of Annuity payments from year to year. 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, the amount of the
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 in value each year. Similarly, if the Separate
Account achieves a net investment result smaller 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
19
<PAGE> 23
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 in accordance with the Plan,
Annuity payments must begin on the Normal Annuity Date.
To the extent not prohibited by the Plan, an optional Annuity Date may be
elected, which date may be the first day of any month prior to the Normal
Annuity Date. 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 indicated otherwise, Option 2
will be applied automatically. Changes in the optional 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, while Option 5 may be elected only as a Fixed
Annuity. The first year's Annuity payments described in Option 1 through 4 are
determined on the basis of: (i) the mortality table specified in the Contract,
(ii) the age and, where permitted, the sex of the Annuitant, (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.
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 that 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 the 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 -- LIFE ANNUITY WITH 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 payments made to the
designated Beneficiary after the death of the individual will stop when the
Company has paid out a total number of payments equal to the minimum number of
payments.
OPTION 4 -- JOINT AND FULL TO 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 4% per annum. Fixed Annuity
payments under this option may not be commuted to a lump sum, except as provided
under "Death Benefits."
20
<PAGE> 24
FREQUENCY OF PAYMENT
At the election of the Payee, payments under any option may be made
annually, semi-annually, quarterly or monthly. If at any time any payments to be
made to any payee from any Series are or become less than $50 each, 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.
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 an adjusted measurement of
the investment performance of the Fund since the end of the preceding Valuation
Period. 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 thus determined will not change throughout the annuity payment
period unless the Participant transfers Annuity Units to or from other Series of
the Separate Account.
DEATH BENEFITS
DEATH BENEFIT BEFORE THE ANNUITY DATE
If the Participant dies before the Annuity Date, the Participant's Account
will be applied in accordance with the terms set forth below.
For Contracts issued other than in connection with a Plan that qualifies
under Sections 401, 403(b), 408 or 457 of the Code, the following provisions
apply:
1. The Beneficiary may elect to receive a lump sum settlement, or to receive
Annuity income under Annuity options 1, 2 or 5. (See "Election of Annuity
Date and Form of Annuity," page 20). The lump sum settlement must be made
within five years of the Participant's death. Annuity payments must begin
within one year of the Participant's death, and the period of payments
may not be longer than the Beneficiary's life expectancy as specified by
the Internal Revenue Service tables.
2. If the Beneficiary is the Participant's spouse, the spouse may delay
election of an income option as described above to the later of (a) one
year after the Participant's death, or (b) a date no later than the date
on which the Participant would have attained age 70 1/2.
For Contracts issued with respect to Plans that qualify under Section 401,
403(b), 408 or 457 of the Code, the following provisions apply unless otherwise
provided in the Plan:
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 Contract as his or her
own. Payments under the Annuity options must begin prior to the date on
which the deceased Participant would have attained age 70 1/2 and in the
case of a Section 457 plan, the payout period must be less than the
spouse's life expectancy.
2. If the Beneficiary is not the Participant's spouse, the Beneficiary may
elect to receive a lump sum settlement (cash value) or to receive Annuity
income under Annuity options 1, 2 or 5. The lump sum settlement must be
made within five years of the death of the Participant. Payments under
the Annuity Options must begin within one year of the Participant's death
and the period of payments 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 less transaction fees or the total of the Participant's Purchase
Payments reduced by any Purchase Payments previously surrendered or applied to
Annuity income. If a Participant who has attained age 65 dies before the Annuity
Date, only the cash value will be paid as a death benefit.
21
<PAGE> 25
DEATH BENEFIT AFTER THE ANNUITY DATE
Unless otherwise provided in this Plan, 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 Annuitant's death. If no designated
Beneficiary survives the Annuitant, the present value of any remaining payments
certain on the date of the 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
Options 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 operations of
Security First Life. Under the Code as it is now written, no federal income tax
is 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, of the requirements
of Section 457 of the Code in the case of a Section 457 plan, no federal income
tax is payable by the Participant on the investment income and capital gains
under a Certificate until annuity payments commence or a full or partial
withdrawal is made. It is intended that the Separate Account will continue to
meet the requirements of Section 817(h) of the Code.
Employers may deduct their contributions to self-employed and corporate
pension and profit-sharing plans described in Section 401 of the Code and tax
sheltered annuities described in Section 403(b) in the year when made up to the
limits specified in the Code. In addition, some employer plans may permit
nondeductible employee contributions.
All distributions, with the exception of tax-free rollovers as described
below or a return of permitted nondeductible employee contributions, are
included in gross income. In the case of Section 401 and Section 403(b) plans
and IRAs, a distribution is includible in the year it is paid. In the case of
457 plans, a distribution is includible in the year it is paid or made
available. Under certain limited circumstances, a lump sum distribution from a
Section 401 plan may qualify for special 5-year or 10-year forward income
averaging or long-term capital gains treatment.
In the case of Section 401, 403(b) and 457 plans and IRAs, 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 later of the calendar year in which the employee
attains the age of 70 1/2 or retires. Distributions under Section 401, 403(b)
and 457 plans must also meet the minimum incidental death benefit requirements
of the Code.
Except as described below, the Code imposes a 10% penalty tax on the taxable
portion of any distribution from qualified retirement plans, including both 401
and 403(b) plans. To the extent amounts are not includible in gross income
because they have been rolled over to an IRA or to another 401 plan or 403(b)
annuity, no tax penalty will be imposed. The tax penalty will not apply to the
following distributions: (a) distributions made on or after the date on which
the Participant reaches age 59 1/2; (b) distributions following the death or
disability of the Participant; (c) after separation from service, distributions
that are part of substantially equal periodic payments, not less frequently than
annually, made for the life (or life expectancy) of the Participant or the joint
lives (or joint life expectancies) of such Participant and his or her designated
beneficiary; (d) distributions to a Participant who has separated from service
after attaining age 55; (e) distributions made to the Participant to the extent
such distributions do not exceed the amount allowable as a deduction under Code
Section 213 to the Participant for amounts paid during the taxable year for
medical care; and (f) distributions made to an alternate payee pursuant to a
qualified domestic relations order.
Similar rules apply to IRAs, but there are fewer exceptions to the 10%
penalty tax. The taxable portion of an IRA distribution will not be subject to
the tax penalty if: (a) it is made on or after the date on which the Participant
reaches age 59 1/2; (b) it is made following the death or disability of the
participant; or (c) it is part of substantially equal periodic payments, not
less frequently than annually, made for the life (or life expectancy) of the
Participant or the joint lives (or joint life expectancies) of such Participant
and his or her designated beneficiary. The 10% penalty tax does not apply to
Section 457 plans.
22
<PAGE> 26
The Code prohibits the withdrawal of amounts contributed or earned under a
Section 403(b) annuity on or after January 1, 1989, except in these
circumstances: (a) the Participant attains age 59 1/2, separates from service,
dies, becomes disabled, or (b) in the case of hardship as determined in
accordance with applicable regulations. Withdrawals for hardship are restricted
to the portion of the Participant's Account which represents contributions by
the Participant and does not include any investment results. These limitations
on withdrawals apply to salary reduction contributions made after December 31,
1988 and to income attributable to amounts held as of December 31, 1988. The
limitations on withdrawals do not affect rollovers or exchanges between Section
403(b) annuities.
Providing certain requirements of the Code are met, distributions from a
plan may be rolled over tax free to another plan. Distributions from a Section
401 plan may be rolled over to a Section 401 defined contribution plan, IRA or a
Section 403(a) annuity. Distributions from a Section 403(b) tax sheltered
annuity may be rolled over to another tax sheltered annuity or an IRA.
Distributions from an IRA may be rolled over to another IRA and, if the IRA
contains only permissible rollover amounts, to a Section 401 defined
contribution plan or a tax sheltered annuity.
The discussion contained in the Prospectus regarding withdrawals and other
distributions from a Participant's Account should be considered in light of the
above.
WITHHOLDING
Security First Life is required to withhold federal income tax on Annuity
payments, distributions and partial and full surrenders. However, recipients of
distributions are allowed to make an election not to have federal income tax
withheld. After an election is made with respect to Annuity payments, an
Annuitant may revoke the election at any time, and thereafter commence
withholding. Security First Life will notify the payee at least annually of his
or her right to revoke the election.
Security First Life 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 and tax deferred
annuities under Code Section 403(b). 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.
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 his or her social security number.
MULTIPLE CONTRACTS
Code Section 72(e)(11) provides that multiple annuity contracts which are
issued within a calendar year to the same Contract Owner by one company or its
affiliates are treated as one annuity contract for purposes of determining the
tax consequences of any distribution. Such treatment may result in adverse tax
consequences.
OBTAINING TAX ADVICE
It should be recognized that the federal income tax information in this
prospectus is not exhaustive and is for information purposes only. The
discussion above does not purport to cover all situations involving the purchase
of an Annuity or the election of an option under the Contract. Tax results may
vary depending upon individual situations and special rules may apply in certain
cases. State and local tax results may also vary. For these reasons a qualified
tax adviser should be consulted.
VOTING RIGHTS
Unless otherwise restricted by the Plan, each Participant holding a
Certificate will have the right to instruct Security First Life with respect to
voting the Fund shares which are the assets underlying his or her interest in
the Separate Account, at all regular and special shareholders meetings of the
Fund. Security First Life will mail to each Participant, at his or her last
known address, all periodic reports and proxy material 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 according to the instructions received from all the Participants
giving timely instructions.
23
<PAGE> 27
Even though Annuity payments have begun, the Annuitant will continue to have
any voting rights exercisable with respect to the Funds shares.
The number of votes to 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, a 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 on that portion of the Participant's Account then
allocated to a Series for a Fund by the net asset value of a Fund share for that
Series 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.
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, 1997, 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.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Insurance Company............................................................................ 3
The Separate Account............................................................................. 3
Surrender Charges................................................................................ 4
Net Investment Factor............................................................................ 4
Annuity Payments................................................................................. 4
Additional Federal Income Tax Information........................................................ 6
Calculation of Performance Data.................................................................. 7
Distribution of the Contracts.................................................................... 9
Voting Rights.................................................................................... 9
Safekeeping of Securities........................................................................ 10
Servicing Agent.................................................................................. 10
Independent Auditors............................................................................. 10
Legal Matters.................................................................................... 10
State Regulation of Security First Life.......................................................... 10
Financial Statements............................................................................. 11
</TABLE>
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, to all
of which reference is made 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.
24
<PAGE> 28
'33 Act File No. 33-37128
STATEMENT OF
ADDITIONAL INFORMATION
SECURITY FIRST LIFE SEPARATE ACCOUNT A
----------------------------------------------------------------
GROUP FLEXIBLE PAYMENT VARIABLE ANNUITY CONTRACTS
----------------------------------------------------------------
SECURITY FIRST LIFE INSURANCE COMPANY
MAY 1, 1997
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the Security First Life Separate Account A prospectus, dated
May 1, 1997, a copy of which 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 (800) 283-4536.
SF 226R1 (228)
<PAGE> 29
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
The Insurance Company 3
The Separate Account 3
Surrender Charges 4
Net Investment Factor 4
Annuity Payments 4
Additional Federal Income Tax Information 6
Calculation of Performance Data 7
Distribution of the Contracts 9
Voting Rights 9
Safekeeping of Securities 10
Servicing Agent 10
Independent Auditors 10
Legal Matters 10
State Regulation of Security First Life 10
Financial Statements 11
</TABLE>
2
<PAGE> 30
THE INSURANCE COMPANY
Security First Life Insurance Company ("Security First Life"), a Delaware
corporation, is a wholly-owned subsidiary of Security First Group, Inc. ("SFG").
The common shares of SFG are held by the London Insurance Group, Inc., a
Canadian insurance service corporation and a publicly traded subsidiary of the
Trilon Financial Corporation of Toronto, Canada.
THE SEPARATE ACCOUNT
The Security First Life Separate Account A ("Separate Account") presently funds
the contracts described in the prospectuses and group variable annuity contracts
on Forms SF 224FL, SF 230, SF 234, SF 236 and individual annuity contracts on
Form SF 135. These individual and group variable annuity contracts are described
in other prospectuses. The combination fixed and variable contracts
("Contracts") described in this Statement of Additional Information and related
prospectuses are distinct contracts from the above described individual and
group variable annuity contacts.
Amounts transferred to the Separate Account under the Contracts are invested in
the securities of eleven Funds: (i) the Money Market Portfolio, the Growth
Portfolio and the Overseas Portfolio of the Variable Insurance Products Fund;
(ii) the Asset Manager Portfolio, Contrafund Portfolio and Index 500 Portfolio
of the Variable Insurance Products Fund II; (iii) the Bond Series and T. Rowe
Price Growth and Income Series of the Security First Trust; (iv) the
International Portfolio of the Scudder Variable Life Investment Fund; (v) the
Small Capitalization Portfolio of The Alger American Fund; and (vi) the T. Rowe
Price Growth Stock Fund [available only for plans that qualify under Sections
401 and 457 of the Internal Revenue Code of 1986 ("the Code")]. The Separate
Account is divided into a number of Series of Accumulation and Annuity Units,
eleven of which are offered under the Contract: Series FM (Money Market
Portfolio), Series FG (Growth Portfolio), Series FO (Overseas Portfolio), Series
FA (Asset Manager Portfolio), Series FC (Contrafund Portfolio), Series FI (Index
500 Portfolio), Series B (T. Rowe Price Bond Series), Series G (T. Rowe Price
Growth and Income Series), Series SI (International Portfolio), Series AS (Small
Capitalization Portfolio), and Series T (T. Rowe Price Growth Stock Fund).
3
<PAGE> 31
SURRENDER CHARGES
Subject to the individual's retirement plan requirements, all or a portion of
the Participant's account may be surrendered at any time prior to the annuity
date. Unless a certificate has been in effect for more than nine full calendar
years after the Certificate Date, a surrender charge (contingent deferred sales
charge) will be deducted in the event the Participant requests a full or partial
surrender from the Separate Account. The charge is based on a percentage of the
amount surrendered. No surrender charge will be applied for that part of the
first surrender from the Separate Account in a calendar year that does not
exceed 10% of the value of the Participant's Account. The surrender charge
amounts to 7% for surrenders attributable to purchase payments received within
60 months prior to the date of the surrender. In no event will the sum of these
surrender charges and the distribution expense charge exceed 9% of the purchase
payments.
NET INVESTMENT FACTOR
The net investment factor for a Separate Account Series is an index of the
percentage change (adjusted for distributions by the Series and the deduction of
the mortality and administrative expense risk charges and distribution expense
charges) in the net asset value of the Fund in which the Series is invested,
since the preceding valuation date. The Separate Account net investment factor
for each Series of accumulation units is determined for any valuation date 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 Fund on such day by (ii) the net asset value
of a share of such Fund determined as of the close of business on the preceding
valuation date and then subtracting from this result the mortality and
administrative expense risk and distribution expense fees factor of .003699% for
each calendar day between the preceding valuation date and the end of the
current valuation date.
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
4
<PAGE> 32
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:
<TABLE>
<CAPTION>
Calendar Year Adjusted
of Birth Age is
-------- ------
<S> <C>
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
</TABLE>
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 valuation
date 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 first year monthly payment from that series by the
Separate Account annuity unit values for the series on the last valuation date
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 or from 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 seven days after the last
5
<PAGE> 33
day of the valuation period upon which they are based or the monthly anniversary
thereof.
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 separate account annuity unit value for each Series was originally
established at $5.00 per unit. The value of an annuity unit for each series for
any subsequent valuation period is determined by multiplying the annuity unit
value of the Series for the immediately preceding valuation period by an
"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 for any valuation period is determined by dividing the value of an
accumulation unit at the end of the valuation period by the value of an
accumulation unit at the end of the pervious valuation period, and multiplying
the result by an interest neutralization factor.
Variable annuity payments for each year after the first reflect variations in
the investment performance of the Separate Account above and below the 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 Fund. Therefore, the assumed investment return must be
"neutralized" in computing the annuity change factor. The Interest
Neutralization Factor is determined by diving 1 by the effective weekly
equivalent of the assumed investment return previously selected by the
annuitant. For example, the Interest Neutralization return for the assumed
investment return of 4.25% is calculated as follows:
Interest Neutralization Factor: 1/[1 + 0.0425)1/52] = 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 therefore 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.
6
<PAGE> 34
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.
Security First Life 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 and tax deferred
annuities under Code Section 403(b). 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 distributions
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 the case of a 401 plan or to another eligible contract
in the case of a 403(b) plan 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.
Obtaining Tax Advice
It should be recognized that the federal income tax information in the
prospectus and this Statement of Additional Information is not exhaustive and is
for information purposes only. The discussions do not purport to cover all
situations involving the purchase of an Annuity or the election of an option
under the Contract. Tax results may vary depending upon individual situations
and special rules may apply in certain cases. State and local tax results may
also vary. For these reasons a qualified tax adviser should be consulted.
CALCULATION OF PERFORMANCE DATA
Periodically, the Separate Account may advertise performance for each Series.
Performance figures are based on historical earnings and are not intended to
indicate future performance. The methods used for calculating performance data
are described below:
a. Money Market Portfolio. The yield of the Money Market Portfolio of the
Separate Account for the seven day period ended December 31, 1996 was 3.98%.
This yield was computed by determining the net change, exclusive of capital
changes, in the value of a hypothetical pre-existing account having a balance of
one accumulation unit of the Portfolio at the beginning of the period,
subtracting a hypothetical charge
7
<PAGE> 35
reflecting deductions from account values, and dividing the difference by the
value of the account at the beginning of the base period to obtain the base
period return, and multiplying the base period return by (365/7) with the
resulting yield figure carried to a least the nearest hundredth of one percent.
The effective yield of the Money Market Portfolio of the Separate Account for
the seven day period ended December 31, 1996 was 4.06%. This effective yield was
computed by determining the net change, exclusive of capital changes, in the
value of a hypothetical pre-existing account having a balance of one
accumulation unit of the Portfolio at the beginning of the period, subtracting a
hypothetical charge reflecting deductions from account values, and dividing the
difference by the value of the account at the beginning of the base period to
obtain the base period return, and then compounding the base period return by
adding 1, raising the sum to a power equal to 365 divided by 7, and subtracting
1 from the result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)365/7] - 1
The yield of the Money Market Portfolio is determined based upon the change in
the value of an outstanding unit in the Separate Account over a seven day period
and annualizing the result. The computation takes into account recurring
deductions from account values, but no deduction is made for transaction or
surrender charges which may apply upon a full or partial surrender. These
charges are described in the Prospectus under "Contract Charges"; specifically
"Sales Charges" and "Transaction Charges". In the event of a surrender of the
Contract, the imposition of surrender and transaction charges will have the
effect of reducing the yield earned over the period of ownership.
b. Other Funds. The average annual total return of the other Funds in the
Separate Account as of December 31, 1996 are as follows:
Average Annual Total Returns*
<TABLE>
<CAPTION>
Inception
1 Year to Date
------ -------
<S> <C> <C>
Growth Portfolio 13.29% 14.13%
(6/1/93)
Overseas Portfolio 11.83% 8.92%
(7/1/93)
Asset Manager Portfolio 13.19% 8.69%
(6/1/93)
Index 500 Portfolio 21.31% 17.16%
(8/1/93)
Bond Series 1.53% 6.09%
(8/1/87)
T. Rowe Price Growth and 20.16% 10.81%
Income Series (4/1/87)
Growth Stock Fund 20.63% 12.49%
(4/1/78)
Contrafund Portfolio 19.81% 27.02%
(3/31/95)
International Portfolio 13.38% 15.01%
(3/31/95)
Small Capitalization Portfolio 2.87% 19.10%
(3/31/95)
</TABLE>
8
<PAGE> 36
Average annual total return was computed by finding the average annual
compounded rates of return over the 1, 5, and 10 year periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P(1+T) to the n power = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at
the beginning of the 1, 5 or 10 year periods (or fractional portion
thereof).
The computation of average annual total returns does take into consideration
recurring charges and any non-recurring charges applicable to a Contract which
is surrendered in full at the end of the stated holding period.
From inception to July 1983, Security Management reimbursed the T. Rowe Price
Growth and Income Series for expenses in excess of the maximum expense
limitation. These reimbursements were repaid from August 1983 to July 1986. The
Bond Series was reimbursed for excess expenses from inception to July 1985, and
repaid such reimbursements from August 1985 to July 1993. Likewise, the Index
500 Portfolio has been reimbursed for certain expenses by the investment
adviser. Reimbursement of expenses to a series increases average annual total
returns, and repayment of such reimbursements reduces these returns.
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 commission are paid to Security First Financial, Inc.
VOTING RIGHTS
Unless otherwise restricted by the retirement plan under which a Contract is
issued, each Participant will have the right to instruct Security First Life
with respect to voting the shares of the Trust Series 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
shares of the Trust's Series 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.
9
<PAGE> 37
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 recordkeeping and administrative services
for the Separate Account.
INDEPENDENT AUDITORS
The consolidated financial statements of Security First Life Insurance Company
as of December 31, 1996, and 1995, and for each of the two years in the period
ended December 31, 1996, and the financial statements of Security First Life
Separate Account A as of December 31, 1996, and 1995, and for each of the two
years in the period ended December 31, 1996, which are included in the
prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon, and are included
in reliance upon such reports given on their authority of such firm as experts
in accounting and auditing. Ernst & Young LLP is located at 515 South Flower
Street, Suite 1800, Los Angeles, California 90071.
LEGAL MATTERS
Legal matters concerning federal securities laws applicable to the issue and
sale of the Variable Annuity Contracts have been passed upon by Routier and
Johnson, P.C., 1700 K Street, N.W., Suite 1003, 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.
10
<PAGE> 38
FINANCIAL STATEMENTS
The financial statements of Security First Life 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.
11
<PAGE> 39
[ERNST & YOUNG LLP 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, AS, SI, FC
and FE) as of December 31, 1996, and the related statements of operations for
the year then ended and changes in net assets for each of the two years in the
period 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, 1996,
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, 1996, the
results of their operations for the year then ended, and the changes in their
net assets for each of the two years in the period then ended, in conformity
with generally accepted accounting principles.
Ernst & Young LLP
Los Angeles, California
April 11, 1997
<PAGE> 40
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series B Series G
------------ ------------
ASSETS
<S> <C> <C>
Investments
Security First Trust - Bond Series (2,522,439 shares at net asset value of
$3.82 per share; cost $9,900,030) $ 9,625,339
Security First Trust - Growth and Income Series (10,449,456 shares at net
asset value of $13.18 per share; cost $116,791,052) $137,726,498
T. Rowe Price Growth Stock Fund, Inc. (2,219,465 shares at net
asset value of $26.18 per share; cost $48,705,613)
T. Rowe Price Prime Reserve Fund, Inc. (2,520,315 shares at net
asset value of $1.00 per share; cost $2,520,315)
T. Rowe Price International Fund, Inc. (972,560 shares at net
asset value of $13.80 per share; cost $12,105,152)
Receivable from Security First Life Insurance Company for purchases 8,236 146,633
Receivable from Mutual Funds 43,128
Other assets
------------ ------------
TOTAL ASSETS 9,633,575 137,916,259
</TABLE>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series T Series P Series I
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments
Security First Trust - Bond Series (2,522,439 shares at net asset value of
$3.82 per share; cost $9,900,030)
Security First Trust - Growth and Income Series (10,449,456 shares at net
asset value of $13.18 per share; cost $116,791,052)
T. Rowe Price Growth Stock Fund, Inc. (2,219,465 shares at net
asset value of $26.18 per share; cost $48,705,613)
$58,105,586
T. Rowe Price Prime Reserve Fund, Inc. (2,520,315 shares at net
asset value of $1.00 per share; cost $2,520,315)
$ 2,520,315
T. Rowe Price International Fund, Inc. (972,560 shares at net
asset value of $13.80 per share; cost $12,105,152)
$13,421,331
Receivable from Security First Life Insurance Company for purchases 44,930 495 38,761
Receivable from Mutual Funds
Other assets 207 36
----------- ----------- -----------
TOTAL ASSETS 58,150,723 2,520,810 13,460,128
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 41
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES (continued)
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
------------- ------------- ------------- ------------- -------------
LIABILITIES
<S> <C> <C> <C> <C> <C>
Payable to Security First Life Insurance
Company for mortality and expense risk
$ 9,912 $ 137,650 $ 48,065 $ 2,158 $ 10,870
Payable to Security First Life Insurance Company
for redemptions
1,063 6,568 18,890 160 1,135
Payable to Mutual Funds 8,236 187,705
Other liabilities 971 9,288 64
------------- ------------- ------------- ------------- -------------
TOTAL LIABILITIES 20,182 341,211 66,955 2,382 12,005
NET ASSETS
Cost to Investors
Series B Accumulation Units 9,888,084
Series G Accumulation Units 116,639,602
Series T Accumulation Units 48,683,795
Series P Accumulation Units 2,518,428
Series I Accumulation Units 12,131,944
Accumulated Undistributed Income (Loss)
Net unrealized appreciation (depreciation) (274,691) 20,935,446 9,399,973 1,316,179
------------- ------------- ------------- ------------- -------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 9,613,393 $ 137,575,048 $ 58,083,768 $ 2,518,428 $ 13,448,123
============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 42
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends
$ 566,443 $ 8,157,311 $ 4,601,929 $ 121,876 $ 359,681
Other income (expense) (4,967) 71,186 14,103 332 1,256
------------ ------------ ------------ ------------ ------------
561,476 8,228,497 4,616,032 122,208 360,937
EXPENSES
Charges for mortality and expense risk 74,638 905,897 448,656 22,573 98,590
------------ ------------ ------------ ------------ ------------
Net Investment Income 486,838 7,322,600 4,167,376 99,635 262,347
REALIZED AND UNREALIZED INVESTMENT GAINS
(LOSSES)
Realized investment gains (losses) (53,594) 2,094,280 1,100,192 99,160
Unrealized appreciation (depreciation) of investments (280,479) 8,500,561 4,324,599 1,142,988
------------ ------------ ------------ ------------
Net investment gains (losses) (334,073) 10,594,841 5,424,791 1,242,148
------------ ------------ ------------ ------------ ------------
Increase in net assets resulting from operations
$ 152,765 $ 17,917,441 $ 9,592,167 $ 99,635 $ 1,504,495
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 43
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series B Series G Series T Series P Series I
------------- ------------- ------------- ------------- -------------
Operations
<S> <C> <C> <C> <C> <C>
Net investment income $ 486,838 $ 7,322,600 $ 4,167,376 $ 99,635 $ 262,347
Net realized investment gains (losses) (53,594) 2,094,280 1,100,192 99,160
Net unrealized investment appreciation
(depreciation) during the year (280,479) 8,500,561 4,324,599 1,142,988
------------- ------------- ------------- ------------- -------------
Increase in net assets resulting from operations 152,765 17,917,441 9,592,167 99,635 1,504,495
Increase (decrease) in net assets resulting from
capital unit transactions 2,936,243 49,078,301 4,958,300 (204,492) 3,609,567
------------- ------------- ------------- ------------- -------------
Total increase (decrease) 3,089,008 66,995,742 14,550,467 (104,857) 5,114,062
Net Assets at beginning of year 6,524,385 70,579,306 43,533,301 2,623,285 8,334,061
------------- ------------- ------------- ------------- -------------
Net Assets at end of year
$ 9,613,393 $ 137,575,048 $ 58,083,768 $ 2,518,428 $ 13,448,123
============= ============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 44
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
------------ ------------ ------------ ------------ ------------
Operations
<S> <C> <C> <C> <C> <C>
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 beginning of year 5,105,480 48,738,047 29,398,951 2,601,974 4,953,879
------------ ------------ ------------ ------------ ------------
Net Assets at end of year
$ 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.
5
<PAGE> 45
SECURITY FIRST LIFE SEPARATE ACCOUNT A
INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SCHEDULE I
Unrealized
Carrying Appreciation
Name of Issue Shares Value (Depreciation) Cost
- -------------------------------------------------------- --------- ------------ -------------- -------------
<S> <C> <C> <C> <C>
Security First Trust Bond Series - capital shares 2,522,439 $ 9,625,339 $ (274,691) $ 9,900,030
Security First Trust Growth and Income Series -
capital shares 10,449,456 $137,726,498 $ 20,935,446 $116,791,052
T. Rowe Price Growth Stock Fund, Inc. - capital shares 2,219,465 $ 58,105,586 $ 9,399,973 $ 48,705,613
T. Rowe Price Prime Reserve Fund, Inc. - capital shares 2,520,315 $ 2,520,315 $ 2,520,315
T. Rowe Price International Stock Fund, Inc. - capital
shares 972,560 $ 13,421,331 $ 1,316,179 $ 12,105,152
</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.
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 46
<TABLE>
<CAPTION>
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Series FA Series FG Series FI
------------ ------------ ------------
ASSETS
<S> <C> <C> <C>
Investments
Fidelity Investments - VIP Asset Manager (5,407,112 shares at net asset value
of $16.93 per share; cost $82,398,497) $ 91,542,442
Fidelity Investments - VIP Growth Portfolio (3,620,363 shares at net asset
value of $31.14 per share; cost $100,954,140) $112,738,113
Fidelity Investments - VIP Index 500 (352,569 shares at net asset
value of $89.13 per share; cost $27,786,069)
$ 31,424,479
Fidelity Investments - VIP Overseas Portfolio (558,623 shares at net asset
value of $18.84 per share; cost $9,455,062)
Fidelity Investments - VIP Money Market Series (17,192,778 shares at net
asset value of $1.00 per share; cost $17,192,778)
Receivable from Security First Life Insurance Company for purchases 121,964 207,355 138,152
Receivable from Mutual Funds
Other assets 12,642 72,055 51,649
------------ ------------ ------------
TOTAL ASSETS
91,677,048 113,017,523 31,614,280
</TABLE>
<TABLE>
<CAPTION>
Series FO Series FM
------------ ------------
ASSETS
<S> <C> <C>
Investments
Fidelity Investments - VIP Asset Manager (5,407,112 shares at net asset value
of $16.93 per share; cost $82,398,497)
Fidelity Investments - VIP Growth Portfolio (3,620,363 shares at net asset
value of $31.14 per share; cost $100,954,140)
Fidelity Investments - VIP Index 500 (352,569 shares at net asset
value of $89.13 per share; cost $27,786,069)
Fidelity Investments - VIP Overseas Portfolio (558,623 shares at net asset
value of $18.84 per share; cost $9,455,062) $ 10,524,466
Fidelity Investments - VIP Money Market Series (17,192,778 shares at net
asset value of $1.00 per share; cost $17,192,778) $ 17,192,778
Receivable from Security First Life Insurance Company for purchases 5,693 182,166
Receivable from Mutual Funds 243,015
Other assets 28,129
------------ ------------
TOTAL ASSETS
10,558,288 17,617,959
</TABLE>
7
<PAGE> 47
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES (continued)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series FA Series FG
------------------ ------------------
LIABILITIES
<S> <C> <C>
Payable to Security First Life Insurance Company for mortality and
expense risk $ 105,252 $ 124,805
Payable to Security First Life Insurance Company for redemptions 15,542 13,412
Payable to Mutual Funds 131,180 279,138
Other liabilities 7,338 17,846
------------------ ------------------
TOTAL LIABILITIES 259,312 435,201
NET ASSETS
Cost to Investors
Series FA Accumulation Units 82,273,791
Series FG Accumulation Units 100,798,349
Series FI Accumulation Units
Series FO Accumulation Units
Series FM Accumulation Units
Accumulated Undistributed Income
Net unrealized appreciation 9,143,945 11,783,973
------------------ ------------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL
$ 91,417,736 $ 112,582,322
================= ==================
</TABLE>
<TABLE>
<CAPTION>
Series FI Series FO Series FM
---------------- ---------------- -------------
LIABILITIES
<S> <C> <C> <C>
Payable to Security First Life Insurance Company for mortality and
expense risk $ 33,509 $ 11,093 $ 17,808
Payable to Security First Life Insurance Company for redemptions 10,902 482 35,697
Payable to Mutual Funds 181,956 28,766
Other liabilities 7,939 231,985
---------------- ---------------- ----------------
TOTAL LIABILITIES 234,306 40,341 285,490
NET ASSETS
Cost to Investors
Series FA Accumulation Units
Series FG Accumulation Units
Series FI Accumulation Units 27,741,564
Series FO Accumulation Units 9,448,543
Series FM Accumulation Units 17,332,469
Accumulated Undistributed Income
Net unrealized appreciation 3,638,410 1,069,404
---------------- ---------------- ----------------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL
$ 31,379,974 $ 10,517,947 $ 17,332,469
================= ================= =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE> 48
SECURITY FIRST LIFE SEPARATE ACCOUNT
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
---------- ---------- ---------- ---------- ----------
INVESTMENT INCOME
<S> <C> <C> <C> <C> <C>
Dividends $2,965,169 $3,436,248 $ 315,697 $ 128,217 $ 605,695
Other income 22,345 74,439 88,093 7,936 441
---------- ---------- ---------- ---------- ----------
2,987,514 3,510,687 403,790 136,153 606,136
EXPENSES
Charges for mortality and expense risk 694,704 844,001 184,777 91,509 130,974
---------- ---------- ---------- ---------- ----------
Net Investment Income 2,292,810 2,666,686 219,013 44,644 475,162
REALIZED AND UNREALIZED INVESTMENT GAINS
Realized investment gains 320,767 814,080 280,197 26,876
Unrealized investment appreciation during the year 5,114,840 5,048,213 2,889,708 819,437
---------- ---------- ---------- ----------
Net investment gains 5,435,607 5,862,293 3,169,905 846,313
---------- ---------- ---------- ---------- ----------
Increase in net assets resulting from operations $7,728,417 $8,528,979 $3,388,918 $ 890,957 $ 475,162
========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE> 49
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series FA Series FG Series FI Series FO Series FM
------------ ------------ ------------ ------------ ------------
Operations
<S> <C> <C> <C> <C> <C>
Net investment income
$ 2,292,810 $ 2,666,686 $ 219,013 $ 44,644 $ 475,162
Net realized investment gains 320,767 814,080 280,197 26,876
Net unrealized investment appreciation
during the year
5,114,840 5,048,213 2,889,708 819,437
------------ ------------ ------------ ------------ ------------
Increase in net assets resulting
from operations 7,728,417 8,528,979 3,388,918 890,957 475,162
Increase in net assets resulting from
capital unit transactions 39,808,589 59,753,701 21,470,058 4,778,724 8,469,934
------------ ------------ ------------ ------------ ------------
Total increase 47,537,006 68,282,680 24,858,976 5,669,681 8,945,096
Net Assets at beginning of year 43,880,730 44,299,642 6,520,998 4,848,266 8,387,373
------------ ------------ ------------ ------------ ------------
Net Assets at end of year $ 91,417,736 $112,582,322 $ 31,379,974 $ 10,517,947 $ 17,332,469
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE> 50
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 gains 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 beginning of year 25,169,843 13,556,557 945,885 1,985,246 3,873,945
----------- ----------- ----------- ----------- ----------
Net Assets at end of year $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.
11
<PAGE> 51
SECURITY FIRST LIFE SEPARATE ACCOUNT A
INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Schedule 1
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 5,407,112 $ 91,542,442 $ 9,143,945 $ 82,398,497
Fidelity Investments VIP Growth Portfolio - capital shares 3,620,363 $112,738,113 $11,783,973 $100,954,140
Fidelity Investments VIP Index 500 - capital shares 352,569 $ 31,424,479 $ 3,638,410 $ 27,786,069
Fidelity Investments Overseas Portfolio - capital shares 558,623 $ 10,524,466 $ 1,069,404 $ 9,455,062
Fidelity Investments VIP Money Market Fund - capital
shares 17,192,778 $ 17,192,778 $ 17,192,778
</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.
The accompanying notes are an integral part of these financial statements.
12
<PAGE> 52
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<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 (3,668,091 shares at
net asset value of $5.14 per
share; cost $18,765,072) $18,858,548
Security First Trust - Equity Series
(4,390,585 shares at net asset
value of $6.45 per share; cost
$25,929,160) $28,309,435
Alger American Small Capitalization
Portfolio (498,003 shares at net
asset value of $40.91 per share;
cost $20,377,148) $20,373,295
Scudder International Fund (154,138
shares at net asset value of $13.25
per share; cost $1,910,731) $2,042,335
Fidelity Investments - VIP Contra Fund
(1,816,726 shares at net asset value
of $16.56 per share; cost $26,529,894) $30,084,981
Fidelity Investments - VIP Equity Income
Portfolio (277,041 shares at net asset
value of $21.03 per share; cost
$5,377,528) $5,826,163
Receivable from Security First Life Insurance
Company for purchases 8,187 12,939 59,561 5,418 105,755 173
Other assets 28,474 48,412 54,907 25,856 51,091
----------- ----------- ----------- ---------- ----------- ----------
TOTAL ASSETS 18,895,209 28,370,786 20,487,763 2,047,753 30,216,592 5,877,427
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE> 53
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 $ 19,998 $ 29,464 $ 22,494 $ 2,198 $ 33,220 $ 6,547
Payable to Security First Life Insurance
Company for redemptions 2,190 9,930 4,175 355 5,870 1,693
Payable to Mutual Funds 36,640 55,130 110,089 5,393 126,767 40,407
Other liabilities 805 289
------------ ----------- ----------- ---------- ----------- ----------
TOTAL LIABILITIES 58,828 95,329 136,758 8,235 165,857 48,647
NET ASSETS
Cost to investors
Series SU Accumulation Units 18,742,905
Series SV Accumulation Units 25,895,182
Series AS Accumulation Units 20,354,858
Series SI Accumulation Units 1,907,914
Series FC Accumulation Units 26,495,648
Series FE Accumulation Units 5,380,145
Accumulated undistributed income (loss)
Net unrealized appreciation (depreciation) 93,476 2,380,275 (3,853) 131,604 3,555,087 448,635
------------ ----------- ----------- ---------- ----------- ----------
NET ASSETS APPLICABLE TO OUTSTANDING
UNITS OF CAPITAL $ 18,836,381 $28,275,457 $20,351,005 $2,039,518 $30,050,735 $5,828,780
============ =========== =========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE> 54
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
--------- ---------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $ 779,578 $2,241,509 $ 40,591 $ 11,510 $ 66,761 $ 47,103
Other income (loss) 9,365 24,201 (10,321) 608 51,958 18,126
--------- ---------- --------- -------- ---------- --------
788,943 2,265,710 30,270 12,118 118,719 65,229
EXPENSES
Charges for mortality and expense risk 162,104 234,234 153,504 12,475 206,662 40,772
--------- ---------- --------- -------- ---------- --------
Net investment income (loss) 626,839 2,031,476 (123,234) (357) (87,943) 24,457
REALIZED AND UNREALIZED INVESTMENT GAINS
(LOSSES)
Net realized investment gains 4,734 136,458 31,846 12,881 20,969 28,195
Unrealized investment appreciation
(depreciation) (154,056) 1,247,963 88,899 121,032 3,462,652 402,870
--------- ---------- --------- -------- ---------- --------
Net investment gains (losses) (149,322) 1,384,421 120,745 133,913 3,483,621 431,065
--------- ---------- --------- -------- ---------- --------
Increase (decrease) in net assets
resulting from operations $ 477,517 $3,415,897 $ (2,489) $133,556 $3,395,678 $455,522
========= ========== ========= ======== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
15
<PAGE> 55
SECURITY FIRST LIFE SEPARATE ACCOUNT A
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Series SU Series SV Series AS Series SI Series FC Series FE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Operations
Net investment income (loss) $ 626,839 $ 2,031,476 $ (123,234) $ (357) $ (87,943) $ 24,457
Net realized investment gains 4,734 136,458 31,846 12,881 20,969 28,195
Net unrealized investment
appreciation (depreciation)
during the year (154,056) 1,247,963 88,899 121,032 3,462,652 402,870
----------- ----------- ----------- ---------- ----------- ----------
Increase (decrease) in net assets
resulting from operations 477,517 3,415,897 (2,489) 133,556 3,395,678 455,522
Increase in net assets resulting
from capital unit transactions 9,107,385 11,774,074 15,547,005 1,523,514 20,780,230 4,568,738
----------- ----------- ----------- ---------- ----------- ----------
Total increase 9,584,902 15,189,971 15,544,516 1,657,070 24,175,908 5,024,260
Net Assets at beginning of year 9,251,479 13,085,486 4,806,489 382,448 5,874,827 804,520
----------- ----------- ----------- ---------- ----------- ----------
Net Assets at end of year $18,836,381 $28,275,457 $20,351,005 $2,039,518 $30,050,735 $5,828,780
=========== =========== =========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
16
<PAGE> 56
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
Net 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 beginning of year 4,519,513 4,552,962
---------- ----------- ---------- -------- ---------- --------
Net Assets at end of year $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.
17
<PAGE> 57
SECURITY FIRST LIFE SEPARATE ACCOUNT A
INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SCHEDULE I
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 3,668,091 $18,858,548 $ 93,476 $18,765,072
Security First Trust Equity Series -
capital shares 4,390,585 $28,309,435 $2,380,275 $25,929,160
Alger American Small Capitalization
Portfolio - capital shares 498,003 $20,373,295 $ (3,853) $20,377,148
Scudder International Portfolio - capital
shares 154,138 $ 2,042,335 $ 131,604 $ 1,910,731
Fidelity Investments VIP Contra Fund -
capital shares 1,816,726 $30,084,981 $3,555,087 $26,529,894
Fidelity Investments VIP Equity
Income Portfolio - capital shares 277,041 $ 5,826,163 $ 448,635 $ 5,377,528
</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.
The accompanying notes are an integral part of these financial statements.
18
<PAGE> 58
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
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, 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.
All series of the Trust receive administrative services for a fee from Security
First Investment Management Corporation (Security Management). Security First
Financial, Inc. (Security Financial) is the principal underwriter for the
Contracts. Security Life, Security Management, and Security Financial 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 Equity and U. S.
Government Income Series by Virtus Capital Management.
19
<PAGE> 59
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.
The preparation of financial statements in conformity with generally accepted
accounting principals requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from these estimates.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS -- Investments are carried at fair 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
SF 230; SF 224R1 contracts 1.35% .0000370
</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
20
<PAGE> 60
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
charge) is deducted from each contract and paid to Security Life at the end of
each contract year NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (continued)
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 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 expenses 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.
SF 224R1, SF 230 * Based on elapsed time since premium received.
Disappears on or before 5th 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, SF 135R2C ** Based on elapsed time since premium received.
Disappears after 7th year.
</TABLE>
* $55 (Currently being waived).
**.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
<PAGE> 61
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
$10 conversion charge is incurred. The amount deducted for
contract charges and CDSC was $513,405 for the year ended December 31, 1996, and
$273,809 for the year ended December 31, 1995.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES (continued)
INCOME RECOGNITION AND REINVESTMENT -- Income is recognized as declared payable
by the investment companies. All distributions received are reinvested in the
investment companies.
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, 1996:
SF 135R; SF 226RI Contracts
---------------------------
Series B Accumulation Units 1,457,968 173,008 288,184 34,370
</TABLE>
<PAGE> 62
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Series G Accumulation Units 14,597,742 1,163,010 1,544,237 124,761
Series FA Accumulation Units 15,083,889 2,386,263 4,817,387 761,858
Series FG Accumulation Units 25,437,990 3,316,801 3,090,860 403,159
Series FI Accumulation Units 14,245,149 1,834,275 1,074,884 134,904
NOTE 4 -- CAPITAL TRANSACTIONS (continued)
Additions to Capital Deductions From Capital
$ Units $ Units
---------------- --------------- --------------- ---------
Series FO Accumulation Units 1,140,778 176,902 169,596 26,298
Series FM Accumulation Units 26,932,483 4,853,215 20,523,960 3,697,741
Series SU Accumulation Units 2,374,207 434,190 109,775 20,040
Series AS Accumulation Units 16,999,648 2,501,793 1,452,643 213,708
Series SI Accumulation Units 1,670,305 266,302 146,791 23,697
Series FC Accumulation Units 21,801,795 3,201,615 1,021,565 149,159
Series FE Accumulation Units 4,806,768 746,267 238,030 36,019
Series SV Accumulation Units 1,544,460 285,804 20,817 3,618
SF 234; SF 224FL; SF 236FL; SF 1700 Contracts
Series B Accumulation Units 931,484 51,367 1,065,392 59,149
Series G Accumulation Units 13,106,032 341,108 7,100,392 185,366
Series T Accumulation Units 11,430,218 348,446 6,471,918 196,812
Series P Accumulation Units 653,049 49,155 857,541 64,727
Series I Accumulation Units 5,543,290 691,905 1,933,723 240,937
Series FA Accumulation Units 4,879,721 801,224 2,064,517 336,514
Series FG Accumulation Units 11,230,260 1,527,712 2,716,606 362,785
Series FI Accumulation Units 4,604,737 613,367 791,378 103,660
Series FM Accumulation Units 1,759,008 317,763 1,732,158 312,636
SF 135R2S
Series SU Accumulation Units 7,593,093 1,416,303 750,140 139,104
Series SV Accumulation Units 11,598,037 1,831,596 1,347,606 210,583
Series FM Accumulation Units 10,241,054 1,826,561 9,046,976 1,610,850
Series FG Accumulation Units 8,059,593 1,075,155 808,401 107,079
Series FO Accumulation Units 4,116,962 747,815 309,420 56,136
SF 224R1; SF 230
Series B Accumulation Units 1,957,058 257,080 56,691 28,429
Series G Accumulation Units 30,537,423 2,308,139 518,267 127,912
Series FA Accumulation Units 27,219,472 4,255,909 492,589 165,276
Series FG Accumulation Units 22,127,890 2,858,154 486,165 114,979
Series FI Accumulation Units 4,650,004 583,863 163,570 35,543
Series FM Accumulation Units 862,152 131,031 21,669 9,661
</TABLE>
23
<PAGE> 63
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>
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
Series FE Accumulation Units 760,961 132,235 6,261 1,114
SF 234; 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
</TABLE>
24
<PAGE> 64
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 5 -- UNITS OF CAPITAL
The following are the units outstanding and corresponding unit values as of
December 31, 1996:
<TABLE>
<CAPTION>
Units
Description Outstanding Unit Value
----------- ----------- ----------
<S> <C> <C>
SF 135R; SF 226 RI Contracts
Series B Accumulation Units 309,366 $ 8.68
Series G Accumulation Units 2,143,643 13.77
Series FA Accumulation Units 7,492,590 6.81
Series FG Accumulation Units 6,733,435 8.08
Series FI Accumulation Units 2,309,743 8.54
Series FO Accumulation Units 370,006 6.86
Series FM Accumulation Units 1,898,863 5.62
Series SU Accumulation Units 433,865 5.56
Series AS Accumulation Units 3,022,385 6.73
Series SI Accumulation Units 308,110 6.62
Series FC Accumulation Units 3,986,138 7.54
Series FE Accumulation Units 841,369 6.93
Series SV Accumulation Units 282,186 5.59
SF 234; SF 224FL; SF 236FL; SF 1700 Contracts
Series B Accumulation Units 269,726 18.60
Series G Accumulation Units 1,795,933 42.57
Series T Accumulation Units 1,581,897 36.72
Series P Accumulation Units 186,679 13.49
Series I Accumulation Units 1,569,196 8.57
Series FA Accumulation Units 1,940,307 6.58
Series FG Accumulation Units 2,551,369 7.77
Series FI Accumulation Units 834,905 8.32
Series FM Accumulation Units 671,516 5.66
SF 224R1; SF 230
Series B Accumulation Units 228,651 8.37
Series G Accumulation Units 2,180,227 14.50
Series FA Accumulation Units 4,090,633 6.74
Series FG Accumulation Units 2,743,175 8.05
Series FI Accumulation Units 548,320 8.57
</TABLE>
25
<PAGE> 65
SECURITY FIRST LIFE SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (continued)
Series FM Accumulation Units 121,370 5.63
NOTE 5 -- UNITS OF CAPITAL (continued)
<TABLE>
<CAPTION>
Units
Description Outstanding Unit Value
----------- ----------- ----------
SF 135R2S
---------
<S> <C> <C>
Series SU Accumulation Units 2,969,871 $ 5.53
Series SV Accumulation Units 3,807,608 7.01
Series FM Accumulation Units 356,076 5.67
Series FG Accumulation Units 2,052,512 7.93
Series FO Accumulation Units 1,359,629 5.87
</TABLE>
NOTE 6 -- ACQUISITION OF SEPARATE ACCOUNT
As a result of certain agreements entered into between Security Life and
Fidelity Standard Life Insurance Company (Fidelity Standard), Security Life
assumptively reinsured certain annuity business from Fidelity Standard. These
agreements were effective October 31, 1996. The reinsurance between Security
Life and Fidelity Standard included variable annuity contracts (SF 224R1
Contracts) which became part of the Separate Account. This transaction had no
effect on unit values or number of units outstanding with respect to the SF224R1
Contracts. Previously issued financial statements for the Separate Account and
Fidelity Standard Life Separate Account were not effected by this transaction.
26
<PAGE> 66
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, 1996 and 1995, 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, 1996. 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, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
As discussed in Note 3 to the consolidated financial statements, Security First
Life Insurance Company and subsidiaries made certain accounting changes in 1994.
February 7, 1997
<PAGE> 67
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
1996 1995
---------- ----------
(In thousands)
<S> <C> <C>
ASSETS
INVESTMENTS
Fixed maturities $2,251,951 $2,178,985
Policy and mortgage loans 22,378 18,798
Short-term investments 24,607 7,024
Other investments 2,754 5,440
---------- ----------
2,301,690 2,210,247
CASH AND CASH EQUIVALENTS 11,472 7,990
ACCRUED INVESTMENT INCOME 32,797 30,459
DEFERRED POLICY ACQUISITION COSTS 103,950 56,515
OTHER ASSETS
Property under capital lease 10,100 10,680
Assets held in separate accounts 594,249 340,287
Receivable from sale of subsidiary 22,295
Other 4,063 4,318
---------- ----------
630,707 355,285
---------- ----------
$3,080,616 $2,660,496
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE> 68
<TABLE>
<CAPTION>
December 31
1996 1995
---------- ----------
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Policyholder liabilities $2,222,128 $2,047,818
Obligation under capital lease 15,720 15,966
Notes payable to parent 35,000 35,000
Note payable 1,000
Federal income taxes 31,296 35,052
Liabilities related to separate accounts 594,249 340,287
Other 7,687 5,293
---------- ----------
2,906,080 2,480,416
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 16,949 38,972
Retained earnings 107,040 90,561
---------- ----------
174,536 180,080
---------- ----------
$3,080,616 $2,660,496
========== ==========
</TABLE>
3
<PAGE> 69
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994
--------- -------- ---------
(In thousands)
<S> <C> <C> <C>
REVENUES
Net investment income $ 164,115 $158,174 $ 146,101
Annuity product income 10,006 14,815 6,121
Net realized investment gains (losses) (2,179) 1,347 (1,735)
Gain on sale of subsidiary 3,879
Other 709 701 709
--------- -------- ---------
TOTAL REVENUES 176,530 175,037 151,196
BENEFITS AND EXPENSES
Interest credited to policyholders 106,347 103,959 102,776
Benefits in excess of policyholder liabilities 4,960 5,738 4,119
Amortization of deferred policy acquisition costs 13,542 15,505 5,612
Operating expenses 25,721 28,201 23,543
--------- -------- ---------
TOTAL BENEFITS AND EXPENSES 150,570 153,403 136,050
--------- -------- ---------
25,960 21,634 15,146
Income tax expense
Current 3,596 3,044 1,776
Deferred 5,885 3,105 3,388
--------- -------- ---------
9,481 6,149 5,164
--------- -------- ---------
NET INCOME $ 16,479 $ 15,485 $ 9,982
========= ======== =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE> 70
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, 1994 $ 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
Net income 16,479 16,479
Net unrealized investment losses (22,023) (22,023)
-------- -------- ------- -------- -------- --------
Balance at December 31, 1996 $ 200 $ 2,200 $48,147 $ 16,949 $107,040 $174,536
======== ======== ======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE> 71
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31
1996 1995 1994
----------- --------- -----------
(In thousands)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income $ 16,479 $ 15,485 $ 9,982
Adjustments to reconcile net income to net cash
provided by operations:
Net realized investment losses (gains) 2,179 (1,347) 3,014
Depreciation and amortization 1,772 1,391 2,281
Accretion of discount and amortization
of premium on investments 1,988 1,059 (2,423)
Gain on sale of subsidiary (3,879)
Changes in operating assets and liabilities:
Accrued investment income (2,338) (3,441) (648)
Deferred policy acquisition costs (24,655) (15,676) (4,915)
Other assets (19,008) 2,194 4,560
Other liabilities 9,889 673 (9,050)
----------- --------- -----------
NET CASH PROVIDED BY
(USED IN) OPERATING ACTIVITIES (17,573) 338 2,801
INVESTING ACTIVITIES
Fixed maturity securities
Purchases (1,065,166) (636,371) (1,033,097)
Sales and maturities 934,171 439,897 860,239
Net sale (purchase) of other investments (314) 801 3,277
Net sale (purchase) of short-term investments (17,583) 19,191 (26,215)
Repayment (issuance) of loans, net (3,580) (2,558) 5,792
Purchase of equipment (320) (388) (896)
----------- --------- -----------
NET CASH USED IN
INVESTING ACTIVITIES (152,792) (179,428) (190,900)
FINANCING ACTIVITIES
Receipts credited to policyholder accounts 693,095 565,698 468,898
Amounts returned to policyholders (518,002) (390,760) (326,691)
Issuance of note payable to parent 10,000
Repayment of note payable (1,000) (1,000) (1,000)
Reduction of capital lease obligation (246) (217) (192)
----------- --------- -----------
NET CASH PROVIDED
BY FINANCING ACTIVITIES 173,847 173,721 151,015
----------- --------- -----------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 3,482 (5,369) (37,084)
Cash and cash equivalents at beginning of year 7,990 13,359 50,443
----------- --------- -----------
CASH AND CASH
EQUIVALENTS AT END OF YEAR $ 11,472 $ 7,990 $ 13,359
=========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE> 72
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
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). 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 differ in some respects
from statutory accounting practices prescribed or permitted by regulatory
authorities (statutory basis) and include the accounts of its wholly-owned
subsidiary, Security First Life Insurance Company of Arizona (SFL-Arizona).
Prior to December 31, 1996, the financial statements also included the accounts
of Fidelity Standard Life Insurance Company (Fidelity Standard Life), which was
sold as of that date. (See Note 9.) All significant intercompany transactions
and accounts are eliminated in consolidation.
INVESTMENTS -- Investments are reported on the following bases:
Fixed Maturities -- 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.
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 classifies its fixed maturities as available-for-sale. The
Company does not maintain a trading portfolio.
Policy and mortgage loans -- at unpaid balances.
Short-term investments -- at cost, which approximates fair value.
Other investments -- at fair value.
Realized gains and losses on disposal of investments are determined on a
specific identification basis.
7
<PAGE> 73
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
CASH AND 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 for 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.
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. 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, 1996 $2,222,128 $2,147,777
December 31, 1995 2,047,818 1,976,079
</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.
8
<PAGE> 74
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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.
SEPARATE ACCOUNTS -- The assets held in separate accounts represent funds that
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.
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 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.
RECLASSIFICATIONS -- Certain reclassifications of prior-year amounts have been
made to conform with current-year classifications.
9
<PAGE> 75
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 2 -- STATUTORY CAPITAL AND RESTRICTIONS
Security First Life and 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, 1996, 1995 and 1994, and
statutory-basis net income for those years are as follows (in thousands):
<TABLE>
<CAPTION>
Capital Net
and Surplus Income
----------- ------
<S> <C> <C>
December 31, 1996
- -----------------
Security First Life Insurance Company $107,501* $13,449*
Security First Life Insurance Company of Arizona 13,823* 1,187*
December 31, 1995
- -----------------
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
</TABLE>
* These unaudited amounts are preliminary and subject to change upon
completion of the statutory annual statements.
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 is subject to statutory limitations which are based on each company's
statutory-basis net income and surplus levels. At December 31, 1996, the maximum
amount of dividends Security First Life could pay SFG without prior approval
from state insurance regulatory authorities is $12,132,000.
10
<PAGE> 76
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.
Unrealized investment gains reported in the accompanying financial statements
are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1996 1995
------- --------
<S> <C> <C>
Unrealized investment gains $48,552 $104,593
Less: Adjustment for deferred policy acquisition costs 22,942 45,736
Deferred income taxes 8,661 19,885
------- --------
Net unrealized investment gains $16,949 $ 38,972
======= ========
</TABLE>
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>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Fixed maturities
Gross gains $ 8,923 $ 6,181 $ 7,174
Gross losses (8,075) (4,621) (6,328)
------- ------- -------
848 1,560 846
Losses on other investments (3,027) (213) (2,281)
Accelerated amortization of
deferred policy acquisition costs (300)
------- ------- -------
Net realized investment gains (losses) $(2,179) $ 1,347 $(1,735)
======= ======= =======
</TABLE>
Proceeds from sales of fixed maturities are $911,529,000 and $441,790,000 in
1996 and 1995, respectively.
11
<PAGE> 77
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, 1996
and 1995 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, 1996
- -----------------
U.S. Treasury securities and
obligations of U.S. Government
corporations and agencies $ 115,250 $ 7,165 $ (494) $ 121,921
Debt securities issued by foreign
governments 35,960 1,335 (308) 36,987
Corporate securities 1,106,617 38,203 (10,094) 1,134,726
Mortgage-backed securities 945,534 20,188 (7,405) 958,317
---------- --------- ----------- ----------
$2,203,361 $ 66,891 $ (18,301) $2,251,951
========== ========= =========== ==========
December 31, 1995
- -----------------
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 896,766 64,723 (5,194) 956,295
Mortgage-backed securities 1,029,090 33,049 (1,901) 1,060,238
---------- --------- ----------- ----------
$2,074,307 $ 111,926 $ (7,248) $2,178,985
========== ========= =========== ==========
</TABLE>
The amortized cost and fair value of fixed maturities by contractual maturity at
December 31, 1996, 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>
Due in one year or less $ 923 $ 955
Due after one year through five years 234,687 242,136
Due after five years through ten years 608,014 620,501
Due after ten years 414,203 430,042
Mortgage-backed securities 945,534 958,317
---------- ----------
$2,203,361 $2,251,951
========== ==========
</TABLE>
12
<PAGE> 78
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3 -- INVESTMENTS (continued)
The Company has recorded valuation reserves for other-than-temporary impairment
in the value of investments of $6,900,000 and $4,250,000 at December 31, 1996
and 1995, respectively.
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, 1996, the Company
had no significant concentration of credit risk.
The fair values for fixed maturities are primarily based on values obtained from
independent pricing services.
The carrying amount of mortgage loans ($945,000 at December 31, 1996 and 1995)
and policy loans ($21,433,000 and $17,853,000 at December 31, 1996 and 1995,
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, 1996, investment securities having an amortized cost of
$10,566,000 were on deposit with various states in accordance with state
insurance department requirements.
Investment income by major category of investment is summarized as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Fixed maturities $ 165,997 $ 159,266 $ 148,303
Policy and mortgage loans 1,283 1,229 1,518
Short-term investments 1,718 1,943 114
Other investments 553 894 406
Cash and cash equivalents 486 388 783
--------- --------- ---------
170,037 163,720 151,124
Investment expenses (5,922) (5,546) (5,023)
--------- --------- ---------
Net investment income $ 164,115 $ 158,174 $ 146,101
========= ========= =========
</TABLE>
The Company has no significant amounts of non-income producing investments.
13
<PAGE> 79
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 4 -- NOTES PAYABLE
Notes payable consist of the following as of December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
5% Surplus note due to SFG, interest payable monthly,
principal payable upon regulatory approval $25,000 $25,000
8% Surplus note due to SFG, interest payable monthly,
principal payable upon regulatory approval 10,000 10,000
8% Note due to The Capitol Life Insurance Company,
interest payable quarterly, principal payment
of $1,000,000 paid on December 31, 1996 1,000
------- -------
$35,000 $36,000
======= =======
</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, 1996
and 1995. 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.
There are no principal payments due on the notes payable during the next five
years.
Interest paid by the Company totaled $2,133,000 in 1996, $2,225,000 in 1995 and
$1,799,000 in 1994.
14
<PAGE> 80
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 5 -- INCOME TAXES
The liability for federal income taxes includes deferred taxes of $30,496,000
and $35,875,000 at December 31, 1996 and 1995, respectively. Significant
components of these deferred taxes are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Deferred tax liabilities:
Deferred policy acquisition costs $41,153 $32,937
Fixed maturities 7,124 19,980
Other assets 1,794
------- -------
Total deferred tax liabilities 50,071 52,917
Deferred tax assets:
Policyholder liabilities 12,856 13,384
Other liabilities 6,503 3,388
Other, net 216 270
------- -------
Total deferred tax assets 19,575 17,042
------- -------
Net deferred tax liabilities $30,496 $35,875
======= =======
</TABLE>
Income taxes paid by the Company were $1,972,000 in 1996, $3,248,000 in 1995 and
$2,000,000 in 1994.
The following is a reconciliation of the federal income tax at statutory rates
of 34% with the income tax provision as shown in the accompanying financial
statements (in thousands):
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Federal income tax at 34% $ 8,826 $ 7,356
Dividends received deduction (259) (317)
True up of prior year taxes 924 (875)
Other (10) (15)
------- -------
Provision for income tax expense $ 9,481 $ 6,149
======= =======
</TABLE>
15
<PAGE> 81
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
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 $1,656,000, $1,663,000 and
$1,649,000 for the years ended December 31, 1996, 1995 and 1994, respectively.
Future payments under the lease are as follows (in thousands):
<TABLE>
<S> <C>
1997 $2,166
1998 2,166
1999 2,166
2000 2,166
2001 2,166
Thereafter 26,885
-------
Total minimum rental payments 37,715
Amount representing interest (21,995)
-------
Present value of minimum rental payments $15,720
=======
</TABLE>
The property under capital lease is net of accumulated amortization of
$7,297,000 in 1996 and $6,717,000 in 1995. Lease amortization expense was
$580,000 in 1996 and 1995.
NOTE 7 -- COMMITMENTS
The Company has forward contracts with commitments to purchase mortgage-backed
securities with total par values of $17,500,000 at December 31, 1996. 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.
16
<PAGE> 82
SECURITY FIRST LIFE INSURANCE COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 8 -- RELATED PARTY TRANSACTIONS
The Company has marketing and administrative agreements with SFG under which SFG
provides all of the Company's marketing and policyholder administration
services. Amounts incurred under these agreements were $52,102,000, $38,954,000,
and $31,183,000 for 1996, 1995 and 1994, respectively. A substantial portion of
these amounts are commissions and are deferred as acquisition costs.
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 1996, 1995 and 1994.
The Company has investment advisory agreements with Security First Investment
Management Corporation, a subsidiary of SFG. Fees of $5,360,000, $4,756,000, and
$4,508,000 were paid in 1996, 1995 and 1994, respectively, pursuant to these
agreements.
NOTE 9 -- OTHER SIGNIFICANT EVENTS
Effective December 31, 1996, the Company sold all of the common stock of its
former subsidiary, Fidelity Standard Life. As a result of this transaction, the
Company recognized a gain in 1996 of $3,879,000. As of December 31, 1996, the
accompanying balance sheet includes receivables of $22,295,000 related to this
sale. These receivables were settled in January 1997.
Prior to the sale of Fidelity Standard Life, the Company assumed all of the
policyholder liabilities through several reinsurance agreements. No gain or loss
was recognized on this transaction.
17
<PAGE> 83
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
(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.
Name Position and Offices with Depositor
- ---- -----------------------------------
Melvin M. Hawkrigg Chairman of the Board and Director
Frederic J. Tomczyk Director
Frank E. Farella 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
<PAGE> 84
Alex H. Masson Senior Vice President, Information Systems
Robert L. Pina Senior Vice President, Human Resources
George R. Bateman Vice President, Public Employees Services
James C. Turner Vice President, Taxation
Cheryl J. Finney Assistant General Counsel and Assistant Secretary
George J. Olah Treasurer
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 February 28, 1997 there were 28,021 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. is the principal underwriter for Security First
Life Separate Account A.
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.
Name Position with Underwriter
- ---- -------------------------
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
Cheryl J. Finney Assistant General Counsel and Assistant Secretary
<PAGE> 85
<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.
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 of 1940 and the rules promulgated
thereunder and as custodian for the Registrant.
Security First Group, Inc. is located at 11365 West Olympic Boulevard, Los
Angeles, California 90064. It performs substantially all of the recordkeeping
and administrative services in connection with the Registrant.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Registrant makes the following undertaking:
Security First Life represents that the charges deducted under the Contracts
described herein this registration statements are, in the aggregate, reasonable
in relation to the services rendered, the expenses expected to be incurred and
the risks assumed by Security First
<PAGE> 86
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 30th day of April 1997.
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 Post-Effective amendment to its
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 30, 1997
- ----------------------
Robert G. Mepham
/s/ Jane F. Eagle Principal Financial and April 30, 1997
- ---------------------- Accounting Officer
Jane F. Eagle
Melvin M. Hawkrigg* Chairman, Director April 30, 1997
- ----------------------
Melvin M. Hawkrigg
- ---------------------- Director April 30, 1997
Frederic J. Tomczyk
Paul X. Kelley* Director April 30, 1997
- ----------------------
Paul X. Kelley
</TABLE>
<PAGE> 87
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Frank E. Farella* Director April 30, 1997
- ----------------------
Frank E. Farella
/s/ Richard C. Pearson Director April 30, 1997
- ----------------------
Richard C. Pearson
/s/ Richard C. Pearson April 30, 1997
- ----------------------
*(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 caption "Independent
Auditors" and to the use of our reports on Security First Life Insurance
Company and Subsidiaries dated February 7, 1997 and Security First Life
Separate Account A dated April 11, 1997 in the Registration Statement
(Form N-4) and related Prospectus of Security First Life Separate Account A.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Los Angeles, California
April 28, 1997
<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 -------------- ----------------- -------------- -----------------
--------------
--------------------
Security First Life
Insurance
Company
of Arizona
AZ 89010
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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 9,900,030
<INVESTMENTS-AT-VALUE> 9,625,339
<RECEIVABLES> 8,236
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,633,575
<PAYABLE-FOR-SECURITIES> 8,236
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,946
<TOTAL-LIABILITIES> 20,182
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 807,743
<SHARES-COMMON-PRIOR> 448,236
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (274,691)
<NET-ASSETS> 9,613,393
<DIVIDEND-INCOME> 566,443
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 79,605
<NET-INVESTMENT-INCOME> 486,838
<REALIZED-GAINS-CURRENT> (53,594)
<APPREC-INCREASE-CURRENT> (280,479)
<NET-CHANGE-FROM-OPS> 152,765
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 481,455
<NUMBER-OF-SHARES-REDEEMED> 121,948
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,089,008
<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> 79,605
<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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 116,791,052
<INVESTMENTS-AT-VALUE> 137,726,498
<RECEIVABLES> 189,761
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 137,916,259
<PAYABLE-FOR-SECURITIES> 187,705
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 153,506
<TOTAL-LIABILITIES> 341,211
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 6,119,803
<SHARES-COMMON-PRIOR> 2,745,585
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 20,935,446
<NET-ASSETS> 137,575,048
<DIVIDEND-INCOME> 8,157,311
<INTEREST-INCOME> 0
<OTHER-INCOME> 71,186
<EXPENSES-NET> 905,897
<NET-INVESTMENT-INCOME> 7,322,600
<REALIZED-GAINS-CURRENT> 2,094,280
<APPREC-INCREASE-CURRENT> 8,500,561
<NET-CHANGE-FROM-OPS> 17,917,441
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,812,257
<NUMBER-OF-SHARES-REDEEMED> 438,039
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 66,995,742
<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> 905,897
<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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 48,705,613
<INVESTMENTS-AT-VALUE> 58,105,586
<RECEIVABLES> 44,930
<ASSETS-OTHER> 207
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 58,150,723
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 66,955
<TOTAL-LIABILITIES> 66,955
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,581,897
<SHARES-COMMON-PRIOR> 1,430,263
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,399,973
<NET-ASSETS> 58,083,768
<DIVIDEND-INCOME> 4,601,929
<INTEREST-INCOME> 0
<OTHER-INCOME> 14,103
<EXPENSES-NET> 448,656
<NET-INVESTMENT-INCOME> 4,167,376
<REALIZED-GAINS-CURRENT> 1,100,192
<APPREC-INCREASE-CURRENT> 4,324,599
<NET-CHANGE-FROM-OPS> 9,592,167
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 348,446
<NUMBER-OF-SHARES-REDEEMED> 196,812
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 14,550,467
<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> 448,656
<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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 82,398,497
<INVESTMENTS-AT-VALUE> 91,542,442
<RECEIVABLES> 121,964
<ASSETS-OTHER> 12,642
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 91,677,048
<PAYABLE-FOR-SECURITIES> 131,180
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 128,132
<TOTAL-LIABILITIES> 259,312
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 13,523,530
<SHARES-COMMON-PRIOR> 7,343,782
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9,143,945
<NET-ASSETS> 91,417,736
<DIVIDEND-INCOME> 2,965,169
<INTEREST-INCOME> 0
<OTHER-INCOME> 22,345
<EXPENSES-NET> 694,704
<NET-INVESTMENT-INCOME> 2,292,810
<REALIZED-GAINS-CURRENT> 320,767
<APPREC-INCREASE-CURRENT> 5,114,840
<NET-CHANGE-FROM-OPS> 7,728,417
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,443,396
<NUMBER-OF-SHARES-REDEEMED> 1,263,648
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 7,728,417
<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> 694,704
<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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 100,954,140
<INVESTMENTS-AT-VALUE> 112,738,113
<RECEIVABLES> 207,355
<ASSETS-OTHER> 72,055
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 113,017,523
<PAYABLE-FOR-SECURITIES> 279,138
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 156,063
<TOTAL-LIABILITIES> 435,201
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 14,080,491
<SHARES-COMMON-PRIOR> 6,290,671
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 11,783,973
<NET-ASSETS> 112,582,322
<DIVIDEND-INCOME> 3,436,248
<INTEREST-INCOME> 0
<OTHER-INCOME> 74,439
<EXPENSES-NET> 844,001
<NET-INVESTMENT-INCOME> 2,666,686
<REALIZED-GAINS-CURRENT> 814,080
<APPREC-INCREASE-CURRENT> 5,048,213
<NET-CHANGE-FROM-OPS> 8,528,979
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,777,822
<NUMBER-OF-SHARES-REDEEMED> 988,002
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 68,282,680
<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> 844,001
<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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 27,786,069
<INVESTMENTS-AT-VALUE> 31,424,479
<RECEIVABLES> 138,152
<ASSETS-OTHER> 51,699
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 31,614,280
<PAYABLE-FOR-SECURITIES> 181,956
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 52,350
<TOTAL-LIABILITIES> 234,306
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,692,968
<SHARES-COMMON-PRIOR> 935,570
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2,638,410
<NET-ASSETS> 31,379,974
<DIVIDEND-INCOME> 315,697
<INTEREST-INCOME> 0
<OTHER-INCOME> 88,093
<EXPENSES-NET> 184,777
<NET-INVESTMENT-INCOME> 219,013
<REALIZED-GAINS-CURRENT> 280,197
<APPREC-INCREASE-CURRENT> 2,889,708
<NET-CHANGE-FROM-OPS> 3,388,918
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,031,505
<NUMBER-OF-SHARES-REDEEMED> 274,107
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 24,858,976
<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> 184,777
<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-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 17,192,778
<INVESTMENTS-AT-VALUE> 17,192,778
<RECEIVABLES> 425,181
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 17,617,959
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 285,490
<TOTAL-LIABILITIES> 285,490
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,047,825
<SHARES-COMMON-PRIOR> 1,550,143
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 17,332,469
<DIVIDEND-INCOME> 605,695
<INTEREST-INCOME> 0
<OTHER-INCOME> 441
<EXPENSES-NET> 130,974
<NET-INVESTMENT-INCOME> 475,162
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 475,162
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,128,570
<NUMBER-OF-SHARES-REDEEMED> 5,630,888
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8,945,096
<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> 130,974
<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> 9
<NAME> FO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 9,455,062
<INVESTMENTS-AT-VALUE> 10,524,466
<RECEIVABLES> 5,693
<ASSETS-OTHER> 28,129
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,558,288
<PAYABLE-FOR-SECURITIES> 28,766
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 11,575
<TOTAL-LIABILITIES> 40,341
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 1,729,635
<SHARES-COMMON-PRIOR> 887,352
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,069,404
<NET-ASSETS> 10,517,947
<DIVIDEND-INCOME> 128,217
<INTEREST-INCOME> 0
<OTHER-INCOME> 7,936
<EXPENSES-NET> 91,509
<NET-INVESTMENT-INCOME> 44,644
<REALIZED-GAINS-CURRENT> 26,876
<APPREC-INCREASE-CURRENT> 819,437
<NET-CHANGE-FROM-OPS> 890,957
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 924,717
<NUMBER-OF-SHARES-REDEEMED> 82,434
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,669,681
<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> 91,509
<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> 15
<NAME> FC
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 26,529,894
<INVESTMENTS-AT-VALUE> 30,084,981
<RECEIVABLES> 105,755
<ASSETS-OTHER> 25,856
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,216,592
<PAYABLE-FOR-SECURITIES> 126,767
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39,090
<TOTAL-LIABILITIES> 165,857
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,986,138
<SHARES-COMMON-PRIOR> 933,682
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,555,087
<NET-ASSETS> 30,050,735
<DIVIDEND-INCOME> 66,761
<INTEREST-INCOME> 0
<OTHER-INCOME> 51,958
<EXPENSES-NET> 206,662
<NET-INVESTMENT-INCOME> (87,943)
<REALIZED-GAINS-CURRENT> 20,969
<APPREC-INCREASE-CURRENT> 3,462,652
<NET-CHANGE-FROM-OPS> 3,395,678
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,201,615
<NUMBER-OF-SHARES-REDEEMED> 149,159
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5,874,827
<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> 206,662
<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> 14
<NAME> SI
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 1,910,731
<INVESTMENTS-AT-VALUE> 2,042,335
<RECEIVABLES> 5,418
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 2,047,753
<PAYABLE-FOR-SECURITIES> 5,393
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,842
<TOTAL-LIABILITIES> 8,235
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 308,110
<SHARES-COMMON-PRIOR> 65,505
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 131,604
<NET-ASSETS> 2,039,518
<DIVIDEND-INCOME> 11,510
<INTEREST-INCOME> 0
<OTHER-INCOME> 608
<EXPENSES-NET> 12,475
<NET-INVESTMENT-INCOME> (257)
<REALIZED-GAINS-CURRENT> 12,881
<APPREC-INCREASE-CURRENT> 121,032
<NET-CHANGE-FROM-OPS> 133,556
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 266,302
<NUMBER-OF-SHARES-REDEEMED> 23,697
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,657,070
<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> 12,475
<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> 13
<NAME> AS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 20,377,148
<INVESTMENTS-AT-VALUE> 20,373,295
<RECEIVABLES> 59,561
<ASSETS-OTHER> 54,907
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 20,487,763
<PAYABLE-FOR-SECURITIES> 110,089
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 26,669
<TOTAL-LIABILITIES> 136,758
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 3,022,385
<SHARES-COMMON-PRIOR> 734,300
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,853)
<NET-ASSETS> 20,351,005
<DIVIDEND-INCOME> 40,591
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 163,825
<NET-INVESTMENT-INCOME> (123,234)
<REALIZED-GAINS-CURRENT> 31,846
<APPREC-INCREASE-CURRENT> 88,899
<NET-CHANGE-FROM-OPS> (2,489)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,501,793
<NUMBER-OF-SHARES-REDEEMED> 213,708
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,544,516
<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> 163,825
<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>
